The accompanying notes are an integral part
of these consolidated financial statements.
The accompanying notes are an integral part
of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares data)
1. Background information of business and organization
Xinyuan Real Estate Co., Ltd. (the “Company”)
and its subsidiaries (collectively the “Group”) are principally engaged in residential real estate development and
the provision of property management services. The Group’s operations are conducted mainly in the People’s Republic
of China (“PRC”). In 2012, the Group expanded its business into the U.S. residential real estate market and established
Vista Sierra, LLC, XIN Irvine, LLC and 421 Kent Development, LLC to acquire three projects in Reno, Nevada, Irvine, California
and Brooklyn, New York, respectively. On April 6, 2012, September 25, 2012 and December 9, 2015, Zhengzhou Jiantou Xinyuan United
Real Estate Co., Ltd. , Henan Wanzhong Real Estate Co., Ltd. and Kunming Huaxia Xinyuan Real Estate Co., Ltd., subsidiaries of
the Company, were liquidated, respectively. On October 18, 2013, Kunshan Xinyuan Real Estate Co., Ltd. (“Kunshan Xinyuan”)
acquired a 100% equity interest in Jiangsu Jiajing Real Estate Co., Ltd. On January 27, 2014, Xinyuan (China) Real Estate, Ltd.
acquired a 100% equity interest in Sanya Beida Science and Technology Park Industrial Development Co., Ltd. (“Sanya Beida”).
On April 11, 2014, Kunshan Xinyuan acquired a 100% equity interest in Shanghai Junxin Real Estate Co., Ltd. (“Shanghai Junxin”).
The Sanya Beida and Shanghai Junxin acquisitions were accounted for as asset acquisitions. Pursuant to the Share Transfer Agreement
entered into by Kunshan Xinyuan and CITIC Trust Co., Ltd. (“CITIC”) on May 27, 2014, 49% of the equity interest in
Shanghai Junxin was transferred to CITIC. Pursuant to the Share Transfer Agreement entered into by Shandong Xinyuan and Shenzhen
Ping’an Dahua Huitong Wealth Management Co., Ltd. (“Ping’an”) on June 24, 2014, 5% of the equity interest
in Jinan Xinyuan Wanzhuo Real Estate Co., Ltd. (“Jinan Wanzhuo”) was transferred to Ping’an. Pursuant to the
Share Transfer Agreement entered into by Xinyuan (China) Real Estate, Ltd. and Shenzhen Lianxin Investment Management Co., Ltd.
(“Lianxin”) on September 15, 2014, 25% of the equity interest in Changsha Xinyuan Wanzhuo Real Estate Co., Ltd. (“Changsha
Wanzhuo”) was transferred to Lianxin. In December 2014, the Group expanded its business into the Malaysia residential real
estate market through acquisition of 100% equity interest in XIN Eco Marine Group Properties Sdn Bhd (formerly named EMG Group
Properties Sdn Bhd) (see Note 9).
On March 2 and May 15, 2015, Shandong Xinyuan
Real Estate Co., Ltd. (“Shandong Xinyuan”) acquired 82% and 18% equity interest, respectively, in Shandong Renju Real
Estate Co., Ltd. (“Shandong Renju”). The Shandong Renju acquisition was accounted for as asset acquisition. Pursuant
to the Share Transfer Agreement entered into by Henan Xinyuan Real Estate Co., Ltd. (“Henan Xinyuan”) and Ping’an
on March 5, 2015, 20% of the equity interest in Zhengzhou Shengdao Real Estate Co., Ltd. (“Zhengzhou Shengdao”) was
transferred to Ping’an.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares data)
As of December 31, 2015, subsidiaries of
the Company and its consolidated variable interest entities included the following entities:
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan International Property Investment Co., Ltd.
|
|
Cayman Islands
October 6, 2011
|
|
US$
|
500,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan International (HK) Property Investment Co., Limited.
|
|
Hong Kong
October 26, 2011
|
|
HK$
|
3,000,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
XIN Development Group International Inc.
|
|
United States
November 10, 2011
|
|
US$
|
0
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan Real Estate, Ltd. (“Xinyuan”)
|
|
Cayman Islands
January 27, 2006
|
|
US$
|
50,000,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Glory International Ltd.
|
|
Hong Kong
January 17, 2001
|
|
HK$
|
10,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Good Development Ltd.
|
|
Hong Kong
January 17, 2001
|
|
HK$
|
10,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elite Quest Holdings Ltd.
|
|
Hong Kong
November 19, 2001
|
|
HK$
|
10,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
XIN Irvine, LLC
|
|
United States
July 12, 2012
|
|
US$
|
50,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vista Sierra, LLC
|
|
United States
May 1, 2012
|
|
US$
|
0
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
XIN Development Management East, LLC
|
|
United States
August 28, 2012
|
|
US$
|
1,000
|
|
|
|
100
|
%
|
|
Property management services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
XIN NY Holding, LLC
|
|
United States
August 29, 2012
|
|
US$
|
1,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares dat
a)
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
421 Kent Development, LLC
|
|
United States
August 29, 2012
|
|
US$
|
1,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan Sailing Co., Ltd.
|
|
Hong Kong
June 21, 2013
|
|
HK$
|
3,000,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AWAN Plasma Sdn Bhd
|
|
Malaysia
April 16, 2007
|
|
MYR
|
33,577,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
XIN Eco Marine Group Properties Sdn Bhd
|
|
Malaysia
July 9, 2014
|
|
MYR
|
33,217,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan Internet Finance Co., Ltd.
|
|
Cayman Islands
July 7, 2015
|
|
US$
|
50,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Dawn International Ltd.
|
|
Cayman Islands
July 7, 2015
|
|
US$
|
50,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Legend International Ltd.
|
|
Cayman Islands
July 7, 2015
|
|
US$
|
50,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NewPoint International Ltd.
|
|
Cayman Islands
July 7, 2015
|
|
US$
|
50,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NewGrace International Ltd.
|
|
Cayman Islands
July 7, 2015
|
|
US$
|
50,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Online Finance Research Institute Limited
|
|
Hong Kong
July 17, 2015
|
|
US$
|
1,000,000
|
|
|
|
100
|
%
|
|
Dormant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Genesis Ocean Investments Ltd.
|
|
Hong Kong
August 19, 2015
|
|
HK$
|
100
|
|
|
|
100
|
%
|
|
Investment holding company
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares dat
a)
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Honest View Development Ltd.
|
|
Hong Kong
August 19, 2015
|
|
|
HK$
|
100
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Honour Triumph Enterprises Ltd.
|
|
Hong Kong
August 19, 2015
|
|
|
HK$
|
100
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well Poly Holdings Ltd.
|
|
Hong Kong
August 19, 2015
|
|
|
HK$
|
100
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Yasheng Construction Material Co., Ltd.
|
|
PRC
October 22, 2013
|
|
|
US$
|
50,000,000
|
|
|
|
100
|
%
|
|
Sales of construction materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Jiasheng Real Estate Co., Ltd.
|
|
PRC
December 2, 2013
|
|
|
US$
|
60,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Yusheng Landscape Design Co., Ltd.
|
|
PRC
December 25, 2013
|
|
|
US$
|
70,000,000
|
|
|
|
100
|
%
|
|
Landscaping engineering and management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan (China) Real Estate, Ltd. (“WFOE”)
|
|
PRC
April 10, 2006
|
|
|
US$
|
307,000,000
|
|
|
|
100
|
%
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan Xinyuan Real Estate Co., Ltd. (“Henan Xinyuan”)
|
|
PRC
May 19, 1997
|
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qingdao Xinyuan Xiangrui Real Estate Co., Ltd.
|
|
PRC
February 9, 2006
|
|
|
RMB
|
10,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shandong Xinyuan Real Estate Co., Ltd. (“Shandong Xinyuan”)
|
|
PRC
June 2, 2006
|
|
|
RMB
|
300,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan Property Service Co., Ltd.
|
|
PRC
December 28, 1998
|
|
|
RMB
|
50,000,000
|
|
|
|
100
|
%
|
|
Property management services
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares dat
a)
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Mingyuan Landscape Engineering Co., Ltd.
|
|
PRC
February 17, 2004
|
|
|
RMB
|
2,000,000
|
|
|
|
100
|
%
|
|
Landscaping engineering and management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Xinyuan Computer Network Engineering Co., Ltd.
|
|
PRC
May 26, 2004
|
|
|
RMB
|
2,000,000
|
|
|
|
100
|
%
|
|
Installation of intercom
systems
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan Xinyuan Wanzhuo Real Estate Co., Ltd. (“Henan Wanzhuo”)
|
|
PRC
December 29, 2011
|
|
|
RMB
|
20,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Suzhou Xinyuan Real Estate Development Co., Ltd. (“Suzhou Xinyuan”)
|
|
PRC November 24, 2006
|
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anhui Xinyuan Real Estate Co., Ltd.
|
|
PRC
December 7, 2006
|
|
|
RMB
|
50,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kunshan Xinyuan Real Estate Co., Ltd.
|
|
PRC
January 31, 2008
|
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan Real Estate (Chengdu) Co., Ltd.
|
|
PRC
June 12, 2007
|
|
|
RMB
|
220,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xuzhou Xinyuan Real Estate Co., Ltd.
|
|
PRC
November 09, 2009
|
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan
Xinyuan Jiye Real Estate Co.,
Ltd.
|
|
PRC
November 15, 2009
|
|
|
RMB
|
50,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Xinyuan Wanzhong Real Estate Co., Ltd. (“Beijing Wanzhong”)
|
|
PRC
March 4, 2008
|
|
|
RMB
|
900,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares dat
a)
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Heju Management Consulting Service
Co.,
Ltd.
|
|
PRC
January 16, 2009
|
|
RMB
|
30,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinyuan Renju (Beijing) Asset Management Co., Ltd.
|
|
PRC
January 16, 2009
|
|
RMB
|
30,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Jiantou Xinyuan Real Estate Co., Ltd. (“Jiantou Xinyuan”)
|
|
PRC
June 13, 2005
|
|
RMB
|
10,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Xinyuan Priority Real Estate Consulting Co., Ltd.
|
|
PRC
March 8, 2012
|
|
RMB
|
30,000,000
|
|
|
|
100
|
%
|
|
Real estate consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan Xinyuan Priority Commercial Management Co., Ltd.
|
|
PRC
August 10, 2012
|
|
RMB
|
2,000,000
|
|
|
|
100
|
%
|
|
Leasing management services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Suzhou Xinyuan Wanzhuo Real Estate Co., Ltd.
|
|
PRC
September 20, 2012
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Xinyuan Jiye Real Estate Co., Ltd.
|
|
PRC
February 17, 2013
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jiangsu Jiajing Real Estate Co., Ltd.
|
|
PRC
March 28, 2005
|
|
RMB
|
150,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing XIN Media Co., Ltd.
|
|
PRC
July 10, 2013
|
|
RMB
|
10,000,000
|
|
|
|
100
|
%
|
|
Culture and Media services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xingyang Xinyuan Real Estate Co., Ltd.
|
|
PRC
July 25, 2013
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APEC Construction Investment (Beijing) Co., Ltd.
|
|
PRC
August 1, 2013
|
|
RMB
|
100,000,000
|
|
|
|
100
|
%
|
|
Dormant
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares dat
a)
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Xinxiang Huicheng Decoration Co., Ltd.
|
|
PRC
October 18, 2013
|
|
RMB
|
10,000,000
|
|
|
|
100
|
%
|
|
Property decoration services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinrongji (Beijing) Investment Co., Ltd.
|
|
PRC
December 25, 2013
|
|
RMB
|
100,000,000
|
|
|
|
100
|
%
|
|
Dormant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanya Beida Science and Technology Park Industrial Development Co., Ltd.
|
|
PRC
January 10, 2014
|
|
RMB
|
200,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chengdu Xinyuan Wanzhuo Real Estate Co., Ltd.
|
|
PRC
February 21, 2014
|
|
RMB
|
50,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kunming Huaxia Xinyuan Real Estate Co., Ltd.*
|
|
PRC
May 27, 2014
|
|
RMB
|
100,000,000
|
|
|
|
80
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Hengsheng Real Estate Co., Ltd.
|
|
PRC
June 19, 2014
|
|
RMB
|
20,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Xinyuan Xindo Park E-commerce Co., Ltd.
|
|
PRC
August 12, 2014
|
|
RMB
|
202,000,000
|
|
|
|
100
|
%
|
|
Electronic commerce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Economy Cooperation Ruifeng Investment Co., Ltd.
|
|
PRC
September 15, 2014
|
|
RMB
|
20,000,000
|
|
|
|
90
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tianjin Xinyuan Real Estate Co., Ltd.
