BBMG Corporation - Proxy Solicitation & Information Statement 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountants or other professional adviser.

If you have sold or transferred all your shares in the Company, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer, registered institution in securities, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company and it must not be used for purpose of offering or inviting offers for any securities.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2009)

(1) PROPOSED ISSUE AND PLACING OF A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT AND (3) WHITEWASH WAIVER

The notice convening the Extraordinary General Meeting of the Company to be held at Conference Room 6, 22nd Floor, Tower D, Global Trade Center, No. 36, North Third Ring East Road, Dongcheng District, Beijing 100013, the People’s Republic of China on Thursday, 24 October 2013 at 2:30 p.m. was despatched to the shareholders of the Company on 10 September 2013.

Whether or not you intend to attend the Extraordinary General Meeting, please complete the form of proxy despatched together with the aforementioned notice in accordance with the instructions printed thereon and return them to the office of the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for holders of H Shares as soon as possible and in any event not less than 24 hours before the time for holding of the Extraordinary General Meeting or appointed time for voting. Completion and return of the form of proxy will not preclude you from attending and voting at the Extraordinary General Meeting should you so wish.

15 October 2013

* for identification purpose only

		Page
Definitions .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter From	The Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
I.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
II.	Proposed issue and placing of A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
III.	Connected transaction – proposed subscription of A Shares by the Parent . . . . . . . .	14
IV.	Effect on the shareholding structure of the Company . . . . . . . . . . . . . . . . . . . . . .	17
V.	Reasons for and benefits of the Propose Placing and the Parent Subscription . . . . . .	18
VI.	Whitewash Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
VII.	IBC of Subscription, IBC of Whitewash Waiver and the
	Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
VIII.	Proposal in relation to the plan on Shareholders’ return . . . . . . . . . . . . . . . . . . . .	20
IX.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
X.	EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
XI.	Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Letter From	IBC of Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Letter From	IBC of Whitewash Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Letter From	Proton Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Appendix I	– Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1

DEFINITIONS

In this circular, unless the context otherwise requires, the expressions below shall have the following meanings:

“A Share(s)” ordinary shares in the share capital of the Company with a par value of RMB1.00 each, which are listed on the Shanghai Stock Exchange (stock code: 601992) “Announcement” the announcement of the Company dated 5 September 2013 in relation to, among others, (i) the proposed issue and placing of A Shares; (ii) the Parent Subscription which constitutes a connected transaction; and (iii) the Whitewash Waiver

“Articles” the articles of association of the Company

“associate(s)” has the meaning ascribed to it under the Hong Kong Listing Rules

“Beijing SASAC” the State-owned Assets Supervision and Administration Commission of People’s Government of Beijing Municipality

“Board” the board of Directors of the Company

“Center” 北京國有資本經�管理中心 (Beijing State-owned Capital Operation and Management Center*), a collectively-owned enterprise established under the laws of the PRC on 30 December 2008 with registered capital fully paid up by Beijing SASAC

“Combined Concert Group” the Parent, the Fund and parties acting in concert with any of them “Company” or “BBMG” 北京金隅股份有限公司 (BBMG Corporation*), a joint stock company established under the laws of the PRC with limited liability on 22 December 2005, the A Shares of which are listed on the Shanghai Stock Exchange and the H Shares of which are listed on the Main Board of the Hong Kong Stock Exchange

“connected person(s)” has the meaning ascribed to it under the Hong Kong Listing Rules “CSRC” China Securities Regulatory Commission “Director(s)” the director(s) of the Company

“EGM” the extraordinary general meeting of the Company to be convened and held at Conference Room 6, 22nd Floor, Tower D, Global Trade Center, No. 36, North Third Ring East Road, Dongcheng District, Beijing 100013, the PRC at 2:30 p.m. on Wendesday, 30 October 2013 to consider and approve, among others, the Proposed Placing, the Subscription Agreements and the Whitewash Waiver

DEFINITIONS

“Executive” the Executive Director of the Corporate Finance Division of the Securities and Futures Commission or any delegate of the Executive Director “Fund” 北京京國發股權投資基金（有限合夥）(Beijing Jingguofa Equity Investment Fund (Limited Partnership)*) “Fund Subscription” the subscription of 52,874,551 A Shares by the Fund pursuant to the Fund Subscription Agreement “Fund Subscription Agreement” the conditional subscription agreement dated 5 September 2013 entered into between the Company and the Fund in respect of the Fund Subscription “General Mandate” an unconditional and general mandate granted to the Directors by the Shareholders at the annual general meeting of the Company held on 21 May 2013 to, either separately or concurrently, issue, allot and/or deal with additional A Shares and H Shares, and to make or grant offers, agreements or options in respect of the issue of A Shares and/or H Shares not exceeding 20% of the total issued share capital of the Company as at 21 May 2013 “Group” the Company and its subsidiaries “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “H Share(s)” the overseas listed foreign invested shares in the share capital of the Company, with a par value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange (stock code: 2009) “IBC of Subscription” the independent board committee of the Company comprising all independent non-executive Directors formed to advise Independent Shareholders on the Parent Subscription in accordance with the Hong Kong Listing Rules “IBC of Whitewash Waiver” the independent board committee of the Company comprising the non-executive Director and all independent non-executive Directors formed to advise the Independent Shareholders on the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver in accordance with the Takeovers Code

DEFINITIONS

“Independent Financial Adviser” or “Proton Capital”
Proton Capital Limited, a corporation licensed to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO, the independent financial adviser appointed by the Company to advise the IBC of Subscription, the IBC of Whitewash Waiver and the Independent Shareholders on the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver
“Independent Shareholders” the shareholders other than the Combined Concert Group and all parties who are interested in or involved in the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver
“Latest Practicable Date” 11 October 2013, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Parent”
北京金隅集團有限責任公司 (BBMG Group Company Limited*), a limited liability company established under the laws of the PRC on 6 December 1996, an indirect wholly-owned subsidiary of the Beijing SASAC and the controlling Shareholder of the Company
“Parent Subscription”
the subscription of 448,028,673 A Shares by the Parent pursuant to the Parent Subscription Agreement
“Parent Subscription Agreement”
the conditional subscription agreement dated 5 September 2013 entered into between the Company and the Parent in relation to the Parent Subscription
“PRC” the People’s Republic of China
“Price Adjustment”
the adjustment which may be made to the Subscription Price where there occurs any ex-dividend or ex-rights event (such as distribution of dividend, bonus issue or capitalization of capital reserves) to the Company between the Price Determination Date and the date of the proposed issue of A Shares
“Price Determination Date” 5 September 2013, i.e. the date of the Announcement
“Proposed Placing”
the proposed non-public issue and placing of not more than 500,903,224 A Shares at the Subscription Price (subject to the Price Adjustment) by the Company to two target subscribers including the Parent and the Fund
“Relevant Period” the period commencing 6 months preceding the date of Announcement and ending on the Latest Practicable Date
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DEFINITIONS

“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Share(s)”	A Share(s) and H Shares(s)
“Shareholder(s)”	holders of the A Share(s) and the H Share(s)
“Subscription Agreements”	collectively, the Parent Subscription Agreement and the Fund
	Subscription Agreement
“Subscription Price”	RMB5.58 per A Share (subject to the Price Adjustment)
“Supervisor(s)”	the supervisor(s) of the Company
“Takeovers Code”	the Code on Takeovers and Mergers
“trading day(s)”	a day on which the Shanghai Stock Exchange is open for dealing or
	trading in securities
“Whitewash Waiver”	a waiver from the Executive pursuant to Note 1 on dispensations
	from Rule 26 of the Takeovers Code in respect of the obligations of
	the Combined Concert Group to make a mandatory general offer for
	all the securities of the Company not already owned by the
	Combined Concert Group which would otherwise arise as a result of
	the Proposed Placing, the Parent Subscription and the Fund
	Subscription
%	per cent

for identification purpose only

Unless otherwise specified, amounts denominated in HK$ or Euro have been translated, for illustration purposes only, into RMB in this circular at a rate of RMB0.79553 : HK$1 and RMB8.1442 : Euro1 respectively.

LETTER FROM THE BOARD

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(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2009)

Executive Directors

Jiang Weiping Jiang Deyi Shi Xijun Zang Feng Wang Hongjun Wang Shizong

Non-executive Director

Yu Shiliang

Headquaters

Tower D, Global Trade Center No.36, North Third Ring East Road Dongcheng District, Beijing 100013 PRC

Registered office and principal place

Tower D, Global Trade Center No.36, North Third Ring East Road Dongcheng District, Beijing 100013 PRC

Independent Non-executive Directors

Hu Zhaoguang Zhang Chengfu Xu Yongmo Yip Wai Ming

Principal place of business in Hong Kong

Room 904, Wah Ying Cheon Central Building 158-164 Queen’s Road Central Central Hong Kong

15 October 2013

To the Independent Shareholders

Dear Sir or Madam,

(1) PROPOSED ISSUE AND PLACING OF A SHARES

(2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT AND (3) WHITEWASH WAIVER

I. INTRODUCTION

References are made to the Announcement, the announcement of the Company dated 25 September 2013 regarding the delay in despatch of the circular and the announcement of the Company dated 10 October 2013 regarding Beijing SASAC approval of the Proposed Placing.

* for identification purpose only

LETTER FROM THE BOARD

The purposes of this circular are to provide the Shareholders with (i) further information on the Proposed Placing, the Parent Subscription, the Fund Subscription, the Whitewash Waiver and the proposal in relation to the plan on Shareholders’ return; (ii) the recommendations of the IBC of Subscription to the Independent Shareholders on the Parent Subscription in accordance with the Hong Kong Listing Rules; (iii) the recommendations of the IBC of Whitewash Waiver to the Independent Shareholders on the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver in accordance with the Takeovers Code; (iv) the letter from Proton Capital, the Independent Financial Adviser to the IBC of Subscription, the IBC of Whitewash Waiver and the Independent Shareholders, on the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver; and (v) further information as required under the Hong Kong Listing Rules and the Takeovers Code.

II. PROPOSED ISSUE AND PLACING OF A SHARES

1. Proposal in relation to the compliance and satisfaction by the Company of the requirements of the non-public issue and placing of A shares of the Company

In accordance with the Company Law of the PRC, the Securities Law of the PRC, the Administrative Measures for the Issuance of Securities of Listed Companies 《上市公司證券發行管( 理辦法》), the Implementation Rules for the Non-public Issue of Shares by Listed Companies 《上市( 公司非公開發行股票實施細則》) and other relevant laws and regulations of the PRC, the Company conducted internal review and self-examination and is of the view that the Company has complied with the regulations of the prevailing laws and regulations on non-public issue of A Shares, and satisfied the conditions for non-public issue of A Shares.

This proposal will be put forward at the EGM as an ordinary resolution for consideration and approval by the Shareholders.

2. Details of the Proposed Placing

Class and par value of The Shares to be issued are A Shares with a par value of Shares to be issued: RMB1.00 each. Method and time of the The Proposed Placing will be carried out by way of non- proposed issue of A public issue of A Shares to two target subscribers including Shares: the Parent and the Fund. The Company will complete the proposed issue within six months from obtaining the endorsement for the Proposed Placing from CSRC.

LETTER FROM THE BOARD

Number of Shares to be issued:

Subject to the Price Adjustment, a maximum of 500,903,224 A Shares will be issued at the Subscription Price of RMB5.58 per A Share under the Proposed Placing, which represents (i) approximately 16.08% of the existing issued A Shares and approximately 11.69% of the existing total issued share capital of the Company as at the Latest Practicable Date; (ii) approximately 13.86% of the enlarged issued A Shares and approximately 10.47% of the enlarged total issued share capital of the Company upon completion of the Proposed Placing.

The aggregate nominal value of the A Shares to be issued, with a par value of RMB1.00 each, will be no more than RMB500,903,224.

Target subscribers:

The two target subscribers are the Parent and the Fund.

Based upon the Subscription Price (subject to the Price Adjustment), each of the Parent and the Fund has conditionally agreed to subscribe for 448,028,673 and 52,874,551 A Shares to be issued by the Company at a total consideration of approximately RMB2,500 million and RMB295 million, respectively.

Subscription price and pricing principles:

Subject to the Price Adjustment and with reference to the relevant requirements of CSRC and Beijing SASAC, the Subscription Price under the Proposed Placing shall be RMB5.58 per A Share, which is not lower than (i) RMB4.59 per A Share, being 90% of the average trading price of A Shares of the Company during the 20 trading days immediately preceding the Price Determination Date; and (ii) the unaudited net asset value of approximately RMB5.574 per Share as at 30 June 2013.

The aggregate Subscription Price will be paid to the Company in cash by bank transfer.

Conditions precedent of the Proposed Placing:

The Proposed Placing is conditional upon:

(i) the passing of all resolutions in respect of the Proposed Placing by the Board and the Shareholders at the EGM;
(ii) the obtaining of the approval from Beijing SASAC and CSRC;
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LETTER FROM THE BOARD

(iii) the obtaining of the approval from the Independent Shareholders at the EGM about the Whitewash Wavier and the granting of the Whitewash Waiver to the Combined Concert Group by the Executive under the Takeovers Code; and
(iv) the obtaining of the approval from the Independent Shareholders in respect of the mandatory general offer by the Parent and its concert parties which may be triggered by the Proposed Placing pursuant to the PRC laws and regulations.
As at the Latest Practicable Date, the Board approval (part of condition (i)) and the Beijing SASAC approval (part of condition (ii)) have been obtained, and the other conditions remain outstanding.
None of the conditions above may be waived by any party to the Proposed Placing and therefore, if any conditions above cannot be obtained (including but not limited to, if the Whitewash Waiver is not granted or approved as per condition (iii) above), the Company will not proceed with the Proposed Placing.
Lock-up period: Under the Proposed Placing, all target subscribers shall not transfer the A Shares subscribed within 36 months of the date of completion of the Proposed Placing.
Use of proceeds: The gross proceeds to be raised from the Proposed Placing will be approximately RMB2,795 million. The net proceeds (after deducting all applicable costs and expenses in association with the Proposed Placing) is intended to be used for the construction of the BBMG international logistics park as to approximately RMB980 million and the furniture manufacturing project as to approximately RMB1,815 million.

General mandate to issue A Shares:

The Company will issue and place the A Shares under the General Mandate, pursuant to which the Board has been authorized to issue and place not more than 622,870,925 A Shares and/or 233,876,487 H Shares. As at the Latest Practicable Date, the Company has not issued any A Shares or H Shares pursuant to the General Mandate.

LETTER FROM THE BOARD

Application for listing of The Company will apply to the Shanghai Stock Exchange for the A Shares to be the listing of, and permission to deal in, the A Shares to be issued: issued. Dealing in the A Shares to be issued under the Proposed Placing on the Shanghai Stock Exchange will commence upon expiration of the 36-months’ lock-up period. Undistributed profit: Upon completion of the Proposed Placing, the existing and new shareholders of the Company will be entitled to share the Company’s cumulative undistributed profits at the time of the Proposed Placing.

Details of this proposal will be put forward at the EGM as a special resolution for consideration and approval by the Independent Shareholders one by one as set out in the notice at the EGM dated 10 September 2013.

3. Subscription Agreements entered into pursuant to the Proposed Placing

As part of the Proposed Placing, the Company has entered into a conditional subscription agreement with each of the Parent and the Fund. Details of the Parent Subscription Agreement are set forth in Section III headed “Connected Transaction – Proposed Subscription of A Shares by the Parent” below. Save for the parties, the number of A Shares subscribed and the aggregate Subscription Price payable to the Company, other major terms of the Fund Subscription Agreement are the same as those of the Parent Subscription Agreement.

Completion of the Parent Subscription and the Fund Subscription is not conditional upon each other.

Pursuant to the applicable PRC laws and regulations, each of the Subscription Agreements and the transactions contemplated thereunder will be subject to the Independent Shareholders’ approval at the EGM by way of ordinary resolutions.

4. General information on the Fund

The Fund is a RMB-denominated fund established under the laws of the PRC sponsored by the Center, the Parent, 北京市國有資產經�有限責任公司 (Beijing State-owned Assets Management Co., Ltd.), and 北京祥龍資產經�有限責任公司 (Beijing Xianglong Assets Management Co., Ltd.) as limited partners as to approximately 70%, 10%, 10% and 10% respectively, and 北京京國發投資管理有限公司 (Beijing Jingguofa Investment Management Co., Ltd.*) as general partner. The Fund principally invests in emerging Beijing municipal state-owned enterprises with priority development of Beijing as strategy so as to guide the development direction of such enterprises and promote the optimization and upgrading of industrial structure.

To the best knowledge and belief of the Directors, the Center is the limited partner with controlling interest to the Fund. Despite the fact that the Center is the sole legal owner of the Parent, the Hong Kong Stock Exchange has previously confirmed to the Company in writing that the Center and its ultimate beneficial owner, Beijing SASAC, are not the Company’s controlling Shareholders

LETTER FROM THE BOARD

and connected persons to the Company as each of them is a “PRC Governmental Body” pursuant to Rules 19A.14 and 19A.19 of the Hong Kong Listing Rules, therefore, neither the Fund nor its ultimate beneficial owners is a connected person of the Company.

5. Validity of resolutions

The resolutions approving the Proposed Placing will be valid for a period of 12 months, commencing from the date of passing of such resolutions at the EGM.

6. Proposal in relation to the plan of the Proposed Placing

Details of the plan have been disclosed in different sections of this circular. This proposal will be put forward at the EGM as a special resolution for consideration and approval by the Independent Shareholders.

7. Proposal in relation to the report on previous proceeds

According to the requirements of relevant laws and regulations and regulatory documents such as the Measure for Administration of the Issue of Securities by Listed Companies 《上市公司證券發( 行管理辦法》), the Implementation Rules for the Non-public Issue of Shares by Listed Companies 《上市公司非公開發行股票實施細則》( ), and the Regulations for Reports on the Use of Proceeds from Previous Fund Raising (《關於前次募集資金使用情況報告的規定》) issued by CSRC, the Board has, upon verification of the use of proceeds from previous issue of A Shares as at 5 September 2013, prepared the report on previous proceeds.

The Company had issued 410,404,560 A Shares at RMB9 per A Share to all the then equity holders of 河北太行水泥股份有限公司 (Hebei Taihang Cements Co., Ltd.) in exchange of the equity interest in 河北太行水泥股份有限公司 (Hebei Taihang Cement Co., Ltd.) held by such equity holders. The difference of RMB3,225.07 million between the total consideration of RMB3,693.64 million (net of the underwriting commission and other fees incurred in an amount of RMB58.17 million) and the total aggregated par value of issued 410,404,560 A shares in an amount of approximately RMB410.40 million was recognised in the share premium account in the Group's consolidated financial statements.

This proposal will be put forward at the EGM as an ordinary resolution for consideration and approval by the Shareholders.

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LETTER FROM THE BOARD

8. Proposal in relation to the feasibility study report

In accordance with the proposal in relation to the feasibility study report, the net proceeds (after deducting all applicable costs and expenses in association with the Proposed Placing) from the Proposed Placing are intended to be used for the construction of the BBMG international logistics park and the furniture manufacturing projects.

(i) BBMG international logistics park

The BBMG international logistics park is situated at Da Zhuang Village, Huang Cun County, Da Xing District, Beijing, PRC* (北京市大興區黃村鎮大莊村). According to the development plan, the construction of the BBMG international logistics park is estimated to be commenced in November 2013 and be completed by December 2015. The total investment for the BBMG international logistics park is approximately RMB1,369.38 million, and approximately RMB980 million is intended to be funded by the net proceeds from the Proposed Placing and the remaining amount is intended to be funded by the Company’s internal resources and/or other means of financings.

The construction of the BBMG international logistics park will be used to support the continuing development of the modern building materials and commerce and logistics business segment of the Company. It is conducive in accelerating the Company’s strategic transition to the “industrial park-based” growth pattern, developing a seasoned industrial chain in its commerce and logistics operation, promoting the domestic and international bulk commodity trading and developing sustainable growth points for both the business scale and efficiency.

Completion of the construction of the BBMG international logistics park is expected to take place by December 2015 and the expected return rate is approximately 8.57%.

(ii) Furniture manufacturing project

The furniture manufacturing project is situated at the BBMG Da Chang Industrial Park, Da Chang Hui Autonomous County, Hebei Province, PRC* (河北省大廠回族自治縣金隅大廠工業園區). According to the development plan, the construction of the project is estimated to be commenced in October 2013 and be completed by July 2016. The total investment amount for the furniture manufacturing project is approximately RMB2,538.08 million, and approximately RMB1,815 million is intended to be funded by the net proceeds from the Proposed Placing and the remaining amount is intended to be funded by the Company’s internal resources and/or other means of financings.

The construction of the furniture manufacturing project will correspond with the Company’s strategic transition to the “industrial park-based” growth pattern in its modern building materials and commerce and logistics business segment. It is conducive in increasing the overall compatibility of the Company’s products, reducing the operational costs and increasing the sector profitability.

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LETTER FROM THE BOARD

Completion of the construction of the furniture manufacturing project is expected to take place by July 2016 and the expected return rate is approximately 11.96%.

This proposal will be put forward at the EGM as an ordinary resolution for consideration and approval by the Shareholders.

9. Proposal in relation to the approval of granting a waiver to the Parent and its concert party from the obligation to make a general offer under the PRC laws and regulations

As the Parent, the controlling Shareholder, will increase its shareholding in the Company upon completion of the Proposed Placing, an obligation to make a general offer on the part of the Parent will be triggered pursuant to the Measures for the Administration of Acquisition of Listed Companies (CSRC Order No.35) and its revisions. Since after the Proposed Placing, the Parent will still be the controlling Shareholder, and the Parent has undertaken to be subject to a 36-month lock-up period for the A Shares to be issued to the Parent, the Board proposed a proposal to be put forward at the EGM to approve the granting of a waiver to the Parent and its concert party from the obligation to make a general offer under the PRC laws and regulations.

This proposal will be put forward at the EGM as an ordinary resolution for consideration and approval by the Independent Shareholders.

10. Proposal in relation to the approval of granting the Whitewash Waiver under the Takeovers Code

Assuming no further Shares will be issued by the Company prior to the completion of the Proposed Placing, the Parent Subscription and the Fund Subscription, upon completion of the Proposed Placing, the Parent Subscription and the Fund Subscription, the interests held by the Combined Concert Group will increase from 43.07% to 49.03% of the total issued share capital of the Company as enlarged by the issue of A Shares under the Proposed Placing, the Parent Subscription and the Fund Subscription. The Combined Concert Group will, in the absence of the Whitewash Waiver, be obliged to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by them pursuant to Rule 26 of the Takeovers Code as a result of the Proposed Placing, the Parent Subscription and the Fund Subscription. The Board will put forward an ordinary resolution for the Independent Shareholders to consider and approve the Whitewash Waiver at the EGM.

Further information about the Whitewash Waiver are set forth in Section VI headed “Whitewash Waiver” below.

11. Authorizations to the Board in connection with the Proposed Placing

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LETTER FROM THE BOARD

put forward a proposal to authorize the Board to handle matters in connection with the Proposed Placing, including but not limited to, at the EGM as special resolution for consideration and approval by the Shareholders:

(i) to formulate and implement the detailed proposal about the Proposed Placing and with full authority to handle and decide the issuance time, final number of shares to be issued, size of proceeds, issue price, target subscribers, detail subscription method and any other matters about the Proposed Placing;
(ii) to negotiate on behalf of the Company in relation to the Proposed Placing, execute all related agreements and other necessary documents, prepare, amend, perfect, execute all documents and information about the Proposed Placing, and carry out necessary and appropriate disclosure;
(iii) to handle the applications to relevant authorities in relation to the Proposed Placing and the listing of shares and adjust the detailed proposal in accordance with the comments from the relevant authorities (if any) (other than those matters requiring further Shareholders’ approval pursuant to the relevant laws, regulations and the Articles);
(iv) to select and engage qualified intermediaries, including but not limited to sponsors, underwriters, lawyers, auditors and valuers, for the Proposed Placing;
(v) to increase the registered capital and actual received capital, amend the relevant provision to the Articles, handle capital verification procedure and relevant registration procedure with the administration for industry and commerce, in accordance with the actual final results of the Proposed Placing;
(vi) to handle the registration of shares, lock-up arrangement and listing matter of the A shares issued upon completion of the Proposed Placing;
(vii) to set-up specialized bank account for proceeds from the Proposed Placing; and
(viii) subject to the applicable laws and regulations, to take all necessary action, decision and handle all other matters in relation to the Proposed Placing

Such authorization shall be valid for a period of 12 months, commencing from the date of passing such resolution at the EGM.

12. Fund raising in the past twelve months

The Company has not conducted any equity fund raising activities in the past 12 months immediately prior to the Latest Practicable Date.

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LETTER FROM THE BOARD

13. Directors’ Confirmation

The Directors (including the independent non-executive Directors) are of the view that the terms of the Proposed Placing are fair, reasonable and on normal commercial terms taking into account of the current market conditions and are in the interests of the Company and the Shareholders as a whole.

The executive Director, Jiang Weiping, who is also a director of the Parent, is materially interested in the Proposed Placing, had abstained from voting on the relevant Board resolutions approving the aforesaid transactions. Save as disclosed above, none of the Directors has a material interest in the Proposed Placing or is required to abstain from voting on the Board resolutions for considering and approving the Proposed Placing and the transaction contemplated thereunder pursuant to the Hong Kong Listing Rules and/or the Articles.

III. CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT

As part of the Proposed Placing, the Company entered into the Parent Subscription Agreement pursuant to which the Parent has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 448,028,673 A Shares at the Subscription Price of RMB5.58 per A Share, subject to the Price Adjustment. Set forth below is the major terms of the Parent Subscription Agreement.

1. Major terms of the Parent Subscription Agreement

Date: 5 September 2013. Parties: (i) The Company as the issuer; and (ii) The Parent as the subscriber. Subscription Shares: 448,028,673 A Shares.

The said 448,028,673 A Shares represent (i) approximately 14.39% of the existing issued A Shares and approximately 10.46% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 12.39% of the enlarged issued A Shares and approximately 9.36% of the enlarged issued share capital of the Company after completion of the Proposed Placing.

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LETTER FROM THE BOARD

Subscription Price:

RMB5.58 per A Share with an aggregate Subscription Price of RMB2,500 million payable by the Parent to the Company in cash.

The Subscription Price is not lower than (i) RMB4.59 per A Share, being 90% of the average trading price of A Shares of the Company during the 20 trading days immediately preceding the Price Determination Date (the average trading price of A Shares during the 20 trading days immediately preceding the Price Determination Date was determined by using the total turnover of A Shares during the 20 trading days immediately preceding the Price Determination Date divided by the total trading volume of A Shares during the 20 trading days immediately preceding the Price Determination Date); and (ii) the unaudited net asset value of approximately RMB5.574 per Share as at 30 June 2013.

Lock-up Undertaking:

The Parent has undertaken to the Company that it will not during the period commencing from the completion of the Parent Subscription and ending on the date which is 36 months from the time of such completion, transfer any of the A Shares so subscribed.

Conditions Precedent:

The Parent Subscription Agreement will become effective after being signed and sealed by the respective authorized representative of the Parent and the Company, and upon the following conditions having been fulfilled:
(i) the passing of all resolutions in respect of the Parent Subscription by the Board and the Independent Shareholders at the EGM;
(ii) the obtaining of the approval from Beijing SASAC;
(iii) the obtaining of the approval from CSRC;
(iv) the obtaining of the approval from the Independent Shareholders at the EGM about the Whitewash Wavier and the granting of the Whitewash Waiver to the Combined Concert Group by the Executive under the Takeovers Code; and
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LETTER FROM THE BOARD

(v) the obtaining of the approval from the Independent Shareholders in respect of the mandatory general offer by the Parent and its concert parties which may be triggered by the Proposed Placing pursuant to the PRC laws and regulations.

As at the Latest Practicable Date, the Board approval (part of condition (i)) and the Beijing SASAC approval (condition (ii) have been obtained, and the other conditions remain outstanding.

None of the conditions above may be waived by any party to the Parent Subscription Agreement and therefore, if any conditions above cannot be obtained (including but not limited to, if the Whitewash Waiver is not granted or approved as per condition (iv) above), the Parent Subscription under the Parent Subscription Agreement will not proceed.

Completion: Subject to the fulfillment of the above mentioned conditions precedent, completion of the Parent Subscription will take place on the date and at the place as specified in the Parent Subscription Agreement.

The Company will appoint a certified registered accountant in the PRC to verify the payment made by the Parent for the Parent Subscription and issue relevant verification report as soon as reasonably practicable, after which the Company will apply in writing to register the A Shares subscribed by the Parent with the securities and depository and clearing institution as soon as practicable so that the Parent can become the legitimate holder of such A Shares.

2. General information on the parties to the Parent Subscription Agreement

The Company is a joint stock company established under the laws of the PRC with limited liability, the H Shares of which are listed on the Main Board of the Hong Kong Stock Exchange and the A Shares of which are listed on the Shanghai Stock Exchange. The Group is principally engaged in the manufacture and sale of cement and modern building materials, property development, property investment, and provision of property management services.

The Parent is a limited liability company established under the laws of the PRC on 6 December 1996 and is a wholly-owned subsidiary of the Center. The Center is a collectively-owned enterprise established under the laws of the PRC on 30 December 2008 with registered capital fully paid up by Beijing SASAC. The Parent is principally engaged in, among others, state-owned assets management,

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LETTER FROM THE BOARD

building materials manufacturing, sale of building materials and real estate development. The Center is principally engaged in investment holding, investment management, organizing corporate mergers and acquisitions and corporate restructurings.

3. Implications under the Hong Kong Listing Rules

As at the Latest Practicable Date, the Parent holds 1,844,852,426 Shares, representing 43.07% of the existing issued share capital of the Company and is a controlling Shareholder of the Company and therefore a connected person of the Company. Accordingly, the Parent Subscription constitutes a connected transaction for the Company under the Hong Kong Listing Rules, and is thereby subject to the reporting, announcement and independent shareholders’ approval requirements under the Hong Kong Listing Rules.

4. Director’s confirmation

The Directors (including the independent non-executive Directors) are of the view that the terms of the Parent Subscription Agreement (including the Subscription Price which is subject to the Price Adjustment) are fair, reasonable and on normal commercial terms, and are in the interests of the Company and the Shareholders as a whole.

The executive Director, Jiang Weiping, who is also a director of the Parent, is materially interested in the Parent Subscription, had abstained from voting on the relevant Board resolutions approving the aforesaid transactions. Save as disclosed above, none of the Directors has a material interest in the Parent Subscription Agreement or is required to abstain from voting on the Board resolutions for considering and approving the Parent Subscription Agreement and the transaction contemplated thereunder pursuant to the Hong Kong Listing Rules and/or the Articles.

IV. EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after completion of the Parent Subscription (assuming the Fund Subscription does not complete); (iii) immediately after completion of the Fund Subscription (assuming the Parent Subscription does not complete); and (iv) immediately after completion of the Proposed Placing, the Parent Subscription and the

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LETTER FROM THE BOARD

Fund Subscription (assuming there is no change in the total issued share capital of the Company other than the issue of A Shares since the Latest Practicable Date and up to completion of the Proposed Placing, the Parent Subscription and the Fund Subscription):

				Shareholding	immediately after	completion of	Shareholding	immediately after completion of	immediately after completion of	immediately after completion of	Shareholding	immediately after completion of	immediately after completion of
				the Parent Subscription (assuming the Fund			the Fund Subscription (assuming the Parent				the Proposed	Placing, the Parent Subscription
Name of Shareholder	Shareholding as at the Latest Practicable Date			Subscription does not complete)			Subscription does not complete)				and	the Fund Subscription
		App.% of the	App.% of the		App.% of the	App.% of the		App.% of the	App.% of the			App.% of the	App.% of the
	Number of	issued A Share	total issued	Number of	issued A Share	total issued	Number of	issued A Share	total issued		Number of	issued A Share	total issued
	Shares	capital	share capital	Shares	capital	share capital	Shares	capital	_share _	capital	Shares	capital	share capital
The Parent	1,844,852,426	59.24%	43.07%	2,292,881,099	64.36%	48.46%	1,844,852,426	58.25%		42.54%	2,292,881,099	63.42%	47.92%
The Fund	–	–	–	–	–	–	52,874,551	1.67%		1.22%	52,874,551	1.46%	1.11%
Sub-total for shareholding
of the Combined Concert
Group	1,844,852,426	59.24%	43.07%	2,292,881,099	64.36%	48.46%	1,897,726,977	59.95%		43.76%	2,345,755,650	64.88%	49.03%
Other public holders of A
Shares	1,269,502,199	40.76%	29.63%	1,269,502,199	35.64%	26.83%	1,269,502,199	40.08%		29.27%	1,269,502,199	35.12%	26.53%
Other public holders of H
Shares	1,169,382,435	–	27.30%	1,169,382,435	–	24.71%	1,169,382,435	–		26.97%	1,169,382,435	–	24.44%
Total	4,283,737,060	100.00%	100.00%	4,731,765,733	100%	100%	4,336,611,611	100%		100%	4,784,640,284	100.00%	100.00%

V. REASONS FOR AND BENEFITS OF THE PROPOSED PLACING AND THE PARENT SUBSCRIPTION

The Proposed Placing is the most appropriate fund raising method currently available for the Company to finance the construction of the BBMG international logistics park and the furniture manufacturing project. The Company has strengthened the development of commerce and logistics business for its modern building materials and commerce and logistics business segment and has adhered to the “industrial park-based” growth pattern for years. The commerce and logistics business is conducive in increasing the sector revenue of the Company, while the “industrial park-based” growth pattern enables the Company to concentrate its advantageous resources, reduce operational costs and increase its sector profitability. Therefore, the construction of the BBMG international logistics park and the furniture manufacturing project is in line with the strategic goals of the Company. The Board believes that the Proposed Placing and two projects to be invested by proceeds raised from the Proposed Placing will help the Company to improve its financial condition, boost its competitiveness in modern building materials and commerce and logistics business, enable the Company to achieve its strategic goals, and satisfy all in the best interest of the Shareholders.

The gross proceeds to be raised from the Proposed Placing will be approximately RMB2,795 million. The net proceeds (after deducting all applicable costs and expenses in association with the Proposed Placing) is intended to be used for the construction of the BBMG international logistics park as to RMB980 million and the furniture manufacturing project as to RMB1,815 million. Provided that only the Parent Subscription completed, the net proceeds (after deducting all applicable costs and expenses in association with the Proposed Placing) will be reduced to approximately RMB2,500 million, of which approximately RMB876

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LETTER FROM THE BOARD

million will be used for the construction of the BBMG international logistics park and approximately RMB1,624 million will be used for the construction of the furniture manufacturing project. Provided that only the Fund Subscription completed, the net proceeds (after deducting all applicable costs and expenses in association with the Proposed Placing) from the Proposed Placing will be reduced to approximately RMB295 million, all of which will be used for the construction of the BBMG international logistics park. The net price of each new A Share to be issued will be determined and disclosed upon completion of the Proposed Placing and determination of relevant expenses incurred or to be incurred in relation to the Proposed Placing in accordance with the requirements of the Hong Kong Listing Rules. Regardless of completion of the Parent Subscription and/or the Fund Subscription, the Company will continue the construction of the two projects and finance them by internal resources and/or other means of financings, and there would be no material impact to the Company or its strategic goals if either the Parent Subscription or the Fund Subscription could not be completed.

In addition, the Parent Subscription also demonstrates the confidence the Parent places in the Company and support to the development of the Company’s business, which is conducive to enhancing the market image of the Company.

In light of the reasons above, despite the fact that completion of the Parent Subscription and the Fund Subscription is not conditional upon each other, the Directors (including the independent non-executive Directors) are of the view that the terms of the Proposed Placing, the Parent Subscription and the Fund Subscription are fair, reasonable and on normal commercial terms, and are in the interests of the Company and the Shareholders as a whole.

Following completion of the Proposed Placing, the Combined Concert Group intends to continue the existing business of the Group, and has no intention to introduce any major changes in such business (including redeployment of the fixed assets of the Group) or terminate the continued employment of the employees of the Group.

VI. WHITEWASH WAIVER

A formal application has been made by the Combined Concert Group to the Executive for the Whitewash Waiver pursuant to Note 1 on Dispensation from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, would be subject to, among other things, the approval by the Independent Shareholders at the EGM by way of poll. It is a condition precedent to completion of the Proposed Placing, the Parent Subscription and the Fund Subscription that the Whitewash Waiver is granted by the Executive. If the Whitewash Waiver is not granted by the Executive or if the conditions (if any) imposed thereon are not fulfilled, none of the Proposed Placing, the Parent Subscription or the Fund

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LETTER FROM THE BOARD

Subscription will proceed. In such case, the requirement of the Combined Concert Group to make a mandatory general offer under Rule 26 of the Takeovers Code as a result of the Proposed Placing, the Parent Subscription and the Fund Subscription will not be triggered.

The Executive has indicated that it will agree, subject to the approval by the Independent Shareholders at the EGM by way of poll, to waive the Combined Concert Group from any obligation to make a general offer for all the Shares under Rule 26 of the Takeovers Code as a result of the Proposed Placing, the Parent Subscription and the Fund Subscription.

The resolution will be put forward at the EGM as an ordinary resolution for consideration and approval by the Independent Shareholders.

VII. IBC OF SUBSCRIPTION, IBC OF WHITEWASH WAIVER AND THE INDEPENDENT FINANCIAL ADVISER

The IBC of Subscription has been established to advise the Independent Shareholders on the Parent Subscription in accordance with the Hong Kong Listing Rules. The IBC of Whitewash Waiver has been established to advise the Independent Shareholders on the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver in accordance with the Takeovers Code.

In this connection, the Company has appointed, and the IBC of Subscription and the IBC of Whitewash Waiver have approved the appointment of, Proton Capital as the Independent Financial Adviser to advise the IBC of Subscription, the IBC of Whitewash Waiver and the Independent Shareholders on the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver.

VIII. PROPOSAL IN RELATION TO THE PLAN ON SHAREHOLDERS’ RETURN

In accordance with the Notice of Further Implementation of Cash Dividend Distribution by Listed Companies and Other Related Matters* 《關於進一步落實上市公司現金分紅有關事項的通知》( ) issued by CSRC, the Company formulates the proposal in relation to the plan on Shareholders’ return.

The Company, after due and careful consideration of the opinions from the Shareholders (especially the minority Shareholders) and the independent non-executive Directors, formulated the plan on Shareholders’ return by taking into account of the strategic goals, operation conditions and profitability of the Company.

According to the plan, the Company will distribute its dividend in the form of cash dividend or scrip dividend or a combination of both. Save for under certain special circumstances (including but not limited to, there is any material investments or cash expenditures of the Company other than fund raising activities which require Shareholders’ approval in accordance with the relevant PRC laws and regulations and the Articles in the relevant year), the Company will distribute its dividend in cash provided the Company is making profits and its accumulated undistributed profits remain positive. Under the plan, the accumulated profits distributed in cash in the recent three years should be not less than 30% of the realized annual distributable profits attributable to the Shareholders as recognized in the consolidated financial statements of the Company in the corresponding period.

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LETTER FROM THE BOARD

In the future, the Board will formulate a detailed proposal about the distribution of cash dividend, and the independent non-executive Directors will give their opinions and recommendations regarding the same.

This proposal will be put forward at the EGM as an ordinary resolution for consideration and approval by the Shareholders.

IX. RECOMMENDATION

Based on the above and the recommendations from Proton Capital as well as other information contained in this circular, the Directors (including the independent non-executive Directors) consider that all the above-mentioned resolutions are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend all the Independent Shareholders to vote in favor of the proposed resolutions as set out in the notice of the EGM.

X. EGM

The EGM will be convened at 2:30 p.m. on Wednesday, 30 October 2013 at which ordinary resolutions will be proposed to approve (i) the proposal in relation to compliance and satisfaction by the Company of the requirements of the non-public issue and placing of A shares of the Company; (ii) each of the Subscription Agreements and the transactions contemplated thereunder; (iii) the proposal in relation to the feasibility study report on use of proceeds from the Proposed Placing; (iv) the proposal in relation to the usage report on previous proceeds of the Company; (v) the proposal in relation to the plan on Shareholders’ return for the three years ending 31 December 2015; (vi) the proposal in relation to the granting of a waiver to the Parent and its concert parties from the obligation to make a general offer under the relevant laws and regulations of the PRC; and (vii) the proposal in relation to the granting of the Whitewash Waiver. At the EGM, special resolutions will also be proposed to approve (i) the Proposed Placing; (ii) the proposal in relation to the plan of the Proposed Placing; and (iii) the authorization to the Board to handle all relevant matters in connection with the Proposed Placing.

The Combined Concert Group and all parties who are interested in or involved in the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver, will abstain from voting in respect of (i) the Parent Subscription Agreement and the transactions contemplated thereunder (resolution no.2); (ii) the Fund Subscription Agreement and the transactions contemplated thereunder (resolution no.3); (iii) the proposal in relation to the granting of a waiver to the Parent from its obligation to make a general offer under the relevant laws and regulations of the PRC (resolution no.7); (iv) the proposal in relation to the granting of the Whitewash Waiver (resolution no.8); (v) the Proposed Placing (resolution no.9); and (vi) the proposal in relation to the plan of the Proposed Placing (resolution no.10).

The notice of EGM was despatched to you on 10 September 2013.

The form of proxy for use at the EGM was enclosed in and despatched to you with the notice of EGM. Whether or not you intend to attend the EGM, please complete the form of proxy in accordance with the instructions printed thereon and return them to the office of the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre,

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LETTER FROM THE BOARD

183 Queen’s Road East, Wanchai, Hong Kong for holders of H Shares as soon as possible and in any event not less than 24 hours before the time for holding of the EGM or appointed time for voting. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM should you so wish.

A reply slip for the purpose of informing the Company whether you will be attending (in person or in proxy) the EGM was also despatched to you together with the notice of EGM. Shareholders who intend to attend the EGM are requested to complete and send the reply slip to the Company not later than 20 days before the date of the meeting in accordance with Article 57 of the Articles (i.e. no later than 10 October 2013, Thursday).

XI. ADDITIONAL INFORMATION

Your attention is drawn to the letter from the IBC of Subscription, the letter from the IBC of Whitewash Waiver, the letter from Proton Capital, as well as other information contained in the appendices to this circular before considering whether to vote for or against the relevant resolutions to be proposed at the EGM for approving the resolutions, among others, relating to the Proposed Placing, the Subscription Agreements (and the transactions contemplated thereunder) and the Whitewash Waiver as set out in the notice of the EGM.

By Order of the Board BBMG Corporation* Jiang Weiping Chairman

for identification purpose only
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LETTER FROM THE IBC OF SUBSCRIPTION

The following is the text of the letter from the IBC of Subscription setting out its recommendation to the Independent Shareholders in connection with the Parent Subscription in accordance with the Hong Kong Listing Rules for inclusion in this circular.

==> picture [319 x 93] intentionally omitted <==

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 2009)

15 October 2013

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION – THE PARENT SUBSCRIPTION

We have been appointed to form the IBC of Subscription to consider and advise the Independent Shareholders as to our opinion on, the terms of the Parent Subscription in accordance with the Hong Kong Listing Rules, the details of which are set out in the circular issued by the Company to the Shareholders dated 15 October 2013 (the “ Circular ”), of which this letter forms part. Terms defined in the Circular will have the same meanings when used herein unless the context otherwise requires.

We wish to draw the attention of the Independent Shareholders to the letter from the Board, the letter from the IBC of Whitewash Waiver and the letter of advice from Proton Capital, the Independent Financial Adviser, set out on pages 5 to 22, page 24 and pages 25 to 39 of the Circular, respectively.

Having taken into account the principal factors and reasons considered by Proton Capital, its conclusion and advice, we concur with the view of Proton Capital and consider that the terms of the Parent Subscription are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and the Parent Subscription is in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favor of the resolutions to be proposed at the EGM to approve the Parent Subscription.

Yours faithfully,

Independent Board Committee of Subscription Hu Zhaoguang, Zhang Chengfu, Xu Yongmo, Yip Wai Ming

* for identification purpose only

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LETTER FROM THE IBC OF WHITEWASH WAIVER

The following is the text of the letter from the IBC of Whitewash Waiver setting out its recommendation to the Independent Shareholders in connection with the Proposed Placing, the Parent Subscription and the Whitewash Waiver in accordance with the Takeovers Code for inclusion in this circular.

==> picture [319 x 93] intentionally omitted <==

(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2009)

15 October 2013

To the Independent Shareholders

Dear Sir or Madam,

THE PROPOSED PLACING, THE PARENT SUBSCRIPTION, THE FUND SUBSCRIPTION AND THE WHITEWASH WAIVER

We have been appointed to form the IBC of Whitewash Waiver to consider and advise the Independent Shareholders as to our opinion on the terms of the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver in accordance with the Takeovers Code, the details of which are set out in the circular issued by the Company to the Shareholders dated 15 October 2013 (the “ Circular ”), of which this letter forms part. Terms defined in the Circular will have the same meanings when used herein unless the context otherwise requires.

We wish to draw the attention of the Independent Shareholders to the letter from the Board, the letter from the IBC of Subscription and the letter of advice from Proton Capital, the Independent Financial Advisor, set out on pages 5 to 22, page 23 and pages 25 to 39 of the Circular, respectively.

Having taken into account the principal factors and reasons considered by Proton Capital, its conclusion and advice, we concur with the view of Proton Capital and consider that (i) the terms of the Proposed Placing, the Parent Subscription and the Fund Subscription are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and the Proposed Placing, the Parent Subscription and the Fund Subscription are in the interests of the Company and the Shareholders as a whole; and (ii) the Whitewash Waiver is in the interests of the Company and the Shareholders as a whole and is fair and reasonable so far as the Independent Shareholders are concerned.

Accordingly, we recommend the Independent Shareholders to vote in favor of the resolutions to be proposed at the EGM to approve the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver.

Yours faithfully,

Independent Board Committee of Whitewash Waiver

Yu Shiliang, Hu Zhaoguang, Zhang Chengfu, Xu Yongmo, Yip Wai Ming

* for identification purpose only

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LETTER FROM PROTON CAPITAL

Set out below is the text of a letter received from Proton Capital, the Independent Financial Adviser to the IBC of Subscription, the IBC of Whitewash Waiver and the Independent Shareholders regarding the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver for the purpose of inclusion in this circular.

==> picture [32 x 35] intentionally omitted <==

普頓資本有限公司 PROTON CAPITAL LIMITED

Suite 06-07, 28/F. Shui On Centre 6-8 Harbour Road Wanchai, Hong Kong

15 October 2013

To: The independent board committees and the independent shareholders of BBMG Corporation

Dear Sirs,

(1) PROPOSED ISSUE AND PLACING OF A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT AND (3) WHITEWASH WAIVER

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the IBC of Subscription, the IBC of Whitewash Waiver and the Independent Shareholders in relation to the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver, details of which are set out in the letter from the Board (the “Board Letter”) contained in the circular dated 15 October 2013 issued by the Company to the Shareholders (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 5 September 2013, the Board has approved the Proposed Placing, pursuant to which the Company will issue a maximum of 500,903,224 A Shares, representing approximately 16.08% of the existing issued A Shares and approximately 11.69% of the existing total issued share capital of the Company, to two target subscribers including the Parent and the Fund at the Subscription Price of RMB5.58 per A Share, subject to the Price Adjustment.

On even date, as part of the Proposed Placing, the Company entered into (i) the Parent Subscription Agreement pursuant to which the Parent has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 448,028,673 A Shares at the Subscription Price of RMB5.58 per A Share, subject to the Price Adjustment; and (ii) the Fund Subscription Agreement pursuant to which the Fund has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 52,874,551 A Shares at the Subscription Price of RMB5.58 per A Share, subject to the Price Adjustment.

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LETTER FROM PROTON CAPITAL

Save for the parties, the number of A Shares subscribed and the aggregate Subscription Price payable to the Company, other major terms of the Fund Subscription Agreement are the same as those of the Parent Subscription Agreement.

According to the Board Letter, the Parent is a controlling shareholder of the Company and therefore a connected person of the Company. Accordingly, the Parent Subscription constitutes a connected transaction for the Company under the Hong Kong Listing Rules, and is thereby subject to the reporting, announcement and independent shareholders’ approval requirements under the Hong Kong Listing Rules.

Upon completion of the Proposed Placing, the Parent Subscription and the Fund Subscription, the interests held by the Combined Concert Group will increase from 43.07% to 49.03% of the total issued share capital of the Company as enlarged by the issue of A Shares under the Proposed Placing, the Parent Subscription and the Fund Subscription. The Combined Concert Group will, in the absence of the Whitewash Waiver, be obliged to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by them pursuant to Rule 26 of the Takeovers Code as a result of the Proposed Placing, the Parent Subscription and the Fund Subscription.

The Combined Concert Group has applied to the Executive for the Whitewash Waiver pursuant to Note 1 of the Notes on Dispensation from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to the approval by the Independent Shareholders at the EGM on a vote taken by way of a poll. The Whitewash Waiver will also be subject to the approval of the Proposed Placing and the Subscription Agreements by the Independent Shareholders at the EGM on a vote taken by way of poll. The Combined Concert Group and any parties who are interested in or involved in the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver will abstain from voting at the EGM for the relevant resolutions. The Proposed Placing will not proceed if the Whitewash Waiver is not granted or approved.

The IBC of Subscription, comprising Mr. Hu Zhaoguang, Mr. Zhang Chengfu, Mr. Xu Yongmo and Mr. Yip Wai Ming (all being independent non-executive Directors), has been formed to advise the Independent Shareholders on (i) whether the terms of the Parent Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Parent Subscription is in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the relevant resolution(s) to approve the Parent Subscription Agreement and the transactions contemplated thereunder at the EGM. None of the members of the IBC of Subscription are interested in the Parent Subscription.

The IBC of Whitewash Waiver, comprising Mr. Yu Shiliang (being non-executive Director), Mr. Hu Zhaoguang, Mr. Zhang Chengfu, Mr. Xu Yongmo and Mr. Yip Wai Ming (all being independent nonexecutive Directors), has been formed to advise the Independent Shareholders on (i) whether the terms of the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver are in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the relevant resolution(s) to approve the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver at the EGM. All members of the IBC of Whitewash Waiver have confirmed to the Company that they are (i) independent of and not parties acting in concert with the

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LETTER FROM PROTON CAPITAL

Combined Concert Group and their respective associates and parties acting in concert with any of them; and (ii) independent in respect of the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver.

We, Proton Capital Limited, have been appointed as the Independent Financial Adviser to advise the IBC of Subscription, the IBC of Whitewash Waiver and the Independent Shareholders in the aforementioned respect, and such appointment has been approved by the IBC of Subscription and the IBC of Whitewash Waiver.

BASIS OF OUR OPINION

In formulating our opinion to the IBC of Subscription, the IBC of Whitewash Waiver and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date, and should there be any material changes to our opinion after the despatch of the Circular, Shareholders would be notified as soon as possible. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Hong Kong Listing Rules and Rule 2 of the Takeovers Code.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular (other than information relating to the Parent and the Fund) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

The directors of the Parent accept full responsibility for the accuracy of the information contained in the Circular (other than information relating to the Group and the Fund) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by the Group and the Fund) in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

The sole executive director of the general partner of the Fund accepts full responsibility for the accuracy of the information contained in the Circular (other than information relating to the Group and the Parent) and confirm, having made all reasonable enquiries, that to the best of its knowledge, opinions expressed (other than those expressed by the Group and the Parent) in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

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We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, the Combined Concert Group or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any A Shares and/or H Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Proton Capital is to ensure that such information has been correctly and fairly extracted, reproduced or presented from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

(A) The Proposed Placing, the Parent Subscription and the Fund Subscription

In arriving at our opinion in respect of the Proposed Placing, the Parent Subscription and the Fund Subscription, we have taken into consideration the following principal factors and reasons:

(1) Background of the Proposed Placing, the Parent Subscription and the Fund Subscription

Information on the Group

The Group is principally engaged in the manufacture and sale of cement and modern building materials, property development, property investment, and provision of property management services.

Set out below are the segmental information of the unaudited financial information on the Group for the six months ended 30 June 2013 and audited financial information for the two years ended 31 December 2012 as extracted from the interim report of the Company for the six months ended 30 June 2013 (the “ 2013 Interim Report ”) and the annual report of the Company for the year ended 31 December 2012:

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	For the six months	For the year ended	For the year ended
	ended 30 June	31 December	31 December	% change from
	2013	2012	2011	2011 to 2012
	RMB’000	RMB’000	RMB’000	%
	(unaudited)	(audited)	(audited)
Operating revenue	20,386,623	34,054,096	28,744,794	18.5
– Cement Segment	5,582,865	11,662,344	13,118,236	(11.1)
– Modern building materials
and commerce and
logistics segment	7,386,333	9,557,119	5,181,248	84.5
– Property development
segment	6,439,065	11,006,341	9,015,403	22.1
– Property investment and
management segment	1,004,967	1,828,292	1,429,907	27.9
Net profit	1,296,033	3,150,231	3,593,125	(12.3)
	As at	As at	As at
	30 June	31 December	31 December	% change from
	2013	2012	2011	2011 to 2012
	RMB’000	RMB’000	RMB’000	%
	(unaudited)	(audited)	(audited)
Total assets	89,115,807	83,161,804	76,914,972	8.1
Total liabilities	62,350,577	58,137,115	55,199,356	5.3
Net assets	26,765,230	25,024,689	21,715,616	15.2
Cash and bank balances	8,084,365	5,906,095	7,918,479	(25.4)

As depicted by the above table, the Group’s turnover improved by approximately 18.5% from 2011 to 2012 with the modern building materials and commerce and logistics segment recorded the most significant increase of approximately 84.5% from approximately RMB5,181million for the year ended 31 December 2011 to approximately RMB9,557 million for the year ended 31 December 2012. As advised by the Directors, despite the decrease in sales volume in the modern building materials and commerce and logistics segment, the segment took the initiative to grasp the opportunity brought by favorable policies, accelerated the adjustment to marketing pattern, improved economic operation quality and shifted the focus on the development of commerce and logistics business, thus facilitating the simultaneous growth in the overall revenue and operational efficiency of the segment.

With reference to the 2013 Interim Report and as advised by the Directors, in the second half of 2013, with a focus on strengthening the cohesiveness of the “three bases” in industry adjustment and upgrading, the Company will speed up the rationalization and improvement of the management mechanism in the modern building materials and commerce and logistics segment to ensure that enterprises in the industrial park can operate efficiently and achieve a substantial growth in economic efficiency.

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LETTER FROM PROTON CAPITAL

Information on the Fund and the Parent

With reference to the Board Letter, the Parent is a limited liability company established under the laws of the PRC and is a wholly-owned subsidiary of the Center. The Center is a collectively-owned enterprise established under the laws of the PRC with registered capital fully paid up by Beijing SASAC. The Parent is principally engaged in, among others, state-owned assets management, building materials manufacturing, sale of building materials and real estate development. The Center is principally engaged in investment holding, investment management, organizing corporate mergers and acquisitions and corporate restructurings.

With reference to the Board Letter, the Fund is a RMB-denominated fund established under the laws of the PRC sponsored by the Center, the Parent, 北京市國有資產經�有限責任公司(Beijing State-owned Assets Management Co., Ltd.), and 北京祥龍資產經�有限責任公司 (Beijing Xianglong Assets Management Co., Ltd.) as limited partners as to approximately 70%, 10%, 10% and 10% respectively, and 北京京國發投資管理有限公司 (Beijing Jingguofa Investment Management Co., Ltd.*) as general partner. The Fund principally invests in emerging Beijing municipal state-owned enterprises with priority development of Beijing as strategy so as to guide the development direction of such enterprises and promote the optimization and upgrading of industrial structure.

Financing alternatives available to the Group

As referred to in the Board Letter, the Company had not conducted any equity fund raising activities in the past 12 months immediately prior to the Latest Practicable Date.

Upon our enquiry with the Directors in this respect, we understand that the Directors have considered both debt and equity financing as fund raising methods for the Group from Hong Kong capital market and/or the PRC capital market. In relation to debt financing, the Directors advised us that in light of that (i) the debt financing may incur interest expenses as compared to equity financing; and (ii) the Company does not prefer to increase the Group’s gearing level and create additional debt liabilities to the Group, debt financing is considered to be less preferable for the Group at present.

The Directors advised us that having considered the Group mainly operates in the PRC with most of the transactions denominated and settled in RMB and the funding requirement of the Group in RMB to finance the construction of the BBMG international logistics park and the furniture manufacturing project, it will be in the interest of the Company to issue new A Shares to obtain the funding directly in RMB. In the event that, the Company conducts fund raising activities by issuance of new H Shares in Hong Kong, the Company is required to convert the foreign currencies raised from such issue to RMB, as well as to go through relevant procedures and approvals as required by the relevant PRC rules and regulations to transfer the proceeds back to the PRC for the Group’s uses.

Furthermore, according to the 《上市公司證券發行管理辦法》 (Measures for Administration of the Issue of Securities by Listed Companies*) and《上市公司非公開發行股票實施細則》(the Implementation Rules for the Non-Public Issuance of Shares by Listed

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Companies) issued by CSRC (the “ Measures* ”), the non-public issuance of new A Shares is generally subject to a lock-up period of not less than (i) 36 months period for (a) the controlling shareholders, their beneficial owners, or their associates; (b) investors who obtain the controlling power upon the completion of the issuance; and (c) strategic investors as introduced by the board of the company; or (ii) 12 months period for the other investors from the date of the completion of the issuance. With reference to the Board Letter, the A Shares to be subscribed by the Fund and the Parent shall not be transferable for a period of 36 months commencing from the completion of the Proposed Placing. However, there is no similar compulsory regulatory requirement in relation to lock-up for H shares listed in Hong Kong. In light of the aforementioned, the Directors are of the view that the issuance of new A Shares has limited the negative impact to the A Share market price of the Company with a lock-up period.

With regard to equity financing, the Directors advised us that although both open offer and rights issue would allow the Shareholders to maintain their respective pro-rata shareholdings in the Company and at the same time strengthening the capital base of the Company, such fund raising exercises (i) require the Company to procure commercial underwriting; and (ii) in general, are relatively more time consuming as compared with any placing and/or subscription of new Shares.

Having considered the above, the Directors are of the opinion that the Proposed Placing, the Parent Subscription and the Fund Subscription are the most appropriate fund raising methods currently available for the Group.

Reasons for the Proposed Placing, the Parent Subscription, the Fund Subscription and use of proceeds

With reference to the Board Letter, the Directors are of the view that the Proposed Placing and two projects to be invested by proceeds raised from the Proposed Placing will help the Company to improve its financial condition, boost its competitiveness in modern building materials and commerce and logistics business, enable the Company to achieve its strategic goals, and satisfy all in the best interest of the Shareholders. In addition, the Parent Subscription also demonstrates the confidence the Parent places in the Company and support to the development of the Company’s business, which is conducive to enhancing the market image of the Company.

The gross proceeds to be raised from the Proposed Placing will be approximately RMB2,795 million. The net proceeds (after deducting all applicable costs and expenses in association with the Proposed Placing) is intended to be used for the construction of the BBMG international logistics park as to RMB980 million and the furniture manufacturing project as to RMB1,815 million. Further details of the intended use of proceeds from the Proposed Placing are set out under the section headed “Reasons for and benefits of the Proposed Placing and the Parent Subscription” of the Board Letter.

As advised by the Directors, the logistic park will be located in 北京市大興區黃村鎮大莊村(Dazhuang Village, Huangcun City, Daxing District, Beijing Municipal*) with a construction land area of 165,800 square meters and the area will be developed by the

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LETTER FROM PROTON CAPITAL

Beijing Municipal into the Beijing south logistics and commercial ports core area. The master development plan for the logistics park consist of “one park and three centers”, which includes integrated logistics center, comprehensive trade and exhibition office center and pharmaceutical logistics center. As for the furniture manufacturing project, the Directors advised us that they will construct a furniture production line with an annual production capacity of 0.8 million “green” furniture in 河北省大廠回族自治縣北部夏墊鎮金隅大廠工業園 (BBMG Dachang Industrial Park, Xiadian Town, Northern Dachang Hui Autonomous County, Hebei Province*) which is in the center of the Bohai Economic Rim. With the continuous economic development and improvement in the living standard in the PRC, the Directors expect that “green” and highquality furniture shall be the major trend in the future and enhance the profitability of the Group. Details of the BBMG international logistics park and the furniture manufacturing project are set out under the section headed “Proposal in relation to the feasibility study report” of the Board Letter.

As advised by the Directors, the PRC central and local government had introduced policies to support the logistic business development in the Twelfth-Five period. In 2011, the State Council has issued 國務院辦公廳關於促進物流業健康發展政策措施的意見 (The opinion of the State Council on promoting the healthy development of the logistics industry’s policies and measures) which introduced eight supporting measures on the development of the logistics industry. In November 2011, the Beijing Municipal Commission of Commerce and the Beijing Municipal Commission of Development and Reform had jointly issued 北京市“十二五”時期物流業發展規劃 (The Beijing Municipal logistics industry development plan in the Twelfth-Five Period) to formulate the guiding ideology, basic principles and development goals for the Beijing Municipal logistics industry in the TwelfthFive Period and to provide a description on areas such as development plan, key projects and assurance measures. The Directors expect that the proceeds from the Proposed Placing would accelerate the Company’s expansion plan in the commerce and logistics industry and hence timely capture the favorable policies to enhance the Company’s competitiveness and profitability.

Having considered the above, we consider that the Proposed Placing (including the Parent Subscription and the Fund Subscription) is in the interests of the Company and the Shareholders as a whole.

(2) The Subscription Agreements

On 5 September 2013, as part of the Proposed Placing, the Company entered into (i) the Parent Subscription Agreement pursuant to which the Parent has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 448,028,673 A Shares at the Subscription Price of RMB5.58 per A Share, subject to the Price Adjustment; and (ii) the Fund Subscription

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Agreement pursuant to which the Fund has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 52,874,551 A Shares at the Subscription Price of RMB5.58 per A Share, subject to the Price Adjustment. Save for the parties, the number of A Shares subscribed and the aggregate Subscription Price payable to the Company, other major terms of the Fund Subscription Agreement are the same as those of the Parent Subscription Agreement.

The Subscription Price

As stated in the Board Letter, subject to the Price Adjustment and with reference to the relevant requirements of CSRC and Beijing SASAC, the Subscription Price under the Proposed Placing will be RMB5.58 per A Share, which is not lower than (i) RMB4.59 per A Share, being 90% of the average trading price of A Shares of the Company during the 20 trading days immediately preceding the Price Determination Date (the average trading price of A Shares during the 20 trading days immediately preceding the Price Determination Date was determined by using the total turnover of A Shares during the 20 trading days immediately preceding the Price Determination Date divided by the total trading volume of A Shares during the 20 trading days immediately preceding the Price Determination Date); and (ii) the unaudited net asset value of approximately RMB5.574 per Share as at 30 June 2013 (the “ Pricing Basis ”).

The Subscription Price represents:

(a) a discount of approximately 7.15% to the closing price of RMB6.01 per A Share as at the Latest Practicable Date;
(b) a premium of approximately 6.90% over the closing price of RMB5.22 per A Share as quoted on Bloomberg on 21 August 2013, being the last trading day immediately preceding the Price Determination Date;
(c) a premium of approximately 8.10% over the average closing price of RMB5.162 per A Share as quoted on Bloomberg for the last five trading days immediately preceding the Price Determination Date; and
(d) a premium of approximately 8.20% over the average closing price of RMB5.157 per A Share as quoted on Bloomberg for the last ten trading days immediately preceding the Price Determination Date;
(e) a premium of approximately 33.46% over the closing price of HK$5.310 (equivalent to approximately RMB4.181 based on the exchange rate of RMB1:HK$1.27) per H Share as quoted on the Hong Kong Stock Exchange on 21 August 2013, being the last trading day immediately preceding the Price Determination Date;
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LETTER FROM PROTON CAPITAL

(f) a premium of approximately 31.82% over the average closing price of HK$5.376 (equivalent to approximately RMB4.233 based on the exchange rate of RMB1:HK$1.27) per H Share as quoted on the Hong Kong Stock Exchange for the last five trading days immediately preceding the Price Determination Date; and
(g) a premium of approximately 35.31% over the average closing price of HK$5.237 (equivalent to approximately RMB4.124 based on the exchange rate of RMB1:HK$1.27) per H Share as quoted on the Hong Kong Stock Exchange for the last ten trading days immediately preceding the Price Determination Date;
(h) a premium of approximately 0.11% over the unaudited net asset value per Share of approximately RMB5.574 as at 30 June 2013, which is calculated based on the number of Shares 4,283,737,060 in issue as at the Latest Practicable Date and the unaudited net asset value of RMB23,875,491,818 attributable to the Shareholders as at 30 June 2013.

As depicted above, we noticed that the Subscription Prices represents a premium to the price of the A Share and H Share and the net asset value per Share. In addition, we noted that the Pricing Basis complies with the Measures issued by CSRC, which requires the A share issue price to be not less than 90% of the average trading price of A Shares of the Company during the 20 trading days immediately preceding the Price Determination Date.

In order to assess the fairness and reasonableness of the Subscription Price, we have reviewed the daily closing price of the A Shares as quoted on Bloomberg during the period commencing from 1 September 2012 up to and including the Latest Practicable Date (the “ Review Period ”). The comparison of closing price of the A Shares and the Subscription Price

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LETTER FROM PROTON CAPITAL

are illustrated as follows (the daily closing price of the H Shares (presented in RMB equivalent based on the exchange rate of RMB1:HK$1.27) as quoted on the Hong Kong Stock Exchange is also included for reference):

==> picture [349 x 187] intentionally omitted <==

Notes:

Trading in the A Shares and H Shares was suspended from 22 August 2013 to 5 September 2013 (both days inclusive).
Trading dates of the A Shares may vary from those of the H Shares.

Source: the Hong Kong Stock Exchange’s website (www.hkex.com.hk) and Bloomberg

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LETTER FROM PROTON CAPITAL

We noted that the daily closing price of the A Shares ranged from RMB4.73 to RMB8.92 during the Review Period. The Subscription Price hence falls within the said price range.

The daily closing price of the A Shares showed a general sliding trend from 8 February 2013 to the Price Determination Date (which is also the date of the Announcement), after reaching the peak of RMB8.92 on 8 February 2013, and fell below the Subscription Price on 14 June 2013. The Subscription Price represents a premium over the daily closing price of the A Shares from 14 June 2013 onwards until 9 September 2013 following the surge in the daily closing price of the A Shares after the date of the Announcement (the “ Post Announcement Price Surge ”).

The daily closing price of the A Shares had risen significantly since the date of the Announcement and maintained at a higher level over the Subscription Price up to 16 September 2013. Upon our enquiry, the Directors confirmed that save for the overall favourable stock market sentiment together with the market reaction towards the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver, they are not aware of any reasons which may lead to the Post Announcement Price Surge. Subsequently, the daily closing price of the A Shares fluctuated between RMB5.40 and RMB6.01 during the period from 17 September 2013 up to and including the Latest Practicable Date.

From the above graph, we also noted that save as and except for the price surge before and the price fall after the daily closing price of the A Shares reaching its peak on 8 February 2013, the daily closing price of the H Shares follow the trend of the daily closing price of the A Shares in general during the Review Period.

Having taken into account that (i) the Subscription Price falls within the range of the daily closing price of the A Shares during the Review Period; (ii) the Subscription Price represents a premium over the daily closing price of the A Shares from 14 June 2013 onwards until 9 September 2013 following the Post Announcement Price Surge which might indicate the overall favourable stock market sentiment together with the market reaction towards the Proposed Placing, the Parent Subscription, the Fund Subscription and the Whitewash Waiver; and (iii) the Pricing Basis complies with the Measures, we consider that the Subscription Price is fair and reasonable so far as the Independent Shareholders are concerned.

Lock-up period

The A Shares to be subscribed by the Fund and the Parent are not transferable within 36 months commencing from the completion of the Proposed Placing. As aforementioned, the Directors are of the view that the issuance of new A Shares has limited negative impact to the A Share market price of the Company with a lock-up period.

Having considered the above, we are of the view that the terms of the Subscription Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

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(3) Dilution effect on the shareholding interests of the existing public Shareholders

The following table illustrates the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Proposed Placing, the Parent Subscription and the Fund Subscription (assuming there is no change in the total issued share capital of the Company other than the issue of A Shares since the Latest Practicable Date and up to completion of the Proposed Placing, the Parent Subscription and the Fund Subscription):

As at the Latest Practicable Date Number of Shares held Approximate percentage of the total issued share capital of the Company (%) 1,844,852,426 43.07 – – 1,269,502,199 29.63 1,169,382,435 27.30 4,283,737,060 100	Upon completion of the Proposed Placing, the Parent Subscription and the Fund Subscription Number of Shares held Approximate percentage of the total issued share capital of the Company (%) 2,292,881,099 47.92 52,874,551 1.11 1,269,502,199 26.53 1,169,382,435 24.44 4,784,640,284 100	Upon completion of the Proposed Placing, the Parent Subscription and the Fund Subscription Number of Shares held Approximate percentage of the total issued share capital of the Company (%) 2,292,881,099 47.92 52,874,551 1.11 1,269,502,199 26.53 1,169,382,435 24.44 4,784,640,284 100
		100

As depicted by the table above, the shareholding interests of the existing public Shareholders (including all of the public holders of A Shares and H Shares) in the Company would be diluted by approximately 5.96 percentage point immediately after completion of the Proposed Placing, the Parent Subscription and the Fund Subscription. Taking into account (i) the reasons for and benefits of the Proposed Placing, the Parent Subscription and the Fund Subscription; and (ii) that the terms of the Subscription Agreements being fair and reasonable so far as the Independent Shareholders are concerned, we are of the view that the aforementioned level of dilution to the shareholding interests of the existing public Shareholders is acceptable.

(4) Financial effects of the Proposed Placing, the Parent Subscription and the Fund Subscription

Effect on net asset value and debt ratio

With reference to the 2013 Interim Report, the unaudited consolidated net asset value and the debt ratio (the ratio of total liabilities to total assets) of the Group as at 30 June 2013 were approximately RMB26,765.2 million and 69.97% respectively. As confirmed by the Directors, the Proposed Placing, the Parent Subscription and the Fund Subscription would increase the total assets and net asset value of the Group.

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Since the total assets of the Group is expected to increase while the Group’s total liabilities would remain unchanged as a result of the Proposed Placing, the Parent Subscription and the Fund Subscription, the Directors expected that the Proposed Placing, the Parent Subscription and the Fund Subscription would improve the Group’s debt ratio.

Effect on working capital

As confirmed by the Directors, part of the net proceeds from the Proposed Placing, the Parent Subscription and the Fund Subscription is intended to be used for the construction of the BBMG international logistics park and the furniture manufacturing project. As such, the Directors expected that the working capital of the Group will be increased by the Proposed Placing, the Parent Subscription and the Fund Subscription before utilisation of the net proceeds.

It should be noted that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial position of the Group will be upon completion of the Proposed Placing, the Parent Subscription and the Fund Subscription.

Recommendation on the Proposed Placing, the Parent Subscription and the Fund Subscription

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Proposed Placing, the Parent Subscription and the Fund Subscription are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Proposed Placing, the Parent Subscription and the Fund Subscription are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the IBC of Subscription and the IBC of Whitewash Waiver to advise the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the Proposed Placing, the Parent Subscription and the Fund Subscription and we recommend the Independent Shareholders to vote in favour of the resolutions in this regard.

(B) The Whitewash Waiver

An application has been made by the Combined Concert Group to the Executive for the granting of the Whitewash Waiver pursuant to Note 1 of the Notes on Dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to, among other things, the

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approval by the Independent Shareholders at the EGM on a vote taken by way of a poll. If the Whitewash Waiver is not granted by the Executive or if the conditions (if any) imposed thereon are not fulfilled, the Proposed Placing, the Parent Subscription and the Fund Subscription will not proceed.

In view of (i) the reasons for and the possible benefits of the Proposed Placing, the Parent Subscription and the Fund Subscription to the Group as set forth under the section headed “Reasons for the Proposed Placing, the Parent Subscription, the Fund Subscription and use of proceeds” above; and (ii) the terms of the Subscription Agreements being fair and reasonable so far as the Independent Shareholders are concerned, we are of the opinion that the approval of the Whitewash Waiver, which is a prerequisite for the completion of the Proposed Placing, the Parent Subscription and the Fund Subscription, is in the interests of the Company and the Shareholders as a whole and is fair and reasonable for the purpose of proceeding with the Proposed Placing, the Parent Subscription and the Fund Subscription.

RECOMMENDATION ON THE WHITEWASH WAIVER

Having taken into account the reasons for and possible benefits of the Proposed Placing, the Parent Subscription and the Fund Subscription, and that the Proposed Placing is conditional upon the grant of the Whitewash Waiver, we consider that the Whitewash Waiver is in the interests of the Company and the Shareholders as a whole and is fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the IBC of Whitewash Waiver to advise the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the Whitewash Waiver and we recommend the Independent Shareholders to vote in favour of the resolution in this regard.

Yours faithfully, For and on behalf of Proton Capital Limited Graham Lam

Managing Director – Corporate Finance

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF THE FINANCIAL INFORMATION

The following is a summary of (i) the audited financial results of the Group for each of the three financial years ended 31 December 2010, 2011 and 2012; (ii) the unaudited financial results of the Group for the six months ended 30 June 2013; (iii) the audited assets and liabilities as at 31 December 2010, 2011 and 2012; and (iv) the unaudited assets and liabilities as at 30 June 2013 as extracted from the published financial statements of the Group for the relevant years/period.

The auditors of the Company did not issue any qualified opinion on the financial statements of the Group for each of the three years ended 31 December 2010, 2011 and 2012. The Company had no items which are exceptional or extraordinary because of size, nature or incidence for the three years ended 31 December 2012.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Income Statement

For the years ended 31 December 2010, 2011, 2012 and for the six months ended 30 June 2013

Operating revenue Less: Operating costs Business tax and surcharges Selling expenses Administrative expenses Finance costs Asset impairment losses Add: Gains from changes in fair value Investment income/(losses) Including: Share of profits/(losses) of associates and jointly-controlled entities Operating profit Add: Non-operating income Less: Non-operating expenses Including: Loss on disposal of non- current assets Total profit Less: Income tax expenses Net profit Net profit attributable to the shareholders of the parent company Non-controlling interests Earnings per share Basic earnings per share (RMB/share) Diluted earnings per share (RMB/share) Dividend per share (RMB/share) Other comprehensive income Total comprehensive income Including: Total comprehensive income attributable to the shareholders of the parent company Total comprehensive income attributable to minority interests	For the six months ended 30 June 2013 RMB 20,386,622,839.47 16,013,389,291.34 761,069,018.03 680,885,123.98 1,370,281,463.25 442,895,708.81 (12,393,172.48) 320,192,740.78 (23,696,571.08) (23,792,766.12) 1,426,991,576.24 309,900,892.74 14,087,901.77 4,884,690.18 1,722,804,567.21 426,771,312.14 1,296,033,255.07 1,299,197,604.31 (3,164,349.24) 0.30 0.30 Nil 2,845,810.12 1,298,879,065.19 1,302,043,414.43 (3,164,349.24)	For the three years ended 31 December 2012 2011 2010 RMB RMB RMB 34,054,096,003.32 28,744,793,854.20 23,189,596,758.31 25,724,691,425.24 20,791,321,334.03 17,106,401,261.50 1,675,101,274.28 1,168,533,970.17 993,777,666.17 1,350,600,351.81 1,173,885,729.63 859,218,730.28 2,189,075,391.00 2,130,415,464.54 1,538,228,294.50 902,397,834.88 797,407,584.00 345,879,453.73 47,719,354.20 193,304,303.46 83,405,032.67 936,201,275.04 776,747,551.26 732,402,067.45 (7,142,672.11) 314,894,380.33 32,999,789.64 (32,989,386.38) 13,379,872.03 (19,992,074.52 3,093,568,974.84 3,581,567,399.96 3,028,088,176.55 931,016,234.14 1,164,939,302.75 960,859,616.94 70,607,884.18 76,497,809.89 54,123,558.77 34,088,371.36 19,195,284.86 30,518,404.27 3,953,977,324.80 4,670,008,892.82 3,934,824,234.72 803,746,757.93 1,076,883,633.98 944,073,991.03 3,150,230,566.87 3,593,125,258.84 2,990,750,243.69 2,965,089,241.74 3,428,644,623.62 2,755,658,441.00 185,141,325.13 164,480,635.22 235,091,802.69 0.69 0.81 0.71 0.69 0.81 0.71 0.071 0.072 0.070 117,016,679.78 (18,574.38) 66,747,418.91 3,267,247,246.65 3,593,106,684.46 3,057,497,662.60 3,082,105,921.52 3,428,626,049.24 2,822,423,616.31 185,141,325.13 164,480,635.22 235,074,046.29	For the three years ended 31 December 2012 2011 2010 RMB RMB RMB 34,054,096,003.32 28,744,793,854.20 23,189,596,758.31 25,724,691,425.24 20,791,321,334.03 17,106,401,261.50 1,675,101,274.28 1,168,533,970.17 993,777,666.17 1,350,600,351.81 1,173,885,729.63 859,218,730.28 2,189,075,391.00 2,130,415,464.54 1,538,228,294.50 902,397,834.88 797,407,584.00 345,879,453.73 47,719,354.20 193,304,303.46 83,405,032.67 936,201,275.04 776,747,551.26 732,402,067.45 (7,142,672.11) 314,894,380.33 32,999,789.64 (32,989,386.38) 13,379,872.03 (19,992,074.52 3,093,568,974.84 3,581,567,399.96 3,028,088,176.55 931,016,234.14 1,164,939,302.75 960,859,616.94 70,607,884.18 76,497,809.89 54,123,558.77 34,088,371.36 19,195,284.86 30,518,404.27 3,953,977,324.80 4,670,008,892.82 3,934,824,234.72 803,746,757.93 1,076,883,633.98 944,073,991.03 3,150,230,566.87 3,593,125,258.84 2,990,750,243.69 2,965,089,241.74 3,428,644,623.62 2,755,658,441.00 185,141,325.13 164,480,635.22 235,091,802.69 0.69 0.81 0.71 0.69 0.81 0.71 0.071 0.072 0.070 117,016,679.78 (18,574.38) 66,747,418.91 3,267,247,246.65 3,593,106,684.46 3,057,497,662.60 3,082,105,921.52 3,428,626,049.24 2,822,423,616.31 185,141,325.13 164,480,635.22 235,074,046.29
			3,028,088,176.55 960,859,616.94 54,123,558.77 30,518,404.27
			3,934,824,234.72 944,073,991.03
			2,990,750,243.69
			2,755,658,441.00
			235,091,802.69
			0.71
			0.71
			0.070
			66,747,418.91
			3,057,497,662.60
			2,822,423,616.31
			235,074,046.29

I-2 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet

As at 31 December 2010, 2011, 2012 and 30 June 2013

Assets Total current assets Total non-current assets Total assets Liabilities and shareholders’ equity Total current liabilities Total non-current liabilities Total liabilities Equity attributable to the shareholders of the parent company Non-controlling interests Total liabilities and equity attributable to shareholders	As at 30 June 2013 RMB 52,254,035,051.56 36,861,771,952.85 89,115,807,004.41 46,225,860,227.51 16,124,716,702.45 62,350,576,929.96 23,875,491,817.77 2,889,738,256.68 89,115,807,004.41	As at 31 December 2012 RMB 47,101,878,945.40 36,059,924,684.94 83,161,803,630.34 43,462,947,177.04 14,674,167,329.57 58,137,114,506.61 22,903,904,282.30 2,120,784,841.43 83,161,803,630.34	As at 31 December 2011 RMB 44,726,242,887.90 32,188,729,568.84 76,914,972,456.74 39,299,198,537.22 15,900,157,708.69 55,199,356,245.91 20,153,779,171.15 1,561,837,039.68 76,914,972,456.74	As at 31 December 2010 RMB 33,132,460,052.91 28,858,404,446.74
				61,990,864,499.65
				27,750,135,655.00 15,293,247,799.38
				43,043,383,454.38 17,064,211,817.43 1,883,269,227.84
				61,990,864,499.65

I-3 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following is the full text of the audited financial statements of the Group for the year ended 31 December 2012:

Consolidated Balance Sheet

As at 31 December 2012

Note V	31 December 2012 RMB	31 December 2011 RMB
Assets Current assets Cash and bank balances 1 Bills receivable 2 Accounts receivable 5 Advances to suppliers 7 Interests receivable 3 Dividends receivable 4 Other receivables 6 Inventories 8 Other current assets 9 Total current assets Non-current assets Available-for-sale financial assets 10 Long-term equity investments 12 Investment properties 13 Fixed assets 14 Construction in progress 15 Construction materials 16 Intangible assets 17 Goodwill 18 Long-term deferred expenditures 19 Deferred income tax assets 20 Total non-current assets Total assets	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 909,415,140.77 1,411,125.80 1,215,425.00 1,899,515,319.31 32,286,890,673.48 1,076,877,652.29 47,101,878,945.40 – 419,868,370.59 12,840,400,000.00 15,331,150,630.80 2,146,494,608.43 14,281,785.80 3,600,681,639.16 312,051,745.55 189,228,562.12 1,205,767,342.49 36,059,924,684.94 83,161,803,630.34	7,918,479,363.14 1,347,905,318.65 3,490,937,470.40 1,397,237,511.97 1,858,662.81 – 2,458,939,025.66 27,269,465,788.38 841,419,746.89 44,726,242,887.90 95,138.56 440,313,672.69 11,599,000,000.00 14,613,460,813.77 950,567,721.98 15,242,793.42 3,352,071,838.40 312,051,745.55 169,908,175.40 736,017,669.07 32,188,729,568.84 76,914,972,456.74

I-4 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet (continued)

As at 31 December 2012

Note V	31 December 2012 RMB	31 December 2011 RMB
Liabilities and shareholders’ equity Current Liabilities Short-term loans 23 Bills payable 24 Accounts payable 25 Receipts in advance 26 Wages payable 27 Tax payable 28 Interest payable 29 Dividends payable 30 Other payables 31 Short-term financing bonds payable 36 Non-current liabilities due within one year 33 Other current liabilities 34 Total current liabilities Non-current liabilities Long-term loans 35 Bonds payable 36 Long-term payables 37 Accrued liabilities 32 Deferred income tax liabilities 20 Other non-current liabilities 38 Total non-current liabilities Total liabilities Equity Share Capital 39 Capital reserve 40 Specialized reserve 41 Surplus reserve 42 Retained earnings 43 Exchange differences on foreign currency translation Equity attributable to the shareholders of the parent company Minority interests Total equity attributable to shareholders Total liabilities and equity attributable to shareholders	11,388,286,880.00 430,004,020.52 6,569,201,907.77 14,206,950,304.93 153,463,306.96 1,308,896,782.25 155,274,711.13 43,048,069.19 2,483,124,813.60 1,000,000,000.00 2,576,020,000.00 3,148,676,380.69 43,462,947,177.04 4,757,051,545.34 6,692,453,587.34 517,416,630.00 100,077,202.17 1,989,993,217.02 617,175,147.70 14,674,167,329.57 58,137,114,506.61 4,283,737,060.00 5,395,792,993.51 9,552,984.58 580,552,232.22 12,634,399,124.91 (130,112.92 ) 22,903,904,282.30 2,120,784,841.43 25,024,689,123.73 83,161,803,630.34	11,286,861,222.71 361,817,226.63 5,124,354,120.51 11,621,778,319.64 143,715,522.38 850,968,870.46 121,856,589.77 55,043,247.30 3,578,163,312.56 – 3,604,124,049.24 2,550,516,056.02 39,299,198,537.22 7,772,597,451.30 4,687,098,763.98 528,129,048.14 33,029,889.08 2,234,700,987.92 644,601,568.27 15,900,157,708.69 55,199,356,245.91 4,283,737,060.00 5,311,872,199.72 – 340,879,231.86 10,217,411,951.85 (121,272.28 ) 20,153,779,171.15 1,561,837,039.68 21,715,616,210.83 76,914,972,456.74

I-5 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet

As at 31 December 2012

Note XI	31 December 2012 RMB	31 December 2011 RMB
Assets Current assets Cash and bank balances Bills receivable Accounts receivable Interest receivable Dividends receivable Other receivables 1 Total current assets Non-current assets Long-term equity investments 2 Investment properties Fixed assets Construction in progress Intangible assets Total non-current assets Total assets Liabilities and shareholders’ equity Current liabilities Short-term loans Accounts payable Receipts in advance Wages payable Tax payable Interest payable Dividends payable Other payables Short-term notes payable Non-current liabilities due within one year Total current liabilities	998,549,054.78 8,100,000.00 60,332.04 250,729,781.21 1,134,198,882.17 14,837,697,277.39 17,229,335,327.59 17,033,320,636.41 7,778,292,087.37 1,427,916,220.95 157,397,881.58 481,328,244.82 26,878,255,071.13 44,107,590,398.72 10,222,500,000.00 5,620,311.33 279,335,584.99 564,620.38 163,908,577.54 149,247,229.17 20,962,235.89 2,064,413,590.02 1,000,000,000.00 1,635,000,000.00 15,541,552,149.32	2,067,665,937.14 194,431,820.00 – 244,076,234.45 1,638,384,989.47 12,440,456,343.56 16,585,015,324.62 16,567,433,258.34 6,853,600,000.00 1,446,902,166.94 1,116,000.00 505,996,003.17 25,375,047,428.45 41,960,062,753.07 9,960,500,000.00 – 91,625,849.71 328,640.47 5,975,518.37 110,626,337.82 37,204,079.53 5,175,977,057.12 – 1,820,000,000.00 17,202,237,483.02

I-6 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet (continued)

As at 31 December 2012

Note XI	31 December 2012 RMB	31 December 2011 RMB
Non-current liabilities Long-term loans Bonds payable Long-term payables Deferred income tax liabilities Total non-current liabilities Total liabilities Equity Share capital Capital reserve Surplus reserve Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity	2,510,000,000.00 6,692,453,587.34 506,240,834.36 1,327,185,517.53 11,035,879,939.23 26,577,432,088.55 4,283,737,060.00 5,679,053,989.85 580,552,232.22 6,986,815,028.10 17,530,158,310.17 44,107,590,398.72	3,865,000,000.00 4,687,098,763.98 504,999,278.14 996,643,592.34 10,053,741,634.46 27,255,979,117.48 4,283,737,060.00 5,724,155,727.37 340,879,231.86 4,355,311,616.36 14,704,083,635.59 41,960,062,753.07

I-7 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Income Statement

For the year ended 31 December 2012

Note V	2012 RMB	2011 RMB
Operating revenue 44 Less: Operating costs 44 Tax and surcharges 45 Selling expenses 46 Administrative expenses 47 Finance costs 48 Asset impairment losses 51 Add: Gains from changes in fair value 49 Investment income/(losses) 50 Including: Share of profits/(losses) of associates and jointly-controlled entities Operating profit Add: Non-operating income 52 Less: Non-operating expenses 53 Including: Loss on disposal of non-current assets Total profit Less: Income tax expenses 54 Net profit Including: Net profit of acquirees in business combination under common control prior to the combination Net profit attributable to the shareholders of the parent company Non-controlling interests Earnings per share 55 Basic earnings per share (RMB/share) Diluted earnings per share (RMB/share) Other comprehensive income 56 Total comprehensive income Including: Total comprehensive income attributable to the shareholders of the parent company Total comprehensive income attributable to minority interests	34,054,096,003.32 25,724,691,425.24 1,675,101,274.28 1,350,600,351.81 2,189,075,391.00 902,397,834.88 47,719,354.20 936,201,275.04 (7,142,672.11 ) (32,989,386.38 ) 3,093,568,974.84 931,016,234.14 70,607,884.18 34,088,371.36 3,953,977,324.80 803,746,757.93 3,150,230,566.87 – 2,965,089,241.74 185,141,325.13 0.69 0.69 117,016,679.78 3,267,247,246.65 3,082,105,921.52 185,141,325.13	28,744,793,854.20 20,791,321,334.03 1,168,533,970.17 1,173,885,729.63 2,130,415,464.54 797,407,584.00 193,304,303.46 776,747,551.26 314,894,380.33 13,379,872.03 3,581,567,399.96 1,164,939,302.75 76,497,809.89 19,195,284.86 4,670,008,892.82 1,076,883,633.98 3,593,125,258.84 79,664,998.68 3,428,644,623.62 164,480,635.22 0.81 0.81 (18,574.38 ) 3,593,106,684.46 3,428,626,049.24 164,480,635.22

I-8 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Income Statement

For the year ended 31 December 2012

Note XI	2012 RMB	2011 RMB
Operating revenue 3 Less: Operating costs 3 Business tax and surcharges Selling expenses Administrative expenses Finance costs Asset impairment losses/(reversal) Add: Gains/(losses) from changes in fair value Investment income 4 Including: Share of losses of associates and jointly-controlled entities Operating profit Add: Non-operating income Less: Non-operating expenses Including: Loss on disposal of non-current assets Total profit Less: Income tax expenses Net profit Other comprehensive income Total comprehensive income	2,972,649,963.41 1,239,631,433.87 143,216,903.19 12,756,689.00 192,736,107.78 396,812,224.04 (30,791,765.10 ) (100,577,945.25 ) 1,081,986,241.10 (36,677,615.26 ) 1,999,696,666.48 509,382,939.81 648,210.31 – 2,508,431,395.98 111,701,392.42 2,396,730,003.56 (45,068,306.25 ) 2,351,661,697.31	490,181,770.11 98,829,928.01 26,976,735.86 11,135,428.48 241,101,985.09 388,767,296.62 46,778,135.92 458,247,577.10 1,492,003,348.92 (42,528,782.06 ) 1,626,843,186.15 5,440,146.06 695,801.33 695,801.33 1,631,587,530.88 148,269,385.04 1,483,318,145.84 – 1,483,318,145.84

I-9 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Cash Flow

For the year ended 31 December 2012

Note V	2012 RMB	2011 RMB
I. Cash flows from operating activities Cash received from sale of goods or rendering of services Refunds of taxes Cash received from other operating activities 57 Subtotal of cash inflows from operating activities Cash paid for goods and services Cash paid to and on behalf of employees Cash paid for all types of taxes Cash paid relating to other operating activities 57 Subtotal of cash outflows from operating activities Net cash flows from operating activities 58(1) II. Cash flows from investing activities Cash received from redemption of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other business entities 58(2) Cash received from other investing activities 57 Subtotal of cash inflows from investing activities Cash paid for acquisition of fixed assets, Intangible assets and other long-term assets Cash paid for acquisition of investments Net cash paid for acquisition of subsidiaries and other business entities 58(2) Subtotal of cash outflows from investing activities Net cash flows from investing activities	35,535,974,753.80 291,914,460.62 542,542,656.14 36,370,431,870.56 24,788,965,427.11 2,385,977,077.29 3,141,628,616.22 1,743,102,001.61 32,059.673,122.23 4,310,758,748.33 49,349.57 19,474,059.84 127,106,077.50 7,878,929.34 4,993,601.29 159,502,017.54 3,528,217,840.81 25,167,600.00 – 3,553,385,440.81 (3,393,883,423.27 )	26,177,129,088.96 370,965,684.17 650,881,064.42 27,198,975,837.55 20,168,091,136.95 2,072,679,130.93 3,021,636,081.35 3,072,350,892.26 28,334,757,241.49 (1,135,781,403.94 ) 12,033,328.00 1,334,117.91 596,722,336.98 – – 610,089,782.89 2,599,557,159.06 3,550,000.00 424,681,770.70 3,027,788,929.76 (2,417,699,146.87 )

I-10 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Cash Flow (continued)

For the year ended 31 December 2012

Note V	2012 RMB	2011 RMB
III. Cash flows from financing activities Cash received from capital contributions Including: Cash received by subsidiaries from non-controlling shareholders Cash received from borrowings Cash received from issue of bonds Subtotal of cash inflows from financing activities Cash repayment for borrowings Cash paid for distribution of dividend or profits and for interest expenses Including: Dividends and profits paid by subsidiaries to non-controlling shareholders Cash paid relating to other financing activities 57 Subtotal of cash outflows from financing activities Net cash flows from financing activities IV. Effect of changes in exchange rate on cash and cash equivalents V. Net increase/(decrease) in cash and cash equivalents Add: Cash and cash equivalents at the beginning of the year VI. Cash and cash equivalents at the end of the year 58(3)	409,550,000.00 409,550,000.00 15,535,244,913.69 3,000,000,000.00 18,944,794,913.69 19,477,469,211.60 1,951,804,163.02 18,211,968.51 – 21,429,273,374.62 (2,484,478,460.93 ) (1,165,125.32 ) (1,568,768,261.19 ) 5,126,471,371.39 3,557,703,110.20	26,750,000.00 26,750,000.00 17,246,982,050.85 – 17,273,732,050.85 11,832,241,473.85 1,733,097,312.17 52,467,094.21 58,165,082.76 13,623,503,868.78 3,650,228,182.07 (867,799.23 ) 95,879,832.03 5,030,591,539.36 5,126,471,371.39

I-11 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Cash Flows

For the year ended 31 December 2012

Note XI	2012 RMB	2011 RMB
I. Cash flows from operating activities Cash received from sale of goods and rendering of services Cash received from other operating activities 5 Subtotal of cash inflows from operating activities Cash paid for goods and services Cash paid to and on behalf of employees Cash paid for all types of taxes Cash paid relating to other operating activities 5 Subtotal of cash outflows from operating activities Net cash flows from operating activities 6 II. Cash flows from investing activities Cash received from redemption of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Cash received from other investing activities 5 Subtotal of cash inflows from investing activities Cash paid for acquisition of fixed assets, intangible assets and other long-term assets Cash paid for acquisition of investments Net cash paid for acquisition of subsidiaries and other business entities Subtotal of cash outflows from investing activities Net cash flows from investing activities	556,465,967.05 40,314,471,651.72 40,870,937,618.77 27,835,037.54 53,291,580.63 207,546,742.35 42,267,263,285.64 42,555,936,646.16 (1,684,999,027.39 ) 20,044,200.00 87,783,670.64 2,578,105,620.48 – 2,685,933,491.12 248,886,660.32 1,345,977,600.00 623,655,609.36 2,218,519,869.68 467,413,621.44	462,681,168.54 39,105,876,386.39 39,568,557,554.93 23,970,079.66 51,586,377.60 101,928,977.68 38,403,326,566.62 38,580,812,001.56 987,745,553.37 – 213,943,918.80 6,167,980.00 11,229,519.80 231,341,418.60 265,837,964.79 2,142,872,460.00 575,422,037.71 2,984,132,462.50 (2,752,791,043.90 )

I-12 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Cash Flows (continued)

For the year ended 31 December 2012

Note XI	2012 RMB	2011 RMB
III. Cash flows from financing activities Cash received from borrowings Cash received from issue of bonds Subtotal of cash inflows from financing activities Cash repayment for borrowings Cash paid for distribution of dividends or profits and for interest expenses Cash paid relating to other financing activities 5 Subtotal of cash outflows from financing activities Net cash flows from financing activities IV. Effect of changes in exchange rate on cash and cash equivalents V. Net decrease in cash and cash equivalents Add: Cash and cash equivalents at the beginning of the year VI. Cash and cash equivalents at the end of the year 6	13,132,500,000.00 3,000,000,000.00 16,132,500,000.00 14,410,500,000.00 1,573,548,608.90 – 15,984,048,608.90 148,451,391.10 17,132.49 (1,069,116,882.36 ) 2,067,665,937.14 998,549,054.78	11,580,901,791.69 – 11,580,901,791.69 8,458,300,000.00 1,322,119,886.59 58,165,082.76 9,838,584,969.35 1,742,316,822.34 (743,067.42 ) (23,471,735.61 ) 2,091,137,672.75 2,067,665,937.14

I-13 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

For the year ended 31 December 2012

Exchange
differences on
Non-
Share
Capital
Specialized
Surplus
Retained
foreign currency
controlling
capital
reserve
reserve
reserve
earnings
translation
Subtotal
interests
Total equity
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB

1. Balance as at the beginning of the year
4,283,737,060.00
5,311,872,199.72
–
340,879,231.86 10,217,411,951.85
(121,272.28 ) 20,153,779,171.15
1,561,837,039.68 21,715,616,210.83
2. Movements during the year
(1) Net profit
–
–
–
–
2,965,089,241.74
–
2,965,089,241.74
185,141,325.13
3,150,230,566.87
(2) Other comprehensive income
–
117,025,520.42
–
–
–
(8,840.64 )
117,016,679.78
–
117,016,679.78
Total comprehensive income
–
117,025,520.42
–
–
2,965,089,241.74
(8,840.64 )
3,082,105,921.52
185,141,325.13
3,267,247,246.65
(3) Capital contribution and reduction from shareholders
1. Capital contribution from non-controlling shareholders
–
–
–
–
–
–
–
587,876,310.80
587,876,310.80
2. Deemed acquisition of non-controlling interests
–
(33,104,726.63 )
–
–
–
–
(33,104,726.63 )
33,104,726.63
–
3. Disposal of subsidiaries
–
–
–
–
–
–
–
(5,749,106.45 )
(5,749,106.45 )
(4) Profit distribution
1. Appropriation of surplus reserve
–
–
–
239,673,000.36
(239,673,000.36 )
–
–
–
–
2. Dividend to shareholders
–
–
–
–
(308,429,068.32 )
–
(308,429,068.32 )
(242,125,666.80 )
(550,554,735.12 )
(5) Specialized reserve
1. Appropriated during the year
–
–
57,730,015.85
–
–
–
57,730,015.85
1,188,692.06
58,918,707.91
2. Paid during the year
–
–
48,177,031.27
–
–
–
48,177,031.27
488,479.62
48,665,510.89
3. Balance as at the end of the year
4,283,737,060.00
5,395,792,993.51
9,552,984.58
580,552,232.22 12,634,399,124.91
(130,112.92 ) 22,903,904,282.30
2,120,784,841.43 25,024,689,123.73

I-14 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity (continued)

For the year ended 31 December 2011

Exchange
differences on
Non-
Share
Capital
Surplus
Retained
foreign currency
controlling
capital
reserve
reserve
earnings
translation
Subtotal
interests
Total equity
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB

1. Balance as at the beginning of the year
3,873,332,500.00
5,762,994,017.86
192,547,417.28
7,236,960,737.01
(119,306.14 )
17,065,715,366.01
1,881,765,710.86
18,947,481,076.87
2. Movements during the year
(1) Net Profit
–
–
–
3,428,644,623.62
–
3,428,644,623.62
164,480,635.22
3,593,125,258.84
(2) Other comprehensive income
–
(16,608.24 )
–
–
(1,966.14 )
(18,574.38 )
–
(18,574.38 )
Total comprehensive income
–
(16,608.24 )
–
3,428,644,623.62
(1,966.14 )
3,428,626,049.24
164,480,635.22
3,593,106,684.46
(3) Capital contribution and reduction from shareholders
1. Net capital contribution from shareholders
–
(5,042,750.21 )
–
–
–
(5,042,750.21 )
99,558,640.63
94,515,890.42
2. Net differences from disposal of
non-controlling interests of subsidiaries
–
–
–
–
–
–
(9,206,539.47 )
(9,206,539.47 )
3. Acquisition of non-controlling interests
by issue of new shares
410,404,560.00
422,780,118.57
–
–
–
833,184,678.57
(890,484,604.74 )
(57,299,926.17 )
4. Business combination under common control
–
(856,112,700.00 )
–
–
–
(856,112,700.00 )
–
(856,112,700.00 )
5. Business combination
–
–
–
–
–
–
462,719,799.91
462,719,799.91
6. Others
–
(12,729,878.26 )
–
–
–
(12,729,878.26 )
11,104,395.86
(1,625,482.40 )
(4) Profit distribution
1. Appropriation of surplus reserve
–
–
148,331,814.58
(148,331,814.58 )
–
–
–
–
2. Dividend to shareholders
–
–
–
(299,861,594.20 )
–
(299,861,594.20 )
(158,100,998.59 )
(457,962,592.79 )
3. Balance as at the end of the year
4,283,737,060.00
5,311,872,199.72
340,879,231.86
10,217,411,951.85
(121,272.28 )
20,153,779,171.15
1,561,837,039.68
21,715,616,210.83

I-15 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Changes in Equity

For the year ended 31 December 2012

	Share capital RMB	Capital reserve RMB	Surplus reserve RMB	Retained earnings RMB	Total equity RMB
I. Balance at the beginning of the year II. Movements during the year (1) Net profit (2) Other comprehensive income Total comprehensive income (3) Merger of subsidiaries (4) Profit distribution 1. Appropriation of surplus reserves 2. Dividend to shareholders III. Balance at the end of the year	4,283,737,060.00 – – – – – – 4,283,737,060.00	5,724,155,727.37 – (45,068,306.25 ) (45,068,306.25 ) (33,431.27 ) – – 5,679,053,989.85	340,879,231.86 – – – – 239,673,000.36 – 580,552,232.22	4,355,311,616.36 2,396,730,003.56 – 2,396,730,003.56 782,875,476.86 (239,673,000.36 ) (308,429,068.32 ) 6,986,815,028.10	14,704,083,635.59 2,396,730,003.56 (45,068,306.25 ) 2,351,661,697.31 782,842,045.59 – (308,429,068.32 ) 17,530,158,310.17

I-16 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Changes in Equity (continued)

For the year ended 31 December 2012

	Share capital RMB	Capital reserve RMB	Surplus reserve RMB	Retained earnings RMB	Total equity RMB
I. Balance at the beginning II. Movements during the year (1) Net profit Total comprehensive income (3) Capital contribution and reduction from shareholders 1. Acquisition of non-controlling interests by issue of new shares 2. Acquisition of subsidiaries under common control (4) Profit distribution 1. Dividend to shareholders 2. Appropriation of surplus reserves III. Balance at the end of the year	3,873,332,500.00 – – 410,404,560.00 – – – 4,283,737,060.00	5,568,781,396.31 – – 193,035,317.55 (37,660,986.49 ) – – 5,724,155,727.37	192,547,417.28 – – – – – 148,331,814.58 340,879,231.86	3,320,186,879.30 1,483,318,145.84 1,483,318,145.84 – – (299,861,594.20 ) (148,331,814.58 ) 4,355,311,616.36	12,954,848,192.89 1,483,318,145.84 1,483,318,145.84 603,439,877.55 (37,660,986.49 ) (299,861,594.20 ) – 14,704,083,635.59

I-17 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

I. BASIC INFORMATION OF THE GROUP

BBMG Corporation (the “Company”) is a joint stock company with limited liability incorporated in Beijing, the People’s Republic of China. It was established on 22 December 2005 jointly by BBMG Group Company Limited (“BBMG Group” or the “Parent”), China National Materials Company Limited (“Sinoma”), Beifang Real Estate Development Co., Ltd. (“Beifang Real Estate”), Tianjin Building Materials (Holding) Co., Ltd. (“Tianjin Building Materials”) and Hopeson Holdings Limited (“Hopeson Holdings”), pursuant to the Approval on Reorganisation Scheme of BBMG Group Company Limited (Jing Guo Zi Gui Hua Zi [2005] No. 48) issued by Beijing Municipal State-owned Assets Supervision and Administration Commission (“Beijing SASAC”) and the Circular of Approval on Establishment of BBMG Corporation (Jing Fa Gai [2005] No. 2682) issued by Beijing Municipal Development and Reform Commission. It was registered with Beijing Municipal Administration of Industry and Commerce (corporate business license number: 110000410285245). The Renminbi-denominated ordinary shares (A shares) and H shares of the Company are listed on the Shanghai Stock Exchange (“Shanghai Stock Exchange”) and the Stock Exchange of Hong Kong Limited (“Stock Exchange of Hong Kong”), respectively. The Company’s headquarters is located at No. 36, North Third Ring East Road, Dongcheng District, Beijing. The Company and its subsidiaries (collectively, the “Group”) are principally engaged in the manufacture and sale of cement and building materials, real estate development, property investment, and the provision of property management services.

The Company’s original registered capital was RMB1,800,000,000, comprising a total of 1,800,000,000 shares in issue. The Company’s shares were issued at a par value of RMB1 each. The capital contributions were verified by the Capital Verification Reports ((2005) Jing Jian Kuai Yan Zi No. 004, (2006) Jing Jian Kuai Wai Yan Zi No. 002, (2007) Jing Jian Kuai Wai Yan Zi No. 002) prepared by Beijing Jianhongxin Certified Public Accountants Company Limited.

Pursuant to the approval by the Ministry of Commerce of the People’s Republic of China (Shang Zi Pi [2008] No. 1001), the Company completed a capital increase in 2008 and increased its registered capital to RMB2,800,000,000, comprising a total of 2,800,000,000 shares in issue, of which 2,279.02 million shares or 81.39% are state-owned legal person shares (held by BBMG Group, Sinoma, China Cinda Asset Management Co., Ltd. (“Cinda Asset”) and Tianjin Building Materials), 182.50 million shares or 6.52% are non state-owned legal person shares (held by Hua Xi Xin Yu Investment Co., Ltd. (“Hua Xi Xin Yu”), Runfeng Investment Group Co., Ltd. (“Runfeng Investment”), and Beijing Taihong Investment (Group) Co., Ltd.), and 338.48 million shares or 12.09% are foreign shares (held by Hopeson Holdings and Tai’an Pinghe Investment Co., Ltd. (“Tai’an Pinghe”)). The capital increase was verified by the Capital Verification Reports (Zhong Xing Hua Yan Zi (2008) No. 007, Zhong Xing Hua Yan Zi (2008) No. 016) prepared by Zhongxinghua Certified Public Accountants Company Limited.

As resolved by the Company’s second extraordinary general meeting in 2008 and under the approval (Zheng Jian Xu Ke [2009] No. 550) of China Securities Regulatory Commission (“CSRC”), the Company issued 933,333,000 H shares on 17 July 2009 and 139,999,500 H shares on 29 July 2009 through the exercise of over-allotment option. The issued H shares were listed respectively on 29 July 2009 and 6 August 2009 on the Main Board of the Stock Exchange of Hong Kong. As a result, the Company’s registered capital was increased to RMB3,873,332,500. The capital increase was verified by the Capital Verification Report ((2009) Jing Kuai Xing Yan Zi No. 2-026) prepared by Beijing Xinghua Certified Public Accountants Company Limited.

I-18 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

I. BASIC INFORMATION OF THE GROUP (continued)

As resolved by the Company’s third extraordinary general meeting in 2010 and under the approvals (Zheng Jian Xu Ke [2011] No. 166 and Zheng Jian Xu Ke [2011] No. 168) of CSRC on 28 January 2011, the Company issued 410,404,560 Renminbi-denominated ordinary shares (A shares) through initial public offering, all of which were used to finance the merger of Hebei Taihang Cement Co., Ltd. (“Taihang Cement”). Upon completion of the merger through share exchange, the former Taihang Cement was deregistered. The A shares were registered with China Securities Depository and Clearing Corporation Limited, Shanghai Branch on 22 February 2011 and listed on the Shanghai Stock Exchange on 1 March 2011. The capital increase through share exchange was verified by the Capital Verification Report ((2011) Jing Kuai Xing Yan Zi No. 4-007) prepared by Beijing Xinghua Certified Public Accountants Company Limited.

As at 31 December 2012, the Company’s registered capital is RMB4,283,737,060, comprising a total of 4,283,737,060 shares in issue, details of which are set out in Note V.39.

The scope of business of the Company includes: cement, building materials manufacturing, construction and decoration, trade and logistics, tourism services, real estate development and property management.

The Group’s parent and ultimate holding company is BBMG Group, a company established in the PRC.

These financial statements were approved by a resolution of the board of directors of the Company on 20 March 2013. In accordance with the Articles of Association of the Company, these financial statements will be proposed to the general meeting for review.

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

1. Basis of preparation of the financial statements

The financial statements are prepared in accordance with Accounting Standards for Business Enterprises – Basic Standards and 38 specific accounting standards issued by the Ministry of Finance (the “MOF”) in February 2006 and the implementation guidance, interpretations and other relevant provisions issued subsequently (collectively referred to as “Accounting Standards for Business Enterprises”).

The financial statements are presented on a going concern basis.

Except for certain financial instruments and investment properties, the financial statements have been prepared under the historical cost convention. If the assets are impaired, corresponding provisions for impairment shall be provided according to relevant provisions.

I-19 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

2. Statement of compliance with Accounting Standards for Business Enterprises

The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises and present fairly and fully the financial position of the Company and the Group as at 31 December 2012 and their financial performance and cash flows for the year then ended.

3. Accounting period

The accounting year for the Group is from 1 January to 31 December of each calendar year.

4. Functional currency

The Group’s reporting and presentation currency is Renminbi (“RMB”). Unless otherwise stated, the unit of the currency is RMB yuan.

The subsidiaries, joint ventures and associates of the Group may determine their own functional currencies based on the specific economic environments in their place of business. In the preparation of financial statements, their functional currencies shall be translated into RMB.

5. Business combinations

A business combination is a transaction or event that brings together two or more separate entities into one reporting entity. Business combinations are classified into business combinations under common control and business combinations not under common control.

Business combinations under common control

A business combination under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For a business combination under common control, the party that, on the combination date, obtains control of another entity participating in the combination is the acquiring party, while that other entity participating in the combination is a party being acquired. The combination date is the date on which the acquiring party effectively obtains control of the party being acquired.

Assets and liabilities that are obtained by the acquirer in a business combination shall be measured at their carrying amounts at the combination date as recorded by the party being acquired. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be adjusted to share premium under capital reserve and the balance of capital reserve transferred in under the old accounting system. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

I-20 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

5. Business combinations (continued)

Business combinations not under common control

A business combination not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the combination. For a business combination not under common control, the party that, on the acquisition date, obtains control of another entity participating in the combination is the acquirer, while that other entity participating in the combination is the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree.

The acquirer shall measure the acquiree’s identifiable assets, liabilities and contingent liabilities acquired in the business combination at their fair values on the acquisition date.

Where the aggregate of the fair value of the consideration paid (or the fair value of the equity securities issued) and any fair value of the acquirer’s previously held equity interest exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall be recognised as goodwill. Goodwill is subsequently measured at cost less any accumulated impairment losses. Where the aggregate of the fair value of the consideration paid (or the fair value of the equity securities issued) and any fair value of the acquirer’s previously held equity interest is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, reassessment of the measurement of these items is conducted first, if the sum of the fair value of this consideration and other items mentioned above is still lower than the fair value of the net assets acquired, the difference is recognised in profit or loss for the current period.

6. Consolidated financial statements

The consolidation scope of consolidated financial statements is determined on the basis of control, including the financial statements for the year ended 31 December 2012 of the Company and all of its subsidiaries. A subsidiary is an enterprise or entity that is controlled by the Company.

In preparation of consolidated financial statements, the subsidiaries use the same accounting period and accounting policies as those of the Company. All intra-group balances, transactions and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated on consolidation in full.

I-21 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

6. Consolidated financial statements (continued)

Where the amount of losses for the current period attributed to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders’ portion of the opening balance of shareholders’ equity of the subsidiary, the excess amount is allocated against non-controlling interests. A change in the non-controlling interests, without a loss of control, is accounted for as an equity transaction.

For subsidiaries acquired through a business combination not under common control, the operating results and cash flows of the acquiree are included in the consolidated financial statements from the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. In preparing consolidated financial statements, adjustments shall be made to the subsidiaries’ financial statements based on the fair values of the identifiable assets, liabilities and contingent liabilities at the acquisition date.

For subsidiaries acquired through a business combination under common control, the operating results and cash flows of the acquiree are included in the consolidated financial statements from the beginning of the combination period. In preparing consolidated financial statements, adjustments shall be made to related items of prior year’s financial statements, as if the reporting entities after the combination had existed from the date when the combining entities first came under control of the ultimate controlling party.

7. Cash and cash equivalents

Cash comprises the Group’s cash on hand and deposits that can be readily withdrawn on demand for payment purposes. Cash equivalents are short-term, highly liquid investments held by the Group, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

8. Foreign currency transactions and translation of the financial statements prepared in foreign currencies

The Group translates the amounts of foreign currency transactions occurred into its functional currency.

Foreign currency transactions are recorded, on initial recognition, in their functional currencies, by applying to the foreign currency amounts at the spot exchange rates at the transaction dates. At the balance sheet date, foreign currency monetary items are translated using the spot exchange rates at the balance sheet date. All the resulting exchange differences are taken to profit or loss, except for those relating to foreign currency borrowings specifically for acquisition and construction of qualifying assets, which are capitalised in accordance with the principle of capitalisation of borrowing costs. Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rates prevailing on the transaction dates, while the amounts denominated in the functional currencies do not change. Non-monetary foreign currency items measured at fair value are translated at the spot exchange rates prevailing at the date on which the fair values are determined. The exchange differences thus resulted are recognised in profit or loss or as other comprehensive income for the current period, depending on the nature of the non-monetary item.

I-22 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

8. Foreign currency transactions and translation of the financial statements prepared in foreign currencies (continued)

For foreign operations, the Group translates their functional currency amounts into Renminbi in preparing the financial statements as follows: asset and liability items in the balance sheet are translated using the spot exchange rates at the balance sheet date, and equity items other than “retained earnings” are translated using the spot exchange rates at the date of transactions; revenue and expense items in the income statement are translated using the weighted average exchange rate for the period during which the transactions occur. The resulting exchange differences are recognised in other comprehensive income and presented as a separate component of shareholders’ equity in the balance sheet. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is transferred to profit and loss in the period during which the disposal occurs. If the disposal only involves a portion of a particular foreign operation, the calculations will be made on a pro-rata basis.

Foreign currency cash flows and the cash flows of foreign subsidiaries are translated using the average exchange rate for the period during which the cash flows occur. The effect of exchange rate changes on cash is separately presented as an adjustment item in the statement of cash flows.

9. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Recognition and derecognition of financial instruments

The Group recognises a financial asset or a financial liability when it becomes a party to the contractual provisions of a financial instrument.

The Group derecognises a financial asset (or part of a financial asset, or part of a group of similar financial assets) when the following conditions are met:

(1) the rights to receive cash flows from the asset have expired; or
(2) the Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
I-23 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

If the underlying obligation of a financial liability has been discharged or cancelled or has expired, the financial liability is derecognised. If an existing financial liability is replaced by the same creditor with a new financial liability that has substantially different terms, or if the terms of an existing financial liability are substantially revised, such replacement or revision is accounted for as the derecognition of the original liability and the recognition of a new liability, and the resulting difference is recognised in profit or loss for the current period.

Regular way purchases or sales of financial assets are recognised and derecognised on the trade date. Regular way purchases or sales of financial assets mean that the financial assets are received or delivered under the terms of a contract within a period as specified by regulations or conventions in the marketplace. Trade date is the date that the Group commits to purchase or sell the asset.

Classification and measurement of financial assets

Financial assets are, on initial recognition, classified into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets and derivatives designated as effective hedging instruments. The Group determines the category of financial assets upon initial recognition. A financial asset is recognised initially at fair value. In the case of financial assets at fair value through profit or loss, relevant transaction costs are directly charged to profit and loss of the current period; transaction costs relating to financial assets of other categories are included in the amount initially recognised.

The subsequent measurement of financial assets depends on its category as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and those designated upon initial recognition at fair value through profit or loss. A financial asset held for trading is the financial asset that meets one of the following conditions: (i) the financial asset is acquired for the purpose of selling in a short term; (ii) the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term profits; (iii) the financial asset is a derivative, except for a derivative that is designated as an effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. For such kind of financial assets, fair values are adopted for subsequent measurement. All the realised or unrealised gains or losses on these financial assets are recognised in profit or loss for the current period. Dividend income or interest income related to financial assets at fair value through profit or loss is credited to profit or loss for the current period.

I-24 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Classification and measurement of financial assets (continued)

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity date that an entity has the positive intention and ability to hold to maturity. Such kind of financial assets are subsequently measured at amortised cost using the effective interest method. Gains or losses arising from amortisation or impairment and derecognition are recognised in profit or loss for the current period.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such kind of financial assets are subsequently measured at amortised cost using the effective interest method. Gains or losses arising from amortization or impairment are recognised in profit or loss for the current period.

Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available for sale or are not classified as any of the other categories at initial recognition. After initial recognition, available-for-sale financial assets are measured at fair value. The discount/premium is amortised using the effective interest method and recognised as interest income or expense. A gain or loss arising from a change in the fair value of an available-for-sale financial asset is recognised as other comprehensive income in capital reserve, except that impairment losses and foreign exchange gains or losses resulted from monetary financial assets are immediately recognised as current profit or loss, until the financial asset is derecognised or determined to be impaired, at which time the accumulated gain or loss previously recognised is transferred to profit or loss for the current period. Interest and dividends relating to an available-for-sale financial asset are recognised in profit or loss for the current period.

Equity instruments without a quoted price from an active market and whose fair value cannot be reliably measured are carried at cost.

I-25 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Classification and measurement of financial liabilities

The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss, other financial liabilities or derivatives designated as effective hedging instruments. The Group determines the category of financial liabilities upon initial recognition. For financial liabilities at fair value through profit or loss, relevant transaction costs are directly recognised in profit or loss for the current period, and transaction costs relating to other financial liabilities are included in the initial recognition amounts.

The subsequent measurement of financial liabilities depends on its category as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and those designated upon initial recognition at fair value through profit or loss. A financial liability held for trading is the financial liability that meets one of the following conditions: (i) the financial liability is assumed for the purpose of repurchasing it in a short term; (ii) the financial liability is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term profits; (iii) the financial liability is a derivative, except for a derivative that is designated as an effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. For such a kind of financial liabilities, fair values are adopted for subsequent measurement. All the realised or unrealised gains or losses on these financial liabilities are recognised in profit or loss for the current period.

Other financial liabilities

After initial recognition, such kind of financial liabilities are measured at amortised cost by using the effective interest method.

Fair value of financial instruments

The fair value of financial assets and liabilities for which there are active markets is determined by reference to the quoted market prices. For financial instruments where there are no active markets, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions between knowledgeable and willing parties, reference to the current fair value of another instrument that is substantially the same, a discounted cash flow analysis, and option pricing models or other valuation models.

I-26 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Impairment of financial assets

The Group assesses at the balance sheet date the carrying amount of every financial asset. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the impairment. Objective evidence that a financial asset is impaired is one or more events that occur after the initial recognition of the asset and have an impact (which can be reliably estimated) on the expected future cash flows of the financial asset.

Financial assets carried at amortised cost

If there is objective evidence that an impairment loss on a financial asset has incurred, the carrying amount of the asset is reduced to the present value of expected future cash flows (excluding future credit losses that have not been incurred). Impairment is recognised in profit or loss for the current period. The present value of expected future cash flows is discounted at the financial asset’s original effective interest rate (i.e., effective interest rate computed on initial recognition) and includes the value of any related collateral. If a financial asset has a variable interest rate, the Group uses the current effective interest rate stipulated in the contract as the discount rate to calculate the present value of future cash flows.

For a financial asset that is individually significant, the asset is individually assessed for impairment, and the amount of impairment is recognised in profit or loss for the current period if there is objective evidence of impairment. For a financial asset that is not individually significant, it is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment or is individually assessed for impairment. If no objective evidence of impairment incurs for an individually assessed financial asset (whether the financial asset is individually significant or not individually significant), it is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. Assets for which an impairment loss is individually recognised is not included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment.

If, subsequent to the Group’s recognition of an impairment loss on a financial asset carried at amortised cost, there is objective evidence of a recovery in value of the financial asset and the recovery can be related to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed and recognised in profit or loss for the current period. However, the reversal shall not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment loss not been recognised at the date the impairment is reversed.

I-27 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Impairment of financial assets (continued)

Available-for-sale financial assets

If there is objective evidence that an available-for-sale asset is impaired, the accumulated losses arising from decline in fair value previously recognised in other comprehensive income are removed and recognised in profit or loss for the current period. The accumulated losses that removed from other comprehensive income are the difference between the initial acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss on the financial asset previously recognised in profit or loss.

If, after an impairment loss has been recognised on an available-for-sale debt instrument, the fair value of the debt instrument increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed with the amount of the reversal recognised in profit or loss for the current period.

Financial assets carried at cost

If there is objective evidence that such an asset is impaired, the difference between its carrying amount and the present value of expected future cash flows which are discounted at the current market interest rate is recognised as an impairment loss in profit or loss for the current period. Once an impairment loss is recognised, it is not reversed.

For a long-term equity investment accounted for according to Accounting Standards for Business Enterprises No. 2 – Long-term Equity Investments and which is not quoted in an active market and for which the fair value cannot be reliably measured, any impairment is accounted for in accordance with the above principles.

Transfers of financial assets

If the Group transfers substantially all the risks and rewards of ownership of the financial asset, the Group derecognises the financial asset; if the Group retains substantially all the risks and rewards of ownership of the financial asset, the Group does not derecognise the financial asset.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, it accounts for the transactions as follows: (i) if the Group has not retained control, it derecognises the financial asset and recognises any resulting assets or liabilities; (ii) if the Group has retained control, it continues to recognise the financial asset to the extent of its continuing involvement in the transferred financial asset and recognises an associated liability.

I-28 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

10. Receivables

(1) Receivables that are individually significant and individually assessed for bad debt provision

As at the balance sheet date, accounts receivable and other receivables greater than RMB10,000,000 are considered as individually significant and are subject to separate impairment assessment. If there is objective evidence that an impairment loss has been incurred, impairment loss is recognised and bad debt provision is made based on the shortfall of the present value of estimated future cash flows as compared to the carrying amount of the receivable.

(2) Receivables that are assessed for bad debt provision by group

Except for receivables that are impaired through individual assessment, the Group considers receivables due from governmental institutions, BBMG Group and the Group’s affiliates as a group with special credit risk characteristics. According to assessment, the risk of these receivables is low and therefore the Group generally makes no provisions for bad debt for such receivables. As for other receivables, the Group determines the receivable group based on the aging as the credit risk characteristics. The provisions for bad debt of accounts receivable and other receivable are recorded based on the aging analysis and the accrual percentages are stated as follows:

	Accounts	Other
	receivable	receivables
	Percentage of	Percentage of
	provision	provision
	(%)	(%)
1 year or less	–	–
1 to 2 years (inclusive)	30	30
2 to 3 years (inclusive)	60	60
3 to 4 years (inclusive)	85	85
4 to 5 years (inclusive)	100	100
More than 5 years	100	100

(3) Receivables that are not individually significant but individually assessed for bad debt provision

Receivable that is not individually significant but with objective evidence that an impairment loss may have been incurred is separated from the relevant group and individually assessed for impairment loss. The bad debt provision is made according to the difference between the present value of estimated future cash flows and the carrying amount of the receivable.

I-29 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

11. Inventories

Inventories include raw materials, work in progress, finished goods, commodity inventories, turnover materials, properties under development and completed properties held for sale.

Inventories are initially carried at the actual cost. Besides properties under development and completed properties held for sale, cost of inventories comprises all costs of purchase, costs of conversion and other costs. The actual cost of inventories transferred out is determined by using the weighted average method. Turnover materials include low value consumables and packing materials. Low value consumables and packing materials are amortised by using immediate write-off method. Costs of properties under development and completed properties held for sale mainly consist of land acquisition cost, construction cost, interests capitalised and other direct and indirect development expenses. Cost of properties under development is transferred to cost of completed properties held for sale based on actual cost upon completion of development.

Within the construction cost, public ancillary facilities represent government-approved public ancillary projects, i.e. roads. The relevant costs are recognised under the properties under development, and are recorded by each cost items. Land use rights for development purpose are classified as part of properties under development.

The Group adopts perpetual inventory system.

At the balance sheet date, inventories are stated at the lower of cost and net realisable value. If the cost of inventories is higher than the net realisable value, a provision for decline in value of inventories is recognised in profit or loss. If factors that previously resulted in the provision for decline in value of inventories no longer exist and result in the net realisable value higher than their carrying amount, the amount of the write-down is reversed to the extent of the amount of the provision for the inventories and is recognised in profit or loss for the current period.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated expenses and the related taxes necessary to make the sale. The provision for decline in value is made on an individual basis, provided that for inventories with large quantity and lower unit cost, the provision for decline in value is made on a category basis; For the inventories related to the series of products manufactured and sold in the same area, and of which the final use or purpose is identical or similar, and if it is difficult to measure them by separating them from other items, the provision for decline in value of inventories are made on a combination basis.

I-30 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

12. Long-term equity investments

Long-term equity investments include investments in subsidiaries, jointly-controlled entities and associates, as well as investments where the Group does not have control, joint control or significant influence over the investees and which are not quoted in an active market and the fair values of which cannot be reliably measured.

A long-term equity investment is recorded at its initial investment cost on acquisition. For a longterm equity investment acquired through a business combination, the initial investment cost of the long-term equity investment is the acquirer’s share of the owner’s equity of the party being acquired at the combination date for a business combination under common control; the initial investment cost of the long-term equity investment is the cost of acquisition for a business combination not under common control (for a business combination not under common control achieved in stages, the initial investment cost is measured at the carrying amount of the equity investments in the acquiree before the acquisition date plus the additional investment cost incurred on the acquisition date). The cost of combination includes the assets transferred and the liabilities incurred or assumed by the acquirer, and the fair value of equity securities issued. For a long-term equity investment acquired otherwise than through a business combination, the initial investment cost is determined as follows: (i) if acquired by paying cash, the initial investment cost is the actual purchase price paid and those costs, taxes and other necessary expenditures directly attributable to the acquisition of the long-term equity investment; (2) if acquired by the issue of equity securities, the initial investment cost is the fair value of the securities issued; (iii) if contributed by the investors, the initial investment cost is the value stipulated in the investment contract or agreement, except where the value stipulated in the investment contract or agreement is not fair.

For a long-term equity investment where the Group does not have joint control or significant influence over the investee, the investment is not quoted in an active market and its fair value cannot be reliably measured, the Group uses the cost method accounting. For a long-term equity investment where the Company can exercise control over the investee, the Company uses the cost method accounting in the Company’s financial statements. Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating activities.

Under the cost method, the long-term equity investment is measured at its initial investment cost. Except for the cash dividend or profit distribution declared but unpaid that is included in the price or consideration paid upon acquisition of a long-term equity investment, the Company recognises its share of cash dividends or profit distributions declared by the investee as investment income in the current period, and considers whether the long-term equity investment is impaired according to the policies related to asset impairment.

I-31 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

12. Long-term equity investments (continued)

The equity method is adopted when the Group holds joint control, or exercises significant influence on the investee. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the significant financial and operational decisions relating to the activity require the unanimous consent of the parties sharing control. Significant influence is the power to participate in decision making in the financial and operating policies of the investee but is not the power to control or joint control with other parties over those policies.

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in the fair values of the investee’s identifiable net assets at the acquisition date, long-term equity investment is measured at the initial investment cost. Where the initial investment cost is less than the investing enterprise’s interest in the fair values of the investee’s identifiable net assets at the acquisition date, the difference is charged to profit or loss for the current period, and the cost of the long-term equity investment is adjusted accordingly.

Under the equity method, the Group recognises, upon acquisition of the long-term equity investment, its share of the net profits or losses made by the investee as investment income or losses, and adjusts the carrying amount of the investment accordingly. The Group recognises its share of the investee’s net profits or losses after making appropriate adjustments to the investee’s net profits or losses based on the fair value of the investee’s identifiable assets at the acquisition date, using the Group’s accounting policies and periods, and eliminating the portion of the profits or losses arising from internal transactions with its jointly-controlled entities and associates, attributable to the investing entity according to its share ratio (but impairment losses for assets arising from internal transactions shall be recognised in full). The carrying amount of the investment is reduced based on the Group’s share of any profit distributions or cash dividends declared by the investee. The Group’s share of net losses of the investee is recognised to the extent the carrying amount of the investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero, except that the Group has incurred obligations to assume additional losses. The Group adjusts the carrying amount of the long-term equity investment for any changes in shareholders’ equity of the investee (other than net profit or loss) and includes the corresponding adjustments in the shareholders’ equity.

On disposal of a long-term equity investment, the difference between the carrying amount and the proceeds actually received is recognised in profit or loss for the current period. For a long-term equity investment accounted for using the equity method, any change in the shareholders’ equity of the investee included in the shareholders’ equity of the Group is transferred to profit or loss for the current period on a pro-rata basis according to the proportion disposed of.

For long-term equity investments in subsidiaries, jointly-controlled entities or associates, refer to Note II.26 for the test for impairment and recognition of provision for impairment. For other long-term equity investments that have no quoted market prices in active markets and whose fair value cannot be reliably measured, refer to Note II.9 for the test for impairment and recognition of provision for impairment.

I-32 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

13. Investment properties

Investment property is held to earn rentals or for capital appreciation or both. Investment properties include land use right that is leased out, land use right held for transfer upon capital appreciation, and building that is leased out. The Group’s investment properties are held for long term purposes and are leased to earn rentals.

An investment property is measured initially at its cost. Subsequent costs incurred for an investment property are included in its cost only when the economic benefits associated with the asset will probably flow in and the cost can be measured reliably. Otherwise, subsequent costs are recognised in profit or loss for the period during which they are incurred.

The Group uses the fair value model for subsequent measurement of its investment properties. Fair value changes are included in “Gains from changes in fair value” on the face of income statement. Reasons for the adoption of the fair value model as the accounting policy for subsequent measurement by the Group are as follows:

(1) The investment properties are located in places where the property markets are active.

The Group’s current investment properties, most of which are commercial properties at developed commercial districts, are primarily located at core districts of Beijing where the property markets are relatively active. The Group is able to obtain market price and other related information of properties of the same category or similar nature. It is practicable for the Group to adopt the fair value model for subsequent measurement of the investment properties.

(2) The Group is able to obtain market price and other related information of properties of the same category or similar nature from the property markets. Based on such information, the Group makes reasonable estimation about the fair value of its investment properties.

The Group has engaged a valuer with relevant qualifications to make valuation on the fair value of the investment properties of the Group using the income method and with reference to the prices in the open market. The result of such valuation is used as the fair value of the investment properties of the Group.

Key assumptions and major uncertain factors adopted by the Group for the estimation of the fair value of the investment properties of the Group mainly include: assuming the investment properties are traded in the open market and will continue to be used for their existing purposes; there will be no significant changes in the macro-economic policies of the PRC and the social and economic environment, tax policies, credit interests and foreign exchange rates in the places where the Group operates; and there is no other force majeure and unforeseeable factor that may have a material impact on the Group’s operation.

I-33 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

14. Fixed assets

A fixed asset is recognised only when the economic benefits associated with the asset will probably flow to the Group and the cost of the asset can be measured reliably. Subsequent expenditures incurred for a fixed asset that meets the recognition criteria shall be included in its cost, and the carrying amount of the component of the fixed asset that is replaced shall be derecognised. Otherwise, such expenditures shall be recognised in profit or loss for the period during which they are incurred.

Fixed assets are initially measured at cost and the effect of any expected costs of abandoning the assets is considered. The cost of a purchased fixed asset comprises the purchase price, relevant taxes and any directly attributable expenditure for bringing the asset to working condition for its intended use.

Besides those utilized in the provision of production safety fees, depreciation is calculated using the straight-line method. The useful lives, estimated net residual value and annual depreciation rates of fixed assets are as follows:

			Annual
		Estimated net	depreciation
	Useful life	residual value	rate (%)
Buildings	20-35 years	5%	2.71-4.75%
Machinery and equipment	15 years	5%	6.33%
Transportation equipment	8-10 years	5%	9.50-11.88%
Electronic equipment	5 years	5%	19.00%
Office equipment	5 years	5%	19.00%

Different depreciation rates are used for fixed assets components that have different useful lives or financially benefit the Company in different ways.

The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least at each financial year-end, and makes adjustments if necessary.

For the test for impairment and recognition of provision for impairment related to fixed assets, refer to Note II.26.

I-34 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

15. Construction in progress

The cost of construction in progress is determined according to the actual expenditure incurred for the construction, including all necessary construction expenditure incurred during the construction period, borrowing costs that shall be capitalised before the construction gets ready for its intended use and other relevant expenses.

Construction in progress is transferred to fixed assets when the asset is ready for its intended use.

For the test for impairment and recognition of provision for impairment related to construction in progress, refer to Note II.26.

16. Borrowing costs

Borrowing costs are interest and other costs incurred by the Group in connection with the borrowing of funds. Borrowing costs include interest, amortisation of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings.

The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised. The amounts of other borrowing costs incurred are recognised as an expense during the period in which they are incurred. Qualifying assets are assets (fixed assets, investment properties, inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

The capitalisation of borrowing costs commences only when all of the following conditions are satisfied:

(1) expenditures for the asset are being incurred;
(2) borrowing costs are being incurred; and
(3) activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced.

Capitalisation of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Any borrowing costs subsequently incurred are recognised as an expense for the period during which they are incurred.

I-35 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

16. Borrowing costs (continued)

During the capitalisation period, the amount of interest to be capitalised for each accounting period shall be determined as follows:

(1) where funds are borrowed for a specific purpose, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds.
(2) where funds are borrowed for a general purpose, the amount of interest to be capitalized on such borrowings is determined by applying a weighted average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings.

Capitalisation of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use or sale, when the interruption is for a continuous period of more than three months. Borrowing costs incurred during these periods are recognised as expenses for the current period until the acquisition, construction or production is resumed.

17. Intangible assets

An intangible asset shall be recognised only when it is probable that the economic benefit associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Intangible assets are measured initially at cost. However, intangible assets acquired in a business combination with a fair value that can be measured reliably are recognised separately as intangible assets and measured at fair value.

The useful life of an intangible asset is determined according to the period over which it is estimated to generate economic benefits for the Group. An intangible asset is regarded as having an indefinite useful life when the period over which the asset is estimated to generate economic benefits for the Group is uncertain.

The intangible assets of the Group consist of land use rights, mining rights, trademarks and software use right.

Land use rights that are purchased by the Group for purposes other than real estate development are generally accounted for as intangible assets. For buildings such as plants that are developed and constructed by the Group, the relevant land use rights and buildings are accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated, all of the land use rights and buildings are accounted for as fixed assets. Land use rights of the Group are amortised on the straight-line basis over the term stipulated on the certificates of land use rights obtained by the Group.

I-36 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

17. Intangible assets (continued)

Costs of mining rights included costs that were incurred to obtain the mining license and estimated mine restoration cost. Amortization is calculated using the production method based on the relevant recoverable mining reserves.

An intangible asset with a finite useful life is amortised using the straight-line method over its useful life. For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation method at least at each financial year-end and makes adjustment if necessary.

Intangible assets with indefinite use life (mainly the trademarks) are tested for impairment at each year-end, irrespective of whether there is any indication that the asset may be impaired. An intangible asset with indefinite useful life shall not be amortised, for which the useful life is reassessed in each accounting period. If there is evidence indicating that the useful life of that intangible asset becomes finite, it shall be accounted for by applying the accounting policy for intangible asset with a finite useful life.

The Group classifies the expenditure in an internal research and development project into expenditure in the research phase and expenditure in the development phase. Expenditure in the research phase is recognised in profit or loss for the period in which it is incurred. Expenditure in the development phase is capitalised when the Group can demonstrate all of the following: (i) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (ii) the intention to complete the intangible asset and use or sell it; (iii) how the intangible asset will generate probable future economic benefits, for which, among other things, the Group can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; (iv) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and (v) the expenditure attributable to the intangible asset during its development can be measured reliably. Expenditure in the development phase that does not meet the above criteria is recognised in profit or loss for the period in which it is incurred.

For the test for impairment and recognition of provision for impairment related to an intangible asset, refer to Note II. 26.

18. Long-term deferred expenditures

Long-term deferred expenditures represent expenditures incurred but should be recognised as expenses over more than one year in the current and subsequent periods, including costs of leasehold improvements, renovation expenses, stripping cost of mines and lease prepayments. A long-term deferred expenditure is amortised using the straight-line method according to the period over which it is estimated to generate economic benefits for the Group.

I-37 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

19. Provisions

Except for contingent consideration transferred and contingent liability assumed in business combinations, the Group recognises an obligation related to a contingency as a provision when all of the following conditions are satisfied:

(1) the obligation is a present obligation of the Group;
(2) it is probable that an outflow of economic benefits from the Group will be required to settle the obligation; and
(3) the amount of the obligation can be measured reliably.

A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation, with comprehensive consideration of factors such as the risks, uncertainty and time value of money relating to a contingency. The carrying amount of a provision is reviewed at each balance sheet date. If there is clear evidence that the carrying amount does not reflect the current best estimate, the carrying amount is adjusted to the best estimate.

20. Revenue

Revenue is recognised only when it is probable that the associated economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases.

Revenue from the sales of goods

The Group recognises the revenue from the sales of goods when it has transferred the significant risks and rewards of ownership of the goods to the buyer; and the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; and the associated costs incurred or to be incurred can be measured reliably. The amount of revenue arising from the sales of goods is determined in accordance with the consideration received or receivable from the buyer under contract or agreement, except where the consideration received or receivable under contract or agreement is not fair. Where the consideration receivable under contract or agreement is deferred so that the arrangement is in substance of a financing nature, the amount of revenue arising on the sales of goods is measured at the fair value of the consideration receivable.

I-38 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

20. Revenue (continued)

Revenue from the sales of properties

Revenue from the sales of completed properties is recognised when the significant risks and rewards of property ownership have been transferred to the buyer, i.e., when the properties has been completed and delivered to the buyer pursuant to the sale agreement and the collection of the related receivables can be assured reasonably. The deposits and installments of sold properties collected prior to the revenue recognition will be presented under advances from customers in the balance sheet.

Revenue from the rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably at the balance sheet date, revenue associated with the transaction is recognised using the percentage of completion method, or otherwise, the revenue is recognised to the extent of costs incurred that are expected to be recoverable. The outcome of a transaction involving the rendering of services can be estimated reliably when all of the following conditions are satisfied: the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the Group; the stage of completion of the transaction can be measured reliably; and the costs incurred and to be incurred for the transaction can be measured reliably. The Group determines the stage of completion of a transaction involving the rendering of services based on the proportion of services performed to date to the total services to be performed. The total service revenue on a transaction involving the rendering of services is determined in accordance with the consideration received or receivable from the recipient of services under contract or agreement, except where the consideration received or receivable under contract or agreement is not fair.

When the Group has entered into a contract or agreement with other enterprises comprising both sales of goods and rendering of services, if the sales of goods component and the rendering of services component can be separately identified and measured, they are accounted for separately; if the sales of goods and the rendering of services cannot be separately identified, or can be separately identified but cannot be separately measured, the contract is treated as the sales of goods.

Interest income

It is determined according to the length of period for which the Group’s currency fund is used by others and the effective interest rate.

Lease income

Lease income from operating leases is recognised on a straight-line basis over the lease term. Contingent rental incomes are credited to profit or loss in the period in which they actually arise.

I-39 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

21. Government grants

Government grants are recognised when all attaching conditions will be complied with and the grant can be received. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a nonmonetary asset, it is measured at fair value; if fair value is not reliably determinable, it is measured at a nominal amount. A government grant related to income is accounted for as follows: (a) if the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognised as deferred income, and recognised in profit or loss over the periods in which the related costs are recognised; and (b) if the grant is a compensation for related expenses or losses already incurred, it is recognised immediately in profit or loss for the current period. A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or loss over the useful life of the related asset. However, a government grant measured at a nominal amount is recognised immediately in profit or loss for the current period.

22. Income tax

Income tax comprises current and deferred income tax. Income tax is recognised as an expense or income in profit or loss for the current period, or otherwise recognised directly in shareholders’ equity if it arises from goodwill on a business combination or relates to a transaction or event which is recognised directly in shareholders’ equity.

The Group measures a current tax liability or asset arising from the current and prior periods based on the amount of income tax estimated to be paid by the Group or returned by taxation authority calculated by related tax laws.

Deferred income tax is recognised under the balance sheet liability method based on the temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts, and temporary differences between the tax bases and carrying amount in respect of items not recognised as assets and liabilities, but the tax bases are determinable under tax law.

Deferred income tax liabilities are recognised for all taxable temporary differences, except:

(1) where the taxable temporary differences arise from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or deductible tax loss; or
(2) in respect of taxable temporary differences associated with investments in subsidiaries, jointlycontrolled entities and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not be reversed in the foreseeable future.
I-40 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

22. Income tax (continued)

A deferred income tax asset is recognised for deductible temporary differences, carryforward of unused deductible tax losses and tax credits, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carryforward of deductible tax losses and tax credits can be utilised, except:

(1) where the deductible temporary difference arises from a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or deductible tax loss; or
(2) in respect of the deductible temporary differences associated with investments in subsidiaries, jointly-controlled entities and associates, a deferred income tax asset is only recognised to the extent that it is probable that the temporary differences will be reversed in the foreseeable future and taxable profit will be available against which the deductible temporary differences can be utilised in the future.

At the balance sheet date, deferred income tax assets and liabilities are measured at the tax rates that are estimated to apply to the period when the asset is realised or the liability is settled, according to the requirements of tax laws. The measurement of deferred income tax assets and deferred income tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the balance sheet date, to recover the assets or settle the liabilities.

The carrying amount of deferred income tax assets is reviewed at the balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available in future periods to allow the deferred income tax assets to be utilised. Unrecognised deferred income tax assets are reassessed at the balance sheet date and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be recovered.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

23. Maintenance and quality guarantee funds

Maintenance fund is collected on behalf of housing administration bureau from property buyers in certain proportion to selling price in accordance with relevant regulations. The fund will be remitted to housing administration bureau upon registration of property ownership. Maintenance fund is accounted under other payables.

Quality guarantee fund is reserved by certain percentage of the project payment. The fund will be repaid to the constructor after the properties are completed, in condition that examined by government authorities with no quality issue, and after the agreed warranty period. The fund is accounted under accounts payable.

I-41 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

24. Lease

A finance lease is a lease that transfers in substance all the risks and rewards of ownership of an asset. An operating lease is a lease other than a finance lease.

In the case of being the lessee of an operating lease

Lease payments under an operating lease are recognised by a lessee on a straight-line basis over the lease terms, and either included in the cost of the related asset or charged to profit or loss for the current period. Contingent rental payments are charged to profit or loss in the period in which they actually arise.

In the case of being the lessor of an operating lease

Rent income under an operating lease is recognised on a straight-line basis over the lease terms through profit or loss. Contingent rental incomes are credited to profit or loss in the period in which they actually arise.

25. Non-current assets held for sale

Except for financial assets, deferred income tax assets and investment properties measured under the fair value model, non-current assets that meet all of the following conditions are classified as held for sale:

(1) A resolution on the disposal of the non-current assets has been made by the Group;
(2) A non-cancellable transfer agreement has been signed with the transferee; and
(3) The transfer is expected to be completed within one year.

Individual assets and disposal groups that are classified as non-current assets held for sale are neither depreciated nor amortised, and stated at fair value less costs to sell, which shall not exceed the original carrying amount when the criteria of being held for sale are met. The excess of the original carrying amount over the fair value less costs to sell is recognised as impairment loss of the asset in the profit or loss for the current period.

I-42 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

26. Impairment of assets

The Group determines the impairment of assets, other than the impairment of inventories, investment properties measured under the fair value model, deferred income taxes, financial assets and long-term equity investments which are accounted for using the cost method as there are no quoted market prices in active markets and whose fair value cannot be reliably measured, using the following methods:

The Group assesses at the balance sheet date whether there is any indication that an asset may be impaired. If any indication exists that an asset may be impaired, the Group estimates the recoverable amount of the asset and performs test for impairment. Goodwill arising from a business combination and intangible assets with indefinite useful life are tested for impairment at least at each year end, irrespective of whether there is any indication that the asset may be impaired. Intangible assets that have not been ready for intended use are tested for impairment each year.

The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the asset group to which the asset belongs. Identification of an asset group is based on whether major cash inflows generated by the asset group are largely independent of the cash inflows from other assets or asset groups.

When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The reduction in carrying amount is treated as impairment loss and recognised in profit or loss for the current period. A provision for impairment loss of the asset is recognised accordingly.

For the purpose of impairment testing, the carrying amount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonable basis to each of the related asset groups; if it is not possible to allocate to the related asset groups, it is allocated to each of the related set of asset groups. Each of the related asset group or set of asset groups is an asset group or set of asset groups that is able to benefit from the synergies of the business combination and shall not be larger than a reportable segment determined by the Group.

I-43 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

26. Impairment of assets (continued)

In testing an asset group or a set of asset groups to which goodwill has been allocated for impairment test, if there is any indication of impairment, the Group first tests the asset group or set of asset groups excluding the amount of goodwill allocated for impairment, i.e., it determines and compare the recoverable amount with the related carrying amount and recognise any impairment loss. After that, the Group tests the asset group or set of asset groups including goodwill for impairment, the carrying amount (including the portion of the carrying amount of goodwill allocated) of the related asset group or set of asset groups is compared to its recoverable amount. If the recoverable amount of the asset group or set of asset groups is lower than its carrying amount, the amount of the impairment loss is first reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, and then by the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups, pro rata based on the carrying amount of each asset.

Once the above impairment loss is recognised, it cannot be reversed in subsequent accounting periods.

27. Employee benefits

Employee benefits are all forms of consideration given and other relevant expenditures incurred by the Group in exchange for service rendered by employees. In the accounting period in which an employee has rendered service to the Group, the employee benefits payable are recognised as liabilities. For employee benefits payable due in more than one year after the balance sheet date, if the discounted value is significant, it is presented at the present value.

The employees of the Group participate in social insurance, such as pension insurance, medical insurance, and unemployment insurance, and housing fund scheme, which is managed by the local government, and the relevant expenditure is recognised, when incurred, in the costs of relevant assets or the profit or loss for the current period.

When the Group terminates the employment with an employee before the expiry of the employment contract or offers compensation for acceptance of voluntary redundancy, if the Group has developed a formal plan for termination of employment or has made an offer for voluntary redundancy, which will be implemented immediately, and the Group is not allowed to unilaterally withdraw the termination plan or the redundancy offer, the estimated liability for compensation arising from the termination of employment with employees shall be recognised and charged to the profit or loss for the current period.

I-44 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

27. Employee benefits (continued)

The same principle is applied to the early retirement plan, as it is for the above-mentioned termination benefits. The Group recognises salaries, social insurance premiums, etc., to be paid for the early retired employees, during the period from the date when the employees stop rendering service to the normal retirement date, as payroll payable through profit or loss for the current period, when the above conditions for the recognition of termination benefit plan are satisfied.

In addition, the Group provides supplementary pension subsidies to certain eligible retirees. Such subsidies are considered as defined benefit plans. An actuarial assessment of the defined benefit obligations is performed by a qualified actuary engaged by the Group using the projected unit credit method. No asset provision is proposed for such defined benefit plans. The liability recognised in the balance sheet in respect of these defined benefit plan is equivalent to the present value of the actuarial defined benefit obligations stated in the balance sheet. The present value of the defined benefit obligations is determined by discounting the estimated future cash outflows using interest rate of government securities which have maturities approximating to the terms of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of 10% of the defined benefit obligations as at the end of the previous year are charged or credited to the income statement over the employees’ estimated average remaining working lives.

28. Distribution of profit

Cash dividend of the Company is recognised as a liability upon being approved in the shareholders’ general meeting.

29. Debt restructuring

A debt restructuring is an event in which a debtor is in financial difficulty and a creditor grants a concession to the debtor in accordance with a mutual agreement or a court judgment.

As a debtor

When a debt is settled by cash in a debt restructuring, the difference between the carrying amount of the debt and the cash actually paid is recognised in profit or loss for the current period. When a debt is satisfied by a transfer of non-cash asset(s) to the creditor in a debt restructuring, the difference between the carrying amount of the debt and the fair value of the non-cash asset(s) transferred is recognised in profit or loss for the current period; the difference between the fair value of the non-cash asset(s) transferred and their carrying amount was recognised in profit or loss for the current period. When a debt is converted into capital in a debt restructuring, the difference between the carrying amount of the debt and the fair value of the capital issued to the creditor is recognised in profit or loss for the current period. When other terms of the debt are modified, the difference between the carrying amount of the debt under restructuring and the sum of the fair value of the debt subsequent to the modification of other terms of the debt and the provisions recognised in respect of amounts payable, shall be included in profit or loss for the current period. When a debt is satisfied by a combination of the methods mentioned above, the carrying amount of the debt is reduced by, and in the sequence of, the cash payment, the fair value of the non-cash asset(s) transferred and the fair value of the capital issued to the creditor, and then accounted for in accordance with the requirements related to a debt restructuring that involves the modification of other terms of a debt.

I-45 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

29. Debt restructuring (continued)

As a creditor

When a debt is settled by cash in a debt restructuring, the difference between the gross carrying amount of the debt receivable and the cash received is recognised in profit or loss for the current period. When a debt is satisfied by a transfer of non-cash asset(s) in a debt restructuring, the difference between the gross carrying amount of the debt receivable and the fair value of the non-cash asset(s) received is recognised in profit or loss for the current period. When a debt is converted into capital in a debt restructuring, the difference between the gross carrying amount of the debt and the fair value of the equity interest received is recognised in profit or loss for the current period. When other terms of the debt are modified, the difference between the gross carrying amount of the debt receivable under restructuring and the fair value of the debt receivable subsequent to the modification of other terms of the debt, shall be recognised in profit or loss for the current period. When a debt is satisfied by a combination of the methods mentioned above, the gross carrying amount of the debt is reduced by, and in the sequence of, the cash received, the fair value of the non-cash asset(s) obtained and the fair value of the equity interest received, and then accounted for in accordance with the requirements related to a debt restructuring that involves the modification of other terms of a debt.

If the creditor has provided for impairment loss on the debt receivable, the above difference is used to reduce the impairment provision and any excess is recognised in profit or loss for the current period.

30. Exchange of non-monetary assets

An exchange of non-monetary assets is an exchange between the parties to the transaction of nonmonetary assets including but not limited to inventories, fixed assets, intangible assets and long-term equity investments. Such exchange does not involve or only involve a few of monetary assets.

If non-monetary assets transaction is commercial in nature and the fair value of the assets received or the assets surrendered can be reliably measured, the fair value of the assets surrendered (unless there are clear evidences showing the fair value of the assets received is more reliable) and relevant taxes payable are recognised as cost of the assets received. The difference between the fair value and the carrying amount of the assets surrendered is included into the current profit or loss. Where such conditions are not met, the carrying amount and relevant payable taxes of the assets surrendered shall be taken as the cost of the assets received and no profit or loss is recognised.

31. Related parties

If a party has the power to control, jointly control or exercise significant influence over another party, they are regarded as related parties. Two or more parties are also regarded as related parties if they are subject to control or joint control from the same party.

I-46 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

32. Segment reporting

The Group identifies operating segments based on the internal organisation structure, managerial requirements and internal reporting system, identifies reportable segments based on operating segments and discloses segment information by operating segment.

An operating segment is a component of the Group that meets all the following conditions:

(1) it engages in business activities from which it may earn revenues and incur expenses;
(2) its operating results are regularly reviewed by the Company’s management to make decisions about resources to be allocated to the segment and assess its performance; and
(3) the Group is able to obtain relevant accounting information such as its financial position, operating results and cash flows of such segment.

If two or more segments have similar economic characteristics and meet certain conditions, then they can be aggregated into a single operating segment.

33. Production safety cost

Production safety cost appropriated pursuant to the related regulations is recognised in the cost of the relevant products or in profit or loss for the current period, and also in the specialized reserve. The cost shall be handled according to whether a fixed asset is formed. The cost incurred through expenditure will be reduced from the specialized reserve. The cost incurred for a fixed asset shall be pooled and recognised as a fixed asset when it reaches the working condition for its intended use; meanwhile an equivalent amount shall be deducted from the specialized reserve and recognised as accumulated depreciation.

34. Significant accounting judgments and estimates

The preparation of the financial statements requires the management to make judgments, estimates and assumptions that will affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent liabilities at the balance sheet date. However, uncertainty about these estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

I-47 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Judgments

In the process of applying the Group’s accounting policies, the management has made the following judgments, apart from those involving estimations, which have significant effect on the amounts recognised in the financial statements:

Operating lease – as lessor

The Group has entered into operating leases on its investment property portfolio. The Group has determined, based on evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases.

Classification between investment properties and inventories

The properties constructed by the Group may be held for sale, earning rental income and/or capital appreciation. The properties are designated as inventories or investment properties according to the intention of holding at the early development stage. During the course of construction, the properties which are intended for sale after their completion are accounted for as inventories – properties under development included in current assets, whereas, the properties which are intended to be held to earn rental income and/or for capital appreciation are accounted for as investment properties under construction included in non-current assets. Upon completion, the properties held for sale are transferred to inventories – completed properties held for sale, while the properties held to earn rentals and/or for capital appreciation are transferred to completed investment properties.

Classification between investment properties and fixed assets

The Group determines whether a property held qualifies as an investment property, and has developed relevant criteria for making the judgment. Properties held to earn rental income or for capital appreciation or both (including buildings under construction or development which are supposed to be used for rental earning) are classified as investment properties. Therefore, the Group considers whether a property generates cash flows largely independently of other assets held by the Group. Some properties comprise a portion that is held to earn rentals or for capital appreciation while the remaining portion is held for use in the production or supply of goods or services or for administrative purpose. The Group accounts for the portion that is held to earn rentals or for capital appreciation separately if such portion can be sold or leased out separately. Otherwise, the property is classified as an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purpose. The Group’s judgment is made on an individual basis when determining whether ancillary services are so significant that a property does not qualify as an investment property.

Uncertainty of estimation

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the future accounting periods, are discussed below:

I-48 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Uncertainty of estimation (continued)

Impairment of non-current assets other than financial assets (other than goodwill)

The Group assesses whether there are any indication of impairment for all non-current assets other than financial assets at the balance sheet date. Intangible assets with indefinite useful lives are tested for impairment annually and at other times when such indication exists. Other non-current assets other than financial assets are tested for impairment when there is indication that the carrying amounts may not be recoverable. Where the carrying amount of an asset or asset group is higher than its recoverable amount (i.e. the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from it), it is indicated that such asset or asset group is impaired. The fair value less costs to sell is determined with reference to the price in sales agreement or observable market price in arm’s length transaction, adjusted for incremental costs that would be directly attributable to the disposal of the asset or asset group. Estimating the present value of the expected future cash flows requires the management to make an estimation of the expected future cash flows from an asset or asset group and also choose a suitable discount rate in order to calculate the present value of those future cash flows. Please refer to Note II.26 for details.

Impairment of goodwill

The Group determines whether the goodwill is impaired at least on annual basis. This requires an estimation of the present value of the expected future cash flows from an asset group or set of asset groups to which the goodwill is allocated. Estimating the present value of the expected future cash flows requires the Group to make an estimation of the expected future cash flows from an asset group or set of asset groups and also choose a suitable discount rate in order to calculate the present value of those future cash flows. Please refer to Note II.26 and Note V.18 for details.

Deferred income tax assets

Deferred income tax assets are recognised for all unused deductible tax losses to the extent that it is probable that taxable profit will be available against which the deductible tax losses can be utilised. Significant management judgment is required to determine the amount of deferred income tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Land appreciation tax

The Group is subject to land appreciation tax (“LAT”). The provision for land appreciation tax is based on the management’s best estimates according to their understanding of the requirements set forth in the relevant tax laws and regulations. The actual land appreciation tax liabilities are subject to the determination by the tax authorities upon the settlement of land appreciation tax. The Group has not finalised the assessment for its land appreciation tax calculations and payments with the tax authorities for certain property development projects. The final outcome could be different from the amounts that were initially recorded, and any differences will have impact on the land appreciation tax expense and the related provision in the period in which the differences are realized.

I-49 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Uncertainty of estimation (continued)

Corporate income tax

The Company and its subsidiaries spreading across different provinces in the PRC are subject to income taxes in the regions where they operate. As a result of the fact that certain matters relating to corporate income taxes have not been confirmed by the local tax authorities, objective estimates and judgements based on currently enacted tax laws, regulations and other related polices are required in determining the provision for corporate income taxes. Where the final tax outcome of these matters is different from the amounts originally recorded, the differences will impact the income tax expenses and tax provisions in the period which the differences are realised.

Fair value of investment properties

The fair value of investment properties are revalued at the balance sheet date by an independent professional valuer. Such valuations were based on certain assumptions, which are subject to uncertainty and might differ from the actual results. In making the relevant estimation, information from current market rentals for similar properties is considered and assumptions that are mainly based on market conditions existing at the balance sheet date are adopted.

Recognition and allocation of development costs on properties under construction

Development costs of properties are recorded as inventory during the construction stage and will be transferred to the income statement upon the recognition of the sale of the properties. Before the final settlement of the development cost and other costs relating to the development of the properties, the management of the Group is required to make estimation on these costs according to the budgeted cost and the progress of development. When developing properties, the Group typically divides the development projects into phases. Costs directly related to the development of a phase are recorded as the costs of such phase. Costs that are common to different phases are allocated to individual phases based on saleable area. Where the final settlement of costs and the related cost allocation is different from the initial estimates, any increase or decrease in the development costs and other costs would affect the profit or loss in future years.

Impairment of accounts receivable and other receivables

The impairment of accounts receivable and other receivables is based on the evaluation of the collectability of the outstanding accounts receivable and other receivables. The management’s judgment and estimation are required in the recognition of the impairment of accounts receivable and other receivables. Provisions for impairment will be made where there is objective evidence that such receivables are not collectible. If the actual results or future expectation differ from the original estimate, such differences will affect the carrying amount of accounts receivable and other receivables and bad debt provisions/reversal in the period in which the estimate changes.

I-50 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Uncertainty of estimation (continued)

Provision of decline in value of inventory

The Group’s inventory is measured at the lower of the costs and net realisable value. Net realisable value of inventory is the estimated selling price of inventory less the estimated costs upon completion of production, the estimated selling expenses and the related taxes and surcharges necessary to make the sale. The management’s calculation of the net realisable value of inventory involves the estimation on the estimated selling price, the estimated costs upon completion, the estimated selling expenses and the related taxes and surcharges necessary to make the sale and the assumption on discount rate. Any changes on such estimates will impact the carrying amount of the inventory and the profit for the coming years.

Supplementary retirement subsidies and early retirement benefits

Supplementary subsidies and benefits paid to certain retired and early retired employees are recognised as a liability. The amounts of benefit expenses and liabilities are determined using actuarial valuations conducted by independent professional actuaries who conduct annual assessment of the actuarial position of the Group’s retirement plans. These actuarial valuations involve making assumptions on discount rates, pension benefit inflation rates, and other factors. Due to their long term nature, such estimates are subject to uncertainties.

Useful lives and residual value of fixed assets

Fixed assets are depreciated over their estimated useful lives by taking into account of their residual values. The Group regularly reviews the estimated useful lives and residual value of relevant assets to determine the total amount of depreciation which will be included in each reporting period. Useful lives and residual value of assets are determined on the basis of the previous experience from assets of the same category and the expected change of technology. If the past estimates change significantly, the depreciation costs shall be adjusted during future periods.

I-51 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

III. TAXATION

(1) Major categories of taxes and respective tax rates

Value-added tax (“VAT”):

The VAT payable is determined as the output VAT calculated based on the taxable revenue at the tax rate of 17% less the deductible input VAT for the current period. For small-scale taxpayers, VAT is levied based on the sales revenue at the tax rate of 3%. For the concrete industry, VAT is levied based on the sales at a simplified tax rate of 6%.

Business tax:

It is levied at 3%, 5% and 20% of the taxable business turnover.

City maintenance and construction tax:

It is levied at 7%, 5% and 1% of net VAT and business tax paid.

Education surcharge:

It is levied at 3% of net VAT and business tax paid.

Property tax:

It is levied based on the values of properties owned or used by the Group at the percentages prescribed by the tax laws. The tax of self-occupied properties is levied according to the values of the properties at an annual tax rate of 1.2%, which is calculated and paid based on the original value of the property less 10%-30% of that value; the tax of lease out properties is levied according to the rent at an annual tax rate of 12%, which is calculated and paid based on the rental income.

Vehicle and vessel tax:

It is levied, by number of passenger in service vehicles and by tonnage of trucks, to the vehicles owned or managed by the Group.

Land use tax:

It is levied based on the land areas occupied by the Group for production and operations, at the annual tax amount per sq.m. for the respective land use tax levels prescribed by local governments.

Individual income tax:

Individual income tax is withheld and paid under the tax laws based on salaries and other personal incomes paid to employees of the Group.

I-52 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

III. TAXATION (continued)

(1) Major categories of taxes and respective tax rates (continued)

Land appreciation tax:

It is levied at four-level excess progressive tax rates ranging from 30% to 60% on the appreciation of land value for any land use right and buildings on the ground or other structures annexed thereto from which VAT arises as a result of the compensatory transfer of ownership by the Group.

Resource tax:

It is levied to the minerals exploited by the Group on a quantity basis under the relevant tax laws of the PRC.

Corporate income tax:

Except the items listed in (2) below, the tax is levied on the Group at the tax rate of 25% based on the taxable profit.

(2) Tax preferential policies and relevant approvals

1. Value-added tax (VAT)

Certain subsidiaries of the Group enjoy the following VAT preferences pursuant to the Notice on VAT Policy for Integrated Use of Resources and Other Products (Cai Shui [2008] No. 156) and the Supplementary Notice on VAT Policy for Integrated Use of Resources and Other Products (Cai Shui (2009) No. 163):
(1) Upon the approval of the tax authorities, some of the Group’s subsidiaries engaged in cement production and operation enjoyed the VAT refund upon collection preferential policy in 2012 in respect of their eligible cement products. Such subsidiaries include Beijing Liulihe Cement Co., Ltd., Beijing BBMG Pinggu Cement Co., Ltd., Luquan BBMG Dingxin Cement Co., Ltd., Cangzhou Lingang BBMG Cement Co., Ltd., Beijing Taihang Qianjing Cement Co., Ltd., Baoding Taihang Heyi Cement Co., Ltd., Beijing Qianglian Cement Co., Ltd., Handan BBMG Taihang Cement Co., Ltd., Handan Shexian BBMG Cement Co., Ltd., Zanhuang BBMG Cement Co., Ltd., Zhuolu Jinyu Cement Co., Ltd., Siping BBMG Cement Co., Ltd., Tianjin Zhenxing Cement Co., Ltd., Lingchuan BBMG Cement Co., Ltd., Beijing Cement Plant Co., Ltd., Beijing Xingfa Cement Co., Ltd., Beijing BBMG Shunfa Cement Co., Ltd., and Boai BBMG Cement Co., Ltd..
I-53 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

III. TAXATION (continued)

(2) Tax preferential policies and relevant approvals (continued)

1. Value-added tax (VAT) (continued)

  - (2) Some of the Group’s subsidiaries engaged in concrete production and operation enjoyed the VAT exemption preferential policy in 2012 in respect of their eligible concrete products. Such subsidiaries include Beijing Jianhua-Bulangni Concrete Co., Ltd., Beijing BBMG Concrete Co., Ltd., Guantao BBMG Taihang Concrete Co., Ltd., Cheng’an Jinghong Concrete Co., Ltd., Handan Shexian BBMG Cement Co., Ltd., Tianjin BBMG Concrete Co., Ltd. and Shijiazhuang BBMG Xucheng Concrete Co., Ltd..

  - (3) The Group’s subsidiaries Beijing Xiliu Building Materials Co., Ltd., Beijing Aerated Concrete Co., Ltd., Beijing BBMG Aerated Concrete Co., Ltd., Beijing Xiang Brand Walling Materials Co., Ltd., and Beijing Building Materials Academy Co., Ltd. enjoyed the VAT exemption preferential policy in respect of their selected building materials in 2012.

Upon the approval of the tax authorities, the Group’s subsidiaries Beijing Jinhaiyan Property Management Co., Ltd., Beijing Xisanqi Heating Co., Ltd., and BBMG Dacheng Property Management Co., Ltd. enjoy the VAT exemption for their revenue from the heating services to individual residents in the period from the heating season of 2011 to 31 December 2015 pursuant to the Notice on Continuing Preferential Policies on VAT, Property Tax and Urban Land Use Tax for Heating Enterprises (Cai Shui [2011] No. 118).

According to the relevant value-added tax provisions of the PRC and upon verification by the relevant government departments and approval of the tax authorities, some subsidiaries of the Group enjoy other preferential enterprise value-added tax as follows:

(1) Handan Taihang Cement Co., Ltd. complies with the policy of VAT refund upon collection (with a cap) for units accommodating disabled persons by tax authorities according to the number of disabled persons actually accommodated by the unit, and enjoys VAT refund upon collection.
I-54 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

III. TAXATION (continued)

(2) Tax preferential policies and relevant approvals (continued)

1. Value-added tax (VAT) (continued)

  - (2) Beijing Bio-Island Science and Technology Co., Ltd. complies with the policy of utilising waste mineral oil for the production of integrated utilisation products and Clause 5 of Article 5 of Cai Shui [2011] No. 115 on Products of Integrated Utilisation of Resources Utilising Waste Lead Acid Batteries, and enjoys refund upon collection of value-added tax.

2. Business tax

Upon the approval of the tax authorities, the Group’s subsidiaries Hebei BBMG Mangrove Environmental Protection Technology Co., Ltd., BBMG Mangrove Environmental Protection Technology Co., Ltd. and Beijing Bio-Island Science and Technology Co., Ltd. are exempted from business tax on revenue from disposal of hazardous wastes pursuant to the Reply of the State Administration of Taxation of the PRC regarding Business Tax Exemption on Revenue from Disposal of Hazardous Wastes (Guo Shui Han [2009] No. 587), the Notice on Circulating the “Reply of the State Administration of Taxation of the PRC regarding Business Tax Exemption on Revenue from Disposal of Hazardous Wastes” issued by Beijing Local Taxation Bureau (Jing Di Shui Han [2009] No. 80) and the Reply of Sanhe Local Taxation Bureau regarding Business Tax Exemption on Revenue from Disposal of Hazardous Wastes (San Di Shui Fa [2011] No. 30).

3. Corporate income tax

Certain subsidiaries of the Group are certified as high-tech enterprises by relevant governmental authorities and enjoyed a preferential corporate income tax rate of 15% for high-tech enterprises in 2012 pursuant to Provisional Regulations on Corporate Income Tax of the People’s Republic of China and the Notice of the State Administration of Taxation of the PRC regarding Corporate Income Tax Preferences for High-tech Enterprises (Guo Shui Han [2009] No. 203). Such subsidiaries include BBMG Tiantan Furniture Co., Ltd., Tongda Refractory Technology Corporation, Gongyi Tongda Zhongyuan Refractory Testing Centre Co., Ltd., Beijing Building Materials Academy Co., Ltd., Beijing Tongda Refractory Technology Corporation, Beijing Jiandu Design and Research Institute Co., Ltd., Beijing Alavus Building Energy Saving Components Co., Ltd., Beijing Building Material Test Center Co., Ltd., Beijing BBMG Cement Energy Saving Technology Co., Ltd., and BBMG Mangrove Environmental Protection Technology Co., Ltd..

I-55 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

III. TAXATION (continued)

(2) Tax preferential policies and relevant approvals (continued)

3. Corporate income tax (continued)

Upon certification of the relevant governmental authorities and the approval of the tax authorities, certain subsidiaries of the Group enjoy other corporate income tax preferences as follows pursuant to the Provisional Regulations on Corporate Income Tax of the People’s Republic of China and relevant requirements:

(1) Beijing Jinhuyuan Property Management Co., Ltd. and Beijing Yuandong Jiemei Cleaning Services Company Limited as small low-profit enterprises were levied corporate income tax at a rate of 20% in 2012.
(2) Beijing BBMG Aerated Concrete Co., Ltd. was levied corporate income tax based on 90% of total revenue from its products that are qualified for the national industrial policies on integrated use of resources in the period from 10 December 2010 to 10 December 2012.
(3) Dachang BBMG Coating Co., Ltd. enjoys a partial relief (reduction by 40%) on corporate income tax for enterprises in ethnic autonomous locality in the period from 1 January 2011 to 31 December 2014.
(4) Hebei BBMG Mangrove Environmental Co., Ltd. enjoys the corporate income tax preferential policy of “exemption for three years and 50% reduction for another three years” since March 2010.
(5) Beijing Bio-Island Science and Technology Co., Ltd. and BBMG Mangrove Environmental Protection Technology Co., Ltd. are energy and water efficient environmental friendly enterprises and enjoy the corporate income tax of “exemption for three years and 50% reduction for another three years” since 2009.
(6) Hetian Yuhe Sand Stone Company Limited complies with the enterprise policy of supporting certain types of enterprises in Western China, and enjoys a preferential tax rate of 15% for 10 years since 1 January 2010.
I-56 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Actual
contribution
Registered
at end of the
Non-controlling
capital
year
Percentage of equity
Voting Right
interests
Type of
Place of
Legal
RMB
Organization
RMB
Direct
Indirect
percentage
Consolidated
RMB
subsidiaries
registration
representative
Principal activities
ten thousand
code
ten thousand
(%)
(%)
(%)
or not
ten thousand

Subsidiaries acquired through establishment,
investment or other ways
Beijing Liulihe Cement Co., Ltd.
Limited liability
Beijing
Zhao Xiandong
Manufacture of
60,000.00
1027464807
62,940.51
100.00
–
100.00
Y
–
(北京市琉璃河水泥有限公司)
cement, mining and
sale of sandstone etc.
Beijing Jianhua-Bulangni Concrete Co., Ltd.
Limited liability
Beijing
Hao Zhitao
Manufacture and sale
1,269.80
6259083609
1,333.62
–
100.00
100.00
Y
–
(北京建華布朗尼混凝土有限公司)
of commercial concrete
Beijing BBMG Concrete Co., Ltd.
Limited liability
Beijing
Liu Wenyan
Process of commodity
31,541.04
1011234005
35,923.59
100.00
–
100.00
Y
–
(北京金隅混凝土有限公司)
concrete etc.
Beijing BBMG Mangrove Environmental
Limited liability
Beijing
Deng Guangjun
Disposal of
109,059.06
7839567405
86,605.70
79.41
–
79.41
Y
12,013.87
Protection Technology Co., Ltd.
hazardous waste etc.
(北京金隅紅樹林環保技術有限責任公司)
Hebei BBMG Mangrove Environmental
Limited liability
Sanhe
Tian Wei
Treatment and disposal
1,000.00
694667950X
1,000.00
–
100.00
100.00
Y
332.94
Protection Technology Co., Ltd.
of hazardous waste
(河北金隅紅樹林環保技術有限責任公司)
Beijing Jinyu Pinggu Cement Co., Ltd.
Limited liability
Beijing
Zhang Jun
Processing and sale of
15,000.00
5585606909
15,000.00
100.00
–
100.00
Y
–
(北京金隅平谷水泥有限公司)
cement etc.
Cangzhou Lingang Jinyu Cement Co., Ltd.
Limited liability
Cangzhou
Zhou Chengyao
Manufacture and sale of
15,000.00
674184580X
15,000.00
–
100.00
100.00
Y
–
(滄州臨港金隅水泥有限公司)
cement and cement product
Cheng’an Jinghong Concrete Co., Ltd.
Limited liability
Cheng’an
Li Huaijiang
Manufacture and sale of
1,000.00
5767807509
1,000.00
–
94.67
94.67
Y
11.08
(成安縣京宏混凝土有限公司)
County
commercial concrete
*Daming BBMG Taihang Concrete Co. Ltd.
Limited liability
Daming County
Li Huaijiang
Sales of concretes and mortar
1,000.00
05097223-8
900.00
–
85.20
85.20
Y
106.22
(大名縣金隅太行混凝土有限公司)
Zanhuang BBMG Cement Co., Ltd.
Limited liability
Zanhuang
Tian Dachun
Manufacture and sale of
45,000.00
672062520X
45,000.00
100.00
–
100.00
Y
–
(贊皇金隅水泥有限責任公司)
County
cement and clinker
BBMG Cement Trading Co., Ltd.
Limited liability
Beijing
Jiang Changlu
Wholesale of cement and
5,000.00
6787533201
5,000.00
100.00
–
100.00
Y
–
(北京金隅水泥經貿有限公司)
cement product etc.

I-57 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Sanhe Jinling Mining Co., Ltd.
Limited liability
Sanhe
Chen Changshu
Processing and sale of
500.00
6920731406
475.00
–
95.00
95.00
Y
4.29
(三河市金嶺礦業有限公司)
rock materials for construction
Beijing BBMG Cement Energy Technology
Limited liability
Beijing
Zhang Zengshou
Development and transfer of
2,500.00
6950455308
2,500.00
100.00
–
100.00
Y
–
Co., Ltd. (北京金隅水泥節能科技有限公司)
cement and concrete technology
Siping BBMG Cement Co., Ltd.
Limited liability
Siping
Jiang Changlu
Manufacture and sale of
30,000.00
6961369205
15,600.00
52.00
–
52.00
Y
17,627.10
(四平金隅水泥有限公司)
cement and cement product etc.
* Shijiazhuang Jinyu Beiyue Concrete Co. Ltd.
Limited liability
Shijiazhuang
Li Fuhai
Sales of concretes
10,000.00
05545166-9
7,000.00
–
66.92
66.92
Y
3,002.42
(石家莊金隅北嶽混凝土有限公司)
Lanxian BBMG Cement Co., Ltd.
Limited liability
Lan county
Liu Wenyan
Manufacture and sale of
20,030.00
5514780403
16,026.00
80.00
–
80.00
Y
3,615.96
(嵐縣金隅水泥有限公司)
cement and cement product
Qinyang BBMG Cement Co., Ltd.
Limited liability
Qinyang
Jiang Changlu
Manufacture and sale of
16,645.00
553167610X
14,464.51
86.90
–
86.90
Y
2,078.87
(沁陽市金隅水泥有限公司)
cement and clinker etc.
Lingchuan BBMG Cement Co., Ltd.
Limited liability
Lingchuan
Zhao Jun
Manufacture and sale of
18,000.00
5613345503
18,000.00
100.00
–
100.00
Y
–
(陵川金隅水泥有限公司)
County
cement and clinker
Beijing BBMG Mining Co., Ltd.
Limited liability
Beijing
Lu Yong
Sale of metal and other
500.00
5603555505
500.00
100.00
–
100.00
Y
–
(北京金隅礦業有限公司)
mining material products
Zuoquan BBMG Cement Co., Ltd.
Limited liability
Zuoquan county Li Qiang
Technical consultation service
21,530.00
575961380X
21,530.00
100.00
–
100.00
Y
–
(左權金隅水泥有限公司)
on cement clinker
Xuanhua BBMG Cement Co., Ltd.
Limited liability
Xuanhua
Jiang Changlu
Manufacture and sale of
500.00
575518290X
325.00
65.00
–
65.00
Y
83.03
(宣化金隅水泥有限公司)
County
cement and clinker

I-58 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Bo’ai BBMG Cement Co., Ltd.
Limited liability
Bo’ai County
Liu Wenyan
Manufacture and sale of
24,182.63
5860453502
14,350.00
59.34
–
59.34
Y
10,123.88
(博愛金隅水泥有限公司)
cement and clinker
Guangling Jinyu Cement Co., Ltd.
Limited liability
Guangling
Wei Weidong
Manufacture and sale of
30,000.00
05626630-X
30,000.00
–
73.33
73.33
Y
7,988.08
(廣靈金隅水泥有限公司)
County
cement clinker
BBMG Mortar Co.,Ltd.
Limited liability
Beijing
Cai Luhong
Manufacture and sale of
10,000.00
05136722-4
10,000.00
80.00
20.00
100.00
Y
–
(北京金隅砂漿有限公司)
dry mix mortar
* Tianjin Jinyu Treasure Bright Mortar
Limited liability
Tianjin
Cai Luhong
Manufacture and sale of mortar
4,900.00
05870889-6
3,430.00
–
70.00
70.00
Y
1,469.99
Co., Ltd. (天津金隅寶輝砂漿有限公司)
Beijing BBMG Tiantan Furniture Co., Ltd.
Limited liability
Beijing
Guo Yanming
Manufacture, processing,
8,709.45
7002402509
11,463.18
93.43
–
93.43
Y
1,270.60
(北京金隅天壇家具股份有限公司)
and sale of furniture etc
Beijing Tiantan-Jingwei Furniture Co., Ltd.
Limited liability
Beijing
He Jianbei
Manufacture of wooden
600.00
6000564003
360.00
–
56.06
56.06
Y
286.83
(北京天壇京偉家具有限公司)
furniture
Foshan BBMG Tiantan Furniture Co., Ltd.
Limited liability
Foshan
Yang Jincai
Processing and sale of
500.00
5536632609
500.00
–
93.43
93.43
Y
35.70
(佛山金隅天壇家具有限公司)
goods; import and export agent
Beijing Tiantan Faram Decorative Materials
Limited liability
Beijing
Tang Yiming
Manufacture of office
4,138.60
7400706405
1,655.44
–
93.43
93.43
Y
(72.86 )
Co., Ltd. (北京天壇法拉姆裝飾材料有限公司)
cube partition boards and furniture etc.
Beijing Tiantan Decoration and Engineering
Limited liability
Beijing
Diao Naiduo
Building renovation
600.00
7235828804
600.00
–
93.43
93.43
Y
44.87
Co., Ltd. (北京天壇裝飾工程有限責任公司)
and design consultation
Beijing Hongyang Furniture Co., Ltd.
Limited liability
Beijing
Wang Changjiang Manufacture and sale of
50.00
1030032309
50.00
–
93.43
93.43
Y
(1.63 )
(北京宏洋家具有限責任公司)
wooden furniture
materials and wooden floorboards

I-59 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Beijing Great Wall Furniture Co., Ltd.
Limited liability
Beijing
Tang Yiming
Manufacture and sale of
6,613.58
1011246904
7,657.85
–
100.00
100.00
Y
–
(北京長城家具有限公司)
wooden furniture etc.
Beijing Great Wall Furniture
Limited liability
Beijing
Shi Feng
Manufacture and sale of
320.00
6000060305
294.00
–
93.43
93.43
Y
(20.49 )
Decorative Materials Co., Ltd.
furniture, decorative
(北京長城家具裝飾材料有限公司)
materials and wooden floorboards
Beijing Quinette Great Wall Seats Co., Ltd.
Limited liability
Beijing
Antoine
Manufacture of seats for
1,597.04
7552558209
954.75
–
55.85
55.85
Y
291.60
(北京奇耐特長城座椅有限公司)
opera houses and auditoriums etc.
Beijing Woodworking Factory Co., Ltd.
Limited liability
Beijing
Sun Deyang
Manufacture and sale of
5,455.63
1011773007
5,455.63
100.00
–
100.00
Y
–
(北京市木材廠有限責任公司)
wood-based panels etc.
Beijing Tongda Refractory Engineering
Limited liability
Beijing
Feng Yunsheng
Development and manufacture
200.00
7560017302
200.00
–
81.10
81.10
Y
66.87
Technology Co., Ltd. (北京通達
of new refractory materials etc.
耐火工程技術有限公司)
Gongyi Tongda Zhongyuan Refractory
Limited liability
Gongyi
Feng Yunsheng
Manufacture and sale of
1,050.00
1705000607
1,620.13
–
81.10
81.10
Y
86.05
Technology Co., Ltd. (鞏義通達中原
refractory materials
耐火技術有限公司)
Gongyi Tongda Zhongyuan Refractory
Limited liability
Gongyi
Li Ping
Testing of refractories
30.00
6987001200
30.00
–
81.10
81.10
Y
2.22
Testing Centre Co., Ltd. (鞏義通達中原
of refractory ceramic etc.
耐火材料檢測中心有限公司)
Beijing Jinyu Energy-Saving Technology
Limited liability
Beijing
Li Huibin
Manufacture and sale of
31,496.77
1011240503
34,245.06
100.00
–
100.00
Y
–
Co., Ltd. (北京金隅節能保溫科技有限公司)
building materials

I-60 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
*Zhangjiakou Star Building Materials Co., Ltd.
Limited liability
Beijing
Li Huibin
Manufacture, processing and
500.00
5896693200
500.00
–
100.00
100.00
Y
–
(張家口市星牌建材有限責任公司)
sale of rockwool products
Beijing Jianzong Building, Installation
Limited liability
Beijing
Zhang Quan
Construction contracting
2,001.12
1011320307
2,001.12
–
100.00
100.00
Y
–
and Engineering Co., Ltd. (北京建總
建築安裝工程有限公司)
Beijing Aerated Concrete Co., Ltd.
Limited liability
Beijing
Jin Xuefeng
Manufacture and sale of
8,681.75
1019575703
8,602.77
–
100.00
100.00
Y
–
(北京市加氣混凝土有限責任公司)
aerated concrete panels
Beijing Jinyu Aerated Concrete Co., Ltd.
Limited liability
Beijing
Jin Xuefeng
Manufacture and sale of
4,000.00
1022992609
4,794.64
100.00
–
100.00
Y
–
(北京金隅加氣混凝土有限責任公司)
aerated concrete products etc
Beijing Xiang Brand Walling Materials Co., Ltd
Limited liability
Beijing
Wang Youbin
Manufacture and sale of
4,043.80
1011344003
3,927.76
100.00
–
100.00
Y
–
(北京市翔牌牆體材料有限公司)
clay bricks and concrete products etc.
Beijing Jinghua Glass Fiber Products Co., Ltd.
Limited liability
Beijing
Yang Chaoying
Manufacture of
300.66
1020108607
286.77
–
100.00
100.00
Y
–
(北京京華玻璃纖維製品有限公司)
glass fiber and its products
Beijing Xiliu Building Materials Co., Ltd.
Limited liability
Beijing
Tang Honggen
Manufacture and sale of
11,160.39
1011002504
10,069.39
100.00
–
100.00
Y
–
(北京市西六建材有限責任公司)
bricks and tiles etc.
Beijing BBMG Coating Co., Ltd
Limited liability
Beijing
Chen Jun
Manufacture of coating;
8,900.00
7817340703
9,542.12
100.00
–
100.00
Y
–
(北京金隅塗料有限責任公司)
professional contracting
Dachang BBMG Coating Co., Ltd.
Limited liability
Dachang
Chen Jun
Manufacture and sale
3,000.00
5648915704
3,000.00
–
100.00
100.00
Y
–
(大廠金隅塗料有限責任公司)
County
of coating
Xinjiang BBMG Coating Co., Ltd.
Limited liability
Urumqi
Qiu Feng
Manufacture of coating;
100.00
6734073704
55.00
–
55.00
55.00
Y
105.40
(新疆金隅塗料有限公司)
sale of building materials etc.