|
|
PRC
September 17, 2014
|
|
RMB
|
100,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xi’an Xinyuan Metropolitan Business Management Co., Ltd.
|
|
PRC
November 25, 2014
|
|
RMB
|
3,000,000
|
|
|
|
100
|
%
|
|
Property management services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Xinleju Technology Development Co., Ltd.
|
|
PRC
December 24, 2014
|
|
RMB
|
10,000,000
|
|
|
|
100
|
%
|
|
Technical service
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares dat
a)
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changsha Xinyuan Wanzhuo Real Estate Co., Ltd.
|
|
PRC
April 3, 2014
|
|
RMB
|
100,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shanghai Junxin Real Estate Co., Ltd. (“Shanghai Junxin”)
|
|
PRC
January 16, 2014
|
|
RMB
|
5,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Yue-Mart Commerce and Trade Co., Ltd
|
|
PRC
January 1, 2015
|
|
RMB
|
30,000,000
|
|
|
|
100
|
%
|
|
Retail store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Xinhe Investment Development Co., Ltd
|
|
PRC
May 5, 2015
|
|
RMB
|
5,000,000
|
|
|
|
100
|
%
|
|
Investment holding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jinan Yue-Mart Commerce and Trade Co., Ltd
|
|
PRC
December 4, 2015
|
|
RMB
|
3,000,000
|
|
|
|
100
|
%
|
|
Retail store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan Yue-Mart Commerce and Trade Co., Ltd
|
|
PRC
March 23, 2015
|
|
RMB
|
10,000,000
|
|
|
|
100
|
%
|
|
Retail store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan Xinyuan Guangsheng Real Estate Co., Ltd.
|
|
PRC
July 27, 2015
|
|
RMB
|
40,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shanghai Hexinli Property Management Center (Limited partnership)
|
|
PRC
July 28, 2015
|
|
RMB
|
100,000
|
|
|
|
100
|
%
|
|
Property management services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shenzhen Xilefu Internet Financial Service Co., Ltd.
|
|
PRC
June 12, 2015
|
|
RMB
|
5,000,000
|
|
|
|
100
|
%
|
|
Dormant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shenzhen Xileju Technology Development Co., Ltd.
|
|
PRC
June 4, 2015
|
|
RMB
|
5,000,000
|
|
|
|
100
|
%
|
|
Intelligent information system development
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
As of December 31, 2014 and 2015
For the years ended December 31, 2013,
2014 and 2015
(All amounts stated in US$, except for
number of shares dat
a)
Company Name
|
|
Registered Place and
Date of Incorporation
|
|
Paid-up
Capital
|
|
|
Percentage
of Equity
Directly
Attributable
to the Group
|
|
|
Principal Activities
|
Subsidiary companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan Xinyuan Real Estate Marketing Co., Ltd.
|
|
PRC
July 30, 2015
|
|
RMB
|
1,000,000
|
|
|
|
100
|
%
|
|
Real estate marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shandong Xinyuan Renju Real Estate Co., Ltd. **
|
|
PRC
November 19, 2011
|
|
RMB
|
50,000,000
|
|
|
|
100
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Jinan Xinyuan Wanzhuo Real Estate Co., Ltd. (“Jinan Wanzhuo”)
|
|
PRC
December 4, 2013
|
|
RMB
|
300,000,000
|
|
|
|
95
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henan Xinyuan Quansheng Real Estate Co., Ltd.(“Henan Quansheng”)
|
|
PRC
January 14, 2015
|
|
RMB
|
40,000,000
|
|
|
|
90
|
%
|
|
Real estate development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhengzhou Shengdao Real Estate Co., Ltd.
(“Zhengzhou Shengdao”)
|
|
PRC
October 14, 2013
|
|
RMB
|
20,000,000
|
|
|
|
80
|
%
|
|
Real estate development
|
* Liquidated on December 9, 2015.
** Acquired on March 1, 2015.
Equity holdings remained unchanged throughout the year ended
December 31, 2015 except for Shanghai Junxin, Zhengzhou Shengdao, Henan Quansheng and Changsha Wanzhuo (see note 1 and 2(a)).
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
2. Summary of significant accounting policies
(a) The Company and basis of presentation and consolidation
Xinyuan Real Estate Co. Ltd. (the “Company”)
and its subsidiaries (collectively the “Group”) are principally engaged in residential real estate development and
the provision of property management services. The Group’s operations are conducted mainly in the People’s Republic
of China (“PRC”). In 2012, the Group expanded its business into the U.S. residential real estate market. The accompanying
consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.
GAAP”). The consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company
transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation.
Subsidiaries are consolidated from the
date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out
of the Group. Where there is a loss of control of a subsidiary, the consolidated financial statements include the results for the
part of the reporting year during which the Group has control.
In
accordance with ASC 810
Consolidation
Jinan Wanzhuo, Henan Quansheng and Zhengzhou Shengdao as of December 31, 2015 and
Shanghai Junxin, Jinan Wanzhuo and Changsha Wanzhuo as of December 31, 2014 are variable interest entities as they were not established
with sufficient equity at risk to finance their activities without additional subordinated financial support. As of December 31,
2014,
the Company was considered as the primary
beneficiary of Shanghai Junxin, Jinan Wanzhuo and Changsha Wanzhuo, as it has the power to direct the activities of Shanghai Junxin,
Jinan Wanzhuo and Changsha Wanzhuo that most significantly impact their economic performance and has the obligation to absorb the
losses and the right to receive benefits from Shanghai Junxin, Jinan Wanzhuo and Changsha Wanzhuo through its voting interest underlying
the 51%, the 95% and the 75% equity interests, respectively, in accordance with PRC Company Law and the articles of association
of Shanghai Junxin, Jinan Wanzhuo and Changsha Wanzhuo, respectively. Based on the above, Shanghai Junxin, Jinan Wanzhuo and Changsha
Wanzhuo are consolidated by the Company. As of December 31,2015, the Company is considered as the primary beneficiary of Jinan
Wanzhuo , Henan Quansheng and Zhengzhou Shengdao, as it has the power to direct the activities of Jinan Wanzhuo, Henan Quansheng
and Zhengzhou Shengdao that most significantly impact their economic performance and has the obligation to absorb the losses and
the right to receive benefits from Jinan Wanzhuo , Henan Quansheng and Zhengzhou Shengdao through its voting interest underlying
the 95%, the 90% and the 80% equity interests, respectively, in accordance with PRC Company Law and the articles of association
of Jinan Wanzhuo, Henan Quansheng and Zhengzhou Shengdao, respectively. Based on the above, Jinan Wanzhuo, , Henan Quansheng and
Zhengzhou Shengdao are consolidated by the Company.
Shanghai Junxin, with registered capital
of US$0.8 million (RMB5.0 million), was acquired by the Company on April 11, 2014, for the purpose of acquiring a parcel of land
located in Shanghai and undertaking a residential property development project accordingly. On May 27, 2014 (“transaction
date”), an unrelated trust company purchased 49% of the equity interest in Shanghai Junxin and lent US$81.2 million (RMB497.6
million) to Shanghai Junxin. The loan is for a two-year term and bears interest at an annual rate of 11.5% for the first year and
15.5% for the second year. As of December 31, 2014, Shanghai Junxin had one project under construction. Pursuant to the share purchase
agreement, the 49% of non-controlling equity interest of Shanghai Junxin will be repurchased by the Company in cash at the earlier
of the second anniversary of the transaction date or the day after the Company’s repayment of the shareholder’s loan
above. Therefore, the non-controlling interest is mandatorily redeemable and is accounted for as liability in accordance with ASC
480
Distinguishing Liabilities From Equity
. On January 12, 2015, the Company repurchased the 49% equity interest of Shanghai
Junxin from CITIC and Shanghai Junxin ceased to be VIE.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Jinan Wanzhuo, with registered capital
of US$48.8 million (RMB300.0 million), was established by the Company on December 4, 2013, for the purpose of undertaking a residential
property development project in Jinan, Shandong province. On June 24, 2014 (“transaction date”), an unrelated asset
management company purchased 5% of the equity interest in Jinan Wanzhuo and lent US$111.7 million (RMB685.0 million) to Jinan Wanzhuo.
The loan is for a two-year term and bears interest at an annual rate of 11.24%. As of December 31, 2015, Jinan Wanzhuo had one
project under construction. Pursuant to the share purchase agreement, the 5% of non-controlling equity interest of Jinan Wanzhuo
will be repurchased by the Company in cash at the earlier of the second anniversary of the transaction date, or the date the Company
elects to repurchase the 5% equity interest of Jinan Wanzhuo. The Company can exercise its right of redemption starting from the
first anniversary of the transaction date. Therefore, the non-controlling interest is mandatorily redeemable and is accounted for
as liability in accordance with ASC 480
Distinguishing Liabilities From Equity
. In addition, since the Company planned to
repurchase the 5% equity interest of Jinan Wanzhuo within the next 12 months, the liability is classified as current liability.
Changsha Wanzhuo, with registered capital
of US$16.3 million (RMB100.0 million), was established by the Company on April 3, 2014, for the purpose of undertaking a residential
property development project in Changsha, Hunan province. On September 15, 2014 (“transaction date”), an unrelated
investment management company purchased 25% of the equity interest in Changsha Wanzhuo and lent US$65.4 million (RMB400.0 million)
to Changsha Wanzhuo. The loan is for a nine-month term and bears interest at an annual rate of 12%. As of December 31, 2014, Changsha
Wanzhuo had one project under construction. Pursuant to the share purchase agreement, the 25% of non-controlling equity interest
of Changsha Wanzhuo will be repurchased by the Company in cash at the date of full repayment of the loan above. Therefore, the
non-controlling interest is mandatorily redeemable and is accounted for as liability in accordance with ASC 480
Distinguishing
Liabilities From Equity
. On May 29, 2015, the Company repurchased the 25% equity interest of Changsha Wanzhuo from Lianxin
and Changsha Wanzhuo ceased to be VIE .
Zhengzhou Shengdao, with registered capital
of US$3.3 million (RMB20.0 million), was established by the Company on October 14, 2013, for the purpose of undertaking a residential
property development project in Zhengzhou, Henan province. On March 5, 2015 (“transaction date”), an unrelated asset
management company purchased 20% of the equity interest in Zhengzhou Shengdao and lent US$86.0million (RMB526.0 million) to Zhengzhou
Shengdao. The loan is for a two-year term and bears interest at an annual rate of 10.984%. As of December 31, 2015, Zhengzhou
Shengdao had two projects under construction. Pursuant to the share purchase agreement, the 20% of non-controlling equity interest
of Zhengzhou Shengdao will be repurchased by the Company in cash at the earlier of the second anniversary of the transaction date,
or the date the Company elects to repurchase the 20% equity interest of Zhengzhou Shengdao. The Company can exercise its right
of redemption starting from the first anniversary of the transaction date. Therefore, the non-controlling interest is mandatorily
redeemable and is accounted for as liability in accordance with ASC 480
Distinguishing Liabilities From Equity
. In addition,
since the Company has no intention to repurchase the 20% equity interest of Zhengzhou Shengdao within the next 12 months, the
liability is classified as non-current liability.
Henan Quansheng, with registered capital
of US$6.5 million (RMB40.0 million), was established by the Company on January 14, 2015, for the purpose of undertaking a residential
property development project in Zhengzhou, Henan province. On March 23, 2015 (“transaction date”), an unrelated asset
management company purchased 10% of the equity interest in Henan Quansheng and lent US$38.1 million (RMB233.0 million) to Henan
Quansheng. The loan is for a two-year term and bears interest at an annual rate of 11%. As of December 31, 2015, Henan Quansheng
had one project under construction. Pursuant to the share purchase agreement, the 10% of non-controlling equity interest of Henan
Quansheng will be repurchased by the Company in cash at the earlier of the second anniversary of the transaction date, or the date
the Company elects to repurchase the 10% equity interest of Henan Quansheng. The Company can exercise its right of redemption starting
from the first anniversary of the transaction date. Therefore, the non-controlling interest is mandatorily redeemable and is accounted
for as liability in accordance with ASC 480
Distinguishing Liabilities From Equity
. In addition, since the Company has no
intention to repurchase the 10% equity interest of Henan Quansheng within the next 12 months, the liability is classified as non-current
liability.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
The carrying amounts and classifications
of the assets and liabilities of the VIEs are as follows:
|
|
December 31, 2014
|
|
|
December 31, 2015
|
|
|
|
US$
|
|
|
US$
|
|
Current assets
|
|
|
681,567,691
|
|
|
|
412,763,119
|
|
Non-current assets
|
|
|
2,268,129
|
|
|
|
7,469,208
|
|
Total assets
|
|
|
683,835,820
|
|
|
|
420,232,327
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
537,233,210
|
|
|
|
262,759,976
|
|
Non-current liabilities
|
|
|
82,124,393
|
|
|
|
66,219,046
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
619,357,603
|
|
|
|
328,979,022
|
|
The financial performance and cash flows
of the VIEs are as follows:
|
|
Year ended
December 31, 2014
|
|
|
Year ended
December 31, 2015
|
|
|
|
US$
|
|
|
US$
|
|
Revenue
|
|
|
25,715,106
|
|
|
|
168,108,983
|
|
Cost of revenue
|
|
|
(21,406,445
|
)
|
|
|
(125,707,809
|
)
|
Net (loss)/profit
|
|
|
(1,702,533
|
)
|
|
|
9,944,795
|
|
Net cash used in operating activities
|
|
|
(252,000,125
|
)
|
|
|
(4,601,835
|
)
|
Net cash used in investing activities
|
|
|
(799,144
|
)
|
|
|
(6,098,628
|
)
|
Net cash provided by financing activities
|
|
|
358,987,226
|
|
|
|
35,532,406
|
|
As of December 31, 2015, the current liabilities
of the VIEs included amounts due to subsidiaries of the Group of US$55,881,889 (2014:214,657,398), which was eliminated upon consolidation
by the Company.