I-61 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Beijing Building Materials Academy Co., Ltd.
Limited liability
Beijing
Wang Zhaojia
Development, manufacture
12,000.00
400709490X
12,246.78
100.00
–
100.00
Y
–
(北京建築材料科學研究總院有限公司)
and sale of building materials etc.
Beijing Building Materials Testing Centre
Limited liability
Beijing
Wang Zhaojia
Testing for
1,000.13
7951149204
1,000.13
–
100.00
100.00
Y
–
Co., Ltd. (北京建築材料檢驗中心有限公司)
building material quality etc.
Beijing Keshi Hardware Co., Ltd.
Limited liability
Beijing
Liu Guosheng
Manufacture of modern
2,552.13
1011231703
2,482.13
100.00
–
100.00
Y
–
(北京市科實五金有限責任公司)
products like construction hardware
Beijing Ceramic Plant Co., Ltd.
Limited liability
Beijing
An Zhiqiang
Manufacture of ceramic
5,666.08
1011259100
5,873.27
–
100.00
100.00
Y
–
(北京市陶瓷廠有限責任公司)
sanitary wares and ceramic veneer
Beijing BBMG Dongrun
Limited liability
Beijing
Liu Guozhi
Wholesale of
2,000.00
6900160009
1,020.00
–
51.00
51.00
Y
1,131.46
Construction Materials Co., Ltd.
building materials etc.
(北京金隅東潤建材有限公司)
Beijing BBMT-Xinke Building Materials
Limited liability
Beijing
Cao Zhanjing
Sale and purchase of
17,000.00
7002424300
17,348.55
–
100.00
100.00
Y
–
Co., Ltd. (北京建貿新科建材有限公司)
building materials etc.
Qingdao BBMT-Xinke Building Materials
Limited liability
Qingdao
Cao Zhanjing
Wholesale and retail of
100.00
7335337306
60.00
–
60.00
60.00
Y
39.01
Co., Ltd. (青島建貿新科建材有限公司)
building materials etc.
BBMG Home Furnishing Co., Ltd.
Limited liability
Beijing
Kou Yingyue
Purchase and sale of
600.00
6631036706
600.00
–
100.00
100.00
Y
–
(北京金隅家居有限公司)
building materials and metals etc.
Beijing BBMG Decoration and Engineering
Limited liability
Beijing
Cao Yuhai
Design and construction of
3,000.00
6000253302
3,000.00
–
100.00
100.00
Y
–
Co., Ltd. (北京金隅裝飾工程有限公司)
building decoration
Beijing Building Materials
Limited liability
Beijing
Zhang Jianping
Commodity operation and agent,
2,000.00
1011370703
2,000.000
–
100.00
100.00
Y
–
import & Export Co., Ltd.
import and export of technology
(北京市建築材料進出口有限公司)

I-62 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Beijing Jiandu Design and
Limited liability
Beijing
Zhang Shaoquan
Design of new building
954.12
4008419401
940.53
100.00
–
100.00
Y
–
Research Institute Co., Ltd.
materials etc
(北京建都設計研究院有限責任公司)
Beijing Jiantuo Engineering Management
Limited liability
Beijing
Zhang Shaoquan
Agent for construction
300.00
6000370206
300.00
–
100.00
100.00
Y
–
Co., Ltd. (北京建拓工程管理有限公司)
tendering
Beijing Sanchong Mirror Co., Ltd.
Limited liability
Beijing
Wang Youbin
Manufacture and sale of
5,766.00
6000322804
2,566.96
–
100.00
100.00
Y
–
(北京三重鏡業有限公司)
glass-made spectacle lenses
BBMG (Dachang) New Building Materials
Limited liability
Dachang
Jiang Hangjun
Manufacture of various
50,000.00
6636835207
50,000.00
100.00
–
100.00
Y
–
Co., Ltd. (大廠金隅新型建材有限公司)
modern building materials etc.
Yangquan Tongda BBMG Refractory
Limited liability
Yangquan
Feng Yunsheng
Manufacture and sale
6,000.00
6942918902
6,000.00
100.00
–
100.00
Y
–
Materials Co., Ltd. (陽泉金隅通達
of refractory ceramic etc.
高溫材料有限公司)
Beijing BBMG Business and Trading Co., Ltd.
Limited liability
Beijing
Kou Yingyue
Wholesale of building
41,000.00
5585089700
41,000.00
100.00
–
100.00
Y
–
(北京金隅商貿有限公司)
materials and metals etc.
Dachang BBMG Jinhaiyan Glass
Limited liability
Dachang
Zhao Yanjun
Manufacture and sale of
8,000.00
678506540X
8,000.00
–
100.00
100.00
Y
–
Wool Co., Ltd. (大廠金隅金海燕
glass wool products
玻璃棉有限公司)
BBMG Material Industrial (Shanghai)
Limited liability
Shanghai
Kou Yingyue
Import and export of
8,000.00
59971945-9
4,080.00
51.00
–
51.00
Y
4,034.45
Co., Ltd. (金隅物產上海有限公司)
coke, iron ore and metal materials
BBMG GEM Real Estate Development
Limited liability
Beijing
Huang An’nan
Property development
200,000.00
1017180907
166,513.84
100.00
–
100.00
Y
–
Co., Ltd. (北京金隅嘉業房
and management etc.
地產開發有限公司)
BBMG (Qingdao) Property Development
Limited liability
Beijing
Huang An’nan
Property development and
5,000.00
5912837500
5,000.00
–
100.00
100.00
Y
–
Co., Ltd. (金隅（青島）房地產開發有限公司)
trading agent

I-63 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Inner Mongolia BBMG Property Investment
Limited liability
Hohhot
Huang An’nan
Property development
20,000.00
7901884300
20,000.00
–
100.00
100.00
Y
–
Co., Ltd. (內蒙古金隅置地投資有限公司)
and management etc.
BBMG (Hangzhou) Property Development
Limited liability
Hangzhou
Huang An’nan
Property development
60,000.00
6680245102
63,482.70
–
100.00
100.00
Y
–
Co., Ltd. (金隅（杭州）房地產開發有限公司)
and management etc.
Hangzhou BBMG Mountain Villa Property
Limited liability
Hangzhou
Huang An’nan
Property development
10,000.00
5687961001
10,000.00
–
100.00
100.00
Y
–
Development Co., Ltd.
and others
(杭州金隅山墅房地產開發有限公司)
BBMG (Tianjin) Property Development
Limited liability
Tianjin
Huang An’nan
Property development
80,000.00
5503542804
80,000.00
–
100.00
100.00
Y
–
Co., Ltd.(金隅（天津）房地產開發有限公司)
and sales etc.
Tangshan BBMG Julong Property
Limited liability
Tangshan
Huang An’nan
Property development
5,000.00
5533091200
4,000.00
–
80.00
80.00
Y
593.79
Development Co., Ltd.
and management etc.
(唐山金隅巨龍房地產開發有限公司)
Beijing BBMG Property Investment And
Limited liability
Beijing
Huang An’nan
Property development
5,000.00
5548780304
5,000.00
–
100.00
100.00
Y
–
Development Co., (北京金隅置地
and sales etc.
房地產開發有限公司)
BBMG Vanke Property Development
Limited liability
Beijing
Huang An’nan
Property development
19,000.00
6656051305
9,690.00
–
51.00
51.00
Y
22,850.30
Co., Ltd. (北京金隅萬科
and sales etc.
房地產開發有限公司)
Beijing Xisanqi High Tech New
Limited liability
Beijing
Chang Yuanhong
Rental, Property development etc.
6,129.76
1011439607
12,358.04
100.00
–
100.00
Y
–
Building Material City Management and
Development Co., Ltd. (北京西三旗高新
建材城經營開發有限公司)
Chengdu BBMG Dacheng Property
Limited liability
Chengdu
Zhang Xiaobing
Property development etc
5,000.00
5875634304
4,000.00
–
80.00
80.00
Y
818.49
Development Co., Ltd.
(成都金隅大成房地產開發有限公司)
Chongqing BBMG Dacheng Property
Limited liability
Chongqing
Zhang Xiaobing
Property development
20,000.00
5540632104
20,000.00
–
100.00
100.00
Y
–
development Property
and consultation etc.
Development Co., Ltd.
(重慶金隅大成房地產開發有限公司)

I-64 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Beijing BBMG Chengyuan Property
Limited liability
Beijing
Chang Yuanhong
Property development
45,944.06
5636560003
47,350.99
100.00
–
100.00
Y
–
Development Co., Ltd. (北京金隅
and sale of commodity housing etc.
程遠房地產開發有限公司)
Beijing Jianhong Property Development
Limited liability
Beijing
Zhou Jiayi
Renovation of dilapidated buildings etc.
10,500.00
60001885-3
10,042.53
100.00
–
100.00
Y
–
Co., Ltd. (北京建宏房地產開發有限公司)
Beijing Dajiangnan International Hotel
Limited liability
Beijing
Chen Ming
Dining services
150.00
7684553208
150.00
–
100.00
100.00
Y
–
Management Co., Ltd. (北京大江南
國際酒店管理有限責任公司)
Beijing Jinyexincheng Property
Limited liability
Beijing
Liu Shucai
Property management
50.00
7609198209
50.00
–
100.00
100.00
Y
–
Management Co., Ltd.
(北京市金業新城物業管理有限責任公司)
Inner Mongolia BBMG Property
Limited liability
Hohhot
Li Weidong
Property management
200.00
6769102704
200.00
–
100.00
100.00
Y
–
Management Co., Ltd.
(內蒙古金隅物業服務有限公司)
BBMG Property Management Co., Ltd.
Limited liability
Beijing
Li Weidong
Property management
1,000.00
6336869700
8,926.45
100.00
–
100.00
Y
–
(北京金隅物業管理有限責任公司)
Beijing Jinhuyuan Property Management
Limited liability
Beijing
Li Weidong
Property management
50.00
7001721209
50.00
–
100.00
100.00
Y
–
Co., Ltd. (北京錦湖園物業管理有限公司)
BBMG Fengshan Hot Spring
Limited liability
Beijing
Liuweiyu
Provision of accommodation
19,998.91
1026918903
20,248.04
100.00
–
100.00
Y
–
Resort Co., Ltd.
and dining services etc.
(北京金隅鳳山溫泉度假村有限公司)
Inner Mongolia BBMG Daihai Resort
Limited liability
Ulanqab
Liu Deyong
Provision of accommodation
3,015.00
7901526006
3,015.00
–
100.00
100.00
Y
–
Co., Ltd. (內蒙古金隅岱海
and dining services etc.
旅遊度假有限責任公司)
Beijing Jianyuan Hotel Co., Ltd.
Limited liability
Beijing
Li Mian
Provision of accommodation
1,000.53
101129680X
1,000.53
–
100.00
100.00
Y
–
(北京市建苑賓館有限公司)
and dining services

I-65 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Beijing Jianji Assets Management Co., Ltd.
Limited liability
Beijing
An Zhiqiang
Self-owned property
6,273.39
1016498209
6,248.82
100.00
–
100.00
Y
–
(北京建機資產經營有限公司)
rental, property management etc.
Beijing Jinhaiyan Assets Management Co., Ltd
Limited liability
Beijing
An Zhiqiang
Self-owned property rental, property
8,292.36
101124580X
7,847.98
100.00
–
100.00
Y
–
(北京金海燕資產經營有限責任公司)
investment and management etc.
Beijing Jinhaiyan Property Management
Limited liability
Beijing
Ma Hong
Property management
350.00
101850160X
350.00
100.00
–
100.00
Y
–
Co., Ltd. (北京金海燕物業管理有限公司)
and sale etc.
BBMG Property Operation Management
Limited liability
Beijing
Li Weidong
Commercial housing rental, property
9,900.00
6691139407
9,900.00
100.00
–
100.00
Y
–
Co., Ltd. (北京金隅地產經營管理有限公司)
and hotel management etc.
*Beijing BBMG Real Estate Agency Co., Ltd.
Limited liability
Beijing
Chang Yuanhong
Property business
500.00
589084550X
500.00
–
100.00
100.00
Y
–
(北京金隅房地產經紀有限公司)
and consultation
Beijing Kaicheng Cinda Property
Limited liability
Beijing
Chen Xu
Property management
300.00
78170528-0
318.11
–
100.00
100.00
Y
–
Management Co., Ltd.
(北京凱誠信達物業管理有限公司)
Beijing Wancheng Taisang Property
Limited liability
Beijing
Chen Xu
Property management
200.00
78861032-1
385.52
–
100.00
100.00
Y
–
Management Co., Ltd.
(北京萬成恒泰商業物業管理有限公司)

I-66 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through business
combination under common control
Zhangjiakou Jinyu Cement Co., Ltd.
Limited liability
Zhangjiakou
Zheng Baojin
Manufacture and sale of
30,000.00
6870473605
27,140.69
90.00
–
90.00
Y
3,607.66
(張家口金隅水泥有限公司)
cement and cement products
Zhuolu Jinyu Cement Co., Ltd.
Limited liability
Zhuolu County
Zhao Qigang
Manufacture and sale of
30,000.00
731423470X
30,000.00
100.00
–
100.00
Y
–
(涿鹿金隅水泥有限公司)
cement and cement products
Quyang Jinyu Cement Co., Ltd.
Limited liability
Quyang County
Fan Guoliang
Manufacture and sale of
28,000.00
6827760400
24,933.35
90.00
–
90.00
Y
3,280.85
(曲陽金隅水泥有限公司)
cement and clinker
Beijing Bio-Island Science
Limited liability
Beijing
Liu Xiaoyu
Development of technologies for
5,000.00
7877525309
–
–
79.41
79.41
Y
959.46
and Technology Co., Ltd.
waste disposal, comprehensive utilization,
(北京生態島科技有限責任公司)
and environmental protection
Tianjin Zhenxing Cement Co., Ltd.
Limited liability
Tianjin
Jiang Changlu
Manufacture of cement
55,811.02
1030713003
40,010.14
60.64
–
60.64
Y
28,312.56
(天津振興水泥有限公司)
Tongda Refractory Technology Co., Ltd.
Limited liability
Beijing
Feng Yunshen
Research and Develop,
28,517.14
7886140704
23,128.11
81.10
–
81.10
Y
13,101.19
(通達耐火技術股份有限公司)
and manufacture of new
refractory materials etc.
Shanghai Sanming Building Materials
Limited liability
Shanghai
Xu Haifeng
Manufacture and sale of
2,700.00
6074059208
2,437.71
–
100.00
100.00
Y
–
Co., Ltd.(上海金隅三明建材有限公司)
modern building materials
Beijing Building Decoration and Design
Limited liability
Beijing
Zhang Quan
Design of project and
8,500.00
101123780X
27,504.04
100.00
–
100.00
Y
–
Engineering Co., Ltd. (北京市建築裝飾
home decorations etc.
設計工程有限公司)
Beijing Building Decoration and
Limited liability
Beijing
Zhang Quan
Decorative design service
2,000.00
1018876204
2,000.00
–
100.00
100.00
Y
–
Design Institute Co., Ltd.
(北京市建築裝飾設計院有限公司)

I-67 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through business
combination under common control(continued)
Beijing Longshuncheng Chinese
Limited liability
Beijing
Wang Zhijun
Manufacture of furniture etc.
1,292.40
1011231801
6,377.59
–
93.43
93.43
Y
140.04
Style Furniture Co., Ltd.
(北京市龍順成中式家具有限公司)
Crane (Beijing) Building Material
Limited liability
Beijing
Kou Yingyue
Wholesale of building
500.00
6699036606
256.34
–
67.50
67.50
Y
114.92
Co., Ltd. (珂恩（北京）建材有限公司)
materials etc.
Beijing BBMG Doudian Technology
Limited liability
Beijing
Tang Jianping
Manufacture of insulate
5,037.66
1012091307
11,193.66
100.00
–
100.00
Y
–
Corporate Management Co., Ltd.
and energy-saving building materials etc.
(北京金隅竇店科技企業管理有限公司)
Beijing BBMG Dacheng Property
Limited liability
Beijing
Zhang Xiaobing
Property development etc.
150,000.00
7226160402
226,277.12
100.00
–
100.00
Y
–
Development Co., Ltd.
(北京金隅大成開發有限公司)
Haikou Dacheng Property Investment
Limited liability
Haikou
Zhang Xiaobing
Property development etc.
1,600.00
2012958307
1,142.21
–
100.00
100.00
Y
–
Co., Ltd. (海口大成置業有限公司)
BBMG Badaling Hot Spring Resort
Limited liability
Beijing
Liu Weiyu
Provision of travelling
28,600.00
6000657005
12,256.23
–
100.00
100.00
Y
–
Co., Ltd. (北京金隅八達嶺溫泉
service and accommodation etc.
度假村有限責任公司)
Beijing Xisanqi Heating Co., Ltd.
Limited liability
Beijing
Wang Haitao
Manufacture of low to medium
7,560.00
6330695402
6,691.07
–
100.00
100.00
Y
–
(北京西三旗熱力有限責任公司)
pressure steam and distilled water etc.
BBMG Hongye Ecological Science and
Limited liability
Beijing
Xu Chuanhui
Property rental and management
200.00
6675186902
85,299.24
100.00
–
100.00
Y
–
Technology Co., Ltd. (北京金隅
宏業生態科技有限責任公司)
Beijing Hengxing Land Real Estate Co., Ltd.
Limited liability
Beijing
Zhang Xiaobing
Property development etc.
4,635.00
7533002000
11,542.01
–
100.00
100.00
Y
–
(北京恆興置地房地產有限公司)

I-68 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through business
combination under common control(continued)
BBMG Hong Kong Limited.
Limited liability
Hong Kong
Ma Hong
Self-owned property rental
(HKD) 100.00
N/A
598.49
100.00
–
100.00
Y
–
(金隅香港有限公司)
Beijing Lvdushangke Science
Limited liability
Beijing
Fu Qiutao
Sale of building materials
2,784.85
1026464109
4,574.17
100.00
–
100.00
Y
–
and Technology Co., Ltd.
and provide technical services etc.
(北京綠都尚科科技有限公司)
Beijing Hengye Qunying Business
Limited liability
Beijing
Jiang He
Manufacture, purchase and sale of
3,600.00
1013050006
9,826.00
–
100.00
100.00
Y
–
and Trading Co., Ltd.(北京恆業群盈
furniture
商貿有限責任公司)
Beijing Zhongweisenhai Property
Limited liability
Beijing
An Zhiqiang
Property management
2,548.50
1014787106
50,449.23
–
100.00
100.00
Y
–
Management Co., Ltd.
(北京中威森海物業管理有限公司)
Beijing Yanshan Cement Co., Ltd.
Limited liability
Beijing
Ding Zhongqin
Manufacture of cement
6,266.85
1011004006
27,504.04
100.00
–
100.00
Y
–
(北京市燕山水泥有限公司)
Beijing Oakland Building
Limited liability
Beijing
Sun Yan’an
Processing and sale of
500.00
6000054003
–
–
100.00
100.00
Y
–
Waterproofing Materials Co., Ltd.
waterproof materials
(北京奧克蘭建築防水材料有限公司)
BBMG Human Resources
Limited liability
Beijing
Liu Shengli
Dispatch of labour
50.00
690001270X
49.45
–
100.00
100.00
Y
–
Management Co., Ltd.
(北京金隅人力資源管理有限公司)
BBMG Dacheng Property
Limited liability
Beijing
Xue Guomin
Property management
500.00
1018504500
1,186.08
100.00
–
100.00
Y
–
Management Co., Ltd.
(北京金隅大成物業管理有限公司)

I-69 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through business
combination not under common control
Hetian Yuhe Sand Stone Company
Limited liability
Hetian
Jiang Changlu
Manufacture and sale of concrete
2,040.80
6792864809
1,428.19
–
51.00
51.00
Y
1,369.99
Limited (和田市玉河砂石有限公司)
Luquan Jinyu Dingxin Cement Co., Ltd.
Limited liability
Luquan
Zhou Chengyao
Manufacture and sale of
130,000.00
7434157902
145,440.00
100.00
–
100.00
Y
–
(鹿泉金隅鼎鑫水泥有限公司)
cement and clinker
***Hebei Taihang Huaxin Building Materials
Limited liability
Handan
Wang Nan
Mining of limestone and
22,800.00
7373777500
6,007.04
33.33
–
100.00
Y
10,352.33
Co., Ltd. (河北太行華信建材有限責任公司)
sale of cement products
Beijing Taihang Qianjing Cement Co., Ltd.
Limited liability
Beijing
Zheng Baojin
Manufacture and sale of
10,000.00
6000945006
6,760.00
67.00
–
67.00
Y
8,189.93
(北京太行前景水泥有限公司)
cement and cement products etc.
Baoding Taihang Xingsheng Cement Co., Ltd.
Limited liability
Baoding
Zheng Baojin
Manufacture and sale of
2,000.00
7634494102
1,640.00
–
61.50
61.50
Y
(804.24 )
(保定太行興盛水泥有限公司)
cement and cement products etc.
Baoding Taihang Heyi Cement Co., Ltd.
Limited liability
Yi county
Jiang Changlu
Manufacture and sale of
16,000.00
7454331402
12,000.00
75.00
–
75.00
Y
8,197.84
(保定太行和益水泥有限公司)
cement and cement products etc.
Yixian Tenghui Mineral Building Materials
Limited liability
Yi county
Wang Chao
Sale of lime and rock materials etc.
2,100.00
7965723002
2,500.00
–
75.00
75.00
Y
600.14
Company Limited
(易縣騰輝礦產建材有限公司)
Handan Taihang Cement Co., Ltd.
Limited liability
Handan
Li Huaijiang
Manufacture of cement
500.00
730279550X
703.80
–
51.00
51.00
Y
776.01
(邯鄲市太行水泥有限責任公司)
Beijing Qianglian Cement Co., Ltd.
Limited liability
Beijing
Zhang Wanbo
Manufacture of cement
2,000.00
7461002806
2,442.59
–
60.00
60.00
Y
1,992.22
(北京強聯水泥有限公司)
Handan BBMG Taihang Cement Co., Ltd.
Limited liability
Handan
Li Huaijiang
Manufacture of cement
65,000.00
5560754101
71,998.66
94.67
–
94.67
Y
5,105.82
(邯鄲金隅太行水泥有限責任公司)
Cheng’an BBMG Taihang Cement Co., Ltd.
Limited liability
Cheng’an
Li Huaijiang
Manufacture of cement
6,000.00
5544806008
4,500.00
–
71.00
71.00
Y
1,690.05
(成安金隅太行水泥有限公司)
Guantao BBMG Taihang Concrete Co., Ltd.
Limited liability
Guantao
Li Huaijiang
Manufacture and sale of
1,000.00
5738955402
1,000.00
–
94.67
94.67
Y
26.25
(館陶縣金隅太行混凝土有限公司)
commercial concrete

I-70 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through
business combination not under
common control(continued)
Handan Shexian BBMG Cement Co., Ltd.
Limited liability
She county
Li Huaijiang
Manufacture and sale of cement
10,000.00
6652936808
18,167.87
91.00
–
91.00
Y
1,790.36
(邯鄲涉縣金隅水泥有限公司)
Tianjin BBMG Concrete Co., Ltd.
Limited liability
Tianjin
Jiang Changlu
Concrete construction and
23,733.78
7548416007
24,697.20
85.00
–
100.00
Y
4,831.01
(天津金隅混凝土有限公司)
manufacturing
Shijiazhuang BBMG Xucheng Concrete
Limited liability
Shijiazhuang
Liu Wenyan
Manufacture and sale of concrete
10,000.00
7575353006
10,204.70
95.60
–
95.60
Y
632.22
Co., Ltd. (石家莊金隅旭成混凝土有限公司)
Beijing Cement Plant Co., Ltd.
Limited liability
Beijing
Liu Wenyan
Manufacture of cement
96,346.28
6343918302
94,321.78
–
79.41
79.41
Y
20,097.11
(北京水泥廠有限責任公司)
and mining of limestone etc.
Beijing Chinefarge Cement Co., Ltd.
Limited liability
Beijing
Jiang Changlu
Manufacture of cement
31,500.00
6000229509
46,474.09
95.70
–
95.70
Y
2,146.48
(北京興發水泥有限公司)
and clinker etc.
BBMG Shunfa Lafarge Cement Co., Ltd.
Limited liability
Beijing
Jiang Changlu
Manufacture of cement
15,000.00
6000968501
11,068.11
70.00
–
70.00
Y
4,875.70
(北京金隅順發水泥有限公司)
and clinker etc.
Beijing Alavus Energy Saving Components
Limited liability
Beijing
Sai Bao
Manufacture, sale and repair of energy
(EUR) 400.00
7177440105
2,998.07
82.72
–
82.72
Y
672.19
Co., Ltd. (北京愛樂屋建築節能製品有限公司)
efficient doors and windows
Chongqing BBMG Dacheng
Limited liability
Chongqing
Zhang Xiaobing
Property development
38,000.00
5567783807
38,000.00
–
100.00
100.00
Y
–
Shanshui Real Estate Co., Ltd.
and sale etc.
(重慶金隅大成山水置業有限公司)
:
Newly-founded subsidiaries during the year.
**:
In September 2010, Tianjin Building Materials Supply Corporation (天津市建築材料供應總公司) entrusted the shareholder’s rights (within the meaning of
the Company Law and the Articles of Association) as represented by the 15% equity interests held in Tianjin BBMG Concrete Co., Ltd. (Tianjin BBMG
Concrete Co., Ltd.) to the Company with a term of 8 years. As at 31 December 2012, the Company held 85% equity interests in Tianjin BBMG Concrete
Co., Ltd. with 100% voting rights.
:
Please refer to Note VI.5(2) for details.

I-71 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Operating entity with special interest, operated through entrustment or through controlling rights formed by rental

		Recognised major	Recognised major
		assets as at	liabilities as at
		the end of	the end of
		the Year in the	the Year in the
	Major business	consolidated	consolidated
	transactions	statement	statement
		RMB	RMB
Hebei Taihang Huaxin Building	Nil	185,585,377.88	30,308,212.16
Materials Co., Ltd.
(“Taihang Huaxin”)

Note: Please refer to Note VI.5(2) for details.

3. Investee that the Company holds half or more of its shareholdings but fails to control it

control it
							Reason for
	Registration	Business	Register	Investment	Shareholding	Voting	the voting right
Investee	location	nature	capital	amount	percentage	right	failing to control
		(RMB10,000)		(RMB10,000)	(%)	(%)
Beijing Beizhuan Gas Station	Beijing City	Retail refined	80.00	64.83	62.50	–	Contracted operation
	oil product
Hainan Dihao Furniture Co., Ltd.	Haikou City	Furniture	900.00	264.54	55.00	–	Withdrawal from
		manufacturing					operation in 2004
Beijing Xinjianxinyuan	Beijing City	Retail agricultural	40.00	38.00	95.00	–	Contracted operation
Farmer’s Market Co., Ltd.		product

4. Change in scope of consolidation

Apart from the newly established subsidiaries during the Period and as stated in Note IV.5, the scope of consolidation for the financial statements remains the same as last year.

I-72 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Entities newly included into or excluded from the scope of consolidation during the Year

Besides the newly established subsidiaries, no other new subsidiary were included into the scope of consolidation for this year.

In 2012, subsidiaries no longer included into the scope of consolidation are as follows:

					Reasons for
	Place of	Business	Proportion of	Proportion of	not being	Date of
	incorporation	nature	shareholding (%)	voting rights	the subsidiary	disposal	Notes
Harbin Taihang Xinglong	Bayan	Production and sales	43%	43%	Disposal	12 March 2012	Note 1
Cement Co. Ltd.	County	of cement and
		cement products
Beijing Yuandong	Beijing	Cleaning services, etc.	100%	100%	Disposal	30 November	Note 2
Jiemei Services Company						2012
(北京遠東潔美保潔服務有限公司)

Note 1: The Group’s subsidiary BBMG Corporation and Heilongjiang Bayan Cement Manufacturing Co. Ltd. executed an equity transfer agreement on 10 March 2012 to dispose its 43% equity in Harbin Taihang Xinglong Cement Co., Ltd. to the latter at a consideration of RMB8,194,200.00 in cash plus arrangement of related debt restructuring. Date of disposal was 12 March 2012. Since 12 March 2012, the Group has not consolidated Harbin Taihang Xinglong Cement Co. Ltd into the scope of consolidation.

Related financial information of Harbin Taihang Xinglong Cement Co. Ltd. are as follows:

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Entities newly included into or excluded from the scope of consolidation during the Year (continued)

Note 1: (continued)

==> picture [359 x 333] intentionally omitted <==

----- Start of picture text -----

12 March 2012 31 December 2011
Carrying amount Carrying amount
Current assets 20,210,673.56 32,695,497.18
Non-current assets 86,083,954.27 87,331,699.07
Current liabilities 96,208,476.16 100,625,543.48
Net assets/(liability) 10,086,151.67 19,401,652.77
Non-controlling interests 5,749,106.45 11,058,942.08
Gains from disposal 21,816,155.37
Consideration for disposal 26,153,200.59
For the period from
1 January 2012
to 12 March 2012
Operating revenue 3,159,104.34
Operating costs 5,789,924.80
Net profit (9,315,501.10 )
----- End of picture text -----

I-74 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Entities newly included into or excluded from the scope of consolidation during the Year (continued)

Note 2: The Group’s subsidiary BBMG Property Management Co. Ltd. and Yan Lijun executed an equity transfer agreement on 13 November 2012 to dispose its 100% equity in Beijing Yuandong Jiemei Services Company to the latter at a consideration of RMB201,238.00. Date of disposal was 30 November 2012. Since 30 November 2012, the Group has not consolidated Beijing Yuandong Jiemei Services Company (北京遠東潔美保潔服務有限公司) into the scope of consolidation.

Related financial information of Beijing Yuandong Jiemei Services Company (北京遠東潔美保潔服務有限公司) are as follows:

	30 November 2012 Carrying amount	31 December 2011 Carrying amount
Current assets Non-current assets Current liabilities Net assets/(liability) Loss from disposal Consideration for disposal Operating revenue Operating costs Net profit	747,957.22 77,579.73 191,050.71 634,486.24 (433,248.24 ) 201,238.00 For the period from 1 January 2012 to 30 November 2012 10,908,422.58 8,564,269.41 2,194.23	717,003.72 105,410.85 190,122.56 632,292.01

6. Exchange rate for major statement items of foreign operating entities of the Group

			Exchange rate
	Average		at the year end
	exchange rate		31 December
	2012	2011	2012 2011
HKD	0.8134	0.8302	0.8109 0.8107

I-75 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Cash and bank balances

Cash and bank balances	Cash and bank balances
31 December 2012 31 December Exchange Exchange Original currency rate As RMB Original currency rate		2011 As RMB
Cash on hand RMB 3,459,018.74 1.0000 EUR – 8.3176 CZK – 0.3280 SGD – 5.1191 IDR 1,820,000.00 0.0006 Cash at banks RMB 5,822,702,449.51 1.0000 USD 715,751.81 6.2855 EUR 85,023.83 8.3176 HKD 13,032,786.73 0.8109 JPY 24,276,089.04 0.0730 Others RMB 62,385,492.73 1.0000 USD – 6.2855 EUR – 8.3176 AUD – 6.5363	3,459,018.74 4,145,557.63 1.0000 – 5.04 8.1625 – 3,284.13 0.3164 – 0.82 4.8679 1,092.00 1,820,000.00 0.0007 3,460,110.74 5,822,702,449.51 7,868,136,259.26 1.0000 4,498,858.00 346,068.60 6.3009 707,194.21 468,564.43 8.1625 10,568,286.76 17,190,589.89 0.8107 1,772,154.50 24,259,781.00 0.0811 5,840,248,942.98 62,385,492.73 24,284,391.68 1.0000 – 106.11 6.3009 – 39.49 8.1625 – 113.14 6.4093 62,385,492.73 5,906,094,546.45	4,145,557.63 41.14 1,039.10 3.99 1,274.00 4,147,915.86 7,868,136,259.26 2,180,543.64 3,824,657.16 13,936,411.22 1,967,468.24 7,890,045,339.52 24,284,391.68 668.59 322.34 725.15 24,286,107.76 7,918,479,363.14

I-76 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Cash and bank balances (continued)

31 December 2012 31 December 2011

Cash and bank balances with restrictions: Deposits for letter of credit Quality/performance deposits Deposits for acceptance bills Restricted part of property pre-sale funds Others	39,206,299.85 51,951,332.14 156,133,605.34 2,052,501,646.63 48,598,552.29 2,348,391,436.25	12,177,894.00 63,173,591.35 70,871,916.10 2,541,681,564.29 104,103,026.01 2,792,007,991.75

As at 31 December 2012, the Group’s cash and bank balances of which ownership were restricted are RMB2,348,391,436.25 (31 December 2011: RMB2,792,007,991.75).

Interest income is generated from current savings as determined by the interest rate for the savings in banks. Short-term time deposits with durations from 7 days to 3 months are made in accordance with the Group’s need of cash, interest income is generated according to the respective interest rates.

2. Bill receivable

Bill receivable
	31 December 2012	31 December 2011
Commercial acceptance bills Bank acceptance bills	3,060,000.00 1,025,602,688.14 1,028,662,688.14	2,000,000.00 1,345,905,318.65 1,347,905,318.65

As at 31 December 2012, there was no bills receivable pledged.

As at 31 December 2012, there was no transfer of bills receivable into accounts receivable due to default on the part of the drawer (31 December 2011: Nil).

As at 31 December 2012, there were no outstanding bills receivable endorsed to other parties.

I-77 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Interests receivable

Interests receivable
	Balance at beginning of the year	Increase in the year	Decrease in the year	Balance at end of the year
STAR-USG Building Materials Co., Ltd.	1,858,662.81	4,546,064.28	4,993,601.29	1,411,125.80

As at 31 December 2012, there was no outstanding interest receivable (31 December 2011: Nil).

4. Dividends receivable

Dividends receivable
	Balance			Balance
	at beginning	Increase in	Decrease in	at end
	of the year	the year	the year	of the year
Dividends receivable	–	4,643,515.74	3,428,090.74	1,215,425.00

5. Accounts receivable

The credit periods of accounts receivable are generally 1 to 3 months. Accounts receivable are noninterest bearing.

An aging analysis of the accounts receivable is as follows:

	31 December 2012	31 December 2011
Within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years Provision for bad debts	3,622,522,577.51 435,084,218.32 81,854,995.55 32,669,200.80 20,172,495.57 90,736,588.11 4,283,040,075.86 (291,243,701.70 ) 3,991,796,374.16	3,232,389,198.26 343,961,433.84 66,724,887.30 48,068,654.92 71,508,300.35 87,831,645.69 3,850,484,120.36 (359,546,649.96 ) 3,490,937,470.40

I-78 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

The movements in provision for bad debt are as follows:

	2012	2011
At the beginning of the year Provision for the year Transfer in from acquisition of subsidiaries Reversal for the year Write-off for the year Transfer out on disposal of subsidiaries At the end of the year	359,546,649.96 46,003,705.19 – (22,008,917.38 ) (90,328,285.46 ) (1,969,450.61 ) 291,243,701.70	365,311,918.39 44,653,953.10 4,727,731.80 (27,344,392.17 ) (27,802,561.16 ) – 359,546,649.96

	31 December 2012 Gross carrying amount Provision for bad debts Amount Proportion Amount Percentage (%) (%)	31 December 2012 Gross carrying amount Provision for bad debts Amount Proportion Amount Percentage (%) (%)	31 December 2012 Gross carrying amount Provision for bad debts Amount Proportion Amount Percentage (%) (%)
Individually significant and subject to separate provision for bad debts Subject to provision on groups by aging Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debts	– 3,619,618,241.84 370,986,855.80 60,008,300.77 27,108,573.69 19,649,376.89 89,664,617.89 4,187,035,966.88 78,713,958.28 17,290,150.70 4,283,040,075.86	– 84.51 8.66 1.40 0.64 0.46 2.09 97.76 1.84 0.40 100.00	– – – – 111,296,056.74 30.00 36,004,980.47 60.00 23,042,287.64 85.00 19,649,376.89 100.00 89,664,617.89 100.00 279,657,319.63 – – 11,586,382.07 67.01 291,243,701.70

I-79 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

Accounts receivable(	continued)
	Gross carrying Amount	31 December 2011 Provision for bad debts Proportion Amount Percentage (%) (%)
Individually significant and subject to separate provision for bad debts Subject to provision on groups by aging Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debts	– 3,225,232,852.12 311,488,990.48 55,111,515.14 20,686,320.88 57,505,148.79 85,464,505.46 3,755,489,332.87 17,262,950.53 77,731,836.96 3,850,484,120.36	– 83.76 8.09 1.43 0.54 1.49 2.22 97.53 0.45 2.02 100.00	– – – – 93,446,697.15 30.00 33,066,909.08 60.00 17,583,372.75 85.00 57,505,148.79 100.00 85,464,505.46 100.00 287,066,633.23 – – 72,480,016.73 93.24 359,546,649.96

I-80 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

As at 31 December 2012, accounts receivable which were not individually significant but subject to separate provision for bad debts were as follows:

	Gross carrying amount at end of the year	Percentage of Provision for provision bad debts (%) Reasons
First Second Third Fourth Fifth Others	2,838,524.28 1,826,415.44 252,745.40 183,943.00 251,015.00 11,937,507.58 17,290,150.70	2,838,524.28 100.00 Uncollectible 1,044,230.41 57.17 Partly uncollectible 252,745.40 100.00 Uncollectible 183,943.00 100.00 Uncollectible 200,812.00 80.00 Partly uncollectible 7,066,126.98 59.19 Partly uncollectible 11,586,382.07

During 2012, there was no significant reversal of provision for bad debts of accounts receivable or significant cash settlement for impaired receivables (2011: Nil).

I-81 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

The accounts receivable that have been written off in 2012 are as follows:

Nature	Amount Related party written off Reason transactions
First accounts receivable from cement Second accounts receivable from cement Third accounts receivable from cement Fourth accounts receivable from cement Fifth accounts receivable Others	22,034,378.43 Disposed No 20,349,922.03 Disposed No 14,469,592.92 Disposed No 12,361,503.62 Disposed No 8,100,916.97 Disposed No 13,011,971.49 Disposed No 90,328,285.46

As at 31 December 2012, there was no accounts receivable due from shareholders of the Group that held 5% or more of the Company’s voting rights (31 December 2011: Nil).

As at 31 December 2012, the accounts receivable of RMB30,808,880.00 were pledged as guarantee for the Group’s bank loans (31 December 2011: Nil) (Note V. 22).

Accounts receivable from related parties as at 31 December 2012 and 31 December 2011 are set out in Note VI. Relationships and Transactions with Related Parties.

As at 31 December 2012, the top 5 accounts receivable were as follows:

Relationship with the Group	Amount Aging	Proportion in total accounts receivables (%)
Customer 1 Third party Customer 2 Third party Customer 3 Third party Customer 4 Third party Customer 5 Third party	78,547,384.50 Within 1 year 73,856,015.93 Within 1 year 63,110,237.57 Within 1 year 41,240,983.09 Within 1 year 36,231,809.77 Within 1 year 292,986,430.86	1.83 1.72 1.47 0.96 0.85 6.83

I-82 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables

An aging analysis of other receivables is as follows:

	31 December 2012	31 December 2011
Within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years Provision for bad debts	999,222,808.24 572,179,974.17 253,405,448.61 9,365,651.27 105,161,899.77 71,276,760.38 2,010,612,542.44 (111,097,223.13 ) 1,899,515,319.31	1,947,758,963.63 293,433,187.03 53,571,485.07 121,991,011.67 108,217,630.81 60,598,764.92 2,585,571,043.13 (126,632,017.47 ) 2,458,939,025.66

Movements in provision for bad debts of other receivables are as follows:

	2012	2011
At the beginning of the year Provision for the year Transfer in from acquisition of subsidiaries Reversal for the year Write-off for the year Transfer out from disposal of subsidiaries At the end of the year	126,632,017.47 32,906,268.11 – (35,073,970.02 ) (9,212,379.78 ) (4,154,712.65 ) 111,097,223.13	83,778,249.37 53,036,837.82 43,057.24 (10,153,477.48 ) (72,649.48 ) – 126,632,017.47

I-83 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

Other receivables(con	tinued)	tinued)	tinued)
	31 December 2012 Book balance Provision for bad debt Amount Proportion Amount Proportion (%) (%)
Individually significant and subject to separate provision for bad debt Subject to provision on groups by aging Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debts	54,231,183.06 978,760,081.60 15,319,315.73 2,358,467.83 2,122,955.14 2,538,341.02 44,574,259.40 1,045,673,420.72 872,996,654.08 37,711,284.58 2,010,612,542.44	2.70 48.68 0.76 0.12 0.11 0.11 2.22 52.00 43.42 1.88 100.00	40,297,783.06 74.31 – – 4,595,794.72 30.00 1,415,080.70 60.00 1,804,511.87 85.00 2,538,341.02 100.00 44,574,259.40 100.00 54,927,987.71 – – 15,871,452.36 42.09 111,097,223.13

I-84 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

Other receivables(con	tinued)	tinued)	tinued)
	31 December 2011 Gross carrying amount Provision for bad debts Amount Proportion Amount Percentage (%) (%)
Individually significant and subject to separate provision for bad debt Subject to provision by groups Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debt	92,115,954.99 849,539,618.38 4,639,187.70 3,018,219.76 3,568,220.67 4,885,739.17 44,076,289.50 909,727,275.18 1,554,680,307.33 29,047,505.63 2,585,571,043.13	3.56 32.86 0.18 0.12 0.14 0.19 1.70 35.19 60.13 1.12 100.00	50,839,355.71 55.19 – – 1,391,756.29 30.00 1,810,931.86 60.00 3,032,987.57 85.00 4,885,739.17 100.00 44,076,289.50 100.00 55,197,704.39 – – 20,594,957.37 70.90 126,632,017.47

I-85 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

As at 31 December 2012, other receivables which were individually significant and separately provided for bad debts were as follows:

	Gross carrying amount	Percentage of Provision for bad debts provision Reasons (%)
First Second	34,180,183.06 20,051,000.00 54,231,183.06	20,246,783.06 59.24 Partly uncollectible 20,051,000.00 100.00 Uncollectible 40,297,783.06

As at 31 December 2012, other receivables which were not individually significant and separately provided for bad debts were as follows:

	Gross carrying amount	Percentage of Provision for bad debts provision Reasons (%)
First Second Third Fourth Fifth Others Total	2,695,880.51 2,596,881.90 2,179,835.26 1,600,000.00 1,563,990.61 27,074,696.30 37,711,284.58	2,695,880.51 100.00 Uncollectible 438,174.13 16.87 Partly uncollectible 2,179,835.26 100.00 Uncollectible 1,600,000.00 100.00 Uncollectible 1,563,990.61 100.00 Uncollectible 7,393,571.85 27.31 Partly uncollectible 15,871,452.36

I-86 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

The reversal or recovery of provision for bad debts of significant other receivables during 2012 is as follows:

			Accumulated
	Reason for	The basis of	provision for
	reversal	original provision for	bad debt made	Amount
	or recovery	bad debts	before the reversal	reversed
JinJian (Tianjin) Property	Cash settlement	Uncollected for	30,788,355.71	29,224,365.10
Investment Limited		long term

In 2011, there was no reversal or recovery of provision for bad debts of significant other receivables.

As at 31 December 2012, no individually significant other receivables have been written off (31 December 2011: nil).

As at 31 December 2012, the top 5 other receivables were as follows:

Relationship with As a percentage the Group Amount Aging of total other receivables (%)	Relationship with As a percentage the Group Amount Aging of total other receivables (%)	Relationship with As a percentage the Group Amount Aging of total other receivables (%)
Entity 1 Third party Entity 2 Third party Entity 3 Third party Entity 4 Third party Entity 5 Joint Venture	358,440,024.69 1 to 2 years 241,434,963.00 Within 1 year, 4 to 5 years 108,880,000.00 Within 1 year 106,273,100.00 Within 1 year 81,688,940.00 Within 1 year, 1 to 2 years, 2 to 3 years 896,717,027.69	17.83 12.01 5.42 5.29 4.06 44.61

As at 31 December 2012, there were no receivables due from shareholders of the Group that held 5% or more of the Company’s voting rights (31 December 2011: RMB20,806,364.37) (Note VI.6).

Other receivables from related parties as at 31 December 2012 and 31 December 2011 are set out in Note VI. Relationships and Transactions with Related Parties.

I-87 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Advances to suppliers

An aging analysis of advances to suppliers is as follows:

	31 December Amount	2012 Proportion (%)	31 December Amount	2011 Proportion (%)
Within 1 year 1 to 2 years 2 to 3 years Over 3 years	862,567,703.50 30,358,878.72 8,936,306.02 7,552,252.53 909,415,140.77	94.85 3.34 0.98 0.83 100.00	1,366,175,051.39 20,072,491.30 2,707,354.37 8,282,614.91 1,397,237,511.97	97.78 1.44 0.19 0.59 100.00

As at 31 December 2012, the top 5 of advances to suppliers were as follows:

Relationship with the Group	Reasons for being not Amount Aging yet settled
Supplier 1 Third party Supplier 2 Third Party Supplier 3 Third Party Supplier 4 Third Party Supplier 5 Third Party	80,000,000.00 Within 1 year Settlement date undue 32,266,590.35 Within 1 year Settlement date undue 31,010,986.20 Within 1 year Settlement date undue 27,967,217.68 Within 1 year Settlement date undue 23,601,283.56 Within 1 year Settlement date undue 194,846,077.79

As at 31 December 2012, there was no advances to suppliers paid to shareholders that held 5% or more of the Company’s voting rights (31 December 2011: Nil). As at 31 December 2012, there was no individually significant advance to suppliers aging more than one year (31 December 2011: Nil).

The balances of advances to suppliers to related parties as at 31 December 2012 and 31 December 2011 are set out in Note VI. Relationships and Transactions with Related Parties.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 8. INVENTORIES

INVENTORIES
	31 December 2012 Gross Provision for carrying amount decline in value		Carrying amount
Raw materials Work in progress Finished goods Turnover materials Trading goods Properties under development Completed properties held for sale	938,248,850.81 722,327,550.36 595,951,402.58 70,211,394.23 408,048,203.24 25,243,954,002.00 4,333,934,509.36 32,312,675,912.58	3,228,859.52 4,287,515.14 10,640,251.43 256,144.54 202,618.35 7,169,850.12 – 25,785,239.10	935,019,991.29 718,040,035.22 585,311,151.15 69,955,249.69 407,845,584.89 25,236,784,151.88 4,333,934,509.36 32,286,890,673.48
	31 December 2011 Gross Provision for carrying amount decline in value		Carrying amount 1,073,222,304.56 588,655,827.61 506,135,324.91 48,719,398.48 332,480,448.85 21,100,181,538.90 3,620,070,945.07 27,269,465,788.38
Raw materials Work in progress Finished goods Turnover materials Trading goods Properties under development Completed properties held for sale	1,080,492,284.20 601,532,805.21 547,495,778.45 49,016,471.85 333,082,919.38 21,107,351,389.02 3,620,070,945.07 27,339,042,593.18	7,269,979.64 12,876,977.60 41,360,453.54 297,073.37 602,470.53 7,169,850.12 – 69,576,804.80

I-89 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. INVENTORIES (continued)

The movements in provision for decline in value of inventories are as follows:

2012

	Opening balance	Provision for the year	Decrease in the year	Decrease in the year	Write-off	Closing balance
			Disposal of subsidiaries	Reversal/ transfer out
Raw materials Work in progress Finished goods Turnover materials Trading goods Properties under development	7,269,979.64 12,876,977.60 41,360,453.54 297,073.37 602,470.53 7,169,850.12 69,576,804.80	1,274,397.87 3,628,782.19 1,135,250.24 – – –	– 1,281,605.67 800,691.78 – – – 2,082,297.45	– – – – – – –	5,315,517.99 10,936,638.98 31,054,760.57 40,928.83 399,852.18 – 47,747,698.55	3,228,859.52 4,287,515.14 10,640,251.43 256,144.54 202,618.35 7,169,850.12 25,785,239.10
		6,038,430.30

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. INVENTORIES (continued)

(1) The breakdown of cost of properties under development:

Commencement Estimated Aggregate Project name time completion time investment	31 December 2012	31 December 2011
Chongqing-Chayuan December 2011 December 2015 3,946,847,900.00 Chongqing-Huangjueya December 2011 December 2015 4,171,004,500.00 Chengdu-Shuangliu December 2012 October 2014 1,450,000,000.00 Hangzhou-Banshan Project November 2012 July 2014 2,216,520,000.00 Inner Mongolia-Jinyu Times City October 2007 June 2016 669,634,340.00 Hangzhou-Guanlan Times March 2010 December 2013 4,873,945,342.00 Haikou-Meilinghu August 2011 October 2013 460,000,000.00 Haikou-Haidianxi – – – Tangshan-Lefu June 2011 September 2013 2,478,239,600.00 Beijing-Feili Huating September 2010 October 2012 800,000,000.00 Beijing-Xisanqi Commercial October 2012 October 2014 1,717,830,000.00 Residential Project Tianjin-Jinyu Yuecheng September 2010 December 2015 5,208,000,000.00 Beijing-Jinyu Vanke City March 2008 November 2014 4,011,000,000.00 Beijing-Dawayao – – – Beijing-Dachengjun September 2007 October 2013 2,044,000,000.00 and facilities Beijing-Liyuan Jincheng November 2011 October 2013 1,918,200,000.00 Beijing-Linglong Tiandi June 2010 June 2012 502,595,000.00 Beijing-Guogongzhuang March 2013 December 2014 1,519,890,000.00 Beijing-Chaoyang New City September 2009 July 2014 2,004,600,000.00 Beijing-Jinyu Town-House February 2009 November 2013 593,280,000.00 Beijing-Dongliu Kanghuiyuan February 2009 December 2013 1,893,020,000.00 Beijing-Jinyu Jiaheyuan March 2012 June 2014 520,000,000.00 Beijing-Guanlan Times October 2010 June 2013 1,219,720,000.00 Beijing Xi Hai’an August 2012 December 2013 1,140,000,000.00 Beijing-Yueheyuan September 2011 September 2013 1,550,000,000.00 Beijing-Tuqiao Project October 2009 June 2014 7,608,722,200.00 Beijing-Yanshan September 2011 May 2014 3,384,510,000.00 Affordable Housing Beijing-Daxing Cube November 2011 October 2013 880,000,000.00 Beijing-Taiheyuan January 2012 December 2013 1,660,000,000.00 Beijing-Ruiheyuan December 2012 December 2014 831,700,000.00 Qingdao-Site in Jinggangshan Rd. May 2013 November 2014 220,000,000.00 Others – – – Total	1,358,593,107.98 1,642,045,464.40 547,265,466.21 1,425,013,511.67 397,120,548.38 1,896,847,820.49 263,322,074.56 536,000,000.00 1,354,029,808.75 – 904,637,288.94 2,229,077,731.87 1,440,096,211.88 210,838,293.41 191,949,430.63 2,303,294,812.46 – 1,048,771,419.76 538,105,615.47 57,586,738.26 135,168,334.65 276,216,629.20 1,148,224,453.15 425,744,431.18 674,467,635.70 1,614,395,747.89 1,278,832,363.89 278,717,835.12 709,548,267.28 163,191,699.21 107,434,691.08 80,246,718.41 25,236,784,151.88	1,104,827,261.41 1,336,813,699.33 406,515,159.00 1,305,417,664.93 423,775,168.16 2,570,339,744.82 71,910,687.17 – 827,414,286.47 411,891,203.01 1,002,257,785.63 2,251,641,167.67 1,488,184,323.38 213,038,293.41 1,228,214,909.33 1,701,292,047.21 464,144,909.11 – 443,583,393.40 53,549,739.24 117,428,728.26 264,971,647.13 924,808,754.36 355,033,511.22 307,9 80,441.76 1,014,740,850.83 460,598,019.05 172,787,019.56 121,267,820.93 – – 55,753,303.12 21,100,181,538.90

As at 31 December 2012, the balance of properties under development included the capitalized interest of RMB1,214,794,424.47 (31 December 2011: RMB1,401,023,257.18), in which RMB654,616,858.14 was capitalized during the current year (2011: RMB699,984,179.84), and the rate of interest capitalization was 6.26% (2011: 6.32%).

As at 31 December 2012, the properties with carrying amount of RMB4,994,957,123.22 were pledged as guarantee for the Group’s bank loans (31 December 2011: RMB7,376,599,492.50) (Note V.22).

I-91 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. INVENTORIES (continued)

(2) The breakdown of completed properties held for sale:

Completion Project name Date	Opening balance	Increase in the year	Decrease in the year	Closing balance
Beijing-Jinyu Town-House September 2010 Beijing-Chaoyang New City June 2012 Beijing-Miaopu Housing December 2008 Renovation Project Beijing-Lijingyuan December 2009 Beijing-Meiheyuan December 2009 Beijing-Kanghuiyuan March 2011 Beijing-Jiaheyuan June 2011 Beijing-Tuqiao Project December 2011 Beijing-Jinheyuan October 2011 Beijing-Jinyu Vanke City June 2012 Inner Mongolia-Jinyu Times City September 2009 Hangzhou-Guanlan Times November 2010 Beijing-Dacheng International December 2011 Beijing-Chang’an New City December 2007 Beijing-Dachengjun June 2012 Beijing-Dacheng Times Center September 2010 Beijing-Linglong Tiandi June 2012 Hainan-Dacheng Business September 2007 Apartments and Jinpan Kindergarten Tianjin-Jinyu Yuecheng December 2011 Beijing-Jianxinyuan Garden December 2008 Economical Affordable Housing Beijing-Tiantan Kungkuan June 2008 Tangshan-Jinyu Lefu October 2014 Beijing-Jinyu Feili July 2012 Others – Total	117,100,661.61 276,491,253.19 14,671,824.56 13,794,051.22 11,956,065.26 785,965,697.63 4,136,765.09 637,687,392.49 36,025,652.04 18,184,112.16 22,889,416.88 466,973,825.66 67,547,623.31 108,849,710.93 305,486,427.30 196,652,714.28 – 40,712,088.47 300,451,546.27 101,641,499.18 22,295,794.60 – – 70,556,822.94 3,620,070,945.07	– 171,148,201.94 – – – 15,118,487.52 – 534,182,300.57 6,124,180.48 645,766,703.88 326,627,767.69 1,576,557,675.72 – – 1,500,307,594.76 – 1,001,481,314.39 – 414,559,707.17 – 2,135,697.81 178,712,989.21 1,163,410,256.13 4,776,349.80 7,540,909,227.07	76,536,823.97 375,645,804.90 – 3,227,915.66 4,311,543.20 431,388,480.95 – 699,055,742.03 42,149,832.52 656,674,428.40 310,774,656.43 960,889,924.69 67,547,623.31 – 996,030,451.51 30,786,709.06 976,097,779.82 – 510,952,492.77 4,293,593.60 308,270.88 95,654,669.23 556,034,066.09 28,684,853.76 6,827,045,662.78	40,563,837.64 71,993,650.23 14,671,824.56 10,566,135.56 7,644,522.06 369,695,704.20 4,136,765.09 472,813,951.03 – 7,276,387.64 38,742,528.14 1,082,641,576.69 – 108,849,710.93 809,763,570.55 165,866,005.22 25,383,534.57 40,712,088.47 204,058,760.67 97,347,905.58 24,123,221.53 83,058,319.98 607,376,190.04 46,648,318.98 4,333,934,509.36

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. Other current assets

Other current assets
	31 December 2012	31 December 2011
Prepaid income tax Land appreciation tax paid Other prepaid tax Prepaid expenses Amortisation of long-term prepaid expenses within one year Others Available-for-sale financial assets	183,210,502.54 111,117,402.18 684,761,106.74 19,404,785.19 25,801,700.07 52,582,155.57 1,076,877,652.29	120,256,258.39 31,730,619.66 576,029,847.50 11,118,139.36 14,728,764.93 87,556,117.05 841,419,746.89 31 December 2011
	31 December 2012
Available-for-sale equity instruments	–	95,138.56

10. Available-for-sale financial assets

The above available-for-sale equity instruments represent the shares of Bank of Beijing Co., Ltd. (listed on the Shanghai Stock Exchange) held by the Group in 2011, which have been disposed of during the period.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Investments in jointly-controlled entities and associates

2012

	Type of	Place of	Authorized	Business nature	Registered	Code of
	enterprise	registration	representative	/scope of operation	capital	organization
					RMB thousand
Joint ventures
STAR-USG	Limited liability	Dachang	Deng Guangjun	Production of	USD54,520	66774000-7
Building Materials Co., Ltd.		county		mineral wool
(星牌優時吉建築				acoustic boards
材料有限公司)
BBMG Zhaode Property	Limited liability	Beijing	Huang Annan	Property development	20,000	68196579-8
Development Co., Ltd.
(北京金隅昭德
置業有限公司)
BBMG Landao Commercial	Limited liability	Beijing	An Zhiqiang	Commodities retail	6,000	79674055-6
Operation Management
Co., Ltd.
(北京金隅藍島商業運
營管理有限公司)
Associates
Beijing Gaoqiang	Limited liability	Beijing	Li Jie	Production of various	55,000	70022904-1
Concrete Co., Ltd.				concretes, pumping
(北京市高強混凝土
有限責任公司)
Krono (Beijing) Woods	Limited liability	Beijing	Deng Guangjun	Production of fiberboards	USD57,380	60004211-6
Co., Ltd.				and artificial boards
(柯諾(北京)木業
有限公司)
Krono (Beijing) Flooring	Limited liability	Beijing	Deng Guangjun	Production of	USD23,500	80114605-0
Co., Ltd.				wear-resisting
(柯諾(北京)地板				composite floors
有限公司)
Zehnder (China) Indoor	Limited liability	Beijing	Guo Yanming	Production of radiators	USD27,500	60005569-7
Climate Co., Ltd.
(森德(中國)暖通
設備有限公司)
Beijing Dynea Chemical	Limited liability	Beijing	Sun Deyang	Production of glass fibers	276,003	70000742-2
Industry Co., Ltd.
(北京太爾化工
有限公司)
OCV Reinforcements	Limited liability	Beijing	Wang Zhaojia	Production of various	55,000	60004302-0
(Beijing) Co., Ltd.				concretes, pumping
(歐文斯科寧複合材料
(北京)有限公司)
Beijing Sinobaide	Limited liability	Beijing	Liu Guosheng	Design and production	10,000	67573374-7
Technology Co., Ltd.				of complete non-standard
(北京金時佰德技術				control equipments
有限公司)

I-94 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Investments in jointly-controlled entities and associates (continued)

2012 (continued)

	Total assets	Total liabilities	Total net assets	Operating
	at end	at end	amount at end	revenue amount	Net profit/(loss)
	of the year	of the year	of the year	for the year	for the year
Joint ventures
STAR-USG	457,370,269.52	267,880,005.37	189,490,264.15	193,866,302.89	(66,951,456.70 )
(星牌優時吉建築材料有限公司)
BBMG Zhaode Property	20,000,000.00	–	20,000,000.00	–	–
Development Co., Ltd.
(北京金隅昭德置業有限公司)
BBMG Landao Commercial	25,490,451.35	16,117,289.23	9,102,756.16	130,066,467.72	2,704,059.86
Operation Management
Co., Ltd.
(北京金隅藍島商業運營管理有限公司)
Associates
Beijing Gaoqiang Concrete Co., Ltd.	602,404,408.24	503,773,873.61	98,630,534.63	661,247,250.49	24,957,925.66
(北京市高強混凝土有限責任公司)
Krono (Beijing) Woods Co., Ltd.	453,263,362.85	85,948,904.61	367,314,458.24	332,440,299.99	(55,692,426.63)
(柯諾(北京)木業有限公司)
Krono (Beijing) Flooring Co., Ltd.	–	–	–	–	–
(柯諾(北京)地板有限公司)
Zehnder (China) Indoor	624,024,009.70	274,996,177.88	349,027,831.82	187,383,043.25	29,256,097.24
Climate Co., Ltd.
(森德(中國)暖通設備有限公司)
Beijing Dynea Chemical	30,098,257.23	3,990,042.46	26,108,214.77	61,786,226.20	1,252,571.19
Industry Co., Ltd.
(北京太爾化工有限公司)
OCV Reinforcements	330,638,324.30	68,974,098.71	261,664,225.59	176,187,436.08	(5,543,376.63 )
(Beijing) Co., Ltd.
(歐文斯科寧複合材料(北京)有限公司)
Beijing Sinobaide Technology Co., Ltd.	49,696,089.59	28,001,399.70	21,739,833.96	65,819,431.91	8,238,006.48
(北京金時佰德技術有限公司)

I-95 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Long-term equity investments

==> picture [388 x 487] intentionally omitted <==

----- Start of picture text -----

31 December 2012 31 December 2011
Long-term equity investment income
under equity method 413,411,839.00 425,877,141.10
Income from long-term equity investments
measured at cost method 17,939,084.80 25,919,084.80
431,350,923.80 451,796,225.90
Less: Provisions for impairment (11,482,553.21 ) (11,482,553.21 )
419,868,370.59 440,313,672.69
2012
Increase/
Investment Opening decrease Closing Percentage of Percentage of Provision for Cash dividends
cost balance for the year balance shareholding voting right impairment for the year
(%) (%)
Equity method:
Joint ventures
STAR-USG
（星牌優時吉建築
材料有限公司） 184,628,800.88 103,053,260.43 (8,308,128.34 ) 94,745,132.09 50.00 50.00 – –
BBMG Landao
Commercial Operation
Management Co., Ltd.
Building Materials
Co., Ltd.
(北京藍島金隅商業
運營管理有限公司) 3,758,666.48 4,435,475.88 115,902.20 4,551,378.08 50.00 50.00 – 1,100,924.74
BBMG Zhaode Property
Development Co., Ltd.
(北京金隅昭德
置業有限公司) 10,000,000.00 10,000,000.00 – 10,000,000.00 50.00 50.00 – –
Subtotal 198,387,467.36 117,488,736.31 (8,192,226.14 ) 109,296,510.17 – 1,100,924.74
----- End of picture text -----

I-96 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Long-term equity investments (continued)

2012 (continued)

Increase/ Investment Opening decrease Closing Percentage of Percentage of Provision for Cash dividends cost balance for the year balance shareholding voting right impairment for the year (%) (%) Equity method: Associates Beijing Gaoqiang Concrete Co., Ltd. (北京市高強混凝土有限責任公司) 15,723,518.14 19,633,577.24 5,024,056.41 24,657,633.65 25.00 25.00 – – Krono (Beijing) Flooring Co., Ltd. (柯諾(北京)地板有限公司) 36,736,395.34 5,469,434.67 – 5,469,434.67 30.00 30.00 5,469,434.67 – Krono (Beijing) Woods Co., Ltd. (柯諾(北京)木業有限公司) 152,304,154.86 126,902,065.46 (16,707,727.99 ) 110,194,337.47 30.00 30.00 – – Zehnder (China) Indoor Climate Co., Ltd. (森德(中國)暖通設備有限公司) 78,150,006.67 85,379,053.13 7,811,377.96 93,190,431.09 26.70 26.70 – – Beijing Dynea Chemical Industry Co., Ltd. (北京太爾化工有限公司) 9,921,366.40 12,612,205.61 (863,508.96 ) 11,748,696.65 45.00 45.00 – – OCV Reinforcements (Beijing) Co., Ltd. (歐文斯科寧複合材料 (北京)有限公司) 27,557,054.00 53,441,520.44 (1,108,675.33 ) 52,332,845.11 20.00 20.00 – 1,427,166.00 Beijing Sinobaide Technology Co., Ltd. (北京金時佰德技術有限公司) 4,950,548.24 4,950,548.24 1,571,401.95 6,521,950.19 30.00 30.00 – 900,000.00 Subtotal 325,343,043.65 308,388,404.79 (4,273,075.96 ) 304,115,328.83 5,469,434.67 2,327,166.00 Total under equity method 523,730,511.01 425,877,141.10 (12,465,302.10 ) 413,411,839.00 5,469,434.67 3,428,090.74

I-97 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Long-term equity investments (continued)

2012 (continued)

2012(continued)
Investment cost	Opening balance	Increase/ decrease for the year	Closing Percentage of Percentage of balance shareholding voting right (%) (%)	Provision for impairment	Cash dividends for the year
Cost method: Tianjia (Tianjin) Building Materials Company Limited (天嘉天津建材有限公司) 1,000,000.00 Chengguan Rural Credit Cooperatives, Fangshan District, Beijing (北京市房山區城關農村信用合作社) 101,000.00 Zhongyou Jinyu (Beijing) Oil Sales Co., Ltd. (中油金隅(北京)石油銷售有限公司) 3,000,000.00 Beijing Lisifang Logistics Information Technology Service Co., Ltd. (北京利四方物流信息技術服務有限公司 900,000.00 Beijing Beizhuan Gas Station (北京市北磚加油站) 648,297.22 Beijing Xinjianxinyuan Farmer’s Market Co., Ltd. (北京市鑫建欣苑農貿市場有限公司) 380,000.00 Beijing Xinchen Ceramic Fiber Products Corp. (北京新辰陶瓷纖維製品公司) 193,219.03 Beijing Tianyun Industrial Co., Ltd. (北京天雲實業) 75,000.00 Beijing Municipal Engineering Group Co., Ltd. (北京市政建設集團有限責任公司) 7,080,000.00 Chengde BBMG Cement Co., Ltd. (承德金隅水泥有限責任公司) 6,328,450.01 Beijing Yadu Science and Technology Co., Ltd (北京亞都科技股份有限公司) 200,000.00 Hainan Dihao Furniture Co., Ltd. (海南帝豪家具公司) 2,645,418.54 Beijing Tsinghua Unisplendor Founder High-Tech Ceramics Co. Ltd. (北京清華紫光方大高技術陶瓷有限公司) 3,267,700.00 Beijing Capital Engineering Co., Ltd. (北京首都工程有限公司) 100,000.00 Total under cost method 25,919,084.80 549,649,595.81*	1,000,000.00 101,000.00 3,000,000.00 900,000.00 648,297.22 380,000.00 193,219.03 75,000.00 7,080,000.00 6,328,450.01 200,000.00 2,645,418.54 3,267,700.00 100,000.00 25,919,084.80 451,796,225.90	– – – (900,000.00 ) – – – – (7,080,000.00 ) – – – – – (7,980,000.00 ) (20,445,302.10 )	1,000,000.00 10.00 10.00 101,000.00 0.00 0.00 3,000,000.00 10.00 10.00 – – – 648,297.22 62.50 – 380,000.00 95.00 – 193,219.03 5.56 5.56 75,000.00 – – – 6,328,450.01 12.52 12.52 200,000.00 0.20 0.20 2,645,418.54 55.00 – 3,267,700.00 27.14 100,000.00 0.34 17,939,084.80 431,350,923.80	– – – – – – – – – – – 2,645,418.54 – 0.34 6,013,118.54 11,482,553.21	– – – – – – – – – – – 3,267,700.00 100,000.00 – 3,428,090.74

The long-term equity investments of the Group as at 31 December 2012 and 31 December 2011 are unlisted investments.

The reasons for the above companies which the Group has more than 50% interest but do not have control are set out in Note IV.3.
I-98 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Investment properties

2012

==> picture [393 x 224] intentionally omitted <==

----- Start of picture text -----

Increase in the year Decrease in the year
Transferred from
inventories or Gains from Transferred to
Opening self-occupied changes in self-occupied Closing
balance Addition properties fair value Disposed properties balance
(Note)
Cost
Buildings 6,185,802,403.50 1,564,975.38 147,501,447.36 – – – 6,334,868,826.24
Changes in fair value
Buildings 5,413,197,596.50 – 156,132,302.22 936,201,275.04 – – 6,505,531,173.76
Carrying amount
Buildings 11,599,000,000.00 1,564,975.38 303,633,749.58 936,201,275.04 – – 12,840,400,000.00
----- End of picture text -----

In light of the new leasing contracts and leasing areas, certain properties transferred from fixed assets or inventories to investment properties during the year. The difference between the appraised value at the time of transfer and the carrying amount was recognised as capital reserves. Please refer to Note V.56.

All the above investment properties are located in the PRC, and their land use rights by remaining maturity are less than 50 years.

The Group’s investment properties were valued by Savills Valuation and Professional Services Limited, an independent professionally qualified valuer on an open market existing use basis, the fair value of which as at 31 December 2012 was RMB12,840,400,000.00 (31 December 2011: RMB11,599,000,000.00).

As at 31 December 2012, the investment properties mentioned above were leased out under operating leases and were held for long-term leasing purposes.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Investment properties (continued)

As at 31 December 2012, procedures for the title certificates for the investment properties with carrying amount of approximately RMB299,500,000.00 were yet to be duly completed. These investment properties were acquired through the business combination under common control in 2011, and the Group is in the process of handling the procedures for changing of relevant titles. The management of the Company is of the view that the Group has the rights to occupy and use the above property legally and effectively. The management of the Company also believe that the above matter does not have any significant adverse impact on the overall financial position of the Group as at 31 December 2012.

As at 31 December 2012, the investment properties with carrying amount of RMB821,900,000.00 were pledged as securities for the borrowings of the parent company (31 December 2011: RMB621,500,000.00) (Note V.22 and Note VI.5(4)) and the investment properties with carrying amount of RMB537,100,000.00 (31 December 2011: RMB2,705,900,000.00) were pledged as securities for the bank borrowings of the Company (Note V.22).

14. Fixed assets

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Cost Buildings Machinery equipment Transporting equipment Electronic equipment Office equipment Accumulated depreciation Buildings Machinery equipment Transporting equipment Electronic equipment Office equipment Net book value Buildings Machinery equipment Transporting equipment Electronic equipment Office equipment	9,613,393,227.05 9,407,785,697.87 787,310,052.49 211,533,350.79 284,273,854.86 20,304,296,183.06 1,919,972,162.38 2,987,848,095.49 338,263,834.56 125,548,943.19 127,589,042.25 5,499,222,077.87 7,693,421,064.67 6,419,937,602.38 449,046,217.93 85,984,407.60 156,684,812.61 14,805,074,105.19	1,074,474,304.81 713,615,668.82 175,537,518.82 20,372,039.60 27,144,466.90 1,976,656,013.73 322,520,985.70 544,092,743.21 79,433,861.21 33,170,155.30 22,580,117.27 1,001,797,862.69	322,481,772.31 282,705,365.63 43,595,474.46 5,322,214.56 85,546,733.40 705,163,575.14 154,905,455.37 213,428,897.91 18,764,780.27 4,893,869.68 7,877,443.56 399,870,446.79	10,365,385,759.55 9,838,696,001.06 919,252,096.85 226,583,175.83 225,871,588.36 21,575,788,621.65 2,087,587,692.71 3,318,511,940.79 398,932,915.50 153,825,228.81 142,291,715.96 6,101,149,493.77 8,277,798,066.84 6,520,184,060.27 520,319,181.35 72,757,947.02 83,579,872.40 15,474,639,127.88

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Fixed assets (continued)

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Provision for impairment Buildings Machinery equipment Transporting equipment Electronic equipment Office equipment Carrying amount Buildings Machinery equipment Transporting equipment Electronic equipment Office equipment	45,879,616.42 136,752,139.68 6,918,771.75 985,603.96 1,077,159.61 191,613,291.42 7,647,541,448.25 6,283,185,462.70 442,127,446.18 84,998,803.64 155,607,653.00 14,613,460,813.77	4,323,016.34 3,805,946.51 3,125.48 – 381,350.56 8,513,438.89	9,288,139.91 47,214,951.83 72,591.21 61,908.10 642.18 56,638,233.23	40,914,492.85 93,343,134.36 6,849,306.02 923,695.86 1,457,867.99 143,488,497.08 8,236,883,573.99 6,426,840,925.91 513,469,875.33 71,834,251.16 82,122,004.41 15,331,150,630.80

The amount of depreciation provided for 2012 was RMB1,001,797,862.69 (2011: RMB966,182,590.57). The amount transferred to the cost of fixed assets from construction in progress for the year was RMB1,460,153,518.91 (2011: RMB2,743,840,553.88).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Fixed assets (continued)

As at 31 December 2012, the buildings with carrying amount of RMB8,527,994.62 were pledged as securities for bank borrowings of the Group (31 December 2011: RMB87,783,961.47) (Note V.22).

As at 31 December 2012, the Group had no temporarily idle fixed assets, and no fixed assets acquired under finance leases (31 December 2011: Nil).

The fixed assets leased out under operating leases are as follows:

	31 December 2012 Carrying amount	31 December 2011 Carrying amount
Buildings Machinery equipment Total	725,464,921.56 437,166,233.76 1,162,631,155.32	498,432,240.31 174,262,758.43 672,694,998.74

As at 31 December 2012, there was no incomplete procedure for the title certificates of certain fixed assets (31 December 2011: RMB8,044,685.77).

As at 31 December 2012, the carrying amount of the buildings held for sale was approximately RMB173,754,339.96. Pursuant to the agreements signed, these buildings will be transferred to a third party in 2013, and a net revenue of approximately RMB235,070,000.00 is expected (31 December 2011: Nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Construction in progress

Construction in	progress
		31 December 2012			31 December 2011
	Gross	Provision for		Gross	Provision for	Carrying
	carrying amount	impairment	Carrying amount	carrying amount	impairment	amount
Beijing Liulihe Cement
– Project concerning
comprehensive utilization
of fly ash	51,930,432.60	–	51,930,432.60	4,931,848.85	–	4,931,848.85
Beijing Liulihe Cement
– Southern desulfuration
gypsum repository project	12,387,367.22	–	12,387,367.22	7,499,264.81	–	7,499,264.81
Luquan BBMG Dingxin Cement
– Stripping of 1st/2nd
sub orebody	34,716,831.62	–	34,716,831.62	–	–	–
Cangzhou Lingang BBMG Cement
– Mixing Plant	13,929,104.06	–	13,929,104.06	–	–	–
Cangzhou Lingang BBMG Cement
– Storage tank of fly ash	12,955,854.09	–	12,955,854.09	–	–	–
Baoding Taihang Heyi Cement
– Limestone project	119,179,342.02	–	119,179,342.02	27,894,955.41	–	27,894,955.41
Handan BBMG Taihang Cement
– production line with capacity
of 1.2 million tons aggregate
concrete	10,255,892.09	–	10,255,892.09	–	–	–
Handan BBMG Taihang Cement
.– technical transformation
in energy – saving and
consumption reduction of
cement mill	25,635,084.70	–	25,635,084.70	–	–	–
Zhangjiakou BBMG Cement
– Works for cement grinding
station with capacity of
1 million tons	68,097,901.80	–	68,097,901.80	999,635.33	–	999,635.33
Tianjin Zhenxing Cement
– Energy-saving technical
innovation of one line of
cement mill	38,246,556.57	–	38,246,556.57	50,000.00	–	50,000.00
Qinyang BBMG Cement
– Clinker production line	11,297,540.06	–	11,297,540.06	–	–	–
BBMG Mineral Industry
– Integration project for
non-coal mine mountains
in Fangshan District	42,377,141.36	–	42,377,141.36	560,000.00	–	560,000.00
Beijing Cement Plant
– Demonstration project
for brickmaking by
stone crusher	20,217,391.06	–	20,217,391.06	–	–	–
Zuoquan BBMG Cement
– Clinker cement production line
with capacity of 2500 tones
per day	464,119,740.91	–	464,119,740.91	9,677,085.47	–	9,677,085.47

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Construction in progress (continued)

Construction in	progress(c	ontinued)
	Gross carrying amount	31 December 2012 Provision for impairment	Carrying amount	Gross carrying amount	31 December 2011 Provision for impairment	Carrying amount
Xuanhua BBMG Cement – 2500 tons cement production line by utilization of carbide slag Guangling Jinyu Cement – Clinker cement production line Jinyu Energy-Saving Technology – Mineral wool project Beijing BBMG Coating – Dachang base project BBMG (Dachang) New Building Materials – Mineral wool project, Alavus project Beijing Alavus – Alavus project BBMG – Huanmao decoration project BBMG – Decoration improvements project in Xiaohuangzhuang Beijing Liulihe Cement – Phase II Project of cement grinding mill BBMG Concrete – Project in Tiancun station Tianjin BBMG Concrete – Station construction works for brickyard Siping BBMG Cement – Cogeneration project Qinyang BBMG Cement – Project concerning comprehensive utilization of carbide slag Lingchuan BBMG Cement – Cogeneration project Beijing Cement Plant –Renovation of raw mill and coal mill Doudian – Air-entrapping plant project Building Materials Academy Technologies upgrading for gypsum plaster production line in Doudian Others	424,949,649.94 107,867,495.19 100,906,598.64 27,357,384.93 42,247,587.93 23,089,647.23 104,753,257.68 47,664,623.90 220.88 – – – 48,253.02 4,952,468.96 – 8,061,042.39 152,850.00 337,814,728.43 2,155,211,989.28	– – – – – – – – – – – – – – – – – 8,717,380.85 8,717,380.85	424,949,649.94 107,867,495.19 100,906,598.64 27,357,384.93 42,247,587.93 23,089,647.23 104,753,257.68 47,664,623.90 220.88 – – – 48,253.02 4,952,468.96 – 8,061,042.39 152,850.00 329,097,347.58 2,146,494,608.43	85,185,320.11 – 400,757.37 30,322,356.13 40,130,175.88 – 1,116,000.00 – 51,646,188.61 19,301,021.04 13,196,971.48 40,521,555.97 142,518,460.88 24,802,249.08 16,963,465.92 17,767,787.46 13,803,693.89 409,996,309.14 959,285,102.83	– – – – – – – – – – – – – – – – – 8,717,380.85 8,717,380.85	85,185,320.11 – 400,757.37 30,322,356.13 40,130,175.88 – 1,116,000.00 – 51,646,188.61 19,301,021.04 13,196,971.48 40,521,555.97 142,518,460.88 24,802,249.08 16,963,465.92 17,767,787.46 13,803,693.89 401,278,928.29 950,567,721.98

As at 31 December 2012, none of the construction in progress of the Group had restrictions in its ownership.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Construction in progress (continued)

							Percentage
				Transferred to			of project in
			Increase in	fixed assets		Source of	budget
Projects	Budget	Opening balance	the year	for the year	Closing balance	funding	(%)
Beijing Liulihe Cement
– Project concerning comprehensive	61,290	4,931,848.85	46,998,583.75	–	51,930,432.60	self-financing	84.73
utilization of fly ash						/borrowing
– Southern desulfuration gypsum
repository project	14,400	7,499,264.81	4,888,102.41	–	12,387,367.22	self-financing	86.02
– Phase II Project of cement
grinding mill	65,000	51,646,188.61	16,718,975.25	68,364,942.98	220.88	self-financing	100.00
Luquan BBMG Dingxin Cement
– Stripping of 1st/2nd sub orebody	100,000	–	34,716,831.62	–	34,716,831.62	self-financing	34.72
Cangzhou Lingang BBMG Cemen
– Mixing Plant	24,121	–	13,929,104.06	–	13,929,104.06	self-financing	57.75
– Storage tank of fly ash	19,910	–	12,955,854.09	–	12,955,854.09	self-financing	65.07
Baoding Taihang Heyi Cement Co., Ltd.
– Limestone project	110,184	27,894,955.41	91,284,386.61	–	119,179,342.02	self-financing	100.00
						/borrowing
Handan BBMG Taihang Cement Co., Ltd.
– production line with capacity of
1.2 million tons aggregate concrete	16,500	–	10,255,892.09	–	10,255,892.09	self-financing	62.16
– technical transformation in
energy – saving and consumption
reduction of cement mill	57,910	–	25,635,084.70	–	25,635,084.70	self-financing	44.27
Zhangjiakou BBMG Cement
– Works for cement grinding station
with capacity of 1 million tons	85,759	999,635.33	67,098,266.47	–	68,097,901.80	self-financing	79.41
Tianjin Zhenxing Cement
– Energy-saving technical innovation
of one line of cement mill	39,950	50,000.00	38,196,556.57	–	38,246,556.57	self-financing	95.74
Qinyang BBMG Cement
– Clinker production line	44,580	–	20,241,179.38	8,943,639.32	11,297,540.06	self-financing	25.34
BBMG Mineral Industry
– Integration project for non-coal	157,920	560,000.00	41,817,141.36	–	42,377,141.36	self-financing	26.83
mine mountains in Fangshan District						/borrowing
Beijing Cement Plant
– Demonstration project for
brickmaking by stone crusher	25,000	–	20,217,391.06	–	20,217,391.06	self-financing	80.87

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Construction in progress (continued)

Projects Budget	Opening balance	Increase in the year	Transferred to fixed assets for the year	Percentage of project in Source of budget Closing balance funding (%)
Zuoquan BBMG Cement – Clinker cement production line with capacity of 2500 tones per day 545,420 Xuanhua BBMG Cement – 2500 tons cement production line by utilization of carbide slag 419,000 Guangling Jinyu Cement – Clinker cement production line 189,479 Jinyu Energy-Saving Technology – Mineral wool project 170,000 Beijing BBMG Coating – Dachang base project 36,080 BBMG (Dachang) New Building Materials – Mineral wool project, Alavus project 100,500 Beijing Alavus – Alavus project 31,500 BBMG Concrete – Project in Tiancun station – Tianjin BBMG Concrete – Station construction works for brickyard 53,000 Siping BBMG Cement – Cogeneration project 53,000 Qinyang BBMG Cement – Project concerning comprehensive utilization of carbide slag 50,000 Lingchuan BBMG Cement – Cogeneration project 50,000 Beijing Cement Plant – Renovation of raw mill and coal mill 57,600 Doudian – Air-entrapping plant project 19,621 Building Materials Academy – Technologies upgrading for gypsum plaster production line in Doudian 19,820 Huanmao Decoration Project 130,000 Decoration Improvement Project in Xiaohuangzhuang 50,000 Other	9,677,085.47 85,185,320.11 – 400,757.37 30,322,356.13 40,130,175.88 – 19,301,021.04 13,196,971.48 40,521,555.97 142,518,460.88 24,802,249.08 16,963,465.92 17,767,787.46 13,803,693.89 1,116,000.00 – 409,996,309.14 959,285,102.83	454,442,655.44 339,764,329.83 107,867,495.19 100,505,841.27 1,186,505.93 46,454,350.03 23,089,647.23 1,662,822.07 840,572.54 7,709,031.14 – 29,519,084.24 43,189,172.29 10,257,744.76 3,990,260.85 103,637,257.68 47,664,623.90 889,345,661.56 2,656,080,405.37	– – – – 4,151,477.13 44,336,937.98 – 20,963,843.11 14,037,544.02 48,230,587.11 142,470,207.86 49,368,864.36 60,152,638.21 19,964,489.83 17,641,104.74 – – 961,527,242.26 1,460,153,518.91	464,119,740.91 self-financing 85.09 424,949,649.94 borrowing 100.00 107,867,495.19 self-financing 56.93 100,906,598.64 self-financing 59.36 27,357,384.93 self-financing 75.82 42,247,587.93 self-financing 42.04 23,089,647.23 self-financing 73.30 – self-financing – – self-financing – – self-financing – 48,253.02 self-financing 0.10 4,952,468.96 self-financing 9.90 /borrowing – self-financing – 8,061,042.39 borrowing 41.08 152,850.00 self-financing 0.77 104,753,257.68 self-financing 80.58 47,664,623.90 self-financing 95.33 337,814,728.44 2,155,211,989.29

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Construction in progress (continued)

The analysis of amount and capitalization rate of borrowing costs included in balances for construction in progress is sets out below:

2012

Progress of works (%)	Accumulated amount of interest capitalized	Of which: Interest capitalized Capitalized rate for the year for the year (%)
Beijing Liulihe Cement – Project concerning comprehensive utilization of fly ash 84.73 Baoding Taihang Heyi Cement Co., Ltd.– Limestone project 100.00 BBMG Mineral Industry – Integration project for non-coal mine mountains in Fangshan District 26.83 Xuanhua BBMG Cement – 2500 tons cement production line by utilization of carbide slag 100.00 Total	1,823,255.53 3,028,510.00 18,413,397.96 25,196,710.49 48,461,873.98	1,823,255.53 6.27 2,953,890.00 6.27 18,413,397.96 6.27 21,854,923.51 6.27 45,045,467.00

I-107 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Construction in progress (continued)

Provision for impairment of construction in progress for 2012:

	Opening balance	Increase in the year	Decrease in the year	Closing Reason for balance making provisions
Luquan BBMG Dingxin Cement Co., Ltd. – A sub project Handan BBMG Taihang Cement Co., Ltd. – Technological upgrading projects of the old lines Beijing BBMG Cement Trading Co., Ltd. (北京金隅水泥經貿有限公司) – New countryside bulk cement logistics distribution Luquan BBMG Dingxin Cement Co., Ltd. – Assets in Zhuozhou	1,299,924.00 6,009,693.38 751,763.47 656,000.00 8,717,380.85	– – – – –	– – – – –	1,299,924.00 Recoverable amount after testing is lower than the carrying amount 6,009,693.38 Shut down for years due to problems occurred in technological upgrading 751,763.47 It is expected it can not generate assets due to suspension of construction in progress 656,000.00 Recoverable amount after testing is lower than the carrying amount 8,717,380.85

I-108 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16 Construction materials

2012

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Special-purpose materials Special-purpose equipment Equipment and instruments Provision for impairment	1,699,734.20 24,085,214.34 2,163,762.59 (12,705,917.71 ) 15,242,793.42	55,606,638.15 59,781,770.55 12,589,136.76 – 127,977,545.46	52,296,628.28 65,240,053.87 11,401,870.93 – 128,938,553.08	5,009,744.07 18,626,931.02 3,351,028.42 (12,705,917.71 ) 14,281,785.80

17. Intangible assets

2012

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Cost Land use rights Computer software licenses Mining rights Trademark rights Others Accumulated amortization Land use rights Computer software licenses Mining rights Trademark rights Others Net book value Land use rights Computer software licenses Mining rights Trademark rights Others	3,188,637,038.51 33,922,831.34 583,847,142.81 16,670,000.00 55,740,949.10 3,878,817,961.76 368,041,061.36 17,866,649.25 60,495,308.52 – 37,989,262.52 484,392,281.65 2,820,595,977.15 16,056,182.09 523,351,834.29 16,670,000.00 17,751,686.58 3,394,425,680.11	53,106,162.81 734,065.85 294,495,016.99 – 44,599,217.76 392,934,463.41 51,044,136.33 636,811.10 14,699,141.71 – 2,667,166.21 69,047,255.35	77,768,514.67 3,974,473.90 – – – 81,742,988.57 13,878,206.48 3,927,773.90 – – – 17,805,980.38	3,163,974,686.65 30,682,423.29 878,342,159.80 16,670,000.00 100,340,166.86 4,190,009,436.60 405,206,991.21 14,575,686.45 75,194,450.23 – 40,656,428.73 535,633,556.62 2,758,767,695.44 16,106,736.84 803,147,709.57 16,670,000.00 59,683,738.13 3,654,375,879.98

I-109 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Intangible assets (continued)

2012 (continued)

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Provision for impairment Land use rights Computer software licenses Mining rights Trademark rights Others Carrying amount Land use rights Computer software licences Mining rights Trademark rights Others	– – 40,043,841.71 – 2,310,000.00 42,353,841.71 2,820,595,977.15 16,056,182.09 483,307,992.58 16,670,000.00 15,441,686.58 3,352,071,838.40	6,340,399.11 – – 5,000,000.00 – 11,340,399.11	– – – – – –	6,340,399.11 – 40,043,841.71 5,000,000.00 2,310,000.00 53,694,240.82 2,752,427,296.33 16,106,736.84 763,103,867.86 11,670,000.00 57,373,738.13 3,600,681,639.16

I-110 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Intangible assets (continued)

All land use rights owned by the Group are within the PRC and are analysed as follows according to the remaining useful lives:

	31 December 2012	31 December 2011
Less than 50 years Longer than 50 years (inclusive) Total	2,743,675,422.15 8,751,874.18 2,752,427,296.33	2,743,118,836.16 77,477,140.99 2,820,595,977.15

For the year 2012, the amortisation amount of intangible assets was RMB69,047,255.35.

As at 31 December 2012, the useful life of trademark rights with a carrying amount of RMB11,670,000.00 was indefinite (31 December 2011: RMB16,670,000.00). The Group can apply for extension at the end of the expiration of protection periods of trademark rights with lower handling fees, and according to comprehensive judgment of product life cycle, market conditions and other factors, these trademark rights will bring economic benefits to the Group during indefinite periods.

As at 31 December 2012, the Group has no intangible asset of which ownership is subject to restrictions (31 December 2011: RMB2,042,851.93).

I-111 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. GOODWILL

2012

Asset group	Opening balance	Increase in the year	Transfer-out in the year	Closing balance
Luquan BBMG Dingxin Cement Co., Ltd. Gongyi Tongda Zhongyuan Refractory Testing Centre Co., Ltd. Handan BBMG Taihang Cement Co., Ltd. Beijing Taihang Qianjing Cement Co., Ltd. Baoding Taihang Heyi Cement Co., Ltd. Handan Taihang Cement Co., Ltd. Beijing Qianglian Cement Co., Ltd. Tianjin Zhenxing Cement Co., Ltd. Handan Shexian BBMG Cement Co., Ltd. Harbin Taihang Xinglong Cement Co., Ltd. Provision for impairment	189,815,999.91 3,967,009.95 26,884,752.28 9,482,871.64 11,428,946.82 522,323.32 2,742,710.29 10,931,009.96 56,276,121.38 1,507,000.00 313,558,745.55 (1,507,000.00 ) 312,051,745.55	– – – – – – – – – – – – –	– – – – – – – – – 1,507,000.00 1,507,000.00 (1,507,000.00 ) –	189,815,999.91 3,967,009.95 26,884,752.28 9,482,871.64 11,428,946.82 522,323.32 2,742,710.29 10,931,009.96 56,276,121.38 – 312,051,745.55 – 312,051,745.55

Measurement basis and major assumptions in determining the recoverable amount of the above assets groups are as follows:

The recoverable amounts of the above assets groups are recognised according to their current value of estimated future cash flows, which are based on the five-year financial budget approved by the management at a discount rate of 13%-15% (2011: 13%). The estimated cash flows of these assets groups in five years are measured at a fixed growth rate of 1% per annum (2011: 2%). Other key assumptions adopted during the evaluation include the estimated cash inflows and outflows relevant to the estimated income and estimated gross profit, and the above assumptions are based on the previous performance of these assets groups and the management’s expectations for the market development.

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APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19. Long-term deferred expenditures

2012

	Opening balance	Increase in the year	Amortisations for the year	Closing balance
Decoration Leasehold improvement for fixed assets rent Land lease prepayments Cost of stripping mines Others Less: amount categorized as amortisations of current assets within one year	68,271,387.54 7,012,238.52 21,612,912.43 40,406,780.45 47,333,621.39 184,636,940.33 14,728,764.93 169,908,175.40	24,030,692.26 4,007,821.17 5,776,000.00 9,026,495.67 23,260,630.61 66,101,639.71	11,744,091.77 1,400,972.10 13,139,720.04 3,534,842.75 5,888,691.20 35,708,317.86	80,557,988.03 9,619,087.59 14,249,192.39 45,898,433.37 64,705,560.80 215,030,262.18 25,801,700.06 189,228,562.12

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20. Deferred income tax assets/liabilities

Deferred income tax assets and deferred income tax liabilities are as follows:

Recognised deferred income tax assets and liabilities:

	31 December 2012 RMB	31 December 2011 RMB
Deferred income tax assets Provision for LAT Deductible tax losses Provisions for impairment of assets Accrual of property development cost Unrealised profits and losses of internal transactions Others Deferred income tax liabilities Revaluation of investment properties Differences arising from deductible depreciation expenses Fair value adjustment arising from business combination Changes of fair value of available-for-sale financial assets Unrealised income of internal transactions Others	341,382,820.54 44,001,525.14 98,891,379.22 215,015,749.31 482,470,310.49 24,005,557.79 1,205,767,342.49 1,392,353,493.43 313,733,206.95 242,290,809.00 – – 41,615,707.64 1,989,993,217.02	236,820,719.12 36,482,663.52 110,785,900.79 231,889,854.78 110,294,119.05 9,744,411.81 736,017,669.07 1,479,503,116.84 305,523,919.88 284,362,876.98 21,221.64 142,059,328.58 23,230,524.00 2,234,700,987.92

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20. Deferred income tax assets/liabilities (continued)

Temporary differences corresponding to assets and liabilities that lead to such differences are as follows:

Amount of temporary differences

	31 December 2012 RMB	31 December 2011 RMB
Deductible differences: Provision for LAT Deductible tax losses Provision for impairment of assets Accrual of property development cost Unrealised profits and losses of internal transactions Others Taxable differences: Revaluation of investment properties Differences arising from deductible depreciation expenses Fair value adjustment arising from business combination Changes of fair value of available-for-sale financial assets Unrealised income of internal transactions Others	1,365,531,282.16 176,006,100.56 395,565,516.88 860,062,997.24 1,929,881,241.96 96,022,231.16 4,823,069,369.96 5,569,413,973.72 1,254,932,827.80 969,163,236.00 – – 166,462,830.56 7,959,972,868.08	947,282,876.48 145,930,654.08 443,143,603.16 927,559,419.12 441,176,476.20 38,977,647.24 2,944,070,676.28 5,918,012,467.36 1,222,095,679.52 1,137,451,507.92 84,886.56 568,237,314.32 92,922,096.00 8,938,803,951.68

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20. Deferred income tax assets/liabilities (continued)

Unrecognised income deferred tax assets are as follows:

	31 December 2012 RMB	31 December 2011 RMB
Deductible tax losses Deductible temporary differences	393,259,968.04 250,808,757.91 644,068,725.95	1,010,521,754.52 249,301,290.61 1,259,823,045.13

The deductible tax losses that are not recognised as deferred income tax assets will expire in the following years:

	31 December 2012 RMB	31 December 2011 RMB
2012 2013 2014 2015 2016 2017	– 13,627,201.55 33,833,624.49 43,515,892.45 123,304,990.50 178,978,259.05 393,259,968.04	22,481,739.15 66,279,766.76 49,628,351.13 342,279,637.72 529,852,259.76 – 1,010,521,754.52

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Provisions for assets impairment

2012

	Opening balance RMB	Provision for the year RMB	Disposal of subsidiaries RMB	Reversal RMB	Write-off RMB	Closing balance RMB
Provision of bad debts: Of which: Accounts receivable Other receivables Provision for decline in value of inventories Provision for impairment of long-term equity investments Provision for impairment of fixed assets Provision for impairment of construction materials Provision for impairment of construction in progress Provision for impairment of intangible assets Provision for impairment of goodwill	486,178,667.43 359,546,649.96 126,632,017.47 69,576,804.80 11,482,553.21 191,613,291.42 12,705,917.71 8,717,380.85 42,353,841.71 1,507,000.00 824,135,457.13	78,909,973.30 60,670,504.03 32,906,268.11 6,038,430.30 – 8,513,438.89 – – 11,340,399.11 – 104,802,241.60	(6,124,163.26 ) (1,969,450.61 ) (4,154,712.65 ) (2,082,297.45 ) – (23,007,628.56 ) – – – – (31,214,089.27 )	(57,082,887.40 ) (36,675,716.22 ) (35,073,970.02 ) – – – – – – – (57,082,887.40 )	(99,540,665.24 ) (90,328,285.46 ) (9,212,379.78 ) (47,747,698.55 ) – (33,630,604.67 ) – – – (1,507,000.00 ) (182,425,968.46 )	402,340,924.83 291,243,701.70 111,097,223.13 25,785,239.10 11,482,553.21 143,488,497.08 12,705,917.71 8,717,380.85 53,694,240.82 – 658,214,753.60

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

22. Assets with title restrictions

2012

	Opening balance RMB	Increase in the year RMB	Decrease in the year RMB	Closing balance RMB Notes
Pledged assets: Accounts Receivable Bills Receivable Inventories Fixed assets Land use right Investment properties Assets whose titles are restricted for other reasons-cash and bank balances Guarantee deposit for L/C Quality/performance deposits Guarantee deposits for acceptance bills Restricted cash arising from pre-sales of properties Other restricted cash	– 9,850,000.00 7,376,599,492.50 87,783,961.47 2,042,851.93 3,327,400,000.00 12,177,894.00 63,173,591.35 70,871,916.10 2,541,681,564.29 104,103,026.01 13,595,684,297.65	30,808,880.00 – – – – – 27,028,405.85 – 85,261,689.24 – – 143,098,975.09	– 9,850,000.00 2,381,642,369.28 79,255,966.85 2,042,851.93 1,968,400,000.00 – 11,222,259.21 – 489,179,917.66 55,504,473.72 4,997,097,838.65	30,808,880.00 (1 ) – 4,994,957,123.22 (1 ) 8,527,994.62 (1 ) – 1,359,000,000.00 (1 ) 39,206,299.85 51,951,332.14 156,133,605.34 2,052,501,646.63 (2 ) 48,598,552.29 8,741,685,434.09

Note:

(1) As at 31 December 2012, the Group obtained bank borrowings of RMB3,208,120,425.34 secured by accounts receivable with a carrying amount of 30,808,880.00, inventories with a carrying amount of RMB4,994,957,123.22, fixed assets with a carrying amount of RMB8,527,994.62 and investment properties with a carrying amount of RMB537,100,000.00 (Note V.5, 8, 13 and 14). As at 31 December 2012, investment properties with carrying amount of RMB821,900,000 were pledged as securities for a guarantee in the benefit of the parent company (Note VI.5(4)).
(2) In accordance with relevant rules, property developers shall place all the pre-sales of commodity houses in specially designated bank accounts for supervision. The deposits can only be used for construction projects. Written application shall be made to the supervisory bank before the use of the deposits.
(3) As at 31 December 2012, the carrying amount of restricted cash and bank balances of the Group was RMB2,348,391,436.25 (Note V.1).
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

23. Short-term loans

Short-term loans
	31 December 2012 RMB	31 December 2011 RMB
Pledged loans (Note 1) Mortgaged loans (Note 1) Guaranteed loans (Note 2) Credit loans	30,808,880.00 250,000,000.00 799,978,000.00 10,307,500,000.00 11,388,286,880.00	9,850,000.00 480,000,000.00 637,470,000.00 10,159,541,222.71 11,286,861,222.71

Note 1: Collaterals and their values for mortgaged loans of the Group as at 31 December 2012 are detailed in note V.22.

Note 2: As at 31 December 2012, included in the guaranteed loans, balances of RMB60,000,000.00 were guaranteed by BBMG Group, while the remaining were guaranteed by the Company and its subsidiaries.

As at 31 December 2012, the above loans bore an interest rate of 5%-6.30% per annum.

As at 31 December 2012, the Group had no outstanding short-term loans that were due.

As at 31 December 2012, short-term credit loans with balances of RMB2,850,000,000.00 were entrusted loans from the Parent.

24. Bills payable

Bills payable
	31 December 2012 RMB	31 December 2011 RMB
Bank acceptance bills	430,004,020.52	361,817,226.63

As at 31 December 2012, balances due in the next accounting period were RMB430,004,020.52.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

25. Accounts payable

Accounts payable are non-interest bearing and shall generally be paid within 90 days.

An aging analysis of accounts payable is as follows:

	31 December 2012 RMB	31 December 2011 RMB
Within 1 year 1-2 years 2-3 years Over 3 years	4,868,812,557.66 1,317,545,708.47 228,144,901.50 154,698,740.14 6,569,201,907.77	4,170,179,825.53 562,097,531.33 276,770,222.96 115,306,540.69 5,124,354,120.51

As at 31 December 2012, other than the accounts payable of RMB82,582,881.98 due to the BBMG Group (31 December 2011: Nil), there were no accounts payable to shareholders holding more than 5%(5% included) of the Company’s voting rights (31 December 2011: Nil).

Please refer to note VI “Relationships and Transactions with Related Parties” for accounts payable to related parties as at 31 December 2012.

As at 31 December 2012, significant accounts payable aging over 1 year were as follows:

				Percentage of
		Relationship		total accounts	Reasons for
		with the Group	Amount	payable (%)	non-payment
			RMB
Supplier	1	Third party	142,424,163.57	2.17	Undue
Supplier	2	Third party	89,944,102.08	1.37	Undue
Supplier	3	Third party	71,194,531.00	1.08	Undue
Supplier	4	Third party	64,925,988.83	0.99	Undue
Supplier	5	Third party	47,500,000.00	0.72	Undue

For the above accounts payable with significant amounts of which aging are more than one year, the repaid amounts subsequent to the balance date are RMB37,700,000.00.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

26. Receipts in advance

An aging analysis on receipts in advance is as follows:

	31 December 2012 RMB	31 December 2011 RMB
Within 1 year 1 to 2 years 2 to 3 years Over 3 years An analysis on receipts in advance by nature is as follows:	12,996,525,315.78 341,001,234.59 848,080,717.60 21,343,036.96 14,206,950,304.93	7,306,937,261.64 4,279,400,153.00 4,316,491.00 31,124,414.00 11,621,778,319.64

An analysis on receipts in advance by nature is as follows:

	31 December 2012	31 December 2011
Advances on sale of goods Advances on pre-sale of properties Advances on construction costs Advances on rents and property fees	1,190,368,520.87 12,514,947,954.70 113,638,759.71 387,995,069.65 14,206,950,304.93	1,032,060,234.00 10,289,139,188.15 132,669,016.99 167,909,880.50 11,621,778,319.64

As at 31 December 2012, there were no receipts in advance due to shareholders holding more than 5%(5% included) of the Company’s voting rights (31 December 2011: nil).

Please refer to Note VI “Relationships and Transactions with Related Parties” for receipts in advance from related parties as at 31 December 2012.

As at 31 December 2012, significant receipts in advance aging over 1 year were as follows:

		Relationship		Reasons for being
		with the Group	Amount	outstanding
Customer	1	Third Party	75,070,000.00	Undue
Customer	2	Third Party	1,062,685,870.94	Properties have not
				been delivered after
				housing prepayment

Within the abovementioned significant receipts in advance aging over 1 year, amounts of RMB2,765,402.00 were settled subsequent to balance sheet date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

26. Receipts in advance (continued)

Details of advances on pre-sale of properties are as follows:

Expected settlement Proportion of Projects date of the first batch the pre-sales	31 December 2012	31 December 2011
Beijing – Chaoyang New City December 2012 97% Beijing – Jinyu Town-House December 2012 95% Beijing – Tuqiao Huashijiang December 2012 54% Beijing – Tuqiao Tongheyuan December 2012 100% Beijing – Kanghuiyuan December 2012 94% Beijing – Guanlan Times December 2013 99% Beijing – Yanshan Affordable Housing June 2014 94% Beijing – Yueheyuan December 2013 99% Beijing – Jinheyuan December 2012 100% Beijing – Taiheyuan December 2013 100% Beijing – Ziyouzhu June 2013 96% Beijing – Binheyuan March 2014 100% Beijing – Ruiheyuan September 2014 94% Hangzhou – Guanlan Times December 2013 53% Beijing – Chang’an New City July 2013 99% Beijing – Dacheng Times Center December 2013 99% Beijing – Linglong Tiandi December 2013 100% Beijing – Dachengjun December 2013 94% Beijing – Xigongguan October 2013 91% Beijing – Jingcheng Center December 2013 98% Tianjin – Jinyu Yuecheng December 2012 85% Inner Mongolia Jinyu Times City June 2014 94% Jinyu Lefu (Tangshan) September 2013 13% Beijing – Feili Huating July 2012 87% Beijing – Jinyu Vanke City December 2013 99% Haikou – Meilinghu October 2013 39% Chongqing – Shidaiduhui December 2013 66% Chongqing – Nanshanjun September 2013 2% Beijing – I Cube June 2013 46% Others	24,083,204.50 15,501,770.05 176,433,732.62 21,520,089.15 89,763,265.40 1,189,963,259.33 1,668,087,526.18 1,777,482,531.30 2,421,945.96 1,140,160,363.90 320,765,233.73 72,329,200.00 400,000,000.00 415,880,807.00 62,287,887.02 10,564,548.00 22,745,862.00 1,521,044,402.23 473,115,023.00 401,570,782.00 119,197,162.00 142,832,999.47 180,064,942.44 195,638,813.00 843,561,281.00 209,845,265.00 236,121,492.00 9,859,299.69 392,592,395.56 379,512,871.17 12,514,947,954.70	384,028,609.45 4,250,000.00 162,315,728.27 496,647,686.28 479,662,743.20 298,837,354.38 483,179,300.35 872,288,103.80 45,937,954.85 – – – – 772,236,425.00 48,415,312.78 56,515,928.00 1,375,822,126.00 2,550,322,576.00 121,430,386.00 – 34,838,492.00 382,908,121.14 44,585,099.42 1,344,164.00 1,627,113,233.00 – – – – 46,459,844.23 10,289,139,188.15

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

27. Wages payable

2012

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Salaries, bonuses, allowances and subsidies Staff welfare Social insurance Including: Medical insurance Basic pension Annuity payment Unemployment insurance Work injury insurance Maternity insurance Housing funds Union fund and employee education fund Non-monetary benefits Compensation for termination Others	70,127,048.00 6,260,366.00 27,484,451.27 11,503,821.27 11,198,686.00 993,040.00 1,816,493.00 1,228,444.00 743,967.00 9,806,512.00 17,270,515.99 477,878.16 698,457.92 11,590,293.04 143,715,522.38	1,662,211,327.62 109,815,330.74 462,518,598.66 119,285,597.29 256,614,694.14 50,358,466.00 15,943,674.20 11,507,017.19 8,809,149.84 123,245,248.52 37,377,778.70 – – 14,377,867.44 2,409,546,151.68	1,659,435,104.62 109,232,099.17 451,122,766.03 111,419,864.34 253,783,718.98 50,919,212.00 15,398,981.68 11,090,794.19 8,510,194.84 123,049,910.52 36,759,021.68 477,878.16 698,457.92 19,023,129.00 2,399,798,367.10	72,903,271.00 6,843,597.57 38,880,283.90 19,369,554.22 14,029,661.16 432,294.00 2,361,185.52 1,644,667.00 1,042,922.00 10,001,850.00 17,889,273.01 – – 6,945,031.48 153,463,306.96

As at 31 December 2012, there was no wages payable in arrears, and all balances are expected to be paid within one year.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

28. Tax payable

Tax payable
	31 December 2012	31 December 2011
VAT Business tax Corporate income tax Individual income tax City maintenance and construction tax Education surcharges Resource tax Land appreciation tax Urban and rural land use tax Real estate tax Others	(301,222,838.85 ) 115,247,418.34 1,275,368,527.26 10,923,795.01 11,526,989.92 5,705,567.32 21,362,210.66 150,690,157.39 3,676,168.80 2,459,358.34 13,159,428.06 1,308,896,782.25	(159,887,491.77 ) 130,134,586.92 818,414,142.96 9,428,818.48 12,882,611.01 9,035,120.71 18,019,819.53 – 2,805,825.68 1,785,388.41 8,350,048.53 850,968,870.46

29. Interest payable

Interest payable
	31 December 2012	31 December 2011
Interests on borrowings Including: Interests on long-term borrowings Interests on short-term borrowings Interests of corporate bonds (Note V.36)	30,938,044.46 6,837,983.85 24,100,060.61 124,336,666.67 155,274,711.13	41,986,589.77 18,573,094.14 23,413,495.63 79,870,000.00 121,856,589.77

30. Dividends payable

Dividends payable
	31 December 2012	31 December 2011
Holders of tradable H shares Sinoma Tianjin Building Materials Dividends payable to other non-controlling shareholders	– 16,770,600.00 – 26,277,469.19 43,048,069.19	1,398,730.15 16,770,600.00 16,425,011.68 20,448,905.47 55,043,247.30

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

31. Other payables

An aging analysis of other payables is as follows:

	31 December 2012	31 December 2011
Within 1 year 1 to 2 years 2 to 3 years Over 3 years	1,661,709,604.32 496,793,758.73 107,126,930.08 217,494,520.47 2,483,124,813.60	1,992,285,614.42 1,137,145,406.34 112,333,069.02 336,399,222.78 3,578,163,312.56

An analysis on other payables by nature is as follows:

	31 December 2012	31 December 2011
Payables to related parties (Note VI.7) Construction costs payable Payables for acquisition of equity investments Payables for relocation compensation Payables for land use right Deposits Amounts collected on behalf and temporary receipts Current portion of provision for supplementary pension subsidies and early retirement benefits Others	197,820,944.21 458,060,901.87 63,966,551.14 156,173,300.83 87,041,567.01 489,503,370.68 449,346,124.28 42,559,432.00 538,652,621.58 2,483,124,813.60	129,200.00 505,679,529.70 763,503,457.58 286,569,022.15 176,364,172.28 433,513,598.69 446,108,318.43 43,456,070.00 922,839,943.73 3,578,163,312.56

As at 31 December 2012, other than the amounts due to the BBMG Group of RMB197,051,945.35 (31 December 2011: Nil), there were no balances payable to other shareholders holding 5% or more of the Company’s voting rights.

Please refer to Note VI “Relationships and Transactions with Related Parties” for other payables to related parties as at 31 December 2012.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

31. Other payables (continued)

As at 31 December 2012, significant other payables aging more than one year are as follows:

				Percentage of
		Relationship		total other	Reasons for
		with the Group	Amount	payable (%)	non-payment
Entity	1*	Third party	72,265,646.00	2.91	Not yet settled
Entity	2**	The Parent	70,000,000.00	2.82	Not yet settled
Entity	3	Third party	24,503,705.03	0.99	Not yet settled
Entity	4	Third party	15,989,575.53	0.64	Not yet settled
Entity	5	Third party	13,013,061.76	0.52	Not yet settled

For the above other payable with significant amounts of which aging are more than one year, no payment has been made subsequent to the balance date.

Land premium payable to Ministry of Land and Resources.
** Special handling charges for ashes emitted from boiler of the Company’s subsidiary.

32. Accrued liabilities

2012

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Estimated concrete loss Expense on recovery of mines	33,029,889.08 – 33,029,889.08	6,880,809.09 60,166,504.00 67,047,313.09	– – –	39,910,698.17Note 1 60,166,504.00Note 2 100,077,202.17

Note 1: The estimated concrete loss was recognised based on potential difference between concrete’s warehouse-out amount and future settlement amount by the Group’s subsidiaries engaged in the production of concrete.

Note 2: The estimated cost on recovery was recognised based on the expense on recovery of mines required to be incurred in subsequent years by the Group’s subsidiaries engaged in the production of cement.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

33. Non-current liabilities due within one year

Non-current liabilities due within one year
	31 December 2012	31 December 2011
Long-term loans due within one year	2,576,020,000.00	3,604,124,049.24

Long-term loans due within one year are as follows:

	31 December 2012	31 December 2011
Mortgaged loans (Note 1) Guaranteed loans (Note 2) Credit loans	934,600,000.00 441,420,000.00 1,200,000,000.00 2,576,020,000.00	397,704,049.24 1,506,420,000.00 1,700,000,000.00 3,604,124,049.24

Note 1: Collaterals and their value for mortgaged loans of the Group as at 31 December 2012 are detailed in note V.22.

Note 2: As at 31 December 2012, included in the guaranteed loans, balances of RMB142,500,000.00 were guaranteed by BBMG Group, while the remaining were guaranteed by the Company and its subsidiaries.

As at 31 December 2012, no extension was made to long-term loans due within one year upon expiry.

As at 31 December 2012, the five highest amounts of long-term loans due within one year were as follows:

				Interest	Interest	Balance as at
Loan unit	Commencement date	Expiry date	Currency	rate (%)		the year end
Agricultural Bank of China, Xuanwu Branch	28 May 2010	27 May 2013	RMB		6.06	500,000,000.00
Construction Bank of China, Beijing Urban
Construction Development Professional Branch	29 June 2011	28 June 2013	RMB		6.41	420,000,000.00
Agricultural Bank of China, Xuanwu Branch	12 August 2010	11 August 2013	RMB		6.65	400,000,000.00
Agricultural Bank of China, Xuanwu Branch	18 June 2010	17 June 2013	RMB		6.65	300,000,000.00
Construction Bank of China, Beijing Urban
Construction Development Professional Branch	25 November 2011	24 February 2013	RMB		7.54	106,000,000.00

As at 31 December 2012, there was no long-term loans due with one year defaulted by the Group.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

34. Other current liabilities

Other current liabilities
	31 December 2012	31 December 2011
Deferred income Accrued expenses Accrued development cost Accrued LAT Accrued costs for treatment of solid waste Other accrued expenses Others Of which, the details of deferred income are as follows:	47,347,882.81 3,101,328,497.88 1,741,522,514.98 1,329,324,617.97 16,565,669.60 13,915,695.33 – 3,148,676,380.69 31 December 2012	53,264,436.01 2,491,760,652.95 1,566,065,339.18 891,452,445.68 16,318,059.97 17,924,808.12 5,490,967.06 2,550,516,056.02 31 December 2011
Government grants related to assets Environmental protection projects Waste-heat generation project Relocation compensation Others Government grants related to income Research and development funds	21,706,094.93 2,398,275.76 11,215,743.64 2,157,039.09 9,870,729.39 47,347,882.81	22,069,317.01 3,730,608.96 13,217,316.32 796,958.72 13,450,235.00 53,264,436.01

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

35. Long-term loans

Long-term loans
	31 December 2012	31 December 2011
Mortgaged loans (Note 1) Guaranteed loans (Note 2) Credit loans	1,992,711,545.34 1,764,340,000.00 1,000,000,000.00 4,757,051,545.34	1,956,837,451.30 2,121,760,000.00 3,694,000,000.00 7,772,597,451.30

Note 1: As at 31 December 2012, the details and value of collaterals corresponding to our mortgaged loans were set out in note V. 22.

Note 2: As at 31 December 2012, included in the guaranteed loans, balances of RMB434,100,000.00 were guaranteed by BBMG Group, while the remaining were guaranteed by the Company and its subsidiaries.

As at 31 December 2012, there was no outstanding long-term loans that were due (31 December 2011: nil).

As at 31 December 2012, long-term loans with balances of nil were entrusted loans from the BBMG Group (31 December 2011: RMB1,994,000,000.00).

As at 31 December 2012, the five highest long-term loans were as follows:

Interest
Loan unit
Commencement date
Expiry date
Currency
rate (%)

Balances as at
31 December 2012

Agricultural Bank of China,
Xuanwu Branch
13 December 2010
13 December 2015
RMB
6.56
Construction Bank of China,
Beijing Urban Construction
Development Professional Branch
23 October 2012
22 April 2015
RMB
6.15
Bank of Communication Co. Ltd,
Fuwai Branch
17 October 2012
17 October 2015
RMB
5.54
Bank of Communication Co., Ltd,
Fuwai Branch
11 December 2012
11 December 2015
RMB
5.54
Bank of Communication Co. Ltd,,
Guanyuan Branch
31 October 2012
28 July 2014
RMB
6.77

1,100,000,000.00
1,000,000,000.00
500,000,000.00
500,000,000.00
429,311,545.34
3,529,311,545.34

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

36. Bonds payable

2012

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Non-current: Corporate bonds Medium-term notes Current: Short-term financing bonds	1,887,098,763.98 2,800,000,000.00 4,687,098,763.98 – 4,687,098,763.98	8,154,823.36 2,000,000,000.00 2,008,154,823.36 1,000,000,000.00 3,008,154,823.36	– 2,800,000.00 2,800,000.00 – 2,800,000.00	1,895,253,587.34 4,797,200,000.00 6,692,453,587.34 1,000,000,000.00 7,692,453,587.34

Pursuant to the approval document (Fa Gai Cai Jin [2009] No.1009) issued by National Development and Reform Commission on 27 April 2009, the Company issued the 2009 corporate bonds of BBMG Corporation (“BBMG Bond”) in open market, totaling RMB1,900,000,000 at a nominal interest rate of 4.32%.

Pursuant to the approval as considered and approved by the 2009 annual general meeting of the Company held on 29 June 2010, the Company intended to issue medium-term notes of no more than RMB3,400,000,000 with a maturity of 5 years. As at 8 September 2010, the registration for the issue of the medium-term notes was accepted by the National Association of Financial Market Institutional Investors pursuant to the Notice of Registration Acceptance (Zhong Shi Xie Zhu [2010] No.MTN89). According to the notice, the medium-term notes issued by the Company had a registered amount of RMB2,800,000,000 and a term of 2 years, and may be issued in tranches within the term. As at 29 September 2010, the Company completed the issue of the first tranche of medium-term notes totaling RMB2,000,000,000 with a term of 5 years and a nominal interest rate of 4.38%. As at 7 December 2010, the Company completed the issue of the second tranche of medium-term notes totaling RMB800,000,000 with a term of 5 years and a nominal interest rate of 5.85%.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

36. Bonds payable (continued)

Pursuant to the approval as considered and approved by the 2011 annual general meeting of the Company held on 24 May 2012, the Company intended to issue bonds (including short-term financing bonds and medium-term notes) of no more than RMB3,000,000,000. Pursuant to the file Zhong Shi Xie Zhu [2012] No. MTN241 issued by the National Association of Financial Market Institutional Investors, the Company completed the issue of its first tranche of 5.58% coupon medium-term notes totaling RMB2,000,000,000 with a term of 5 years on 18 September 2012 and 19 September 2012. Pursuant to the file Zhong Shi Xie Zhu No. [2012] No. CP243 issued by the National Association of Financial Market Institutional Investors, the Company completed the issue of its first tranche of 4.80% coupon short-term financing bonds totaling RMB1,000,000,000 with a term of 365 days on 18 September 2012.

The bonds interests of the above corporate bonds, medium-term notes and short-term financing bonds for the period were charged to interests payable.

As at 31 December 2012, bonds payable were as follows:

	Par value Issuance date Term	Issuance amount	Balance as at end of the year
Non-current 2009 BBMG Bond RMB2 billion medium-term notes RMB800 million medium-term notes RMB2 billion medium-term notes Current RMB1 billion short-term notes	1,900,000,000.00 27 April 2009 5 years 2,000,000,000.00 29 September 2010 5 years 800,000,000.00 7 December 2010 5 years 2,000,000,000.00 20 September 2012 5 years 6,700,000,000.00 1,000,000,000.00 18 September 2012 1 year 7,700,000,000.00	1,900,000,000.00 2,000,000,000.00 800,000,000.00 2,000,000,000.00 6,700,000,000.00 1,000,000,000.00 7,700,000,000.00	1,895,253,587.34 1,995,500,000.00 801,700,000.00 2,000,000,000.00 6,692,453,587.34 1,000,000,000.00 7,692,453,587.34

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

36. Bonds payable (continued)

36.	Bonds payable (continued)
37.		Interest at beginning of the year	Accrued interest for the year		Interest paid for the year	Interest payable at end of the year (Note V.29 )
	Non-current 2009 BBMG Bond RMB2 billion medium-term notes RMB800 million medium-term notes RMB2 billion medium-term notes Current RMB1 billion short-term notes Long-term payables	54,720,000.00 21,900,000.00 3,250,000.00 – 79,870,000.00 – 79,870,000.00	82,080,000.00 82,080,000.00 87,600,000.00 87,600,000.00 46,800,000.00 46,800,000.00 31,000,000.00 – 247,480,000.00 216,480,000.00 13,466,666.67 – 260,946,666.67 216,480,000.00 31 December 2012 31			54,720,000.00 21,900,000.00 3,250,000.00 31,000,000.00 110,870,000.00 13,466,666.67 124,336,666.67 December 2011

	Provision for supplementary pension subsidies and early retirement benefits for former and retired employees Changes in provision for supplementary pension subsidies early retirement benefits and are as follows: Retirement benefits as at 1 January 2012 Cost of retirement benefits for the year Retirement benefits paid for the year Retirement benefits as at 31 December 2012 Amount categorized as current portion of other payables Non-current portion			517,416,630.00		528,129,048.14 571,585,118.00 25,000,753.00 36,609,809.00 559,976,062.00 (42,559,432.00 ) 517,416,630.00

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

37. Long-term payables (continued)

The details of provision for supplementary pension subsidies and early retirement benefits are set out in Note II.27, Employee benefits under defined benefit obligations.

The provision for supplementary pension subsidies early retirement benefits payable within one year is accounted for as other payables.

38. Other non-current liabilities

Other non-current liabilities
	31 December 2012	31 December 2011
Deferred income Of which, the details of deferred income are as follows:	617,175,147.70	644,601,568.27 31 December 2011
	31 December 2012
Government grants related to assets Environmental protection projects Waste-heat generation project Relocation compensation Others Government grants related to income Research and development funds Less: Current portion included in current liabilities	314,098,044.71 18,507,235.89 303,692,803.22 18,354,217.30 9,870,729.39 664,523,030.51 47,347,882.81 617,175,147.70	351,570,403.05 21,793,511.65 305,326,541.48 4,383,866.07 14,791,682.03 697,866,004.28 53,264,436.01 644,601,568.27

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

38. Other non-current liabilities (continued)

As at 31 December 2012 and 31 December 2011, details and amounts of material government grants were as follows:

	31 December 2012	31 December 2011
Subsidy for Zanhuang – 2,500 tonnes new dry method clinker production line project Subsidy for environmental equipment for Bio-Island project Appropriation for mud project of Beijing Cement Plant Subsidy for Relocation Fee of Tiantan Relocation compensation for Hengxing Qunying Share capital	10,899,111.11 233,981,575.14 42,783,055.55 244,735,227.46 58,957,575.76	– 249,357,492.78 45,759,722.22 246,126,541.48 60,800,000.00

39. Share capital

2012

	Opening balance		Increase/(decrease) in the year shares released Issue of from lock-up new shares period subtotal	Increase/(decrease) in the year shares released Issue of from lock-up new shares period subtotal	Increase/(decrease) in the year shares released Issue of from lock-up new shares period subtotal	Closing balance
			Issue of new shares	shares released from lock-up period
I. Shares subject to lock-up restriction 1. State-owned legal person shareholdings 2. Other domestic shareholdings 3. Foreign shareholdings Total shares subject to lock-up restriction II. Shares not subject to lock-up restriction 1. RMB ordinary shares 2. Foreign listed shares Total shares not subject to lock-up restriction Total share capital	2,274,174,625.00 185,572,000.00 338,480,000.00 2,798,226,625.00 316,128,000.00 1,169,382,435.00 1,485,510,435.00 4,283,737,060.00		– – – – – – – –	(429,322,199.00 ) (182,620,000.00 ) (338,480,000.00 ) (950,422,199.00 ) 950,422,199.00 – 950,422,199.00 –	(429,322,199.00 ) (182,620,000.00 ) (338,480,000.00 ) (950,422,199.00 ) 950,422,199.00 – 950,422,199.00 –	1,844,852,426.00 2,952,000.00 – 1,847,804,426.00 1,266,550,199.00 1,169,382,435.00 2,435,932,634.00 4,283,737,060.00

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

39. Share capital (continued)

Prior to the initial public offering and listing of A-share, the shareholders of the Company being Sinoma, Hopeson Holdings, Tai’an Pinghe, Tianjin Building Materials Group, Cinda Asset, Huaxi Xinyu, Winfirst, Beijing Great Ocean Investment (Group) Co., Ltd. (renamed Tibet Great Ocean Investment Co., Ltd) had made the following commitments: neither of them shall transfer or entrust other parties to manage the shares in issue, directly and indirectly, held by them before the initial public offering of the Company, nor the Company shall repurchase such part of shares within twelve months from the date on A-share of the Company listing on Shanghai Stock Exchange.

During the Reporting Period, the commitments have been performed and the restricted shares held by the above shareholders were released from the lock-up period on 1 March 2012.

40. Capital reserve

2012

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Share premium Other capital reserves	4,931,624,856.00 380,247,343.72 5,311,872,199.72	– 117,025,520.42 117,025,520.42	– 33,104,726.63 33,104,726.63	4,931,624,856.00 464,168,137.51 5,395,792,993.51

See the table of Change in the Ownership Interest and Note V.55 for the reasons of fluctuation in capital reserve.

41. Specialized reserve

2012

	Opening balance	Amount provided for the year	Amount paid for the year	Closing balance
Production safety cost	–	57,730,015.85	48,177,031.27	9,552,984.58

Pursuant to the regulations of “the Provision and Usage Measures of Production Safety Expenses of the Enterprises” (Caiqi [2012] No.16), issued by the PRC Ministry of Finance and the State Administration of Work Safety, the enterprises of specific industries should provide production safety cost subject to a fixed proportion. The details of which are set out in Note II.33. Production safety cost.

I-135 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

42. Surplus reserve

2012

	Opening balance	Increase in the year	Decrease in the year	Closing balance
Statutory surplus reserve	340,879,231.86	239,673,000.36	–	580,552,232.22

According the requirements of the Company Law and the Articles of Association of the Company, the Company shall allocate 10% of its net profit to the statutory surplus reserve. In the event that the accumulated statutory surplus reserve of the Company have reached 50% of the registered capital of the Company, additional appropriation will not be needed.

After the appropriation to statutory surplus reserve, the Company may make appropriation to the discretionary surplus reserves. Upon approval, discretionary reserves fund can be used to make up for accumulated losses or to increase the share capital.

43. Retained earnings

2012

Retained earnings at the beginning of the year 10,217,411,951.85 Net profit attributable to the owners of the Company (Note 1) 2,965,089,241.74 Less: Appropriation of statutory surplus reserve (239,673,000.36 ) Cash dividends declared for ordinary shares (Note 2) (308,429,068.32 )

Retained earnings at the end of the year 12,634,399,124.91

Notes: 1. The appropriation of surplus reserve attributable to the shareholders of the parent company by the subsidiaries of the Group amounted to RMB342,235,618.23 during the year.
Upon the consideration and approval at the 2011 annual general meeting of BBMG Corporation convened on 24 May 2012, profit distribution for the year 2011 was calculated based on 4,283,737,060 ordinary shares in issue, with the distribution of a final dividend of RMB0.72 per 10 shares (tax included) in an aggregate amount of cash dividends of RMB308,429,068.32.
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

44. Operating revenue and operating costs

Operating revenue is as follows:

	2012	2011
Revenue from principal operations Revenue from other operations Operating costs is as follows:	33,549,169,796.66 504,926,206.66 34,054,096,003.32 2012	28,234,382,964.40 510,410,889.80 28,744,793,854.20 2011
Cost of principal operations Cost of other operations	25,494,913,969.49 229,777,455.75 25,724,691,425.24	20,490,359,459.18 300,961,874.85 20,791,321,334.03

Operating revenue and operating costs of principal operations by segment:

		2012 Revenue Operating costs	2012 Revenue Operating costs	2011 Revenue Operating costs	2011 Revenue Operating costs
		Revenue
Cement New building materials Real estate development Property investment and management		11,461,142,954.17 9,479,831,592.31 10,934,922,941.64 1,673,272,308.54 33,549,169,796.66	9,616,815,840.11 8,446,204,922.92 6,798,927,674.61 632,965,531.85 25,494,913,969.49	12,972,767,751.29 5,074,967,649.12 8,779,335,254.15 1,407,312,309.84 28,234,382,964.40	10,157,074,512.24 4,050,536,073.69 5,769,857,661.39 512,891,211.86 20,490,359,459.18

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

44. Operating revenue and operating costs (continued)

Operating revenue and operating costs of principal operations by product:

		2012 Revenue Operating costs	2012 Revenue Operating costs	2011 Revenue Operating costs	2011 Revenue Operating costs
		Revenue
Sale of products Bulk commodity trade Sale of properties and land Including: Sales of affordable properties Rental income from investment properties Property management Hotel management Income from decoration work Treatment of solid waste Others		14,534,817,931.46 4,593,720,631.68 10,915,924,393.00 1,507,563,688.64 820,222,199.72 498,491,826.03 403,465,966.60 1,232,317,624.86 366,110,514.33 184,098,708.98 33,549,169,796.66	12,108,467,697.14 4,568,062,932.75 6,787,638,016.59 1,278,581,906.09 63,593,538.60 307,122,178.88 220,094,781.06 1,085,219,695.60 204,704,592.19 150,010,536.68 25,494,913,969.49	16,146,997,285.98 477,967,956.00 8,778,229,257.49 2,732,966,135.00 665,944,455.45 443,577,843.88 287,082,414.45 965,170,888.87 273,631,131.00 195,781,731.28 28,234,382,964.40	12,435,889,889.76 470,301,728.26 5,828,076,989.19 2,257,673,654.99 74,202,806.03 270,782,096.44 148,911,519.00 908,639,576.52 209,701,042.02 143,853,811.96 20,490,359,459.18

Operating revenue and operating costs of principal operations by region:

		2012 Revenue Operating costs	2012 Revenue Operating costs	2011 Revenue Operating costs	2011 Revenue Operating costs
		Revenue
North China Central China East China South China Northwest China Southwest China Northeast China		28,316,601,308.00 1,532,977,176.07 2,902,902,907.90 136,253,637.61 84,706,447.38 46,023,284.94 529,705,034.76 33,549,169,796.66	20,946,700,926.64 1,077,842,564.59 2,841,958,572.14 96,948,893.07 71,514,089.05 34,304,405.34 425,644,518.66 25,494,913,969.49	26,590,052,990.48 185,219,526.90 770,982,862.80 72,515,644.35 5,260,717.25 55,745,147.51 554,606,075.11 28,234,382,964.40	19,174,446,103.11 138,915,324.19 567,797,332.02 65,489,925.77 3,274,993.29 53,147,968.43 487,287,812.37 20,490,359,459.18

I-138 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

44. Operating revenue and operating costs (continued)

Operating revenue from the top 5 customers for the year 2012 is as follows:

	Amount	Percentage to the total operating revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	646,960,339.00 628,239,753.00 311,936,777.27 311,734,661.00 285,410,400.00 2,184,281,930.27	1.90 1.84 0.92 0.92 0.84 6.42

Operating revenue from the top 5 customers for the year 2011 is as follows:

	Amount	Percentage to the total operating revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	694,172,350.00 357,010,066.22 209,630,317.65 157,691,607.32 152,006,193.98 1,570,510,535.17	2.41 1.24 0.73 0.55 0.53 5.46

I-139 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

44. Operating revenue and operating costs (continued)

Operating revenue is as follows:

	2012	2011
Sale of products Bulk commodity trading Sale of properties and land Rental income Including: rental income from investment properties other rental income Property management Hotel management Income from construction work Treatment of solid waste Others	14,534,817,931.46 4,593,720,631.68 10,915,924,393.00 969,035,173.07 820,222,198.59 148,812,974.48 498,491,826.03 403,465,966.60 1,232,317,624.86 366,110,514.33 540,211,942.29 34,054,096,003.32	16,146,997,285.98 477,967,956.00 8,778,229,257.49 831,876,191.99 665,944,455.45 165,931,736.54 443,577,843.88 287,082,414.45 965,170,888.87 273,631,131.00 540,260,884.54 28,744,793,854.20

45. Business Tax and surcharges

Business Tax and surcharges
	2012	2011
Business tax City maintenance and construction tax Education surcharge LAT Others	821,149,103.02 89,664,743.86 64,196,837.76 689,295,109.27 10,795,480.37 1,675,101,274.28	597,456,298.17 74,019,179.16 43,210,202.97 449,835,811.21 4,012,478.66 1,168,533,970.17

See Note III. Taxes for tax base.

I-140 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

46. Selling expenses

Selling expenses
	2012	2011
Remuneration of employees Office expenses Lease fee Agency fee Advertisement fee Transportation and travelling expenses Others	335,424,324.83 193,001,146.18 77,117,082.53 135,096,795.72 204,110,229.22 388,746,980.62 17,103,792.71 1,350,600,351.81	253,673,252.67 195,325,056.35 68,310,526.79 126,227,161.93 158,644,473.55 288,679,050.53 83,026,207.81 1,173,885,729.63

47. Administrative expenses

Administrative expenses
	2012	2011
Remuneration of employees Office expenses Reception expenses R&D expenses Professional fees Lease and utilities Tax Sewage and afforestation fees Others	1,097,810,938.43 501,557,310.99 102,496,049.35 63,170,191.15 83,150,005.88 73,697,214.84 154,971,310.13 28,290,853.74 83,931,516.49 2,189,075,391.00	985,919,923.18 523,751,948.14 88,110,777.50 68,904,425.73 158,135,712.28 72,709,173.15 121,452,997.03 32,009,783.50 79,420,724.03 2,130,415,464.54

The abovementioned administrative expenses included the auditor’s remuneration for the audit of the Company’s annual report and interim report and the audit of its subsidiaries’ annual reports of RMB11,000,000 (2011: RMB13,950,000).

I-141 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

48. Finance costs

Finance costs
	2012	2011
Interest expenses Including: Interests on bank loans, overdrafts and other loans which require to be fully repaid within 5 years Other interest expenses Less: Interest income (note 1) Less: capitalized interest (note 2) Exchange gains and losses Bank charges Others	1,666,934,439.53 1,637,299,518.07 29,634,921.46 70,507,159.39 723,672,304.44 1,165,125.32 24,466,462.39 4,011,271.47 902,397,834.88	1,344,991,550.12 1,344,991,550.12 – 26,443,677.00 538,670,453.32 (539,533.96 ) 16,681,844.96 1,387,853.20 797,407,584.00

Note 1: Interest income included the interests accrued on the loan to STAR-USG Building Materials Co., Ltd of RMB4,546,064.28. Please refer to note VI, V.(5).
Note 2: The amount of capitalized interest has been included in the balances of construction in progress (Note V.15) and properties under development (Note V.8).

49. Gains from changes in fair value

Gains from changes in fair value
	2012	2011
Investment properties measured at fair value	936,201,275.04	776,747,551.26

I-142 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

50. Investments income/(losses)

Investments income/(losses)
	2012	2011
Income from long-term equity investments measured at cost method: Long-term equity investment income/(losses) under equity method: Including: Investment loss from associates Investment income/(losses) from joint venture Gain from step-acquisition of BBMG Vanke Investment income/(losses) from disposal of available-for-sale financial assets Investment income from disposal of long-term equity investments Investment income from disposal of subsidiaries	– (32,989,386.38 ) (730,484.97 ) (32,258,901.41 ) – 27,917.26 4,435,889.88 21,382,907.13 (7,142,672.11 )	166,592.46 13,739,872.03 (7,926,317.66 ) 21,666,189.69 288,477,779.20 (9,516.41 ) 12,519,653.05 – 314,894,380.33

Income from long-term equity investments measured at cost method:

Investees	2012	Reasons for increase/ 2011 decrease
Luquan Rural Cooperative Society of Credit Beijing Rural Commercial Bank Co., Ltd. Beijing Xinchen Ceramic Fiber Products Corp.	– – – –	130,082.69 Dividend distributions 2,525.00 Dividend distributions 33,984.77 Dividend distributions 166,592.46

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

50. Investments income/(losses) (continued)

In respect of the income/(losses) from long-term equity investments measured at equity method, the top 5 investees in terms of the proportion of their investment income to the Group’s total profits are as follows:

			Reasons for
			increase/
Investees	2012	2011	decrease
STAR-USG Building Materials Co., Ltd	(33,475,728.35 )	(33,010,516.15 )	Fluctuations
			of results
Beijing Gaoqiang Concrete Co., Ltd.	6,239,481.41	(3,226,181.01 )	Fluctuations
			of results
Krono (Beijing) Woods Co., Ltd.	(16,707,727.99 )	(12,895,212.61 )	Fluctuations
			of results
Zehnder (China) Indoor Climate Co., Ltd.	7,811,377.96	2,579,322.79	Fluctuations
			of results
Beijing Sinobaide Technology Co., Ltd	2,471,401.94	1,724,948.30	Fluctuations

There were no significant restrictions on the repatriation of investment income of the Group as of 31 December 2012. In 2012, the Group’s investment income was the investment income from listing securities at RMB27,917.26 (2011: investment loss at RMB9,516.41).

51. Asset impairment losses

Asset impairment losses
	2012	2011
Losses on bad debts Losses on decline in value of inventory Losses on impairment of fixed assets Losses on impairment of intangible assets Losses on impairment of goodwill Losses on impairment of construction in process	21,827,085.90 6,038,430.30 8,513,438.89 11,340,399.11 – – 47,719,354.20	60,192,921.27 41,400,074.49 84,358,799.45 – 6,600,744.78 751,763.47 193,304,303.46

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

52. Non-operating income

Non-operating income
	2012	2011
Gains from disposal of non-current assets Including: Gains from disposal of fixed assets Gains from disposal of intangible assets Gains from disposal of investment properties Gains from debt restructuring Gains on compensation, penalties and fines Government grants Unpayable amounts Others	96,353,883.74 96,353,883.74 – – 30,115,945.05 9,503,304.50 678,513,991.95 94,447,128.88 22,081,980.02 931,016,234.14	462,730,381.87 60,494,794.98 309,570,729.89 92,664,857.00 55,629,780.84 4,732,200.33 534,725,764.13 25,514,899.13 81,606,276.45 1,164,939,302.75

Government grants credited to profit or loss for the current period are as follows:

	2012	2011
Refunds of VAT Subsidy Revenue from relocation compensation	419,218,625.54 131,045,976.01 128,249,390.40 678,513,991.95	396,361,757.06 104,190,067.13 34,173,939.94 534,725,764.13

53. Non-operating expenses

Non-operating expenses
	2012	2011
Loss from disposal of non-current assets Including: Loss from disposal of fixed assets Loss from natural disasters Donation Losses on compensation, penalties and fines Others	34,088,371.36 34,088,371.36 3,971,183.92 861,934.77 10,189,658.90 21,496,735.23 70,607,884.18	19,195,284.86 19,195,284.86 218,699.36 1,380,850.00 24,816,545.46 30,886,430.21 76,497,809.89

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

54. Income tax expenses

Income tax expenses
	2012	2011
Current income tax expenses Deferred income tax expenses	1,615,032,589.40 (811,285,831.47 ) 803,746,757.93	1,118,013,009.10 (41,129,375.12 ) 1,076,883,633.98

A Reconciliation of income tax expenses and total profit is listed as follows:

	2012	2011
Total profit Income tax expenses calculated at statutory tax rate of 25% (Note 1) Effect of different tax rates applicable to certain subsidiaries Tax effect of share of profits and losses of jointly-controlled entities and associates Income not subject to tax Expenses not deductible for tax Tax losses utilized from previous years Adjustments in respect of current income tax of previous periods Effect of deductible temporary difference and tax losses not recognised Income tax expense calculated at the Group’s effective tax rate	3,953,977,324.80 988,494,331.20 (26,708,179.09 ) 8,247,346.59 (68,157,666.51 ) 37,625,225.59 (200,694,648.15 ) 2,659,087.80 62,281,260.50 803,746,757.93	4,670,008,892.82 1,167,502,223.20 (40,817,051.03 ) 11,693,180.77 (204,679,829.48 ) 31,680,349.91 (11,382,238.85 ) (3,524,997.74 ) 126,411,997.20 1,076,883,633.98

Note 1: Income tax of the Group shall be calculated based on the applicable tax rate and the estimated taxable income from Mainland China. Taxes of taxable income arising from other regions shall be calculated based on the applicable tax rate pursuant to the existing laws, interpretations, announcements and practices in the jurisdiction where the Group operates.
Note 2: The share of taxes attributable to jointly-controlled entities and associates for the year 2012 were RMB453,911.92 and RMB2,488,820.07 respectively (for the year 2011: RMB413,912.37 and RMB3,330,513.95 respectively).
I-146 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

55. Earnings per share

The calculation of the basic earnings per share is based on the net profit for the period attributable to ordinary shareholders of the Company divided by the weighted average number of outstanding ordinary shares in issue. The number of newly-issued ordinary shares is calculated and determined from the date of consideration receivable in accordance with the specified terms of issuance agreement.

The calculation of basic earnings per share is as follows:

	2012	2011
Earnings Net profit for the period attributable to ordinary shareholders of the parent company Shares Weighted average number of ordinary shares in issue of the Company (note 1)	2,965,089,241.74 4,283,737,060	3,428,644,623.62 4,224,144,069

The Company did not have potentially dilutive ordinary shares.

Note 1: In February 2011, the Company issued 410,404,560 new shares for the merger with Taihang Cement, after which there were 4,283,737,060 ordinary shares in issue of the Company. Consequently, earnings per share for the 2011 are calculated based on the adjusted number of shares.

56. Other comprehensive income

Other comprehensive income
	2012	2011
Transferred out from disposal of available-for-sale financial assets Less: Income tax effect transferred out from available-for-sale financial assets Other comprehensive income generated from investment properties transferred from fixed assets/inventory Less: Income tax effect arising from investment properties transferred from fixed assets/inventory Exchange differences on translation of foreign operations	(98,275.00 ) 24,568.75 156,132,302.22 (39,033,075.55 ) (8,840.64 ) 117,016,679.78	(22,144.32 ) 5,536.08 – – (1,966.14 ) (18,574.38 )

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

57. Notes to items of statement of cash flows

Notes to items of statement of cash flows
	2012	2011
Cash received from other operating activities Deposits and relevant amounts received Others	471,131,260.53 71,411,395.61 542,542,656.14	557,324,995.93 93,556,068.49 650,881,064.42 2011
	2012
Cash paid relating to other operating activities Bidding deposits of land items and related expenses Selling and administrative expenses paid	71,000,000.00 1,672,102,001.61 1,743,102,001.61	1,213,216,886.08 1,859,134,006.18 3,072,350,892.26 2011
	2012
Cash received from other investing activities Interests received from the joint venture STAR-USG	4,993,601.29	– 2011
	2012
Cash paid relating to other financing activities Issuance expenses for merger of Taihang Cement	–	58,165,082.76

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

58. Supplemental information to statement of cash flows

(1) Supplemental information to statement of cash flows

Reconciliation of net profit to cash flows from/(used in) operating activities:

	2012	2011
- I-149 - Net profit Add: Provisions for assets impairment Depreciation of fixed assets Amortisation of intangible assets Amortisation of long term deferred expenses Gains from disposal of fixed assets, intangible assets and other long-term assets Losses from retirement of fixed assets Gains from changes in fair value Finance expenses Investment losses/(gains) Increase in deferred income tax assets Increase/(decrease) in deferred income tax liabilities Increase in inventories Increase in operating receivables Increase in operating payables Net cash flows from operating activities Material financing activities not involving cash: Non-monetary capital injection of non-controlling shareholders (Note 1) Non-monetary dividends to non-controlling shareholders (Note 2) Net movements in cash and cash equivalents: Balances of cash at end of the year Less: Balances of cash at beginning of the year Net increase/(decrease) in cash and cash equivalents	3,150,230,566.87 47,719,354.20 1,001,797,862.69 69,047,255.35 35,708,317.86 (62,265,512.38 ) – (936,201,275.04 ) 939,881,196.13 7,142,672.11 (526,799,716.58 ) (284,486,114.94 ) (4,103,975,564.53 ) (4,476,919,191.76 ) 9,449,878,898.35 4,310,758,748.33 178,326,310.80 209,272,323.56 387,598,634.36 3,557,703,110.20 5,126,471,371.39 (1,568,768,261.19 )	3,593,125,258.84 193,304,303.46 966,182,590.57 87,445,405.39 67,140,775.16 (443,535,097.01 ) 828,737.00 (776,747,551.26 ) 806,321,096.80 (314,894,380.33 ) (275,204,307.23 ) 189,435,825.11 (4,266,534,613.71 ) (2,709,930,599.36 ) 1,747,281,152.63 (1,135,781,403.94 ) – – – 5,126,471,371.39 5,030,591,539.36 95,879,832.03

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

58. Supplemental information to statement of cash flows (continued)

(1) Supplemental information to statement of cash flows (continued)
- Note 1: Refer to capital contribution made by non-controlling shareholders in form of noncash assets.
- Note 2: No cash payment due to offset of dividends payable and other amount due from non-controlling shareholders.

(2) Information on acquisition or disposal of subsidiaries and other operating units

Information on acquisition of subsidiaries and other operating units

	2012	2011
Price of acquisition of subsidiaries and other operating units Cash and cash equivalents paid for acquisition of subsidiaries and other operating units Less: Cash and cash equivalents held by acquirees: Net cash paid for acquisition of subsidiaries and other operating units Net assets of acquirees Current assets Non-current assets Current liabilities Non-current liabilities	– – – – – – – – –	1,470,816,637.71 615,260,837.71 190,579,067.01 424,681,770.70 2,306,378,773.71 3,798,239,404.46 1,690,813,563.43 2,433,806,770.20 748,867,423.98

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

58. Supplemental information to statement of cash flows (continued)

(2) Information on acquisition or disposal of subsidiaries and other operating units (continued)

Information on disposal of subsidiaries and other operating units

	2012	2011
Price of disposal of subsidiaries and other operating units Cash and cash equivalents received from disposal of subsidiaries and other operating units Less: Cash and cash equivalents held by disposed subsidiaries and other operating units Net cash received from disposal of subsidiaries and other business entities Net assets of disposed subsidiaries Current assets Non-current assets Current liabilities Non-Current liabilities Cash and equivalents	26,354,438.59 8,194,200.00 315,270.66 7,878,929.34 10,720,637.91 20,958,630.78 86,161,534.00 96,399,526.87 –	– – – – – – – – – 31 December 2011
	31 December 2012
Cash Including: Cash on hand Bank deposits on demand Other demand monetary fund Balance of cash and cash equivalents at end of the year	3,557,703,110.20 3,460,110.74 3,491,857,506.73 62,385,492.73 3,557,703,110.20	5,126,471,371.39 4,147,915.86 5,098,037,347.77 24,286,107.76 5,126,471,371.39

(3) Cash and equivalents

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

1. Parent company

==> picture [388 x 135] intentionally omitted <==

----- Start of picture text -----

Registered
Type of Place of Legal capital Proportion of Proportion Organization
company registration representative Nature of Business RMB ten shareholding of votes code
(%) (%)
BBMG Group limited liability Beijing Jiang Weiping Operation and management of state-owned 91,076 43.07 43.07 10113006-6
assets within the authorised scope; manufacture
and sale of building materials, non-metallic
minerals, furniture, construction hardware,
etc.; comprehensive property development, etc.
----- End of picture text -----

The parent and ultimate holding company of the Company is BBMG Group.

2. Subsidiaries

For details on the subsidiaries, please refer to Note IV. Scope of Consolidated Financial Statements.

3. Jointly-controlled entities and associates

For details on the Jointly-controlled entities and associates, please refer to Note V.12.

4. Other related parties

Other related parties
		Code of
Names of other related parties	Relationship with related parties	organization
Beijing Building Materials Sales Center	Under common control of the parent company	10116478-4
BBMG Assets Operation and Management Co., Ltd.	Under common control of the parent company	66840416-0
BBMG Jianmao Property Management Center	Under common control of the parent company	10161139-6
Zhuhai Jinyu Yale Property Management Co., Ltd.	Under common control of the parent company	19252930-3
Beijing Fumin House Co., Ltd.	Under common control of the parent company	10219626-X
Beijing Jiaye Xincheng Labor Force-dispatching Co., Ltd.	Under common control of the parent company	68289927-8
Beijing Xisha Assets Management Co., Ltd.	Under common control of the parent company	10189622-1
Beijing Building Materials Group Corporation	Under common control of the parent company	10121880-X
Industrial & Commerce Development Co., Ltd
Beijing Guanghua Woodworking Factory	Under common control of the parent company	10110042-2
Beijing Doors and Windows Co., Ltd.	Under common control of the parent company	10110161-X
Beijing Chaoyang New City Property Management Co., Ltd.	Under common control of the parent company	75330262-8
Beijing Quality Inspection & Supervision	Under common control of the parent company	40071127-4
Station of Plumbing Hardware
Beijing Quality Inspection & Supervision	Under common control of the parent company	E0005230-4
Station of Wood Furniture

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

4. Other related parties (continued)

Other related parties (continued)
		Code of
Names of other related parties	Relationship with related parties	organization
Beijing Longfengshan Sands and Stone Factory	Under common control of the parent company	10262614-3
Beijing Hazardous Waste Materials Treatment Centre	Under common control of the parent company	70012505-8
Beijing Building Materials Industry	Under common control of the parent company	40071032-7
Metrological Supervision Institute
Beijing Building Materials Boiler Installation Co., Ltd.	Under common control of the parent company	10113474-5
Beijing Building Materials Boiler and Pressure Vessel
Supervision and Inspection Institution	Under common control of the parent company	40070985-2
Beijing No. 54 Occupational Skill Testing Institution	Under common control of the parent company	40071158-1
Handan Hanni Building Materials Co., Ltd	Under common control of the parent company	67469504-8
BBMG Properties Limited	Under common control of the parent company	67425108-4
BBMG Sports Culture Co., Ltd.	Under common control of the parent company	67962969-9
Beijing Jinyu Scien-tech School	Under common control of the parent company	40070953-7
Party School of the Communist Party of	Under common control of the parent company	40070955-3
China Beijing Building Materials Group
Corporation Committee
Beijing Dacheng Real Estate Development Co., Ltd.	Under common control of the parent company	10139366-7
Beijing Dacheng Anjia Property Management Center	Under common control of the parent company	79671299-3
Beijing Chengrong Real Estate Development Co., Ltd.	Under common control of the parent company	60001883-7
Beijing Cement Quality Supervision & Test Station	Under common control of the parent company	40071024-7
Beijing Research Institute of Wood Industry	Under common control of the parent company	40070951-0

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties

  - **(1) Transactions concerning goods and services with related parties**

Type of goods or services	2012 Amount Percentage (%)	2012 Amount Percentage (%)	2011 Amount Percentage (%)	2011 Amount Percentage (%)
Purchase of goods and receipt of services from related parties Transactions with jointly-controlled entities and associates Beijing Dynea Chemical Purchase of Industry Co., Ltd. raw materials STAR-USG Building Purchase of Materials Co., Ltd raw materials Krono (Beijing) Woods Purchase of Co., Ltd. raw materials Krono (Beijing) Flooring Purchase of Co., Ltd. fixed assets Zehnder (China) Indoor Purchase of Climate Co., Ltd. raw materials Beijing Sinobaide Purchase of Technology Co., Ltd. goods	51,100.00 124,543.86 5,395,136.20 – 197,150.20 2,431,638.00 8,199,568.26	0.00 0.00 0.02 – 0.00 0.01 0.03	90,256.41 278,868.57 1,210,194.87 100,000.00 180,000.00 – 1,859,319.85	0.00 0.00 0.01 – 0.00 – 0.01

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(1) Transactions concerning goods and services with related parties (continued)

Transactions concerning goods	and services with related p	and services with related p	arties(continued)	arties(continued)
Type of goods or services	2012 Amount Percentage (%)		2011 Amount Percentage (%)
Transactions with other related parties Beijing Pinggu No. 2 Cement Purchase of Plant Co., Ltd. goods Beijing Building Materials Purchase of Sales Center raw materials Beijing Doors and Windows Relocation fee Co., Ltd. Beijing Doors and Windows Receipt of Co., Ltd. services Beijing Doors and Windows Purchase of Co., Ltd. raw materials Beijing Jinhaiyan Glass Purchase of Wool Co., Ltd. raw materials Beijing Jinyu Scien-tech School Receipt of services BBMG Assets Management Purchase of Co., Ltd. raw materials Beijing Building Materials Receipt of Boiler and Pressure Vessel services Supervision and Inspection Institution Beijing Building Materials Receipt of Industry Metrological services Supervision Institute Beijing Longfengshan Sands Purchase of and Stone Factory raw materials Beijing Longfengshan Sands Receipt of and Stone Factory services Beijing Jiaye Xincheng Labor Receipt of Force-dispatching Co., Ltd. services Beijing Building Materials Receipt of Boiler Installation Co., Ltd. services Party School of the Communist Receipt of Party of China Beijing Building services Materials Group Corporation Committee Beijing Quality Inspection Receipt of & Supervision services Station of Plumbing Hardware Beijing Dongjiao Woodworking Receipt of Factory services Beijing Building Materials Receipt of Group Corporation services Industrial & Commerce Development Co., Ltd. Beijing Xisha Assets Relocation fee Management Co., Ltd. Beijing Xisha Assets Receipt of Management Co., Ltd. services	– 601,418.28 127,822,400.00 713,681.50 54,361.80 – 3,400.00 520,030.35 228,841.00 35,177.00 – 325,000.00 614,028.10 100,000.00 11,990.00 – 87,772.14 57,949.85 80,494,900.00 390,621.24 212,061,571.26 220,261,139.52	– 0.00 0.50 0.00 0.00 – 0.00 0.00 0.00 0.00 – 0.00 0.00 0.00 0.00 – 0.00 0.00 0.31 0.00 0.81 0.84	12,189,044.86 2,077,083.28 – 931,783.93 – 978,246.90 112,179.00 3,910,766.87 955,258.00 273,369.00 85,317.40 1,574,817.04 175,800.00 380,000.00 420,460.00 71,804.00 – – – – 24,135,930.28 25,995,250.13	0.06 0.01 – 0.00 – 0.00 0.00 0.02 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 – – – – 0.10 0.11

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(1) Transactions concerning goods and services with related parties (continued)

Transactions concerning goods	and services with related p	and services with related p	arties(continued)	arties(continued)
Type of goods or services	2012 Amount Percentage(%)		2011 Amount Percentage(%)
Sale of goods and render of services to related parties Transactions with the parent company BBMG Group Company Render of Limited services BBMG Group Company Primary land Limited (note) development BBMG Group Company Sale of goods Limited	4,238,656.00 43,945,044.13 7,264.96 48,190,965.09	0.01 0.13 0.00 0.14	8,048,000.00 – 43,128.21 8,091,128.21	0.03 – 0.00 0.03

Note: During the year, BBMG Group continued to entrust BBMG Beijing Xisanqi High Tech New Building Material City Management and Development Co., Ltd. (“Xisanqi Building Material”) to carry out primary land development for its owned land and paid 12% of the development cost of primary land development as entrustment service fees to the Group upon completion of settlement on completion of primary land developments entrustment service fees.

Type of goods or services	2012 Amount Percentage(%)	2012 Amount Percentage(%)	2011 Amount Percentage(%)	2011 Amount Percentage(%)
Transactions with jointly-controlled entities and associates Krono (Beijing) Woods Sale of goods Co., Ltd. Beijing Dynea Chemical Render of Industry Co., Ltd. services Zehnder (China) Indoor Render of Climate Co., Ltd. services Beijing Sinobaide Technology Sale of goods Co., Ltd. Beijing Gaoqiang Concrete Sale of goods Co., Ltd. OCV Reinforcements Sale of goods (Beijing) Co., Ltd.	5,067,721.30 737,459.47 – 220,099.10 106,211,817.87 14,721,417.18 126,958,514.92	0.01 0.00 – 0.00 0.31 0.04 0.36	35,975,087.30 1,170,729.64 2,871,971.22 167,318.30 73,580,149.15 – 113,765,255.61	0.13 0.00 0.01 0.00 0.26 – 0.40

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(1) Transactions concerning goods and services with related parties (continued)

	Type of goods	2012
	or services	Amount	Percentage(%)	Amount	Percentage(%)
Transactions with
other related parties
Beijing Pinggu No. 2	Sale of goods	–	–	6,615,801.62	0.02
Cement Plant Co., Ltd.
Handan Hanni Building	Sale of goods	353,859.43	0.00	724,477.29	0.00
Materials Co., Ltd.
BBMG Properties Limited	Render of	846,965.00	0.00	658,870.00	0.00
	services
Beijing Building Materials	Render of	–	–	–	–
Sales Center	services
BBMG Sports Culture Co., Ltd.	Render of	1,650,000.00	0.00	350,000.00	0.00
	services
BBMG Assets Operation and	Render of	19,839.00	0.00	111,986.00	0.00
Management Co., Ltd.	services
BBMG Assets Operation and	Sale of goods	786,286.61	0.00	1,824,478.64	0.01
Management Co., Ltd.
BBMG Assets Operation and	Render of	27,008.00	0.00	–	–
Management Co., Ltd.	services
Zhaikou branch
BBMG Jianmao Property	Render of	–	–	23,420.00	0.00
Management Center	services
Beijing Pinggu No. 2	Render of	–	–	290,000.00	0.00
Cement Plant Co., Ltd.	services
Beijing Hazardous Waste	Render of	36,997.00	0.00	–	–
Materials Treatment Centre	services
Beijing Quality Inspection	Render of	150,000.00	0.00	1,500,000.00	0.01
& Supervision Station of	services
Wood Furniture
Beijing Chengrong Real	Render of	233,964.00	0.00	–	–
Estate Development Co., Ltd.	services
Beijing Jinyu Scien-tech School	Render of	50,000.00	0.00	700,000.00	0.00
	services
Beijing Dacheng Real Estate	Render of	–	–	2,557,265.18	0.01
Development Co., Ltd.	services
Beijing Chaoyang New City	Render of	–	–	50,000.00	0.00
Property Management Co., Ltd.	services

I-157 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(1) Transactions concerning goods and services with related parties (continued)

Type of goods or services	2012 Amount Percentage(%)	2012 Amount Percentage(%)	2011 Amount Percentage(%)	2011 Amount Percentage(%)
Transactions with other related parties (continued) Beijing Building Materials Boiler Render of and Pressure Vessel Supervision services and Inspection Institution Beijing Quality Inspection Render of & Supervision Station of services Plumbing Hardware Party School of the Communist Render of Party of China Beijing Building services Materials Group Corporation Committee Party School of Sale of goods Corporation Committee Beijing Guanghua Render of Woodworking Factory services Beijing Xisha Assets Render of Management Co., Ltd. services Beijing Xisha Assets Sale of Management Co., Ltd. properties Beijing Dacheng Real Estate Render of Development Co., Ltd. services	– – 296,508.00 11,435.90 160,000.00 36,000.00 90,383,700.00 636,717.32 95,679,280.26 270,828,760.27	– – 0.00 0.00 0.00 0.00 0.27 0.00 0.27 0.77	505,622.00 4,123,761.56 441,062.07 – – – – – 20,476,744.36 142,333,128.18	0.00 0.01 0.00 – – – – – 0.06 0.49

Purchase or sale of goods and receipt or render of services from/to related parties by the Group are carried out according to the terms of the agreements entered into between the Group and related parties. The agreed price is market price.

I-158 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(2) Entrustment of assets of related parties

Management of entrusted assets

2012

					Entrustment
					income
		Type of assets		Termination	recognised
	Note	entrusted	Starting Date	date	during the year
		66.67% equity interest
BBMG Group	(2)a	of Taihang Huaxin	July 2008	See note	Nil

Note (2)a: BBMG Group held 66.67% equity interest in Hebei Taihang Huaxin Building Materials Co., Ltd (“Taihang Huaxin”), while the Company held 33.33% equity interest in Hebei Taihang Huaxin. By virtue of an entrustment agreement on the equity interest and the related supplementary agreement in relation to Taihang Huaxin dated 26 July 2008 and 24 May 2010 respectively entered into between the Company and BBMG Group, BBMG Group entrusted its holding of all the equity interests in Taihang Huaxin to the Company. Thus, the Company has obtained the control over the financial and operational decision-making of Taihang Huaxin. As such, Taihang Huaxin was treated as a subsidiary of the Company from July 2008.

The termination date of entrustment shall be the date falling on the third anniversary from the effective date of the entrustment agreement or upon all or part of target equity interests being obtained by the Company. Subject to fulfillment of relevant laws and regulations and requirements imposed by securities regulatory institutions, unless otherwise notified in writing to the entrusting party by the entrusted Party, the validity of the entrustment agreement will be automatically extended for three years or to the completion date of transfer of target equity interests or such other date as agreed by both parties, whichever is earlier.

I-159 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(3) Leases with related parties

Lease out assets to related parties

Category Name of of leased Starting Termination the lessee assets date date	Rental income in 2012	Rental income in 2011
STAR-USG Building Building 1 August 2009 30 September 2030 Materials Co., Ltd STAR-USG Building Building 1 July 2010 31 December 2014 Materials Co., Ltd STAR-USG Building Materials Co., Ltd Building 20 July 2009 19 July 2012 Krono (Beijing) Woods Building 1 January 2011 31 December 2012 Co., Ltd. Krono (Beijing) Flooring Building 1 January 2011 31 December 2012 Co., Ltd. Beijing Dynea Chemical Building 1 January 2012 31 December 2012 Industry Co., Ltd. OCV Reinforcements Plant 1 May 2009 19 July 2012 (Beijing) Co., Ltd. OCV Reinforcements Plant 1 January 2012 31 December 2013 (Beijing) Co., Ltd. Beijing Sinobaide Building 1 March 2011 29 February 2012 Technology Co., Ltd. Beijing Quality Inspection Building 1 January 2012 31 December 2012 & Supervision Station of Plumbing Hardware Beijing Quality Inspection Building 1 January 2012 31 December 2012 & Supervision Station of Plumbing Hardware Beijing Dacheng Real Building 1 July 2012 30 September 2013 Estate Development Co., Ltd.	15,477,296.65 1,287,592.00 – 6,536,481.63 – 73,851.49 587,030.02 969,221.00 651,182.80 108,554.00 2,794,302.75 2,865,228.12 31,350,740.46	14,716,708.88 1,287,591.00 624,965.88 6,395,536.07 20,234.22 167,419.77 293,000.04 969,221.00 618,004.88 – – – 25,092,681.74

I-160 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(3) Leases with related parties (continued)

Lease of assets from related parties

Category Name of of leased Starting Termination the lessor assets date date	Rental income in 2012	Rental income in 2011
Beijing Longfengshan Sands and Stone Factory Plant 1 January 2011 31 December 2012 Beijing Xisha Assets Management Co., Ltd. Building 1 January 2009 31 December 2012 Party School of the Building 15 October 2008 14 October 2011 Communist Party of China Beijing Building Materials Group Corporation Committee BBMG Assets Operation Land 1 January 2010 31 December 2029 and Management Co., Ltd.	324,576.00 2,931,500.00 – 400,000.00 3,656,076.00	600,000.00 1,500,000.00 970,400.00 400,000.00 3,470,400.00

The rentals from the assets leased out to or leased from related parties by the Group are based on the terms of the agreements entered into between the Group and related parties by making reference to market prices.

I-161 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(4) Guarantees received from/provided to related parties Guarantees received from related parties

2012

Guaranteed
Guarantor
party

Completion of
performance
Amount
of guarantee
guaranteed
Starting date
Maturity date
or not

BBMG Group
Tianjin BBMG Concrete Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Quyang Jinyu Cement Co., Ltd.
BBMG Group
Quyang Jinyu Cement Co., Ltd.
BBMG Group
Quyang Jinyu Cement Co., Ltd.
BBMG Group
Beijing BBMG Business and.
Trading Co., Ltd
BBMG Group
BBMG Jiaye Real Estate
Development Co., Ltd.
BBMG Group
Tianjin Zhenxing Cement Co., Ltd.
BBMG Group
Tianjin Zhenxing Cement Co., Ltd.

30,000,000.00
2 November 2012
1 November 2013
No
10,800,000.00
22 December 2009
22 December 2015
No
16,200,000.00
29 December 2009
22 December 2015
No
27,000,000.00
1 February 2010
22 December 2015
No
86,400,000.00
16 August 2010
22 December 2012
Yes
17,100,000.00
20 August 2010
22 December 2015
No
28,800,000.00
13 October 2010
22 December 2015
No
11,700,000.00
2 March 2011
22 December 2015
No
350,000,000.00
2 September 2010
25 December 2015
No
40,000,000.00
24 November 2010
25 December 2015
No
10,000,000.00
2 March 2011
25 December 2015
No
20,000,000.00
15 March 2012
14 March 2013
No
150,000,000.00
21 May 2012
21 May 2014
No
4,890,000.00
28 March 2011
27 March 2012
Yes
7,580,000.00
27 May 2011
26 May 2012
Yes
810,470,000.00

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(4) Guarantees received from/provided to related parties (continued) Guarantees received from related parties (continued)
- 2011

					Completion of
					performance
	Guaranteed	Amount			of guarantee
Guarantor	party	guaranteed	Starting date	Maturity date	or not
BBMG Group	BBMG Corporation	53,000,000.00	29 July 2010	28 July 2011	Yes
BBMG Group	BBMG Corporation	36,000,000.00	29 July 2010	28 July 2011	Yes
BBMG Group	BBMG Corporation	50,000,000.00	20 August 2010	19 August 2011	Yes
BBMG Group	BBMG Corporation	19,000,000.00	25 August 2010	24 August 2011	Yes
BBMG Group	BBMG Corporation	100,000,000.00	30 April 2010	30 April 2011	Yes
BBMG Group	BBMG Corporation	30,000,000.00	6 January 2010	5 January 2012	Yes
BBMG Group	BBMG Corporation	237,400,000.00	27 July 2010	25 December 2015	Yes
BBMG Group	BBMG Corporation	47,500,000.00	28 September 2010	26 December 2015	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	30,000,000.00	29 October 2010	29 October 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	40,000,000.00	27 May 2010	27 May 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	30,000,000.00	22 November 2010	22 November 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	30,000,000.00	9 December 2010	9 December 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	4,800,000.00	25 June 2010	24 June 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	4,896,000.00	24 June 2010	23 June 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	7,574,812.17	28 June 2010	27 June 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	23,729,187.83	20 July 2010	19 July 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	7,412,024.01	29 July 2010	28 July 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	1,580,000.00	27 August 2010	26 August 2011	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	4,890,000.00	28 March 2011	27 March 2012	No
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	7,580,000.00	27 May 2011	26 May 2012	No
BBMG Group	Beijing Building Decoration	8,300,000.00	1 September 2010	1 September 2011	Yes
	and Design Engineering Co., Ltd.
BBMG Group	Beijing BBMG Dacheng	150,000,000.00	4 March 2009	3 March 2011	Yes
	Property Development Co., Ltd.
BBMG Group	Beijing BBMG Dacheng	200,000,000.00	29 November 2010	28 November 2012	No
	Property Development Co., Ltd.
BBMG Group	Beijing BBMG Dacheng	220,000,000.00	30 November 2010	29 November 2012	No
	Property Development Co., Ltd.
BBMG Group	Beijing BBMG Dacheng	100,000,000.00	30 November 2010	29 November 2012	No
	Property Development Co., Ltd.

I-163 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(4) Guarantees received from/provided to related parties (continued) Guarantees received from related parties (continued)
- 2011 (continued)

Guaranteed Guarantor party	Completion of performance Amount of guarantee guaranteed Starting date Maturity date or not
BBMG Group Zhuolu Jinyu Cement Co., Ltd. BBMG Group Zhuolu Jinyu Cement Co., Ltd. BBMG Group Quyang Jinyu Cement Co., Ltd. BBMG Group Quyang Jinyu Cement Co., Ltd. BBMG Group Quyang Jinyu Cement Co., Ltd. BBMG Group Baoding Taihang Heyi Cement Co., Ltd. BBMG Group Beijing BBMG Business and Trading Co., Ltd.	192,000,000.00 16 August 2010 22 December 2015 No 72,000,000.00 22 December 2009 25 December 2015 No 30,400,000.00 24 November 2010 25 December 2015 No 267,100,000.00 2 September 2010 25 December 2015 No 7,600,000.00 2 March 2011 25 December 2015 No 80,000,000.00 2 March 2010 1 March 2012 Yes 10,000,000.00 29 September 2011 28 September 2012 Yes 2,102,762,024.00

The above related parties provided guarantees in respect of borrowings for the Group with nil consideration.

Guarantees provided for related parties

On 31 December 2012, BBMG Hongye Ecological Science and Technology Co., Ltd., a subsidiary of the Group, provided a guarantee of RMB800,000,000.00 (2011: RMB800,000,000.00) for BBMG Group in respect of its borrowings with nil consideration. The starting date of the guarantee is 8 May 2009 and the maturity date of the guarantee is 23 May 2017.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(5) Borrowing from/lending to related parties

Lending to related parties

2012

			Commencement	Maturity
	Note	Amount	date	date
STAR-USG Building	(5)a	25,158,400.00	April 2012	No fixed
Materials Co., Ltd				date
2011
			Commencement	Maturity
		Amount	date	date
STAR-USG Building
Materials Co., Ltd	(5)a	26,150,590.00	March 2011	No fixed
				date

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(5) Borrowing from/lending to related parties (continued) Borrowings from related parties 2012

2012
			Commencement
	Note	Amount	date	Maturity date
BBMG Group	(5)b	2,850,000,000.00	November	November
			2012	2013
2011
			Commencement
		Amount	date	Maturity date
BBMG Group	(5)b	3,350,000,000.00	April 2011	November 2012
BBMG Group	(5)b	1,994,000,000.00	November	November 2012
			2011
BBMG Vanke Property
Development Co., Ltd.	(5)c	722,894,566.78	April 2010	No fixed date

Note (5)a: During the term of borrowing, with respect to the short-term borrowings provided by the Company to STAR-USG Building Materials Co., Ltd. by installment, the rate was in line with the benchmark 1-year lending rate issued by People’s Bank of China in the corresponding period. The interest income recognised in the year was RMB4,546,064.28 (2011: RMB3,154,032.32)

Note (5)b: Through financial institutions, the Group obtained entrusted loans of RMB3,350,000,000.00 and RMB1,994,000,000.00 from BBMG Group, which were used for liquidity purposes and construction of affordable housing projects respectively. As at 31 December 2012, the balance was RMB2,850,000,000.00 (31 December 2011: RMB5,344,000,000.00). The rates of aforesaid loans were in line with the benchmark rates issued by People’s Bank of China on the drawdown date for such loan and its credit period for the corresponding ranking and period. For the year 2012, the total interest expenses recognised for the loans were RMB323,734,666.66 (2011: RMB215,100,372.33).

Note (5)c: During the term of borrowing, with respect to the short-term borrowings provided by BBMG Vanke Property Development Co., Ltd. to BBMG GEM Property Development Co., Ltd. by installment, the rate was in line with the benchmark 1-year lending rate issued by People’s Bank of China in the corresponding period. Prior to July 2011, BBMG Vanke Property Development Co., Ltd. was a jointly-controlled entity of the Group, and it became a subsidiary of the Group since July 2011 and was included in the scope of consolidation.

I-166 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(5) Borrowing from/lending to related parties (continued)
- Lending to related parties Interest income from lending:

	2012	2011
STAR-USG Building Materials Co., Ltd.
(星牌優時吉建築材料有限公司)	4,546,064.28	3,154,032.32
Interest expenses from borrowing:
	2012	2011
BBMG Vanke Property Development Co., Ltd.	–	16,290,585.46
BBMG Group	323,734,666.66	215,100,372.22

(6) Transfer of assets of related parties

Acquisitions of equity interest

Project		2012	2011
BBMG Group	100% equity interest in	–	852,992,400.00
	BBMG Hongye Ecological
	Science and Technology Co., Ltd.
BBMG Group	100% equity interest in Beijing	–	556,900.00
	Yuandong Jiemei Services Company
Beijing Building	67.5% equity interest	–	2,563,400.00
Materials Sales	in Crane (Beijing) Building Materials
Center	Co., Ltd.,

The above acquisition prices for acquisitions of equity interests are determined based on the assessed value of the subject of acquisition on the benchmark acquisition date.

I-167 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(7) Remuneration for key management personnel

Remuneration for key management personnel
	2012	2011
Remuneration for key management personnel	4,461,000.00	4,266,528.16

Note: Apart from transactions with jointly-controlled entities and associates, other major transactions between the Group and its related parties constitute connected transactions and continuing connected transactions under Chapter 14A of the Hong Kong Listing Rules.

6. Balances of receivables due from related parties

31 December 2012 31 December 2011

Trade receivables Due from associates Zehnder (China) Indoor Climate Co., Ltd. Beijing Gaoqiang Concrete Co., Ltd. Due from a jointly-controlled entity STAR-USG Building Materials Co., Ltd Due from other related parties Beijing Dacheng Real Estate Development Co., Ltd Beijing Building Materials Sales Center	64,000.00 73,856,015.93 73,920,015.93 5,539,099.16 8,394,514.74 – 8,394,514.74 87,853,629.83	68,000.00 24,092,509.41 24,160,509.41 7,495,769.05 9,514,369.38 372,283.82 9,886,653.20 41,542,931.66

I-168 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

6. Balances of receivables due from related parties (continued)

Balances of receivables due from related parties (	continued)
	31 December 2012	31 December 2011
Advances to suppliers Prepayments to associates Zehnder (China) Indoor Climate Co., Ltd. Krono (Beijing) Woods Co., Ltd. Advances to other related parties BBMG Assets Operation and Management Co., Ltd. Zhaikou branch Other receivables due from Parent company BBMG Group Due from associates OCV Reinforcements (Beijing) Co., Ltd. Zehnder (China) Indoor Climate Co., Ltd. Beijing Dynea Chemical Industry Co., Ltd. Krono (Beijing) Woods Co., Ltd. Krono (Beijing) Flooring Co., Ltd. Beijing Sinobaide Technology Co., Ltd. Due from a jointly-controlled entity STAR-USG Building Materials Co., Ltd.	603,181.39 10,500,000.00 11,103,181.39 3,385.72 11,106,567.11 – – 2,881,471.22 272,502.28 2,415,674.32 200,000.00 9,062.00 5,778,709.82 84,974,879.61 90,753,589.43	98,442.39 – 98,442.39 3,385.72 101,828.11 20,806,364.37 76,253.01 2,871,971.22 319,946.22 3,764,125.38 – – 7,032,295.83 58,252,047.37 86,090,707.57

I-169 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

6. Balances of receivables due from related parties (continued)

Balances of receivables due from related parties (	continued)
	31 December 2012	31 December 2011
Interest receivable Due from a jointly-controlled entity STAR-USG Building Materials Co., Ltd Dividend receivable Due from an associate Beijing Gaoqiang Concrete Co., Ltd.	1,411,125.80 1,215,425.00	1,858,662.81 –

7. Balances of payables to related parties

Balances of payables to related parties
	31 December 2012	31 December 2011
Accounts payable Due to the parent company BBMG Group (Note 1) Due to associates Beijing Dynea Chemical Industry Co., Ltd. Zehnder (China) Indoor Climate Co., Ltd. Krono (Beijing) Woods Co., Ltd. Due to a jointly-controlled entity STAR-USG Building Materials Co., Ltd.(星牌優時吉建築材料有限公司) BBMG Landao Commercial Operation Management Co., Ltd.	82,582,881.98 1,275,125.22 221,500.00 12,538,110.92 14,034,736.14 3,889,760.55 7,500 3,897,260.55	– 946,033.51 1,056,012.00 56.00 2,002,101.51 3,811,126.63 – 3,811,126.63

I-170 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

7. Balances of payables to related parties (continued)

Balances of payables to related parties (continued)
	31 December 2012	31 December 2011
Due to other related parties Beijing Building Materials Group Corporation Industrial & Commerce Development Co., Ltd. BBMG Assets Operation and Management Co., Ltd. Beijing Building Materials Industry Metrological Supervision Institute Beijing Building Materials Boiler Installation Co., Ltd. Beijing Building Materials Sales Center Advances from customers Advance received from other related parties Beijing Longfengshan Sands and Stone Factory Beijing Xisha Assets Management Co., Ltd Beijing Doors and Windows Co., Ltd. BBMG Assets Operation and Management Co., Ltd. Beijing Quality Inspection & Supervision Station of Plumbing Hardware Beijing Building Materials Sales Center Advance received from a jointly-controlled entity BBMG Zhaode Property Development Co., Ltd.	410,595.11 – – – 95,839.14 506,434.25 101,021,312.92 149,098.29 225,443,500.00 174,137,400.00 238,567.00 – 420.00 399,968,985.29 70,880,444.53 470,849,429.82	392,271.41 67,741.7 11,194.00 75,000.00 2,253,947.83 2,800,155.03 8,613,383.17 150,919.89 – – 238,567.00 3,000.00 70,971.21 463,458.10 70,880,444.53 71,343,902.63

I-171 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

7. Balances of payables to related parties (continued)

Balances of payables to related parties (continued)
	31 December 2012	31 December 2011
Other payables Due to the parent company BBMG Group Due to associates Beijing Sinobaide Technology Co., Ltd. OCV Reinforcements (Beijing) Co., Ltd. Due to a jointly-controlled entity STAR-USG Building Materials Co., Ltd. BBMG Group Short-term borrowings Long-term borrowings	197,051,945.35 380,500.00 159,200.00 539,700.00 229,298.86 197,820,944.21 2,850,000,000.00 – 2,850,000,000.00	– – 129,200.00 129,200.00 – 129,200.00 3,350,000,000.00 1,994,000,000.00 5,344,000,000.00

Except for the balances due from STAR-USG Building Materials Co., Ltd. (STAR-USG Building Materials Co., Ltd) included in other receivables, which are interest-bearing, other amounts due from/to related parties are interest-free, unsecured and have no fixed terms of repayment.

Note 1: BBMG Chengyuan obtained the land use rights of a specific land through open tender, auction and listing. According to the related land compensation agreement, the Group should pay the original owner of the land use right, BBMG Group, a relocation compensation fee of approximately RMB450 million, including the municipal construction fee, relocation settlement fee and construction expenses paid to the third parties by the Group on its behalf. The Group will pay the net amount of balance of about RMB82,582,881.98 to BBMG Group after deducting such primary land development costs.
I-172 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

VII. CONTINGENCIES

CONTINGENCIES
Note	31 December 2012	31 December 2011
Providing guarantee for related parties Note 1 Providing guarantee for third parties Note 2	800,000,000.00 3,885,136,892.77 4,685,136,892.77	800,000,000.00 3,120,640,376.71 3,920,640,376.71

Note 1: BBMG Hongye Ecological Science and Technology Co., Ltd., a subsidiary of the Group, provided a guarantee for BBMG Group. See Note VI.5.(4).

Note 2: Some of the Group’s customers purchased the commodity houses developed by the Group by way of mortgages (mortgage loan) provided by the banks. According to the requirements of personal housing mortgage loan, the Group provide joint-liability guarantee by phases for the mortgage loans provided by the banks to the purchasers. These guarantees will be released upon obtaining building ownership certificates and completion of formalities of mortgage by the home buyers. The directors are of the view that, should there be any default in repayment, the net realisable value of the said properties is still able to repay the unsettled mortgage principal and the interests and penalties accrued. Therefore, no provision has been made.

VIII. COMMITMENTS

COMMITMENTS
	31 December 2012	31 December 2011
Acquisition or construction of fixed assets which are contracted but not completed Property construction contracts which are contracted and being executed or will be executed Equity investment contract which is contracted and being executed	600,880,577.76 5,386,341,877.26 216,500,000.00 6,203,722,455.02	649,549,808.22 6,857,714,585.64 195,000,000.00 7,702,264,393.86

The significant commitments made by the Group as at 31 December 2011 have been duly performed as previously undertaken.

IX. SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE

On 20 March 2013, the Board of Directors of the Company has considered and approved the 2012 annual profit distribution resolution, which proposed to declare a cash dividend of RMB0.71 (tax included) for every 10 shares, with total dividend distribution amounting to RMB304,145,300.00. The above resolution is subject to approval of the Company’s shareholders at the forthcoming annual general meeting.

I-173 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS

1. Lease

As lessor

Significant operating leases: According to the lease contracts entered into with lessees, the minimum lease receipts under non-cancellable operating leases are as follows:

	31 December 2012	31 December 2011
Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) Over 3 years	640,098,815.99 435,162,423.70 242,725,998.55 643,497,777.35 1,961,485,015.59	687,907,366.06 514,161,562.82 277,710,435.96 1,419,037,200.73 2,898,816,565.57

Please refer to note V.13 and 14 for details of investment properties and fixed assets leased out under operating leases.