As of December 31, 2015, the land use rights
included in real estate properties under development of the VIEs of US$289,057,933 (2014:404,133,649) were pledged as collateral
for bank loans and other debt. Creditors of the VIEs have no recourse to the general credit of the primary beneficiary.
The VIEs contributed 14.4% (2014:2.8%)
of the Company’s consolidated revenues for the year ended December 31, 2015.
(b) Use of Estimates
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes, and disclosure of contingent liabilities at the date of the consolidated financial
statements. Estimates are used for, but not limited to, the selection of the useful lives of property and equipment and capital
lease, allowance for doubtful debt associated with accounts receivable, other receivables, deposit for land use rights, other deposits
and prepayments and advances to suppliers, fair values of the purchase price allocation with respect to business combinations,
revenue recognition for percentage of completion method, accounting for the share-based compensation, classification of financial
instruments, accounting for mandatorily redeemable non-controlling interests, accounting for deferred income taxes, impairment
of real estate properties under development, real estate properties held for lease and long-term investments, and provision necessary
for contingent liabilities. Management analyzed the forecasted cash flows for the twelve months from December 31, 2015, which indicates
that the Group will have sufficient liquidity from cash flows generated by operations and existing credit facilities and therefore,
there will be sufficient financial resources to settle borrowings and payables that will be due in the next twelve months. Management
believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results
could differ from these estimates.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
(c) Fair value of financial instruments
Financial instruments include cash and
cash equivalents, restricted cash, restricted deposit, short-term investments, accounts receivable, other deposits and prepayments,
due from employees, due from related party, other receivables, investment in joint venture and other long-term investment, accounts
payable, customer deposits, other payables and accrued liabilities, and borrowings. The carrying amounts of cash and cash equivalents,
restricted cash, restricted deposit, short-term investments, accounts receivable, other deposits and prepayments, due from employees,
due from related party, other receivables, accounts payable, customer deposits, other payables and accrued liabilities, and short-term
bank borrowings approximate their fair value due to the short term maturities of these instruments. The Group is exposed to credit
risk for financial assets and its maximum amount of loss in the event of non-performance by the counterparty is the recorded amount.
The Group generally does not require collateral for its financial assets or liabilities, except as disclosed in Note 10, Note
11 and Note 12. Trading securities were initially recognized at cost and subsequently remeasured at the end of each reporting
period with the adjustment in its fair value recognized in profit and loss. Available-for-sale securities were initially recognized
at cost and subsequently remeasured at the end of each reporting period with the adjustment in its fair value recognized in accumulated
comprehensive income.
Investment in joint ventures and other
long-term investments have no quoted market prices and it is not practicable to estimate their fair value without incurring excessive
costs. The Group reviews the investments for impairment whenever events or changes in circumstances indicate that the carrying
amount may no longer be recoverable.
The carrying amounts of the long-term borrowings
approximate their fair values because the stated interest rates approximate rates currently offered by financial institutions for
similar debt instruments of comparable credit risk and maturities.
Accounting guidance defines fair value
as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted
to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it
considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair
value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level
of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be
used to measure fair value:
Level 1-Observable inputs that reflect
quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2-Includes other inputs that are
directly or indirectly observable in the market place
Level 3-Unobservable inputs which are supported
by little or no market activity
The carrying values of the Company’s
financial instruments approximate their fair values except for the short-term investments.
ASC 820 describes three main approaches
for measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market
approach uses prices and other relevant information generated from market transactions involving identical or comparable assets
or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement
is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount
that would currently be required to replace an asset.
In accordance with ASC 820, the investment
in equity securities, real estate investment trusts (“REITs”) and money market instrument classified as trading security
is within Level 1 as the Company measures the fair value using quoted trading prices that are published on a regular basis.
(d) Foreign currency translation
The
Group’s financial information is presented in U.S. dollars. The functional currency of the Company is U.S. dollars. The functional
currency of the Company’s subsidiaries in the PRC is Renminbi (“RMB”), the currency of the PRC. The functional
currency of the Company’s subsidiaries in
Malaysia
is Malaysian Ringgit (“MYR”), the currency of the Malaysia. The functional currency of the Company’s subsidiaries
other than those in the PRC and Malaysia is U.S. dollars. Transactions by the Company’s subsidiaries in the PRC which are
denominated in currencies other than RMB are remeasured into RMB at the exchange rate quoted by the People’s Bank of China
(“PBOC”) prevailing at the dates of the transactions. Exchange gains and losses resulting from transactions denominated
in a currency other than RMB are included in the consolidated statements of comprehensive income as exchange gains. The consolidated
financial statements of the Company’s subsidiaries have been translated into U.S. dollars in accordance with ASC 830,
“Foreign Currency Matters”
. The PRC subsidiaries’ financial information is first prepared in RMB and then
is translated into U.S. dollars at period-end exchange rates as to assets and liabilities and average exchange rates as to revenue
and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.
XINYUAN REAL
ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
The effects of foreign currency translation
adjustments are included as a component of accumulated other comprehensive income in shareholders’ equity.
|
|
December 31,
2013
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year end RMB: US$ exchange rate
|
|
|
6.0969
|
|
|
|
6.1190
|
|
|
|
6.4936
|
|
Period average RMB: US$ exchange rate
|
|
|
6.1956
|
|
|
|
6.1424
|
|
|
|
6.2272
|
|
The RMB is not freely convertible into
foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made
that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
(e) Cash and cash equivalents
The Group considers all highly liquid investments
with original maturities of three months or less when purchased to be cash equivalents. The Group maintains bank accounts mainly
in the PRC, Hong Kong and United States. The vast majority of the PRC bank balances are denominated in RMB. Hong Kong and United
States bank balances are denominated in U.S. dollars.
Cash includes cash on hand and demand
deposits in accounts maintained with various state-owned and private banks within the PRC, Hong Kong and United States. Total
cash in banks at December 31, 2015 amounted to US$387,528,092 (December 31, 2014: US$140,494,754), of which the vast majority
of deposits are not covered by insurance. The Group has not experienced any losses in such accounts and management believes it
is not exposed to any risks on its cash in bank accounts.
(f) Restricted cash and restricted deposit
The Group is required to maintain certain
deposits with banks that provide mortgage loans to the Group’s customers in order to purchase residential units from the
Group (see Note 14). These balances are subject to withdrawal restrictions and totaled US$47,351,169 as of December 31, 2015 (December
31, 2014: US$29,674,355). The Group is also required to maintain certain deposits with banks and financial institutions that provide
loans to the Group. As of December 31, 2015, the Group held US$315,786,041 (December 31, 2014: US$333,092,735) in its restricted
cash accounts, representing funds received from loans, which were designated to finance permitted project development expenditures
that are subject to approval by the lender. As of December 31, 2015, the Group also held US$232,351,854 (December 31, 2014: US$68,990,158)
in its restricted cash accounts and held nil (December 31, 2014: US$69,357,738) in its restricted deposits accounts as security
for its short-term loans (see Note 10), held nil (December 31, 2014: US$24,513,809) in its restricted cash accounts and nil (December
31, 2014: nil) in its restricted deposit accounts as security for its long-term loans and current portion of long-term loans (see
Note 11), and held US$29,918,940 (December 31, 2014: US$68,672,151) in its restricted cash accounts as security for its other
debts (see Note 12). These restricted cash deposits are not covered by insurance. The Group has not experienced any losses in
such accounts and management believes it is not exposed to any risks on its cash in bank accounts.
(g) Real estate properties
development completed, under development and held for sale
Real estate properties consist of finished
residential unit sites, commercial offices and residential unit sites under development. The Group leases the land for the residential
unit sites under land use right leases with various terms from the PRC. Real estate properties development completed, under development
and held for sale are stated at the lower of carrying amounts or fair value less selling costs.
Expenditures for land development, including
cost of land use rights, deed tax, pre-development costs and engineering costs, are capitalized and allocated to development projects
by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales value
of units to the estimated total sales value times the total project costs.
XINYUAN REAL
ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Costs of amenities transferred to buyers
are allocated as common costs of the project that are allocated to specific units as a component of total construction costs. For
amenities retained by the Group, costs in excess of the related fair value of the amenities are also treated as common costs. Results
of operations of amenities retained by the Group are included in the current operating results.
In accordance with ASC 360,
“Property,
Plant and Equipment”
(“ASC 360”), real estate property development completed, under development and held
for sale are subject to valuation adjustments when the carrying amount exceeds fair value. An impairment loss is recognized only
if the carrying amount of the assets is not recoverable and exceeds fair value. The carrying amount is not recoverable if it exceeds
the sum of the undiscounted cash flows expected to be generated by the assets.
When the profitability of a current project
deteriorates due to a slowdown in the sales pace, reduction of pricing or some other factor, this indicates that there may be a
possible future loss on delivery and possible impairment in the recoverability of the assets. Accordingly, the assets of such project
are subsequently reviewed for future losses and impairment by comparing the estimated future undiscounted cash flows for the project
to the carrying value of such project. If the estimated future undiscounted cash flows are less than the asset’s carrying
value, such deficit will be charged as a future loss and the asset will then be written down to its estimated fair value.
The Group determines estimated fair value
primarily by discounting the estimated future cash flows relating to the asset. In estimating the cash flows for a project, the
Group uses various factors including (a) the expected pace at which the planned number of units will be sold, based on competitive
market conditions, historical trends in sales pace and actual average selling prices of similar product offerings and any other
long or short-term economic conditions which may impact the market in which the project is located; (b) the estimated net
sales prices expected to be attained based on the current market conditions and historical price trends, as well as any estimated
increases in future sales prices based upon the projected rate of unit sales, the estimated time gap between presale and expected
delivery, the impact of government policies, the local and regional competitive environment, and certain external factors such
as the opening of a subway line, school or factory; and (c) the expected costs to be incurred in the future by the Group,
including, but not limited to, construction cost, construction overhead, sales and marketing, sales taxes and interest costs.
The Group’s determination of fair
value requires discounting the estimated cash flows at a rate commensurate with the inherent risk associated with the assets and
related estimated cash flows. The discount rate used in determining each project’s fair value depends on the stage of development,
location and other specific factors that increase or decrease the risk associated with the estimated cash flows.
The properties held for sale consist of
finished lots for single family home communities and custom homes located in Reno, Nevada, U.S., and finished condominium units
located in Irvine, California, U.S., which were acquired in the second and third quarter of 2012, respectively. All of the properties
held for sale were sold as of December 31, 2015.
For the years ended December 31, 2013,
2014 and 2015, the Group did not recognize any impairment for real estate properties completed, under development and held for
sale.
(h) Revenue recognition
Real estate sales are reported in accordance
with the provisions of ASC 360,
“Property, Plant and Equipment”
and ASC 976,
“Real Estate-Retail Land”
.
Percentage-of-completion method
Revenue and profit from the sale
of development properties is recognized by the percentage-of-completion method on the sale of individual units when the following
conditions are met:
|
l
|
Construction is beyond a preliminary stage.
|
|
l
|
The buyer is committed to the extent of being unable to require a refund except for non-delivery of the unit.
|
|
l
|
Sufficient units have already been sold to assure that the entire property will not revert to rental property.
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
|
l
|
Sales prices are collectible.
|
|
l
|
Aggregate sales proceeds and costs can be reasonably estimated.
|
If any of the above criteria is not met,
proceeds are accounted for as customer deposits until the criteria are met.
During parts of 2011 and 2012 the Group
offered certain homebuyers seller-financing arrangements. All the homebuyers entered into such arrangement were subject to credit
verification procedures. In addition, accounts receivable balances are unsecured, but monitored on an ongoing basis via the Group’s
management reporting procedures. The Group provided longer payment terms, ranging between six months to two years to particular
home buyers after applying strict credit requirements based on the Group’s credit policy. In the second half of 2012, execution
of seller-financed contracts dropped significantly to the point that the Group did not offer seller-financed contracts to second
home buyers starting in the fourth quarter of 2012. Commencing in the second quarter of 2014, the Group again offer seller-financed
contracts. Under current seller-financed contract arrangements, the buyer pays the purchase price for the residential unit in installment
payments over one year. These contracts generally require a 10% down payment upon the contract execution date, the second payment
of 20% to 70% within 180 days to 270 days and the final payment 30 days before delivery.
Since 2013, PRC banks have tightened
the distributions of mortgage loans to homebuyers. Therefore, mortgage loans for homebuyers have been subject to longer processing
periods or even denied by the banks. The Group took the position that the processing periods of the contracts with underlying mortgage
loans exceeding one year cannot be recognized as revenue under the percentage of completion method. As a result, the Group reversed
contracted sales amounts of US$4.2 million related to sales contracts of 28 apartments when determining revenue to be recognized
under the percentage of completion method in 2015.
Under the percentage of completion method,
revenues from units sold and related costs are recognized over the course of the construction period, based on the completion progress
of a project. In relation to any project, revenue is determined by calculating the ratio of incurred costs, including land use
rights costs and construction costs, to total estimated costs and applying that ratio to the contracted sales amounts. Cost of
sales is recognized by determining the ratio of contracted sales during the period to total estimated sales value, and applying
that ratio to the incurred costs. Current period amounts are calculated based on the difference between the life-to-date project
totals and the previously recognized amounts.
The effect of changes to total estimated
contract cost or revenues, if any, are recognized in the period in which they are determined. Revenue recognized to date in excess
of amounts received from customers is classified as current assets under real estate properties under development. Amounts received
from customers in excess of revenue recognized to date are classified as current liabilities under customer deposits. As of December 31,
2014 and December 31, 2015, the gross amounts received from customers in excess of revenues recognized were US$223.5 million and
US$280.2 million, respectively.
Any losses occurred or forecast to occur
on real estate transactions are recognized in the period in which the loss is first anticipated.
Full accrual method
Revenue from sales of development properties
where the construction period, the period from the construction permit award date to the unit delivery date is expected to be 12
months or less, or the construction period is expected to be longer than 12 months and sales prices are not certain to be collected
is recognized by the full accrual method when the sale is consummated and the unit has been delivered. Revenue from the sale of
properties held for sale is recognized by the full accrual method at the time of the closing of an individual unit sale. This occurs
when title to the property is transferred to the buyer. A sale is not considered consummated until (a) the parties are bound
by the terms of a contract, (b) all consideration has been exchanged, (c) any permanent financing of which the seller
is responsible has been arranged, (d) all conditions precedent to closing have been performed, (e) the seller does not
have substantial continuing involvement with the property, and (f) the usual risks and rewards of ownership have been transferred
to the buyer. In addition, the buyer’s initial and continuing investment must be adequate to demonstrate a commitment to
pay for the property, and the buyer’s receivable, if any, must not be subject to future subordination. Sales transactions
not meeting all the conditions of the full accrual method are accounted for using the deposit method in which all costs are capitalized
as incurred, and payments received from the buyer are recorded as a deposit liability.
XINYUAN REAL ESTATE
CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
For the year ended December 31, 2013, revenue
was recognized in the amount of US$1.2 million for the resale of several parcels of the Northern Nevada Land Portfolio and US$5.4
million for the sale of 7 of 15 finished condominium units located in Irvine, California. For the year ended December 31, 2014,
revenue was recognized in the amount of US$4.9 million for the sales of 7 of 15 finished condominium units located in Irvine, California.
For the year ended December 31, 2015, revenue was recognized in the amount of US$0.8 million for the resale of the remaining parcels
of the Northern Nevada Land Portfolio and US$0.8 million for the sales of the remaining 1 finished condominium unit located in
Irvine, California.
Real estate lease income is recognized on
a straight-lin
e basis over the terms of the tenancy agreements. Depreciation
cost and maintenance cost of the property are recorded as the cost of rental income.
Other
revenue includes services ancillary to the Group’s real estate projects, including property management, landscaping
and computer network engineering. Property management income is ratably as services are provided over the term of the
property management agreements. Landscaping and computer network engineering income is recognized when services are provided.
(i) Accounts receivable
Accounts receivable consists of balances due
from customers for the sale of residential units in the PRC. These balances are unsecured, bear no interest and are due within
a year from the date of the sale.
Accounts receivable are reviewed periodically
as to whether their carrying value has become impaired. The Group considers the assets to be impaired if the collectability of
the balances become doubtful. As of December 31, 2014 and 2015, there was no allowance for doubtful debts.
(j) Other receivables
Other receivables consist of various cash advances
to unrelated companies and individuals with which the Group has business relationships. The balance as at December 31, 2015 mainly
included the amounts that the Company paid to third parties related to the direct negotiation model in acquiring lands.
Other receivables are reviewed periodically
as to whether their carrying value has become impaired. The Group considers the assets to be impaired if the collectability of
the balances becomes doubtful. As of December 31, 2014 and 2015, there was no allowance for doubtful debts.
(k) Deposits for land use rights
Deposits for land use rights consist of upfront
cash payments made to local land bureaus to secure land use rights under executed short-term or long-term land framework cooperation
agreements or land use rights agreements.
Deposits for land use rights are reviewed periodically
as to whether their carrying value has become impaired. The Group considers the assets to be impaired if the collectability of
the balances become doubtful. There were no impairment losses for any periods presented.
(l) Other deposits and prepayments
Other
deposits and prepayments mainly consist of upfront cash payments made to third parties related to direct negotiation model in
acquiring lands.
Other deposits and prepayments are reviewed
periodically as to whether their carrying value has become impaired. The Group considers the assets to be impaired if the collectability
of the balances become doubtful. There were no impairment losses for any periods presented.
(m) Advances to suppliers
Advances to suppliers consist of balances paid
to contractors and vendors for services and materials that have not been provided or received and generally relate to the development
and construction of residential units in the PRC. Advances to suppliers are reviewed periodically to determine whether their carrying
value has become impaired. The Group considers the assets to be impaired if it is doubtful that the services and materials can
be provided. As of December 31, 2014 and 2015, there was no allowance provided.
(n) Customer deposits
Customer deposits consist of amounts received
from customers relating to the sale of residential units in the PRC. In the PRC, customers will generally obtain financing for
the purchase of their residential unit prior to the completion of the project. The lending institution will provide the funding
to the Group upon the completion of the financing rather than the completion of the project. The Group receives these funds and
recognizes them as a current liability until the revenue can be recognized.
XINYUAN
REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
(o) Notes payable and other payables
Notes payable represents short-term bank
acceptance notes issued by financial institutions that entitle the holder to receive the stated amount from the financial
institutions at the maturity date of the notes. The Group has utilized notes payable to settle amounts owed to suppliers and
contractors. The notes payable is non-interest bearing and is normally settled within six months. Notes payable was
US$2,453,228 and US$46,986,399 as of December 31, 2014 and 2015, respectively.
Other payables consist of balances for non-construction
costs with unrelated companies and individuals with which the Group has business relationships.
(p) Real estate properties held for lease, net
Real estate properties held for lease are recorded
at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives
of the assets. Estimated useful lives of the real estate properties held for lease are 20-60 years.
Maintenance, repairs and minor renewals are
charged directly to expenses as incurred. Major additions and improvements to the real estate properties held for lease are capitalized.
In accordance with ASC 360,
“Property,
Plant and Equipment”
(“ASC 360”), real estate properties held for lease is subject to valuation adjustments
when the carrying amount exceeds fair value. An impairment loss is recognized only if the carrying amount of the assets is not
recoverable and exceeds fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows
expected to be generated by the assets.
For the years ended December 31, 2013, 2014
and 2015, the Group did not recognize any impairment for real estate properties held for lease.
(q) Property and equipment, net
Property and equipment are recorded at cost
less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
Estimated useful lives of the assets are as follows:
Aircraft
|
|
15 years
|
Vehicles
|
|
5 years
|
Furniture and fixtures
|
|
5 years
|
Maintenance, repairs and minor renewals are
charged directly to expense as incurred unless such expenditures extend the useful life or represent a betterment, in which case
they are capitalized.
(r) Long-term investments
The Group accounts for long-term investments
as equity method investment and cost method investments as follows:
Where the Group has significant influence over
the investee, the Group applies the equity method of accounting in accordance with ASC subtopic 323-10-20 (“ASC 323-10-20”),
Investments-Equity Method and Joint Ventures
. The reporting dates and accounting policies of the equity investee are the same
as the Group. The investment in the equity investee is stated at cost, including the Group’s share of the equity investee’s
net gain or loss, less any impairment in value. The Group recognizes in its consolidated statement of comprehensive income its
share of the net income of the equity investees.
On October 21, 2013, the Group acquired a 51%
equity interest in a joint venture, Shaanxi Zhongmao Economy Development Co., Ltd. (“Shaanxi Zhongmao”). There are
only two shareholders in this joint venture, the Group and the founder of Shaanxi Zhongmao (collectively, the “joint venture
shareholders”). According to the Shaanxi Zhongmao’s articles of association, all significant decisions require unanimous
consent of both the joint venture shareholders. Therefore, the joint venture shareholders exercise joint control over the joint
venture. Based on the above, the Group accounts for its investment in Shaanxi Zhongmao as joint venture under the equity method
in accordance with ASC 323-10-20. Investment income or loss is recognized by the Group periodically according to 51% of the total
net profit or loss generated by the equity investee.
On March 19, 2014, the Group together with
other four independent shareholders established a joint venture Huayi Xincheng (Beijing) Intelligent City Construction Co., Ltd.
(“Huayi Xincheng”), in which the Group holds 40% equity interest. According to the Huayi Xincheng’s articles
of association, all significant decisions require unanimous consent of the shareholders. Therefore, the joint venture shareholders
exercise joint control over the joint venture. Based on the above, the Group accounts for its investment in Huayi Xincheng as joint
venture under the equity method in accordance with ASC 323-10-20. Investment income or loss is recognized by the Group periodically
according to 40% of the total net profit or loss generated by the equity investee.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
In
accordance with ASC subtopic 325-20 (“ASC 325-20”),
Investments-Other: Cost Method Investments,
for
investments in an investee over which the Company does not have significant influence and which do not have readily determinable
fair value, the Company carries the investment at cost and only adjusts for other-than-temporary declines in fair value and distributions
of earnings that exceed the Company’s share of earnings since its investment. Management regularly evaluates the impairment
of the cost method investments based on performance and financial position of the investee as well as other evidence of market
value. Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financing, projected
and historical financial performance, cash flow forecasts and financing needs. An impairment loss is recognized in earnings equal
to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the
assessment is made. The fair value would then become the new cost basis of investment. Cost method accounting is also applied to
investments that are not considered as “in-substance” common stock investments, and do not have readily determinable
fair values.
As of December 31, 2014
and 2015, the Group has a 1.85% investment in Zhengzhou Lianhe Real Estate Co., Ltd. The Group does not exercise significant influence
over Zhengzhou Lianhe Real Estate Co., Ltd. and therefore, the Group accounts for the investment under the cost method. Investment
income is recognized by the Group when the investee declares a dividend and the Group believes it is collectible.
As of December 31, 2015,
the Group has an 80% investment in Beijing Ruihao Rongtong Real Estate Development Co., Ltd. (“Ruihao Rongtong”).
In accordance with ASC 325-20,
Cost Method Investments
, cost method accounting was applied as the investment did not qualify
as “in-substance” common stock and did not have readily determinable fair value. Investment income is recognized by
the Group when the investee declares a dividend and the Group believes it is collectible.
There was nil dividend
received for the 2013, 2014 and 2015.
No impairment provision
was provided for the Company’s long-term investments for any of the periods presented.
(s) Capitalized interest
The Group capitalizes interest as a component
of building construction costs in accordance with ASC 835,
“Interest”
(“ASC 835”).