As lessee

Significant operating leases: According to the lease contracts entered into with lessors, the minimum lease payments under non-cancellable operating leases are as follows:

	31 December 2012	31 December 2011
Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) Over 3 years	39,921,183.61 25,508,664.68 18,944,129.36 87,012,067.66 171,386,045.31	32,683,950.81 20,414,971.75 12,971,808.63 82,471,457.12 148,542,188.31

I-174 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

2. Assets and liabilities measured at fair value

2012

==> picture [393 x 141] intentionally omitted <==

----- Start of picture text -----

Profit or Provision of
Amount at loss on changes Accumulated impairment
beginning of of fair value for fair values for the Amount at
the year the current year included in equity current period end of the year
Available-for-sale financial assets 95,138.56 – – – –
Investment properties 11,599,000,000.00 936,201,275.04 252,048,052.56 – 12,840,400,000.00
11,599,095,138.56 936,201,275.04 252,048,052.56 – 12,840,400,000.00
----- End of picture text -----

3. Segment reporting

Operating segments

For management purposes, the Group is organized into business units based on their products and services and has four reportable operating segments as follows:

(1) the cement segment engages in the manufacture and sale of cement and concrete;
(2) the building materials and commercial logistics segment engages in the manufacture, sale and commercial logistics of building materials and furniture;
(3) the property development segment engages in real estate development and sales; and
(4) the property investment and management segment invests in properties for their rental income potential and/or for capital appreciation, and provides management and security services to residential and commercial properties.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment results are evaluated based on the segment profits reported. It represents the indicator after adjustments have been made to total profit, and except for excluding overheads attributable to the head office, it is consistent with the Group’s total profit.

Segment assets and liabilities exclude unallocated assets and liabilities of the head office, because all such assets and liabilities are under the unified management of the Group.

Pricing for transfer between operating segments is agreed by both parties to transactions with reference to the fair price adopted in the transaction with third parties.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

3. Segment reporting (continued)

Operating segments (continued)

2012

	Cement Segment	Building Materials and Commercial Logistics Segment	Property Development Segment	Property Investment and Management Segment	Unallocated corporate assets/ liabilities/expenses	Elimination on consolidation	Total
Revenues from external transactions Revenues from inter-segment transactions Gains/(losses) on investments in associates and joint ventures Impairment losses from assets Depreciation and amortization charges Total profits Income tax expense Total assets Total liabilities Other disclosure Long-term equity investment in associates and joint ventures Increase in other non-current assets (excluding long-term equity investments)	11,662,344,179.50 9,230,558.34 11,671,574,737.84 6,239,481.41 52,814,341.54 861,290,813.61 625,321,451.97 187,535,597.01 24,774,017,463.16 12,805,332,632.87 24,657,633.65 3,145,940,490.53	9,557,119,100.30 488,293,436.84 10,045,412,537.14 (40,445,694.72 ) 5,487,164.33 102,152,427.39 93,929,499.65 48,887,646.80 7,006,066,922.77 3,566,863,982.34 368,733,392.60 322,706,361.15	11,006,341,023.75 – 11,006,341,023.75 – (2,858,555.44 ) 7,916,287.70 2,258,767,289.19 586,960,733.43 36,784,183,248.14 32,205,497,477.73 10,000,000.00 13,847,937.40	1,828,291,699.77 97,087,019.87 1,925,378,719.64 1,216,826.94 (7,723,596.23 ) 77,025,881.04 1,535,385,634.48 (19,637,219.31 ) 17,160,666,478.54 7,847,581,691.93 4,551,378.08 228,209,626.46	– – – – – 58,168,026.16 (562,962,176.46 ) – 2,222,167,932.03 6,675,698,867.92 – –	– (594,611,015.05 ) (594,611,015.05 ) – – – 3,535,625.97 – (4,785,298,414.30 ) (4,963,860,146.18 ) – –	34,054,096,003.32 – 34,054,096,003.32 (32,989,386.37 ) 47,719,354.20 1,106,553,435.90 3,953,977,324.80 803,746,757.93 83,161,803,630.34 58,137,114,506.61 407,942,404.33 3,710,704,415.54

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

3. Segment reporting (continued)

Operating segments (continued)

2011

2011
	Cement Segment	Building Materials and Commercial Logistics Segment	Property Development Segment	Property Investment and Management Segment	Unallocated corporate assets/ liabilities/expenses	Elimination on consolidation	Total
Revenues from external transactions Revenues from inter-segment transactions Gains/(losses) on investment in associate and joint ventures Impairment losses from assets Depreciation and amortization charges Total profits Income tax expense Total assets Total liabilities Other disclosure: Long-term equity investment in associates and joint ventures Increase in other non-current assets (excluding long-term equity investments)	13,118,235,794.37 34,206,952.75 13,152,442,747.12 (3,226,181.01 ) 36,091,109.50 845,853,061.42 1,794,623,715.75 423,637,204.43 21,821,987,718.47 11,096,394,242.39 19,633,577.24 1,948,233,215.38	5,181,248,253.45 378,600,394.22 5,559,848,647.67 (38,079,351.36 ) 16,862,884.70 103,457,148.74 214,287,874.85 55,948,883.77 7,108,975,443.85 4,381,743,663.80 390,774,128.87 313,199,929.12	9,015,403,150.92 7,661,118.55 9,023,064,269.47 53,453,456.13 11,773,829.77 8,106,842.05 2,151,656,465.71 381,930,757.63 34,365,942,452.78 30,866,217,607.31 10,000,000.00 22,306,541.87	1,429,906,655.46 224,683,017.99 1,654,589,673.45 1,591,948.27 128,576,479.49 110,453,146.35 1,642,935,597.23 215,366,788.15 18,439,266,954.05 9,967,619,938.96 – 741,746,299.55	– – – – – 26,964,802.86 (641,117,025.56 ) – 2,243,623,730.83 7,932,266,220.11	– (645,151,483.51 ) (645,151,483.51 ) – – – (492,377,735.16 ) – (7,064,823,843.24 ) (9,044,885,426.66 ) –	28,744,793,854.20 – 28,744,793,854.20 13,739,872.03 193,304,303.46 1,094,834,801.42 4,670,008,892.82 1,076,883,633.98 76,914,972,456.74 55,199,356,245.91 420,407,706.11 3,025,485,985.92

Other information

Information on products and services

Revenue by product/service type is set out in Note V.44.

Geographic information

The major businesses and customers of the Group are located in PRC. The Group’s segment revenues from external transactions and major non-current assets are mainly located in PRC.

Information on our major customers

During the year 2012, none of sales income arising from any single customer of the Group exceeds 10% of the Group’s total revenues (2011: Nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks

The Group’s principal financial instruments comprise bank borrowings, other interest-bearing borrowings, bonds payable and cash and banks. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as accounts receivable and accounts payable, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and market risk.

Financial instruments by category

The carrying amounts of each of the categories of financial instruments as at the balance sheet date are as follows:

Financial assets	31 December 2012 Available- Loans and for-sale receivables financial assets	31 December 2012 Available- Loans and for-sale receivables financial assets	31 December 2011 Available- Loans and for-sale receivables financial assets	31 December 2011 Available- Loans and for-sale receivables financial assets
Cash and bank balances Bills receivable Accounts receivable Interests receivable Dividends receivable Other receivables Available-for-sale financial assets	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 1,411,125.80 1,215,425.00 1,899,515,319.31 – 12,828,695,478.86	– – – – – – – –	7,918,479,363.14 1,347,905,318.65 3,490,937,470.40 1,858,662.81 – 2,458,939,025.66 – 15,218,119,840.66	– – – – – – 95,138.56 95,138.56

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Financial instruments by category (continued)

Financial instruments by category (continued)
financial liabilities	Other financial liabilities as at 31 December 2012	Other financial liabilities as at 31 December 2012
Short-term loans Bills payable Accounts payable Interests payable Dividends payable Other payables Non-current liabilities due within one year Long-term loans Bonds payable	11,388,286,880.00 430,004,020.52 6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 2,576,020,000.00 4,757,051,545.34 7,692,453,587.34 36,051,521,824.05	11,286,861,222.71 361,817,226.63 5,124,354,120.51 121,856,589.77 55,043,247.30 3,475,902,488.80 3,604,124,049.24 7,772,597,451.30 4,687,098,763.98 36,489,655,160.24

Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of another party to meet its obligations.

The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, balances of accounts receivable are monitored on an ongoing basis to ensure that the Group’s exposure to bad debt is not significant. For transactions that are not settled in the functional currency of the relevant operating unit, the Group does not offer credit terms without the specific approval of the Department of Credit Control in the Group.

The credit risk of the Group’s other financial assets, which comprise cash and bank balances, available-for-sale financial assets and other payables, etc. arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments. The Group is also exposed to credit risk through the granting of financial guarantees, further details of which are disclosed in Notes VI.5 and VII.

Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral. Concentrations of credit risk are managed by customer/counterparty, by geographical region and by industry sector. There are no significant concentrations of credit risk within the Group as the customer bases of the Group’s accounts receivable are widely dispersed in different sectors and industries. The Group does not hold any collateral or other credit enhancements over the balances of accounts receivable.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Financial instruments by category (continued)

Quantitative data in respect of the Group’s exposure to credit risk arising from accounts receivable and other receivables are disclosed in Note V.5 and 6.

As at 31 December 2012 and 31 December 2011, the aging analysis of financial assets which are not considered to be impaired is as follows:

31 December 2012

				Past due
		Neither past due	Within		Over
	Total	nor impaired	3 months	3 to 6 months	6 months
Accounts receivable	3,698,332,200.10	1,779,459,575.18	850,473,265.61	434,217,175.82	634,182,183.49
Other receivables	1,851,756,735.66	1,851,756,735.66	–	–	–
Bills receivable	1,028,662,688.14	1,028,662,688.14	–	–	–
Interests receivable	1,411,125.80	1,411,125.80	–	–	–
Dividends receivable	1,215,425.00	1,215,425.00	–	–	–

31 December 2011

				Past due
		Neither past due	Within		Over
	Total	nor impaired	3 months	3 to 6 months	6 months
Accounts receivable	3,242,495,802.65	1,131,221,231.47	1,345,073,685.34	364,015,065.97	402,185,819.87
Other receivables	2,404,219,925.71	2,404,219,925.71	–	–	–
Bills receivable	1,347,905,318.65	1,347,905,318.65	–	–	–
Interests receivable	1,858,662.81	1,858,662.81	–	–	–

As at 31 December 2012, the accounts receivable that were neither past due nor impaired related to a large number of diversified customers for whom there was no recent history of default.

As at 31 December 2012, the accounts receivable that were past due but not impaired related to a number of independent customers that have a good track record with the Group. Based on past experience, the Group believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Liquidity risk

Liquidity risk is the risk that an enterprise may encounter deficiency of funds in meeting obligations associated with financial liabilities.

The Group manages its risk to deficiency of funds using a recurring liquidity planning tool. This tool considers both the maturity of its financial instruments and the projected cash flows from the Group’s operations.

The Group’ objective is to maintain a balance between continuity and flexibility of funding through the use of bank borrowings, bonds payable and other interest-bearing borrowings.

The liquidity of the Group is primarily dependent on its ability to maintain adequate cash inflows from operations to meet its debt obligations as they fall due, and its ability to obtain external financing to meet its committed future capital expenditure. With respect to future capital commitment and other funding requirements, the Group’s credit facilities granted by domestic banks amounted to RMB40,500,000,000.00 as at 31 December 2012, of which RMB21,693,500,000.00 billion remained unutilised.

The table below summarises the maturity profile of financial liabilities based on the undiscounted contractual cash flows:

31 December 2012

	Within 1 year	1-2 years	2-3 years	Over 3 years	Total
Accounts payable Interests payable Dividends payable Other payables Bills payable Bank borrowings Bonds payable	4,868,812,557.66 155,274,711.13 26,277,469.19 1,618,765,893.48 430,004,020.52 14,641,545,845.81 1,381,480,000.00 23,122,160,497.79	1,317,545,708.47 – 16,770,600.00 496,793,758.73 – 1,518,796,189.99 2,233,480,000.00 5,583,386,257.19	228,144,901.50 – – 107,126,930.08 – 3,467,927,863.04 3,051,400,000.00 6,854,599,694.62	154,698,740.14 – – 217,494,520.47 – 270,208,273.97 2,234,000,000.00 2,876,401,534.58	6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 430,004,020.52 19,898,478,172.81 8,900,360,000.00 38,436,547,984.18

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Liquidity risk (continued)

31 December 2011

	Within 1 year	1-2 years	2-3 years	Over 3 years	Total
Accounts payable Interests payable Dividends payable Other payables Bills payable Bank borrowings Bonds payable	4,170,179,825.53 121,856,589.77 55,043,247.30 1,890,024,790.66 361,817,226.63 14,890,985,271.95 216,480,000.00 21,706,386,951.84	562,097,531.33 – – 1,137,145,406.34 – 5,000,500,000.00 216,480,000.00 6,916,222,937.67	276,770,222.96 – – 112,333,069.02 – 816,337,451.30 2,116,480,000.00 3,321,920,743.28	115,306,540.69 – – 336,399,222.78 – 2,329,341,452.16 2,934,400,000.00 5,715,447,215.63	5,124,354,120.51 121,856,589.77 55,043,247.30 3,475,902,488.80 361,817,226.63 23,037,164,175.41 5,483,840,000.00 37,659,977,848.42

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. It mainly includes interest rate risk, currency risk and other price risk, such as equity investment price risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debts.

The table below demonstrates the sensitivity analysis of interest rate risk to a reasonably possible change in interest rates, with all other variables held constant, with respect to the effects on net profit (through the impact on floating rate borrowings) and equity.

If interest rate had been increased or decreased by 1 percentage point and all other variables remained unchanged, the Group’s total profit for the year 2012 and 2011 would decrease or increase by approximately RMB54,937,852.00 and RMB63,134,015.75 respectively, and except for retained earnings, it would have no impact on other constituents of the Group’s consolidated equity.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Group’s exposure to currency risk mainly arises from certain financial assets and liabilities held by the Group that are principally denominated in United States dollars and Hong Kong dollars.

The table below demonstrates the sensitivity analysis of currency risk to a possible change in exchange rates of Renminbi against United States dollars or Hong Kong dollars, with all other variables held constant, with respect to the effects on total profit and equity for the current period.

		Total profit	Equity (Note)
	Percentage of	Increase/	Increase/
	appreciation	(decrease)	(decrease)
2012	USD$ appreciation 1%	(44,988.58 )	–
2012	HK$ appreciation 1%	(105,682.87 )	–
2011	USD$ appreciation 1%	(21,812.12 )	–
2011	HK$ appreciation 1%	(139,364.11 )	–

Note: Retained earnings excluded in equity.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Fair value

Set out below are carrying amount and fair value of each category of financial instruments of the Group:

	Carrying amount 31 December 2012 31 December 2011	Carrying amount 31 December 2012 31 December 2011	31 December 2012	Fair value 31 December 2011
Financial assets Cash and bank balances Bill receivable Accounts receivable Interests receivable Dividends receivable Other receivables Available-for-sale financial assets Financial liabilities Short-term loans Bill payable Accounts payable Interests payable Dividends payable Other payables Non-current liabilities due within one year Long-term loans Bonds payable	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 1,411,125.80 1,215,425.00 1,899,515,319.31 – 12,828,695,478.86 11,388,286,880.00 430,004,020.52 6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 2,576,020,000.00 4,757,051,545.34 7,692,453,587.34 36,051,521,824.05	7,918,479,363.14 1,347,905,318.65 3,490,937,470.40 1,858,662.81 – 2,458,939,025.66 95,138.56 15,218,214,979.22 11,286,861,222.71 361,817,226.63 5,124,354,120.51 121,856,589.77 55,043,247.30 3,475,902,488.80 3,604,124,049.24 7,772,597,451.30 4,687,098,763.98 36,489,655,160.24	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 1,411,125.80 1,215,425.00 1,899,515,319.31 – 12,828,695,478.86 11,388,286,880.00 430,004,020.52 6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 2,576,020,000.00 4,757,051,545.34 7,692,453,587.34 36,051,521,824.05	7,918,479,363.14 1,347,905,318.65 3,490,937,470.40 1,858,662.81 – 2,458,939,025.66 95,138.56 15,218,214,979.22 11,286,861,222.71 361,817,226.63 5,124,354,120.51 121,856,589.77 55,043,247.30 3,475,902,488.80 3,604,124,049.24 7,772,597,451.30 4,687,098,763.98 36,489,655,160.24

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Fair value (continued)

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The following methods and assumptions are used to estimate the fair values.

The fair values of cash and bank balances, bills receivable, accounts receivable, interests receivable, other receivables, bill payable, accounts payable, interests payable, other payables and similar instruments approximate their carrying amounts due to the short term maturities of these instruments.

The fair values of long and short-term loans, bonds payable and similar instruments are calculated by discounting the estimated future cash flows using rates currently available for other instruments with substantially equivalent terms and characteristics.

The fair values of listed financial instruments are determined based on the quoted market prices.

The Group uses the following hierarchy for fair value measurement:

The Group uses the following hierarchy for fair value measurement: Level 1: fair values are measured using quoted prices (unadjusted) in active markets for identical assets or liabilities available on the measurement date; Level 2: fair values are measured by adjusting quoted prices of similar assets or liabilities from active markets or quoted prices of identical or similar assets or liabilities from non-active markets available on the measurement date; Level 3: fair values are measured based on inputs used by market participants in the valuation of assets or liabilities when there is no available comparable market prices of identical or similar assets.

Financial instruments measured at fair value:

31 December 2012

	Level 1	Level 2	Level 3	Total
Available-for-sale financial assets 31 December 2011	–	–	–	–
	Level 1	Level 2	Level 3	Total 95,138.56
Available-for-sale financial assets	95,138.56	–	–

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

5. Comparative amounts

Some comparative amounts have been restated to conform with the current year’s presentation.

6. Supplementary information to the statement of financial position

Net current assets (consolidated)	31 December 2012	31 December 2011
Current assets Less: Current liabilities Net current assets Total assets less current liabilities (consolidated) Total assets Less: current liabilities Total assets less current liabilities Net current assets (Company) Current assets Less: Current liabilities Net current assets/(liabilities) Total assets less current liabilities (Company) Total assets Less: Current liabilities Total assets less current liabilities	47,101,878,945.40 43,462,947,177.04 3,638,931,768.36 31 December 2012 83,161,803,630.34 43,462,947,177.04 39,698,856,453.30 31 December 2012 17,229,335,327.59 15,541,552,149.32 1,687,783,178.27 31 December 2012 44,107,590,398.72 15,541,552,149.32 28,566,038,249.40	44,726,242,887.90 39,299,198,537.22 5,427,044,350.68 31 December 2011 76,914,972,456.74 39,299,198,537.22 37,615,773,919.52 31 December 2011 16,585,015,324.62 17,202,237,483.02 (617,222,158.40) 31 December 2011 41,960,062,753.07 17,202,237,483.02 24,757,825,270.05

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

7. Directors’ and Supervisors’ Remuneration

Directors’ and supervisors’ remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and Section 161 of the Hong Kong Companies Ordinance, is as follows:

	2012	2011
Fees Other emoluments: Salaries, allowances and benefits in kind Performance related bonuses Pension scheme contributions	471,763.00 1,275,974.00 2,607,966.00 105,297.00 4,461,000.00	581,488.00 1,298,924.15 2,284,821.16 101,294.85 4,266,528.16

(1) Independent non-executive directors

The fees paid to independent non-executive directors for the year are as follows:

	2012	2011
Mr. Hu Zhaoguang Mr. Zhang Chengfu Mr. Xu Yongmo Mr. Yip Wai Ming	101,274.00 101,274.00 101,274.00 101,274.00 405,096.00	125,372.00 125,372.00 125,372.00 125,372.00 501,488.00

No other remuneration was payable to non-executive directors for the year (2011: Nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

7. Directors’ and Supervisors’ Remuneration (continued)

(2) Executive directors, non-executive directors and supervisors: 2012

	Fee	Salaries, allowances and non-cash benefits	Performance related bonuses	Pension scheme contributions	Total remuneration
Executive directors Mr. Jiang Weiping Mr. Jiang Deyi Mr. Shi Xijun Mr. Zang Feng Mr. Wang Hongjun Mr. Wang Shizhong Mr. Deng Guangjun Non-executive directors Mr. Li Xinhua Supervisors* Mr. Wang Xiaoqun Mr. Sheng Guihua Mr. Ma Weixin Mr. Hu Jingshan Mr. Zhangjie Mr. Wang Youbin Mr. Zhang Dengfeng Mr. Zhang Yifeng Mr. Wang Xin	– – – – – – – – 66,667.00 66,667.00 – – – – – – – – – – 66,667.00	– 235,946.00 62,312.00 35,289.00 148,826.00 148,386.00 84,632.00 715,391.00 – – 128,500.00 49,500.00 41,667.00 41,667.00 41,667.00 150,000.00 37,954.00 33,944.00 35,684.00 560,583.00 1,275,974.00	– 609,392.00 144,667.00 86,900.00 482,927.00 507,154.00 278,121.00 2,109,161.00 – – 75,000.00 16,700.00 – – – 215,405.00 71,950.00 60,850.00 58,900.00 498,805.00 2,607,966.00	– 21,314.00 7,288.00 5,466.00 21,314.00 21,314.00 12,203.00 88,899.00 – – – – – – – – 5,466.00 5,466.00 5,466.00 16,398.00 105,297.00	– 866,652.00 214,267.00 127,655.00 653,067.00 676,854.00 374,956.00 2,913,451.00 66,667.00 66,667.00 203,500.00 66,200.00 41,667.00 41,667.00 41,667.00 365,405.00 115,370.00 100,260.00 100,050.00 1,075,786.00 4,055,904.00

Mr. Jiang Deyi is the President of the Company.
I-188 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

7. Directors’ and Supervisors’ Remuneration (continued)

(2) Executive directors, non-executive directors and supervisors (continued) 2011

	Fee	Salaries, allowances and non-cash benefits	Performance related bonuses	Pension scheme contributions	Total remuneration
Executive directors Mr. Jiang Weiping Mr. Li Changli Mr. Shi Xijun Mr. Jiang Deyi Mr. Wang Hongjun Mr. Deng Guangjun Non-executive director Mr. Zhou Yuxian Mr. Li Xinhua Supervisors Mr. Wang Xiaoqun Mr. Sheng Guihua Mr. Ma Weixin Mr. Hu Jingshan Mr. Zhang Jie Ms. Fan Xiaolan Mr. Wang Youbin	– – – – – – – 40,000.00 40,000.00 80,000.00 – – – – – – – – 80,000.00	106,977.85 95,477.85 72,502.85 237,620.40 150,800.40 151,520.40 814,899.75 – – – 153,600.00 32,250.00 50,000.00 50,000.00 50,000.00 32,594.00 115,580.40 484,024.40 1,298,924.15	60,000.00 60,000.00 138,000.00 522,717.00 506,659.00 505,917.00 1,793,293.00 – – – 90,000.00 92,600.00 – – – 10,000.00 298,928.16 491,528.16 2,284,821.16	7,872.15 7,872.15 7,872.15 19,419.60 19,419.60 19,419.60 81,875.25 – – – – – – – – – 19,419.60 19,419.60 101,294.85	174,850.00 163,350.00 218,375.00 779,757.00 676,879.00 676,857.00 2,690,068.00 40,000.00 40,000.00 80,000.00 243,600.00 124,850.00 50,000.00 50,000.00 50,000.00 42,594.00 433,928.16 994,972.16 3,765,040.16

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

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APPENDIX I

Notes to Financial Statements

As at 31 December 2012

X. OTHER SIGNIFICANT MATTERS (continued)

8. 5 highest paid employees

During the reporting year, 5 highest paid employees include one (2011: nil) director, the remuneration details of whom are shown in Appendix X.7. The remuneration details of the other four (2011: five) non-director employees are as follows:

	2012	2011
Labour, subsidies and non-cash interests value Merit bonus Pension scheme contributions	1,651,858.41 1,918,592.00 59,041.59 3,629,492.00	2,052,321.60 3,088,238.02 77,678.40 5,218,238.02

The remuneration distribution of the non-director employees is as follows:

Number of employees

	2012	2011
RMB0-1,000,000 RMB1,000,001-1,500,000	3 1 4	4 1 5

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APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

1. Other receivables

An aging analysis of other receivables is as follows:

	31 December 2012	31 December 2011
Within 1 year 1 to 2 years 2 to 3 years 4 to 5 years Over 5 years Provision for bad debt of other receivables	14,827,697,064.41 – 30,380,000.00 1,563,990.61 9,754,425.49 14,869,395,480.51 (31,698,203.12 ) 14,837,697,277.39	12,432,453,348.23 35,331,603.88 30,788,355.71 – 4,240,000.00 12,502,813,307.82 (62,356,964.26 ) 12,440,456,343.56

Movements in provision for bad debts of other receivables are as follows:

	2012	2011
Amount at beginning of the year Provision/(reversal) for the year Amount at end of the year	62,356,964.26 (30,658,761.14 ) 31,698,203.12	4,240,000.00 58,116,964.26 62,356,964.26

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APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

1. Other receivables (continued)

	31 December 2012 Gross Provision carrying for bad Provision amount Proportion debts amount proportion (%) (%)	31 December 2012 Gross Provision carrying for bad Provision amount Proportion debts amount proportion (%) (%)	31 December 2011 Gross Provision carrying for bad Provision amount Proportion debts amount proportion (%) (%)	31 December 2011 Gross Provision carrying for bad Provision amount Proportion debts amount proportion (%) (%)
Individually significant and subject to separate provision Subject to provision by groups: Within 1 year (inclusive of 1 year) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debt	34,180,183.06 0.23 44,189,296.61 0.30 9,754,425.49 0.06 53,943,722.10 0.36 14,779,510,415.40 99.40 1,761,159.95 0.01 14,869,395,480.51 100.00	20,246,783.06 59.24 – – 9,754,425.49 100.00 9,754,425.49 – – 1,696,994.57 96.36 31,698,203.12	72,064,954.99 0.58 396,568,279.44 3.17 4,240,000.00 0.03 400,808,279.44 3.20 12,024,425,647.90 96.18 5,514,425.49 0.04 12,502,813,307.82 100.00	52,602,538.77 72.99 – – 4,240,000.00 100.00 4,240,000.00 – – 5,514,425.49 100.00 62,356,964.26

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APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

1. Other receivables (continued)

As at 31 December 2012, the top five other receivables were as follows:

Relationship with the Company	Proportion in total other Amount Age receivables (%)
BBMG (Tianjin) Subsidiary Property Development Limited BBMG (Hangzhou) Subsidiary Property Development Limited Beijing Jinyu Jiaye Real Subsidiary Estate Development Co., Ltd. Beijing BBMG Dacheng Subsidiary Property Development Co., Ltd. Tangshan BBMG Subsidiary Julong Property Development Co., Ltd.	1,613,994,192.70 Within 1 year 10.88 1,513,217,520.64 Within 1 year 10.20 1,276,158,175.65 Within 1 year 8.60 1,002,167,210.47 Within 1 year 6.75 697,425,064.60 Within 1 year 4.70 6,102,962,164.06 41.13

Other receivables included the amounts due from subsidiaries, jointly-controlled entities, associates as follows:

	31 December 2012	31 December 2011
Amounts due from subsidiaries Amounts due from a jointly-controlled entity Amounts due from associates	14,722,979,875.40 81,688,940.00 62,936.72 14,804,731,752.12	11,989,869,402.54 56,530,540.00 2,871,971.22 12,049,271,913.76

The above other receivables due from related parties are unsecured and repayable on demand.

There were no other receivables due from shareholders holding 5% or more of the Company’s voting rights (31 December 2011: nil).

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APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

2. Long-term equity investments

2012

2012
			Increase/			Percentage
		Opening	(decrease)	Closing		of voting	Cash dividends
	Investment cost	balance	in the year	balance	Shareholding	rights	for the year
					(%)	(%)
Cost method:
Beijing Liulihe Cement Co., Ltd.	629,405,052.96	629,405,052.96	–	629,405,052.96	100.00	100.00	–
Beijing BBMG Concrete Co., Ltd.	359,235,910.27	359,235,910.27	–	359,235,910.27	100.00	100.00	–
Beijing BBMG Mangrove Environmental
Protection Technology Co., Ltd.	2,036,662,200.00	150,226,600.00	943,217,800.00	1,093,444,400.00	79.41	79.41	–
Yangquan Tongda BBMG
Refractory Materials Co., Ltd.	60,000,000.00	60,000,000.00	–	60,000,000.00	100.00	100.00	–
Luquan BBMG Dingxin Cement Co., Ltd.	1,454,400,000.00	1,454,400,000.00	–	1,454,400,000.00	100.00	100.00	22,000,000.00
Hebei Taihang Huaxin Building
Materials Co., Ltd.	60,070,428.44	60,070,428.44	–	60,070,428.44	33.33	33.33	–
Zanhuang BBMG Cement Co., Ltd.	450,000,000.00	450,000,000.00	–	450,000,000.00	100.00	100.00	–
BBMG Cement Trading Co., Ltd.	50,000,000.00	50,000,000.00	–	50,000,000.00	100.00	100.00	–
Beijing BBMG Cement
Energy Saving Technology Co., Ltd.	25,000,000.00	25,000,000.00	–	25,000,000.00	100.00	100.00	–
Zhangjiakou Jinyu Cement Co., Ltd.	286,161,805.81	286,161,805.81	–	286,161,805.81	90.00	90.00	–
Tianjin Zhenxing Cement Co., Ltd.	392,950,236.38	392,950,236.38	–	392,950,236.38	60.64	60.64	–
Quyang Jinyu Cement Co., Ltd.	245,747,261.65	245,747,261.65	–	245,747,261.65	90.00	90.00	–
Siping BBMG Cement Co., Ltd.	156,000,000.00	156,000,000.00	–	156,000,000.00	52.00	52.00	–
Shijiazhuang BBMG Xucheng
Concrete Co., Ltd.	102,047,000.00	102,047,000.00	–	102,047,000.00	95.60	95.60	–
Nanxian BBMG Cement Co., Ltd.	160,240,000.00	160,240,000.00	–	160,240,000.00	80.00	80.00	–
Qinyang BBMG Cement Co., Ltd.	144,145,100.00	144,145,100.00	–	144,145,100.00	86.60	86.60	–
Zhuolu Jinyu Cement Co., Ltd.	286,677,498.05	286,677,498.05	–	286,677,498.05	100.00	100.00	–
Beijing BBMG Tiantan Furniture Co., Ltd.	114,305,960.36	114,305,960.36	–	114,305,960.36	93.05	93.05	–
Beijing Woodworking Factory Co., Ltd.	54,556,261.16	54,556,261.16	–	54,556,261.16	100.00	100.00	–
Tongda Refractory Technology Co., Ltd.	412,160,000.00	35,650,000.00	376,510,000.00	412,160,000.00	81.10	81.10	–
Beijing Jinyu Energy-Saving
Technology Co., Ltd.	342,450,576.31	342,450,576.31	–	342,450,576.31	100.00	100.00	–
Beijing Jinyu Aerated Concrete Co., Ltd.	47,946,419.68	47,946,419.68	–	47,946,419.68	100.00	100.00	–
Beijing Xiang Brand Walling
Materials Co., Ltd	39,277,559.44	39,277,559.44	–	39,277,559.44	100.00	100.00	–
Beijing Xiliu Building Materials Co., Ltd.	100,693,940.92	100,693,940.92	–	100,693,940.92	100.00	100.00	–

I-194 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

2. Long-term equity investments (continued)

2012 (continued)

2012 (continued)
			Increase/			Percentage
		Opening	(decrease)	Closing		of voting	Cash dividends
	Investment cost	balance	in the year	balance	Shareholding	rights	for the year
					(%)	(%)
Cost method:(continued)
Beijing Architectural Coating Co., Ltd.	–	24,202,164.45	(24,202,164.45 )	–	–	–	–
Beijing Building Materials	122,467,784.68	122,467,784.68	–	122,467,784.68	100.00	100.00	–
Academy Co., Ltd.
Beijing Keshi Hardware Co., Ltd.	24,821,267.11	24,821,267.11	–	24,821,267.11	100.00	100.00	–
Beijing Building Materials
Trading Group Co., Ltd.	–	353,808,000.00	(353,808,000.00 )	–	–	–	–
Beijing Jiandu Design and	9,405,299.48	9,405,299.48	–	9,405,299.48	100.00	100.00	–
Research Institute Co., Ltd.
BBMG (Dachang) New Building	500,000,000.00	500,000,000.00	–	500,000,000.00	100.00	100.00	–
Materials Co., Ltd.
Beijing Alavus Energy Saving	29,980,669.86	29,980,669.86	–	29,980,669.86	82.00	82.00	–
Components Co., Ltd.
BBMG GEM Real Estate	1,665,138,411.45	1,665,138,411.45	–	1,665,138,411.45	100.00	100.00	46,320,504.64
Development Co., Ltd.
BBMG Century City Property	–	176,913,769.63	(176,913,769.63 )	–	100.00	100.00	–
Development Co., Ltd.
Beijing Xisanqi High Tech	123,580,431.35	123,580,431.35	–	123,580,431.35	100.00	100.00	–
New Building Material
City Management and
Development Co., Ltd.
Beijing Gaoling Property	–	270,350,138.35	(270,350,138.35 )	–	–	–	–
Development Co., Ltd.
BBMG Property Management Co., Ltd.	89,264,530.92	89,264,530.92	–	89,264,530.92	100.00	100.00	–
BBMG Fengshan Hot Spring Resort Co., Ltd.	202,480,361.57	202,480,361.57	–	202,480,361.57	100.00	100.00	–
Beijing Jianji Assets Management Co., Ltd.	62,488,240.83	62,488,240.83	–	62,488,240.83	100.00	100.00	–
Beijing Jinhaiyan Assets Management Co., Ltd.	78,479,818.89	78,479,818.89	–	78,479,818.89	100.00	100.00	–
BBMG Property Operation
Management Co., Ltd.	99,000,000.00	99,000,000.00	–	99,000,000.00	100.00	100.00	–
Beijing BBMG Dacheng Property
Development Co., Ltd.	1,594,735,641.87	1,594,735,641.87	–	1,594,735,641.87	100.00	100.00	–
Tianjin BBMG Concrete Co., Ltd.	247,454,707.80	247,454,707.80	–	247,454,707.80	85.00	85.00	18,000,000.00
Beijing Jinyu Pinggu Cement Co., Ltd.	150,000,000.00	150,000,000.00	–	150,000,000.00	100.00	100.00	–
Beijing BBMG Mining Co., Ltd.	5,000,000.00	5,000,000.00	–	5,000,000.00	100.00	100.00	–
Lingchuan BBMG Cement Co., Ltd.	180,000,000.00	180,000,000.00	–	180,000,000.00	100.00	100.00	–

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APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

2. Long-term equity investments (continued)

2012 (continued)

2012 (continued)
			Increase/			Percentage
		Opening	(decrease)	Closing		of voting	Cash dividends
	Investment cost	balance	in the year	balance	Shareholding	rights	for the year
					(%)	(%)
Cost method:(continued)
Beijing BBMG Coating Co., Ltd	95,421,200.61	95,421,200.61	–	95,421,200.61	100.00	100.00	–
Beijing BBMG Business and
Trading Co., Ltd.	410,000,000.00	160,000,000.00	250,000,000.00	410,000,000.00	100.00	100.00	–
Beijing Jinhaiyan Property
Management Co., Ltd.	4,133,292.75	4,133,292.75	–	4,133,292.75	100.00	100.00	–
Beijing BBMG Chengyuan
Property Development Co., Ltd.	473,509,857.53	449,307,693.09	24,202,164.44	473,509,857.53	100.00	100.00	–
Beijing Building Decoration and
Design Engineering Co., Ltd.	82,429,882.34	82,429,882.34	–	82,429,882.34	100.00	100.00	–
Beijing Cement Plant Co., Ltd.	–	943,217,800.00	(943,217,800.00 )	–	–	–	–
Beijing Lvdushangke Science and
Technology Co., Ltd.	43,615,552.98	43,615,552.98	–	43,615,552.98	100.00	100.00	36,000.00
Beijing BBMG Doudian Technology
Corporate Management Co., Ltd.	52,788,777.09	52,788,777.09	–	52,788,777.09	100.00	100.00	–
Beijing Yanshan Cement Co., Ltd.	32,707,342.45	32,707,342.45	–	32,707,342.45	100.00	100.00	–
BBMG Hongye Ecological Science
and Technology Co., Ltd.	815,331,413.51	815,331,413.51	–	815,331,413.51	100.00	100.00	–
BBMG Hong Kong Limited.	37,137.91	37,137.91	–	37,137.91	100.00	100.00	–
Beijing Dacheng Property
Management Co., Ltd.	11,198,711.92	11,198,711.92	–	11,198,711.92	100.00	100.00	–
Beijing Taihang Qianjing Cement Co., Ltd.	67,600,000.00	67,600,000.00	–	67,600,000.00	67.00	67.00	–
Harbin Taihang Xinglong Cement Co., Ltd.	–	8,192,227.69	(8,192,227.69 )	–	–	–	–
Baoding BBMG Taihang Heyi Cement Co., Ltd.	120,000,000.00	120,000,000.00	–	120,000,000.00	75.00	75.00	–
Beijing Qianglian Cement Co., Ltd.	–	24,425,880.00	(24,425,880.00 )	–	–	–	–
Handan BBMG Taihang Cement Co., Ltd.	719,986,626.30	419,986,626.30	300,000,000.00	719,986,626.30	94.67	94.67	–
Shexian BBMG Cement Co., Ltd.	181,678,700.00	181,678,700.00	–	181,678,700.00	91.00	91.00	–
Beijing Chinefarge Cement Co., Ltd.	464,740,918.29	464,740,918.29	–	464,740,918.29	95.70	95.70	–
BBMG Shunfa Lafarge Cement Co., Ltd.	110,681,119.42	110,681,119.42	–	110,681,119.42	70.00	70.00	–
Zuoquan BBMG Cement Co., Ltd.	215,300,000.00	215,300,000.00	–	215,300,000.00	100.00	100.00	–
Xuanhua BBMG Cement Co., Ltd.	3,250,000.00	3,250,000.00	–	3,250,000.00	65.00	65.00	–

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

2. Long-term equity investments (continued)

2012 (continued)

2012 (continued)
	Investment cost	Opening balance	Increase/ Percentage (decrease) Closing of voting in the year balanceShareholding rights (%) (%)	Cash dividends for the year
Cost method:(continued) BBMG Material Industrial (Shanghai) Co., Ltd. BBMG Mortar Co., Ltd. Guangling Jinyu Cement Co., Ltd. Bo’ai BBMG Cement Co., Ltd. Beijing Municipal Engineering Group Co., Ltd Beijing Yadu Science & Technology Co., Ltd. Chengde BBMG Cement Co., Ltd. Total under cost method Equity method: Joint ventures STAR-USG Building Materials Co., Ltd Associates Krono (Beijing) Flooring Co., Ltd. Krono (Beijing) Woods Co., Ltd. Beijing Zehnder Radiators Co., Ltd Beijing Dynea Chemical Industry Co., Ltd. OCV Reinforcements (Beijing) Co., Ltd. Beijing Gaoqiang Concrete Co., Ltd Total of associates Total under equity method	40,800,000.00 80,000,000.00 350,000,000.00 197,000,000.00 – 200,000.00 6,328,450.01 17,773,169,360.35 184,628,800.88 36,736,395.34 152,304,154.86 78,150,006.67 9,921,366.40 27,557,054.00 15,723,518.14 320,392,495.41 505,021,296.29 18,278,190,656.64	– – – 90,000,000.00 7,080,000.00 200,000.00 6,328,450.01 16,166,411,576.03 103,053,260.43 – 126,902,065.46 85,379,053.13 12,612,205.61 53,441,520.44 19,633,577.24 297,968,421.88 401,021,682.31 16,567,433,258.34	40,800,000.00 40,800,000.00 51.00 51.00 80,000,000.00 80,000,000.00 80.00 80.00 220,000,000.00 220,000,000.00 100.00 100.00 53,500,000.00 143,500,000.00 59.34 59.34 (7,080,000.00 ) – – – – 200,000.00 0.20 0.20 – 6,328,450.01 12.52 12.52 480,039,984.32 16,646,451,560.35 (8,308,128.34 ) 94,745,132.09 50.00 50.00 – – 30.00 30.00 (16,707,727.99 ) 110,194,337.47 30.00 30.00 7,811,377.96 93,190,431.09 26.70 26.70 (863,508.96 ) 11,748,696.65 45.00 45.00 (1,108,675.33 ) 52,332,845.11 20.00 20.00 5,024,056.41 24,657,633.65 25.00 25.00 (5,844,477.91 ) 292,123,943.97 (14,152,606.25 ) 386,869,076.06 465,887,378.07 17,033,320,636.41	– – – – – – – 86,356,504.64 – – – – 1,427,166.00 – – 1,427,166.00 1,427,166.00 87,783,670.64
			465,887,378.07

As at 31 December 2012, there was no listing investment in long-term share investment.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

3. Revenue and cost of sales

Revenue is as follows:

	2012	2011
Revenue from principal operations Revenue from other operations	510,759,769.85 2,461,890,193.56 2,972,649,963.41	369,127,568.29 121,054,201.82 490,181,770.11

Cost of sales is as follows:

	2012	2011
Cost of principal operations Cost of other operations	75,341,507.58 1,164,289,926.29 1,239,631,433.87	39,040,690.66 59,789,237.35 98,829,928.01

Revenue by type is as follows:

	2012 Revenue Cost	2012 Revenue Cost	2011 Revenue Cost	2011 Revenue Cost
Rental income Sales of investment properties Others	510,759,769.85 2,418,625,604.00 43,264,589.56 2,972,649,963.41	75,341,507.58 1,164,075,356.41 214,569.88 1,239,631,433.87	369,127,568.29 81,754,339.96 39,299,861.86 490,181,770.11	39,040,690.66 59,410,067.54 379,169.81 98,829,928.01

All operating incomes are from North China Region.

I-198 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

3. Revenue and cost of sales (continued)

Revenue from the five largest customers for 2012 is as follows:

	Amount	Percentage of revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	1,324,194,450.00 505,359,720.00 263,477,104.00 240,709,130.00 84,885,200.00 2,418,625,604.00	44.55 17.00 8.86 8.10 2.86 81.37

Revenue from the five largest customers for 2011 is as follows:

	Amount	Percentage of revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	13,910,588.45 12,213,938.12 9,876,710.06 7,922,479.07 6,809,915.82 50,733,631.52 2012	2.84 2.49 2.01 1.62 1.39 10.35 2011
Income from long-term equity investments measured at cost method: Long-term equity investment income under equity method: Including: Income from investments in jointly-controlled entities Income from investments in associates	1,118,663,856.36 (36,677,615.26 ) (33,475,728.35 ) (3,201,886.91 ) 1,081,986,241.10	1,534,532,130.98 (42,528,782.06 ) (33,010,516.15 ) (9,518,265.91 ) 1,492,003,348.92

I-199 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

4. Investment income/(loss)

The investee with long-term equity investment income under cost method accounting for more than 5% of total profits:

Investee name	2012	2011 Reason for the change
BBMG GEM Real Estate Development Co., Ltd. Beijing BBMG Dacheng Property Development Co., Ltd. Beijing BBMG Mangrove Environmental Protection Technology Co., Ltd.	286,500,000.00 265,691,000.00 191,684,707.62 743,875,707.62	297,094,398.47 Change in business results 324,752,995.17 Change in business results 23,272,119.04 Change in business results 645,119,512.68

Long-term equity investment income under equity method:

Investee name	2012	2011 Reason for the change
Beijing Gaoqiang Concrete Co., Ltd. Beijing Dynea Chemical Industry Co., Ltd. Krono (Beijing) Woods Co., Ltd. OCV Reinforcements (Beijing) Co., Ltd. Zehnder (China) Indoor Climate Co., Ltd. STAR-USG Building Materials Co., Ltd	6,239,481.41 563,657.04 (16,707,727.99 ) (1,108,675.33 ) 7,811,377.96 (33,475,728.35 ) (36,677,615.26 )	(3,226,181.01 ) Change in business results 859,682.12 Change in business results (12,895,212.61 ) Change in business results 3,164,122.79 Change in business results 2,579,322.80 Change in business results (33,010,516.15 ) Change in business results (42,528,782.06)

I-200 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

5. Notes to items of statement of cash flows

Notes to items of statement of cash flows
	2012	2011
Cash received from other operating activities Cash received from funding Cash received from repayment of internal borrowingsand interests from subsidiaries Interests income Current accounts	38,179,879,279.00 1,339,182,627.77 74,235,842.08 721,173,902.87 40,314,471,651.72 2012	37,816,381,124.57 732,905,347.14 52,283,467.57 504,306,447.11 39,105,876,386.39 2011
Cash paid relating to other operating activities Cash expensed for subsidiaries Cash paid to subordinate units Inter-group current accounts Expenses and costs of the headquarters	5,126,351,344.89 34,682,004,230.80 2,230,474,696.36 228,433,013.59 42,267,263,285.64 2012	4,922,202,945.43 32,415,495,235.41 815,569,624.27 250,058,761.51 38,403,326,566.62 2011
Cash received from other investment activities Cash received from the acquisition of Taihang Celment Co., Ltd Cash paid relating to other investment activities Issuance expenses on merger of Taihang Cement	– –	11,229,519.80 58,165,082.76

I-201 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 31 December 2012

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

6. Supplemental information to statement of cash flows

(1) Reconciliation of net profit to cash flow from operating activities:

	2012	2011
Net profit Add: Provisions for assets impairment Depreciation of fixed assets Amortisation of intangible assets Amortisation of long-term prepaid expenses Loss/gain from disposal of fixed assets, intangible assets and other long-term assets Gain from fair value change Finance costs Investment income Increase in deferred income tax liabilities Increase in operating receivables Increase in operating payables Net cash flow generated from operating activities Cash and equivalents	2,396,730,003.56 (30,791,765.10 ) 58,168,026.16 18,007,281.18 – (473,057,920.89 ) (680,443,378.91 ) 1,034,307,851.91 (1,081,986,241.10 ) (45,599,405.80 ) (3,561,241,130.11 ) 680,907,651.71 (1,684,999,027.39 ) 31 December 2012	1,483,318,145.84 46,778,135.92 26,964,802.86 15,110,067.26 48,196,943.78 695,801.33 (458,247,577.10 ) 1,097,578,161.99 (1,492,003,348.92 ) 148,269,385.04 (1,493,183,752.23 ) 1,564,268,787.60 987,745,553.37 31 December 2011
Cash Including: Cash on hand Bank deposits on demand Balance of cash and cash equivalents at end of the year	998,549,054.78 1,014.54 998,548,040.24 998,549,054.78	2,067,665,937.14 689.12 2,067,665,248.02 2,067,665,937.14

(2) Cash and equivalents

I-202 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following is the full text of the unaudited financial statements of the Group for the six months ended 30 June 2013:

Consolidated Balance Sheet

As at 30 June 2013

Note V	30 June 2013 RMB	31 December 2012 RMB
Assets Current assets Cash and bank balances 1 Bills receivable 2 Accounts receivable 5 Advances to suppliers 7 Interests receivable 3 Dividends receivable 4 Other receivables 6 Inventories 8 Other current assets 9 Total current assets Non-current assets Long-term equity investments 11 Investment properties 12 Fixed assets 13 Construction in progress 14 Construction materials 15 Intangible assets 16 Goodwill 17 Long-term deferred expenditures 18 Deferred income tax assets 19 Total non-current assets Total assets	8,084,364,849.02 822,734,787.54 5,146,180,829.44 1,163,683,585.68 1,382,841.69 – 2,478,474,609.24 33,259,486,830.78 1,297,726,718.17 52,254,035,051.56 386,970,327.53 13,169,800,000.00 15,421,085,276.47 2,528,386,192.33 14,615,331.95 3,671,221,376.65 312,051,745.55 179,794,225.89 1,177,847,476.48 36,861,771,952.85 89,115,807,004.41	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 909,415,140.77 1,411,125.80 1,215,425.00 1,899,515,319.31 32,286,890,673.48 1,076,877,652.29 47,101,878,945.40 419,868,370.59 12,840,400,000.00 15,331,150,630.80 2,146,494,608.43 14,281,785.80 3,600,681,639.16 312,051,745.55 189,228,562.12 1,205,767,342.49 36,059,924,684.94 83,161,803,630.34

I-203 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet (continued)

As at 30 June 2013

Note V	30 June 2013 RMB	31 December 2012 RMB
Liabilities and shareholders’ equity Current Liabilities Short-term loans 22 Bills payable 23 Accounts payable 24 Receipts in advance 25 Wages payable 26 Tax payable 27 Interest payable 28 Dividends payable 29 Other payables 30 Short-term financing bonds payable 35 Non-current liabilities due within one year 32 Other current liabilities 33 Total current liabilities Non-current liabilities Long-term loans 34 Bonds payable 35 Long-term payables 36 Accrued liabilities 31 Deferred income tax liabilities 19 Other non-current liabilities 37 Total non-current liabilities Total liabilities Equity Share Capital 38 Capital reserve 39 Specialized reserve 40 Surplus reserve 41 Retained earnings 42 Exchange differences on foreign currency translation Equity attributable to the shareholders of the parent company Minority interests Total equity attributable to shareholders Total liabilities and equity attributable to shareholders	11,250,500,000.00 331,763,985.87 7,015,425,497.00 15,244,996,344.08 139,198,365.79 890,191,585.99 276,640,606.13 344,002,926.45 2,342,573,279.22 3,000,000,000.00 1,661,420,000.00 3,729,147,636.98 46,225,860,227.51 6,006,995,904.61 6,705,606,060.93 511,617,093.00 97,598,890.80 2,203,569,699.34 599,329,053.77 16,124,716,702.45 62,350,576,929.96 4,283,737,060.00 5,365,481,877.34 16,399,633.06 580,552,232.22 13,629,451,397.96 (130,382.81 ) 23,875,491,817.77 2,889,738,256.68 26,765,230,074.45 89,115,807,004.41	11,388,286,880.00 430,004,020.52 6,569,201,907.77 14,206,950,304.93 153,463,306.96 1,308,896,782.25 155,274,711.13 43,048,069.19 2,483,124,813.60 1,000,000,000.00 2,576,020,000.00 3,148,676,380.69 43,462,947,177.04 4,757,051,545.34 6,692,453,587.34 517,416,630.00 100,077,202.17 1,989,993,217.02 617,175,147.70 14,674,167,329.57 58,137,114,506.61 4,283,737,060.00 5,395,792,993.51 9,552,984.58 580,552,232.22 12,634,399,124.91 (130,112.92 ) 22,903,904,282.30 2,120,784,841.43 25,024,689,123.73 83,161,803,630.34

I-204 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet

As at 30 June 2013

Note XI	30 June 2013 RMB	31 December 2012 RMB
Assets Current assets Cash and bank balances Bills receivable Accounts receivable Interest receivable Dividends receivable Other receivables 1 Other current assets Total current assets Non-current assets Long-term equity investments 2 Investment properties Fixed assets Construction in progress Intangible assets Total non-current assets Total assets Liabilities and shareholders’ equity Current liabilities Short-term loans Accounts payable Receipts in advance Wages payable Tax payable Interest payable Dividends payable Other payables Short-term financing bonds payable Non-current liabilities due within one year Total current liabilities	1,885,064,787.87 – 60,332.04 136,753,728.78 661,048,971.75 16,966,790,090.01 15,012,503.61 19,664,730,414.06 17,930,452,962.08 8,007,527,000.00 1,338,969,500.59 4,980,000.00 473,868,378.77 27,755,797,841.44 47,420,528,255.50 10,392,500,000.00 5,181,309.23 61,891,262.86 551,235.22 17,808,367.47 270,230,222.23 316,398,656.81 2,596,892,411.99 3,000,000,000.00 1,080,000,000.00 17,741,453,465.81	998,549,054.78 8,100,000.00 60,332.04 250,729,781.21 1,134,198,882.17 14,837,697,277.39 – 17,229,335,327.59 17,033,320,636.41 7,778,292,087.37 1,427,916,220.95 157,397,881.58 481,328,244.82 26,878,255,071.13 44,107,590,398.72 10,222,500,000.00 5,620,311.33 279,335,584.99 564,620.38 163,908,577.54 149,247,229.17 20,962,235.89 2,064,413,590.02 1,000,000,000.00 1,635,000,000.00 15,541,552,149.32

I-205 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet (continued)

As at 30 June 2013

Note XI	30 June 2013 RMB	31 December 2012 RMB
Non-current liabilities Long-term loans Bonds payable Long-term payables Deferred income tax liabilities Total non-current liabilities Total liabilities Equity Share capital Capital reserve Surplus reserve Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity	3,500,000,000.00 6,705,606,060.93 501,379,113.65 1,516,094,245.70 12,223,079,420.28 29,964,532,886.09 4,283,737,060.00 5,679,053,989.85 580,552,232.22 6,912,652,087.34 17,455,995,369.41 47,420,528,255.50	2,510,000,000.00 6,692,453,587.34 506,240,834.36 1,327,185,517.53 11,035,879,939.23 26,577,432,088.55 4,283,737,060.00 5,679,053,989.85 580,552,232.22 6,986,815,028.10 17,530,158,310.17 44,107,590,398.72

I-206 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Income Statement

For the six months ended 30 June 2013

Note V	For the six months ended 30 June 2013 RMB	For the six months ended 30 June 2012 RMB
Operating revenue 43 Less: Operating costs 43 Tax and surcharges 44 Selling expenses 45 Administrative expenses 46 Finance costs 47 Asset impairment losses 50 Add: Gains from changes in fair value 48 Investment losses 49 Including: Share of losses of associates and jointly-controlled entities Operating profit Add: Non-operating income 51 Less: Non-operating expenses 52 Including: Loss on disposal of non-current assets Total profit Less: Income tax expenses 53 Net profit Net profit attributable to the shareholders of the parent company Minority interests Earnings per share 54 Basic earnings per share (RMB/share) Diluted earnings per share (RMB/share) Other comprehensive income 55 Total comprehensive income Including: Total comprehensive income attributable to the shareholders of the parent company Total comprehensive income attributable to minority interests	20,386,622,839.47 16,013,389,291.34 761,069,018.03 680,885,123.98 1,370,281,463.25 442,895,708.81 (12,393,172.48 ) 320,192,740.78 (23,696,571.08 ) (23,792,766.12 ) 1,426,991,576.24 309,900,892.74 14,087,901.77 4,884,690.18 1,722,804,567.21 426,771,312.14 1,296,033,255.07 1,299,197,604.31 (3,164,349.24 ) 0.30 0.30 2,845,810.12 1,298,879,065.19 1,302,043,414.43 (3,164,349.24 )	14,745,959,135.81 10,397,377,679.85 764,353,984.63 581,866,026.29 998,193,416.56 470,709,511.65 13,158,150.60 346,744,119.25 (19,589,256.13 ) (37,302,368.64 ) 1,847,455,229.35 297,910,514.70 31,689,833.14 11,235,299.81 2,113,675,910.91 585,726,128.30 1,527,949,782.61 1,387,233,578.71 140,716,203.90 0.32 0.32 (78,984.71 ) 1,527,870,797.90 1,387,154,594.00 140,716,203.90

I-207 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Income Statement

For the six months ended 30 June 2013

Note XI	For the six months ended 30 June 2013 RMB	For the six months ended 30 June 2012 RMB
Operating revenue 3 Less: Operating costs 3 Business tax and surcharges Selling expenses Administrative expenses Finance costs Asset impairment reversal Add: Gains from changes in fair value Investment income/(loss) 4 Including: Share of losses of associates and jointly-controlled entities Operating profit Add: Non-operating income Less: Non-operating expenses Including: Loss on disposal of non-current assets Total profit Less: Income tax expenses Net profit Other comprehensive income Total comprehensive income	317,635,161.33 49,733,966.20 16,172,644.93 6,016,139.00 109,706,342.04 137,234,191.18 – 229,234,912.63 10,275,138.30 (24,457,062.60 ) 238,281,928.91 61,353,699.17 324,689.00 – 299,310,939.08 69,328,548.58 229,982,390.50 – 229,982,390.50	248,231,396.06 50,963,850.90 13,895,918.27 5,770,500.00 79,624,854.37 264,897,045.12 (32,355,755.71 ) 204,482,857.36 (3,160,718.81 ) (37,781,216.00 ) 66,757,121.66 3,212,195.24 522,124.19 340,426.47 69,447,192.71 64,222,510.26 5,224,682.45 – 5,224,682.45

I-208 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Cash Flows

For the six months ended 30 June 2013

Note V	For the six months ended 30 June 2013 RMB	For the six months ended 30 June 2012 RMB
I. Cash flows from operating activities Cash received from sale of goods or rendering of services Refunds of taxes Cash received from other operating activities 56 Subtotal of cash inflows from operating activities Cash paid for goods and services Cash paid to and on behalf of employees Cash paid for all types of taxes Cash paid relating to other operating activities 56 Subtotal of cash outflows from operating activities Net cash flows from operating activities 57(1) II. Cash flows from investing activities Cash received from redemption of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash paid for acquisition of subsidiaries and other business entities 57(2) Net cash received from disposal of subsidiaries and other business entities 57(2) Cash received from other investing activities 56 Subtotal of cash inflows from investing activities Cash paid for acquisition of fixed assets, Intangible assets and other long-term assets Cash paid for acquisition of investments Subtotal of cash outflows from investing activities Net cash flows from investing activities	20,085,766,881.24 130,371,756.05 317,223,009.92 20,533,361,647.21 15,794,259,618.64 1,318,474,526.65 1,728,626,211.57 1,285,758,174.12 20,127,118,530.98 406,243,116.23 – 3,992,251.94 36,404,591.35 3,182,755.40 8,697,873.99 2,489,834.15 54,767,306.83 1,350,084,146.84 – 1,350,084,146.84 (1,295,316,840.01 )	13,568,446,681.24 54,777,747.08 652,307,018.99 14,275,531,447.31 9,907,553,108.43 1,115,756,313.75 1,624,423,896.49 802,661,253.16 13,450,394,571.83 825,136,875.48 49,349.57 1,100,924.74 103,977,388.24 – 8,164,989.31 – 113,292,651.86 1,703,478,313.25 65,967,600.00 1,769,445,913.25 (1,656,153,261.39 )

I-209 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Cash Flows (continued)

For the six months ended 30 June 2013

Note V	For the six months ended 30 June 2013 RMB	For the six months ended 30 June 2012 RMB
III. Cash flows from financing activities Cash received from capital contributions Including: Cash received by subsidiaries from non-controlling shareholders Cash received from borrowings Cash received from issue of bonds Subtotal of cash inflows from financing activities Cash repayment for borrowings Cash paid for distribution of dividend or profits and for interest expenses Including: Dividends and profits paid by subsidiaries to minority interests Cash paid relating to other financing activities Subtotal of cash outflows from financing activities Net cash flows from financing activities IV. Effect of changes in exchange rate on cash and cash equivalents V. Net increase/(decrease) in cash and cash equivalents Add: Cash and cash equivalents at the beginning of the period VI. Cash and cash equivalents at the end of the period 57(3)	872,822,100.04 872,822,100.04 9,160,866,359.27 2,000,000,000.00 12,033,688,459.31 8,963,308,880.00 646,066,339.16 7,254,868.82 408,872,381.58 10,018,247,600.74 2,015,440,858.57 (234,986.59 ) 1,126,132,148.20 3,557,703,110.20 4,683,835,258.40	19,650,000.00 19,650,000.00 8,415,590,000.00 – 8,435,240,000.00 7,561,786,222.71 816,052,578.31 18,058,669.55 – 8,377,838,801.02 57,401,198.98 (96,100.84 ) (773,711,287.77 ) 5,126,471,371.39 4,352,760,083.62

I-210 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Cash Flows

For the six months ended 30 June 2013

Note XI	For the six months ended 30 June 2013 RMB	For the six months ended 30 June 2012 RMB
I. Cash flows from operating activities Cash received from sale of goods or rendering of services Cash received from other operating activities 5 Subtotal of cash inflows from operating activities Cash paid for goods and services Cash paid to and on behalf of employees Cash paid for all types of taxes Cash paid relating to other operating activities 5 Subtotal of cash outflows from operating activities Net cash flows from operating activities 6 II. Cash flows from investing activities Cash received from redemption of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other business entities Subtotal of cash inflows from investing activities Cash paid for acquisition of fixed assets, intangible assets and other long-term assets Cash paid for acquisition of investments Subtotal of cash outflows from investing activities Net cash flows from investing activities	311,220,203.15 22,896,266,720.51 23,207,486,923.66 24,296,746.67 41,726,590.46 106,286,509.78 23,172,557,448.18 23,344,867,295.09 (137,380,371.43 ) – 1,215,425.00 1,523,235.03 61,247,700.00 63,986,360.03 58,214,530.63 1,089,278,058.47 1,147,492,589.10 (1,083,506,229.07 )	234,660,993.06 19,587,881,376.94 19,822,542,370.00 8,756,563.63 31,534,503.16 54,444,418.86 19,708,744,555.71 19,803,480,041.36 19,062,328.64 8,194,200.00 22,014,400.00 1,595,756.59 – 31,804,356.59 151,740,712.95 666,306,881.19 818,047,594.14 (786,243,237.55 )

I-211 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Cash Flows (continued)

For the six months ended 30 June 2013

Note XI	For the six months ended 30 June 2013 RMB	For the six months ended 30 June 2012 RMB
III. Cash flows from financing activities Cash received from borrowings Cash received relating to other financing activities Subtotal of cash inflows from financing activities Cash repayment for borrowings Cash paid for distribution of dividends or profits and for interest expenses Subtotal of cash outflows from financing activities Net cash flows from financing activities IV. Effect of changes in exchange rate on cash and cash equivalents V. Net increase/(decrease) in cash and cash equivalents Add: Cash and cash equivalents at the beginning of the period VI. Cash and cash equivalents at the end of the period 6	8,362,500,000.00 2,000,000,000.00 10,362,500,000.00 7,757,500,000.00 497,597,666.41 8,255,097,666.41 2,107,402,333.59 – 886,515,733.09 998,549,054.78 1,885,064,787.87	7,802,500,000.00 – 7,802,500,000.00 6,970,500,000.00 615,826,907.06 7,586,326,907.06 216,173,092.94 – (551,007,815.97 ) 2,067,665,937.14 1,516,658,121.17

I-212 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2013 (Unaudited)

Equity attributable to the shareholders of the parent company
Exchange
Non-
Share
Capital
Specialized
Surplus
Retained
differences on
controlling
capital
reserve
reserve
reserve
earnings
translation
Subtotal
interests
Total equity
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB

1. Balance as at the beginning of the period
4,283,737,060.00
5,395,792,993.51
9,552,984.58
580,552,232.22
12,634,399,124.91
(130,112.92 )
22,903,904,282.30
2,120,784,841.43
25,024,689,123.73
2. Movements during the period
(1) Net profit
–
–
–
–
1,299,197,604.31
–
1,299,197,604.31
(3,164,349.24 )
1,296,033,255.07
(2) Other comprehensive income
–
2,846,080.01
–
–
–
(269.89 )
2,845,810.12
–
2,845,810.12
Total comprehensive income
–
2,846,080.01
–
–
1,299,197,604.31
(269.89 )
1,302,043,414.43
(3,164,349.24 )
1,298,879,065.19
(3) Capital contribution and reduction from shareholders
1. Capital contribution from non-controlling shareholders
–
(36,602,826.36 )
–
–
–
–
(36,602,826.36 )
969,064,816.60
932,461,990.24
2. Acquisition of non-controlling interests in subsidiaries
–
3,445,630.18
–
–
–
–
3,445,630.18
(195,355,630.18 )
(191,910,000.00 )
3. Business combination not under common control
–
–
–
–
–
–
–
10,391,671.30
10,391,671.30
(4) Profit distribution
1. Dividend to shareholders
–
–
–
–
(304,145,331.26 )
–
(304,145,331.26 )
(12,772,755.65 )
(316,918,086.91 )
(5) Specialized reserve
1. Appropriated during the period
–
–
14,819,644.88
–
–
–
14,819,644.88
2,753,485.50
17,573,130.38
2. Paid during the period
–
–
(7,972,996.40 )
–
–
–
(7,972,996.40 )
(1,963,823.08 )
(9,936,819.48 )
3. Balance as at the end of the period
4,283,737,060.00
5,365,481,877.34
16,399,633.06
580,552,232.22
13,629,451,397.96
(130,382.81 )
23,875,491,817.77
2,889,738,256.68
26,765,230,074.45

I-213 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity (continued)

For the six months ended 30 June 2012 (Unaudited)

Equity attributable to the shareholders of the parent company
Exchange
Non-
Share
Capital
Surplus
Retained
differences on
controlling
capital
reserve
reserve
earnings
translation
Subtotal
interests
Total equity
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB

1. Balance as at the beginning of the period
4,283,737,060.00
5,311,872,199.72
340,879,231.86
10,217,411,951.85
(121,272.28 )
20,153,779,171.15
1,561,837,039.68
21,715,616,210.83
2. Movements during the period
(1) Net Profit
–
–
–
1,387,233,578.71
–
1,387,233,578.71
140,716,203.90
1,527,949,782.61
(2) Other comprehensive income
–
(73,706.25 )
–
–
(5,278.46 )
(78,984.71 )
–
(78,984.71 )
Total comprehensive income
–
(73,706.25 )
–
1,387,233,578.71
(5,278.46 )
1,387,154,594.00
140,716,203.90
1,527,870,797.90
(3) Internal transfer of shareholders’ equity
1. Capital contribution from non-controlling shareholders
–
(1,527,207.92 )
–
–
–
(1,527,207.92 )
119,503,518.72
117,976,310.80
2. Disposal of subsidiaries
–
–
–
–
–
–
(11,058,942.08 )
(11,058,942.08 )
(4) Profit distribution
1. Dividend to shareholders
–
–
–
(308,429,068.32 )
–
(308,429,068.32 )
(18,058,669.55 )
(326,487,737.87 )
3. Balance as at the end of the period
4,283,737,060.00
5,310,271,285.55
340,879,231.86
11,296,216,462.24
(126,550.74 )
21,230,977,488.91
1,792,939,150.67
23,023,916,639.58

I-214 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Changes in Equity

For the six months ended 30 June 2013 (Unaudited)

	Share capital RMB	Capital reserve RMB	Surplus reserve RMB	Retained earnings RMB	Total equity RMB
I. Balance at the beginning of the period II. Movements during the period (1) Net profit Total comprehensive income (2) Profit distribution 1. Dividend to shareholders III. Balance at the end of the period	4,283,737,060.00 – – – 4,283,737,060.00	5,679,053,989.85 – – – 5,679,053,989.85	580,552,232.22 – – – 580,552,232.22	6,986,815,028.10 229,982,390.50 229,982,390.50 (304,145,331.26 ) 6,912,652,087.34	17,530,158,310.17 229,982,390.50 229,982,390.50 (304,145,331.26 ) 17,455,995,369.41

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Changes in Equity (continued)

For the six months ended 30 June 2012 (Unaudited)

	Share capital RMB	Capital reserve RMB	Surplus reserve RMB	Retained earnings RMB	Total equity RMB
I. Balance at the beginning of the period II. Movements during the period (1) Net profit Total comprehensive income (2) Profit distribution 1. Dividend to shareholders III. Balance at the end of the period	4,283,737,060.00 – – – 4,283,737,060.00	5,724,155,727.37 – – – 5,724,155,727.37	340,879,231.86 – – – 340,879,231.86	4,355,311,616.36 5,224,682.45 5,224,682.45 (308,429,068.32 ) 4,052,107,230.49	14,704,083,635.59 5,224,682.45 5,224,682.45 (308,429,068.32 ) 14,400,879,249.72

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

I. BASIC INFORMATION OF THE GROUP

BBMG Corporation (the “ Company ”) is a joint stock company with limited liability incorporated in Beijing, the People’s Republic of China. It was established on 22 December 2005 jointly by BBMG Group Company Limited (“ BBMG Group ” or the “ Parent ”), China National Materials Company Limited (“ Sinoma ”), Beifang Real Estate Development Co., Ltd. (“ Beifang Real Estate ”), Tianjin Building Materials (Holding) Co., Ltd. (“ Tianjin Building Materials ”) and Hopeson Holdings Limited (“ Hopeson Holdings ”), pursuant to the Approval on Reorganisation Scheme of BBMG Group Company Limited (Jing Guo Zi Gui Hua Zi [2005] No. 48) issued by Beijing Municipal State-owned Assets Supervision and Administration Commission (“ Beijing SASAC ”) and the Circular of Approval on Establishment of BBMG Corporation (Jing Fa Gai [2005] No. 2682) issued by Beijing Municipal Development and Reform Commission. It was registered with Beijing Municipal Administration of Industry and Commerce (corporate business license number: 110000410285245). The Renminbi-denominated ordinary shares (A shares) and H shares of the Company are listed on the Shanghai Stock Exchange (“ Shanghai Stock Exchange ”) and the Stock Exchange of Hong Kong Limited (“ Stock Exchange of Hong Kong ”), respectively. The Company’s headquarters is located at No. 36, North Third Ring East Road, Dongcheng District, Beijing. The Company and its subsidiaries (collectively, the “ Group ”) are principally engaged in the manufacture and sale of cement and building materials, real estate development, property investment, and the provision of property management services.

Pursuant to the approval by the Ministry of Commerce of the People’s Republic of China (Shang Zi Pi [2008] No. 1001), the Company completed a capital increase in 2008 and increased its registered capital to RMB2,800,000,000, comprising a total of 2,800,000,000 shares in issue, of which 2,279.02 million shares or 81.39% are state-owned legal person shares (held by BBMG Group, Sinoma, China Cinda Asset Management Co., Ltd. (“ Cinda Asset ”) and Tianjin Building Materials), 182.50 million shares or 6.52% are non state-owned legal person shares (held by Hua Xi Xin Yu Investment Co., Ltd. (“ Hua Xi Xin Yu ”), Runfeng Investment Group Co., Ltd. (“ Runfeng Investment ”), and Beijing Taihong Investment (Group) Co., Ltd.), and 338.48 million shares or 12.09% are foreign shares (held by Hopeson Holdings and Tai’an Pinghe Investment Co., Ltd. (“ Tai’an Pinghe ”)). The capital increase was verified by the Capital Verification Reports (Zhong Xing Hua Yan Zi (2008) No. 007, Zhong Xing Hua Yan Zi (2008) No. 016) prepared by Zhongxinghua Certified Public Accountants Company Limited.

As resolved by the Company’s second extraordinary general meeting in 2008 and under the approval (Zheng Jian Xu Ke [2009] No. 550) of China Securities Regulatory Commission (“ CSRC ”), the Company issued 933,333,000 H shares on 17 July 2009 and 139,999,500 H shares on 29 July 2009 through the exercise of over-allotment option. The issued H shares were listed respectively on 29 July 2009 and 6 August 2009 on the Main Board of the Stock Exchange of Hong Kong. As a result, the Company’s registered capital was increased to RMB3,873,332,500. The capital increase was verified by the Capital Verification Report ((2009) Jing Kuai Xing Yan Zi No. 2-026) prepared by Beijing Xinghua Certified Public Accountants Company Limited.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

I. BASIC INFORMATION OF THE GROUP (continued)

As resolved by the Company’s third extraordinary general meeting in 2010 and under the approvals (Zheng Jian Xu Ke [2011] No. 166 and Zheng Jian Xu Ke [2011] No. 168) of CSRC on 28 January 2011, the Company issued 410,404,560 Renminbi-denominated ordinary shares (A shares) through initial public offering, all of which were used to finance the merger of Hebei Taihang Cement Co., Ltd. (“ Taihang Cement ”). Upon completion of the merger through share exchange, the former Taihang Cement was deregistered. The A shares were registered with China Securities Depository and Clearing Corporation Limited, Shanghai Branch on 22 February 2011 and listed on the Shanghai Stock Exchange on 1 March 2011. The capital increase through share exchange was verified by the Capital Verification Report ((2011) Jing Kuai Xing Yan Zi No. 4-007) prepared by Beijing Xinghua Certified Public Accountants Company Limited.

As at 30 June 2013, the Company’s registered capital is RMB4,283,737,060, comprising a total of 4,283,737,060 shares in issue, details of which are set out in Note V.38.

The Group’s parent and ultimate holding company is BBMG Group, a company established in the PRC.

These financial statements were approved by a resolution of the board of directors of the Company on 21 August 2013.

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

1. Basis of preparation of the financial statements

The financial statements are prepared in accordance with Accounting Standards for Business Enterprises – Basic Standards and 38 specific accounting standards issued by the Ministry of Finance (the “ MOF ”) in February 2006 and the implementation guidance, interpretations and other relevant provisions issued subsequently (collectively referred to as “ Accounting Standards for Business Enterprises ”).

The financial statements are presented on a going concern basis.

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the annual financial statements for the previous year which prepared in accordance with Accounting Standards for Business Enterprises.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

2. Statement of compliance with Accounting Standards for Business Enterprises

The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises and present fairly and fully the financial position of the Company and the Group as at 30 June 2013 and their financial performance and cash flows for the six months then ended.

3. Accounting period

The accounting year for the Group is from 1 January to 31 December of each calendar year. This accounting period is from 1 January 2013 to 30 June 2013.

4. Functional currency

The Group’s reporting and presentation currency is Renminbi (“ RMB ”). Unless otherwise stated, the unit of the currency is RMB yuan.

5. Business combinations

Business combinations under common control

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

5. Business combinations (continued)

Business combinations not under common control

The acquirer shall measure the acquiree’s identifiable assets, liabilities and contingent liabilities acquired in the business combination at their fair values on the acquisition date.

6. Consolidated financial statements

The consolidation scope of consolidated financial statements is determined on the basis of control, including the financial statements for the six-month period ended 30 June 2013 of the Company and all of its subsidiaries. A subsidiary is an enterprise or entity that is controlled by the Company.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

6. Consolidated financial statements (continued)

7. Cash and cash equivalents

8. Foreign currency transactions and translation of the financial statements prepared in foreign currencies

The Group translates the amounts of foreign currency transactions occurred into its functional currency.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

8. Foreign currency transactions and translation of the financial statements prepared in foreign currencies (continued)

9. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Recognition and derecognition of financial instruments

The Group recognises a financial asset or a financial liability when it becomes a party to the contractual provisions of a financial instrument.

The Group derecognises a financial asset (or part of a financial asset, or part of a group of similar financial assets) when the following conditions are met:

(1) the rights to receive cash flows from the financial asset have expired; or
(2) the Group has transferred its rights to receive cash flows from the financial asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the financial asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the financial asset, but has not retained control of the financial asset.
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Recognition and derecognition of financial instruments (continued)

Classification and measurement of financial assets

The Group’s financial assets are, on initial recognition, classified into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets and derivatives designated as effective hedging instruments. The Group determines the category of financial assets upon initial recognition. A financial asset is recognised initially at fair value. In the case of financial assets at fair value through profit or loss, relevant transaction costs are directly charged to profit and loss of the current period; transaction costs relating to financial assets of other categories are included in the amount initially recognised.

The subsequent measurement of financial assets depends on its category as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and those designated upon initial recognition at fair value through profit or loss. A financial asset held for trading is the financial asset that meets one of the following conditions: the financial asset is acquired for the purpose of selling in a short term; the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term profits; the financial asset is a derivative, except for a derivative that is designated as an effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. For such kind of financial assets, fair values are adopted for subsequent measurement. All the realised or unrealised gains or losses on these financial assets are recognised in profit or loss for the current period. Dividend income or interest income related to financial assets at fair value through profit or loss is credited to profit or loss for the current period.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Classification and measurement of financial assets (continued)

Held-to-maturity investments

Loans and receivables

Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available for sale or are not classified as any of the other categories at initial recognition. After initial recognition, available-for-sale financial assets are measured at fair value. The discount/premium is amortised using the effective interest method and recognised as interest income or expense. A gain or loss arising from a change in the fair value of an available-for-sale financial asset is recognised as other comprehensive income in capital reserve, except that impairment losses and foreign exchange gains or losses resulted from monetary financial assets are immediately recognised as current profit or loss, until the financial asset is derecognised or determined to be impaired, at which time the accumulated gain or loss previously recognised is transferred to profit or loss for the current period. Dividends and interest income relating to an available-for-sale financial asset are recognised in profit or loss for the current period.

Equity instruments without a quoted price from an active market and whose fair value cannot be reliably measured are measured at cost.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Classification and measurement of financial liabilities

The subsequent measurement of financial liabilities depends on its category as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and those designated upon initial recognition at fair value through profit or loss. A financial liability held for trading is the financial liability that meets one of the following conditions: (i) the financial liability is assumed for the purpose of repurchasing it in a short term; (ii) the financial liability is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term profits; (iii) the financial liability is a derivative, except for a derivative that is designated as an effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. For such a kind of financial liabilities, fair values are adopted for subsequent measurement. All the realised and unrealised gains or losses on these financial liabilities are recognised in profit or loss for the current period.

Other financial liabilities

After initial recognition, such kind of financial liabilities are measured at amortised cost by using the effective interest method.

Fair value of financial instruments

The fair value of financial assets or liabilities for which there are active markets is determined by reference to the quoted market prices. For financial instruments where there are no active markets, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions between knowledgeable and willing parties, reference to the current fair value of another instrument that is substantially the same, a discounted cash flow analysis, and option pricing models or other valuation models.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Impairment of financial assets

Financial assets measured at amortised cost

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

9. Financial instruments (continued)

Impairment of financial assets (continued)

Available-for-sale financial assets

If there is objective evidence that an available-for-sale financial asset is impaired, the accumulated losses arising from decline in fair value previously recognised in other comprehensive income are removed and recognised in profit or loss for the current period. The accumulated losses that removed from other comprehensive income are the difference between the initial acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss on the financial asset previously recognised in profit or loss.

Financial assets measured at cost

If there is objective evidence that such financial asset is impaired, the difference between its carrying amount and the present value of expected future cash flows which are discounted at the current market interest rate is recognised as an impairment loss in profit or loss for the current period. Once an impairment loss is recognised, it is not reversed.

Transfers of financial assets

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

10. Receivables

(1) Receivables that are individually significant and individually assessed for bad debt provision

(2) Receivables that are assessed for bad debt provision by group

	Accounts	Other
	receivable	receivables
	Percentage of	Percentage of
	provision	provision
	(%)	(%)
1 year or less	–	–
1 to 2 years (inclusive)	30	30
2 to 3 years (inclusive)	60	60
3 to 4 years (inclusive)	85	85
4 to 5 years (inclusive)	100	100
More than 5 years	100	100

(3) Receivables that are not individually significant but individually assessed for bad debt provision

I-228 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

11. Inventories

Inventories include raw materials, work in progress, finished goods, commodity inventories, turnover materials, properties under development and completed properties held for sale.

Inventories are initially measured at cost. Cost of inventories, other than cost of properties under development and cost of completed properties held for sale, comprises costs of purchase, costs of conversion and other costs. The actual cost of inventories transferred out is determined by using the weighted average method. Turnover materials include low value consumables and packing materials. Low value consumables and packing materials are amortised by using immediate write-off method. Costs of properties under development and actual costs of completed properties held for sale mainly consist of land acquisition cost, construction cost, interests capitalised and other direct and indirect development expenses. Cost of properties under development is transferred to cost of completed properties held for sale based on actual cost upon completion of development.

The Group adopts perpetual inventory system.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated expenses and the related taxes and surcharges. The provision for decline in value is made on an individual basis, provided that for inventories with large quantity and lower unit cost, the provision for decline in value is made on a category basis; for the inventories related to the series of products manufactured and sold in the same area, and of which the final use or purpose is identical or similar, and if it is difficult to measure them by separating them from other items, the provision for decline in value of inventories are made on a combination basis.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

12. Long-term equity investments

A long-term equity investment is recorded at its initial investment cost on acquisition. For a longterm equity investment acquired through a business combination, the initial investment cost of the long-term equity investment is the acquirer’s share of the owner’s equity of the party being acquired at the combination date for a business combination under common control; the initial investment cost of the long-term equity investment is the cost of acquisition for a business combination not under common control (for a business combination not under common control achieved in stages, the initial investment cost is measured at the carrying amount of the equity investments in the acquiree before the acquisition date plus the additional investment cost incurred on the acquisition date). The cost of combination includes the assets transferred and the liabilities incurred or assumed by the acquirer, and the fair value of equity securities issued. For a long-term equity investment acquired otherwise than through a business combination, the initial investment cost is determined as follows: (i) if acquired by paying cash, the initial investment cost is the actual purchase price paid and those costs, taxes and other necessary expenditures directly attributable to the acquisition of the long-term equity investment; (ii) if acquired by the issue of equity securities, the initial investment cost is the fair value of the securities issued; (iii) if contributed by the investors, the initial investment cost is the value stipulated in the investment contract or agreement, except where the value stipulated in the investment contract or agreement is not fair.

I-230 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

12. Long-term equity investments (continued)

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

13. Investment properties

(1) The investment properties are located in places where the property markets are active.

The Group’s current investment properties, most of which are commercial properties at developed commercial districts, are primarily located at core districts of Beijing where the property markets are relatively active. The Group is able to obtain market price and other related information of properties of the same category or similar nature. It is practicable to adopt the fair value model for subsequent measurement of the investment properties.

(2) The Group is able to obtain market price and other related information of properties of the same category or similar nature from the property markets. Based on such information, the Group makes reasonable estimation about the fair value of its investment properties.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

14. Fixed assets

Other than that arising from utilisation of appropriated production safety fees, depreciation is calculated using the straight-line method. The useful lives, estimated net residual value and annual depreciation rates of fixed assets are as follows:

			Annual
		Estimated net	depreciation
	Useful life	residual value	rate
			(%)
Buildings	20-35 years	5%	2.71-4.75%
Machinery and equipment	15 years	5%	6.33%
Transportation equipment	8-10 years	5%	9.50-11.88%
Electronic equipment	5 years	5%	19.00%
Office equipment	5 years	5%	19.00%

Different depreciation rates are used for fixed assets components that have different useful lives or financially benefit the Company in different ways.

The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least at each financial year-end, and makes adjustments if necessary.

For the test for impairment and recognition of provision for impairment related to fixed assets, refer to Note II.26.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

15. Construction in progress

Construction in progress is transferred to fixed assets when the asset is ready for its intended use.

For the test for impairment and recognition of provision for impairment related to construction in progress, refer to Note II.26.

16. Borrowing costs

The capitalisation of borrowing costs commences only when all of the following conditions are satisfied:

(1) expenditures for the asset are being incurred;
(2) borrowing costs are being incurred; and
(3) activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

16. Borrowing costs (continued)

During the capitalisation period, the amount of interest to be capitalised for each accounting period shall be determined as follows:

(1) where funds are borrowed for a specific purpose, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds.
(2) where funds are borrowed for a general purpose, the amount of interest to be capitalized on such borrowings is determined by applying a weighted average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings.

17. Intangible assets

The intangible assets of the Group consist of land use rights, mining rights, trademarks and software use right.

I-235 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

17. Intangible assets (continued)

The Group classifies the expenditure in an internal research and development project into expenditure in the research phase and expenditure in the development phase. Expenditure in the research phase is recognised in profit or loss for the period in which it is incurred. Expenditure in the development phase is capitalised when the Group can demonstrate all of the following: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; how the intangible asset will generate probable future economic benefits, for which, among other things, the Group can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and the expenditure attributable to the intangible asset during its development can be measured reliably. Expenditure in the development phase that does not meet the above criteria is recognised in profit or loss for the period in which it is incurred.

For the test for impairment and recognition of provision for impairment related to an intangible asset, refer to Note II.26.

18. Long-term deferred expenditures

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

19. Provisions

(1) the obligation is a present obligation of the Group;
(2) it is probable that an outflow of economic benefits from the Group will be required to settle the obligation; and
(3) the amount of the obligation can be measured reliably.

20. Revenue

Revenue is recognised only when it is probable that the associated economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases.

Revenue from the sales of goods

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

20. Revenue (continued)

Revenue from the sales of properties

Revenue from the sales of completed properties is recognised when the significant risks and rewards of property ownership have been transferred to the buyer, i.e., when the properties has been completed and delivered to the buyer pursuant to the sale agreement and the collection of the related receivables can be assured reasonably. The deposits and installments of sold properties collected prior to the revenue recognition are presented under advances from customers in the balance sheet.

Revenue from the rendering of services

Interest income

It is determined according to the length of period for which the Group’s currency fund is used by others and the effective interest rate.

Lease income

Lease income from operating leases is recognised on a straight-line basis over the lease term. Contingent rental incomes are credited to profit or loss in the period in which they actually arise.

I-238 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

21. Government grants

Government grants are recognised when all attaching conditions will be complied with and the grant can be received. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a nonmonetary asset, it is measured at fair value; if fair value is not reliably determinable, it is measured at a nominal amount. A government grant related to income is accounted for as follows: if the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognised as deferred income, and recognised in profit or loss over the periods in which the related expenses are recognised; and if the grant is a compensation for related expenses or losses already incurred, it is recognised immediately in profit or loss for the current period. A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or loss over the useful life of the related asset. However, a government grant measured at a nominal amount is recognised immediately in profit or loss for the current period.

22. Income tax

Deferred income tax liabilities are recognised for all taxable temporary differences, except:

(1) where the taxable temporary differences arise from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or deductible tax loss; or
(2) in respect of taxable temporary differences associated with investments in subsidiaries, jointlycontrolled entities and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not be reversed in the foreseeable future.
I-239 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

22. Income tax (continued)

(1) where the deductible temporary difference arises from a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or deductible tax loss.
(2) in respect of the deductible temporary differences associated with investments in subsidiaries, jointly-controlled entities and associates, a deferred income tax asset is only recognised to the extent that it is probable that the temporary differences will be reversed in the foreseeable future and taxable profit will be available against which the deductible temporary differences can be utilised in the future.

At the balance sheet date, deferred income tax assets and liabilities are measured at the tax rates that are estimated to apply to the period when the asset is realised or the liability is settled, according to the requirements of tax laws. The measurement of deferred income tax assets and deferred income tax liabilities reflects the income tax consequences that would follow from the manner in which the Group expects, at the balance sheet date, to recover the assets or settle the liabilities.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

23. Maintenance and quality guarantee funds

Quality guarantee fund is reserved by certain percentage of the project payment. The fund will be repaid to the constructor after the properties are completed, in condition that examined by relevant authorities with no quality issue, and after the agreed warranty period. The quality guarantee fund is accounted for under accounts payable.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

24. Lease

A finance lease is a lease that transfers in substance all the risks and rewards of ownership of an asset. An operating lease is a lease other than a finance lease.

In the case of being the lessee of an operating lease

In the case of being the lessor of an operating lease

Rental income under an operating lease is recognised on a straight-line basis over the lease terms through profit or loss. Contingent rental incomes are credited to profit or loss in the period in which they actually arise.

25. Non-current assets held for sale

(1) A resolution on the disposal of the non-current assets has been made by the Group;
(2) A non-cancellable transfer agreement has been signed with the transferee;
(3) The transfer is expected to be completed within one year.

I-241 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

26. Impairment of assets

I-242 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

26. Impairment of assets (continued)

Once the above impairment loss is recognised, it cannot be reversed in subsequent accounting periods.

27. Employee wages

Employee wages are all forms of consideration given and other relevant expenditures incurred by the Group in exchange for service rendered by employees. In the accounting period in which an employee has rendered service to the Group, the employee wages payable are recognised as liabilities. For employee wages payable due in more than one year after the balance sheet date, if the discounted value is significant, it is presented at the present value.

I-243 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

27. Employee wages (continued)

28. Distribution of profit

Cash dividend of the Company is recognised as a liability upon being approved in the shareholders’ general meeting.

29. Debt restructuring

A debt restructuring is an event in which a debtor is in financial difficulty and a creditor grants a concession to the debtor in accordance with a mutual agreement or a court judgment.

As a debtor

I-244 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

29. Debt restructuring (continued)

As a creditor

30. Exchange of non-monetary assets

31. Related parties

I-245 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

32. Segment reporting

An operating segment is a component of the Group that meets all the following conditions:

(1) it engages in business activities from which it may earn revenues and incur expenses;
(2) its operating results are regularly reviewed by the Company’s management to make decisions about resources to be allocated to the segment and assess its performance;
(3) the Group is able to obtain relevant accounting information such as its financial position, operating results and cash flows of such segment.

If two or more segments have similar economic characteristics and meet certain conditions, then they can be aggregated into a single operating segment.

33. Production safety cost

34. Significant accounting judgments and estimates

I-246 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Judgments

In the process of applying the Group’s accounting policies, the management has made the following judgments, which have significant effect on the amounts recognised in the financial statements:

Operating lease – as lessor

The Group has entered into operating leases on its investment property portfolio. The Group has determined, based on the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases.

Classification between investment properties and inventories

Classification between investment properties and fixed assets

I-247 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Uncertainty of estimation

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that may result in a material adjustment to the carrying amounts of assets and liabilities within the future accounting periods, are discussed below.

Deferred income tax assets

Impairment of non-current assets other than financial assets (other than goodwill)

The Group assesses whether there are any indication of impairment for all non-current assets other than financial assets at the balance sheet date. Intangible assets with indefinite useful lives are tested for impairment annually and at other times when such indication exists. Other non-current assets other than financial assets are tested for impairment when there is indication that the carrying amounts may not be recoverable. Where the carrying amount of an asset or asset group is higher than its recoverable amount (i.e. the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from it), it is indicated that such asset or asset group is impaired. The fair value less costs to sell is determined with reference to the price of assets of similar nature in sales agreement or observable market price of assets of similar nature in arm’s length transaction, adjusted for incremental costs that would be directly attributable to the disposal of the asset or asset group. Estimating the present value of the expected future cash flows requires the management to make an estimation of the expected future cash flows from an asset or asset group and also choose a suitable discount rate in order to calculate the present value of those future cash flows.

Impairment of goodwill

I-248 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Uncertainty of estimation (continued)

Land appreciation tax

The Group is subject to land appreciation tax (“ LAT ”). The provision for land appreciation tax is based on the management’s best estimates according to their understanding of the requirements set forth in the relevant tax laws and regulations. The actual land appreciation tax liabilities are subject to the determination by the tax authorities upon the settlement of land appreciation tax. The Group has not finalised the assessment for its land appreciation tax calculations and payments with the tax authorities for certain property development projects. The final outcome could be different from the amounts that were initially recorded, and any differences will have impact on the land appreciation tax expense and the related provision in the period in which the differences are realized.

Recognition and allocation of development costs on properties under construction

Fair value of investment properties

Impairment of accounts receivable and other receivables

I-249 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

II. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

34. Significant accounting judgments and estimates (continued)

Uncertainty of estimation (continued)

Provision for decline in value of inventory

The Group’s inventory is measured at the lower of the costs and net realisable value. Net realisable value of inventory is the estimated selling price of inventory less the estimated costs upon completion of production, the estimated selling expenses and the related taxes and surcharges. The management’s calculation of the net realisable value of inventory involves the estimation on the estimated selling price, the estimated costs upon completion, the estimated selling expenses and the related taxes and surcharges. Any changes on such estimates will impact the carrying amount of the inventory and the profit for the coming years.