As a result of the total interest costs capitalized
during the period, the interest expense for the years ended December 31, 2013, 2014 and 2015, was as follows:
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Amortization of issuance cost related to other long term debt
|
|
|
640,565
|
|
|
|
3,744,695
|
|
|
|
6,554,767
|
|
Accretion of discount arising from warrants on Guaranteed Senior Secured Note
|
|
|
288,220
|
|
|
|
-
|
|
|
|
-
|
|
Interest expense on corporate aircraft capital lease
|
|
|
778,032
|
|
|
|
2,896,977
|
|
|
|
2,617,000
|
|
Interest on borrowings
|
|
|
36,515,162
|
|
|
|
128,014,504
|
|
|
|
171,035,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest costs
|
|
|
38,221,979
|
|
|
|
134,656,176
|
|
|
|
180,207,422
|
|
Less: total interest costs capitalized
|
|
|
(21,359,447
|
)
|
|
|
(106,455,409
|
)
|
|
|
(159,926,006
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
16,862,532
|
|
|
|
28,200,767
|
|
|
|
20,281,416
|
|
(t) Retirement benefits
Regulations in the PRC require the Group to
contribute to a defined contribution retirement plan for all permanent employees. Pursuant to the mandatory requirement from the
local authority in the PRC, the retirement pension insurance, unemployment insurance, health insurance and housing fund were established
for the employees during the term they are employed. For the years ended December 31, 2013, 2014 and 2015, the level of contribution
to these funds for each employee was determined at 43% of their average salary determined by the Social Welfare Bureau. For the
year ended December 31, 2015, the Group recorded expense in the amount of US$10,664,576 (2013: US$3,471,862; 2014: US$7,328,091).
Employee benefits for the remaining wholly owned subsidiaries were immaterial.
(u) Distribution of earnings and reserve fund
The Company’s ability to pay dividends
is primarily dependent on the Company receiving distributions from its subsidiaries. The earnings reflected in the consolidated
financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements
of the Company’s subsidiaries. In accordance with the PRC Company Law, the PRC subsidiaries are required to transfer 10%
of their profit after tax, as determined in accordance with PRC accounting standards and regulations, to the statutory surplus
reserve (the “SSR”) until such reserve reaches 50% of the registered capital of the subsidiaries. Subject to certain
restrictions set out in the PRC Company Law, the SSR may be distributed to stockholders in the form of share bonus issues to increase
share capital, provided that the remaining balance after the capitalization is not less than 25% of the registered capital.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
(v) Income taxes
The Group accounts for income tax using the
balance sheet method. Deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as unutilized
net operating losses. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will
either expire before the Group is able to realize their benefits, or that future utilization is uncertain. The Group assesses its
need for valuation allowances by tax reporting unit by jurisdiction.
Interest and penalties arising from underpayment
of income taxes is recognized according to the relevant tax law. The amount of interest expense to be recognized is computed by
applying the applicable statutory rate of interest to the difference between the tax position recognized and the amount previously
taken or expected to be taken in a tax return. Interest recognized in accordance with ASC 740-10,
“Income Tax”
(“ASC 740-10”) is classified in the consolidated financial statements as interest expense, while penalties recognized
in accordance with this Interpretation are classified in the consolidated financial statements as other expenses.
In accordance with the provisions of ASC 740-10,
the Group recognizes in its consolidated financial statements the impact of a tax position if a tax return’s position or
future tax position is “more likely than not” to prevail (defined as a likelihood of more than fifty percent of being
sustained upon audit, based on the technical merits of the tax position). Tax positions that meet the “more likely than not”
threshold are measured (using a probability weighted approach) at the largest amount of tax benefit that has a greater than fifty
percent likelihood of being realized upon settlement. The Group’s estimated liability for unrecognized tax benefits is periodically
assessed for adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, certain changes and/or
developments with respect to audits, and expiration of the statute of limitations. The outcome for a particular audit cannot be
determined with certainty prior to the conclusion of the audit and, in some cases, appeal or litigation process. The actual benefits
ultimately realized may differ from the Group’s estimates. As each audit is concluded, adjustments, if any, are appropriately
recorded in the Group’s consolidated financial statements. Additionally, in future periods, changes in facts, circumstances,
and new information may require the Group to adjust the recognition and measurement estimates with regards to individual tax positions.
Changes in recognition and measurement estimates are recognized in the period in which the changes occur.
(w) Land Appreciation Tax (“LAT”)
In accordance with the relevant taxation laws
for real estate companies of the provinces in which the subsidiaries operate in the PRC, the local tax authorities levy LAT based
on progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds of sales of properties less
deductible expenditures, including borrowing costs and all property development expenditures. LAT is prepaid based on a fixed percentage
(varying by local tax jurisdiction) of customer deposits and is expensed when the related revenue is recognized, as explained at
Note 2(h).
(x) Comprehensive income
Comprehensive
income is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding
transactions resulting from investments by owners and distributions to owners. Among other disclosures, ASC topic 220,
Comprehensive
Income
, requires that all items that are required to be recognized under current accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same prominence as other financial statements. For each
of the periods presented, the Group's comprehensive income includes net income and foreign currency translation adjustments and
is presented in the consolidated statement of comprehensive income.
(y) Advertising and promotion expenses
Advertising and promotion costs are expensed
as incurred, or the first time the activity takes place, in accordance with ASC 720-35,
“Advertising Costs
”.
For the year ended December 31, 2015, the Group recorded advertising and promotion expenses of US$35,350,419 (2013: US$18,096,298;
2014: US$32,137,186).
(z) Leases
In accordance with ASC 840, “
Leases
”,
leases are classified at the inception date as either a capital lease or an operating lease. For the lessee, a lease is a capital
lease if any of the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there
is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d)
the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased
property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an
incurrence of an obligation at the inception of the lease.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
On October 23, 2012, the Group entered into
an agreement with Minsheng Hongtai (Tianjin) Aircraft Leasing Co., Ltd. to lease a corporate aircraft (see Note 13).The lease meets
the transfer-of-ownership to the lessee criterion and is therefore classified as a capital lease. The capital lease is measured
at the commencement of the lease at an amount equal to the present value at the beginning of the lease term of minimum lease payments
during the lease term excluding that portion of the payments representing executory costs (such as insurance, maintenance, and
taxes to be paid by the lessor) including any profit thereon. During the lease term, each minimum lease payment is allocated between
a reduction of the obligation and interest expense to produce a constant periodic rate of interest on the remaining balance of
the obligation (the interest method). A leased asset is amortized in a manner consistent with the Group’s normal depreciation
policy for owned assets (see Note 6).
All other leases are accounted for as operating
leases wherein rental payments are expensed as incurred. Certain lease arrangements contain escalation clauses.
For the year ended December 31, 2015, the Group
recorded operating lease expenses of US$7,613,448 (2013: US$3,694,591; 2014: US$6,031,670).
(aa) Property warranty
The Company and its subsidiaries provide customers
with warranties which cover major defects of building structure and certain fittings and facilities of properties sold as stipulated
in the relevant sales contracts. The warranty period varies from two months to three years, depending on different property components
the warranty covers.
The Group regularly estimates potential costs
for materials and labor with regards to warranty-type claims expected to be incurred subsequent to the delivery of a property.
Reserves are determined based on historical data and trends with respect to similar property types and geographical areas. The
Group regularly monitors the warranty reserve and makes adjustments to its pre-existing warranties, if any, in order to reflect
changes in trends and historical data as information becomes available. The Group may seek recourse against its contractors or
any related third parties if it can be demonstrated they are at fault. In addition, the Group withholds up to 5% of the contract
cost from sub-contractors for periods of 2 to 5 years. These amounts are included in current liabilities, and are only paid to
the extent that there has been no warranty claim against the Group relating to the work performed or materials supplied by the
subcontractors. For the years ended December 31, 2013, 2014 and 2015, the Group had not recognized any warranty liability or incurred
any warranty costs in excess of the amount retained from subcontractors.
(ab) Earnings per share
Earnings per share are calculated in accordance
with ASC 260, “
Earnings Per Share
”. Basic earnings per share is computed by dividing net income attributable
to holders of common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per
common share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised
or converted into common shares. Common shares issuable upon the conversion of the convertible note, were included in diluted earnings
per common share computation for the period during which they were outstanding using the if-converted method. Common share equivalents
consists of common shares issuable upon the exercise of the share options and vesting of restricted shares units using treasury
stock method. Common equivalents shares are excluded from the computation of diluted earnings per share if their effects would
be anti-dilutive. The non-vested options granted with performance conditions are excluded in the computation of diluted EPS unless
the options are dilutive and unless their conditions (a) have been satisfied at the reporting date or (b) would have
been satisfied if the reporting date was the end of the contingency period.
(ac) Treasury Shares
The Company accounted for shares repurchased
as treasury shares at cost in accordance to ASC Subtopic 505-30 (“ASC 505-30”), “
Treasury Shares
”.
When the Company decides to retire the treasury shares, the difference between the original issuance price and the repurchase price
may be allocated between additional paid-in capital and retained earnings.
On July 12, 2013, the Board of Directors unanimously authorized management to repurchase up to US$60 million
of the Company’s shares from the approval date to
July
5, 2015. On December 28, 2015, the Board of Directors unanimously authorized management to repurchase up to US$40 million of the
Company’s shares from the approval date to the end of 2017. The Board of Directors also agreed to review the Company’s
share repurchase program periodically and to adjust the amount authorized for repurchase as necessary. As of December 31, 2015,
the Company had a balance of 13,470,488 treasury shares amounting to US$24,045,440.
(ad) Senior Secured Notes
On May 3, 2013, the Company issued notes with
an aggregate principal amount of US$200,000,000 due on May 3, 2018 (the "May 2018 Senior Secured Notes") at a coupon
rate of 13.25% per annum payable semi-annually. Interest is payable on May 3 and November 3 of each year, commencing November 3,
2013. Given that the May 2018 Senior Secured Notes is debt in its legal form and is not a derivative in its entirety, it has been
classified as other long-term debt. The Company has evaluated and determined that there was no embedded derivative requiring bifurcation
from the May 2018 Senior Secured Notes under the requirements of ASC 815
"Derivatives and Hedging
". The embedded
redemption options and repurchase features did not qualify for derivative accounting because the embedded derivatives were considered
clearly and closely related to the characteristics of the May 2018 Senior Secured Notes. The May 2018 Senior Secured Notes were
issued at par.
On
December 6, 2013, the Company issued notes with an aggregate principal amount of US$200,000,000 due on June 6, 2019 (the "June
2019 Senior Secured Notes") at a coupon rate of 13% per annum payable semi-annually. Interest is payable on June 6 and December
6 of each year, commencing June 6, 2014. Given that the June 2019 Senior Secured Notes is debt in its legal form and is not a derivative
in its entirety, it has been classified as other long-term debt. The Company has evaluated and determined that there was no embedded
derivative requiring bifurcation from the June 2019 Senior Secured Notes under the requirements of ASC 815. The embedded redemption
options and repurchase features did not qualify for derivative accounting because the embedded derivatives were considered clearly
and closely related to the characteristics of the June 2019 Senior Secured Notes. The June 2019 Senior Secured Notes were issued
at par.
In February 2015,
through a consent
solicitation to the holders of the May 2018 Secured Notes and the June 2019 Secured Notes, the Company amended the May 2018 and
June 2019 Indentures (collectively, known as the “Indentures”) to provide it with additional flexibility in pursuing
new business opportunities and new sources of capital. The amendments to the Indentures include: (i) to incur additional Indebtedness
(as defined in the Indentures) in furtherance of the Company's business plans; (ii) make certain Restricted Payments (as defined
in the Indentures) and Permitted Investments (as defined in the Indentures); and (iii) make certain deemed Investments (as defined
in the Indentures) without having to satisfy the Fixed Charge Coverage Ratio (as defined in the Indentures) requirement. The amendments
also amend (i) the “Limitation on Issuances of Guarantees by Restricted Subsidiaries” covenant in the Indentures to
the extent that the Company believes necessary as a result of the amendments to other covenants and (ii) the “Limitation
on Asset Sales” covenant in the Indentures to remove the Fixed Charge Coverage Ratio requirement for Asset Dispositions (as
defined in the Indentures). The amendments also amended certain related definitions in the Indentures. The Company accounted for
the amendments, which did not result in a debt extinguishment pursuant to ASC 470-50,
Debt – Modifications and
Exchanges
.
Onshore corporate bonds
On December 28, 2015, Xinyuan (China) Real
Estate, Ltd. issued the first tranche of the onshore corporate bonds with an aggregate principal amount of RMB 1 billion (US$154
million) due on December 28, 2020 (the "First Tranche Bonds") at a coupon rate of 7.5% per annum payable annually. Interest
is payable on December 28 of each year, commencing December 28, 2015. Given that First Tranche Bonds is debt in its legal form
and is not a derivative in its entirety, it has been classified as other long-term debt. The Company has evaluated and determined
that there was no embedded derivative requiring bifurcation from the First Tranche Bonds under the requirements of ASC 815 "Derivatives
and Hedging". The First Tranche Bonds were issued at par.