Supplementary retirement subsidies and early retirement benefits

Useful lives and residual value of fixed assets

I-250 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

III. TAXATION

(1) Major categories of taxes and respective tax rates

Value-added tax (“ VAT ”):

The VAT payable is determined as the output VAT calculated based on the taxable revenue at the tax rate of 17% less the deductible input VAT for the current period. For small-scale taxpayers, VAT is levied based on the sales revenue at the tax rate of 3%. For the concrete industry, VAT is levied based on the sales revenue at a simplified tax rate of 6%.

Business tax:

It is levied at 3%, 5% and 20% of the taxable business turnover.

City maintenance and construction tax:

It is levied at 7%, 5% and 1% of net VAT and business tax paid.

Education surcharge:

It is levied at 3% of net VAT and business tax paid.

Property tax:

Vehicle and vessel tax:

It is levied, by number of passenger in service vehicles and by tonnage of trucks, to the vehicles owned or managed by the Group.

Land use tax:

It is levied based on the land areas occupied by the Group for production and operations, at the annual tax amount per sq.m. for the respective land use tax levels prescribed by local governments.

Individual income tax:

Individual income tax is withheld and paid under the tax laws based on salaries and other personal incomes paid to employees of the Group.

I-251 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

III. TAXATION (continued)

(1) Major categories of taxes and respective tax rates (continued)

Land appreciation tax:

Resource tax:

It is levied to the minerals exploited by the Group on a quantity basis under the relevant tax laws of the PRC.

Corporate income tax:

Except the items listed in (2) below, the tax is levied on the Group at the tax rate of 25% based on the taxable profit.

(2) Tax preferential policies and relevant approvals

1. Value-added tax (VAT)

Certain subsidiaries of the Group enjoy the following VAT preferences pursuant to the Notice on VAT Policy for Integrated Use of Resources and Other Products (Cai Shui [2008] No. 156) and the Supplementary Notice on VAT Policy for Integrated Use of Resources and Other Products (Cai Shui (2009) No. 163):
(1) Upon the approval of the tax authorities, some of the Group’s subsidiaries engaged in cement production and operation enjoyed the VAT refund upon collection preferential policy during 2013 in respect of their eligible cement products. Such subsidiaries include Beijing Liulihe Cement Co., Ltd., Beijing BBMG Pinggu Cement Co., Ltd., Luquan BBMG Dingxin Cement Co., Ltd., Cangzhou Lingang BBMG Cement Co., Ltd., Beijing Taihang Qianjing Cement Co., Ltd., Baoding Taihang Heyi Cement Co., Ltd., Beijing Qianglian Cement Co., Ltd., Handan BBMG Taihang Cement Co., Ltd., Handan Shexian BBMG Cement Co., Ltd., Zanhuang BBMG Cement Co., Ltd., Zhuolu Jinyu Cement Co., Ltd., Siping BBMG Cement Co., Ltd., Tianjin Zhenxing Cement Co., Ltd., Lingchuan BBMG Cement Co., Ltd., Beijing Cement Plant Co., Ltd., Beijing Xingfa Cement Co., Ltd., Beijing BBMG Shunfa Cement Co., Ltd., Boai BBMG Cement Co., Ltd. and Quyang Jinyu Cement Co., Ltd..
I-252 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

III. TAXATION (continued)

(2) Tax preferential policies and relevant approvals (continued)

1. Value-added tax (VAT) (continued)

  - (2) Some of the Group’s subsidiaries engaged in concrete production and operation enjoyed the VAT exemption preferential policy during 2013 in respect of their eligible concrete products. Such subsidiaries include Beijing Jianhua-Bulangni Concrete Co., Ltd., Beijing BBMG Concrete Co., Ltd., Guantao BBMG Taihang Concrete Co., Ltd., Cheng’an Jinghong Concrete Co., Ltd., Handan Shexian BBMG Cement Co., Ltd., Tianjin BBMG Concrete Co., Ltd. and Shijiazhuang BBMG Xucheng Concrete Co., Ltd..

  - (3) The Group’s subsidiaries Beijing Xiliu Building Materials Co., Ltd., Beijing Aerated Concrete Co., Ltd., Beijing BBMG Aerated Concrete Co., Ltd., Beijing Xiang Brand Walling Materials Co., Ltd., and BBMG Mortar Co., Ltd. enjoyed the VAT exemption preferential policy in respect of their selected building materials during 2013.

(1) Handan Taihang Cement Co., Ltd. complies with the policy of VAT refund upon collection (with a cap) for units accommodating disabled persons by tax authorities according to the number of disabled persons actually accommodated by the unit, and enjoys VAT refund upon collection.
(2) Beijing Bio-Island Science and Technology Co., Ltd. complies with the policy of utilising waste mineral oil for the production of integrated utilisation products and Clause 5 of Article 5 of Cai Shui [2011] No. 115 on Products of Integrated Utilisation of Resources Utilising Waste Lead Acid Batteries, and enjoys refund upon collection of value-added tax.
I-253 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

III. TAXATION (continued)

(2) Tax preferential policies and relevant approvals (continued)

2. Business tax

3. Corporate income tax

Certain subsidiaries of the Group are certified as high-tech enterprises by relevant governmental authorities and enjoyed a preferential corporate income tax rate of 15% for high-tech enterprises during 2013 pursuant to Provisional Regulations on Corporate Income Tax of the People’s Republic of China and the Notice of the State Administration of Taxation of the PRC regarding Corporate Income Tax Preferences for High-tech Enterprises (Guo Shui Han [2009] No. 203). Such subsidiaries include BBMG Tiantan Furniture Co., Ltd., Tongda Refractory Technology Corporation, Gongyi Tongda Zhongyuan Refractory Testing Centre Co., Ltd., Beijing Building Materials Academy Co., Ltd., Beijing Building Materials Testing Centre Co., Ltd., Beijing Jiandu Design and Research Institute Co., Ltd., Beijing Alavus Building Energy Saving Components Co., Ltd., Beijing BBMG Cement Energy Saving Technology Co., Ltd., and BBMG Mangrove Environmental Protection Technology Co., Ltd..

I-254 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

III. TAXATION (continued)

(2) Tax preferential policies and relevant approvals (continued)

3. Corporate income tax (continued)

Pursuant to the Provisional Regulations on Corporate Income Tax of the People’s Republic of China and relevant requirements, upon certification of the relevant governmental authorities and the approval of the tax authorities, certain subsidiaries of the Group enjoy other corporate income tax preferences as follows:

(1) Beijing BBMG Aerated Concrete Co., Ltd. was levied corporate income tax based on 90% of total revenue from its products that are qualified for the national industrial policies on integrated use of resources in the period from 1 January 2013 to 31 December 2013.
(2) Dachang BBMG Coating Co., Ltd. enjoys a partial relief (reduction by 40%) on corporate income tax for enterprises in ethnic autonomous locality in the period from 1 January 2011 to 31 December 2014.
(3) Hebei BBMG Mangrove Environmental Co., Ltd. enjoys the corporate income tax preferential policy of “exemption for three years and 50% reduction for another three years” since March 2010.
(4) Beijing Bio-Island Science and Technology Co., Ltd. and BBMG Mangrove Environmental Protection Technology Co., Ltd. are energy and water efficient environmental friendly enterprises and enjoy the corporate income tax of “exemption for three years and 50% reduction for another three years” since 2009.
(5) Hetian Yuhe Sand Stone Company Limited complies with the enterprise policy of supporting certain types of enterprises in Western China, and enjoys a preferential tax rate of 15% for 10 years since 1 January 2010.
(6) Cheng’an BBMG Taihang Cement Co., Ltd. complied with the identified condition of integrated use of resources and was levied corporate income tax based on 90% of sales revenue from 32.5 Portland Composite cement during the period from January 2012 to December 2013.
I-255 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			–		–		–		66,440.61			981.45			–		–		96.25		113.29		–		–		(6.04 )
					Consolidated	or not					Y		Y		Y		Y			Y			Y		Y		Y		Y		Y		Y		Y
					Voting right	percentage		(%)			100.00		100.00		100.00		51.00			51.00			100.00		100.00		94.67		85.20		100.00		100.00		95.00
					Percentage of equity	Direct Indirect		(%) (%)			100.00 –		– 100.00		100.00 –		51.00 –			– 51.00			100.00 –		– 100.00		– 94.67		– 85.20		100.00 –		100.00 –		– 95.00
			Actual	contribution	at end of the	period	RMB	ten thousand			62,940.51		1,333.62		35,923.59		109,344.44			1,000.00			15,000.00		15,000.00		1,000.00		900.00		60,000.00		5,000.00		475.00
					Organization	code					1027464807		6259083609		1011234005		7839567405			694667950X			5585606909		674184580X		5767807509		05097223-8		672062520X		6787533201		6920731406
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS	1. Major subsidiaries:			Type of Place of Legal Registered	subsidiaries registration representative Principal activities capital	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways	Beijing Liulihe Cement Co., Ltd. Limited liability Beijing Zhao Xiangdong Manufacture of cement, mining 60,000.00	(北京市琉璃河水泥有限公司) and sale of sandstone etc.	Beijing Jianhua-Bulangni Concrete Co., Ltd. Limited liability Beijing Hao Zhitao Manufacture and sale 1,269.80	(北京建華布朗尼混凝土有限公司) of commercial concrete	Beijing BBMG Concrete Co., Ltd. Limited liability Beijing Liu Wenyan Process of commodity 31,541.04	(北京金隅混凝土有限公司) concrete etc.	Beijing BBMG Mangrove Environmental Limited liability Beijing Zheng Baojin Disposal of 169,815.09	Protection Technology Co., Ltd. hazardous waste etc.	(北京金隅紅樹林環保技術有限責任公司)	Hebei BBMG Mangrove Environmental Limited liability Sanhe Tian Wei Treatment and disposal 1,000.00	Protection Technology Co., Ltd. of hazardous waste	(河北金隅紅樹林環保技術有限責任公司)	Beijing Jinyu Pinggu Cement Co., Ltd. Limited liability Beijing Zhang Jun Manufacture and sale of 15,000.00	(北京金隅平谷水泥有限公司) cement etc.	Cangzhou Lingang Jinyu Cement Co., Ltd. Limited liability Cangzhou Zhou Chengyao Manufacture and sale of 15,000.00	(滄州臨港金隅水泥有限公司) cement and cement products	Cheng’an BBMG Taihang Cement Co., Ltd. Limited liability Cheng’an Li Huaijiang Manufacture and sale of 1,000.00	(成安金隅太行水泥有限公司) County commercial concrete	Daming BBMG Taihang Concrete Co. Ltd. Limited liability Daming County Li Huaijiang Sales of concretes and mortar 1,000.00	(大名縣金隅太行混凝土有限公司)	Zanhuang BBMG Cement Co., Ltd. Limited liability Zanhuang Tian Dachun Manufacture and sale of 60,000.00	(贊皇金隅水泥有限責任公司) County cement and clinker	BBMG Cement Trading Co., Ltd. Limited liability Beijing Jiang Changlu Wholesale of cement and 5,000.00	(北京金隅水泥經貿有限公司) cement product etc.	Sanhe Jinling Mining Co., Ltd. Limited liability Sanhe Chen Changshu Processing and sale of rock 500.00	(三河市金嶺礦業有限公司) materials for construction

I-256 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			–		18,481.98		2,824.13		3,398.77		1,918.00		–		–		–		(155.32 )		7,524.03		–		–
					Consolidated	or not					Y		Y		Y		Y		Y		Y		Y		Y		Y		Y		Y		Y
					Voting right	percentage		(%)			100.00		52.00		68.46		80.00		86.60		100.00		100.00		100.00		65.00		74.50		100.00		100.00
					Percentage of equity	Direct Indirect		(%) (%)			100.00 –		52.00 –		– 68.46		80.00 –		86.60 –		100.00 –		100.00 –		100.00 –		65.00 –		74.50 –		100.00 –		80.00 20.00
			Actual	contribution	at end of the	period	RMB	ten thousand			2,500.00		15,600.00		7,000.00		16,024.00		14,464.51		18,000.00		500.00		21,530.00		325.00		22,350.00		30,000.00		10,000.00
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways(continued)	Beijing BBMG Cement Energy Technology Limited liability Beijing Zhang Zengshou Development and transfer of 2,500.00 6950455308	(北京金隅水泥節能科技有限公司) cement and concrete technology	Siping BBMG Cement Co., Ltd. Limited liability Siping Jiang Changlu Manufacture and sale of 30,000.00 6961369205	(四平金隅水泥有限公司) cement and cement product etc.	Shijiazhuang Jinyu Beiyue Concrete Co. Ltd. Limited liability Shijiazhuang Li Fuhai Sales of concretes 10,000.00 05545166-9	(石家莊金隅北嶽混凝土有限公司)	Lanxian BBMG Cement Co., Ltd. Limited liability Lan county Liu Wenyan Manufacture and sale of 20,030.00 5514780403	(嵐縣金隅水泥有限公司) cement and cement product	Qinyang BBMG Cement Co., Ltd. Limited liability Qinyang Jiang Changlu Manufacture and sale of 16,645.00 553167610X	(沁陽市金隅水泥有限公司) cement and clinker etc.	Lingchuan BBMG Cement Co., Ltd. Limited liability Lingchuan Zhao Jun Manufacture and sale of 18,000.00 5613345503	(陵川金隅水泥有限公司) County cement and clinker	Beijing BBMG Mining Co., Ltd. Limited liability Beijing Lu Yong Sale of metal and other 500.00 5603555505	(北京金隅礦業有限公司) mining material products	Zuoquan BBMG Cement Co., Ltd. Limited liability Zuoquan Li Qiang Technical consultation service 21,530.00 575961380X	(左權金隅水泥有限公司) County on cement and clinker	Xuanhua BBMG Cement Co., Ltd. Limited liability Xuanhua Jiang Changlu Manufacture and sale of 500.00 575518290X	(宣化金隅水泥有限公司) County cement and clinker	Bo’ai BBMG Cement Co., Ltd. Limited liability Bo’ai County Liu Wenyan Manufacture and sale of 30,000.00 5860453502	(博愛金隅水泥有限公司) cement and clinker	Guangling Jinyu Cement Co., Ltd. Limited liability Guangling Wei Weidong Manufacture and sale of 30,000.00 05626630-X	(廣靈金隅水泥有限公司) County cement and clinker	BBMG Mortar Co., Ltd. Limited liability Beijing Cai Luhong Manufacture and sale of 10,000.00 05136722-4	(北京金隅砂漿有限公司) dry mix mortar

I-257 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Actual
contribution
Type of
Place of
Legal
Registered
Organization
at end of the
Percentage of equity
Voting right
Consolidated
Non-controlling
subsidiaries
registration
representative
Principal activities
capital
code
period
Direct
Indirect
percentage
or not
interests
RMB
RMB
RMB
ten thousand
ten thousand
(%)
(%)
(%)
ten thousand

Subsidiaries acquired through establishment,
investment or other ways(continued)
Tianjin Jinyu Treasure Bright Mortar Co., Ltd.
Limited liability
Tianjin
Cai Luhong
Manufacture and sale of mortar
4,900.00
05870889-6
3,430.00
–
70.00
70.00
Y
1,525.37
(天津金隅寶輝砂漿有限公司)
Fengfeng BBMG Concrete Co. Ltd.
Limited liability
Handan
Li Huaijiang
Manufacture and sale of prepared
3,000.00
06571549-6
3,000.00
100.00
–
100.00
Y
–
(峰峰金隅混凝土有限公司)
components and processing of concrete
Handan Hanshan BBMG Concrete Co. Ltd.
Limited liability
Handan
Li Huaijiang
Manufacture and sale of
3,000.00
06703702-7
2,760.00
92.00
–
92.00
Y
261.28
(邯鄲市邯山金隅混凝土有限公司)
commercial concrete and crushed stone
Wei County BBMG Concrete Co. Ltd
Limited liability
Handan
Li Huaijiang
Manufacture and sale of concrete
1,000.00
06570518-3
920.00
92.00
–
92.00
Y
80.04
(魏縣金隅混凝土有限公司)
Handan BBMG Concrete Co., Ltd.
Limited liability
Handan
Li Huaijiang
Manufacture and sale of concrete
3,000.00
06571994-8
2,760.00
92.00
–
92.00
Y
262.44
(邯鄲縣金隅混凝土有限公司)
* Handan BBMG Taihang Building Materials
Limited liability
Handan
Li Huaijiang
Manufacture and sale of slag powder
8,109.00
06704174-7
8,109.00
–
94.67
94.67
Y
430.85
Co., Ltd. (邯鄲金隅太行建材有限公司)
Beijing BBMG Tiantan Furniture Co., Ltd.
Limited liability
Beijing
Guo Yanming
Manufacture, processing,
8,709.45
7002402509
11,430.60
93.43
–
93.43
Y
1,293.38
(北京金隅天壇傢俱股份有限公司)
and sale of furniture etc
Beijing Tiantan-Jingwei Furniture Co., Ltd.
Limited liability
Beijing
He Jianbei
Manufacture of wooden furniture
600.00
6000564003
360.00
–
56.06
56.06
Y
315.06
(北京天壇京偉傢俱有限公司)
Foshan BBMG Tiantan Furniture Co., Ltd.
Limited liability
Foshan
Yang Jincai
Processing and sale of
500.00
5536632609
500.00
–
93.43
93.43
Y
36.07
(佛山金隅天壇傢俱有限公司)
furniture and wooden products
Beijing Tiantan Faram Decorative Materials
Limited liability
Beijing
Tang Yiming
Manufacture of office cube
4,138.60
7400706405
1,655.44
–
93.43
93.43
Y
(100.52 )
Co., Ltd. (北京天壇法拉姆裝飾材料有限公司)
partition boards and furniture etc.
Beijing Tiantan Decoration and Engineering
Limited liability
Beijing
Diao Naiduo
Building decoration
600.00
7235828804
600.00
–
93.43
93.43
Y
50.24
Co., Ltd. (北京天壇裝飾工程有限責任公司)
and design consultation

I-258 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			(1.63 )		–		(29.72 )			352.47		–		67.07			93.16			2.23			–		–
					Consolidated	or not					Y		Y		Y			Y		Y		Y			Y			Y			Y		Y
					Voting right	percentage		(%)			93.43		100.00		93.43			55.85		100.00		81.10			81.10			81.10			100.00		100.00
					Percentage of equity	Direct Indirect		(%) (%)			– 93.43		– 100.00		– 93.43			– 55.85		100.00 –		– 81.10			– 81.10			– 81.10			100.00 –		– 100.00
			Actual	contribution	at end of the	period	RMB	ten thousand			50.00		7,657.85		294.00			954.75		5,455.63		200.00			1,620.13			30.00			34,245.06		500.00
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways(continued)	Beijing Hongyang Furniture Co., Ltd. Limited liability Beijing Wang Manufacture and sale of 50.00 1030032309	(北京宏洋家具有限責任公司) Changjiang wooden furniture	Beijing Great Wall Furniture Co., Ltd. Limited liability Beijing Tang Yiming Manufacture and sale of wooden 6,613.58 1011246904	(北京長城傢俱有限公司) furniture etc.	Beijing Great Wall Furniture Decorative Limited liability Beijing Shi Feng Manufacture and sale of 320.00 6000060305	Materials Co., Ltd. furniture, decorative materials and	(北京長城傢俱裝飾材料有限公司) wooden floorboards	Beijing Quinette Great Wall Seats Co., Ltd. Limited liability Beijing Antoine Manufacture of seats for 1,597.04 7552558209	(北京奇耐特長城座椅有限公司) opera houses and auditoriums etc.	Beijing Woodworking Factory Co., Ltd. Limited liability Beijing Sun Deyang Manufacture and sale of 5,455.63 1011773007	(北京市木材廠有限責任公司) wood-based panels etc.	Beijing Tongda Refractory Engineering Limited liability Beijing Feng Yunsheng Development and manufacture of 200.00 7560017302	Technology Co., Ltd. new refractory materials etc.	(北京通達耐火工程技術有限公司)	Gongyi Tongda Zhongyuan Refractory Limited liability Gongyi Feng Yunsheng Manufacture and sale of 1,050.00 1705000607	Technology Co., Ltd. refractory materials	(鞏義通達中原耐火技術有限公司)	Gongyi Tongda Zhongyuan Refractory Limited liability Gongyi Li Ping Testing of refractories 30.00 6987001200	Testing Centre Co., Ltd.	(鞏義通達中原耐火材料檢測中心有限公司)	Beijing Jinyu Energy-Saving Technology Limited liability Beijing Li Huibin Manufacture and sale of 31,496.77 1011240503	Co., Ltd. (北京金隅節能保溫科技有限公司) building materials	Zhangjiakou Star Building Materials Co., Ltd. Limited liability Beijing Li Huibin Manufacture, processing and 500.00 5896693200	(張家口市星牌建材有限責任公司) sale of rockwool products

I-259 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Non-controlling	interests	RMB	ten thousand			–			–		–		–		–		–		–		–		113.61		–		–		–
			Consolidated	or not					Y			Y		Y		Y		Y		Y		Y		Y		Y		Y		Y		Y
			Voting right	percentage		(%)			100.00			100.00		100.00		100.00		100.00		100.00		100.00		100.00		55.00		100.00		100.00		100.00
			Percentage of equity	Direct Indirect		(%) (%)			– 100.00			– 100.00		100.00 –		100.00 –		– 100.00		100.00 –		100.00 –		– 100.00		– 55.00		100.00 –		– 100.00		100.00 –
	Actual	contribution	at end of the	period	RMB	ten thousand			2,001.12			8,602.77		4,794.64		3,927.76		286.77		10,069.39		9,542.12		3,000.00		55.00		12,246.78		1,000.13		2,482.13
1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways(continued)	Beijing Jianzong Building, Installation and Limited liability Beijing Zhang Quan Construction contracting 2,001.12 1011320307	Engineering Co., Ltd.	(北京建總建築安裝工程有限公司)	Beijing Aerated Concrete Co., Ltd. Limited liability Beijing Jin Xuefeng Manufacture and sale of 8,681.75 1019575703	(北京市加氣混凝土有限責任公司) aerated concrete panels	Beijing Jinyu Aerated Concrete Co., Ltd. Limited liability Beijing Jin Xuefeng Manufacture and sale of 4,000.00 1022992609	(北京金隅加氣混凝土有限責任公司) aerated concrete products etc	Beijing Xiang Brand Walling Materials Co., Ltd Limited liability Beijing Wang Youbin Manufacture and sale of clay bricks 4,043.80 1011344003	(北京市翔牌牆體材料有限公司) and concrete products etc.	Beijing Jinghua Glass Fiber Products Co., Ltd. Limited liability Beijing Yang Chaoying Manufacture of glass fiber and 300.66 1020108607	(北京京華玻璃纖維製品有限公司) its products	Beijing Xiliu Building Materials Co., Ltd. Limited liability Beijing Tang Honggen Manufacture and sale of 11,160.39 1011002504	(北京市西六建材有限責任公司) bricks and tiles etc.	Beijing BBMG Coating Co., Ltd Limited liability Beijing Chen Jun Manufacture of coating; 8,900.00 7817340703	(北京金隅塗料有限責任公司) professional contracting	Dachang BBMG Coating Co., Ltd. Limited liability Dachang Chen Jun Manufacture and sale of coating 3,000.00 5648915704	(大廠金隅塗料有限責任公司) County	Xinjiang BBMG Coating Co., Ltd. Limited liability Urumqi Qiu Feng Manufacture of coating; 100.00 6734073704	(新疆金隅塗料有限公司) sale of building materials etc.	Beijing Building Materials Academy Co., Ltd. Limited liability Beijing Wang Zhaojia Development, manufacture 12,000.00 400709490X	(北京建築材料科學研究總院有限公司) and sale of building materials etc.	Beijing Building Materials Testing Centre Limited liability Beijing Wang Zhaojia Testing for building material quality etc. 1,000.13 7951149204	Co., Ltd. (北京建築材料檢驗中心有限公司)	Beijing Keshi Hardware Co., Ltd. Limited liability Beijing Liu Guosheng Manufacture of modern 2,552.13 1011231703	(北京市科實五金有限責任公司) products like construction hardware

I-260 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Non-controlling	interests	RMB	ten thousand			–		1,208.27			–		48.27		–		–		–		–			–		–		–
			Consolidated	or not					Y		Y			Y		Y		Y		Y		Y		Y			Y		Y		Y
			Voting right	percentage		(%)			100.00		51.00			100.00		60.00		100.00		100.00		100.00		100.00			100.00		100.00		100.00
			Percentage of equity	Direct Indirect		(%) (%)			– 100.00		– 51.00			– 100.00		– 60.00		– 100.00		– 100.00		– 100.00		100.00 –			– 100.00		– 100.00		100.00 –
	Actual	contribution	at end of the	period	RMB	ten thousand			5,873.27		1,020.00			17,348.55		60.00		600.00		3,000.00		2,000.00		940.53			300.00		2,566.96		50,000.00
1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways(continued)	Beijing Ceramic Plant Co., Ltd. Limited liability Beijing An Zhiqiang Manufacture of ceramic 5,666.08 1011259100	(北京市陶瓷廠有限責任公司) sanitary wares and ceramic veneer	Beijing BBMG Dongrun Construction Limited liability Beijing Liu Guozhi Wholesale of building materials etc. 2,000.00 6900160009	Materials Co., Ltd.	(北京金隅東潤建材有限公司)	Beijing BBMT-Xinke Building Materials Limited liability Beijing Cao Zhanjing Sale and purchase of 17,000.00 7002424300	Co., Ltd. (北京建貿新科建材有限公司) building materials etc.	Qingdao BBMT-Xinke Building Materials Limited liability Qingdao Cao Zhanjing Wholesale and retail of 100.00 7335337306	Co., Ltd. (青島建貿新科建材有限公司) building materials etc.	BBMG Home Furnishing Co., Ltd. Limited liability Beijing Kou Yingyue Purchase and sale of 600.00 6631036706	(北京金隅家居有限公司) building materials and metals etc.	Beijing BBMG Decoration and Engineering Limited liability Beijing Cao Yuhai Design and construction of 3,000.00 6000253302	Co., Ltd. (北京金隅裝飾工程有限公司) building decoration	Beijing Building Materials Import & Export Limited liability Beijing Zhang Jianping Commodity operation and agent, 2,000.00 1011370703	Co., Ltd. (北京市建築材料進出口有限公司) import and export of technology	Beijing Jiandu Design and Research Limited liability Beijing Zhang Shaoquan Design of modern building materials etc. 954.12 4008419401	Institute Co., Ltd. materials etc	(北京建都設計研究院有限責任公司)	Beijing Jiantuo Engineering Management Limited liability Beijing Zhang Shaoquan Agent for construction tendering 300.00 6000370206	Co., Ltd. (北京建拓工程管理有限公司)	Beijing Sanchong Mirror Co., Ltd. Limited liability Beijing Wang Youbin Manufacture and sale of 5,766.00 6000322804	(北京三重鏡業有限公司) glass-made spectacle lenses	BBMG (Dachang) New Building Materials Limited liability Dachang Jiang Hangjun Manufacture of various 50,000.00 6636835207	Co., Ltd. (大廠金隅新型建材有限公司) County modern building materials etc.

I-261 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through establishment,
investment or other ways(continued)
Yangquan Tongda BBMG Refractory
Limited liability
Yangquan
Feng Yunsheng
Manufacture and sale
6,000.00
6942918902
6,000.00
–
81.10
81.10
Y
128.07
Materials Co., Ltd.
of refractory ceramic etc.
(陽泉金隅通達高溫材料有限公司)
Beijing BBMG Business and Trading Co.,Ltd.
Limited liability
Beijing
Kou Yingyue
Wholesale of building
41,000.00
5585089700
41,000.00
100.00
–
100.00
Y
–
(北京金隅商貿有限公司)
materials and metals etc.
Dachang BBMG Jinhaiyan Glass Wool Co., Ltd.
Limited liability
Dachang
Zhao Yanjun
Manufacture and sale of glass
8,000.00
678506540X
8,000.00
–
100.00
100.00
Y
–
(大廠金隅金海燕玻璃棉有限公司)
County
wool products
BBMG Material Industrial (Shanghai)
Limited liability
Shanghai
Kou Yingyue
Import and export of coke,
8,000.00
59971945-9
4,080.00
51.00
–
51.00
Y
4,060.47
Co.,Ltd. (金隅物產上海有限公司)
iron ore and metal materials
* Tangshan Jinyu Aerated Concrete Co., Ltd
Limited liability
Tangshan
Jin Xuefeng
Manufacture and sale of
6,860.00
06048276-9
4,596.20
–
67.00
67.00
Y
2,209.94
(唐山金隅加氣混凝土有限責任公司)
aerated concrete panels
BBMG GEM Real Estate Development
Limited liability
Beijing
Huang An’ nan
Property development
200,000.00
1017180907
166,513.84
100.00
–
100.00
Y
–
Co., Ltd. (北京金隅嘉業房地產開發有限公司)
and management etc.
BBMG (Qingdao) Property Development
Limited liability
Qingdao
Huang An’ nan
Property development and
5,000.00
5912837500
5,000.00
–
100.00
100.00
Y
–
Co., Ltd. (金隅（青島）房地產開發有限公司)
trading agent
Inner Mongolia BBMG Property Investment
Limited liability
Hohhot
Huang An’ nan
Property development
20,000.00
7901884300
20,000.00
–
100.00
100.00
Y
–
Co., Ltd. (內蒙古金隅置地投資有限公司)
and management etc.
BBMG (Hangzhou) Property Development
Limited liability
Hangzhou
Huang An’ nan
Property development
60,000.00
6680245102
63,482.70
–
100.00
100.00
Y
–
Co., Ltd. (金隅(杭州)房地產開發有限公司)
and management etc.
Hangzhou BBMG Mountain Villa Property
Limited liability
Hangzhou
Huang An’ nan
Property development
10,000.00
5687961001
10,000.00
–
100.00
100.00
Y
–
Development Co., Ltd.
and others
(杭州金隅山墅房地產開發有限公司)
BBMG (Tianjin) Property Development
Limited liability
Tianjin
Huang An’ nan
Property development
80,000.00
5503542804
80,000.00
–
100.00
100.00
Y
–
Co., Ltd. (金隅(天津)房地產開發有限公司)
and sales etc.

I-262 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			686.39			–		23,510.26		–				581.05			–			–			–		–
					Consolidated	or not					Y			Y		Y		Y				Y			Y			Y			Y		Y
					Voting right	percentage		(%)			80.00			100.00		51.00		100.00				80.00			100.00			100.00			100.00		100.00
					Percentage of equity	Direct Indirect		(%) (%)			– 80.00			– 100.00		– 51.00		100.00 –				– 80.00			– 100.00			100.00 –			100.00 –		– 100.00
			Actual	contribution	at end of the	period	RMB	ten thousand			4,000.00			5,000.00		9,690.00		12,358.04				4,000.00			20,000.00			47,350.99			10,042.53		150.00
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways(continued)	Tangshan BBMG Julong Property Limited liability Tangshan Huang An’ nan Property development 5,000.00 5533091200	Development Co., Ltd. and management etc.	(唐山金隅巨龍房地產開發有限公司)	Beijing BBMG Property Development Limited liability Beijing Huang An’ nan Property development 5,000.00 5548780304	Co., Ltd. (北京金隅置地房地產開發有限公司) and sales etc.	BBMG Vanke Property Development Limited liability Beijing Huang An’ nan Property development 19,000.00 6656051305	Co., Ltd. (北京金隅萬科房地產開發有限公司) and sales etc.	Beijing Xisanqi High Tech New Building Limited liability Beijing Chang Yuanhong Rental, property development etc. 6,129.76 1011439607	Material City Management and	Development Co., Ltd.	(北京西三旗高新建材城經營開發有限公司)	Chengdu BBMG Dacheng Property Limited liability Chengdu Zhang Xiaobing Property development etc 5,000.00 5875634304	Development Co., Ltd.	(成都金隅大成房地產開發有限公司)	Chongqing BBMG Dacheng Property Limited liability Chongqing Zhang Xiaobing Property development 20,000.00 5540632104	Development Co., Ltd. and consultation etc.	(重慶金隅大成房地產開發有限公司)	Beijing BBMG Chengyuan Property Limited liability Beijing Chang Yuanhong Property development 45,944.06 5636560003	Development Co., Ltd. and sale of commodity housing etc.	(北京金隅程遠房地產開發有限公司)	Beijing Jianhong Property Development Limited liability Beijing Zhou Jiayi Renovation of dilapidated buildings etc. 10,500.00 60001885-3	Co., Ltd. (北京建宏房地產開發有限公司)	Beijing Dajiangnan International Hotel Limited liability Beijing Chen Ming Dining services 150.00 7684553208	Management Co., Ltd.	(北京大江南國際酒店管理有限責任公司)

I-263 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			–			–			–		–		–		–		–		–		–		–		–
					Consolidated	or not					Y			Y			Y		Y		Y		Y		Y		Y		Y		Y		Y
					Voting right	percentage		(%)			100.00			100.00			100.00		100.00		100.00		100.00		100.00		100.00		100.00		100.00		100.00
					Percentage of equity	Direct Indirect		(%) (%)			– 100.00			– 100.00			100.00 –		– 100.00		100.00 –		– 100.00		100.00 –		100.00 –		100.00 –		100.00 –		– 100.00
			Actual	contribution	at end of the	period	RMB	ten thousand			50.00			200.00			8,926.45		50.00		20,248.04		1,000.53		6,248.82		7,847.98		563.32		9,900.00		500.00
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways(continued)	Beijing Jinyexincheng Property Limited liability Beijing Liu Shucai Property management 50.00 7609198209	Management Co., Ltd.	(北京市金業新城物業管理有限責任公司)	Inner Mongolia BBMG Property Limited liability Hohhot Li Weidong Property management 200.00 6769102704	Management Co., Ltd.	(內蒙古金隅物業服務有限公司)	BBMG Property Management Co., Ltd. Limited liability Beijing Li Weidong Property management 1,000.00 6336869700	(北京金隅物業管理有限責任公司)	Beijing Jinhuyuan Property Management Limited liability Beijing Li Weidong Property management 50.00 7001721209	Co., Ltd. (北京錦湖園物業管理有限公司)	BBMG Fengshan Hot Spring Resort Co., Ltd. Limited liability Beijing Liu Weiyu Provision of accommodation 19,998.91 1026918903	(北京金隅鳳山溫泉度假村有限公司) and dining services etc.	Beijing Jianyuan Hotel Co., Ltd. Limited liability Beijing Li Mian Provision of accommodation 1,000.53 101129680X	(北京市建苑賓館有限公司) and dining services	Beijing Jianji Assets Management Co., Ltd. Limited liability Beijing An Zhiqiang Self-owned property 6,273.39 1016498209	(北京建機資產經營有限公司) rental, property management etc.	Beijing Jinhaiyan Assets Management Co., Ltd Limited liability Beijing An Zhiqiang Self-owned property rental, property 8,292.36 101124580X	(北京金海燕資產經營有限責任公司) investment and management etc.	Beijing Jinhaiyan Property Management Limited liability Beijing Ma Hong Property management 500.00 101850160X	Co., Ltd. (北京金海燕物業管理有限公司)	BBMG Property Operation Management Limited liability Beijing Li Weidong Commercial housing rental, property 9,900.00 6691139407	Co., Ltd. (北京金隅地產經營管理有限公司) and hotel management etc.	Beijing BBMG Real Estate Agency Co., Ltd. Limited liability Beijing Chang Yuanhong Property agency business and consultation 500.00 589084550X	(北京金隅房地產經紀有限公司)

I-264 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Non-controlling	interests	RMB	ten thousand			–			–			–			–			–			1,245.95					–		–
			Consolidated	or not					Y			Y			Y			Y			Y			Y					Y		Y
			Voting right	percentage		(%)			100.00			100.00			100.00			100.00			100.00			75.00					100.00		100.00
			Percentage of equity	Direct Indirect		(%) (%)			– 100.00			– 100.00			– 100.00			– 100.00			– 100.00			– 75.00					100.00 –		100.00 –
	Actual	contribution	at end of the	period	RMB	ten thousand			318.11			385.52			5,000.00			1,000.00			1,000.00			3,750.00					30,331.69		30,000.00
1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through establishment,	investment or other ways(continued)	Beijing Kaicheng Cinda Property Limited liability Beijing Chen Xu Property management 300.00 78170528-0	Management Co., Ltd.	(北京凱誠信達物業管理有限公司)	Beijing Wancheng Taisang Property Limited liability Beijing Chen Xu Property management 200.00 78861032-1	Management Co., Ltd.	(北京萬成恆泰商業物業管理有限公司)	* Jinyu Ligang (Tianjin) Property Limited liability Tianjin Huang An’ nan Property development and operation etc. 5,000.00 06123361-7	Development Co., Ltd. (金隅麗港（天津）	房地產開發有限公司)	* Beijing Jinyu Chaoxin Tiandi Limited liability Beijing Huang An’ nan Property development and management etc. 1,000.00 06491200-9	Property Investment Co., Ltd.	(北京金隅朝新天地置業有限公司)	* Beijing Jinyu Shiji Jiaye Property Limited liability Beijing Huang An’ nan Property development and management etc. 1,000.00 06282874-3	Development Co., Ltd. (北京金隅世紀嘉業	房地產開發有限公司)	* Jinyu Mengcheng (Ma’anshan) Limited liability Ma’anshan Huang An’ nan Property development 5,000.00 06653447-8	Property Development Co., Ltd. (金隅夢城 and sale of commodity housing etc	（馬鞍山）房地產開發有限公司)	Subsidiaries acquired through business	combination under common control	Zhangjiakou Jinyu Cement Co., Ltd. Limited liability Zhangjiakou Zheng Baojin Manufacture and sale of 30,000.00 6870473605	(張家口金隅水泥有限公司) cement and cement products	Zhuolu Jinyu Cement Co., Ltd. Limited liability Zhuolu County Zhao Qigang Manufacture and sale of 30,000.00 731423470X	(涿鹿金隅水泥有限公司) cement and cement products

I-265 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			3,283.87		2,282.82			27,613.85		13,202.08			–		–			–			148.50			106.11
					Consolidated	or not					Y		Y			Y		Y			Y		Y			Y			Y			Y
					Voting right	percentage		(%)			90.00		51.00			60.64		81.10			100.00		100.00			100.00			93.43			67.50
					Percentage of equity	Direct Indirect		(%) (%)			90.00 –		– 51.00			60.64 –		81.10 –			– 100.00		100.00 –			– 100.00			– 93.43			– 67.50
			Actual	contribution	at end of the	period	RMB	ten thousand			24,933.35		–			40,010.14		23,128.11			2,437.71		27,504.04			2,000.00			6,377.59			256.34
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through business	combination under common control(continued)	Quyang Jinyu Cement Co., Ltd. Limited liability Quyang County Fan Guoliang Manufacture and sale of 28,000.00 6827760400	(曲陽金隅水泥有限公司) cement and clinker	Beijing Bio-Island Science Limited liability Beijing Liu Xiaoyu Development of technologies for waste 5,000.00 7877525309	and Technology Co., Ltd. disposal, comprehensive utilization,	(北京生態島科技有限責任公司) and environmental protection	Tianjin Zhenxing Cement Co., Ltd. Limited liability Tianjin Jiang Changlu Manufacture of cement 55,811.02 1030713003	(天津振興水泥有限公司)	Tongda Refractory Technology Co., Ltd. Limited liability Beijing Feng Yunsheng Research and Development, and 28,517.14 7886140704	(通達耐火技術股份有限公司) manufacture of new refractory	materials etc.	Shanghai Jinyu Sanming Building Materials Limited liability Shanghai Xu Haifeng Manufacture and sale of 2,700.00 6074059208	Co., Ltd. (上海金隅三明建材有限公司) modern building materials	Beijing Building Decoration and Design Limited liability Beijing Zhang Quan Decoration of design projects and 8,500.00 101123780X	Engineering Co., Ltd. furniture decorations etc.	(北京市建築裝飾設計工程有限公司)	Beijing Building Decoration and Limited liability Beijing Zhang Quan Decorative design service 2,000.00 1018876204	Design Institute Co., Ltd.	(北京市建築裝飾設計院有限公司)	Beijing Longshuncheng Chinese Limited liability Beijing Wang Zhijun Manufacture of furniture etc. 1,292.40 1011231801	Style Furniture Co., Ltd.	(北京市龍順成中式家具有限公司)	Crane (Beijing) Building Material Limited liability Beijing Kou Yingyue Wholesale of building materials etc. 500.00 6699036606	Co., Ltd. (珂恩(北京)建材有限公司)

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FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			–			–			–		–			–		–			–		–		–
					Consolidated	or not					Y			Y			Y		Y			Y		Y			Y		Y		Y
					Voting right	percentage		(%)			100.00			100.00			100.00		100.00			100.00		100.00			100.00		100.00		100.00
					Percentage of equity	Direct Indirect		(%) (%)			100.00 –			100.00 –			– 100.00		– 100.00			– 100.00		100.00 –			– 100.00		100.00 –		100.00 –
			Actual	contribution	at end of the	period	RMB	ten thousand			21,193.66			226,277.12			1,142.21		12,256.23			6,691.07		85,299.24			11,542.01		598.49		4,574.17
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through business	combination under common control(continued)	Beijing BBMG Doudian Technology Limited liability Beijing Tang Jianping Manufacture of insulate 15,037.66 1012091307	Corporate Management Co., Ltd. and energy-saving building materials etc.	(北京金隅竇店科技企業管理有限公司)	Beijing BBMG Dacheng Property Limited liability Beijing Zhang Xiaobing Property development etc. 150,000.00 7226160402	Development Co., Ltd. (北京金隅大成	開發有限公司)	Haikou Dacheng Property Investment Limited liability Haikou Zhang Xiaobing Property development etc. 1,600.00 2012958307	Co., Ltd. (海口大成置業有限公司)	BBMG Badaling Hot Spring Resort Co., Ltd. Limited liability Beijing Liu Weiyu Provision of travelling 28,600.00 6000657005	(北京金隅八達嶺溫泉度假村 service and accommodation etc.	有限責任公司)	Beijing Xisanqi Heating Co., Ltd. Limited liability Beijing Wang Haitao Manufacture of low to medium 7,560.00 6330695402	(北京西三旗熱力有限責任公司) pressure steam and distilled water etc.	BBMG Hongye Ecological Science and Limited liability Beijing Xu Chuanhui Property rental and management 200.00 6675186902	Technology Co., Ltd. (北京金隅宏業生態科技	有限責任公司)	Beijing Hengxing Land Real Estate Co., Ltd. Limited liability Beijing Zhang Xiaobing Property development etc. 4,635.00 7533002000	(北京恆興置地房地產有限公司)	BBMG Hong Kong Limited Limited liability Hong Kong Ma Hong Self-owned property rental (HKD) 100.00 N/A	(金隅香港有限公司)	Beijing Lvdushangke Science Limited liability Beijing Fu Qiutao Sale of building materials 2,784.85 1026464109	and Technology Co., Ltd. and provision of technical services etc.	(北京綠都尚科科技有限公司)

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			–			–			–		–			–			–					1,373.44		–		10,453.66		7,375.85
					Consolidated	or not					Y			Y			Y		Y			Y			Y					Y		Y		Y		Y
					Voting right	percentage		(%)			100.00			100.00			100.00		100.00			100.00			100.00					51.00		100.00		33.33		67.00
					Percentage of equity	Direct Indirect		(%) (%)			– 100.00			– 100.00			100.00 –		– 100.00			– 100.00			100.00 –					– 51.00		100.00 –		33.33 –		67.00 –
			Actual	contribution	at end of the	period	RMB	ten thousand			9,826.00			50,449.23			27,504.04		–			49.45			1,186.08					1,428.19		145,440.00		6,007.04		6,760.00
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through business	combination under common control(continued)	Beijing Hengye Qunying Business Limited liability Beijing Jiang He Manufacture, purchase and sale of 3,600.00 1013050006	and Trading Co., Ltd.(北京恆業群盈商貿 furniture	有限責任公司)	Beijing Zhongweisenhai Property Limited liability Beijing An Zhiqiang Property management 2,548.50 1014787106	Management Co., Ltd. (北京中威森海物業	管理有限公司)	Beijing Yanshan Cement Co., Ltd. Limited liability Beijing Ding Zhongqin Manufacture of cement 6,266.85 1011004006	(北京市燕山水泥有限公司)	Beijing Oakland Building Limited liability Beijing Sun Yan’an Processing and sale of 500.00 6000054003	Waterproofing Materials Co., Ltd. waterproof materials	(北京奧克蘭建築防水材料有限公司)	BBMG Human Resources Limited liability Beijing Liu Shengli Dispatch of labour 50.00 690001270X	Management Co., Ltd.	(北京金隅人力資源管理有限公司)	BBMG Dacheng Property Limited liability Beijing Xue Guomin Property management 500.00 1018504500	Management Co., Ltd.	(北京金隅大成物業管理有限公司)	Subsidiaries acquired through business	combination not under common control	Hetian Yuhe Sand Stone Company Limited liability Hetian Jiang Changlu Manufacture and sale of concrete 2,040.80 6792864809	Limited (和田市玉河砂石有限公司)	Luquan BBMG Dingxin Cement Co., Ltd. Limited liability Luquan Zhou Chengyao Manufacture and sale of 130,000.00 7434157902	(鹿泉金隅鼎鑫水泥有限公司) cement and clinker etc.	*** Hebei Taihang Huaxin Building Materials Limited liability Handan Wang Nan Mining of limestone and 22,800.00 7373777500	Co., Ltd. (河北太行華信建材有限責任公司) sale of cement products	Beijing Taihang Qianjing Cement Co., Ltd. Limited liability Beijing Zheng Baojin Manufacture and sale of 10,000.00 6000945006	(北京太行前景水泥有限公司) cement and cement products etc.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

					Non-controlling	interests	RMB	ten thousand			(857.25 )		8,074.77		593.34		691.08		1,407.79		4,617.41		1,728.13		141.93		1,795.10		4,531.01		515.62		51,334.25
					Consolidated	or not					Y		Y		Y		Y		Y		Y		Y		Y		Y		Y		Y		Y
					Voting right	percentage		(%)			61.50		75.00		75.00		48.28		60.00		94.67		71.00		94.67		91.00		100.00		97.80		51.00
					Percentage of equity	Direct Indirect		(%) (%)			– 61.50		75.00 –		– 75.00		– 48.28		– 60.00		94.67 –		– 71.00		– 94.67		91.00 –		85.00 –		97.80 –		– 51.00
			Actual	contribution	at end of the	period	RMB	ten thousand			1,640.00		12,000.00		2,500.00		703.80		2,442.59		71,998.66		4,500.00		1,000.00		18,167.87		24,697.20		20,204.70		94,321.78
As at 30 June 2013	IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS(continued)	1. Major subsidiaries:(continued)			Type of Place of Legal Registered Organization	subsidiaries registration representative Principal activities capital code	RMB	ten thousand	Subsidiaries acquired through business	combination not under common control(continued)	Baoding Taihang Xingsheng Cement Co., Ltd. Limited liability Baoding Zheng Baojin Manufacture and sale of 2,000.00 7634494102	(保定太行興盛水泥有限公司) cement and cement products etc.	Baoding Taihang Heyi Cement Co., Ltd. Limited liability Yi county Jiang Changlu Manufacture and sale of 16,000.00 7454331402	(保定太行和益水泥有限公司) cement and cement products etc.	Yixian Tenghui Mineral Building Materials Limited liability Yi county Wang Chao Sale of lime and rock materials etc. 2,100.00 7965723002	Company Limited (易縣騰輝礦產建材有限公司)	Handan Taihang Cement Co., Ltd. Limited liability Handan Li Huaijiang Manufacture of cement 500.00 730279550X	(邯鄲市太行水泥有限責任公司)	Beijing Qianglian Cement Co., Ltd. Limited liability Beijing Zhang Wanbo Manufacture of cement 2,000.00 7461002806	(北京強聯水泥有限公司)	Handan BBMG Taihang Cement Co., Ltd. Limited liability Handan Li Huaijiang Manufacture of cement 65,000.00 5560754101	(邯鄲金隅太行水泥有限責任公司)	Cheng’an BBMG Taihang Cement Co., Ltd. Limited liability Cheng’an Li Huaijiang Manufacture of cement 6,000.00 5544806008	(成安金隅太行水泥有限公司)	Guantao BBMG Taihang Concrete Co., Ltd. Limited liability Guantao Li Huaijiang Manufacture and sale of commodity 1,000.00 5738955402	(館陶縣金隅太行混凝土有限公司) concrete	Handan Shexian BBMG Cement Co., Ltd. Limited liability She county Li Huaijiang Manufacture and sale of cement 10,000.00 6652936808	(邯鄲涉縣金隅水泥有限公司)	** Tianjin BBMG Concrete Co., Ltd. Limited liability Tianjin Jiang Changlu Concrete construction and manufacturing 23,733.78 7548416007	(天津金隅混凝土有限公司)	Shijiazhuang BBMG Xucheng Concrete Limited liability Shijiazhuang Liu Wenyan Manufacture and sale of concrete 20,000.00 7575353006	Co., Ltd. (石家莊金隅旭成混凝土有限公司)	Beijing Cement Plant Co., Ltd. Limited liability Beijing Liu Wenyan Manufacture of cement 96,346.28 6343918302	(北京水泥廠有限責任公司) and mining of limestone etc.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries acquired through business
combination not under common control(continued)
Beijing Chinefarge Cement Co., Ltd.
Limited liability
Beijing
Jiang Changlu
Manufacture of cement
31,500.00
6000229509
46,474.09
95.70
–
95.70
Y
2,121.37
(北京興發水泥有限公司)
and clinker etc.
BBMG Shunfa Lafarge Cement Co., Ltd.
Limited liability
Beijing
Jiang Changlu
Manufacture of cement
15,000.00
6000968501
11,068.11
70.00
–
70.00
Y
4,648.97
(北京金隅順發水泥有限公司)
and clinker etc.
Beijing Alavus Energy Saving Components
Limited liability
Beijing
Sai Bao
Manufacture, sale and repair of energy
(EUR) 400.00
7177440105
2,998.07
82.00
–
82.00
Y
707.33
Co., Ltd. (北京愛樂屋建築節能製品有限公司)
efficient doors and windows
Chongqing BBMG Dacheng
Limited liability
Chongqing
Zhang Xiaobing
Property development and sale etc.
38,000.00
5567783807
38,000.00
–
100.00
100.00
Y
–
Shanshui Real Estate Co., Ltd.
(重慶金隅大成山水置業有限公司)
Chengde BBMG Cement Co., Ltd.
Limited liability
Chengde
Jiang Changlu
Manufacture of cement
30,000.00
78865130-X
24,000.00
95.85
–
95.85
Y
1,035.58
(承德金隅水泥有限責任公司)
and clinker etc.

Newly-founded subsidiaries during the period

In September 2010, Tianjin Building Materials Supply Corporation (天津市建築材料供應總公司) entrusted the shareholder’s rights (within the meaning of
the Company Law and the Articles of Association) as represented by the 15% equity interests held in Tianjin BBMG Concrete Co., Ltd.(天津金隅混凝土
有限公司) to the Company with a term of 8 years. As at 30 June 2013, the Company held 85% equity interests in Tianjin BBMG Concrete Co., Ltd. with
100% voting rights.
**
Please refer to Note VI.5.(2) for details.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Operating entity with special interest, operated through entrustment or through controlling rights formed by rental

		Recognised major	Recognised major
		assets as at	liabilities as at
		the end of	the end of
		the Period in the	the Period in the
	Major business	consolidated	consolidated
	transactions	statements	statements
Hebei Taihang Huaxin Building Materials Co., Ltd.	Nil	186,515,940.94	29,718,883.84
(”Taihang Huaxin”)

Note: Please refer to Note VI.5(2) for details.

3. Investee that the Company holds half or more of its shareholdings but fails to control it

control it
							Reason for
	Place of	Principal	Registered	Investment	Shareholding	Voting	the voting right
Investee	registration	activities	capital	amount	percentage	right	failing to control
			(RMB10,000)	(RMB10,000)	(%)	(%)
Beijing Beizhuan Gas Station	Beijing	Retail of	80.00	64.83	62.50	–	Contracted operation
		refined oil
Hainan Dihao Furniture Co., Ltd.	Haikou	Manufacture	900.00	264.54	55.00	–	Withdrawal from
		of furniture					operation in 2004
Beijing Xinjianxinyuan	Beijing	Retail of	40.00	38.00	95.00	–	Contracted operation
Farmer’s Market Co., Ltd.		agricultural
		product

4. Change in scope of consolidation

Apart from the newly established subsidiaries during the Period and as stated in Note IV.5 and Note IV.6, the scope of consolidated financial statements remains the same as last year.

I-271 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Entities newly included into or excluded from the scope of consolidation during the Period

Entities newly included into the scope of consolidation for the Period are as follows:

	30 June 2013 Net assets	From the acquisition date to the end of the Period Loss
Chengde BBMG Cement Co., Ltd.	249,142,165.64	(1,203,368.30)

During the Period, subsidiaries no longer included into the scope of consolidation are as follows:

		From the
		beginning of the
	Date of	Period to the
	disposal	date of disposal
	Net assets	Loss
Inner Mongolia BBMG Daihai Resort Co., Ltd.	12,053,804.96	(96,195.04 )

6. Business combinations not under common control during the Period

	Amount of	Calculation of
	Goodwill	Goodwill
Chengde BBMG Cement Co., Ltd.	–	Indirect measurement
		method

The Company originally held 12.52% equity interest in Chengde BBMG Cement Co., Ltd. During the Period, the Company acquired 83.33% equity interest in Chengde BBMG Cement Co., Ltd by way of capital increase at a cash consideration of RMB233,671,549.99. As such, the Company holds 95.85% equity interest in that company. The acquisition date was determined as 16 April 2013.

I-272 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Business combinations not under common control during the Period (continued)

As at the acquisition date, the fair value of the identifiable assets and liabilities of Chengde BBMG Cement Co., Ltd. is approximate to their carrying value, details of which are as follows:

	16 April 2013 Fair value
Cash and bank balances Accounts receivable Other receivables Fixed assets Less: Tax payable Other payables Minority interests Goodwill arising from acquisition Consideration for combination (Note)	236,854,305.39 150,000.00 74,443.28 16,985,490.47 (31,915.41 ) 3,750,620.61 250,345,533.94 10,399,384.11 – 239,946,149.83

Note: Such amounts included the cash consideration of RMB233,671,549.99 paid by the Company for business combination and the assessed fair value of RMB6,274,599.84 of the 12.52% equity interest held in Chengde BBMG Cement Co., Ltd. prior to the acquisition date.

I-273 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Business combinations not under common control during the Period (continued)

The operating results and cash flows of Chengde BBMG Cement Co., Ltd. from the acquisition date to the end of the Period are set out as below:

	For the period from
	16 April 2013 to
	30 June 2013
Operating revenue	–
Net Profit	(1,203,368.30 )
Net cash flows from operating activities	(1,054,427.10 )
Net cash flows from investing activities	(191,533,080.14 )
Net cash flows from financing activities	–

7. Reduction of subsidiaries due to loss of control during the Period

					Reasons for
	Place of	Principal	Percentage of	Percentage of	ceasing to be	Date of
	registration	activities	shareholding	voting rights	a subsidiary	disposal	Note
			(%)	(%)
Inner Mongolia BBMG	Ulanqab	Provision of	100.0	100.0	Disposal	28 February	Note 1
Daihai Resort Co., Ltd.		accommodation				2013
(內蒙古金隅岱海旅遊		and dining
度假有限公司)		services etc.

Note 1: The Group’s subsidiary BBMG Fengshan Hot Spring Resort Co., Ltd. (北京金隅鳳山溫泉度假村有限公司) and Xinghe County Muzi Carbon Co., Ltd. (興河縣木子炭素有限責任公司) entered into an equity transfer agreement to dispose its 100% equity interest in Inner Mongolia BBMG Daihai Resort Co., Ltd. (內蒙古金隅岱海旅遊度假有限公司) at a consideration of RMB12,150,000.00 in cash. The date of disposal was 28 February 2013. Since 28 February 2013, the Group has ceased to include Inner Mongolia BBMG Daihai Resort Co., Ltd. into the scope of consolidation.
I-274 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

IV. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Reduction of subsidiaries due to loss of control during the Period (continued)

Related financial information of Inner Mongolia BBMG Daihai Resort Co., Ltd. are as follows:

	28 February 2013 Carrying amount	31 December 2012 Carrying amount
Current assets Non-current assets Current liabilities Net assets Consideration for disposal Gains from disposal	2,126.01 12,053,109.45 1,430.50 12,053,804.96 12,150,000.00 96,195.04	5,365.61 12,146,064.89 1,430.50 12,150,000.00 For the period from 1 January 2013 to 28 February 2013
Operating revenue Operating costs Net profit		– – (96,195.04 )

8. Exchange rate for major statement items of foreign operating entities of the Group

Group
			Exchange rate at the
	Average exchange rate		period/year end
	For the six
	months ended		30 June31 December
	30 June 2013	2012	2013 2012
HKD	0.7906	0.8134	0.7913 0.8109

I-275 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Cash and bank balances

Cash and bank balances	Cash and bank balances
30 June 2013 31 December Original Exchange Original Exchange currency rate As RMB currency rate		2012 As RMB
Cash on hand RMB 5,218,345.55 1.0000 IDR – – Cash at banks RMB 8,041,258,498.57 1.0000 USD 85,728.87 6.1377 EUR 72,114.79 7.9839 HKD 9,596,678.08 0.7913 JPY 24,484,950.88 0.0619 Others RMB 27,676,599.69 1.0000	5,218,345.55 3,459,018.74 1.0000 – 1,820,000.00 0.0006 5,218,345.55 8,041,258,498.57 5,822,702,449.51 1.0000 526,178.08 715,751.81 6.2855 575,757.31 85,023.83 8.3176 7,593,851.36 13,032,786.73 0.8109 1,515,618.46 24,276,089.04 0.0730 8,051,469,903.78 27,676,599.69 62,385,492.73 1.0000 8,084,364,849.02	3,459,018.74 1,092.00 3,460,110.74 5,822,702,449.51 4,498,858.00 707,194.21 10,568,286.76 1,772,154.50 5,840,248,942.98 62,385,492.73 5,906,094,546.45

I-276 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Cash and bank balances (continued)

Cash and bank balances(continued)
	30 June 2013	31 December 2012
Cash and bank balances with restrictions: Deposits for letter of credit Quality/performance deposits Deposits for acceptance bills Restricted fund of property pre-sale funds Others	30,000.00 47,721,441.55 115,612,105.39 3,133,624,665.79 103,541,377.89 3,400,529,590.62	39,206,299.85 51,951,332.14 156,133,605.34 2,052,501,646.63 48,598,552.29 2,348,391,436.25

As at 30 June 2013, the Group’s cash and bank balances of which ownership were restricted are RMB3,400,529,590.62 (31 December 2012: RMB2,348,391,436.25).

Interest income is generated from current savings as determined by the interest rate for the savings in banks. Short-term time deposits with durations from 7 days to 3 months are made in accordance with the Group’s need of cash, and interest income is generated according to the respective interest rates.

2. Bills receivable

Bills receivable
	30 June 2013	31 December 2012
Commercial acceptance bills Bank acceptance bills	11,647,264.23 811,087,523.31 822,734,787.54	3,060,000.00 1,025,602,688.14 1,028,662,688.14

As at 30 June 2013, bills receivable of RMB14,750,000.00 were pledged (31 December 2012: Nil).

As at 30 June 2013, there was no transfer of bills receivable into accounts receivable due to default on the part of the drawer (31 December 2012: Nil).

As at 30 June 2013, there were no outstanding bills receivable endorsed to other parties.

I-277 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Interests receivable

Interests receivable
	Balance at beginning of the Period	Increase in the Period	Decrease in the Period	Balance at end of the Period
STAR-USG Building Materials Co., Ltd.	1,411,125.80	2,461,550.04	2,489,834.15	1,382,841.69

As at 30 June 2013, there were no outstanding interests receivable (31 December 2012: Nil).

4. Dividends receivable

Dividends receivable
	Balance at			Balance at
	beginning of	Increase in	Decrease in	end of
	the Period	the Period	the Period	the Period
Dividends receivable	1,215,425.00	–	1,215,425.00	–

5. Accounts receivable

The credit periods of accounts receivable are generally 1 to 3 months. Accounts receivable are noninterest bearing.

An aging analysis of the accounts receivable is as follows:

	30 June 2013	31 December 2012
Within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years Provision for bad debts	4,684,897,911.10 503,342,416.07 94,778,300.51 28,924,382.78 23,381,487.89 87,835,565.10 5,423,160,063.45 (276,979,234.01 ) 5,146,180,829.44	3,622,522,577.51 435,084,218.32 81,854,995.55 32,669,200.80 20,172,495.57 90,736,588.11 4,283,040,075.86 (291,243,701.70 ) 3,991,796,374.16

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

The movements in provision for bad debts are as follows:

			For the six months ended 30 June 2013	For the six months ended 30 June 2013	2012
At the beginning of the period/year 291,243,701.70 359,546,649.96 Provision for the period/year 10,748,563.20 46,003,705.19 Reversal for the period/year (23,767,316.81 ) (22,008,917.38 ) Write-off for the period/year (1,245,714.08 ) (90,328,285.46 ) Transfer out on disposal of subsidiaries – (1,969,450.61 ) At the end of the period/year 276,979,234.01 291,243,701.70 30 June 2013 Gross carrying amount Provision for bad debts Amount Proportion Amount Percentage (%) (%)
Individually significant and subject to separate provision for bad debts Subject to provision on groups by aging Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debts	– 4,671,300,966.67 363,411,574.70 62,947,000.90 12,796,257.04 22,855,411.76 87,835,565.10 5,221,146,776.17 191,948,991.01 10,064,296.27 5,423,160,063.45	– 86.14 6.70 1.16 0.23 0.42 1.62 96.27 3.54 0.19 100.00		– – – – 109,023,472.41 30.00 37,768,200.54 60.00 10,876,818.48 85.00 22,855,411.76 100.00 87,835,565.10 100.00 268,359,468.29 – – 8,619,765.72 85.65 276,979,234.01

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

Accounts receivable(	continued)	continued)	continued)
	31 December 2012 Gross carrying amount Provision for bad debts Amount Proportion Amount Proportion (%) (%)
Individually significant and subject to separate provision for bad debts Subject to provision on groups by aging Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debts	– 3,619,618,241.84 370,986,855.80 60,008,300.77 27,108,573.69 19,649,376.89 89,664,617.89 4,187,035,966.88 78,713,958.28 17,290,150.70 4,283,040,075.86	– 84.51 8.66 1.40 0.64 0.46 2.09 97.76 1.84 0.40 100.00	– – – – 111,296,056.74 30.00 36,004,980.47 60.00 23,042,287.64 85.00 19,649,376.89 100.00 89,664,617.89 100.00 279,657,319.63 – – 11,586,382.07 67.01 291,243,701.70

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

As at 30 June 2013, accounts receivable which were not individually significant but subject to separate provision for bad debts were as follows:

	Gross carrying amount at end of the year	Provision for Percentage of bad debts provision Reasons (%)
First Second Third Fourth Fifth Others	2,838,524.28 1,125,176.11 649,499.14 499,827.80 399,056.12 4,552,212.82 10,064,296.27	2,838,524.28 100.00 Probably uncollectible 1,125,176.11 100.00 Probably uncollectible 649,499.14 100.00 Probably uncollectible 333,214.68 66.67 Partly uncollectible 399,056.12 100.00 Probably uncollectible 3,274,295.39 71.93 Partly uncollectible 8,619,765.72

During the six months ended 30 June 2013, there was no reversal of provision for bad debts of individually significant accounts receivable or recovery of individually significant impaired accounts receivable (2012: Nil).

The accounts receivable that had been written off during the six months ended 30 June 2013 are as follows:

Nature	Amount Related party written off Reason transactions
First accounts receivable Second accounts receivable from cement Third accounts receivable from cement Fourth accounts receivable Fifth accounts receivable Others Others	179,179.14 Uncollectible No 160,000.00 Uncollectible No 96,665.00 Uncollectible No 40,897.12 Uncollectible No 20,632.80 Uncollectible No 748,340.02 Uncollectible No 1,245,714.08

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts receivable (continued)

As at 30 June 2013, there was no accounts receivable due from shareholders of the Group that held 5% or more of the Company’s voting rights (31 December 2012: Nil) except for the receivable of RMB27,338.00 (31 December 2012: Nil) from BBMG Group, the parent company (Note VI. 6).

As at 30 June 2013, there was no accounts receivable that were pledged as guarantee for the Group’s bank loans (31 December 2012: RMB30,808,880.00) (Note V. 21).

Accounts receivable from related parties as at 30 June 2013 and 31 December 2012 are set out in Note VI. Related Party Relationships and Transactions.

As at 30 June 2013, the top 5 accounts receivable were as follows:

Relationship with the Group	Amount Aging	Proportion in total accounts receivables (%)
Customer 1 Third party Customer 2 Associates Customer 3 Third party Customer 4 Third party Customer 5 Third party	157,286,870.20 Within 1 year 92,000,077.33 Within 1 year 87,802,620.00 Within 1 year 46,860,843.59 Within 1 year 40,945,387.75 Within 1 year 424,895,798.87	2.90 1.70 1.62 0.86 0.76
		7.84

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables

An aging analysis of other receivables is as follows:

	30 June 2013	31 December 2012
Within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years Provision for bad debts	1,770,820,364.17 132,766,214.41 565,801,042.86 13,624,284.27 33,578,749.86 73,187,477.38 2,589,778,132.95 (111,303,523.71 ) 2,478,474,609.24	999,222,808.24 572,179,974.17 253,405,448.61 9,365,651.27 105,161,899.77 71,276,760.38 2,010,612,542.44 (111,097,223.13 ) 1,899,515,319.31

Movements in provision for bad debts of other receivables are as follows:

	For the six months ended 30 June 2013	2012
At the beginning of the period/year Provision for the period/year Reversal for the period/year Write-off for the period/year Transfer out from disposal of subsidiaries At the end of the period/year	111,097,223.13 1,335,725.68 (710,144.55 ) – (419,280.55 ) 111,303,523.71	126,632,017.47 32,906,268.11 (35,073,970.02 ) (9,212,379.78 ) (4,154,712.65 ) 111,097,223.13

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

Other receivables(con	tinued)	tinued)	tinued)
	30 June 2013 Book balance Provision for bad debt Amount Proportion Amount Proportion (%) (%)
Individually significant and subject to separate provision for bad debt Subject to provision and grouped by aging Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debts	53,231,183.06 1,612,183,175.78 9,521,035.47 7,439,992.38 1,575,234.52 1,378,905.97 46,105,227.84 1,678,203,571.96 835,196,935.44 23,146,442.49 2,589,778,132.95	2.06 62.25 0.37 0.29 0.06 0.05 1.78 64.80 32.25 0.89 100.00	40,297,783.06 75.70 – – 2,856,310.64 30.00 4,463,995.43 60.00 1,338,949.34 85.00 1,378,905.97 100.00 46,105,227.84 100.00 56,143,389.22 – – 14,862,351.43 64.21 111,303,523.71

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

Other receivables(con	tinued)
	Book Amount	31 December 2012 balance Provision for bad debt Proportion Amount Proportion (%) (%)
Individually significant and subject to separate provision for bad debt Subject to provision and grouped by aging Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) 3 to 4 years (inclusive of 4 years) 4 to 5 years (inclusive of 5 years) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debts	54,231,183.06 978,760,081.60 15,319,315.73 2,358,467.83 2,122,955.14 2,538,341.02 44,574,259.40 1,045,673,420.72 872,996,654.08 37,711,284.58 2,010,612,542.44	2.70 48.68 0.76 0.12 0.11 0.11 2.22 52.00 43.42 1.88 100.00	40,297,783.06 74.31 – – 4,595,794.72 30.00 1,415,080.70 60.00 1,804,511.87 85.00 2,538,341.02 100.00 44,574,259.40 100.00 54,927,987.71 – – 15,871,452.36 42.09 111,097,223.13

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

As at 30 June 2013, other receivables which were individually significant and separately provided for bad debts were as follows:

	Gross carrying amount	Provision for Percentage of bad debts provision Reasons (%)
First Second	33,180,183.06 20,051,000.00 53,231,183.06	20,246,783.06 61.02 Partly uncollectible 20,051,000.00 100.00 Probably uncollectible 40,297,783.06

As at 30 June 2013, other receivables which were not individually significant but separately provided for bad debts were as follows:

	Gross carrying amount	Provision for Percentage of bad debts provision Reasons (%)
First Second Third Fourth Fifth Others Total	2,695,880.51 2,596,881.90 2,179,835.26 1,600,000.00 1,563,990.61 12,509,854.21 23,146,442.49	2,695,880.51 100.00 Probably uncollectible 438,174.13 16.87 Partly uncollectible 2,179,835.26 100.00 Probably uncollectible 1,600,000.00 100.00 Probably uncollectible 1,563,990.61 100.00 Probably uncollectible 6,384,470.92 51.04 Partly uncollectible 14,862,351.43

For the six months ended 30 June 2013, no significant bad debt provision for other receivables was reversed or recovered.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Other receivables (continued)

For the six months ended 30 June 2013, significant bad debt provision for other receivables reversed or recovered was as follows:

			Accumulated
	Reason for	The basis of	provision for
	reversal	original provision	bad debt made	Amount
	or recovery	for bad debts	before the reversal	recovered
JinJian (Tianjin) Property	Amount recovered	Uncollectible for	30,788,355.71	29,224,365.10
Investment Limited		a long time

For the six months ended 30 June 2013, no individually significant other receivables had been written off (2012: nil).

As at 30 June 2013, the top 5 other receivables were as follows:

Relationship with As a percentage the Group Amount Aging of total other receivables (%)	Relationship with As a percentage the Group Amount Aging of total other receivables (%)
Entity 1 Third party 428,731,546.95 Within 1 year, 2 to 3 years Entity 2 Third party 290,000,000.00 Within 1 year Entity 3 Parent Company 111,226,484.82 Within 1 year Entity 4 Third party 108,880,000.00 1 to 2 years Entity 5 Third party 100,000,000.00 Within 1 year 1,038,838,031.77	16.55 11.20 4.29 4.20 3.86 40.10

As at 30 June 2013, other than the accounts receivable of RMB111,226,484.82 due from BBMG Group (31 December 2012: Nil), there were no accounts receivable from shareholders holding more than 5% or more of the Company’s voting rights (31 December 2012: Nil) (Note VI.6).

Other receivables from related parties as at 30 June 2013 and 31 December 2012 are set out in Note VI. Related Party Relationships and Transactions.

I-287 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Advances to suppliers

An aging analysis of advances to suppliers is as follows:

	30 June 2013 Amount Proportion (%)	30 June 2013 Amount Proportion (%)	31 December Amount	2012 Proportion (%)
Within 1 year 1 to 2 years 2 to 3 years Over 3 years	1,111,818,206.63 33,793,304.37 9,494,461.19 8,577,613.49 1,163,683,585.68	95.54 2.90 0.82 0.74 100.00	862,567,703.50 30,358,878.72 8,936,306.02 7,552,252.53 909,415,140.77	94.85 3.34 0.98 0.83 100.00

As at 30 June 2013, the top 5 advances to suppliers were as follows:

Relationship with the Group	Reasons for being not Amount Aging yet settled
Supplier 1 Third party Supplier 2 Third party Supplier 3 Third party Supplier 4 Third party Supplier 5 Third party	80,000,000.00 Within 1 year Goods not yet received 39,145,667.10 Within 1 year Goods not yet received 38,700,000.00 Within 1 year Goods not yet received 30,503,436.60 Within 1 year Goods not yet received 30,000,000.00 Within 1 year Goods not yet received 218,349,103.70

As at 30 June 2013, there was no advances to suppliers paid to shareholders that held 5% or more of the Company’s voting rights (31 December 2012: Nil). As at 30 June 2013, there was no individually significant advance to suppliers aging more than one year (31 December 2012: Nil).

The balances of advances to related parties suppliers as at 30 June 2013 and 31 December 2012 are set out in Note VI. Related Party Relationships and Transactions.

I-288 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 8. INVENTORIES

INVENTORIES
	Gross carrying amount	30 June 2013 Provision for decline in value	Carrying amount
Raw materials Work in progress Finished goods Turnover materials Trading goods Properties under development Completed properties held for sale	971,952,018.26 768,333,483.39 482,699,217.67 59,238,576.56 453,584,592.40 26,495,424,383.08 4,052,942,495.38 33,284,174,766.74	3,228,859.52 3,505,925.14 10,324,538.29 256,144.54 202,618.35 7,169,850.12 – 24,687,935.96	968,723,158.74 764,827,558.25 472,374,679.38 58,982,432.02 453,381,974.05 26,488,254,532.96 4,052,942,495.38 33,259,486,830.78

	31 December 2012 Gross Provision for carrying amount decline in value	31 December 2012 Gross Provision for carrying amount decline in value	Carrying amount
Raw materials Work in progress Finished goods Turnover materials Trading goods Properties under development Completed properties held for sale	938,248,850.81 722,327,550.36 595,951,402.58 70,211,394.23 408,048,203.24 25,243,954,002.00 4,333,934,509.36 32,312,675,912.58	3,228,859.52 4,287,515.14 10,640,251.43 256,144.54 202,618.35 7,169,850.12 – 25,785,239.10	935,019,991.29 718,040,035.22 585,311,151.15 69,955,249.69 407,845,584.89 25,236,784,151.88 4,333,934,509.36 32,286,890,673.48

I-289 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. INVENTORIES (continued)

The movements in provision for decline in value of inventories are as follows:

For the six months ended 30 June 2013

	Opening balance	Provision for the period	Decrease in the period Disposal of Reversal Subsidiaries /transfer out Write-off	Decrease in the period Disposal of Reversal Subsidiaries /transfer out Write-off	Decrease in the period Disposal of Reversal Subsidiaries /transfer out Write-off	Closing balance
			Disposal of Subsidiaries	Reversal /transfer out
Raw materials Work in progress Finished goods Turnover materials Trading goods Properties under development	3,228,859.52 4,287,515.14 10,640,251.43 256,144.54 202,618.35 7,169,850.12 25,785,239.10	– – – – – – –	– – – – – – –	– – – – – – –	– 781,590.00 315,713.14 – – – 1,097,303.14	3,228,859.52 3,505,925.14 10,324,538.29 256,144.54 202,618.35 7,169,850.12 24,687,935.96

I-290 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. INVENTORIES (continued)

(1) The breakdown of cost of properties under development:

Estimated Commencement completion date Aggregate Project name time of the next phase investment	30 June 2013	31 December 2012
Chongqing–Chayuan December 2011 December 2015 3,946,847,900.00 Chongqing–Huangjueya December 2011 December 2015 4,171,004,500.00 Chengdu-Shuangliu December 2012 October 2014 1,450,000,000.00 Hangzhou-Banshan Project November 2012 July 2014 2,216,520,000.00 Inner Mongolia-Jinyu Times City October 2007 June 2016 669,634,340.00 Hangzhou-Guanlan Times March 2010 June 2014 4,873,945,342.00 Haikou-Meilinghu August 2011 October 2013 460,000,000.00 Haikou-Haidianxi December 2013 December 2016 1,700,000,000.00 Tangshan-Lefu June 2011 December 2013 2,478,239,600.00 Beijing-Xisanqi Commercial October 2012 October 2014 1,717,830,000.00 Residential Project Tianjin-Jinyu Yuecheng September 2010 December 2015 5,208,000,000.00 Beijing-Jinyu Vanke City March 2008 November 2014 4,011,000,000.00 Tianjin-Elegancy City June 2013 September 2015 2,282,910,000.00 Beijing-Dawayao – – – Beijing-Dachengjun September 2007 October 2013 2,044,000,000.00 Beijing-Liyuan Jincheng November 2011 December 2013 1,918,200,000.00 Beijing-Guogongzhuang March 2013 December 2014 1,519,890,000.00 Beijing-Chaoyang New City September 2009 July 2014 2,004,600,000.00 Beijing-Jinyu Town-House February 2009 November 2013 593,280,000.00 Beijing-Dongliu Kanghuiyuan February 2009 December 2013 1,893,020,000.00 Beijing-Jinyu Jiaheyuan March 2012 June 2014 520,000,000.00 Beijing-Guanlan Times October 2010 December 2013 1,219,720,000.00 Beijing-Xi Hai’an August 2012 December 2014 1,140,000,000.00 Beijing-Yueheyuan September 2011 September 2013 1,550,000,000.00 Beijing-Tuqiao Project October 2009 June 2014 11,625,917,700.00 Beijing-Yanshan September 2011 May 2014 3,384,510,000.00 Affordable Housing Beijing-Daxing Cube November 2011 October 2013 880,000,000.00 Beijing-Taiheyuan January 2012 December 2013 1,660,000,000.00 Beijing-Ruiheyuan December 2012 December 2014 831,700,000.00 Qingdao-Site May 2013 November 2014 220,000,000.00 in Jinggangshan Rd. Others – – – Total	1,579,138,371.81 1,795,589,116.98 653,413,632.43 1,484,214,500.60 601,341,259.42 1,207,933,596.54 69,463,658.94 557,165,968.68 1,834,975,201.81 998,591,365.72 2,097,515,673.52 1,439,811,124.49 1,037,499,516.11 210,838,293.41 – 2,320,380,095.13 1,264,625,386.83 649,356,644.80 58,303,277.90 140,568,966.98 288,970,609.66 27,569,419.58 506,235,064.66 825,801,839.19 1,669,189,506.90 1,444,006,276.68 501,466,948.98 808,329,126.59 250,895,057.40 119,803,900.31 45,261,130.91 26,488,254,532.96	1,358,593,107.98 1,642,045,464.40 547,265,466.21 1,425,013,511.67 397,120,548.38 1,896,847,820.49 263,322,074.56 536,000,000.00 1,354,029,808.75 904,637,288.94 2,229,077,731.87 1,440,096,211.88 – 210,838,293.41 191,949,430.63 2,303,294,812.46 1,048,771,419.76 538,105,615.47 57,586,738.26 135,168,334.65 276,216,629.20 1,148,224,453.15 425,744,431.18 674,467,635.70 1,614,395,747.89 1,278,832,363.89 278,717,835.12 709,548,267.28 163,191,699.21 107,434,691.08 80,246,718.41 25,236,784,151.88

As at 30 June 2013, the balance of properties under development included capitalized interest of RMB1,315,120,219.94 (31 December 2012: RMB1,214,794,424.47), of which an amount of RMB280,790,694.89 was capitalized during the current period, and the rate of interest capitalization was 6%.

As at 30 June 2013, properties under development with carrying amount of RMB3,828,253,785.68 (31 December 2012: RMB4,994,957,123.22) were pledged as guarantee for the Group’s bank loans (Note V. 21).

I-291 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. INVENTORIES (continued)

(2) The breakdown of completed properties held for sale:

Completion date of the Project name latest phase	Opening balance	Increase in the period	Decrease in the period	Closing balance
Beijing-Jinyu Town-House September 2010 Beijing-Chaoyang New City June 2012 Beijing-Miaopu December 2008 Housing Renovation Project Beijing-Lijingyuan December 2009 Beijing-Meiheyuan December 2009 Beijing-Kanghuiyuan March 2011 Beijing-Jiaheyuan June 2011 Beijing-Tuqiao Project June 2013 Beijing-Guanlan Times (觀瀾時代) June 2013 Tuqiao F3(Ziyouzhu) June 2013 (土橋F3 (自由築)) Beijing-Jinyu Vanke City June 2012 Inner Mongolia-Jinyu December 2012 Times City Hangzhou-Guanlan Times November 2010 Beijing-Chang’an New City December 2007 Beijing-Dachengjun June 2012 Beijing-Dacheng Times Center September 2010 Beijing-Linglong Tiandi June 2012 Beijing-Western Group January 2013 (西組團) and facilities Hainan-Dacheng Business September 2007 Apartments and Jinpan Kindergarten Haikou – Meilinghu June 2013 Tianjin-Jinyu Yuecheng June 2013 Beijing-Jianxinyuan December 2008 Garden Economical Affordable Housing Beijing-Tiantan Kungkuan June 2008 Tangshan-Jinyu Lefu October 2012 Beijing-Jinyu Feili December 2012 Beijing-I Cube June 2013 Beijing-Dacheng International December 2011 BBMG International (金隅國際) April 2005 Others Total	40,563,837.64 71,993,650.23 14,671,824.56 10,566,135.56 7,644,522.06 369,695,704.20 4,136,765.09 323,111,102.41 – – 7,276,387.64 38,742,528.14 1,082,641,576.69 108,849,710.93 809,763,570.55 165,866,005.22 25,383,534.57 – 40,712,088.47 – 204,058,760.67 97,347,905.58 24,123,221.53 83,058,319.98 607,376,190.04 – 67,547,463.62 82,155,385.00 46,648,318.98 4,333,934,509.36	– – – – 168,268.92 26,143,775.77 – 282,311,615.67 1,185,213,393.63 799,002,148.82 – – 461,602,621.43 – – – 2,685,914.79 237,186,583.56 – 257,230,199.59 345,092,424.88 – 324,877.66 115,601,029.46 – 204,823,250.04 – – 13,245,198.50 3,930,631,302.72	8,003,092.66 4,618,678.05 549,891.99 1,109,468.47 575,996.10 176,497,684.12 – 301,139,294.26 1,037,818,927.56 535,584,399.17 6,899,955.20 8,920,436.00 390,181,587.47 – 636,876,257.87 – 23,350,383.84 119,927,097.97 – 170,761,272.29 242,626,488.37 – – 87,568,637.04 290,686,396.58 164,872,376.55 – – 3,054,995.13 4,211,623,316.69	32,560,744.98 67,374,972.18 14,121,932.57 9,456,667.09 7,236,794.88 219,341,795.85 4,136,765.09 304,283,423.82 147,394,466.07 263,417,749.65 376,432.44 29,822,092.14 1,154,062,610.65 108,849,710.93 172,887,312.68 165,866,005.22 4,719,065.52 117,259,485.59 40,712,088.47 86,468,927.30 306,524,697.17 97,347,905.58 24,448,099.19 111,090,712.40 316,689,793.46 39,950,873.49 67,547,463.62 82,155,385.00 56,838,522.35 4,052,942,495.38

I-292 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. Other current assets

Other current assets
	30 June 2013	31 December 2012
Prepaid income tax Land appreciation tax paid Prepaid business tax and other tax Prepaid expenses Amortisation of long-term prepaid expenses within one year Others	166,130,208.52 186,176,648.14 799,895,445.31 71,664,377.96 34,009,143.22 39,850,895.02 1,297,726,718.17	183,210,502.54 111,117,402.18 684,761,106.74 19,404,785.19 25,801,700.06 52,582,155.58 1,076,877,652.29

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Investments in jointly-controlled entities and associates

For the six months ended 30 June 2013

	Type of	Place of	Authorised	Business nature/	Registered	Code of
	enterprise	registration	representative	scope of operation	capital	organisation
					RMB thousand
Jointly-controlled entities
STAR-USG Building	Limited liability	Dachang	Deng Guangjun	Production of	USD54,520	66774000-7
Materials Co., Ltd. (星牌優		county		mineral wool
時吉建築材料有限公司)				acoustic boards
BBMG Zhaode Property	Limited liability	Beijing	Huang An’ nan	Property development	20,000	68196579-8
Development Co., Ltd.
(北京金隅昭德置業有限公司)
BBMG Landao Commercial	Limited liability	Beijing	An Zhiqiang	Commodities retail	6,000	79674055-6
Operation Management
Co., Ltd. (北京金隅藍島商業
運營管理有限公司)
Associates
Beijing Gaoqiang Concrete	Limited liability	Beijing	Li Jie	Production of various	55,000	70022904-1
Co., Ltd. (北京市高強混凝				concretes, pumping
土有限責任公司)
Krono (Beijing) Woods Co.,	Limited liability	Beijing	Deng Guangjun	Production of fiberboard	USD57,380	60004211-6
Ltd.(柯諾（北京）木業有限公司)				and artificial boards
Krono (Beijing) Flooring Co.,	Limited liability	Beijing	Deng Guangjun	Production of	USD23,500	80114605-0
Ltd.(柯諾（北京）地板有限公司)				wear-resisting
				composite floors
Zehnder (China) Indoor	Limited liability	Beijing	Guo Yanming	Production of radiators	USD27,500	60005569-7
Climate Co., Ltd. (森德（中國）
暖通設備有限公司)
Beijing Dynea Chemical	Limited liability	Beijing	Sun Deyang	Production of glass fibers	276,003	70000742-2
Industry Co., Ltd.
(北京太爾化工有限公司)
OCV Reinforcements (Beijing)	Limited liability	Beijing	Wang Zhaojia	Production of various	55,000	60004302-0
Co., Ltd. Production				concretes, pumping
of various (歐文斯科寧複合
材料（北京）有限公司)
Beijing Sinobaide Technology	Limited liability	Beijing	Liu Guosheng	Design and production	10,000	67573374-7
Co., Ltd. (北京金時佰				of complete non-standard
德技術有限公司)				control equipment

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Investments in jointly-controlled entities and associates (continued)

For the six months ended 30 June 2013 (continued)

				Operation
	Total assets	Total liabilities	Total net	revenue	Net profit/(loss)
	at end	at end of	assets at end	amount for	amount for
	of the period	the period	of the period	the period	the period
Jointly-controlled entities
STAR-USG Building Materials Co., Ltd.	430,964,909.39	270,162,910.94	160,801,998.45	89,866,364.27	(28,688,265.72 )
(星牌優時吉建築材料有限公司)
BBMG Zhaode Property Development Co., Ltd.	20,000,000.00	–	20,000,000.00	–	–
(北京金隅昭德置業有限公司)
BBMG Landao Commercial Operation	21,021,352.04	13,327,863.72	7,693,488.32	73,766,080.98	1,024,386.04
Management Co., Ltd.
(北京金隅藍島商業運營管理有限公司)
Associates
Beijing Gaoqiang Concrete Co., Ltd.	631,559,924.15	531,712,286.37	99,847,637.78	238,631,801.56	1,217,103.18
(北京市高強混凝土有限責任公司)
Krono (Beijing) Woods Co., Ltd.	434,972,309.63	86,265,751.62	348,706,558.01	146,741,125.45	(18,607,900.23 )
(柯諾(北京)木業有限公司)
Krono (Beijing) Flooring Co., Ltd.	–	–	–	–	–
(柯諾(北京)地板有限公司)
Zehnder (China) Indoor Climate Co., Ltd.	686,996,338.62	357,128,854.74	329,867,483.88	73,097,130.72	(19,160,347.94 )
(森德(中國)暖通設備有限公司)
Beijing Dynea Chemical Industry Co., Ltd.	30,688,166.28	4,801,138.20	25,887,028.08	23,651,314.47	(221,186.69 )
(北京太爾化工有限公司)
OCV Reinforcements (Beijing) Co., Ltd.	340,304,528.56	76,737,745.79	263,566,782.77	120,518,329.65	1,902,557.18
(歐文斯科寧複合材料(北京)有限公司)
Beijing Sinobaide Technology Co., Ltd.	66,685,770.16	49,611,924.63	17,046,845.53	37,374,957.13	507,011.57
(北京金時佰德技術有限公司)

I-295 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Long-term equity investments

==> picture [388 x 207] intentionally omitted <==

----- Start of picture text -----

30 June 2013 31 December 2012
Long-term equity investments
under equity method 386,842,245.95 413,411,839.00
Long-term equity investments
under cost method 11,610,634.79 17,939,084.80
398,452,880.74 431,350,923.80
Less: Provisions for impairment of
long-term investments (11,482,553.21 ) (11,482,553.21 )
386,970,327.53 419,868,370.59
----- End of picture text -----

For the six months ended 30 June 2013

==> picture [388 x 267] intentionally omitted <==

----- Start of picture text -----

Increase/
Investment Opening decrease Closing Percentage of Percentage of Provision for Cash dividends
cost balance for the period balance shareholding voting right impairment for the period
(%) (%)
Equity method:
Jointly-controlled entities
STAR-USG Building
Materials Co., Ltd.
(星牌優時吉建築
材料有限公司) 184,628,800.88 94,745,132.09 (14,344,132.86 ) 80,400,999.23 50.00 50.00 – –
BBMG Landao
Commercial Operation
Management Co., Ltd.
(北京藍島金隅商業
運營管理有限公司) 3,758,666.48 4,551,378.08 (704,633.92 ) 3,846,744.16 50.00 50.00 – 1,216,826.94
BBMG Zhaode Property
Development Co., Ltd.
(北京金隅昭德
置業有限公司) 10,000,000.00 10,000,000.00 – 10,000,000.00 50.00 50.00 – –
Subtotal 198,387,467.36 109,296,510.17 (15,048,766.78 ) 94,247,743.39 – 1,216,826.94
----- End of picture text -----

I-296 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Long-term equity investments (continued)

For the six months ended 30 June 2013 (continued)

Increase/ Investment Opening decrease Closing Percentage of Percentage of Provision for Cash dividends cost balance for the period balance shareholding voting right impairment for the period (%) (%) Equity method: (continued) Associates Beijing Gaoqiang Concrete Co., Ltd. (北京市高強混凝土有限責任公司) 15,723,518.14 24,657,633.65 304,275.80 24,961,909.45 25.00 25.00 – – Krono (Beijing) Flooring Co., Ltd. (柯諾（北京）地板有限公司) 36,736,395.34 5,469,434.67 – 5,469,434.67 30.00 30.00 5,469,434.67 – Krono (Beijing) Woods Co., Ltd. (柯諾（北京）木業有限公司) 152,304,154.86 110,194,337.47 (5,582,370.07 ) 104,611,967.40 30.00 30.00 – – Zehnder (China) Indoor Climate Co., Ltd. (森德（中國）暖通設備有限公司) 78,150,006.67 93,190,431.09 (5,115,812.90 ) 88,074,618.19 26.70 26.70 – – Beijing Dynea Chemical Industry Co., Ltd. (北京太爾化工有限公司) 9,921,366.40 11,748,696.65 (99,534.01 ) 11,649,162.64 45.00 45.00 – – OCV Reinforcements (Beijing) Co., Ltd. (歐文斯科寧複合材料（北京）有限公司) 27,557,054.00 52,332,845.11 380,511.44 52,713,356.55 20.00 20.00 – – Beijing Sinobaide Technology Co., Ltd. (北京金時佰德技術有限公司) 4,950,548.24 6,521,950.19 (1,407,896.53 ) 5,114,053.66 30.00 30.00 – 1,560,000.00 Subtotal 325,343,043.65 304,115,328.83 (11,520,826.27 ) 292,594,502.56 5,469,434.67 1,560,000.00 Total under equity method 523,730,511.01 413,411,839.00 (26,569,593.05 ) 386,842,245.95 5,469,434.67 2,776,826.94

I-297 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Long-term equity investments (continued)

For the six months ended 30 June 2013 (continued)

Investment cost	Opening balance	Increase/ decrease for the period	Closing Percentage of Percentage of balance shareholding voting right (%) (%)	Provision for impairment	Cash dividends for the period
Cost method: Tianjia (Tianjin) Building Materials Company Limited (天嘉天津建材有限公司) 1,000,000.00 Chengguan Rural Credit Cooperatives, Fangshan District, Beijing (北京市房山區城關農村信用合作社) 101,000.00 Zhongyou Jinyu (Beijing) Oil Sales Co., Ltd. (中油金隅（北京）石油銷售有限公司) 3,000,000.00 Beijing Beizhuan Gas Station (北京市北磚加油站) 648,297.22 Beijing Xinjianxinyuan Farmer’s Market Co., Ltd. (北京市鑫建欣苑) 農貿市場有限公司) 380,000.00 Beijing Xinchen Ceramic Fiber Products Corp. (北京新辰陶瓷纖維製品公司) 193,219.03 Beijing Tianyun Industrial Co., Ltd. (北京天雲實業) 75,000.00 * Chengde BBMG Cement Co., Ltd. (承德金隅水泥有限責任公司) 6,328,450.01 Beijing Yadu Science and Technology Co., Ltd. (北京亞都科技股份有限公司) 200,000.00 Hainan Dihao Furniture Co., Ltd. (海南帝豪傢俱公司) 2,645,418.54 Beijing Tsinghua Unisplendor Founder High-Tech Ceramics Co. Ltd. (北京清華紫光方大高技術陶瓷有限公司) 3,267,700.00 Beijing Capital Engineering Co., Ltd. (北京首都工程有限公司) 100,000.00 Total under cost method 17,939,084.80 541,669,595.81	1,000,000.00 101,000.00 3,000,000.00 648,297.22 380,000.00 193,219.03 75,000.00 6,328,450.01 200,000.00 2,645,418.54 3,267,700.00 100,000.00 17,939,084.80 431,350,923.80	– – – – – – – (6,328,450.01 ) – – – – (6,328,450.01 ) (32,898,043.06 )	1,000,000.00 10.00 10.00 101,000.00 – – 3,000,000.00 10.00 10.00 648,297.22 62.50 – 380,000.00 95.00 – 193,219.03 5.56 5.56 75,000.00 – – – 95.85 95.85 200,000.00 0.20 0.20 2,645,418.54 55.00 – 3,267,700.00 27.14 27.14 100,000.00 0.34 0.34 11,610,634.79 398,452,880.74	– – – – – – – – – 2,645,418.54 3,267,700.00 100,000.00 6,013,118.54 11,482,553.21	– – – – – – – – – – – – – 2,776,826.94

The long-term equity investments of the Group as at 30 June 2013 and 31 December 2012 were unlisted investments.

The reasons for holding more than 50% of the interests in the above companies but without having control are set out in Note IV.2.
** During the period, the Group gained control of Chengde BBMG Cement Co., Ltd. through capital injection and has included that entity into the scope of consolidation.
I-298 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Investment properties

For the six months ended 30 June 2013

==> picture [388 x 185] intentionally omitted <==

----- Start of picture text -----

Increase in the period Decrease in the period
Transferred from
self-occupied Gains from Transferred to
Opening properties or changes in self-occupied Closing
balance Addition inventories fair value Disposed properties balance
(Note)
Cost
Buildings 6,334,868,826.24 70,000.00 5,342,485.87 – – – 6,340,281,312.11
Changes in fair value
Buildings 6,505,531,173.76 – 3,794,773.35 320,192,740.78 – – 6,829,518,687.89
Carrying amount
Buildings 12,840,400,000.00 70,000.00 9,137,259.22 320,192,740.78 – – 13,169,800,000.00
----- End of picture text -----

In light of the new leasing contracts and leasing areas, certain properties were transferred from inventories to investment properties during the period. The difference between the appraised value at the time of transfer and the carrying amount was recognised as capital reserves. Please refer to Note V.55.

All the above investment properties are located in the PRC, and held under mid-term leases.

The Group’s investment properties were valued by Savills Valuation and Professional Services Limited, an independent valuer with professional qualification, on an open market existing use basis, the appraised value of which as at 30 June 2013 was RMB13,169,800,000.00 (31 December 2012: RMB12,840,400,000.00).

As at 30 June 2013, procedures for the title certificates for the investment properties with carrying amount of approximately RMB305,600,000.00 were yet to be duly completed. These investment properties were acquired through the business combination under common control in 2011, and the Group is in the process of handling the procedures for changing the relevant titles. The management of the Company is of the view that the Group has the right to occupy and use the above properties legally and validly.

As at 30 June 2013, the investment properties with carrying amount of RMB846,900,000.00 were pledged as securities for the entrusted loans of BBMG Group, the parent company (31 December 2012: RMB821,900,000.00) (Note V.21 and Note VI.5(4)) and the investment properties with carrying amount of RMB539,900,000.00 (31 December 2012: RMB537,100,000.00) were pledged as securities for the bank loans of the Group (Note V.21).

I-299 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Fixed assets

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Cost Buildings 10,365,385,759.55 Machinery equipment 9,838,696,001.06 Transporting equipment 919,252,096.85 Electronic equipment 226,583,175.83 Office equipment 225,871,588.36 21,575,788,621.65 Accumulated depreciation Buildings 2,087,587,692.71 Machinery equipment 3,318,511,940.79 Transporting equipment 398,932,915.50 Electronic equipment 153,825,228.81 Office equipment 142,291,715.96 6,101,149,493.77 Net book value Buildings 8,277,798,066.84 Machinery equipment 6,520,184,060.27 Transporting equipment 520,319,181.35 Electronic equipment 72,757,947.02 Office equipment 83,579,872.40 15,474,639,127.88 Provision for impairment Buildings 40,914,492.85 Machinery equipment 93,343,134.36 Transporting equipment 6,849,306.02 Electronic equipment 923,695.86 Office equipment 1,457,867.99 143,488,497.08 Carrying amount Buildings 8,236,883,573.99 Machinery equipment 6,426,840,925.91 Transporting equipment 513,469,875.33 Electronic equipment 71,834,251.16 Office equipment 82,122,004.41 15,331,150,630.80		353,326,667.13 487,801,813.06 37,908,633.49 9,298,908.05 5,951,302.41 894,287,324.14 180,386,604.12 284,906,211.62 45,563,944.43 17,920,040.71 1,919,685.19 530,696,486.07 – – – – – –	315,170,422.22 95,053,245.38 13,049,864.79 2,064,359.28 6,119,332.85 431,457,224.52 32,235,373.96 61,315,607.06 9,263,676.89 1,980,251.32 5,436,273.76 110,231,182.99 40,353,540.08 6,191,784.35 147,684.39 – 876,840.31 47,569,849.13	10,403,542,004.46 10,231,444,568.74 944,110,865.55 233,817,724.60 225,703,557.92 22,038,618,721.27 2,235,738,922.87 3,542,102,545.35 435,233,183.04 169,765,018.20 138,775,127.39 6,521,614,796.85 8,167,803,081.59 6,689,342,023.39 508,877,682.51 64,052,706.40 86,928,430.53 15,517,003,924.42 560,952.77 87,151,350.01 6,701,621.63 923,695.86 581,027.68 95,918,647.95 8,167,242,128.82 6,602,190,673.38 502,176,060.88 63,129,010.54 86,347,402.85 15,421,085,276.47

I-300 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Fixed assets (continued)

The amount of depreciation provided for the six months ended 30 June 2013 was RMB530,696,486.07 (for the six months ended 30 June 2012: RMB509,581,292.30). The amount transferred to cost of fixed assets from construction in progress for the period was RMB635,780,516.18 (for the six months ended 30 June 2013: RMB472,009,297.66).

As at 30 June 2013, the buildings with carrying amount of RMB8,141,747.38 were pledged as securities for bank loans of the Group (31 December 2012: RMB8,527,994.62) (Note V.21).

As at 30 June 2013, the Group had no temporarily idle fixed assets, and no fixed assets acquired under finance leases (31 December 2012: nil).

The fixed assets leased out under operating leases are as follows:

	30 June 2013 Carrying amount	31 December 2012 Carrying amount
Buildings Machinery equipment Total	717,428,494.94 418,359,504.85 1,135,787,999.79	725,464,921.56 437,166,233.76 1,162,631,155.32

As at 30 June 2013, there was no incomplete procedure for the title certificates of fixed assets (31 December 2012: nil).

As at 30 June 2013, there was no fixed asset held for sale.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Construction in progress

Construction in	progress
		30 June 2013			31 December 2012
		Provision for			Provision for
	Book balance	impairment	Book value	Book balance	impairment	Book value
Beijing Liulihe Cement
– Project concerning
comprehensive utilisation
of fly ash	–	–	–	51,930,432.60	–	51,930,432.60
– Southern desulfuration
gypsum repository project	12,387,367.22	–	12,387,367.22	12,387,367.22	–	12,387,367.22
Luquan BBMG Dingxin
– Stripping of 1st/2nd
sub orebody	54,189,116.38	–	54,189,116.38	34,716,831.62	–	34,716,831.62
– Upgrading on raw mill
into roll mill	20,203,820.93	–	20,203,820.93	–	–	–
Cangzhou Lingang BBMG Cement
– Mixing Plant	3,421,036.82	–	3,421,036.82	13,929,104.07	–	13,929,104.07
– Storage tank of fly ash	585,480.92	–	585,480.92	12,955,854.09	–	12,955,854.09
Baoding Taihang Heyi
– Limestone project	141,494,032.50	–	141,494,032.50	119,179,342.02	–	119,179,342.02
Handan BBMG Taihang
– Cement grinding	27,053,144.93	–	27,053,144.93	25,635,084.70	–	25,635,084.70
– Technological improvement
in energy–saving and
consumption reduction
of cement mill	14,104,716.00	–	14,104,716.00	–	–	–
– Upgrading on 5＃kiln
feed homogenising silo	11,673,000.00	–	11,673,000.00	–	–	–
Zanhuang BBMG
– The third phase project	82,211,762.33	–	82,211,762.33	770,337.70	–	770,337.70
Zhangjiakou BBMG
– Works for cement grinding
station with capacity
of 1 million tonnes	76,195,368.12	–	76,195,368.12	68,097,901.80	–	68,097,901.80
Bio-Island
– Equipment for soil restoration	12,917,901.00	–	12,917,901.00	8,917,901.00	–	8,917,901.00
Bio-Island
– Pretreatment project	12,187,806.49	–	12,187,806.49	8,140,773.83	–	8,140,773.83
Tianjin Zhenxing
– Energy-saving technological
improvement of line
one of cement mill	38,246,556.57	–	38,246,556.57	38,246,556.57	–	38,246,556.57
– Upgrading on general
step-down station	15,100,653.98	–	15,100,653.98	–	–	–
Qinyang BBMG
– Clinker production line	44,844,162.40	–	44,844,162.40	11,297,540.06	–	11,297,540.06
BBMG Mineral Industry
– Integration of non-coal
mines in Fangshan District	63,805,468.37	–	63,805,468.37	42,377,141.36	–	42,377,141.36
Beijing Cement Plant
– Demonstration project
for brickmaking by
stone crusher	26,122,332.35	–	26,122,332.35	20,217,391.06	–	20,217,391.06
– 3# upgrading cement grinding
to combined grinding	32,348,836.32	–	32,348,836.32	–	–	–

I-302 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Construction in progress (continued)

Construction in	progress(c	ontinued)
	Book balance	30 June 2013 Provision for impairment	Book value	Book balance	31 December 2012 Provision for impairment	Book value
Zuoquan BBMG – Clinker cement production line with capacity of 2500 tonnes per day Xuanhua BBMG – 2500 tonnes cement production line by utilisation of carbide slag Beijing Xingfa – Energy-saving improvement of cement grinding system Chengde BBMG – 4000 tonnes clinker cement production line Guangling Jinyu – Clinker cement production line Doudian – Fire protection detection project Doudian – Capacity expansion of power station Jinyu Energy-Saving – Mineral wool project Beijing BBMG Coating – Dachang base project BBMG (Dachang) New Building Materials – Mineral wool project, Alavus project Beijing Alavus – Alavus project BBMG Fengshan Hot Spring Resort – Hotel decoration project BBMG – Huanmao decoration project BBMG – Decoration improvements project in Xiaohuangzhuang Others	522,558,019.61 474,238,941.96 15,161,219.73 248,352,782.00 – 11,100,228.65 10,069,894.04 128,475,277.80 11,592,555.44 52,513,083.13 – 14,339,745.85 – – 359,609,261.34 2,537,103,573.18	– – – – – – – – – – – – – – 8,717,380.85 8,717,380.85	522,558,019.61 474,238,941.96 15,161,219.73 248,352,782.00 – 11,100,228.65 10,069,894.04 128,475,277.80 11,592,555.44 52,513,083.13 – 14,339,745.85 – – 350,891,880.49 2,528,386,192.33	464,119,740.91 424,949,649.94 9,448,277.56 – 107,867,495.19 8,594.32 – 100,906,598.64 27,357,384.93 42,247,587.93 23,089,647.23 7,028,601.70 104,753,257.68 47,664,623.90 326,970,969.65 2,155,211,989.28	– – – – – – – – – – – – – – 8,717,380.85 8,717,380.85	464,119,740.91 424,949,649.94 9,448,277.56 – 107,867,495.19 8,594.32 – 100,906,598.64 27,357,384.93 42,247,587.93 23,089,647.23 7,028,601.70 104,753,257.68 47,664,623.90 318,253,588.80 2,146,494,608.43

As at 30 June 2013, none of the construction in progress of the Group had restrictions in its ownership (31 December 2012: nil).

I-303 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Construction in progress (continued)

				Transferred to			Percentage
		Opening	Increase in	fixed assets		Source of	of project
Projects	Budget	balance	the period	in the period	Closing balance	of funding	in budget
	RMB thousand						%
Beijing Liulihe Cement
– Project concerning
comprehensive
utilisation of fly ash	61,290.00	51,930,432.60	8,394,693.15	60,325,125.75	–	self-financing	100.00
– Southern desulfuration
gypsum repository project	14,400.00	12,387,367.22	–	–	12,387,367.22	self-financing	86.02
Luquan BBMG Dingxin
– Stripping of 1st/2nd
sub orebody	100,000.00	34,716,831.62	19,472,284.76	–	54,189,116.38	self-financing	54.19
– Upgrading on raw
mill into roll mill	31,600.00	–	20,203,820.93	–	20,203,820.93	self-financing	63.94
Cangzhou Lingang BBMG Cement
– Mixing Plant	24,121.00	13,929,104.07	10,212,608.95	20,720,676.20	3,421,036.82	self-financing	99.00
– Storage tank of fly ash	19,910.00	12,955,854.09	5,627,364.56	17,997,737.73	585,480.92	self-financing	99.00
Baoding Taihang Heyi
– Limestone project	110,184.00	119,179,342.02	22,314,690.48	–	141,494,032.50	borrowing	100.00
Handan BBMG Taihang
– Cement grinding	57,915.00	25,635,084.70	1,418,060.23	–	27,053,144.93	self-financing	46.71
– Technological improvement
in energy–saving and
consumption
reduction of cement mill	57,915.00	–	14,104,716.00	–	14,104,716.00	self-financing	24.35
– Upgrading on 5＃kiln feed
homogenizing silo	11,850.00	–	11,673,000.00	–	11,673,000.00	self-financing	98.51
Zanhuang BBMG
– The third phase project	86,510.00	770,337.70	81,441,424.63	–	82,211,762.33	borrowing	95.03
Zhangjiakou BBMG Cement
– Works for cement
grinding station with
capacity of 1 million tonnes	85,759.00	68,097,901.80	8,097,466.32	–	76,195,368.12	self-financing	88.85
Bio-Island
– Equipment for
soil restoration	12,918.00	8,917,901.00	4,000,000.00	–	12,917,901.00	self-financing	99.00
Bio-Island
– Pretreatment project	25,460.00	8,140,773.83	4,047,032.66	–	12,187,806.49	self-financing	47.87
Tianjin Zhenxing
– Energy-saving technological
improvement of line
one of cement mill	40,730.00	38,246,556.57	–	–	38,246,556.57	self-financing	93.90
– Upgrading on general
step-down station	13,800.00	–	15,100,653.98	–	15,100,653.98	self-financing	100.00

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APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Construction in progress (continued)

				Transferred to			Percentage
		Opening	Increase in	fixed assets		Source of	of project
Projects	Budget	balance	the period	in the period	Closing balance	of funding	in budget
	RMB thousand						%
Qinyang BBMG
– Clinker production line	44,580.00	11,297,540.06	33,546,622.34	–	44,844,162.40	self-financing	100.00
BBMG Mineral Industry
– Integration of non-coal
mines in Fangshan District	157,920.00	42,377,141.36	21,428,327.01	–	63,805,468.37	borrowing	40.40
Beijing Cement Plant
– Demonstration project
for brickmaking
by stone crusher	25,000.00	20,217,391.06	7,034,941.29	1,130,000.00	26,122,332.35	self-financing	100.00
– 3# upgrading cement
grinding to
combined grinding	25,000.00	–	32,348,836.32	–	32,348,836.32	self-financing	100.00
Zuoquan BBMG Cement
– Clinker cement production line
with capacity of 2500
tonnes per day	545,420.00	464,119,740.91	58,438,278.70	–	522,558,019.61	borrowing	95.81
Xuanhua BBMG Cement
– 2500 tonnes cement
production line
by utilisation of carbide slag	434,000.00	424,949,649.94	49,289,292.02	–	474,238,941.96	borrowing	100.00
Beijing Xingfa Cement
– Energy-saving improvement
of cement grinding system	17,600.00	9,448,277.56	5,712,942.17	–	15,161,219.73	self-financing	86.14
Chengde BBMG Cement
– 4000T clinker cement
production line	833,941.00	–	248,352,782.00	–	248,352,782.00	self-financing	29.78
Guangling Jinyu Cement
– Clinker cement
production line	385,840.00	107,867,495.19	196,534,533.67	304,402,028.86	–	borrowing	100.00
Doudian
– Fire protection
detection project	36,000.00	8,594.32	11,091,634.33	–	11,100,228.65	borrowing	30.83
Doudian
– Capacity expansion
of power station	15,000.00	–	10,069,894.04	–	10,069,894.04	borrowing	67.13
Jinyu Energy-Saving
– Mineral wool project	193,300.00	100,906,598.64	27,568,679.16	–	128,475,277.80	self-financing	66.46
Beijing BBMG Coating
– Dachang base project	36,080.00	27,357,384.93	308,904.09	16,073,733.58	11,592,555.44	self-financing	32.13

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APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Construction in progress (continued)

Projects Budget RMB thousand	Opening balance	Increase in the period	Transferred to fixed assets in the period	Percentage Source of of project Closing balance of funding in budget %
BBMG (Dachang) New Building Materials – Mineral wool project, Alavus project 100,500.00 Beijing Alavus – Alavus project 315,000.00 BBMG Fengshan Hot Spring Resort – Hotel decoration project 90,000.00 BBMG – Huanmao decoration project 130,000.00 BBMG – Decoration improvements project in Xiaohuangzhuang 50,000.00 Others	42,247,587.93 23,089,647.23 7,028,601.70 104,753,257.68 47,664,623.90 326,970,969.65 2,155,211,989.28	10,265,495.20 – 7,311,144.15 1,973,284.38 11,035,376.10 59,253,316.46 1,017,672,100.08	– 23,089,647.23 – 106,726,542.06 58,700,000.00 26,615,024.77 635,780,516.18	52,513,083.13 self-financing 52.25 – self-financing 100.00 14,339,745.85 self-financing 15.93 – self-financing 100.00 – self-financing 100.00 359,609,261.34 2,537,103,573.18

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APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Construction in progress (continued)

The analysis of the amount and rate of interest capitalisation of borrowing costs included in balances for construction in progress is set out below:

For the six months ended 30 June 2013

Progress of works (%)	Accumulated amount of interest capitalised	Of which: Interest Rate of capitalised interest for the period for the period (%)
Baoding Taihang Heyi – Limestone project 99.00 Zanhuang BBMG – The third phase project 51.21 BBMG Mineral Industry – Integration of non-coal mines in Fangshan District 98.51 Zuoquan BBMG – Clinker cement production line with capacity of 2500 tonnes per day 99.00 Xuanhua BBMG – 2500 tonnes cement production line by utilisation of carbide slag 95.81 Guangling Jinyu – Clinker cement production line 100.00 Guangling Jinyu – Cogeneration 100.00 Doudian – Fire protection detection project 80.00 Doudian – Capacity expansion of power station 80.00 Total	4,183,186.66 642,927.10 28,697,387.74 9,642,908.01 37,622,182.73 8,333.34 300,149.04 69,894.04 44,605.96 81,211,574.62	1,154,676.66 6.00 642,927.10 6.00 10,283,989.78 6.00 9,642,908.01 6.00 12,425,472.24 6.00 8,333.34 6.00 300,149.04 6.00 69,894.04 6.00 44,605.96 6.00 34,572,956.17

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Construction in progress (continued)

Provision for impairment of construction in progress for the six months ended 30 June 2013:

Opening balance	Increase in the period	Decrease in the period	Closing Reason for balance making provisions
BBMG Dingxin Cement 1,299,924.00 Co., Ltd. – A sub project Handan BBMG Taihang 6,009,693.38 Cement Co., Ltd. – Technological upgrading projects of the old lines Beijing BBMG Cement 751,763.47 Trading Co., Ltd. (北京金隅水泥經貿有限公司) – New countryside bulk cement logistics distribution BBMG Dingxin Cement 656,000.00 Co., Ltd. – Assets in Zhuozhou 8,717,380.85	– – – – –	– – – – –	1,299,924.00 Recoverable amount after testing is lower than the carrying amount 6,009,693.38 Shut down for years due to problems in technological upgrading 751,763.47 It is expected it can not turn into assets due to suspension of construction in progress 656,000.00 Recoverable amount after testing is lower than the carrying amount 8,717,380.85

15 Construction materials

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Special-purpose materials Special-purpose equipment Equipment and instruments Provision for impairment	18,626,931.02 5,009,744.07 3,351,028.42 (12,705,917.71 ) 14,281,785.80	40,624,297.75 4,040,253.25 – – 44,664,551.00	40,612,212.53 379,411.98 3,339,380.34 – 44,331,004.85	18,639,016.24 8,670,585.34 11,648.08 (12,705,917.71 ) 14,615,331.95

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Intangible assets

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Cost Land use rights Computer software licences Mining rights Trademark rights Others Accumulated amortisation Land use rights Computer software licences Mining rights Trademark rights Others Net book value Land use rights Computer software licences Mining rights Trademark rights Others Provision for impairment Land use rights Computer software licences Mining rights Trademark rights Others Carrying amount Land use rights Computer software licences Mining rights Trademark rights Others	3,163,974,686.65 30,682,423.29 878,342,159.80 16,670,000.00 100,340,166.86 4,190,009,436.60 405,206,991.21 14,575,686.45 75,194,450.23 – 40,656,428.73 535,633,556.62 2,758,767,695.44 16,106,736.84 803,147,709.57 16,670,000.00 59,683,738.13 3,654,375,879.98 6,340,399.11 – 40,043,841.71 5,000,000.00 2,310,000.00 53,694,240.82 2,752,427,296.33 16,106,736.84 763,103,867.86 11,670,000.00 57,373,738.13 3,600,681,639.16	65,114,233.04 195,178.47 62,477,076.00 – – 127,786,487.51 34,949,623.43 1,921,966.20 8,098,183.83 – 954,180.60 45,923,954.06 – – – – – –	19,371,952.38 – – – 754,325.58 20,126,277.96 1,920,421.29 – – – 542,661.60 2,463,082.89 6,340,399.11 – – – – 6,340,399.11	3,209,716,967.31 30,877,601.76 940,819,235.80 16,670,000.00 99,585,841.28 4,297,669,646.15 438,236,193.35 16,497,652.65 83,292,634.06 – 41,067,947.73 579,094,427.79 2,771,480,773.96 14,379,949.11 857,526,601.74 16,670,000.00 58,517,893.55 3,718,575,218.36 – – 40,043,841.71 5,000,000.00 2,310,000.00 47,353,841.71 2,771,480,773.96 14,379,949.11 817,482,760.03 11,670,000.00 56,207,893.55 3,671,221,376.65

I-309 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Intangible assets (continued)

All land use rights owned by the Group are within the PRC and are analysed as follows according to their remaining lives:

	30 June 2013	31 December 2012
Less than 50 years Longer than 50 years (inclusive) Total	2,762,728,899.78 8,751,874.18 2,771,480,773.96	2,743,675,422.15 8,751,874.18 2,752,427,296.33

For the six months ended 30 June 2013, the amortisation amount of intangible assets was RMB45,923,954.06 (For the six months ended 30 June 2012: RMB38,557,168.11).

As at 30 June 2013, the useful life of trademark rights with an original carrying amount of RMB16,670,000.00 was indefinite (31 December 2012: RMB16,670,000.00). The Group can apply for extension at the end of the expiration of protection periods of trademark rights with lower handling fees, and according to comprehensive judgment of product life cycle, market conditions and other factors, these trademark rights will bring economic benefits to the Group during indefinite periods.

As at 30 June 2013, the Group had no intangible assets the ownership of which was subject to restrictions (31 December 2012: nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Goodwill

Goodwill
Asset group	30 June 2013	31 December 2012
Luquan BBMG Dingxin Cement Co., Ltd. Gongyi Tongda Zhongyuan Refractory Testing Centre Co., Ltd. Handan BBMG Taihang Cement Co., Ltd. Beijing Taihang Qianjing Cement Co., Ltd. Baoding Taihang Heyi Cement Co., Ltd. Handan Taihang Cement Co., Ltd. Beijing Qianglian Cement Co., Ltd. Tianjin Zhenxing Cement Co., Ltd. Handan Shexian BBMG Cement Co., Ltd.	189,815,999.91 3,967,009.95 26,884,752.28 9,482,871.64 11,428,946.82 522,323.32 2,742,710.29 10,931,009.96 56,276,121.38 312,051,745.55	189,815,999.91 3,967,009.95 26,884,752.28 9,482,871.64 11,428,946.82 522,323.32 2,742,710.29 10,931,009.96 56,276,121.38 312,051,745.55

Measurement basis and major assumptions in determining the recoverable amount of the above assets groups are as follows:

The recoverable amounts of the above assets groups are recognised according to their current value of estimated future cash flows, which are based on the five-year financial budget approved by the management at a discount rate of 13%-15% (2012: 13%-15%). The estimated cash flows of these assets groups in five years are measured at a fixed growth rate of 1% per annum (2012: 1%). Other key assumptions adopted during the evaluation include the estimated cash inflows and outflows relevant to the estimated income and estimated gross profit, and the above assumptions are based on the previous performance of these assets groups and the management’s expectations for the market development.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Long-term deferred expenditures

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Amortisation for the period	Closing balance
Decoration Leasehold improvement for fixed assets rented Land lease prepayments Cost of stripping mines Others Less: amount amortised within one year and categorised as current assets	80,557,988.03 9,619,087.59 14,249,192.39 45,898,433.37 64,705,560.80 215,030,262.18 25,801,700.06 189,228,562.12	13,013,693.03 164,711.65 2,015,000.00 – 6,481,099.81 21,674,504.49	11,655,088.40 2,005,118.18 851,681.93 1,500,431.11 6,889,077.94 22,901,397.56	81,916,592.66 7,778,681.06 15,412,510.46 44,398,002.26 64,297,582.67 213,803,369.11 34,009,143.22 179,794,225.89

19. Deferred income tax assets/liabilities

Deferred tax assets and deferred tax liabilities are as follows:

Recognised deferred tax assets and liabilities:

	30 June 2013	31 December 2012
Deferred income tax assets Provision for LAT Deductible tax losses Provisions for impairment of assets Accrual of property development cost Unrealised profits and losses of internal transactions Others Deferred income tax liabilities Revaluation of investment properties Differences arising from deductible depreciation expenses Fair value adjustment arising from business combination Others	375,737,684.10 67,038,143.83 91,655,689.09 179,847,353.58 439,948,399.93 23,620,205.95 1,177,847,476.48 1,472,860,136.01 311,861,466.72 241,898,835.91 176,949,260.70 2,203,569,699.34	341,382,820.54 44,001,525.14 98,891,379.22 215,015,749.31 482,470,310.49 24,005,557.79 1,205,767,342.49 1,392,353,493.43 313,733,206.95 242,290,809.00 41,615,707.64 1,989,993,217.02

I-312 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19. Deferred tax assets/liabilities (continued)

Temporary differences corresponding to assets and liabilities that lead to such differences are as follows:

Amount of temporary differences

	30 June 2013	31 December 2012
Deductible differences: Provision for LAT Deductible tax losses Provision for impairment of assets Accrual of property development cost Unrealised profits and losses of internal transactions Others Taxable differences: Revaluation of investment properties Differences arising from deductible depreciation expenses Fair value adjustment arising from business combination Others Unreconised income deferred tax assets are as follows:	1,502,950,736.40 268,152,575.32 366,622,756.36 719,389,414.32 1,759,793,599.72 94,480,823.80 4,711,389,905.92 5,893,401,487.85 1,247,445,866.88 967,595,343.64 705,836,098.99 8,814,278,797.36	1,365,531,282.16 176,006,100.56 395,565,516.88 860,062,997.24 1,929,881,241.96 96,022,231.16 4,823,069,369.96 5,569,413,973.72 1,254,932,827.80 969,163,236.00 166,462,830.56 7,959,972,868.08

Unrecognised income deferred tax assets are as follows:

	30 June 2013	31 December 2012
Deductible tax losses Deductible temporary differences	612,289,764.87 222,526,278.76 834,816,043.63	393,259,968.04 250,808,757.91 644,068,725.95

I-313 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19. Deferred tax assets/liabilities (continued)

The deductible tax losses that are not recognised as deferred income tax assets will expire in the following years:

	30 June 2013	31 December 2012
2013 2014 2015 2016 2017 2018	13,627,201.55 33,833,624.49 43,515,892.45 123,304,990.50 178,978,259.05 219,029,796.83 612,289,764.87	13,627,201.55 33,833,624.49 43,515,892.45 123,304,990.50 178,978,259.05 – 393,259,968.04

20. Provisions for assets impairment

For the six months ended 30 June 2013

	Opening balance	Provision for the period	Disposal of Subsidiaries	Reversal for the period	Write-off for the period	Closing balance
Provision of bad debts: Of which: Accounts receivable Other receivables Provision for decline in value of inventories Provision for impairment of long-term equity investments Provision for impairment of fixed assets Provision for impairment of construction materials Provision for impairment of construction in progress Provision for impairment of intangible assets	402,340,924.83 291,243,701.70 111,097,223.13 25,785,239.10 11,482,553.21 143,488,497.08 12,705,917.71 8,717,380.85 53,694,240.82 658,214,753.60	12,084,288.88 10,748,563.20 1,335,725.68 – – – – – – 12,084,288.88	419,280.55 – 419,280.55 – – 7,315,610.12 – – 6,340,399.11 14,075,289.78	24,477,461.36 23,767,316.81 710,144.55 – – – – – – 24,477,461.36	1,245,714.08 1,245,714.08 – 1,097,303.14 – 40,254,239.01 – – – 42,597,256.23	388,282,757.72 276,979,234.01 111,303,523.71 24,687,935.96 11,482,553.21 95,918,647.95 12,705,917.71 8,717,380.85 47,353,841.71 589,149,035.11

I-314 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Assets with title restrictions

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance Note
Pledged assets: Bills Receivable Accounts Receivable Inventories Fixed assets Investment properties Assets whose titles are restricted for other reasons – Cash and bank balances Guarantee deposit for L/C Quality/performance deposits Guarantee deposits for acceptance bills Restricted fund of property pre-sale funds Other restricted cash	– 30,808,880.00 4,994,957,123.22 8,527,994.62 1,359,000,000.00 39,206,299.85 51,951,332.14 156,133,605.34 2,052,501,646.63 48,598,552.29 8,741,685,434.09	14,750,000.00 – – – 27,800,000.00 – – – 1,081,123,019.16 54,942,825.60 1,178,615,844.76	– 30,808,880.00 1,166,703,337.54 386,247.24 – 39,176,299.85 4,229,890.59 40,521,499.95 – – 1,281,826,155.17	14,750,000.00 – 3,828,253,785.68 (1) 8,141,747.38 (1) 1,386,800,000.00 (1) 30,000.00 47,721,441.55 115,612,105.39 3,133,624,665.79 (2) 103,541,377.89 8,638,475,123.68

Note:

(1) As at 30 June 2013, inventories with a carrying amount of RMB3,828,253,785.68, fixed assets with a carrying amount of RMB8,141,747.38 and investment properties with a carrying amount of RMB1,386,800,000.00 were pledged as securities for the bank borrowings of RMB2,880,455,904.61 of the Group and debts of RMB800,000,000.00 of BBMG Group, the parent company (Note V.8, 12 and 13).
(2) In accordance with relevant rules, property developers shall place all the funds for pre-sales of commodity houses in specially designated bank accounts for supervision of funds for pre-sales of properties. The funds can only be used for construction projects. Written application shall be made to the supervisory bank before the use of the funds.
(3) As at 30 June 2013, the carrying amount of restricted cash and bank balances of the Group was RMB3,400,529,590.62 (Note V.1).
I-315 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

22. Short-term loans

Short-term loans
	30 June 2013	31 December 2012
Pledged loans Mortgaged loans Guaranteed loans (Note 1) Credit loans	– – 590,000,000.00 10,660,500,000.00 11,250,500,000.00	30,808,880.00 250,000,000.00 799,978,000.00 10,307,500,000.00 11,388,286,880.00

Note 1: As at 30 June 2013, balances of RMB90,000,000.00 in the guaranteed loans were guaranteed by BBMG Group, while the remaining was guaranteed by the Company and its subsidiaries.

As at 30 June 2013, the above loans bore an interest rate of 5% – 7.22% per annum.

As at 30 June 2013, the Group had no outstanding short-term loans that were due.

As at 30 June 2013, The Group’s short-term credit loans with balances of RMB3,520,000,000.00 were entrusted loans from BBMG Group.

23. Bills payable

Bills payable
	30 June 2013	31 December 2012
Bank acceptance bills	331,763,985.87	430,004,020.52

As at 30 June 2013, balances due in the next accounting period were RMB331,763,985.87.

I-316 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

24. Accounts payable

Accounts payable are non-interest bearing and shall generally be paid within 90 days.

An aging analysis of accounts payable is as follows:

	30 June 2013	31 December 2012
Within 1 year 1-2 years 2-3 years Over 3 years	5,850,787,277.66 741,877,674.28 313,812,716.47 108,947,828.59 7,015,425,497.00	4,868,812,557.66 1,317,545,708.47 228,144,901.50 154,698,740.14 6,569,201,907.77

As at 30 June 2013, there were no accounts payable to shareholders holding 5% or more of the Company’s voting rights (31 December 2012: RMB82,582,881.98) (Note VI.7).

Please refer to note VI “Relationships and Transactions with Related Parties” for accounts payable to related parties as at 30 June 2013.

As at 30 June 2013, the Group’s significant accounts payable aging over 1 year were as follows:

				Percentage of
		Relationship		total accounts	Reasons for
		with the Group	Amount	payable	non-payment
				(%)
Supplier	1	Third party	142,424,163.57	2.03	Undue
Supplier	2	Third party	28,921,125.00	0.41	Undue
Supplier	3	Third party	25,831,182.78	0.37	Undue
Supplier	4	Third party	17,224,776.55	0.25	Undue
Supplier	5	Third party	11,581,116.64	0.17	Undue

The above significant accounts payable aging more than one year were outstanding as at the balance sheet date.

I-317 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

25. Receipts in advance

An aging analysis on advances from customers is as follows:

	30 June 2013	31 December 2012
Within 1 year 1 to 2 years 2 to 3 years Over 3 years	14,261,611,610.42 962,113,286.89 9,508,617.73 11,762,829.04 15,244,996,344.08	12,996,525,315.78 341,001,234.59 848,080,717.60 21,343,036.96 14,206,950,304.93

An analysis on advances from customers by nature is as follows:

	30 June 2013	31 December 2012
Advances on sale of goods Advances on pre-sale of properties Advances on construction costs Advances on rents and property fees	1,075,149,349.01 13,696,372,917.90 89,473,783.59 384,000,293.58 15,244,996,344.08	1,190,368,520.87 12,514,947,954.70 113,638,759.71 387,995,069.65 14,206,950,304.93

As at 30 June 2013, there were no receipts in advance from shareholders holding 5% or more of the Company’s voting rights (31 December 2012: nil).

Please refer to Note VI “Relationships and Transactions with Related Parties” for receipts in advance from related parties as at 30 June 2013.

As at 30 June 2013, significant receipts in advance aging over 1 year were as follows:

		Relationship	Reasons for being
		with the Group	Amount outstanding
Supplier	1	Third Party	864,231,830.63 Properties have not
			been delivered

For the above significant receipts in advance aging over 1 year, amounts of RMB189,334,774.18 were settled subsequent to balance sheet date.

I-318 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

25. Receipts in advance (continued)

Details of advances on pre-sale of properties are as follows:

Expected settlement Proportion of Project date of the first batch the pre-sales	30 June 2013	31 December 2012
Beijing – Chaoyang New City December 2013 95% Beijing – Jinyu Town-House December 2013 94% Beijing – Tuqiao Huashijiang November 2015 72% Beijing – Tuqiao Tongheyuan December 2013 99% Beijing – Kanghuiyuan December 2013 85% Beijing – Guanlan Times June 2013 88% Beijing – Yanshan Affordable Housing June 2014 93% Beijing – Yueheyuan September 2013 100% Beijing – Jinheyuan December 2013 100% Beijing – Taiheyuan December 2013 91% Beijing – Ziyouzhu December 2013 69% Beijing – Binheyuan March 2014 98% Beijing – Ruiheyuan September 2014 90% Beijing – Meiheyuan December 2013 99% Hangzhou – Guanlan Times September 2015 56% Beijing – Chang’an New City July 2013 99% Beijing – Dacheng Times Center December 2013 99% Beijing – Linglong Tiandi December 2013 100% Beijing – Dachengjun December 2013 96% Beijing – Xigongguan October 2013 92% Beijing – Jingcheng Center December 2013 59% Tianjin – Jinyu Yuecheng June 2016 33% Inner Mongolia-Jinyu Times City June 2014 96% Tangshan – Jinyu Lefu April 2015 19% Beijing – Feili Huating July 2013 73% Beijing – Jinyu Vanke City December 2014 94% Haikou – Meilinghu June 2013 78% Chongqing – Shidaiduhui December 2013 17% Chongqing – Nanshanjun September 2013 2% Beijing – I Cube December 2013 66% Beijing – Guogongzhuang plot December 2014 24% Chengdu – Shuangliu plot August 2014 17% Hangzhou– Banshantianyuan plot May 2015 11% Others	20,228,580.50 3,820,000.00 58,655,179.36 7,647,901.00 9,377,292.92 38,947,039.71 1,726,789,755.49 1,812,543,423.90 2,421,945.96 1,530,560,923.00 407,477,331.14 1,375,402,391.40 468,571,428.57 16,546,662.00 193,361,865.00 66,288,520.02 10,564,548.99 10,838,380.00 355,313,040.00 189,403,038.00 1,214,013,794.00 297,861,563.00 156,143,706.20 216,198,717.74 93,782,152.10 1,039,638,162.00 103,447,967.01 674,652,314.00 84,896,838.00 312,050,579.16 699,676,214.00 274,615,048.00 110,041,470.00 114,595,145.73 13,696,372,917.90	24,083,204.50 15,501,770.05 176,433,732.62 21,520,089.15 89,763,265.40 1,189,963,259.33 1,668,087,526.18 1,777,482,531.30 2,421,945.96 1,140,160,363.90 320,765,233.73 72,329,200.00 400,000,000.00 34,949,012.00 415,880,807.00 62,287,887.02 10,564,548.00 22,745,862.00 1,521,044,402.23 473,115,023.00 401,570,782.00 119,197,162.00 142,832,999.47 180,064,942.44 195,638,813.00 843,561,281.00 209,845,265.00 236,121,492.00 9,859,299.69 392,592,395.56 – – – 344,563,859.17 12,514,947,954.70

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

26. Wages payable

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Salaries, bonuses, allowances and subsidies Staff welfare Social insurance Including: Medical insurance Basic pension Annuity payment Unemployment insurance Work injury insurance Maternity insurance Housing funds Union fund and employee education fund Others	72,903,271.00 6,843,597.57 38,880,283.90 19,369,554.22 14,029,661.16 432,294.00 2,361,185.52 1,644,667.00 1,042,922.00 10,001,850.00 17,889,273.01 6,945,031.48 153,463,306.96	928,951,886.25 52,984,937.86 241,724,023.29 80,114,184.28 117,001,560.63 25,035,415.00 8,469,346.44 6,213,460.17 4,890,056.77 66,423,569.36 21,287,986.85 4,457,241.83 1,315,829,645.44	935,302,601.25 55,100,708.86 243,953,754.47 79,337,845.16 118,845,150.93 25,813,127.00 8,770,059.44 6,268,240.17 4,919,331.77 69,227,726.00 19,510,953.88 6,998,842.15 1,330,094,586.61	66,552,556.00 4,727,826.57 36,650,552.72 20,145,893.34 12,186,070.86 (345,418.00 ) 2,060,472.52 1,589,887.00 1,013,647.00 7,197,693.36 19,666,305.98 4,403,431.16 139,198,365.79

As at 30 June 2013, there were no wages payable in arrears, and all balances are expected to be paid within one year.

27. Tax payable

30 June 2013 31 December 2012

- I-320 - VAT Business tax Enterprise income tax Individual income tax City maintenance and construction tax Education surcharges Resource tax Land appreciation tax Urban and rural land use tax Real estate tax Others	(328,810,286.71 ) 125,248,296.99 837,655,254.51 7,474,603.56 12,653,386.22 9,416,921.73 12,728,919.74 176,246,009.61 4,141,141.17 3,976,878.57 29,460,460.60 890,191,585.99	(301,222,838.85 ) 115,247,418.34 1,275,368,527.26 10,923,795.01 11,526,989.92 5,705,567.32 21,362,210.66 150,690,157.39 3,676,168.80 2,459,358.34 13,159,428.06 1,308,896,782.25

I-320 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

28. Interest payable

Interest payable
	30 June 2013	31 December 2012
Interests on borrowings Interests on long-term borrowings Interests on short-term borrowings Interests of corporate bonds (Note V.35) Dividends payable	27,548,383.90 4,630,973.91 22,917,409.99 249,092,222.23 276,640,606.13 30 June 2013	30,938,044.46 6,837,983.85 24,100,060.61 124,336,666.67 155,274,711.13 31 December 2012
Sinoma BBMG Group Company Limited Other shareholders of circulating shares Dividends payable to other non-controlling shareholders	34,120,597.38 130,984,522.25 147,285,069.33 31,612,737.49 344,002,926.45	16,770,600.00 – – 26,277,469.19 43,048,069.19

29. Dividends payable

30. Other payables

An aging analysis of other payables is as follows:

	30 June 2013	31 December 2012
Within 1 year 1 to 2 years 2 to 3 years Over 3 years	1,564,913,330.56 442,250,517.06 91,515,945.00 243,893,486.60 2,342,573,279.22	1,661,709,604.32 496,793,758.73 107,126,930.08 217,494,520.47 2,483,124,813.60

I-321 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

30. Other payables (continued)

An analysis on other payables by nature is as follows:

	30 June 2013	31 December 2012
Payables to related companies (Note VI.7) Construction costs payable Payables for acquisition of equity investments Payables for relocation compensation Payables for land use right Deposits Amounts collected on behalf and temporary receipts Current portion of provision for supplementary pension subsidies and early retirement benefits Others	1,148,111.52 447,838,741.27 48,263,780.64 155,454,149.28 85,184,067.01 530,034,259.17 634,648,100.12 42,429,237.00 397,572,833.21 2,342,573,279.22	197,820,944.21 458,060,901.87 63,966,551.14 156,173,300.83 87,041,567.01 489,503,370.68 449,346,124.28 41,217,136.00 539,994,917.58 2,483,124,813.60

As at 30 June 2013, there were no balances payable to shareholders holding 5% or more of the Company’s voting rights (31 December 2012: RMB197,051,945.35) (Note: VI.7).

Please refer to note VI “Relationships and Transactions with Related Parties” for other payables to related parties as of 30 June 2013.

As at 30 June 2013, significant other payables aging more than one year are as follows:

				Percentage of
		Relationship		total other	Reasons for
		with the Group	Amount	payable	non-payment
				(%)
Entity	1*	Third party	72,265,646.00	3.08	Not yet settled
Entity	2	Third party	24,634,712.10	1.05	Not yet settled
Entity	3	Third party	12,718,870.02	0.54	Not yet settled
Entity	4	Third party	12,164,044.97	0.52	Not yet settled
Entity	5	Third party	11,042,424.45	0.47	Not yet settled

For the above significant other payables aging more than one year, amounts of RMB99,964.52 were settled subsequent to the balance sheet date.

Land premium payable to Ministry of Land and Resources.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

31. Accrued liabilities

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Estimated concrete loss Expense on recovery of mines	39,910,698.17 60,166,504.00 100,077,202.17	– 1,545,100.00 1,545,100.00	3,816,747.37 206,664.00 4,023,411.37	36,093,950.80 Note 1 61,504,940.00 Note 2 97,598,890.80

Note 1: The estimated concrete loss was recognised based on potential difference between concrete’s warehouse-out amount and future settlement amount by the Company’s subsidiaries engaged in the production of concrete.

Note 2: The estimated cost on recovery was recognised based on the expense on recovery of mines required to be incurred in subsequent years by the Group’s subsidiaries engaged in the production of cement.

32. Non-current liabilities due within one year

Non-current liabilities due within one year
	30 June 2013	31 December 2012
Long-term loans due within one year	1,661,420,000.00	2,576,020,000.00

Long-term loans due within one year are as follows:

	30 June 2013	31 December 2012
Mortgaged loans (Note 1) Guaranteed loans (Note 2) Credit loans	760,800,000.00 500,620,000.00 400,000,000.00 1,661,420,000.00	934,600,000.00 441,420,000.00 1,200,000,000.00 2,576,020,000.00

Note 1: Collaterals and their values for mortgaged loans of the Group as at 30 June 2013 are detailed in note V.21.

Note 2: As at 30 June 2013, balances of RMB289,700,000.00 in the guaranteed loans were guaranteed by BBMG Group, while the remaining was guaranteed by the Company and its subsidiaries.

As at 30 June 2013, no extension was made to long-term loans due within one year upon expiry.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

32. Non-current liabilities due within one year (continued)

As at 30 June 2013, the five highest amounts of long-term loans due within one year were as follows:

					Balance as at the
Loan unit	Commencement date	Expiry date	Currency	Interest rate	period end
				(%)
Agricultural Bank of China,	12 August 2010	11 August 2013	RMB	5.54	400,000,000.00
Xuanwu Branch
Construction Bank of China,	21 May 2012	21 May 2014	RMB	6.21	150,000,000.00
Beijing Urban
Construction Development
Professional Branch
Agricultural Bank of China,	6 April 2011	6 March 2014	RMB	6.15	130,000,000.00
Xuanwu Branch
Bank of Communication	1 August 2011	1 August 2013	RMB	6.77	106,000,000.00
Co., Ltd, Guanyuan
Branch
Industrial and Commercial	6 January 2011	20 December 2013	RMB	6.15	100,000,000.00
Bank of China, West
Railway Station Branch

As at 30 June 2013, there were no outstanding long-term loans that were due.

33. Other current liabilities

Other current liabilities
	30 June 2013	31 December 2012
Deferred income Accrued expenses Accrued development cost Accrued LAT Accrued costs for treatment of solid waste Other accrued expenses	46,265,860.79 3,682,881,776.19 2,049,022,141.07 1,539,787,172.60 27,193,708.23 66,878,754.29 3,729,147,636.98	47,347,882.81 3,101,328,497.88 1,741,522,514.98 1,329,324,617.97 16,565,669.60 13,915,695.33 3,148,676,380.69

I-324 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

33. Other current liabilities (continued)

Of which, the details of deferred income are as follows:

30 June 2013 31 December 2012

Government grants related to assets Environmental protection projects Cogeneration project Relocation compensation Others Government grants related to income Research and development funds	21,706,094.93 2,398,275.76 11,215,743.64 3,629,531.72 7,316,214.74 46,265,860.79	21,706,094.93 2,398,275.76 11,215,743.64 2,157,039.09 9,870,729.39 47,347,882.81

34. Long-term loans

Long-term loans
	30 June 2013	31 December 2012
Mortgaged loans (Note 1) Guaranteed loans (Note 2) Credit loans	2,119,655,904.61 2,087,340,000.00 1,800,000,000.00 6,006,995,904.61	1,992,711,545.34 1,764,340,000.00 1,000,000,000.00 4,757,051,545.34

Note 1: As at 30 June 2013, the details and value of collaterals corresponding to our mortgaged loans were set out in note V. 21.

Note 2: As at 30 June 2013, balances of RMB704,100,000.00 in the guaranteed loans were guaranteed by BBMG Group, while the remaining was guaranteed by the Company and its subsidiaries.

I-325 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

34. Long-term loans (continued)

Aging analysis of long-term loans:

	30 June 2013	31 December 2012
2 years or less 3 to 5 years (inclusive) More than 5 years	688,275,904.61 5,298,720,000.00 20,000,000.00 6,006,995,904.61	1,247,131,545.34 3,471,920,000.00 38,000,000.00 4,757,051,545.34

As at 30 June 2013, there were no outstanding long-term loans that were due (31 December 2012: nil).

As at 30 June 2013, the five highest long-term loans were as follows:

Loan unit
Commencement date
Expiry date
Currency
Interest rate
(%)

Balance as at the
period end

Agricultural Bank of China,
13 December 2010
13 December 2015
RMB
5.76
Xuanwu Branch
Construction Bank of China,
23 October 2012
22 April 2015
RMB
6.15
Beijing Urban
Construction Development
Professional Branch
Construction Bank of China,
16 May 2013
19 March 2016
RMB
5.84
Beijing Urban
Construction Development
Professional Branch
Bank of Communication
17 October 2012
17 October 2015
RMB
5.54
Co., Ltd, Fuwai Branch
Bank of Communication
11 December 2012
11 December 2015
RMB
5.54
Co., Ltd, Fuwai Branch

1,100,000,000.00
1,000,000,000.00
600,000,000.00
500,000,000.00
500,000,000.00
3,700,000,000.00

I-326 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

35. Bonds payable

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Non-current: Corporate bonds Medium-term notes Current: Short-term financing bonds	1,895,253,587.34 4,797,200,000.00 6,692,453,587.34 1,000,000,000.00 7,692,453,587.34	2,602,473.59 10,550,000.00 13,152,473.59 2,000,000,000.00 2,013,152,473.59	– – – – –	1,897,856,060.93 4,807,750,000.00 6,705,606,060.93 3,000,000,000.00 9,705,606,060.93

Pursuant to the approval document (Fa Gai Cai Jin [2009] No.1009) issued by National Development and Reform Commission on 27 April 2009, the Company issued the 2009 corporate bonds of BBMG Corporation (“ BBMG Bond 2009 ”) in open market, totaling RMB1,900,000,000 at a coupon of 4.32%.

As considered and approved by the 2009 annual general meeting of the Company held on 29 June 2010, the Company intended to issue medium-term notes of no more than RMB3,400,000,000 with a term of 5 years. On 8 September 2010, the registration for the issue of the medium-term notes was accepted by the National Association of Financial Market Institutional Investors pursuant to the Notice of Registration Acceptance (Zhong Shi Xie Zhu [2010] No.MTN89). According to the notice, the medium-term notes issued by the Company had a registered amount of RMB2,800,000,000 and a term of 2 years, and may be issued in tranches within the term. On 29 September 2010, the Company completed the issue of the first tranche of medium-term notes totaling RMB2,000,000,000 with a term of 5 years and a coupon of 4.38%. On 7 December 2010, the Company completed the issue of the second tranche of medium-term notes totaling RMB800,000,000 with a term of 5 years and a coupon of 5.85%.

As considered and approved by the 2011 annual general meeting of the Company held on 24 May 2012, the Company intended to issue bonds (including short-term financing bonds and medium-term notes) of no more than RMB3,000,000,000. Pursuant to the file Zhong Shi Xie Zhu [2012] No. MTN241 issued by the National Association of Financial Market Institutional Investors, the Company completed the issue of its first tranche of medium-term notes in 2012 from 18 September 2012 to 19 September 2012, totaling RMB2,000,000,000 with a term of 5 years and a coupon of 5.58%. Pursuant to the file Zhong Shi Xie Zhu No. [2012] No. CP243 issued by the National Association of Financial Market Institutional Investors, the Company completed the issue of its first tranche of short-term financing bonds in 2012 on 18 September 2012, totaling RMB1,000,000,000 with a term of 365 days and a coupon of 4.80%.

I-327 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

35. Bonds payable (continued)

As considered and approved by the 19th meeting of the 2nd session of the Board held on 28 August 2012 and the first extraordinary general meeting in 2012 held on 26 October 2012, the Company intended to issue short-term financing bonds of no more than RMB7,600,000,000. Pursuant to the file Zhong Shi Xie Zhu No. [2013] No. CP54 issued by the National Association of Financial Market Institutional Investors, the Company completed the issue of its first tranche of short-term financing bonds in 2013 from 13 March to 19 March 2013, totaling RMB2,000,000,000 with a coupon of 4.27%.

The bonds interests payable in the period of the above corporate bonds, medium-term notes and shortterm financing bonds were charged to interests payable.

As at 30 June 2013, the balances of bonds payable were as follows:

	Par value Issuance date Term	Issuance amount	Balance as at end of the period
Non-current: BBMG Bond 2009 RMB2 billion medium-term notes RMB800 million medium-term notes RMB2 billion medium-term notes Current: RMB1 billion short-term financing bonds RMB2 billion short-term financing bonds	1,900,000,000.00 27 April 2009 5 years 2,000,000,000.00 29 September 2010 5 years 800,000,000.00 7 December 2010 5 years 2,000,000,000.00 20 September 2012 5 years 6,700,000,000.00 1,000,000,000.00 18 September 2012 1 year 2,000,000,000.00 13 March 2013 1 year 9,700,000,000.00	1,900,000,000.00 2,000,000,000.00 800,000,000.00 2,000,000,000.00 6,700,000,000.00 1,000,000,000.00 2,000,000,000.00 9,700,000,000.00	1,897,856,060.93 2,001,750,000.00 806,000,000.00 2,000,000,000.00 6,705,606,060.93 1,000,000,000.00 2,000,000,000.00 9,705,606,060.93

I-328 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

35. Bonds payable (continued)

Bonds payable (continued)
	Interest at beginning of the period	Accrued interest for the period		Interest paid for the period	Interest payable at end of the period (Note V.28 )
Non-current: 2009 BBMG Bond RMB2 billion medium-term notes RMB800 million medium-term notes RMB2 billion medium-term notes Current: RMB1 billion short-term financing bonds RMB2 billion short-term financing bonds Long-term payables	54,720,000.00 21,900,000.00 3,250,000.00 31,000,000.00 110,870,000.00 13,466,666.67 – 124,336,666.67	41,040,000.00 43,800,000.00 20,150,000.00 52,700,000.00 157,690,000.00 24,000,000.00 25,145,555.56 206,835,555.56 30		82,080,000.00 – – – 82,080,000.00 – – 82,080,000.00 June 2013 31	13,680,000.00 65,700,000.00 23,400,000.00 83,700,000.00 186,480,000.00 37,466,666.67 25,145,555.56 249,092,222.23 December 2012
				June 2013
Provision for supplementary pension subsidies and early retirement benefits for former and retired employees Changes in provision for supplementary pension subsidies and early retirement benefits are as follows: Retirement benefits as at 1 January 2013 Cost of retirement benefits for the period Retirement benefits paid for the period Retirement benefits as at 30 June 2013 Amount categorised as current portion of other payables Non-current portion			511,617,093.00		517,416,630.00 559,976,062.00 9,970,419.00 (15,900,151.00 ) 554,046,330.00 42,429,237.00 511,617,093.00

36. Long-term payables

The details of provision for supplementary pension subsidies and early retirement benefits are set out in Note II.27, Employee benefits under defined benefit plan.

The provision for supplementary pension subsidies early retirement benefits payable within one year was accounted for as other payables.

I-329 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

37. Other non-current liabilities

Other non-current liabilities
	30 June 2013	31 December 2012
Deferred income Of which, the details of deferred income are as follows:	599,329,053.77	617,175,147.70 31 December 2012
	30 June 2013
Government grants related to assets Environmental protection projects Cogeneration project Relocation compensation Others Government grants related to income Research and development funds Less: Deferred income carried over within one year and included in current liabilities	296,263,538.32 17,308,098.01 298,084,931.42 26,622,132.07 7,316,214.74 645,594,914.56 46,265,860.79 599,329,053.77	314,098,044.71 18,507,235.89 303,692,803.22 18,354,217.30 9,870,729.39 664,523,030.51 47,347,882.81 617,175,147.70

As at 30 June 2013 and 31 December 2012, details and amounts of significant government grants were as follows:

	30 June 2013	31 December 2012
Subsidy for relocation fee of Tiantan	240,048,567.76	244,735,227.46
Subsidy for environmental equipment for Bio-Island project	226,293,616.32	233,981,575.14
Relocation compensation for Hengxing Qunying	58,036,363.66	58,957,575.76
Appropriation for mud project of Beijing Cement Plant	41,294,722.21	42,783,055.55
Subsidy for Zanhuang – 2,500 tonnes new dry method
clinker production line project	10,716,444.44	10,899,111.11

I-330 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

38. Share capital

For the six months ended 30 June 2013

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Opening balance Increase/(decrease) in the period Closing balance
shares released
Issue of from lock-up
new shares period subtotal
I. Shares subject to
lock-up restriction
1. State-owned legal
person shareholdings 1,844,852,426.00 – – – 1,844,852,426.00
2. Other domestic
shareholdings 2,952,000.00 – – – 2,952,000.00
3. Foreign shareholdings – – – – –
Total shares subject to
lock-up restriction 1,847,804,426.00 – – – 1,847,804,426.00
II. Shares not subject to
lock-up restriction
1. RMB ordinary shares 1,266,550,199.00 – – – 1,266,550,199.00
2. Foreign listed shares 1,169,382,435.00 – – – 1,169,382,435.00
Total shares not subject to
lock-up restriction 2,435,932,634.00 – – – 2,435,932,634.00
Total share capital 4,283,737,060.00 – – – 4,283,737,060.00
----- End of picture text -----

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

39. Capital reserve

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Share premium Other capital reserves	4,931,624,856.00 464,168,137.51 5,395,792,993.51	– 2,846,080.01 2,846,080.01	– 33,157,196.18 33,157,196.18	4,931,624,856.00 433,857,021.34 5,365,481,877.34

Please refer to the table of Changes in Equity of owners and Note V.55 for the reasons of changes in capital reserve.

40. Specialised reserve

For the six months ended 30 June 2013

	Opening balance	Amount appropriated in the period	Amount paid in the period	Closing balance
Production safety cost	9,552,984.58	14,819,644.88	7,972,996.40	16,399,633.06

Pursuant to the requirements of the “Administrative Measures on Allocation and Utilisation of Production Safety Fund for Enterprises” (Caiqi [2012] No.16) issued by the PRC Ministry of Finance and the State Administration of Work Safety, the Group started making provision for the production safety fund subject to a fixed proportion for the specific industries required therein since 2012. Please refer to Note II.33. Production safety fund for details.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

41. Surplus reserve

For the six months ended 30 June 2013

	Opening balance	Increase in the period	Decrease in the period	Closing balance
Statutory surplus reserve	580,552,232.22	–	–	580,552,232.22

According to the requirements of the Companies Law and the Articles of Association of the Company, the Company shall allocate 10% of its net profit to the statutory surplus reserve. In the event that the accumulated statutory surplus reserves of the Company have reached 50% of the registered capital of the Company, additional appropriation will not be needed.

42. Retained earnings

For the six months ended 30 June 2013

Retained earnings at beginning of the period Net profit attributable to the owners of the Parent Less: Cash dividends payable for ordinary shares (Note 1) Retained earnings at the end of the period	12,634,399,124.91 1,299,197,604.31 304,145,331.26
	13,629,451,397.96

Note 1: As considered and approved at the 2012 annual general meeting of BBMG Corporation convened on 21 May 2013, profit distribution for the year 2012 was calculated based on 4,283,737,060 ordinary shares in issue, with the distribution of a final dividend of RMB0.71 per 10 shares (tax included) in an aggregate amount of cash dividends of RMB304,145,331.26.
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

43. Operating revenues and operating costs

Operating revenues, which are turnovers of the Group, represent the net invoice value of goods sold, net of returns and trade discounts; value of services rendered; total rental income received and receivable as well as amount receivable from investment properties.

Operating revenues were as follows:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Revenue from principal operations Revenue from other operations	20,161,051,297.58 225,571,541.89 20,386,622,839.47	14,490,724,892.40 255,234,243.41 14,745,959,135.81

Operating costs were as follows:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Cost of principal operations Cost of other operations	15,888,516,006.05 124,873,285.29 16,013,389,291.34	10,269,209,922.10 128,167,757.75 10,397,377,679.85

Information of principal operations by segment:

	For the six months ended 30 June 2013 Revenue Operating costs	For the six months ended 30 June 2013 Revenue Operating costs	For the six months ended 30 June 2012 Revenue Operating costs	For the six months ended 30 June 2012 Revenue Operating costs
	Revenue
Cement New building materials Real estate development Property investment and management	5,492,377,704.88 7,302,903,939.77 6,422,750,826.00 943,018,826.93 20,161,051,297.58	4,623,186,916.37 6,678,726,911.03 4,211,623,316.69 374,978,861.96 15,888,516,006.05	5,306,368,130.22 2,840,441,645.96 5,540,946,203.63 802,968,912.59 14,490,724,892.40	4,241,893,135.55 2,299,785,104.08 3,381,302,512.71 346,229,169.76 10,269,209,922.10

I-334 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

43. Operating revenue and operating costs (continued)

Information of principal operations by product:

	For the six months ended 30 June 2013 Revenue Operating costs	For the six months ended 30 June 2013 Revenue Operating costs	For the six months ended 30 June 2012 Revenue Operating costs	For the six months ended 30 June 2012 Revenue Operating costs
	Revenue
Sale of products Bulk commodity trade Sale of properties and land Including: sales of affordable properties Rental income from investment properties Property management Hotel management Income from decoration work Treatment of solid waste Others	7,089,827,283.02 4,792,866,339.60 6,422,750,826.00 280,183,391.48 457,475,047.12 275,771,515.40 204,955,141.80 644,192,144.00 193,737,524.28 79,475,476.36 20,161,051,297.58	5,860,699,627.08 4,775,761,179.03 4,211,623,316.69 254,375,881.96 52,731,483.88 178,122,274.00 114,742,032.93 500,839,646.24 128,575,072.44 65,421,373.76 15,888,516,006.05	7,226,482,660.15 183,247,862.10 5,540,946,204.00 1,412,344,233.89 372,918,503.74 244,820,279.00 200,203,849.90 469,951,382.70 165,743,621.86 86,410,528.95 14,490,724,892.40	5,778,728,699.35 180,845,433.35 3,381,302,512.71 1,182,729,486.13 47,905,387.05 158,212,338.30 108,900,360.54 470,907,738.40 92,524,752.22 49,882,700.18 10,269,209,922.10

Information of principal operations by region:

	For the six months ended 30 June 2013 Revenue Operating costs	For the six months ended 30 June 2013 Revenue Operating costs	For the six months ended 30 June 2012 Revenue Operating costs	For the six months ended 30 June 2012 Revenue Operating costs
	Revenue
North China East China Central China South China Northeast China Southwest China Northwest China	17,505,390,650.46 1,558,108,228.76 299,763,750.64 342,586,491.09 277,579,591.57 126,724,366.94 50,898,218.12 20,161,051,297.58	13,596,417,486.98 1,424,830,751.36 256,095,496.50 222,890,360.50 224,302,754.12 118,965,766.04 45,013,390.55 15,888,516,006.05	13,944,720,463.55 97,758,416.68 142,625,184.47 25,492,822.78 37,606,115.74 21,280,167.52 221,241,721.66 14,490,724,892.40	9,856,386,581.70 65,197,307.56 116,102,149.63 19,543,439.48 31,371,162.20 18,149,603.92 162,459,677.61 10,269,209,922.10

I-335 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

43. Operating revenue and operating costs (continued)

Operating revenue from the top 5 customers for the six months ended 30 June 2013 is as follows:

	Amount	Percentage of the operating revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	1,229,359,580.21 1,181,268,854.62 319,728,403.36 301,312,609.78 210,228,258.30 3,241,897,706.27	6.03 5.79 1.57 1.48 1.03 15.90

Operating revenue from the top 5 customers for the six months ended 30 June 2012 is as follows:

	Amount	Percentage of the operating revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	646,960,339.00 600,039,753.00 311,010,542.20 285,410,400.00 238,615,235.00 2,082,036,269.20	4.39 4.07 2.11 1.93 1.62 14.12

I-336 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

43. Operating revenue and operating costs (continued)

Operating revenue is as follows:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Sale of products Bulk commodity trading Sale of properties and land Rental income Including: rental income from investment properties other rental income Property management Hotel management Income from construction work Treatment of solid waste Others	7,089,827,283.02 4,792,866,339.60 6,422,750,826.00 540,107,034.92 457,475,047.12 82,631,987.80 275,771,515.40 204,955,141.80 644,192,144.00 193,737,524.28 222,415,030.45 20,386,622,839.47	7,261,722,735.71 183,247,862.10 5,540,946,204.00 484,860,088.22 372,918,503.74 111,941,584.48 244,820,279.00 200,203,849.90 469,951,382.70 165,743,621.86 194,463,112.32 14,745,959,135.81

44. Business Tax and surcharges

Business Tax and surcharges
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Business tax City maintenance and construction tax Education surcharge LAT	401,251,084.60 45,973,765.75 29,555,337.87 284,288,829.81 761,069,018.03	357,916,942.03 35,963,921.98 31,126,638.14 339,346,482.48 764,353,984.63

Please refer to Note III. Taxes for tax base.

I-337 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

45. Selling expenses

Selling expenses
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Remuneration of employees Office expenses Lease fee Agency fee Advertisement fee Transportation and travelling expenses Others	184,885,849.86 64,223,646.22 38,642,354.31 103,579,365.46 101,206,555.25 181,665,366.60 6,681,986.28 680,885,123.98	156,835,996.94 41,429,836.37 35,256,152.33 43,010,792.24 81,925,455.30 167,499,126.95 55,908,666.16 581,866,026.29

46. Administrative expenses

Administrative expenses
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Remuneration of employees Office expenses Reception expenses R&D expenses Professional fees Lease and utilities Tax Sewage and afforestation fees Others	632,367,604.12 421,035,148.10 34,022,725.34 27,800,876.13 53,341,637.93 37,730,912.08 86,911,419.40 18,767,640.04 58,303,500.10 1,370,281,463.24	504,914,221.36 228,329,954.80 43,642,930.32 25,098,510.20 46,380,552.48 34,380,206.59 62,829,643.43 12,691,849.74 39,925,547.64 998,193,416.56

I-338 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

47. Finance costs

Finance costs
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Interest expenses Including: Interests on bank loans, overdrafts and other loans which require to be fully repaid within 5 years Other interest expenses Less: interest income (Note 1) Less: capitalised interest (Note 2) Exchange gains and losses Bank charges Others	773,329,838.94 767,475,168.10 5,854,670.84 32,882,368.67 315,363,651.06 234,986.59 10,890,545.88 6,686,357.13 442,895,708.81	875,802,324.01 855,346,420.02 20,455,903.99 68,262,705.22 372,545,123.23 241,569.87 7,029,779.43 28,443,666.79 470,709,511.65

Note 1: Interest income included the interests accrued on the loan to STAR-USG Building Materials Co., Ltd of RMB2,461,550.04. Please refer to note VI.5.(5).
Note 2: The capitalised interests of RMB34,572,956.17 and RMB280,790,694.89 have been included in construction in progress (Note V.14) and properties under development (Note V.8) respectively.

48. Gains from changes in fair value

Gains from changes in fair value
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Investment properties measured at fair value	320,192,740.78	346,744,119.25

I-339 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

49. Investments losses

Investments losses
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Long-term equity investment losses under equity method: Including: Investment losses from associates Investment losses from joint venture Investment income from disposal of available-for-sale financial assets Investment losses from disposal of long-term equity investments Investment income from disposal of subsidiaries	(23,792,766.12 ) (9,960,826.28 ) (13,831,939.84 ) – – 96,195.04 (23,696,571.08 )	(37,302,368.64 ) (20,718,758.01 ) (16,583,610.63 ) 27,917.26 (339,160.12 ) 18,024,355.37 (19,589,256.13 )

In respect of the income/(losses) from long-term equity investments measured at equity method, the top 5 investees in terms of the proportion of their investment income/(losses) to the total profits are as follows:

	For the six months	For the six months	Reasons for
	ended 30 June	ended 30 June	increase/
Investees	2013	2012	decrease
STAR-USG Building Materials	(14,344,132.86 )	(17,048,146.29 )	Fluctuations
Co., Ltd.			of results
Krono (Beijing) Woods Co., Ltd.	(5,582,370.07 )	(19,265,062.49 )	Fluctuations
			of results
Zehnder (China) Indoor Climate	(5,115,812.90 )	(1,257,461.27 )	Fluctuations
Co., Ltd. (森德（中國）暖通設備			of results
有限公司)
OCV Reinforcements (Beijing)	380,511.44	(1,305,879.00 )	Fluctuations
Co., Ltd.			of results
Beijing Gaoqiang Concrete	304,275.80	1,019,442.76	Fluctuations
Co., Ltd.			of results

There were no significant restrictions on the repatriation of investment income of the Group as of 30 June 2013. For the six months ended 30 June 2013, there was no income arising from investment in listing securities within the Group’s investment income (for the six months ended 30 June 2012: RMB27,917.26).

I-340 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

50. Asset impairment losses

50.	Asset impairment losses
51.		For the six months ended 30 June 2013	For the six months ended 30 June 2012
	Losses on bad debts Provision for decline in value of inventory Others Non-operating income	(12,393,172.48 ) – – (12,393,172.48 )	(10,263,924.61 ) 23,183,972.08 238,103.13 13,158,150.60 For the six months ended 30 June 2012
		For the six months ended 30 June 2013
	Gains from disposal of fixed assets Gains from debt restructuring Net gains from fines Government grants Unpayable amounts Others	61,339,813.20 337,916.44 3,288,222.39 234,267,183.96 1,588,314.16 9,079,442.59 309,900,892.74	4,738,873.28 28,091,231.50 1,528,240.69 237,653,452.53 2,807,862.02 23,090,854.68 297,910,514.70

I-341 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

51. Non-operating income (continued)

Government grants credited to profit or loss for the current period are as follows:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Refunds of VAT Transferred in from deferred income Revenue from relocation compensation Non-operating expenses	176,759,862.55 51,899,449.61 5,607,871.80 234,267,183.96	169,647,473.00 52,675,895.97 15,330,083.56 237,653,452.53 For the six months ended 30 June 2012
	For the six months ended 30 June 2013
Loss from disposal of fixed assets Loss from debt restructuring Donation Expense on compensation, penalties and fines Others Income tax expenses	4,884,690.18 162,047.66 484,823.30 2,837,099.38 5,719,241.25 14,087,901.77	11,235,299.81 21,942.69 354,792.11 6,959,747.99 13,118,050.54 31,689,833.14 For the six months ended 30 June 2012
	For the six months ended 30 June 2013
Current income tax expenses Deferred income tax expenses	186,223,657.15 240,547,654.99 426,771,312.14	491,124,140.00 94,601,988.30 585,726,128.30

I-342 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

53. Income tax expenses (continued)

A reconciliation of income tax expenses and total profit are listed as follows:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Total profit Income tax expenses calculated at statutory tax rate of 25% (Note 1) Effect of different tax rates applicable to certain subsidiaries Tax effect of share of profits and losses of jointly-controlled entities and associates Income not subject to tax Expenses not deductible for tax Tax losses utilised from previous years Adjustments in respect of current income tax of previous periods Effect of deductible temporary difference and tax losses not recognised	1,722,804,567.21 430,701,141.80 (7,519,784.07 ) 5,948,191.53 (357,657.28 ) 12,345,447.13 (1,510,628.82 ) (67,592,847.36 ) 54,757,449.21 426,771,312.14	2,113,675,910.91 528,418,977.73 (10,095,469.04 ) 9,325,592.16 (13,676,918.49 ) 14,829,077.63 (1,866,732.65 ) (2,548,398.21 ) 61,339,999.17 585,726,128.30

Note 1: Income tax of the Group shall be calculated based on the applicable tax rate and the estimated taxable income from Mainland China. Taxes of taxable income arising from other regions shall be calculated based on the applicable tax rate pursuant to the existing laws, interpretations, explanatory announcements and practices in the jurisdiction where the Group operates.

Note 2: The shares of taxes attributable to jointly-controlled entities and associates for the six months ended 30 June 2013 were RMB341,462.01 and RMB89,472.63 respectively (for the six months ended 30 June 2012: RMB154,845.19 and RMB920,350.85 respectively).

I-343 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

54. Earnings per share

The calculation of basic earnings per share is as follows:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Earnings Net profit for the period attributable to the ordinary shareholders of the Company Shares Weighted average number of ordinary shares in issue of the Company	1,299,197,604.31 4,283,737,060.00	1,387,233,578.71 4,283,737,060.00

The Company did not have potentially dilutive ordinary shares.

55. Other comprehensive income

Other comprehensive income
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Transferred out from disposal of available-for-sale financial assets Less: Income tax effect transferred out from available-for-sale financial assets Other comprehensive income generated from investment properties transferred from inventories Less: Income tax effect Exchange differences from translation of foreign statements	– – 3,794,773.35 (948,693.34 ) (269.89 ) 2,845,810.12	(98,275.00 ) 24,568.75 – – (5,278.46 ) (78,984.71 )

I-344 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

56. Notes to items of statement of cash flows

Notes to items of statement of cash flows
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Cash received from other operating activities Deposits and relevant amounts received Compensation received Others Cash paid relating to other operating activities Bidding deposits of land items and relevant amounts Selling and administrative expenses paid Others Cash received from other investing activities Interests received from the joint venture STAR-USG Cash paid relating to other financing activities Acquisition of minority interests	40,000,000.00 106,273,000.00 170,950,009.92 317,223,009.92 390,000,000.00 700,334,653.67 195,423,520.45 1,285,758,174.12 2,489,834.15 408,872,381.58	474,113,339.42 68,005,979.53 110,187,700.04 652,307,018.99 41,300,000.00 736,073,710.64 25,287,542.52 802,661,253.16 – –

I-345 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

57. Supplemental information to statement of cash flows

(1) Supplemental information to statement of cash flows

Reconciliation of net profit to cash flows from operating activities:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Net profit Add: Provisions for assets impairment Depreciation of fixed assets Amortisation of intangible assets Amortisation of long-term deferred expenses Gains/(losses) from disposal of fixed assets, intangible assets and other long-term assets Gains from changes in fair value Finance expenses Investment losses Increase in deferred income tax assets Increase in deferred income tax liabilities Increase in inventories Increase in operating receivables Increase/(decrease) in operating payables Net cash flows from operating activities Material financing activities not involving cash: Non-monetary capital injection of non-controlling shareholders (Note 1) Net movements in cash and cash equivalents: Balances of cash at end of the period Less: Balances of cash at beginning of the period Net increase/(decrease) in cash and cash equivalents	1,296,033,255.07 (12,393,172.48 ) 530,696,486.07 45,923,954.06 22,901,397.56 (56,455,123.02 ) (320,192,740.78 ) 455,739,624.43 23,696,571.08 27,919,866.01 212,627,788.98 (471,274,282.98 ) (2,984,572,243.81 ) 1,635,591,736.04 406,243,116.23 59,639,890.02 59,639,890.02 4,683,835,258.40 3,557,703,110.20 1,126,132,148.20	1,527,949,782.61 13,158,150.60 509,581,292.30 38,557,168.11 9,247,347.39 6,496,426.53 (346,744,119.25 ) 503,257,200.78 19,589,256.13 (6,408,167.99 ) 100,700,452.37 (1,105,150,929.73 ) (11,578,295.72 ) (433,518,688.65 ) 825,136,875.48 98,326,310.80 98,326,310.80 4,352,760,083.62 5,126,471,371.39 (773,711,287.77 )

Note 1: Refers to capital contribution made by non-controlling shareholders in form of non-cash assets.

I-346 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

57. Supplemental information to statement of cash flows (continued)

(2) Information on acquisition or disposal of subsidiaries and other operating units

Information on acquisition of subsidiaries and other operating units

==> picture [359 x 299] intentionally omitted <==

----- Start of picture text -----

For the six For the six
months ended months ended
30 June 2013 30 June 2012
Cash consideration paid for acquisition of
–
subsidiaries and other operating units 233,671,549.99
Less: Cash and cash equivalents held by
the acquired subsidiaries and other
–
operating units 236,854,305.39
Net cash received for acquisition of
–
subsidiaries and other operating units 3,182,755.40
–
Net assets of acquirees 250,345,533.94
Current assets 237,078,748.67 –
Non-current assets 16,985,490.47 –
Current liabilities 3,718,705.20 –
----- End of picture text -----

I-347 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

57. Supplemental information to statement of cash flows (continued)

(2) Information on acquisition or disposal of subsidiaries and other operating units (continued)

Information on disposal of subsidiaries and other operating units

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Price of disposal of subsidiaries and other operating units Cash and cash equivalents received from disposal of subsidiaries and other operating units Less: Cash and cash equivalents held by disposed subsidiaries and other operating units Net cash received from disposal of subsidiaries and other operating units Net assets of disposed subsidiaries Current assets Non-current assets Current liabilities Cash and cash equivalents	12,150,000.00 8,700,000.00 2,126.01 8,697,873.99 12,053,804.96 2,126.01 12,053,109.45 1,430.50	8,194,200.00 8,194,200.00 29,210.69 8,164,989.31 (10,221,031.39 ) 20,210,673.56 65,776,771.21 96,208,476.16 31 December 2012
	30 June 2013
Cash Including: Cash on hand Bank deposits on demand Other monetary fund on demand Balance of cash and cash equivalents at end of the period/year	4,683,835,258.40 5,218,345.55 4,650,940,313.16 27,676,599.69 4,683,835,258.40	3,557,703,110.20 3,460,110.74 3,491,857,506.73 62,385,492.73 3,557,703,110.20

I-348 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

1. Parent company

==> picture [388 x 127] intentionally omitted <==

----- Start of picture text -----

Registered
Type of Place of Legal capital Proportion of Proportion Organization
company registration representative Nature of Business RMB ten thousand shareholding of votes code
(%) (%)
BBMG Group limited liability Beijing Jiang Weiping Operation and management of state-owned 255,449 43.07 43.07 10113006-6
assets within the authorised scope; manufacture
and sale of building materials, non-metallic
minerals, furniture, construction hardware etc.;
comprehensive property development, etc
----- End of picture text -----

The parent and ultimate holding company of the Company is BBMG Group.

2. Subsidiaries

For details on the subsidiaries, please refer to Note IV. Scope of Consolidated Financial Statements.

3. Jointly-controlled entities and associates

For details on the jointly-controlled entities and associates, please refer to Note V. 10.

4. Other related parties

Other related parties
		Code of
Names of other related parties	Relationship with related parties	organization
Beijing Building Materials Sales Center	Under common control of the parent company	10116478-4
BBMG Assets Operation and Management Co., Ltd.	Under common control of the parent company	66840416-0
BBMG Jianmao Property Management Center	Under common control of the parent company	10161139-6
Zhuhai Jinyu Yale Property Management Co., Ltd.	Under common control of the parent company	19252930-3
Beijing Fumin House Co., Ltd.	Under common control of the parent company	10219626-X
Beijing Jiaye Xincheng Labor Force-dispatching Co., Ltd.	Under common control of the parent company	68289927-8
Beijing Xisha Assets Management Co., Ltd.	Under common control of the parent company	10189622-1
Beijing Building Materials Group Corporation	Under common control of the parent company	10121880-X
Industrial & Commerce Development Co., Ltd.
Beijing Guanghua Woodworking Factory	Under common control of the parent company	10110042-2
Beijing Doors and Windows Co., Ltd.	Under common control of the parent company	10110161-X
Beijing Chaoyang New City Property Management Co., Ltd.	Under common control of the parent company	75330262-8
Beijing Quality Inspection & Supervision	Under common control of the parent company	40071127-4
Station of Plumbing Hardware
Beijing Quality Inspection & Supervision	Under common control of the parent company	E0005230-4
Station of Wood Furniture

I-349 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

4. Other related parties (continued)

Other related parties (continued)
		Code of
Names of other related parties	Relationship with related parties	organization
Beijing Longfengshan Sands and Stone Factory	Under common control of the parent company	10262614-3
Beijing Hazardous Waste Materials Treatment Centre	Under common control of the parent company	70012505-8
Beijing Building Materials Industry	Under common control of the parent company	40071032-7
Metrological Supervision Institute
Beijing Building Materials Boiler Installation Co., Ltd.	Under common control of the parent company	10113474-5
Beijing Building Materials Boiler and Pressure Vessel	Under common control of the parent company	40070985-2
Supervision and Inspection Institution
Beijing No. 54 Occupational Skill Testing Institution	Under common control of the parent company	40071158-1
Handan Hanni Building Materials Co., Ltd.	Under common control of the parent company	67469504-8
BBMG Properties Limited	Under common control of the parent company	67425108-4
BBMG Sports Culture Co., Ltd.	Under common control of the parent company	67962969-9
Beijing Jinyu Scien-tech School	Under common control of the parent company	40070953-7
Party School of the Communist Party of China	Under common control of the parent company	40070955-3
Beijing Building Materials Group Corporation Committee
Beijing Dacheng Real Estate Development Co., Ltd.	Under common control of the parent company	10139366-7
Beijing Dacheng Anjia Property Management Center	Under common control of the parent company	79671299-3
Beijing Chengrong Real Estate Development Co., Ltd.	Under common control of the parent company	60001883-7
Beijing Cement Quality Supervision & Test Station	Under common control of the parent company	40071024-7
Beijing Research Institute of Wood Industry	Under common control of the parent company	40070951-0

I-350 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties

  - **(1) Transactions concerning goods and services with related parties**

Type of goods or services	For the six months ended 30 June 2013 Amount Percentage (%)	For the six months ended 30 June 2013 Amount Percentage (%)	For the six months ended 30 June 2012 Amount Percentage (%)	For the six months ended 30 June 2012 Amount Percentage (%)
Purchase of goods and receipt of services from related parties Transactions with jointly-controlled entities and associates Beijing Dynea Chemical Purchase of Industry Co., Ltd. raw materials STAR-USG Building Purchase of Materials Co., Ltd. raw materials Krono (Beijing) Woods Purchase of Co., Ltd. raw materials Beijing Sinobaide Technology Purchase of Co., Ltd. raw materials Zehnder (China) Indoor Climate Purchase of Co., Ltd. raw materials	66,532.00 918,812.66 18,988,598.17 7,277,266.71 1,172,387.95 28,423,597.49	– 0.01 0.12 0.05 0.01 0.19	51,100.00 124,543.86 1,221,250.10 – 197,150.20 1,594,044.16	– – 0.01 – – 0.01

I-351 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(1) Transactions concerning goods and services with related parties (continued)

Transactions concerning goods	and services with related p	and services with related p	arties(continued)	arties(continued)
Type of goods or services	For the six months ended 30 June 2013 Amount Percentage (%)		For the six months ended 30 June 2012 Amount Percentage (%)
Transactions with other related parties Beijing Building Materials Purchase of Sales Center raw materials Beijing Doors and Receipt of Windows Co., Ltd. services Beijing Doors and Windows Purchase of Co., Ltd. raw materials BBMG Assets Management Purchase of Co., Ltd. raw materials Beijing Building Materials Receipt of Boiler and Pressure Vessel services Supervision and Inspection Institution Beijing Building Materials Receipt of Industry Metrological services Supervision Institute Beijing Longfengshan Sands Receipt of and Stone Factory services Beijing Jiaye Xincheng Labor Receipt of Force-dispatching Co., Ltd. services Beijing Building Materials Boiler Receipt of Installation Co., Ltd. services Party School of the Communist Receipt of Party of China Beijing Building services Materials Group Corporation Committee Beijing Building Materials Receipt of Group Corporation services Industrial & Commerce Development Co., Ltd. Beijing Xisha Assets Receipt of Management Co., Ltd. services	1,451,433.42 416,009.10 – 27,549.00 85,150.00 14,438.00 1,364,127.28 32,400.00 – 2,000.00 – – 3,393,106.80 31,816,704.29	0.01 – – – – – 0.01 – – – – – 0.02 0.21	604,387.49 713,681.50 54,361.80 520,030.35 43,189.00 18,410.00 305,000.00 26,400.00 100,000.00 2,890.00 57,949.85 390,621.24 2,836,921.23 4,430,965.39	0.01 0.01 – 0.01 – – – – – – – – 0.03 0.04

I-352 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(1) Transactions concerning goods and services with related parties (continued)

Transactions concerning goods	and services with related p	and services with related p	arties(continued)	arties(continued)
Type of goods or services	For the six months ended 30 June 2013 Amount Percentage (%)		For the six months ended 30 June 2012 Amount Percentage (%)
Sale of goods and render of services to related parties Transactions with the parent company BBMG Group Render of services BBMG Group Sale of goods Transactions with jointly-controlled entities and associates Krono (Beijing) Woods Sale of goods, Co., Ltd. Render of services Beijing Dynea Chemical Sale of goods Industry Co., Ltd. Beijing Sinobaide Sale of goods Technology Co., Ltd. Beijing Gaoqiang Sale of goods Concrete Co., Ltd. STAR-USG Building Sale of goods Materials Co., Ltd. OCV Reinforcements Sale of goods (Beijing) Co., Ltd.	1,749,300.00 2,393.16 1,751,693.16 30,422,351.84 499,477.83 – 85,725,109.45 1,062,100.94 7,624,707.34 125,333,747.40	0.01 – 0.01 0.15 – – 0.42 0.01 0.04 0.62	2,833,372.00 7,264.96 2,840,636.96 16,941,165.63 496,907.18 260,473.12 49,364,819.15 – 6,944,975.91 74,008,340.99	0.02 – 0.02 0.11 – – 0.34 0.05 0.50

I-353 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(1) Transactions concerning goods and services with related parties (continued)

Transactions concerning goods	and services with related p	and services with related p	arties(continued)	arties(continued)
Type of goods or services	For the six months ended 30 June 2013 Amount Percentage (%)		For the six months ended 30 June 2012 Amount Percentage (%)
Sale of goods and render of services to related parties(continued) Transactions with other related parties Beijing Xinshan Mineral Sale of goods Industry Co., Ltd. Beijing Xinyuan Mineral Sale of goods Industry Co., Ltd. Handan Hanni Building Sale of goods Materials Co., Ltd. BBMG Properties Limited Render of services Beijing Building Materials Render of Sales Center services BBMG Sports Culture Render of Co., Ltd. services Sale of goods BBMG Assets Operation Render of and Management Co., Ltd. services Beijing Hazardous Waste Render of Materials Treatment Centre services Beijing Quality Inspection & Render of Supervision station of services Wood Furniture Beijing Chengrong Real Estate Render of Development Co., Ltd. services Beijing Jinyu Scien-tech Render of School services Beijing Dacheng Real Estate Render of Development Co., Ltd. services Beijing Guanghua Render of Woodworking Factory services Beijing Doors and Sale of Windows Co., Ltd. properties	– – 415,133.94 380,000.00 256,410.26 60,000.00 115,287.71 – – – – 50,000.00 524,558.13 416,000.00 119,567,500.00 121,784,890.04 248,870,330.60	– – – – – – – – – – – – – – 0.59 0.59 1.22	310,190.19 393,367.87 – 846,965.00 – 1,400,000.00 – 19,839.00 36,997.00 150,000.00 80,976.00 50,000.00 159,179.34 – – 3,447,514.40 80,296,492.35	– – – 0.01 – 0.01 – – – – – – – – – 0.02 0.54

I-354 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(2) Entrustment of assets of related parties

Management of entrusted assets

					Entrustment
					income
		Type of assets		Termination	recognised
	Note	entrusted	Starting Date	date	during the year
BBMG Group	(2)a	66.67% equity interest	July 2008	See note	Nil
		of Taihang Huaxin

Note (2)a: BBMG Group held 66.67% equity interest in Hebei Taihang Huaxin Building Materials Co., Ltd. (“ Taihang Huaxin ”), while the Company held 33.33% equity interest in Taihang Huaxin. By virtue of an entrustment agreement on the equity interest and the related supplementary agreement in relation to Taihang Huaxin dated 26 July 2008 and 24 May 2010 respectively entered into between the Company and BBMG Group, BBMG Group entrusted its holding of all the equity interests in Taihang Huaxin to the Company. Thus, the Company has obtained the control over the financial and operational decision-making of Taihang Huaxin. As such, Taihang Huaxin was treated as a subsidiary of the Company from July 2008.

The termination date of entrustment shall be the date falling on the third anniversary from the effective date of the entrustment agreement or upon all or part of target equity interests being obtained by the Company. Subject to fulfillment of relevant laws and regulations and requirements imposed by securities regulatory institutions, unless otherwise notified in writing to the entrusting party by the entrusted party, the validity of the entrustment agreement will be automatically extended for three years or to the completion date of transfer of target equity interests or such other date as agreed by both parties, whichever is earlier.