(ae) Deferred charges
Debt issuance costs are capitalized as deferred
charges and amortized over the life of the loan to which they relate using the effective interest method. The remaining debt issuance
cost to be amortized as of December 31, 2015 amounted to US$12,504,255 (2013: US$9,048,940; 2014: US$16,677,352).
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
(af) Short-term investments
All highly liquid investments with original
maturities of greater than three months, but less than 12 months, are classified as short-term investments. Investments that are
expected to be realized in cash during the next 12 months are also included in short-term investments. The Company accounts for
its investments in debt and equity securities in accordance with ASC 320-10 (“ASC 320-10”),
Investments-Debt and
Equity Securities: Overall
. The Company classifies the investments in debt and equity securities as “held-to-maturity”,
“trading” or “available-for-sale”, whose classification determines the respective accounting methods stipulated
by ASC 320-10. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all
categories of investments in securities are included in earnings. Any realized gains or losses on the sale of the short-term investments
are determined on a specific identification method, and such gains and losses are reflected in earnings during the period in which
such gains or losses are realized.
The securities that the Company has positive
intent and ability to hold to maturity are classified as held-to-maturity securities and stated at amortized cost. For individual
securities classified as held-to-maturity securities, the Company evaluates whether a decline in fair value below the amortized
cost basis is other-than-temporary in accordance with the Company’s policy and ASC 320-10. When the Company intends to sell
an impaired debt security or it is more likely than not that it will be required to sell prior to recovery of its amortized cost
basis, an other-than-temporary impairment is deemed to have occurred. In these instances, the other-than-temporary impairment loss
is recognized in earnings equal to the entire excess of the debt security’s amortized cost basis over its fair value at the
balance sheet date of the reporting period for which the assessment is made. When the Company does not intend to sell an impaired
debt security and it is more-likely-than-not that it will not be required to sell prior to recovery of its amortized cost basis,
the Company must determine whether or not it will recover its amortized cost basis. If the Company concludes that it will not,
an other-than-temporary impairment exists and that portion of the credit loss is recognized in earnings, while the portion of loss
related to all other factors is recognized in other comprehensive income.
The securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading securities. Realized gains and losses, and unrealized
gains and losses for trading securities are included in earnings.
Investments not classified as trading or as
held-to-maturity are classified as available-for-sale securities. Available-for-sale securities are reported at fair value, with
unrealized gains and losses recorded in accumulated other comprehensive income (loss). Realized gains or losses are charged to
earnings during the period in which the gain or loss is realized. An impairment loss on available-for-sale securities would be
recognized in the consolidated statements of comprehensive income when the decline in value is determined to be other-than-temporary.
(ag) Asset acquisition and business combinations
Pursuant to ASC 805 (“ASC 805”),
Business Combinations
, the Company determines whether a transaction or other event is a business combination by applying the
definition below, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired
are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition. A business consists
of inputs and processes applied to those inputs that have the ability to create outputs. Although businesses usually have outputs,
outputs are not required for an integrated set to qualify as a business. The three elements of a business are defined as follows:
a. Input. Any economic resource that creates,
or has the ability to create, outputs when one or more processes are applied to it.
b. Process. Any system, standard, protocol,
convention, or rule that when applied to an input or inputs, creates or has the ability to create outputs.
c. Output. The result of inputs and processes
applied to those inputs that provide or have the ability to provide a return in the form of dividends, lower costs, or other economic
benefits directly to investors or other owners, members, or participants.
The
Company accounted for its acquisitions of Sanya Beida, Shanghai Junxin and Shandong
Renju
on January 27, 2014, February 24, 2014 and March 1, 2015 as asset acquisitions, respectively, since the acquired entities had no
processes in place to apply to inputs to have the ability to create outputs.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
(ah) Effect of change in estimate
Revisions
in estimated gross profit margins related to percentage of completion revenues are made in the period in which circumstances requiring
the revisions become known. During the year ended December 31, 2015 real estate development projects (Jinan Xinyuan Splendid, Zhengzhou
Royal Palace, Xuzhou Colorful Garden, Zhengzhou Century East B, Zhengzhou Xin City, Suzhou Lake Royal Palace, Kunshan Royal Palace,
Henan Thriving Family,
Xingyang
Splendid Phase I,
Beijing Xindo Park,
Zhengzhou
Yipin Xiangshan Phase II, Changsha Xinyuan
Splendid),
which recognized gross profits in 2014, had changes in their estimated gross profit margins. As of December 31, 2015, each of these
projects has a percentage of completion at 40.6% or more. As the unit sales and selling prices were on an upward trend during the
year ended December 31, 2015, the Group revised upwards its prior estimates related to selling prices and total estimated sales
values in conjunction with the change in total estimated costs, which led to a decrease of the percentage sold and thus a decrease
in the recognized costs. As a result of the changes in estimate above, gross profit, net income and basic and diluted earnings
per share increased by US$52.1 million (2013: US$54.3 million, 2014: US$10.8 million), US$39.1 million (2013: US$40.7 million,
2014: US$8.1 million), US$0.27 per share (2013: US$0.28 per share, 2014: US$0.05 per share), US$0.27 per share (2013: US$0.27 per
share, 2014: US$0.05 per share), respectively, for the year ended December 31, 2015.
(ai) Share-based compensation
The Group has adopted ASC 718 “
Compensation-Stock
Compensation
”, which requires that share-based payment transactions with employees, such as restricted shares or stock
options, be measured based on the grant-date fair value of the equity instrument issued and the Company has elected to recognize
compensation expense using the straight-line method for all restricted shares and stock options granted with service conditions
that have a graded vesting schedule. The Company has a policy of using authorized shares in the existing pool to satisfy any future
exercise of share options and shares repurchased held by a third party trustee to satisfy the RSUs granted under the Company's
2014 Restricted Stock Unit plan (“2014 RSU plan”).
For options granted with performance conditions,
share-based compensation expense is recognized based on the probable outcome of the performance condition. A performance condition
is not taken into consideration in determining fair value of the non-vested shares granted.
(aj) Segment Reporting
In accordance with ASC 280 “
Segment
Reporting
” (“ASC 280”), segment reporting is determined based on how the Group’s chief operating decision
maker reviews operating results to make decisions about allocating resources and assessing performance for the Group. According
to the management approach, the Group operates in geographical segments. Therefore, each of its individual property developments
is a discrete operating segment. The Group has aggregated its segments on a provincial basis as property development projects undertaken
within a province have similar expected economic characteristics, type of properties offering, customers and market and regulatory
environment (see Note 21).
(ak) Goodwill
Goodwill represents the excess of the purchase
price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In
accordance with ASC 350, “
Goodwill and Other Intangible Assets
”, recorded goodwill amounts are not amortized.
The Group adopted Accounting Standards Update (“ASU”) 2011-08, “
Testing Goodwill for Impairment
”,
to test goodwill for impairment. This ASU permits the Group to first assess qualitative factors to determine whether it is “more-likely-than-not”
that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to
perform the two-step goodwill impairment test. If the Group determines, on the basis of qualitative factors, that the fair value
of a reporting unit is more likely than not less than the carrying amount, a two-step impairment test is required. The Group also
has an unconditional option to bypass the qualitative assessment in any period and proceed directly to performing the two-step
impairment test.
The performance of the impairment test in accordance
to ASC 350 involves a two-step process. The first step of the impairment test involves comparing the fair value of the reporting
unit with its carrying amount, including goodwill. Fair value is primarily determined by computing the future discounted cash flows
expected to be generated by the reporting unit. If the reporting unit’s carrying value exceeds its fair value, goodwill may
be impaired. If this occurs, the Company performs the second step of the goodwill impairment test to determine the amount of impairment
loss.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
The fair value of the reporting unit is allocated
to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of
the reporting unit’s goodwill. If the implied goodwill fair value is less than its carrying value, the difference is recognized
an impairment loss.
In accordance with ASC 350, the Group assigned
and assessed goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the
operating segment.
Management evaluated the recoverability of
goodwill by performing a qualitative assessment before using a two-step impairment test approach at the reporting unit level. Based
on an assessment of the qualitative factors, management determined that it is more-likely-than-not that the fair value of the reporting
unit is in excess of its carrying amount. Therefore, management concluded that it was not necessary to proceed to the two-step
goodwill impairment test. No impairment loss was recorded for any of the years presented.
(al) Recent Accounting Pronouncements
In June 2014, Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-12,
Compensation
– Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance
Target Could Be Achieved after the Requisite Service Period
(“ASU 2014-12”). The amendments in this ASU apply to
all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance
target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target
that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting
entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account
for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those
annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU
either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance
targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all
new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this ASU as of the
beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening
retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring
and recognizing the compensation cost. This ASU is not expected to have a material impact on our results of operations, cash flows
or financial condition.
In August 2014, the FASB issued ASU
No. 2014-15
Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an
Entity’s Ability to Continue as a Going Concern
(“ASU 2014-15”). The guidance requires an entity to evaluate
whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue
as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures
in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim
periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a significant impact
on the Group’s consolidated financial statements.
In March 2015, the FASB issued
ASU No. 2015-03,
Interest — Imputation of Interest (Subtopic 835-30) — Simplifying the Presentation of Debt Issuance
Costs
(“ASU 2015-03”). The guidance is to simplify the presentation of debt issuance costs by requiring debt issuance
costs to be presented as a deduction from the corresponding debt liability and will make the presentation of debt issuance costs
consistent with the presentation of debt discounts or premiums. The guidance is effective for public business entities for financial
statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption
is permitted. The Group is currently in the process of evaluating the impact of the adoption of ASU 2015-03 on the consolidated
financial statements.
In August 2015, the FASB issued ASU No. 2015-14,
Revenue from Contracts with Customers-Deferral of the effective date
(“ASU 2015-14”). The amendments in ASU
2015-14 defer the effective date of Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with
Customers
issued in May 2014. According to the amendments in ASU 2015-14, the new revenue guidance ASU 2014-09 is effective
for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period.
Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting
periods within that reporting period. The Group is currently evaluating the method of adoption to be utilized and it cannot currently
estimate the financial statement impact of adoption.
In November 2015, FASB issued ASU
No. 2015-17,
Income Taxes-Balance Sheet Classification of Deferred Taxes
(“ASU 2015-17”). The amendments in
this update simplify the presentation of deferred income taxes. ASU 2015-17 requires that deferred tax liabilities and assets be
classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 are effective for fiscal
years beginning after December 15, 2016 including interim periods within those fiscal years. Earlier application is permitted for
all entities as of the beginning of an interim or annual reporting period. The adoption of the guidance is not expected to have
significant impact on the Group’s consolidated financial statements.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
3. Short-term investments
The short-term investments represent
investments in real estate investment trusts (“REITs”) publicly traded on the Hong Kong Stock Exchange, money market
instruments and equity securities publicly traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange, which are expected
to be realized in cash during the next 12 months. The Company accounts for the short-term investments in accordance with ASC subtopic
320-10 (“ASC 320-10
”), Investments-Debt and Equity Securities: Overall
. The Company classified the REITs, investment
in equity securities and money market instruments as trading securities which are bought and held principally for the purpose
of selling them in the near term. The Company uses quoted prices in active markets for identical assets (consistent with the Level
1 definition in the fair value hierarchy) to measure the fair value of its investments on a recurring basis pursuant to ASC 820,
Fair Value Measurement
.
The realized gains, and unrealized losses presented
in the accompanying statements of comprehensive income are related to trading securities held as of December 31, 2015.
The following summarizes the short-term investments measured
at fair value at December 31, 2014 and 2015:
|
|
December 31, 2014
|
|
|
|
|
|
|
US$
|
|
|
|
|
|
|
Aggregate fair value
|
|
|
Cost
|
|
|
Unrealized gain
in profit and loss
|
|
Trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
5,189,456
|
|
|
|
5,069,310
|
|
|
|
120,146
|
|
Money market instrument
|
|
|
819,021
|
|
|
|
817,134
|
|
|
|
1,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,008,477
|
|
|
|
5,886,444
|
|
|
|
122,033
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
US$
|
|
|
|
|
|
|
Aggregate fair value
|
|
|
Cost
|
|
|
Unrealized gain
In profit and loss
|
|
Trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
REITs
|
|
|
1,167,647
|
|
|
|
1,124,293
|
|
|
|
43,354
|
|
Money market instrument
|
|
|
76,999
|
|
|
|
70,910
|
|
|
|
6,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,244,646
|
|
|
|
1,195,203
|
|
|
|
49,443
|
|
During the year ended December 31, 2015, US$456,149
net realized gain and US$49,443 unrealized gain for trading securities are included in earnings. During the year ended December
31, 2014, US$3,128,014 net realized gain and US$122,033 unrealized gain for trading securities are included in earnings.
4. Real estate properties development completed, under development
and held for sale
The following summarizes the components of real estate properties
development
completed, under development and held for sale at December 31, 2014 and 2015:
|
|
December 31,
2014
|
|
|
December 31,
201
5
|
|
|
|
US$
|
|
|
US$
|
|
Development completed:
|
|
|
|
|
|
|
|
|
Zhengzhou Royal Palace
|
|
|
2,267,171
|
|
|
|
-
|
|
Zhengzhou Century East A
|
|
|
7,907,556
|
|
|
|
4,775,131
|
|
Suzhou International City Garden
|
|
|
754,914
|
|
|
|
2,018,240
|
|
Hefei Wangjiang Garden
|
|
|
286,128
|
|
|
|
-
|
|
Jinan International City Garden
|
|
|
778,376
|
|
|
|
-
|
|
Suzhou Xin City
|
|
|
-
|
|
|
|
16,736,651
|
|
Kunshan International City Garden
|
|
|
314,854
|
|
|
|
546,537
|
|
Real estate properties development completed
|
|
|
12,308,999
|
|
|
|
24,076,559
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
Underdevelopment:
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Jinan Xinyuan Splendid
|
|
|
95,433,442
|
|
|
|
40,847,827
|
|
Xuzhou Colorful City
|
|
|
57,957,843
|
|
|
|
54,157,809
|
|
Zhengzhou Xin City
|
|
|
122,025,858
|
|
|
|
46,165,101
|
|
Suzhou Xin City
|
|
|
73,916,667
|
|
|
|
-
|
|
Beijing Xindo Park
|
|
|
258,585,693
|
|
|
|
176,553,742
|
|
Kunshan Royal Palace
|
|
|
267,625,395
|
|
|
|
215,917,469
|
|
Suzhou Lake Royal Palace
|
|
|
233,846,400
|
|
|
|
267,569,547
|
|
Xingyang Splendid Phase I
|
|
|
44,991,390
|
|
|
|
32,010,140
|
|
Xingyang Splendid Phase II
|
|
|
35,341,974
|
|
|
|
43,311,674
|
|
Xingyang Splendid Phase III
|
|
|
22,910,650
|
|
|
|
23,896,026
|
|
Xingyang Splendid Phase IV
|
|
|
6,441,922
|
|
|
|
6,762,190
|
|
Zhengzhou Xindo Park (residential)
|
|
|
66,471,564
|
|
|
|
29,098,191
|
|
Zhengz hou Xindo Park (commercial)
|
|
|
41,827,678
|
|
|
|
73,294,372
|
|
Jinan Royal Palace
|
|
|
262,820,980
|
|
|
|
261,268,961
|
|
Sanya Yazhou Bay No.1
|
|
|
85,135,798
|
|
|
|
109,896,103
|
|
Shanghai Yipin Royal Palace
|
|
|
192,275,658
|
|
|
|
215,117,468
|
|
Changsha Xinyuan Splendid
|
|
|
151,442,473
|
|
|
|
194,444,916
|
|
Chengdu Thriving Family
|
|
|
222,716,181
|
|
|
|
258,173,028
|
|
Jinan Xin Central
|
|
|
-
|
|
|
|
163,174,394
|
|
Zhengzhou Fancy City
|
|
|
-
|
|
|
|
71,896,698
|
|
Tianjin Spring Royal Palace
|
|
|
-
|
|
|
|
65,583,961
|
|
Zhengzhou Xindo Park
|
|
|
-
|
|
|
|
39,117,259
|
|
Henan Xin Central I
|
|
|
-
|
|
|
|
127,696,203
|
|
XIN Eco Marine Group Properties Sdn Bhd (“Malaysia project”) (Note 9)
|
|
|
9,642,365
|
|
|
|
8,165,745
|
|
New York Oosten
|
|
|
119,947,878
|
|
|
|
226,208,448
|
|
|
|
|
2,371,357,809
|
|
|
|
2,750,327,272
|
|
Profit recognized
|
|
|
264,182,323
|
|
|
|
347,083,874
|
|
Less: progress billings (see Note 14)
|
|
|
(920,965,080
|
)
|
|
|
(1,210,089,345
|
)
|
|
|
|
|
|
|
|
|
|
Total real estate properties under development
|
|
|
1,714,575,052
|
|
|
|
1,887,321,801
|
|
|
|
|
|
|
|
|
|
|
Northern Nevada Land Portfolio
|
|
|
588,000
|
|
|
|
-
|
|
Lennox Project
|
|
|
597,217
|
|
|
|
-
|
|
Real estate properties held for sale
|
|
|
1,185,217
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total real estate properties development completed, under development and held for sale
|
|
|
1,728,069,268
|
|
|
|
1,911,398,360
|
|
As of December 31, 2015, land use rights included
in the real estate properties under development totaled US$1,130,109,973 (December 31, 2014: US$1,274,725,570).
As
of December 31, 2015, land use rights with an aggregate net book value of US$1,018,987,851
was
pledged as collateral for certain bank loans and other debts (December 31, 2014: US$923,762,759).
5. Real estate properties held for lease, net
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Elementary schools
|
|
|
3,485,673
|
|
|
|
3,284,593
|
|
Basement parking
|
|
|
1,979,104
|
|
|
|
10,181,887
|
|
Kindergartens
|
|
|
8,040,216
|
|
|
|
7,576,396
|
|
Parking facilities
|
|
|
19,238,109
|
|
|
|
18,128,308
|
|
Clubhouses
|
|
|
6,811,668
|
|
|
|
6,418,720
|
|
Shopping mall
|
|
|
40,322,338
|
|
|
|
38,499,378
|
|
|
|
|
|
|
|
|
|
|
Total costs
|
|
|
79,877,108
|
|
|
|
84,089,282
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
(10,653,360
|
)
|
|
|
(12,956,700
|
)
|
|
|
|
|
|
|
|
|
|
Real estate properties held for lease, net
|
|
|
69,223,748
|
|
|
|
71,132,582
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
Depreciation expense for real estate properties
held for lease for the year ended December 31, 2015 amounted to US$2,303,340 (2013: US$1,580,540; 2014: US$2,032,019).
As of December 31, 2015, US$36,550,198 real
estate properties held for lease were pledged as collateral for other debts (2014: US$38,280,864).
As of December 31, 2015, minimum future rental
income on non-cancellable leases (none of which contain any contingent rental clauses), in the aggregate and for each of the five
succeeding fiscal years and thereafter, is as follows:
Year
|
|
Amount
|
|
|
|
US$
|
|
|
|
|
|
2016
|
|
|
9,950,598
|
|
2017
|
|
|
9,947,668
|
|
2018
|
|
|
9,969,725
|
|
2019
|
|
|
10,048,191
|
|
2020 and thereafter
|
|
|
150,781,495
|
|
|
|
|
|
|
Total
|
|
|
190,697,677
|
|
6. Property and equipment, net
Property and equipment consisted of the following:
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Corporate aircraft (Note 13)
|
|
|
43,184,212
|
|
|
|
40,693,020
|
|
Vehicles
|
|
|
4,919,955
|
|
|
|
4,636,135
|
|
Furniture and fixtures
|
|
|
6,914,706
|
|
|
|
7,044,387
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
55,018,873
|
|
|
|
52,373,542
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
(8,543,148
|
)
|
|
|
(13,050,220
|
)
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
46,475,725
|
|
|
|
39,323,322
|
|
Depreciation expense for property and equipment
for the year ended December 31, 2015 amounted to US$4,947,575 (2013: US$1,400,639; 2014: US$4,543,419) which includes amortization
expense related to the corporate aircraft capital lease (Note 13) amounting to US$2,713,085 (2013: 710,895; 2014: US$2,868,205).
Accumulated depreciation expense for property
and equipment as of December 31, 2015 amounted to US$13,050,220 (2013: US$4,427,924; 2014: US$8,543,148) which includes accumulated
amortization expense related to the corporate aircraft capital lease (Note 13) amounting to US$6,104,441 (2013: 710,895; 2014:
US$3,585,257).
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
7. Other long-term investment
As of December 31, 2014 and 2015, the other
long-term investment accounted for at cost consisted of the following:
Cost method investee
|
|
Initial Cost
|
|
|
Ownership
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
|
|
|
US$
|
|
|
US$
|
|
Beijing Ruihao Rongtong Real estate development Co., Ltd.
|
|
|
30,865,904
|
|
|
|
80
|
%
|
|
|
-
|
|
|
|
30,865,904
|
|
Zhengzhou
Lianhe Real Estate Co., Ltd.
|
|
|
241,648
|
|
|
|
1.85
|
%
|
|
|
241,648
|
|
|
|
241,648
|
|
On
May 6, 2015, the Company acquired 80% equity interest of Beijing Ruihao Rongtong Real Estate Development Co., Ltd. (“Ruihao
Rongtong”) at a consideration of US$30,865,904.
In
accordance with ASC 325-20,
Cost Method Investments
, cost method accounting was applied as the investment did not qualify
as in-substance common stock and did not have readily determinable fair value.
For
the years ended December 31, 2013, 2014 and 2015, the Group recognized no investment profit or loss. As of December 31, 2014 and
2015, management noted no indicators of impairment related to these investments.
8.
Investment in joint ventures
On
October 21, 2013, the Group acquired a 51% equity interest in Shaanxi Zhongmao. The Group and the other remaining shareholder
exercises joint control over Shaanxi Zhongmao. The purpose of the joint venture is to undertake residential property development
projects in Xi’an, Shaanxi Province. As at December 31, 2015, the joint venture had a project, Xi’an Metropolitan.
Pursuant to the Shaanxi Zhongmao joint venture agreement, the Group will acquire the remaining 49% equity interest of Shaanxi
Zhongmao if the joint venture is successful in securing land use rights. As of December 31, 2015, the joint venture has not been
successful in securing the agreed upon land use rights.
On
March 19, 2014, the Group together with four other independent shareholders established a joint venture Huayi Xincheng (Beijing)
Intelligent City Construction Co., Ltd. (“Huayi Xincheng”), in which the Group holds a 40% equity interest. The purpose
of the joint venture is to undertake residential property development projects in Beijing. As at December 31, 2015, the joint
venture has no active residential projects.
On
May 27, 2015, the Group together with an unrelated company, Nanjing Starry Sky Studios Management Co., Ltd. established a joint
venture Beijing Starry Sky Cinema Co., Ltd. (“Beijing Starry Sky Cinema”), in which the Group holds a 51% equity interest.
The purpose of the joint venture is to operate movie theatres.
For
the year ended December 31, 2015, the investees recognized income of US$4,381,637 (2014: loss US$3,317,444). The Group’s
share of the income of the equity investees was US$2,234,635 (2014: loss US$1,691,897).
As
of December 31, 2015, the Group’s investment in the investees in the aggregate exceeded its proportionate share of the net
assets of the equity method investee by US$3,982,603 (2014: US$4,226,414). This difference represents equity method goodwill and
therefore, is not amortized.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
9.
Acquisition of subsidiaries
Acquisition
of XIN Eco Marine Group Properties Sdn Bhd
On
December 29, 2014, Xinyuan International (Hong Kong) Property Investment Inc. (“XYHK”) signed an agreement to acquire
a 100% equity interest in XIN Ec
o Marine Group Properties Sdn Bhd (formerly named EMG Group Properties Sdn Bhd) (“EMG”)
for purpose of acquiring a land reclamation development located in Pekan Klebang, Section II, District of Melaka Tengah, Malaysia.
XYHK paid a purchase price of approximately
US$10 million in cash to complete the acquisition on December 29, 2014 (“acquisition date”). The goodwill recognized
at acquisition date amounting to US$278,300, which is not tax deductible, is primarily attributable to synergies expected to be
achieved from the acquisition through expansion into an overseas market. The accounting for this acquisition was incomplete in
2014 because the transaction occurred only shortly before the end of the fiscal year and therefore, the amounts recognized in the
consolidated financial statements are regarded provisional as of December 31, 2014.