I-355 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(3) Leases with related parties

Lease out assets to related parties

Category Name of of leased Starting Termination the lessee assets date date	Rental income recognised for the six months ended 30 June 2013	Rental income recognised for the six months ended 30 June 2012
STAR-USG Building Building 1 August 2009 30 September 2030 Materials Co., Ltd STAR-USG Building Building 1 July 2010 31 December 2013 Materials Co., Ltd STAR-USG Building Building 20 July 2009 19 July 2012 Materials Co., Ltd Krono (Beijing) Woods Building 1 January 2010 31 December 2013 Co., Ltd. Beijing Dynea Chemical Building 1 September 2011 1 August 2013 Industry Co., Ltd. OCV Reinforcements Plant 1 August 2011 30 July 2013 (Beijing) Co., Ltd. OCV Reinforcements Plant 1 January 2012 31 December 2013 (Beijing) Co., Ltd. Beijing Sinobaide Building 1 March 2011 28 February 2014 Technology Co., Ltd. Beijing Quality Inspection Building 1 January 2012 31 December 2013 & Supervision Station of Plumbing Hardware Beijing Quality Inspection Building 1 January 2012 31 May 2013 & Supervision Station of Plumbing Hardware Beijing Dacheng Real Building 1 July 2012 30 September 2013 Estate Development Co., Ltd.	7,721,998.26 634,795.50 – 4,205,444.89 54,750.00 275,450.00 484,610.50 260,472.00 108,554.00 995,181.14 1,724,442.90 16,465,699.19	7,740,898.31 634,795.50 9,000.00 3,422,797.92 43,750.87 284,030.02 484,610.50 38,655.60 108,554.00 931,434.00 716,000.00 14,414,526.72

I-356 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(3) Leases with related parties (continued)

Lease of assets from related parties

Lease of assets from related parties
Category Name of of leased Starting Termination the lessor assets date date	Rental expenses recognised for the six months ended 30 June 2013	Rental expenses recognised for the six months ended 30 June 2012
Beijing Longfengshan Premise 1 January 2011 31 December 2012 Sands and Stone Factory Beijing Xisha Assets Building 1 January 2009 31 December 2013 Management Co., Ltd.	– 1,144,162.00 1,144,162.00	324,576.00 1,584,997.00 1,909,573.00

I-357 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(4) Guarantees received from/provided to related parties Guarantees received from related parties

For the six months ended 30 June 2013

Guaranteed
Guarantor
party

Completion of
performance
Amount
of guarantee
guaranteed
Starting date
Maturity date
or not

BBMG Group
Beijing Building Decoration
and Design Engineering Co., Ltd.
BBMG Group
Beijing BBMG Business
and Trading Co., Ltd.
BBMG Group
BBMG Jiaye
Real Estate Development
Co., Ltd.
BBMG Group
BBMG Jiaye
Real Estate Development
Co., Ltd.
BBMG Group
Tianjin BBMG Concrete Co., Ltd.
BBMG Group
Quyang Jinyu Cement Co., Ltd.
BBMG Group
Quyang Jinyu Cement Co., Ltd.
BBMG Group
Quyang Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.
BBMG Group
Zhuolu Jinyu Cement Co., Ltd.

30,000,000.00
7 November 2012
6 November 2013
No
20,000,000.00
15 March 2012
14 March 203
Yes
150,000,000.00
21 May 2012
21 May 2014
No
420,000,000.00
27 June 2013
27 June 2016
No
30,000,000.00
2 November 2012
1 November 2013
No
22,800,000.00
24 November 2010
25 December 2015
No
200,100,000.00
2 September 2010
25 December 2015
No
5,700,000.00
2 March 2011
25 December 2015
No
10,800,000.00
22 December 2009
22 December 2015
No
16,200,000.00
29 December 2009
22 December 2015
No
27,000,000.00
1 February 2010
22 December 2015
No
86,400,000.00
16 August 2010
22 December 2015
No
17,100,000.00
20 August 2010
22 December 2015
No
28,800,000.00
13 October 2010
22 December 2015
No
11,700,000.00
2 March 2011
22 December 2015
No
1,076,600,000.00

I-358 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(4) Guarantees received from/provided to related parties (continued) Guarantees received from related parties (continued)
- For the six months ended 30 June 2012

					Completion of
					performance
	Guaranteed	Amount			of guarantee
Guarantor	party	guaranteed	Starting date	Maturity date	or not
BBMG Group	Beijing BBMG Business and Trading	30,000,000.00	30 June 2011	30 June 2012	Yes
	Co., Ltd.
BBMG Group	Beijing BBMG Business and Trading	10,000,000.00	29 September 2011	29 September 2012	No
	Co., Ltd.
BBMG Group	Beijing BBMG Business and Trading	10,000,000.00	23 November 2011	23 November 2012	No
	Co., Ltd.
BBMG Group	Baoding Taihang Heyi Cement Co., Ltd.	80,000,000.00	2 March 2010	1 March 2012	Yes
BBMG Group	Zhuolu Jinyu Cement Co., Ltd.	14,400,000.00	22 December 2009	22 December 2015	No
BBMG Group	Zhuolu Jinyu Cement Co., Ltd.	21,600,000.00	29 December 2009	22 December 2015	No
BBMG Group	Zhuolu Jinyu Cement Co., Ltd.	36,000,000.00	1 February 2010	22 December 2015	No
BBMG Group	Zhuolu Jinyu Cement Co., Ltd.	115,200,000.00	16 August 2010	22 December 2015	No
BBMG Group	Zhuolu Jinyu Cement Co., Ltd.	22,800,000.00	20 August 2010	22 December 2015	No
BBMG Group	Zhuolu Jinyu Cement Co., Ltd.	38,400,000.00	13 October 2010	22 December 2015	No
BBMG Group	Zhuolu Jinyu Cement Co., Ltd.	15,600,000.00	2 March 2011	22 December 2015	No
BBMG Group	Quyang Jinyu Cement Co., Ltd.	30,400,000.00	24 November 2010	25 December 2015	No
BBMG Group	Quyang Jinyu Cement Co., Ltd.	267,100,000.00	2 September 2010	25 December 2015	No
BBMG Group	Quyang Jinyu Cement Co., Ltd.	7,600,000.00	2 March 2011	25 December 2015	No
BBMG Group	BBMG Jiaye Real Estate	150,000,000.00	21 May 2012	21 May 2014	No
	Development Co., Ltd.
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	4,890,000.00	28 March 2011	27 March 2012	Yes
BBMG Group	Tianjin Zhenxing Cement Co., Ltd.	7,580,000.00	27 May 2011	26 May 2012	Yes
		861,570,000.00

The above related parties provided guarantees in respect of borrowings for the Group with nil consideration.

Guarantees provided to related parties

On 30 June 2013, investment properties of BBMG Hongye Ecological Science and Technology Co., Ltd., a subsidiary of the Group, were pledged as guarantee for the debts of RMB800,000,000.00 (31 December 2012: RMB800,000,000.00) of BBMG Group. The starting date of the guarantee is 8 May 2009 and the maturity date of the guarantee is 23 May 2017.

I-359 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(5) Borrowing from/lending to related parties

Lending

For the six months ended 30 June 2012

			Commencement	Maturity
		Amount	date	date
STAR-USG Building	(5)a	25,158,400.00	April 2012	No fixed
Materials Co., Ltd.				date

Borrowing

For the six months ended 30 June 2013

			Commencement
	Note	Amount	date	Maturity date
BBMG Group	(5)b	500,000,000.00	4 January 2013	25 October 2013
BBMG Group	(5)b	500,000,000.00	10 April 2013	10 April 2014
BBMG Group	(5)b	170,000,000.00	25 April 2013	25 April 2014
BBMG Group	(5)b	300,000,000.00	6 May 2013	6 May 2014
BBMG Group	(5)b	400,000,000.00	9 May 2013	9 May 2014

For the six months ended 30 June 2012

			Commencement
		Amount	date	Maturity date
BBMG Group	(5)b	500,000,000.00	18 April 2012	18 April 2013
BBMG Group	(5)b	300,000,000.00	4 May 2012	4 May 2013
BBMG Group	(5)b	400,000,000.00	8 May 2012	8 May 2013

Note (5)a: During the term of borrowing, with respect to the short-term borrowings provided by the Company to STAR-USG Building Materials Co., Ltd., the rate was in line with the benchmark 1-year lending rate issued by People’s Bank of China in the corresponding period. The interest income recognised for the six months ended 30 June 2013 was RMB2,461,550.04.

Note (5)b: Through financial institutions, the Group obtained entrusted loans of RMB1,870,000,000.00 from BBMG Group, which were used for liquidity purposes. As of 30 June 2013, the balance of these loans was RMB3,520,000,000.00 (31 December 2012: RMB2,850,000,000.00). The interest rates of the aforesaid loans were in line with the benchmark rates announced by People’s Bank of China on the drawdown date for such loan and its credit period for the corresponding ranking and period. For the six months ended 30 June 2013, the total interest expenses recognised for the loans were RMB117,618,410.96 (For the six months ended 30 June 2012: RMB172,476,200.00).

I-360 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

5. Major transactions between the Group and related parties (continued)

(5) Borrowing from/lending to related parties (continued)

Interest income from lending:

	For the six	For the six
	months ended	months ended
	30 June 2013	30 June 2012
STAR-USG Building Materials Co., Ltd.	2,461,550.04	2,189,170.15
Interest expenses from borrowing:
	For the six	For the six
	months ended	months ended
	30 June 2013	30 June 2012
BBMG Group	117,618,410.96	172,476,200.00

I-361 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

6. Balances of receivables due from related parties

	30 June 2013	31 December 2012
Trade receivables Due from associates Zehnder (China) Indoor Climate Co., Ltd. Beijing Gaoqiang Concrete Co., Ltd. Due from a jointly-controlled entity STAR-USG Building Materials Co., Ltd. Due from other related parties Beijing Dacheng Real Estate Development Co., Ltd. Due from the parent company BBMG Group Advances to suppliers Prepayments to an associate Zehnder (China) Indoor Climate Co., Ltd. Krono (Beijing) Woods Co., Ltd. Advances to other related parties BBMG Assets Operation and Management Co., Ltd.	– 92,000,077.33 92,000,077.33 9,408,198.32 7,834,587.42 27,338.00 109,270,201.07 20,000.00 – 20,000.00 – 20,000.00	64,000.00 73,856,015.93 73,920,015.93 5,539,099.16 8,394,514.74 – 87,853,629.83 603,181.39 10,500,000.00 11,103,181.39 3,385.72 11,106,567.11

I-362 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

6. Balances of receivables due from related parties (continued)

	30 June 2013	31 December 2012
Other receivables Due from the parent company BBMG Group Due from associates Zehnder (China) Indoor Climate Co., Ltd. Beijing Dynea Chemical Industry Co., Ltd. Krono (Beijing) Woods Co., Ltd. Krono (Beijing) Flooring Co., Ltd. Beijing Sinobaide Technology Co., Ltd. Due from jointly-controlled entities STAR-USG Building Materials Co., Ltd. Interest receivable Due from a jointly-controlled entity STAR-USG Building Materials Co., Ltd. Dividend receivable Due from an associate Beijing Gaoqiang Concrete Co., Ltd.	111,226,484.82 2,871,971.22 119,154.32 8,001,719.03 200,000.00 1,560,000.00 12,752,844.57 87,067,246.40 211,046,575.79 1,382,841.69 –	– 2,881,471.22 272,502.28 2,415,674.32 200,000.00 9,062.00 5,778,709.82 84,974,879.61 90,753,589.43 1,411,125.80 1,215,425.00

I-363 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

7. Balances of payables to related parties

Balances of payables to related parties
	30 June 2013	31 December 2012
Accounts payable Due to the parent company BBMG Group Due to associates Beijing Dynea Chemical Industry Co., Ltd. Zehnder (China) Indoor Climate Co., Ltd. Krono (Beijing) Woods Co., Ltd. Due to jointly-controlled entities STAR-USG Building Materials Co., Ltd. BBMG Landao Commercial Operation Management Co., Ltd. Due to other related parties Beijing Building Materials Group Corporation Industrial & Commerce Development Co., Ltd. Beijing Building Materials Sales Center	– – 221,500.00 – 221,500.00 878,503.46 – 878,503.46 – 700,955.04 700,955.04 1,800,958.50	82,582,881.98 1,275,125.22 221,500.00 12,538,110.92 14,034,736.14 3,889,760.55 7,500.00 3,897,260.55 410,595.11 95,839.14 506,434.25 101,021,312.92

I-364 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

7. Balances of payables to related parties (continued)

Balances of payables to related parties (con	tinued)
	30 June 2013	31 December 2012
Advances from customers Advances received from other related parties Beijing Longfengshan Sands and Stone Factory Beijing Xisha Assets Management Co., Ltd. Beijing Doors and Windows Co., Ltd. BBMG Assets Operation and Management Co., Ltd. Beijing Xinshan Mineral Industry Co., Ltd. Beijing Building Materials Sales Center Advances received from a jointly-controlled entity BBMG Zhaode Property Development Co., Ltd.	149,098.29 225,443,500.00 54,569,900.00 – 238,567.00 517,929.35 280,918,994.64 70,880,444.53 351,799,439.17	149,098.29 225,443,500.00 174,137,400.00 238,567.00 – 420.00 399,968,985.29 70,880,444.53 470,849,429.82

I-365 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (continued)

7. Balances of payables to related parties (continued)

==> picture [388 x 355] intentionally omitted <==

----- Start of picture text -----

30 June 2013 31 December 2012
Other payables
Due to the parent company
BBMG Group – 197,051,945.35
Due to associates
Beijing Sinobaide Technology Co., Ltd. – 380,500.00
OCV Reinforcements (Beijing) Co., Ltd. – 159,200.00
– 539,700.00
Due to a jointly-controlled entity
STAR-USG Building Materials Co., Ltd. 1,148,111.52 229,298.86
1,148,111.52 197,820,944.21
Notes payable
Due to an associate
–
Krono (Beijing) Woods Co., Ltd. 4,500,000.00
Short-term borrowings
BBMG Group
3,520,000,000.00 2,850,000,000.00
----- End of picture text -----

Except for the balances due from STAR-USG Building Materials Co., Ltd. (星牌優時吉建築材料有限公司) included in other receivables, which are interest-bearing, other amounts due from/to related parties are interest-free, unsecured and have no fixed terms of repayment.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

VII. CONTINGENCIES

CONTINGENCIES
Note	30 June 2013	31 December 2012
Providing guarantee for related parties Note 1 Providing guarantee for third parties Note 2	800,000,000.00 3,041,713,100.77 3,841,713,100.77	800,000,000.00 3,885,136,892.77 4,685,136,892.77

Note 1: BBMG Hongye Ecological Science and Technology Co., Ltd., a subsidiary of the Group, provided a guarantee for BBMG Group. See Note VI.5.(4).
Note 2: Some of the Group’s customers purchased the commodity houses developed by the Group by way of mortgages (mortgage loans) provided by the banks. According to the requirements of personal housing mortgage loans, the Group provided joint and several liability guarantees by phases for the mortgage loans provided by the banks to the purchasers. These guarantees will be released upon obtaining building ownership certificates and completion of formalities of housing mortgage registration by the home buyers. The Directors are of the view that, should there be any defaults in repayment, the net realisable values of the said properties are still sufficient to repay the unsettled mortgage principals and the interests and penalties accrued. Therefore, no provision has been made for the guarantees in the financial statements.

VIII. COMMITMENTS

COMMITMENTS
	30 June 2013	31 December 2012
Acquisition or construction of fixed assets which are contracted but not completed Property development contracts which are contracted and being executed or will be executed Equity investment contracts which are contracted and being executed	418,479,180.51 6,715,086,132.93 274,252,044.48 7,407,817,357.92	600,880,577.76 5,386,341,877.26 216,500,000.00 6,203,722,455.02

The significant commitments made by the Group as at 31 December 2012 have been duly performed as previously undertaken.

IX. SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE

As considered and approved by the 19th meeting of the 2nd session of the Board held on 28 August 2012 and the first extraordinary general meeting in 2012 held on 26 October 2012, and according to the file Zhong Shi Xie Zhu No.[2013] No.CP54 issued by the National Association of Financial Market Institutional Investors, the Company completed the issue of its second tranche of short-term financing bonds in 2013 on 22 July 2013, totaling RMB1,000,000,000 with a coupon of 5.2%.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS

1. Lease

As lessor

Significant operating leases: according to the lease contracts entered into with lessees, the minimum lease receipts under non-cancellable operating leases are as follows:

	30 June 2013	31 December 2012
Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) Over 3 years	816,962,493.44 527,346,376.98 321,988,253.20 908,290,744.19 2,574,587,867.81	640,098,815.99 435,162,423.70 242,725,998.55 643,497,777.35 1,961,485,015.59

Please refer to Note V.12 and 13 for details of investment properties and fixed assets leased under operating leases.

As lessee

Significant operating leases: according to the lease contracts entered into with lessors, the minimum lease payments under non-cancellable operating leases are as follows:

	30 June 2013	31 December 2012
Within 1 year (inclusive of 1 year) 1 to 2 years (inclusive of 2 years) 2 to 3 years (inclusive of 3 years) Over 3 years	43,778,963.01 23,340,366.34 19,041,223.65 84,313,228.80 170,473,781.80	39,921,183.61 25,508,664.68 18,944,129.36 87,012,067.66 171,386,045.31

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

2. Assets and liabilities measured at fair value

For the six months ended 30 June 2013

==> picture [388 x 79] intentionally omitted <==

----- Start of picture text -----

Profit or Provision of
loss on changes Accumulated impairment
Opening of fair value for fair values for the Closing
balance the current period included in equity current period balance
Investment properties 12,840,400,000.00 320,192,740.78 3,794,773.35 – 13,169,800,000.00
----- End of picture text -----

3. Segment reporting

Operating segments

For management purposes, the Group is organised into business units based on their products and services and has four reportable operating segments as follows:

(1) the cement segment engages in the manufacture and sale of cement and concrete;
(2) the building materials and commercial logistics segment engages in the manufacture and sale of building materials and furniture and commercial logistics;
(3) the property development segment engages in the development and sale of real estate; and
(4) the property investment and management segment invests in properties for their rental income potential and/or for capital appreciation, and provides management and security services to residential and commercial properties.

Segment assets and segment liabilities exclude unallocated assets and liabilities of the head office, because all such assets and liabilities are under the unified management of the Group.

Pricing for transfer between operating segments is agreed by both parties to transactions with reference to the fair price adopted in the transactions with third parties.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

3. Segment reporting (continued)

Operating segments (continued)

For the six months ended 30 June 2013

	Cement Segment	Building Materials and Commercial Logistics Segment	Property Development Segment	Property Investment and Management Segment	Unallocated corporate assets/ liabilities/expenses	Elimination on consolidation	Total
Revenues from external transactions Revenues from inter-segment transactions Gains/(losses) on investments in associates and joint ventures Losses from impairment of assets Depreciation and amortisation charges Total profits Income tax expense Total assets Total liabilities Other disclosure Long-term equity investment in associates and joint ventures Increase in other non-current assets (excluding long-term equity investments)	5,582,864,866.04 2,305,448.61 5,585,170,314.65 304,275.80 (10,450,989.63 ) 470,891,814.11 66,692,448.04 54,282,212.25 25,877,061,128.86 12,591,253,259.01 24,961,909.45 1,223,679,491.15	7,386,332,884.03 178,606,422.38 7,564,939,306.41 (24,609,234.92 ) (1,939,847.36 ) 51,750,985.81 45,040,996.63 (44,837,985.23 ) 8,298,350,551.81 4,338,958,796.90 342,564,157.67 192,157,724.66	6,439,065,228.13 1,300,000.00 6,440,365,228.13 – (2,335.49 ) 4,341,995.02 1,175,154,927.72 298,773,925.46 39,258,490,207.75 34,009,280,042.58 10,000,000.00 4,292,172.74	1,004,966,633.58 – 1,004,966,633.58 512,193.00 – 61,096,221.10 731,505,933.47 119,937,474.46 17,898,016,091.43 7,508,976,479.47 3,846,744.16 66,461,977.61	– – – – – 11,440,821.65 (248,484,702.65 ) – 2,647,444,346.60 8,868,859,709.39 – –	(26,606,772.31 ) (182,211,870.99 ) (208,818,643.30 ) – – – (47,105,036.00 ) (1,384,314.80 ) (4,863,555,322.04 ) (4,966,751,357.39 ) –	20,386,622,839.47 – 20,386,622,839.47 (23,792,766.12 ) (12,393,172.48 ) 599,521,837.69 1,722,804,567.21 426,771,312.14 89,115,807,004.41 62,350,576,929.96 381,372,811.28 1,486,591,366.16

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

3. Segment reporting (continued)

Operating segments (continued)

For the six months ended 30 June 2012

	Cement Segment	Building Materials and Commercial Logistics Segment	Property Development Segment	Property Investment and Management Segment	Unallocated corporate assets/ liabilities/expenses	Elimination on consolidation	Total
Revenues from external transactions Revenues from inter-segment transactions Gains/(losses) on investment in associate and joint ventures Losses from impairment of assets Depreciation and amortisation charges Total profits Income tax expense 31 December 2012 Total assets Total liabilities Other disclosure Long-term equity investment in associates and joint ventures Increase in other non-current assets (excluding long-term equity investments)	5,415,890,060.11 7,238,017.87 5,423,128,077.98 1,019,442.76 10,661,851.45 409,625,260.84 522,390,350.40 131,703,334.51 24,774,017,463.16 12,805,332,632.87 24,657,633.65 3,145,940,490.53	2,881,676,483.63 179,234,698.55 3,060,911,182.18 (16,569,298.93 ) 14,967,985.82 52,611,113.04 28,825,098.60 18,626,135.60 7,006,066,922.77 3,566,863,982.34 368,733,392.60 322,706,361.15	5,558,341,764.79 – 5,558,341,764.79 – 148,604.09 5,989,528.11 1,303,995,947.11 325,422,329.06 36,784,183,248.14 32,205,497,477.73 10,000,000.00 13,847,937.40	890,050,827.28 22,774,339.19 912,825,166.47 (21,752,512.47 ) (12,620,290.76 ) 75,526,813.02 625,872,384.18 114,379,890.70 17,160,666,478.54 7,847,581,691.93 4,551,378.08 228,209,626.46	– – – – – 13,633,092.79 (326,497,544.12 ) – 2,222,167,932.03 6,675,698,867.92 – –	– (209,247,055.61 ) (209,247,055.61 ) – – – (40,910,325.26 ) (4,405,561.57 ) (4,785,298,414.30 ) (4,963,860,146.18 ) – –	14,745,959,135.81 – 14,745,959,135.81 (37,302,368.64 ) 13,158,150.60 557,385,807.80 2,113,675,910.91 585,726,128.30 83,161,803,630.34 58,137,114,506.61 407,942,404.33 3,710,704,415.54

Other information

Information on products and labour services

Revenue by product/service is set out in Note V.43.

Geographic information

The major businesses and customers of the Group are located in PRC. The segment’s revenue from external transactions and major non-current assets are also generated or located in PRC.

Information on our major customers

For the six months ended 30 June 2013, none of sales income arising from any single customer of the Group exceeds 10% of the Group’s total revenues (For the six months ended 30 June 2012: nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks

The Group’s principal financial instruments comprise bank borrowings, other interest-bearing borrowings, bonds payable and cash and bank balances. The main purpose of these financial instruments is to raise capital for the Group’s operations. The Group has various other financial assets and liabilities such as accounts receivable and accounts payable, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and market risk.

Financial instruments by category

The carrying amounts of each of the categories of financial instruments as at the balance sheet date are as follows:

Financial assets	30 June 2013 Loans and receivables	31 December 2012 Loans and receivables
Cash and bank balances Bills receivable Accounts receivable Interests receivable Dividends receivable Other receivables	8,084,364,849.02 822,734,787.54 5,146,180,829.44 1,382,841.69 – 2,478,474,609.24 16,533,137,916.93	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 1,411,125.80 1,215,425.00 1,899,515,319.31 12,828,695,478.86

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Financial instruments by category (continued)

Financial instruments by category (continued)
Financial liabilities	30 June 2013 Other financial liabilities	31 December 2012 Other financial liabilities
Short-term loans Bills payable Accounts payable Interest payable Dividend payable Other payables Non-current liabilities due within one year Long-term loans Bonds payable Short-term financing bonds payable	11,250,500,000.00 331,763,985.87 7,015,425,497.00 276,640,606.13 344,002,926.45 2,300,144,042.22 1,661,420,000.00 6,006,995,904.61 6,705,606,060.93 3,000,000,000.00 38,892,499,023.21	11,388,286,880.00 430,004,020.52 6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 2,576,020,000.00 4,757,051,545.34 6,692,453,587.34 1,000,000,000.00 36,051,521,824.05

Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of another party to meet its obligations.

The credit risk of the Group’s other financial assets, which comprise cash and bank balances, bills receivable and other receivables, etc. arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments. The Group is also exposed to credit risk through the granting of financial guarantees, further details of which are disclosed in Notes VI.5 and VII.

Please refer to Note V.5 and 6 for quantitative data in respect of the Group’s exposure to credit risk arising from accounts receivable and other receivables.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Financial instruments by category (continued)

As at 30 June 2013 and 31 December 2012, the aging analysis of financial assets which are not considered as impaired is as follows:

30 June 2013

		Neither past due		Past due
	Total	nor impaired	Within 3 months	3 to 6	months	Over 6 months
Accounts receivable	4,863,249,957.68	2,426,196,479.37	1,597,898,464.25	376,789,629.92		462,365,384.14
Other receivables	2,447,380,111.22	2,447,380,111.22	–		–	–
Bills receivable	822,734,787.54	822,734,787.54	–		–	–
Interest receivable	1,382,841.69	1,382,841.69	–		–	–
31 December 2012
		Neither past due		Past due
	Total	nor impaired	Within 3 months	3 to 6	months	Over 6 months
Accounts receivable	3,698,332,200.12	1,779,459,575.20	850,473,265.61	434,217,175.82		634,182,183.49
Other receivables	1,851,756,735.68	1,851,756,735.68	–		–	–
Bills receivable	1,028,662,688.14	1,028,662,688.14	–		–	–
Interest receivable	1,411,125.80	1,411,125.80	–		–	–
Dividend receivable	1,215,425.00	1,215,425.00	–		–	–

As at 30 June 2013, the accounts receivable that were neither past due nor impaired related to a large number of diversified customers for whom there was no recent history of default.

As at 30 June 2013, the accounts receivable that were past due but not impaired related to a number of independent customers that have a good track record with the Group. Based on past experience, the Group believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

Liquidity risk

Liquidity risk is the risk that an enterprise may encounter deficiency of funds in meeting obligations associated with financial liabilities.

I-374 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Liquidity risk (continued)

The Group’s objective is to maintain a balance between continuity and flexibility of funding through the use of bank borrowings, bonds payable and other interest-bearing borrowings.

The liquidity of the Group is primarily dependent on adequate cash inflows from operations to meet its debt obligations as they fall due and external financing to meet its committed future capital expenditure. With respect to future capital commitment and other funding requirements, the Company’s credit facilities granted by domestic banks amounted to RMB37,550,000,000.00 as at 30 June 2013, of which RMB22,101,500,000.00 remained unutilised.

The table below summarises the maturity profile of financial liabilities based on the undiscounted contractual cash flows:

30 June 2013

	Within 1 year	1-2 years	2-3 years	Over 3 years	Total
Accounts payable Interests payable Dividends payable Other payables Bills payable Bank borrowings Bonds payable	5,850,787,277.66 276,640,606.13 327,232,326.45 1,522,484,093.56 331,763,985.87 13,656,785,858.55 5,366,880,000.00 27,332,574,148.22	741,877,674.28 – – 442,250,517.06 – 995,124,690.75 251,400,000.00 2,430,652,882.09	313,812,716.47 – 16,770,600.00 91,515,945.00 – 5,391,142,744.00 3,051,400,000.00 8,864,642,005.47	108,947,828.59 – – 243,893,486.60 – 131,264,757.81 2,234,000,000.00 2,718,106,073.00	7,015,425,497.00 276,640,606.13 344,002,926.45 2,300,144,042.22 331,763,985.87 20,174,318,051.11 10,903,680,000.00 41,345,975,108.78

31 December 2012

	Within 1 year	1-2 years	2-3 years	Over 3 years	Total
Accounts payable Interests payable Dividends payable Other payables Bills payable Bank borrowings Bonds payable	4,868,812,557.66 155,274,711.13 26,277,469.19 1,618,765,893.48 430,004,020.52 14,641,545,845.81 1,381,480,000.00 23,122,160,497.79	1,317,545,708.47 – 16,770,600.00 496,793,758.73 – 1,518,796,189.99 2,233,480,000.00 5,583,386,257.19	228,144,901.50 – – 107,126,930.08 – 3,467,927,863.04 3,051,400,000.00 6,854,599,694.62	154,698,740.14 – – 217,494,520.47 – 270,208,273.97 2,234,000,000.00 2,876,401,534.58	6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 430,004,020.52 19,898,478,172.81 8,900,360,000.00 38,436,547,984.18

I-375 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Market risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Group manages its interest cost using a mix of fixed and variable rate debts.

The sensitivity analysis of interest rate risk reflected the impact on net profit (through the impact on floating rate borrowings) and shareholder’s equity when a reasonably possible change in interest rates occurred, with all other variables held constant.

If interest rate had been increased or decreased by 1 percentage point and all other variables remained unchanged, the Group’s total profit for the six months ended 30 June 2013 and the six months ended 30 June 2012 would decrease or increase by approximately RMB130,744,452.26 and RMB163,564,231.48, respectively and except for retained earnings, it would have no impact on other constituents of the Group’s consolidated shareholder’s equity.

Currency risk

		Total profit	Equity (Note)
	Percentage of appreciation	Increase/(decrease)	Increase/(decrease)
For the six months ended
30 June 2013	USD$ appreciation of 1%	(5,261.78 )	–
For the six months ended
30 June 2013	HK$ appreciation of 1%	(75,938.51 )	–
For the six months ended
30 June 2012	USD$ appreciation of 1%	(7,157.52 )	–
For the six months ended
30 June 2012	HK$ appreciation of 1%	(242,760.89 )	–

Note: Retained earnings excluded in equity.

I-376 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Fair value

Set out below are carrying amount and fair value of each category of financial instruments of the Group:

	Carrying amount 30 June 2013 31 December 2012	Carrying amount 30 June 2013 31 December 2012	Fair value 30 June 2013 31 December 2012	Fair value 30 June 2013 31 December 2012
Financial assets Cash and bank balances Bills receivable Accounts receivable Interests receivable Dividends receivable Other receivables Financial liabilities Short-term loans Bills payable Accounts payable Interests payable Dividends payable Other payables Non-current liabilities due within one year Long-term loans Bonds payable Short-term financing bonds	8,084,364,849.02 822,734,787.54 5,146,180,829.44 1,382,841.69 – 2,478,474,609.24 16,533,137,916.93 11,250,500,000.00 331,763,985.87 7,015,425,497.00 276,640,606.13 344,002,926.45 2,300,144,042.22 1,661,420,000.00 6,006,995,904.61 6,705,606,060.93 3,000,000,000.00 38,892,499,023.21	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 1,411,125.80 1,215,425.00 1,899,515,319.31 12,828,695,478.86 11,388,286,880.00 430,004,020.52 6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 2,576,020,000.00 4,757,051,545.34 6,692,453,587.34 1,000,000,000.00 36,051,521,824.05	8,084,364,849.02 822,734,787.54 5,146,180,829.44 1,382,841.69 – 2,478,474,609.24 16,533,137,916.93 11,250,500,000.00 331,763,985.87 7,015,425,497.00 276,640,606.13 344,002,926.45 2,300,144,042.22 1,661,420,000.00 6,006,995,904.61 6,705,606,060.93 3,000,000,000.00 38,892,499,023.21	5,906,094,546.45 1,028,662,688.14 3,991,796,374.16 1,411,125.80 1,215,425.00 1,899,515,319.31 12,828,695,478.86 11,388,286,880.00 430,004,020.52 6,569,201,907.77 155,274,711.13 43,048,069.19 2,440,181,102.76 2,576,020,000.00 4,757,051,545.34 6,692,453,587.34 1,000,000,000.00 36,051,521,824.05

I-377 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

4. Financial instruments and their risks (continued)

Fair value (continued)

The fair values of cash and bank balances, bill receivable, accounts receivable, interests receivable, other receivables, bill payable, accounts payable, interests payable, other payables and similar instruments approximate their carrying amounts due to the short maturity of these instruments.

The fair values of long and short-term loans, bonds payable and similar instruments are calculated by discounting the future cash flows using market yields currently available for other financial instruments with substantially equivalent terms and characteristics as the discount rate.

The fair values of listed financial instruments are determined based on the quoted market prices.

The Group uses the following hierarchies for fair value measurement:

Level 1: fair values are measured using quoted prices in active markets for identical assets or liabilities available on the measurement date; Level 2: fair values are measured by adjusting quoted prices of similar assets or liabilities from active markets or quoted prices of identical or similar assets or liabilities from inactive markets available on the measurement date; Level 3: fair values are measured based on inputs used by market participants in the valuation of assets or liabilities when there is no available comparable market prices of identical or similar assets.

5. Comparative figures

Some comparative figures have been restated to conform with the current period’s presentation.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

X. OTHER SIGNIFICANT MATTERS (continued)

6. Supplementary information to the statement of financial position

Net current assets (consolidated)	30 June 2013	31 December 2012
Current assets Less: current liabilities Net current assets Total assets less current liabilities (consolidated)	52,254,035,051.56 46,225,860,227.51 6,028,174,824.05	47,101,878,945.40 43,462,947,177.04 3,638,931,768.36 31 December 2012
	30 June 2013
Total assets Less: current liabilities Total assets less current liabilities Net current assets (the Company)	89,115,807,004.41 46,225,860,227.51 42,889,946,776.90	83,161,803,630.34 43,462,947,177.04 39,698,856,453.30 31 December 2012
	30 June 2013
Current assets Less: Current liabilities Net current assets/(liabilities) Total assets less current liabilities (the Company)	19,664,730,414.06 17,741,453,465.81 1,923,276,948.25	17,229,335,327.59 15,541,552,149.32 1,687,783,178.27 31 December 2012
	30 June 2013
Total assets Less: current liabilities Total assets less current liabilities	47,420,528,255.50 17,741,453,465.81 29,679,074,789.69	44,107,590,398.72 15,541,552,149.32 28,566,038,249.40

I-379 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

1. Other receivables

An aging analysis of other receivables is as follows:

	30 June 2013	31 December 2012
Within 1 year 1 to 2 years 2 to 3 years 4 to 5 years Over 5 years Provision for bad debt of other receivables	16,856,819,573.93 99,970,303.10 30,380,000.00 – 11,318,416.10 16,998,488,293.13 (31,698,203.12 ) 16,966,790,090.01	14,827,697,064.41 – 30,380,000.00 1,563,990.61 9,754,425.49 14,869,395,480.51 (31,698,203.12 ) 14,837,697,277.39

Movements in provision for bad debts of other receivables are as follows:

	For the six months ended 30 June 2013	2012
Amount at beginning of the period/year Reversal for the current period/year Amount at end of the period/year	31,698,203.12 – 31,698,203.12	62,356,964.26 (30,658,761.14 ) 31,698,203.12

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

1. Other receivables (continued)

	30 June 2013 Gross carrying amount Provision for bad debt Amount Proportion Amount Proportion (%) (%)	30 June 2013 Gross carrying amount Provision for bad debt Amount Proportion Amount Proportion (%) (%)	31 December 2012 Gross carrying amount Provision for bad debt Amount Proportion Amount Proportion (%) (%)	31 December 2012 Gross carrying amount Provision for bad debt Amount Proportion Amount Proportion (%) (%)
Individually significant and subject to separate provision Subject to provision by groups Within 1 year (inclusive of 1 year) Over 5 years Special credit characteristics group Individually not significant but subject to separate provision for bad debt	33,180,183.06 0.20 148,380,438.27 0.87 9,754,425.49 0.06 158,134,863.76 0.93 16,805,412,086.36 98.86 1,761,159.95 0.01 16,998,488,293.13 100.00	20,246,783.06 61.02 – – 9,754,425.49 100.00 9,754,425.49 – – 1,696,994.57 96.36 31,698,203.12	34,180,183.06 0.23 44,189,296.61 0.30 9,754,425.49 0.06 53,943,722.10 0.36 14,779,510,415.40 99.40 1,761,159.95 0.01 14,869,395,480.51 100.00	20,246,783.06 59.24 – – 9,754,425.49 100.00 9,754,425.49 – – 1,696,994.57 96.36 31,698,203.12

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

1. Other receivables (continued)

As at 30 June 2013, the top five other receivables were as follows:

Relationship with the Company	Amount Age	Proportion in total other receivables (%)
Beijing BBMG Dacheng Property Subsidiary Development Co., Ltd. BBMG (Hangzhou) Property Subsidiary Development Limited Beijing Jinyu Jiaye Real Estate Subsidiary Development Co., Ltd. BBMG (Tianjin) Property Subsidiary Development Limited Beijing BBMG Chengyuan Subsidiary Property Development Co., Ltd.	2,020,000,000.00 Within 1 year 1,454,000,000.00 Within 1 year 1,420,997,945.22 Within 1 year 1,410,000,000.00 Within 1 year 981,091,907.06 Within 1 year 7,286,089,852.28	10.79 7.76 7.59 7.53 5.24
		38.91

Other receivables including the amounts due from the parent, subsidiaries, jointly-controlled entities and associates were as follows:

	30 June 2013	31 December 2012
Amounts due from the parent Amounts due from subsidiaries Amounts due from jointly-controlled entities Amounts due from associates	131,881,600.00 16,582,071,961.15 81,688,940.00 2,871,971.22 16,798,514,472.37	– 14,722,979,875.40 81,688,940.00 62,936.72 14,804,731,752.12

Other receivables due from related companies are unsecured and repayable on demand.

Other than the amount of RMB131,881,600.00 (31 December 2012: nil) due from the parent, there were no other receivables due from shareholders holding 5% or more of the Company’s voting rights (31 December 2012: nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

2. Long-term equity investments

For the six months ended 30 June 2013

			Increase/			Percentage
		Opening	(decrease)	Closing		of voting	Cash dividends
	Investment cost	balance	in the year	balance	Shareholding	rights	for the year
					(%)	(%)
Cost method:
Beijing Liulihe Cement Co., Ltd.	629,405,052.96	629,405,052.96	–	629,405,052.96	100.00	100.00	–
Beijing BBMG Concrete Co., Ltd.	359,235,910.27	359,235,910.27	–	359,235,910.27	100.00	100.00	–
Beijing BBMG Mangrove Environmental	2,036,662,200.00	1,093,444,400.00	–	1,093,444,400.00	51.00	51.00	–
Protection Technology Co., Ltd.
Yangquan Tongda BBMG	–	60,000,000.00	(60,000,000.00 )	–	–	–	–
Refractory Materials Co., Ltd.
Luquan BBMG Dingxin Cement Co., Ltd.	1,454,400,000.00	1,454,400,000.00	–	1,454,400,000.00	100.00	100.00	–
Hebei Taihang Huaxin Building	60,070,428.44	60,070,428.44	–	60,070,428.44	33.33	100.00	–
Materials Co., Ltd.
Zanhuang BBMG Cement Co., Ltd.	600,000,000.00	450,000,000.00	150,000,000.00	600,000,000.00	100.00	100.00	–
BBMG Cement Trading Co., Ltd.	50,000,000.00	50,000,000.00	–	50,000,000.00	100.00	100.00	–
Beijing BBMG Cement	25,000,000.00	25,000,000.00	–	25,000,000.00	100.00	100.00	–
Energy Saving Technology Co., Ltd.
Zhangjiakou Jinyu Cement Co., Ltd.	318,071,805.81	286,161,805.81	31,910,000.00	318,071,805.81	100.00	100.00	–
Tianjin Zhenxing Cement Co., Ltd.	392,950,236.38	392,950,236.38	–	392,950,236.38	60.64	60.64	–
Quyang Jinyu Cement Co., Ltd.	245,747,261.65	245,747,261.65	–	245,747,261.65	90.00	90.00	–
Siping BBMG Cement Co., Ltd.	156,000,000.00	156,000,000.00	–	156,000,000.00	52.00	52.00	–
Shijiazhuang BBMG Xucheng	202,047,000.00	102,047,000.00	100,000,000.00	202,047,000.00	97.80	97.80	–
Concrete Co., Ltd.
Lanxian BBMG Cement Co., Ltd.	160,240,000.00	160,240,000.00	–	160,240,000.00	80.00	80.00	–
Qinyang BBMG Cement Co., Ltd.	144,145,100.00	144,145,100.00	–	144,145,100.00	86.60	86.60	–
Zhuolu Jinyu Cement Co., Ltd.	286,677,498.05	286,677,498.05	–	286,677,498.05	100.00	100.00	–
Beijing BBMG Tiantan Furniture Co., Ltd.	114,305,960.36	114,305,960.36	–	114,305,960.36	93.05	93.05	–
Beijing Woodworking Factory Co., Ltd.	54,556,261.16	54,556,261.16	–	54,556,261.16	100.00	100.00	–
Tongda Refractory Technology Co., Ltd.	412,160,000.00	412,160,000.00	–	412,160,000.00	81.10	81.10	–
Beijing Jinyu Energy-Saving	342,450,576.31	342,450,576.31	–	342,450,576.31	100.00	100.00	–
Technology Co., Ltd.
Beijing Jinyu Aerated Concrete Co., Ltd.	47,946,419.68	47,946,419.68	–	47,946,419.68	100.00	100.00	–
Beijing Xiang Brand Walling	39,277,559.44	39,277,559.44	–	39,277,559.44	100.00	100.00	–
Materials Co., Ltd.
Beijing Xiliu Building Materials Co., Ltd.	100,693,940.92	100,693,940.92	–	100,693,940.92	100.00	100.00	–
Beijing Building Materials Academy Co., Ltd.	122,467,784.68	122,467,784.68	–	122,467,784.68	100.00	100.00	–

I-383 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

2. Long-term equity investments (continued)

For the six months ended 30 June 2013 (continued)

			Increase/			Percentage
		Opening	(decrease)	Closing		of voting	Cash dividends
	Investment cost	balance	in the year	balance	Shareholding	rights	for the year
					(%)	(%)
Cost method:(continued)
Beijing Keshi Hardware Co., Ltd.	24,821,267.11	24,821,267.11	–	24,821,267.11	100.00	100.00	–
Beijing Jiandu Design and Research Institute Co., Ltd.	9,405,299.48	9,405,299.48	–	9,405,299.48	100.00	100.00	–
BBMG (Dachang) New Building Materials Co., Ltd.	500,000,000.00	500,000,000.00	–	500,000,000.00	100.00	100.00	–
Beijing Alavus Energy Saving Components Co., Ltd.	29,980,669.86	29,980,669.86	–	29,980,669.86	82.00	82.00	–
BBMG Jiaye Real Estate Development Co., Ltd.	1,665,138,411.45	1,665,138,411.45	–	1,665,138,411.45	100.00	100.00	–
Beijing Xisanqi High Tech New Building Material	123,580,431.35	123,580,431.35	–	123,580,431.35	100.00	100.00	–
City Management and Development Co., Ltd.
BBMG Property Management Co., Ltd.	89,264,530.92	89,264,530.92	–	89,264,530.92	100.00	100.00	–
BBMG Fengshan Hot Spring Resort Co., Ltd.	202,480,361.57	202,480,361.57	–	202,480,361.57	100.00	100.00	–
Beijing Jianji Assets Management Co., Ltd.	62,488,240.83	62,488,240.83	–	62,488,240.83	100.00	100.00	–
Beijing Jinhaiyan Assets Management Co., Ltd.	78,479,818.89	78,479,818.89	–	78,479,818.89	100.00	100.00	–
BBMG Property Operation Management Co., Ltd.	99,000,000.00	99,000,000.00	–	99,000,000.00	100.00	100.00	–
Beijing BBMG Dacheng Property Development Co., Ltd.	1,594,735,641.87	1,594,735,641.87	–	1,594,735,641.87	100.00	100.00	–
Tianjin BBMG Concrete Co., Ltd.	247,454,707.80	247,454,707.80	–	247,454,707.80	85.00	100.00	–
Beijing Jinyu Pinggu Cement Co., Ltd.	150,000,000.00	150,000,000.00	–	150,000,000.00	100.00	100.00	–
Beijing BBMG Mining Co., Ltd.	5,000,000.00	5,000,000.00	–	5,000,000.00	100.00	100.00	–
Lingchuan BBMG Cement Co., Ltd.	180,000,000.00	180,000,000.00	–	180,000,000.00	100.00	100.00	–
Beijing BBMG Coating Co., Ltd.	95,421,200.61	95,421,200.61	–	95,421,200.61	100.00	100.00	–
Beijing BBMG Business and Trading Co., Ltd.	410,000,000.00	410,000,000.00	–	410,000,000.00	100.00	100.00	–
Beijing Jinhaiyan Property Management Co., Ltd.	5,633,292.75	4,133,292.75	1,500,000.00	5,633,292.75	100.00	100.00	–
Beijing BBMG Chengyuan Property	473,509,857.53	473,509,857.53	–	473,509,857.53	100.00	100.00	–
Development Co., Ltd.
Beijing Building Decoration and	82,429,882.34	82,429,882.34	–	82,429,882.34	100.00	100.00	–
Design Engineering Co., Ltd.
Beijing Lvdushangke Science and Technology Co., Ltd.	43,615,552.98	43,615,552.98	–	43,615,552.98	100.00	100.00	–
Beijing BBMG Doudian Technology	152,788,777.09	52,788,777.09	100,000,000.00	152,788,777.09	100.00	100.00	–
Corporate Management Co., Ltd.
Beijing Yanshan Cement Co., Ltd.	32,707,342.45	32,707,342.45	–	32,707,342.45	100.00	100.00	–
BBMG Hongye Ecological Science	815,331,413.51	815,331,413.51	–	815,331,413.51	100.00	100.00	–
and Technology Co., Ltd.
BBMG Hong Kong Limited.	37,137.91	37,137.91	–	37,137.91	100.00	100.00	–
Beijing Dacheng Property Management Co., Ltd.	11,198,711.92	11,198,711.92	–	11,198,711.92	100.00	100.00	–
Beijing Taihang Qianjing Cement Co., Ltd.	67,600,000.00	67,600,000.00	–	67,600,000.00	67.00	67.00	–
Baoding Taihang Heyi Cement Co., Ltd.	120,000,000.00	120,000,000.00	–	120,000,000.00	75.00	75.00	–
Handan BBMG Taihang Cement Co., Ltd.	719,986,626.30	719,986,626.30	–	719,986,626.30	94.67	94.67	–

I-384 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

2. Long-term equity investments (continued)

For the six months ended 30 June 2013 (continued)

	Investment cost	Opening balance	Increase/ (decrease) in the year	Cash dividends for the year
Cost method:(continued) Handan Shexian BBMG Cement Co., Ltd. Beijing Chinefarge Cement Co., Ltd. BBMG Shunfa Lafarge Cement Co., Ltd. Zuoquan BBMG Cement Co., Ltd. Xuanhua BBMG Cement Co., Ltd. BBMG Material Industrial (Shanghai) Co., Ltd. BBMG Mortar Co., Ltd. Guangling Jinyu Cement Co., Ltd. Bo’ai BBMG Cement Co., Ltd. Beijing Yadu Science & Technology Co., Ltd. Chengde BBMG Cement Co., Ltd. Fengfeng BBMG Concrete Co., Ltd. Handan Danshan BBMG Concrete Co., Ltd. Handan County BBMG Concrete Co., Ltd. Weixian BBMG Concrete Co., Ltd. Beijing Aerated Concrete Co., Ltd. Total under cost method Equity method: Joint ventures STAR-USG Building Materials Co., Ltd. Associates Krono (Beijing) Flooring Co., Ltd. Krono (Beijing) Woods Co., Ltd. Zehnder (China) Indoor Climate Co., Ltd. Beijing Dynea Chemical Industry Co., Ltd. OCV Reinforcements (Beijing) Co., Ltd. Beijing Gaoqiang Concrete Co., Ltd. Total of associates Total under equity method	181,678,700.00 464,740,918.29 110,681,119.42 215,300,000.00 3,250,000.00 40,800,000.00 80,000,000.00 300,000,000.00 223,500,000.00 200,000.00 240,044,464.00 30,000,000.00 27,600,000.00 27,600,000.00 9,200,000.00 110,107,838.28 18,511,303,212.62 184,628,800.88 36,736,395.34 152,304,154.86 78,150,006.67 9,921,366.40 27,557,054.00 15,723,518.14 320,392,495.41 505,021,296.29 19,016,324,508.91	181,678,700.00 464,740,918.29 110,681,119.42 215,300,000.00 3,250,000.00 40,800,000.00 80,000,000.00 220,000,000.00 143,500,000.00 200,000.00 6,328,450.01 – – – – – 16,646,451,560.35 94,745,132.09 – 110,194,337.47 93,190,431.09 11,748,696.65 52,332,845.11 24,657,633.65 292,123,943.97 386,869,076.06 17,033,320,636.41	– – – – – – – 80,000,000.00 80,000,000.00 – 233,671,549.99 30,000,000.00 27,600,000.00 27,600,000.00 9,200,000.00 110,107,838.28	– – – – – – – – – – – – – – – – – – – – – – – – – – –
			921,589,388.27
			897,132,325.67

As at 30 June 2013, there was no listed investment in long-term equity investment.

I-385 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

3. Operating revenue and cost

Operating revenue is as follows:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Revenue from principal operations Revenue from other operations Operating cost is as follows:	295,107,723.74 22,527,437.59 317,635,161.33	227,104,572.67 21,126,823.39 248,231,396.06 For the six months ended 30 June 2012
	For the six months ended 30 June 2013
Cost of principal operations Cost of other operations Information by products is as follows:	49,733,966.20 – 49,733,966.20	49,900,434.52 1,063,416.38 50,963,850.90

	For the six months ended 30 June 2013 Revenue Cost	For the six months ended 30 June 2013 Revenue Cost	For the six months ended 30 June 2012 Revenue Cost	For the six months ended 30 June 2012 Revenue Cost
Rental income Others	295,107,723.74 22,527,437.59	49,733,966.20 – 49,733,966.20	229,354,078.17 18,877,317.89 248,231,396.06	50,963,850.90 – 50,963,850.90
	317,635,161.33

All operating incomes are from North China Region.

I-386 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

3. Revenue and cost of sales (continued)

Revenue from the five largest customers for the six months ended 30 June 2013 is as follows:

	Amount	Percentage of revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	11,535,373.50 6,299,701.70 6,164,485.26 6,056,071.08 5,465,614.08 35,521,245.62	3.63 1.98 1.94 1.91 1.72 11.18

Revenue from the five largest customers for the six months ended 30 June 2012 is as follows:

	Amount	Percentage revenue (%)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5	8,436,753.99 6,299,701.70 5,376,232.44 3,491,094.40 3,438,765.50 27,042,548.03	3.40 2.54 2.17 1.41 1.39 10.91

I-387 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

4. Investment income/(loss)

Investment income/(loss)
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Income from long-term equity investments under cost method Income from long-term equity investments under equity method Including: Income from investments in jointly-controlled entities Income from investments in associates Investment income from disposal of subsidiaries	33,484,500.90 (24,457,062.60 ) (10,112,929.75 ) (14,344,132.85 ) 1,247,700.00 10,275,138.30	43,309,676.52 (37,781,216.00 ) (17,048,146.29 ) (20,733,069.71 ) (8,689,179.33 ) (3,160,718.81 )

The investee with long-term equity investment income under cost method accounting for more than 5% of total profits:

For the six months ended Name of Investee 30 June 2013	For the six months ended Name of Investee 30 June 2013	For the six months ended 30 June 2012 Reason for the change
Tianjin BBMG Concrete Co., Ltd. 15,303,583.53 Taihang Qianjing Cement Co., Ltd. 13,400,000.00 Beijing Chinefarge Cement Co., Ltd. 4,491,501.39 BBMG Mortar Co., Ltd. 289,415.98 33,484,500.90 Long-term equity investment income under equity method: For the six months ended Name of Investee 30 June 2013		– Fluctuation of results 33,500,000.00 Fluctuation of results 9,809,676.52 Fluctuation of results – Fluctuation of results 43,309,676.52 For the six months ended 30 June 2012 Reason for the change
Beijing Gaoqiang Concrete Co., Ltd. Beijing Dynea Chemical Industry Co., Ltd. Krono (Beijing) Woods Co., Ltd. OCV Reinforcements (Beijing) Co., Ltd. Zehnder (China) Indoor Climate Co., Ltd. STAR-USG Building Materials Co., Ltd.	304,275.80 (99,534.01 ) (5,582,370.07 ) 380,511.44 (5,115,812.90 ) (14,344,132.86 ) (24,457,062.60 )	1,019,442.76 Fluctuation of results 75,890.29 Fluctuation of results (19,265,062.49 ) Fluctuation of results (1,305,879.00 ) Fluctuation of results (1,257,461.27 ) Fluctuation of results (17,048,146.29 ) Fluctuation of results (37,781,216.00)

I-388 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

5. Notes to items of statement of cash flows

Notes to items of statement of cash flows
	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Cash received relating to other operating activities Cash received from subordinate units Cash received from repayment of internal borrowings and interests among subsidiaries Interests income Current accounts Others Cash paid relating to other operating activities Cash expensed for subsidiaries Cash paid to subordinate units Inter-group current accounts Expenses and costs of the headquarters Cash received relating to other financing activities Cash received from issuance of bonds	22,589,867,664.31 115,000,000.00 27,076,889.53 111,141,027.10 53,181,139.57 22,896,266,720.51 3,037,389,310.95 19,555,016,059.79 505,890,507.78 74,261,569.66 23,172,557,448.18 2,000,000,000.00	18,336,970,213.99 750,615,228.30 25,088,338.47 401,594,568.31 73,613,027.87 19,587,881,376.94 2,150,861,642.12 17,405,676,145.42 93,013,952.11 59,192,816.06 19,708,744,555.71 –

I-389 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to Financial Statements

As at 30 June 2013

XI. NOTES TO KEY ITEMS OF THE COMPANY’S FINANCIAL STATEMENTS

(continued)

6. Supplemental information to statement of cash flows

(1) Reconciliation of net profit to cash flows from operating activities:

	For the six months ended 30 June 2013	For the six months ended 30 June 2012
Net profit Add: Provisions for assets impairment Depreciation of fixed assets Amortisation of intangible assets Loss/(gain) from disposal of fixed assets, intangible assets and other long-term assets Gain from fair value change Finance costs Investment income/(loss) Increase in deferred income tax liabilities Increase in operating receivables Increase/(decrease) in operating payables Net cash flow generated from operating activities Cash and cash equivalents	229,982,390.50 – 30,462,516.52 7,459,866.05 (64,017,992.86 ) (229,234,912.63 ) 411,745,103.91 (10,275,138.30 ) 190,843,966.01 (617,529,707.58 ) (86,816,463.05 ) (137,380,371.43 )	5,224,682.45 (32,355,755.71 ) 29,157,433.45 7,553,147.43 46,962.75 (204,482,857.36 ) 679,683,726.30 3,160,718.81 64,222,510.26 (1,686,292,591.43 ) 1,153,144,351.69 19,062,328.64 31 December 2012
	30 June 2013
Cash Including: Cash on hand Bank deposits on demand Balance of cash and cash equivalents at end of the period/year	1,885,064,787.87 690.59 1,885,064,097.28 1,885,064,787.87	998,549,054.78 1,014.54 998,548,040.24 998,549,054.78

(2) Cash and cash equivalents
I-390 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. STATEMENT OF INDEBTEDNESS

Indebtedness

As at 31 July 2013, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the Group had indebtedness amounting to approximately RMB29,628,915,000, details of which are as follows:

Bank loans_(note a)_ Bonds payable	As at 31 July 2013 RMB’000 (Unaudited) 18,928,915 10,700,000
	29,628,915

Note (a) The bank loans comprise of short-term loans of RMB11,270,500,000, long-term loans due within one year of RMB1,651,420,000 and long-term loans of RMB6,006,995,000.

Contingent liabilities

	As at
	31 July 2013
	RMB’000
	(Unaudited)
Guarantees given to banks in respect mortgage facilities
for certain purchasers of the Group’s properties	5,583,662

The Group provided guarantees in respect of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain purchasers of the Group’s properties. Pursuant to the terms of the guarantees, upon default in mortgage payments by these purchasers, the Group is responsible to repay the outstanding mortgage principal together with the accrued interest and penalty owed by the defaulted purchasers to the banks and the Group is entitled to take over the legal titles and possession of the related properties. The Group’s guarantee period starts from the date of grant of the relevant mortgage loans and ends upon issuance of real estate ownership certificates which will generally be available within a certain period after the purchasers take possession of the relevant properties.

Save as aforesaid and apart from intra-group liabilities and normal trade payables, the Group did not have any loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities issued and outstanding, and authorised or otherwise created but unissued and term loans or other borrowings, indebtedness in the nature of borrowings, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance lease or hire purchase commitments, which are either guaranteed, unguaranteed, secured or unsecured, guarantees or other material contingent liabilities outstanding at the close of business on 31 July 2013.

The Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 31 July 2013 up to the Latest Practicable Date.

I-391 -

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

This circular includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Group. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than information relating to the Parent and the Fund) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by the Parent and the Fund) in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The information in relation to the Parent contained in this circular has been supplied by the directors of the Parent. The directors of the Parent jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than information relating to the Group and the Fund) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by the Group and the Fund) in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The information in relation to the Fund contained in this circular has been supplied by the Mr. Yin Rongyan, the sole executive director of the general partner of the Fund. The sole executive director of the general partner of the Fund accepts full responsibility for the accuracy of the information contained in this circular (other than information relating to the Group and the Parent) and confirms, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed (other than those expressed by the Group and the Parent) in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

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GENERAL INFORMATION

APPENDIX II

2. MARKET PRICE

(a) The table below sets out the closing prices of the H Shares on the Hong Kong Stock Exchange (i) at the end of each of six calendar months immediately preceding the trading day of the Announcement up to the Latest Practicable Date; (ii) on 21 August 2013 (being the last trading day immediately preceding the Announcement); and (iii) on the Latest Practicable Date.

Date	Closing price per H Share
	HK$
28 February 2013	6.83
28 March 2013	6.33
30 April 2013	6.23
31 May 2013	5.64
28 June 2013	4.77
31 July 2013	4.88
21 August 2013	5.31
30 August 2013	N/A (suspended)
30 September 2013	5.19
Latest Practicable Date	5.71

The lowest and highest closing market prices of the H Shares recorded on the Hong Kong Stock Exchange during the period between the beginning of the six months preceding the date of the Announcement and the Latest Practicable Date were HK$4.18 on 8 July 2013 and HK$7.59 on 15 February 2013, respectively.

(b) The table below sets out the closing prices of the A Shares on the Shanghai Stock Exchange (i) at the end of each of six calendar months immediately preceding the trading day of the Announcement up to the Latest Practicable Date; (ii) on 21 August 2013 (being the last trading day immediately preceding the date of the Announcement); and (iii) on the Latest Practicable Date.

Date	Closing price per A Share
	RMB
28 February 2013	7.87
29 March 2013	6.79
26 April 2013	6.49
31 May 2013	6.26
28 June 2013	5.00
31 July 2013	4.79
21 August 2013	5.22
30 August 2013	N/A (suspended)
30 September 2013	5.40
Latest Practicable Date	6.01

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GENERAL INFORMATION

APPENDIX II

The lowest and highest closing market prices of the A Shares recorded on the Shanghai Stock Exchange during the period between the beginning of the six months preceding the date of the Announcement and the Latest Practicable Date were RMB4.73 on 29 July 2013 and RMB8.92 on 8 February 2013, respectively.

3. SHARE CAPITAL, SHARE OPTIONS AND CONVERTING SECURITIES

The authorized and issued share capital of the Company as at the Latest Practicable Date are set out below:

RMB

Authorized capital:
3,114,354,625 A Shares of RMB1.00 each	3,114,354,625
1,169,382,435 H Shares of RMB1.00 each	1,169,382,435
Issued and fully paid or credited as fully paid:
3,114,354,625 A Shares of RMB1.00 each	3,114,354,625
1,169,382,435 H Shares of RMB1.00 each	1,169,382,435

The A Shares and H Shares and in issue are ordinary shares in the share capital of the Company. Save for that (a) the dividends paid to A Shareholders shall be in Renminbi and that to H Shareholders shall be in Hong Kong dollar; and (b) holders of A Shares shall be investors located in the PRC and that of H Shares shall be investors located outside the PRC, including but not limited to Hong Kong, Macau, Taiwan and all other foreign countries, all existing A Shares and H Shares rank pari passu in all respects with each other, including capital, dividends and voting rights. The H Shares and A Shares in issue are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively.

Since 31 December 2012 (being the date to which the latest published audited consolidated financial statements of the Group were made up), the Company has not issued any new Shares or agreed to issue any new Shares (other than the A Shares proposed to be issued under the Proposed Placing).

The holder of the A Shares to be issued under the Proposed Placing will be entitled to receive all future dividends and distribution which are declared, made or paid after the date of the issue of such A Shares. The A Shares to be issued under the Proposed Placing will, when issued and fully paid, rank pari passu in all respects with the existing A Shares.

As at the Latest Practicable Date, the Company has no outstanding options, warrants, derivatives or securities convertible into Shares.

4. DIRECTORS AND SUPERVISORS’ INTERESTS

As at Latest Practicable Date, none of the Directors, Supervisors or chief executive of the Company had any interest or short position in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), that was required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO

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GENERAL INFORMATION

APPENDIX II

(including interests or short positions which were taken or deemed to have taken under such provisions of the SFO), or which were recorded in the register required to be kept under section 352 of the SFO, or which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

As at the Latest Practicable Date, there was no agreement, arrangement or understanding (including any compensation arrangement) exists between the Combined Concert Group and any Director, recent Director, Shareholder or recent Shareholder having any connection with or dependence upon the Proposed Placing, the Parent Subscription, the Fund Subscription or the Whitewash Waiver.

As at the Latest Practicable Date, there was no benefit given or agreed to be given to any Director as compensation for loss of office or otherwise in connection with the Proposed Placing, the Parent Subscription, the Fund Subscription or the Whitewash Waiver.

As at the Latest Practicable Date, there was no agreement, arrangement or understanding between any Director or any other person which is conditional on or dependent upon the outcome of the Proposed Placing, the Parent Subscription, the Fund Subscription or the Whitewash Waiver or otherwise connected with the Proposed Placing or the Whitewash Waiver.

As at the Latest Practicable Date, no material contacts were entered into by any of the Combined Concert Group in which any Director, Supervisor or the chief executive of the Company has a material personal interest.

5. SUBSTANTIAL SHAREHOLDERS’ INTERESTS

As at the Latest Practicable Date and to the best knowledge of the Directors or the chief executive of the Company, persons having interests and short positions in 5% or more in the Shares, underlying Shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, and required to be recorded in the register of interests and short positions required to be kept by the Company pursuant to section 336 of the SFO were as follows:

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APPENDIX II

GENERAL INFORMATION

Long Positions:

				Percentage of
				such
				shareholding in
				the same type	Percentage of
Type of	Name of	Capacity and	Number of	of the issued	total issued
shareholding	Shareholder	nature of interest	Shares held	share capital	share capital
A Shares	the Parent	Directly and	1,844,852,426	59.24%	43.07%
		beneficially owned
A Shares	China National	Directly and	239,580,000	7.69%	5.59%
	Materials Co. Ltd.	beneficially owned
H Shares	BlackRock, Inc.	Directly and	105,950,516	9.06%	2.47%
		beneficially owned
H Shares	HSBC Global Asset	Directly and	81,140,748	6.94%	1.89%
	Management	beneficially owned
	(Hong Kong)
	Limited
H Shares	Schroders Plc.	Directly and	76,997,000	6.58%	1.80%
		beneficially owned
H Shares	Sloane Robinson	Directly and	70,497,000	6.03%	1.65%
	LLP	beneficially owned
H Shares	FMR LLC	Directly and	60,504,500	5.17%	1.41%
		beneficially owned
H Shares	JP Morgan Chase &	Directly and	59,839,736	5.12%	1.40%
	Co.	beneficially owned

Short Positions:

				Percentage of
				such
				shareholding in
				the same type	Percentage of
Type of	Name of	Capacity and nature	Number of	of the issued	total issued
shareholding	Shareholder	of interest	Shares held	share capital	share capital
A Shares	the Parent	Directly and	92,120,474	2.96%	2.15%
		beneficially owned
H Shares	BlackRock, Inc.	Directly and	9,000	0.0008%	0.0002%
		beneficially owned

Save as disclosed above, as at the Latest Practicable Date, there were no other parties who had interests or short positions in the Sharers or underlying Shares of the Company which would fall to be recorded in the register required to be kept under section 336 of SFO.

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GENERAL INFORMATION

APPENDIX II

6. SHAREHOLDINGS OF AND DEALINGS IN THE SECURITIES OF THE COMPANY AND THE COMBINED CONCERT GROUP

As at the Latest Practicable Date:

(a) the Company did not hold, control or have direction over any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in any member of the Combined Concert Group and it has not dealt for value in any such securities of any member of the Combined Concert Group during the Relevant Period;
(b) none of the Directors, Supervisors or chief executive of the Company held, controlled or had direction over any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in any member of the Combined Concert Group and none of them has dealt for value in any such securities of any member of the Combined Concert Group during the Relevant Period;
(c) none of the advisers of the Company as specified in class (2) of the definition of “associates” under the Takeovers Code, held, controlled or had direction over any Shares, options, warrants, derivatives or convertible securities of the Company and none of them has dealt for value in any such securities of the Company during the Relevant Period;
(d) no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code existed between any person and the Company or any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of an associate under the Takeovers Code during the Relevant Period;
(e) none of the subsidiaries of the Company and none of the pension funds of the Company and/or its subsidiaries, nor any fund managed on a discretionary basis by any fund manager connected with the Company owned or controlled any Shares, warrants, options or derivatives of the Company or had dealt for value in any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company during the Relevant Period;
(f) none of the Directors and their respective associates owned or controlled any Shares, convertible securities, warrants, options or derivatives of the Company, and therefore, none of the Directors intends, in respect of his own beneficial shareholding, to vote for or against the resolutions with respect to the Proposed Placing and the Whitewash Waiver, and none of them has dealt for value in any such securities of the Company during the Relevant Period; and
(g) neither the Company nor any of the Directors has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company.
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GENERAL INFORMATION

APPENDIX II

As at the Latest Practicable Date, save as disclosed under the paragraph headed “Effect on the Shareholding Structure of the Company” in the letter from the Board and the paragraph headed “Substantial Shareholders’ Interests” in this appendix:

(a) the Combined Concert Group did not hold, control or have direction over any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company and none of them has dealt for value in any such securities of the Company during the Relevant Period;
(b) the Combined Concert Group did not hold, control or have direction over any outstanding options, warrants, or any securities that are convertible into Shares or any derivatives in respect of securities in the Company, or hold, control or have direction over any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company and none of them has dealt for value in any such securities of the Company during the Relevant Period;
(c) the Combined Concert Group did not borrow or lend any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company;
(d) no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code existed between any person and the Combined Concert Group during the Relevant Period;
(e) none of the member of the Combine Concert Group has received any irrevocable commitment to vote for or against the Proposed Placing, the Parent Subscription, the Fund Subscription or the Whitewash Waiver; and
(g) none of the directors or investment committee of the manager (where applicable) of the Combined Concert Group owned or controlled any Shares, convertible securities, warrants, options or derivatives of the Company as at the Latest Practicable Date, and none of them has dealt for value in any such securities of the Company during the Relevant Period.

As at the Latest Practicable Date, no Shares acquired by the Combined Concert Group pursuant to the Proposed Placing will be transferred, charged or pledged to any other person.

7. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or Supervisors had entered into any existing or proposed service contract with the Company or any member of the Group which:

(a) (including both continuous and fixed term contracts) had been entered into or amended within six months before the date of the Announcement;
(b) was a continuous contract with a notice period of 12 months or more; or
(c) was a fixed term contract with more than 12 months to run irrespective of the notice period.
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GENERAL INFORMATION

APPENDIX II

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Group) have been entered into by the Company or any member of the Group within two years immediately preceding the date of the Announcement and up to the Latest Practicable Date and are material:

(a) an equity transfer agreement dated 31 October 2011 entered into between Jiaozuo Yan Xin Cement Co., Ltd. (焦作市岩鑫水泥有限責任公司) (“ Yan Xin Cement ”) as the seller and the Company as the purchaser in relation to the sale and transfer of 65% equity interest in Bo Ai BBMG Cement Co., Ltd. (博愛金隅水泥有限公司) (“ Boai BBMG ”) and all rights, benefits and claims attaching thereto, at the consideration of RMB195,000,000. After the transfer, Boai BBMG is owned as to 95% by the Company and 5% by Yan Xin Cement;
(b) a capital increase and contribution agreement dated 25 October 2011 entered into among the Company, Chengde Xing Long Mining Co., Ltd. (承德興隆礦業有限責任公司) (“ Xing Long Mining ”) and Chengde BBMG Cement Co. Ltd., (承德金隅水泥有限責任公司) (“ Chengde BBMG ”), in respect of the increase of an additional capital of RMB249,790,700 in Chengde BBMG, pursuant to which, the Company had contributed RMB233,713,800 in cash while Xing Long Mining had contributed the rest of the increased capital by way of mining rights, mining facilities and land use rights. After the capital increase, Chengde BBMG is owned as to 80% by the Company and 20% by Xing Long Mining;
(c) an amendment agreement dated 3 February 2012 entered into between the Company and USG ChinaLux S.a.r.l. (優時吉中盧有限責任公司) (“ USG ”) in relation to the amendment to the joint venture agreement regarding Star-USG Building Materials Co., Ltd. (“ Star-VSG Building ”), a Chinese-foreign joint venture jointly controlled by the Company and USG on 50-50 basis. Pursuant to the amendment agreement, the registered capital of Star-USG Building had been increased from US$46,520,000 to US$54,520,000, while the Company and USG had each contributed the difference in equal shares;
(d) an equity transfer agreement dated 9 March 2012 entered into between the Company as the seller and Heilongjiang Bayan Cement Manufacturing Co. Ltd.* (黑龍江省巴彥水泥製造有限公司) as the purchaser in relation to the sale and transfer of 43% equity interest in Harbin Taihang Xing Long Cement Co., Ltd. (哈爾濱太行興隆水泥有限公司) at the consideration of RMB8,194,200;
(e) a capital contribution agreement dated 28 May 2012 entered into between the Company and Zhongchong Group Co., Ltd (中崇集團有限公司) (“ Zhongchong Group ”) in relation to the establishment of a joint venture namely BBMG Property Shanghai Co., Ltd. (金隅物產上海有限公司) (“ BBMG Property Shanghai ”), pursuant to which the Company and Zhongchong Group had contributed RMB40,800,000 (representing 51% of the entire registered capital of BBMG Property Shanghai) and RMB39,200,000 (representing 49% of the entire registered capital of BBMG Property Shanghai) in cash to the registered capital of BBMG Property Shanghai respectively;
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APPENDIX II

GENERAL INFORMATION

(f) a cooperation agreement dated 15 July 2012 entered into between Handan BBMG Taihang Cement Co., Ltd (邯鄲金隅太行水泥有限責任公司) (“ Handan BBMG Taihang Cement ”), a subsidiary of the Company, and Handan Pan Shuo Concrete Co., Ltd. (邯鄲市磐爍混凝土有限公司) (“ Pan Shuo Concrete ”) in relation to the establishment of a joint venture namely Da Ming BBMG Concrete Co., Ltd (大名金隅混凝土有限公司) (“ Da Ming BBMG* ”). Pursuant to the cooperation agreement, Handan BBMG Taihang Cement had contributed RMB900,000,000 in cash (representing 90% of the entire registered capital of Da Ming BBMG) and Pan Shuo Concrete had contributed RMB100,000,000 in cash (representing 10% of the entire registered capital of Da Ming BBMG);
(g) a capital increase and contribution agreement dated 18 September 2012 entered into between the Company and Beijing Tongda Refractory Technologies Co., Ltd. (通達耐火技術股份有限公司) (“ Beijing Tongda ”), a subsidiary of the Company, in respect of the increase of an additional capital of RMB159,845,105 in Beijing Tongda, all of which had been contributed by the Company in cash;
(h) a cooperation agreement dated 25 September 2012 entered into between Shijiazhuang BBMG Xucheng Concrete Co., Ltd. (石家莊金隅旭成混凝土有限公司) (“ BBMG Xucheng Concrete ”), a subsidiary of the Company, and Shijiazhuang Bei Yue New Construction Materials Co., Ltd. (石家莊市北嶽新型建材有限公司) (“ Bei Yue New Construction Materials ”) in relation to the establishment of a joint venture namely Shijiazhuang BBMG Beiyue Concrete Co., Ltd. (石家莊金隅北岳混凝土有限公司) (“ BBMG Beiyue Concrete* ”). Pursuant to the cooperation agreement. BBMG Xucheng Concrete had contributed RMB70,000,000 in cash (representing 70% of the entire registered capital of BBMG Beiyue Concrete) and Bei Yue New Construction Materials had contributed RMB3,000,000 by way of buildings and structures, equipment and other investments in kinds (representing 30% of the entire registered capital of BBMG Beiyue Concrete);
(i) an asset transfer agreement dated 20 October 2012 entered into between Huanghua Hong Zhen Yuan Concrete Co., Ltd. (黃驊市宏振源混凝土有限公司) (“ Hong Zhen Yuan Concrete ”) as the seller and Cangzhou Lingang BBMG Cement Co., Ltd. (滄州臨�金隅水泥有限公司) (“ Lingang BBMG Cement ”), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all assets necessary to the daily operation of Hong Zhen Yuan Concrete (including but not limited to two sets of 180 production units, one 12-square meter concrete truck, one 52-meter pump truck, buildings and structures and other equipment) at the consideration of RMB18,200,000;
(j) an asset transfer agreement dated 8 November 2012 entered into between Hebei Zhushan Ready-Mixed Concrete Co., Ltd.（河北築山預拌混凝土有限公司）(“ Zhushan Ready-Mixed Concrete* ”) as the seller and BBMG Xucheng Concrete, a subsidiary of the Company as the purchaser in relation to the sale and transfer of all assets necessary to the daily operation of Zhushan Ready-Mixed Concrete (including but not limited to two sets of HLS180 production units, one set of HZS240 production unit, thirty-two concrete trucks, buildings and structures and other equipment) at the consideration of RMB37,000,000;
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APPENDIX II

GENERAL INFORMATION

(k) an asset transfer agreement dated 15 November 2012 entered into between Tianjin Fu Rui De Concrete Product Co., Ltd. (天津市富瑞德混凝土製品有限公司) (“ Fu Rui De Concrete Product ”) as the seller and Tianjin BBMG Concrete Co., Ltd. (天津金隅混凝土有限公司) (“ Tianjin BBMG Concrete ”), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all real assets owned by the concrete mixing plant of Fu Rui De Concrete Product (including but not limited to two sets of 180 concrete production lines, one shovel truck, buildings and structures and other equipment) at the consideration of RMB14,300,000;
(l) an asset transfer agreement dated 19 November 2012 entered into between Tianjin Xin Jian Concrete Co., Ltd. (天津市鑫建混凝土有限公司) (“ Xinjian Concrete* ”) as the seller and Tianjin BBMG Concrete, a subsidiary of the Company, as the purchaser in relation to the sale and transfer of part of the physical assets owned by the Jinghai concrete mixed plant of Xinjian Concrete (including but not limited to two sets of 180 production units, two sets of 120 production units, thirty-five concrete trucks, six pump trucks, buildings and structures and other equipment) at the consideration of RMB28,000,000;
(m) an equity transfer agreement dated 30 November 2012 entered into between Beijing BBMG Fengshan Hot Sprint Resort Co., Ltd. (北京金隅鳳山溫泉度假村有限公司) (“ BBMG Fengshan Resort ”), a subsidiary of the Company, as the seller and Xinghe Muzi Tansu Co., Ltd. (興和縣木子碳素有限責任公司) as the purchaser in relation to the sale and transfer of 100% equity interest in Inner Mongolia BBMG Daihai Resort Co., Ltd.* (內蒙古金隅岱海旅游度假有限責任公司 (a wholly-owned subsidiary of BBMG Fengshan Resort) and the shareholders’ loan in the sum of RMB13,968,901.26 at the total consideration of RMB12,150,000;
(n) an equity transfer agreement dated 17 October 2012 entered into between Guangling Fucheng Cement Co., Ltd. (廣靈縣富成水泥有限公司) (“ Fucheng Cement ”) as the seller and the Company as the purchaser in relation to the sale and transfer of 70% equity interest in Guangling BBMG Cement Co., Ltd. (廣靈金隅水泥有限公司), a company jointly established by Fucheng Cement and the Company, and all rights, benefits and claims attaching thereto, at the consideration of RMB210,000,000;
(o) an asset transfer agreement dated 8 December 2012 entered into between Tianjin Bao Hui Ready-Mixed Mortar Co., Ltd. (天津市寶輝預拌砂漿有限公司) (“ Tianjin Bao Hui ReadyMixed Mortar ”) as the seller and Tianjin BBMG Bao Hui Ready-Mixed Mortar Co., Ltd. (天津金隅寶輝砂漿有限公司), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all assets situated within the plants of Tianjin Bao Hui Ready-Mixed Mortar at the consideration of RMB49,000,000;
(p) an asset transfer agreement dated 13 December 2012 entered into between Tangshan Fengrun Guang Sha Aerated Brick Co., Ltd.（唐山市豐潤區廣廈加氣磚有限公司）(“ Guang Sha Aerated Brick ”) as the seller and Tangshan BBMG Aerated Concrete Co., Ltd. (唐山金隅加氣混凝土有限責任公司) (“ BBMG Aerated Concrete ”), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all physical assets in which Guang Sha Aerated Brick enjoyed good and marketable title at the consideration of RMB35,759,600;
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GENERAL INFORMATION

APPENDIX II

(q) an asset transfer agreement dated 5 March 2013 entered into between Xin Nuo (Handan) Concrete Co., Ltd. (鑫諾（邯鄲）混凝土有限公司) (“ Xin Nuo Concrete ”) as the seller and Feng Feng BBMG Concrete Co., Ltd. (峰峰金隅混凝土有限公司) (“ Feng Feng BBMG* ”), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all assets necessary to the daily operation of Xin Nuo Concrete (including but not limited to the equipment for concrete production and physical assets such as vehicles) at the consideration of RMB58,880,000;
(r) an asset transfer agreement dated 5 March 2013 entered into between Handan Jinan WaterProof Construction Co., Ltd. (邯鄲市冀南建築防水工程有限責任公司) (“ Jinan WaterProof Construction ”) as the seller and Weixian BBMG Concrete Co., Ltd. (魏縣金隅混凝土有限公司) (“ Weixian BBMG ”), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all assets necessary to the daily operation of Jinan Water-Proof Construction (including but not limited to the equipment for concrete production and physical assets such as vehicles, at the consideration of RMB24,580,000;
(s) an asset transfer agreement dated 5 March 2013 entered into between Handan Xin Qi Commercial Concrete Co., Ltd. (邯鄲市新奇商品混凝土有限公司) (“ Xinqi Commercial Concrete ”) as the seller and Handan BBMG Concrete Co., Ltd. (邯鄲縣金隅混凝土有限公司) (“ Handan BBMG Concrete ”), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all assets necessary to the daily operation of Xinqi Commercial Concrete (including but not limited to the equipment for concrete production and physical assets such as vehicles) at the consideration of RMB41,000,000;
(t) an asset transfer agreement dated 5 March 2013 entered into between Handan Chenxiang Concrete Co., Ltd. (邯鄲辰翔混凝土有限公司) (“ Chenxiang Concrete ”) as the seller and Hanshan BBMG Concrete Co., Ltd. (邯山區金隅混凝土有限公司) (“ Hanshan BBMG Concrete ”), a subsidiary of the Company, as the purchaser in relation to the sale and transfer of all assets necessary to the daily operation of Chenxiang Concrete (including but not limited to the equipment for concrete production and physical assets such as vehicles) at the consideration of RMB48,000,000;
(u) an assignment of mining rights dated 10 June 2013 executed between Chengde Hong Ji Cement Co., Ltd. (承德弘基水泥有限公司) (“ Hong Ji Cement ”) as the assignor and Chengde BBMG Cemenet Co., Ltd. (承德金隅水泥有限責任公司), a subsidiary of the Company, as the assignee in relation to the assignment of mining rights (reference no. C1308002010127120086866) enjoyed by Hong Ji Cement and the mining assets attaching thereto at the consideration of RMB8,980,000; and
(v) an equity transfer agreement dated 5 September 2013 entered into between Dynea Chemicals Oy as the seller and the Company as the purchaser in relation to the sale and transfer of 55% equity interests of Beijing Dynea Chemical Industry Co., Ltd. at the consideration of EUR2,750,000 (equivalent to approximately RMB22,396,550).
II-11 -

GENERAL INFORMATION

APPENDIX II

9. MATERIAL CHANGE

The Directors confirm that, save as and except for the below, there has been no material change in the financial or trading position or outlook of the Group since 31 December 2012, being the date to which the latest published audited financial statements of the Company were made up, up to the Latest Practicable Date:

(i) the Group has incurred additional long term loans in the sum of approximately RMB1,250 million since 31 December 2012;
(ii) the Group has reduced short-term loans and non-current liabilities due within one year in the sum of approximately RMB1,042 million since 31 December 2012;
(iii) the Group has issued two short term financing bonds in the sum of RMB3,000 million in March 2013 and July 2013;
(iv) the Group’s guarantees given to banks in respect of mortgage facilities for certain purchases of the Group’s properties increased by approximately RMB1,699 million since 31 December 2012;
(v) the Group had increased in capital and other commitments of approximately RMB1,204 million from 31 December 2012 to 30 June 2013 primarily due to the increase in property development contracts which are contracted and being executed or will be executed;
(vi) the Group has recorded a significant increase in revenue for the six months ended 30 June 2013 as compared to the same period of 2012. Such improvement in financial and trading position of the Group was mainly attributable to the improvement and business expansion of the bulk commodity trading segment and the property development segment of the Group; and
(vii) the Company published a profit warning announcement on 19 April 2013 which disclosed that the Group recorded a loss attributable to the owners of the Company for the three months ended 31 March 2013 as compared to a profit for the same period in 2012. According to the first quarterly report of the Company for the three months ended 31 March 2013, the Group recorded net loss attributable to the owners of the Company of approximately RMB93 million for the three months ended 31 March 2013 as compared to a profit of approximately RMB292 million for the same period in 2012. Such deterioration in financial and trading position of the Group was mainly due to the year-on-year decrease in the cement selling price (as a result of intensified market competition) and the Company’s cement subsidiaries operate as a result of insufficient local market demand under the influence of the continued macro-economic adjustment.

10. COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or Supervisors nor their respective associates had any interests in other business, which competes or may compete, either directly or indirectly, with the business of the Group.

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GENERAL INFORMATION

APPENDIX II

11. DIRECTORS AND SUPERVISORS’ INTERESTS IN THE GROUPS ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date:

(a) none of the Directors or Supervisors is material interested in any contract or arrangement, which was significant in relation to the business of the Group; and
(b) so far as the Directors are aware, none of the Directors or Supervisors nor their respective associates had any direct or indirect interests in any assets which had been acquired or disposed of by or leased to, or were proposed to be acquired or disposed of by or leased to, any member of the Group since 31 December 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

12. MATERIAL LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or claims of material importance and no litigation or claims of material importance was known to the Directors to be pending or threatened by or against any member of the Group.

13. EXPERT

(a) The following sets out the qualifications of the expert who have given its opinions or advice as contained in this circular:

Name

Qualification

Proton Capital a corporation licensed to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO

(b) As at the Latest Practicable Date, Proton Capital has no shareholding in the Company or any other member of the Group or the right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in the Company or any other member of the Group.
(c) As at the Latest Practicable Date, Proton Capital has no direct or indirect interests in any assets which has been acquired or disposed of by or leased to any member of the Group since 31 December 2012 (the date to which the latest published audited consolidated financial statements of the Group were made up) or proposed to be so acquired, disposed of or leased.
(d) Proton Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its advice, letters, reports and/or summary of its opinions (as the case may be) and references to its name and logo in the form and context in which they respectively appear.
II-13 -

GENERAL INFORMATION

APPENDIX II

14. MISCELLANEOUS

(a) The registered office of the Company is at Tower D, Global Trade Center, No.36 of North Third Ring East Road, Dongcheng District, Beijing 100013, PRC.
(b) The company secretary of the Company is Mr. Lau Fai Lawrence, a practising certified public accountant in Hong Kong, a member of the Hong Kong Institute of Certified Public Accountants, a member of the Institute of Chartered Accountants in England and Wales and a fellow member of the Association of Chartered Certified Accountants in the UK.
(c) The registered address of the Parent is at No. 129 Xuan Wu Men Xi Da Street, Xi Cheng District, Beijing, PRC. The board of directors of the Parent comprises Jiang Weiping, Wang Jianguo, Li Jianjun, Li Zhongyuan and Sun Weilin. The legal owner of the Parent is the Center, whose registered address is at Huaibaishu St.2, Xuanwu District, Beijing, PRC. The managing committee of the Center comprises Lin Fusheng, Lu Yuguo, Zhao Linhua, Pang Jianguo, Zhang Xianping, Meng Tao, Yin Yisheng and Qian Kai. The ultimate controller of the Parent is Beijing SASAC.
(d) The registered address of the Fund is at Unit F802, 8F, Winland International Finance Center, Jinrong St. 2, Xicheng District, Beijing, PRC. The limited partners of the Fund include the Center, the Parent, 北京市國有資產經�有限責任公司 (Beijing State-owned Assets Management Co., Ltd.) and 北京祥龍資產經�有限責任公司 (Beijing Xianglong Assets Management Co., Ltd). The registered address of Beijing State-owned Assets Management Co., Ltd. is at 16F, Fukai Building B, Jinrong St. 19, Xicheng District, Beijing, PRC and its board of directors comprises Li Aiqing, Zhi Jun, Xu Zhe, Bai Jinrong, Fan Yuexian, Guo Yitao and Chen Ting. The registered address of Beijing Xianglong Assets Management Co., Ltd) is at Building 2, Guang’anmen Inner St. 311, Xuanwu District, Beijing, PRC and its board of directors comprises Zhang Tong, Meng Weidong, Wen Bo, Ma Ronghan, Qian Duanwei, Li Jiyan, Xiao Yuhang and Liu Tonglai. The general partner of the Fund is 北京京國發投資管理有限公司 (Beijing Jingguofa Investment Management Co., Ltd.*), whose registered address is at Unit F806, 8F, Winland International Finance Center, Jinrong St. 2, Xicheng District, Beijing, PRC and its sole executive director is Yin Rongyan.
(e) The Company’s H Share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited is situated at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(f) The Independent Financial Adviser is Proton Capital and its registered office is situated at Suite 06-07, 28/F, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong.
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GENERAL INFORMATION

APPENDIX II

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection on the website of the SFC (www.sfc.hk) and the website of the Company at www.bbmg.com.cn from the date of this circular up to and including the date of the EGM:

(a) the Articles;
(b) the audited consolidated accounts of the Company for the last two financial years ended 31 December 2011 and 31 December 2012 respectively;
(c) the Parent Subscription Agreement;
(d) the Fund Subscription Agreement;
(e) the letter from the Board, the text of which is set out on pages 5 to 22 of this circular;
(f) the letter from the IBC of Subscription, the text of which is set out on page 23 of this circular;
(g) the letter from the IBC of Whitewash Waiver, the text of which is set out on page 24 of this circular;
(h) the letter from Proton Capital, the text of which is set out on pages 25 to 39 of this circular;
(i) the letters of consent from Proton Capital referred to in the paragraph headed “Expert” in this appendix; and
(j) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix.
II-15 -

AI assistant

BBMG Corporation — Proxy Solicitation & Information Statement 2013

50338_rns_2013-10-14_7132aa9f-eed3-4442-904b-579a01ee33da.pdf

(1) PROPOSED ISSUE AND PLACING OF A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT AND (3) WHITEWASH WAIVER

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Executive Directors

Non-executive Director

Headquaters

Independent Non-executive Directors

(1) PROPOSED ISSUE AND PLACING OF A SHARES

(2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT AND (3) WHITEWASH WAIVER

I. INTRODUCTION

LETTER FROM THE BOARD

II. PROPOSED ISSUE AND PLACING OF A SHARES

1. Proposal in relation to the compliance and satisfaction by the Company of the requirements of the non-public issue and placing of A shares of the Company

2. Details of the Proposed Placing

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

3. Subscription Agreements entered into pursuant to the Proposed Placing

4. General information on the Fund

5. Validity of resolutions

6. Proposal in relation to the plan of the Proposed Placing

7. Proposal in relation to the report on previous proceeds

8. Proposal in relation to the feasibility study report

(i) BBMG international logistics park

(ii) Furniture manufacturing project

9. Proposal in relation to the approval of granting a waiver to the Parent and its concert party from the obligation to make a general offer under the PRC laws and regulations

10. Proposal in relation to the approval of granting the Whitewash Waiver under the Takeovers Code

11. Authorizations to the Board in connection with the Proposed Placing

12. Fund raising in the past twelve months

LETTER FROM THE BOARD

13. Directors’ Confirmation

III. CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT

1. Major terms of the Parent Subscription Agreement

LETTER FROM THE BOARD

Lock-up Undertaking:

LETTER FROM THE BOARD

2. General information on the parties to the Parent Subscription Agreement

LETTER FROM THE BOARD

3. Implications under the Hong Kong Listing Rules

4. Director’s confirmation

IV. EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

V. REASONS FOR AND BENEFITS OF THE PROPOSED PLACING AND THE PARENT SUBSCRIPTION

LETTER FROM THE BOARD

VI. WHITEWASH WAIVER

LETTER FROM THE BOARD

VII. IBC OF SUBSCRIPTION, IBC OF WHITEWASH WAIVER AND THE INDEPENDENT FINANCIAL ADVISER

VIII. PROPOSAL IN RELATION TO THE PLAN ON SHAREHOLDERS’ RETURN

IX. RECOMMENDATION

X. EGM

The notice of EGM was despatched to you on 10 September 2013.

XI. ADDITIONAL INFORMATION

CONNECTED TRANSACTION – THE PARENT SUBSCRIPTION

THE PROPOSED PLACING, THE PARENT SUBSCRIPTION, THE FUND SUBSCRIPTION AND THE WHITEWASH WAIVER

LETTER FROM PROTON CAPITAL

(1) PROPOSED ISSUE AND PLACING OF A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE PARENT AND (3) WHITEWASH WAIVER

INTRODUCTION

LETTER FROM PROTON CAPITAL

BASIS OF OUR OPINION

LETTER FROM PROTON CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

(A) The Proposed Placing, the Parent Subscription and the Fund Subscription

(1) Background of the Proposed Placing, the Parent Subscription and the Fund Subscription

Information on the Group

LETTER FROM PROTON CAPITAL

LETTER FROM PROTON CAPITAL

Information on the Fund and the Parent

Financing alternatives available to the Group

LETTER FROM PROTON CAPITAL

LETTER FROM PROTON CAPITAL

(2) The Subscription Agreements

LETTER FROM PROTON CAPITAL

The Subscription Price

LETTER FROM PROTON CAPITAL

BBMG Corporation Proxy Solicitation & Information Statement 2013