On the acquisition date, EMG signed an agreement
(“Service Agreement”) with one of the selling shareholders, Mr. Alex Teh Chee Teong (“Mr.Teh”), appointing
Mr. Teh as a Project Manager to assist XYHK in supervising and completing the land reclamation development within twenty four months
from the commencement date. Under the same Service Agreement, EMG granted Mr. Teh an option to purchase 25% of EMG’s equity
interest (“Share Option”) in exchange for post-acquisition services subject to the fulfillment of certain performance
conditions. The Company with the assistance of an independent valuer determined that the fair value of the Share Option at the
acquisition date is US$3,167,000. However, no compensation expense was recorded as of December 31, 2014 and 2015 since such performance
conditions were not met.
Since the acquisition date, neither the results
of operations nor pro forma results of operations of EMG were presented because the effects of EMG were not material to the Group’s
consolidated financial statements.
An analysis of the cash flows in respect of
the acquisition of EMG is as follows:
|
|
US$
|
|
|
|
|
|
Cash consideration
|
|
|
(10,000,000
|
)
|
Cash and cash equivalents acquired
|
|
|
2,200
|
|
Net outflow of cash and cash equivalents
|
|
|
(9,997,800
|
)
|
The purchase price allocation for the acquisition
is primarily based on a valuation determined by the Group with the assistance of an independent third party valuation firm. The
following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition on December
29, 2014.
|
|
US$
|
|
|
|
|
|
Total purchase price
|
|
|
10,000,000
|
|
|
|
|
|
|
Net identifiable assets acquired:
|
|
|
|
|
Cash and cash equivalents
|
|
|
2,200
|
|
Land reclamation development
|
|
|
9, 740,000
|
|
Goodwill
|
|
|
278,300
|
|
Current liabilities
|
|
|
(20,500
|
)
|
Net assets acquired
|
|
|
10,000,000
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
10. Short-term bank loans and other debt
Short-term bank loans represent amounts due
to various banks and are due on the dates indicated below. Short-term bank loans at December 31, 2014 and 2015 consisted of the
following:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
Loan from China Fortune International Trust Co., Ltd.
|
|
|
|
|
|
|
|
|
Due February 25, 2015, at 11% per annum
|
|
|
40,856,349
|
|
|
|
-
|
|
|
|
|
40,856,349
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loan from ICBC Credit Suisse Investment Management Co., Ltd.
|
|
|
|
|
|
|
|
|
Due April 3, 2015, at 11% per annum
|
|
|
24,513,809
|
|
|
|
-
|
|
|
|
|
24,513,809
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loan from Bridge Trust Co., Ltd.
|
|
|
|
|
|
|
|
|
Due June 24, 2015, at 12.5% per annum
|
|
|
32,685,079
|
|
|
|
-
|
|
|
|
|
32,685,079
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loan from Shenzhen Ping’an Dahua Huitong Wealth Management Co., Ltd.
|
|
|
|
|
|
|
|
|
Due August 12, 2015, at 12% per annum*
|
|
|
65,370,159
|
|
|
|
-
|
|
|
|
|
65,370,159
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loan from The Bank of East Asia
|
|
|
|
|
|
|
|
|
Due February 24, 2015, at 2.80% plus 3 month LIBOR**
|
|
|
14,971,245
|
|
|
|
-
|
|
Due February 25, 2015, at 2.60% plus 3 month LIBOR**
|
|
|
20,353,100
|
|
|
|
-
|
|
Due June 2, 2016, at 2.00% plus 3 month LIBOR**
|
|
|
-
|
|
|
|
9,675,655
|
|
Due August 16, 2016, at 1.40% plus 3 month LIBOR**
|
|
|
-
|
|
|
|
20,000,000
|
|
Due August 31, 2016, at 1.40% plus 3 month LIBOR**
|
|
|
-
|
|
|
|
9,700,000
|
|
Due September 20, 2016, at 1.40% plus 3 month LIBOR**
|
|
|
-
|
|
|
|
2,220,000
|
|
Due October 27, 2016, at 1.40% plus 3 month LIBOR**
|
|
|
-
|
|
|
|
13,250,000
|
|
Due November 18, 2016, at 1.25% plus 3 month LIBOR**
|
|
|
-
|
|
|
|
14,958,974
|
|
Due November 23, 2016, at 1.25% plus 3 month LIBOR**
|
|
|
-
|
|
|
|
34,421,617
|
|
|
|
|
35,324,345
|
|
|
|
104,226,246
|
|
|
|
|
|
|
|
|
|
|
Loan from Bank of China Tokyo Branch
|
|
|
|
|
|
|
|
|
Due May 17, 2015, at 2% plus 6 month LIBOR***
|
|
|
65,000,000
|
|
|
|
-
|
|
Due July 21, 2016, at 1.2% per annum***
|
|
|
-
|
|
|
|
30,000,000
|
|
Due September 26, 2016, at 1.55% per annum***
|
|
|
-
|
|
|
|
13,000,000
|
|
Due October 11, 2016, at 1.55% per annum***
|
|
|
-
|
|
|
|
20,000,000
|
|
|
|
|
65,000,000
|
|
|
|
63,000,000
|
|
|
|
|
|
|
|
|
|
|
Loan from Industrial and Commercial Bank of China (Asia) Limited ("ICBC (Asia)")
|
|
|
|
|
|
|
|
|
Due February 17, 2015, at 2.1% plus 3 month LIBOR****
|
|
|
20,000,000
|
|
|
|
-
|
|
Due March 2, 2015, at 2% plus 3 month LIBOR****
|
|
|
9,700,000
|
|
|
|
-
|
|
Due May 18, 2016, at 2% plus 3 month LIBOR****
|
|
|
-
|
|
|
|
10,000,000
|
|
Due October 5, 2016, at 1.6% plus 3 month LIBOR****
|
|
|
-
|
|
|
|
20,000,000
|
|
|
|
|
29,700,000
|
|
|
|
30,000,000
|
|
Loan from Industrial and Commercial Bank of China (Thai) Public Company Limited ("ICBC (Thai)")
|
|
|
|
|
|
|
|
|
Due September 21, 2016, at 1.7% plus 3 month LIBOR*****
|
|
|
-
|
|
|
|
25,000,000
|
|
|
|
|
-
|
|
|
|
25,000,000
|
|
|
|
|
|
|
|
|
|
|
Total short-term bank loans and other debt
|
|
|
293,449,741
|
|
|
|
222,226,246
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
|
*
|
Pursuant to the agreements with Shenzhen Ping’an Dahua Huitong Wealth Management Co., Ltd. entered into on November 12, 2014, which was designated as the lender by Lianxin, the non-controlling shareholder of Changsha Wanzhuo, this other short-term debt is secured by the Group’s 75% equity interest in Changsha Wanzhuo and the Group’s land use rights. This other short-term debt was paid in full in May, 2015.
|
|
**
|
Pursuant to the loan contract with The Bank of East Asia, these seven loans from The Bank of East Asia, amounting to US$9.7 million, US$20.0 million, US$9.7 million, US$2.2 million, US$13.3 million , US$15.0 million and US$34.4 million respectively, are denominated in US$ and are secured by the deposits of US$9,778,859 (December 31, 2014: nil), US$20,943,698 (December 31, 2014: nil) , US$10,166,934 (December 31, 2014: nil), US$2,386,966 (December 31, 2014: nil), US$13,752,002 (December 31, 2014: nil), US$15,553,766 (December 31, 2014: nil) and US$35,878,403 (December 31, 2014: nil)respectively. Such deposits are classified as restricted cash on the consolidated balance sheets as of December 31, 2015.
|
|
|
|
|
***
|
Pursuant to the loan contract with Bank of China Tokyo Branch , these three loans from Bank of China Tokyo Branch amounting to US$30.0 million, US$13.0 million and US$20.0 million in 2015 respectively, are denominated in US$ and are secured by the deposit of US$30,645,559 (December 31, 2014: nil), US$13,705,803 (December 31, 2014: nil) and US$21,097,696 (December 31, 2014: nil) respectively. Such deposits are classified as restricted cash on the consolidated balance sheets as of December 31, 2015.
|
|
****
|
Pursuant to the loan contract with ICBC (Asia), these two loans from ICBC (Asia), amounting to US$10.0million and US$20.0million in 2015, respectively, are denominated in US$ and are secured by the deposits of US$10,799,845 (December 31, 2014: nil) and US$21,251,694 (December 31, 2014: nil). respectively. Such deposits are classified as restricted cash on the consolidated balance sheets as of December 31, 2015.
|
|
*****
|
Pursuant to the loan contract with ICBC (Thai), this loan from ICBC (Thai), amounting to US$25.0 million in 2015, is denominated in US$ and is secured by the deposits of US$26,410,620. This deposit is classified as restricted cash on the consolidated balance sheets as of December 31, 2015.
|
As of December 31, 2015, except when otherwise
indicated the Group’s short-term bank loans were denominated in USD and were mainly secured by the deposits. This deposit
is classified as restricted cash on the consolidated balance sheets.
The weighted average interest rate on short-term bank loans and
other debt as of December 31, 2015 was 1.71% (December 31, 2014: 7.62%).
11. Long-term bank loans
Long-term bank loans as of December 31, 2014
and 2015 consisted of the following:
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Loan from ICBC
|
|
|
|
|
|
|
|
|
Due July 20, 2016 at 5.25% per annum*
|
|
|
14,708,286
|
|
|
|
10,779,845
|
|
|
|
|
14,708,286
|
|
|
|
10,779,845
|
|
Loan from Agricultural Bank of China
|
|
|
|
|
|
|
|
|
Due May 30, 2015, at 6.77% per annum**
|
|
|
3,268,508
|
|
|
|
-
|
|
Due June 30, 2015, at 6.77% per annum**
|
|
|
8,171,270
|
|
|
|
-
|
|
Due April 18, 2015, at 6.46% per annum**
|
|
|
8,171,270
|
|
|
|
-
|
|
Due November 18, 2015, at 6.46% per annum**
|
|
|
1,634,254
|
|
|
|
-
|
|
Due March 18, 2016, at 6.46% per annum**
|
|
|
8,171,270
|
|
|
|
-
|
|
Due May 18, 2016, at 5.78% per annum*
|
|
|
6,537,016
|
|
|
|
6,159,911
|
|
|
|
|
35,953,588
|
|
|
|
6,159,911
|
|
Loan from China Guangfa Bank
|
|
|
|
|
|
|
|
|
Due June 20, 2015, at 7.07% per annum**
|
|
|
1,323,746
|
|
|
|
-
|
|
Due May 29, 2016, at 8.00% per annum*
|
|
|
11,439,778
|
|
|
|
3,233,953
|
|
Due December 23, 2017, at 8.4% per annum*
|
|
|
16,342,539
|
|
|
|
6,159,911
|
|
Due February 17, 2018, at 8.4% per annum*
|
|
|
-
|
|
|
|
30,799,556
|
|
|
|
|
29,106,063
|
|
|
|
40,193,420
|
|
Loan from Bank of China
|
|
|
|
|
|
|
|
|
Due December 30, 2015, at 8.45% per annum**
|
|
|
32,685,079
|
|
|
|
-
|
|
Due January 8, 2016, at 8.45% per annum**
|
|
|
24,513,809
|
|
|
|
-
|
|
|
|
|
57,198,888
|
|
|
|
-
|
|
Loan from China Construction Bank
|
|
|
|
|
|
|
|
|
Due January 23, 2017, at 5.70% per annum*
|
|
|
113,642,752
|
|
|
|
76,998,891
|
|
|
|
|
113,642,752
|
|
|
|
76,998,891
|
|
Loan from Bank of Shanghai
|
|
|
|
|
|
|
|
|
Due April 30, 2017, at 9.10% per annum*
|
|
|
86,615,460
|
|
|
|
35,419,490
|
|
|
|
|
86,615,460
|
|
|
|
35,419,490
|
|
Loan from The Bank of East Asia
|
|
|
|
|
|
|
|
|
Due April 27, 2018, at 6.18% per annum*
|
|
|
-
|
|
|
|
47,428,237
|
|
|
|
|
-
|
|
|
|
47,428,237
|
|
Loan from Ping An Bank
|
|
|
|
|
|
|
|
|
Due March 20, 2018, at 9.25% per annum*
|
|
|
-
|
|
|
|
43,119,380
|
|
|
|
|
|
|
|
|
43,119,380
|
|
Total
|
|
|
337,225,037
|
|
|
|
260,099,174
|
|
|
|
|
|
|
|
|
|
|
Less: current portion of long-term bank loans
|
|
|
(284,928,910
|
)
|
|
|
(246,239,374
|
)
|
|
|
|
|
|
|
|
|
|
Total long-term bank loans
|
|
|
52,296,127
|
|
|
|
13,859,800
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
As of December 31, 2015, the contractual maturities
of these loans are as follows:
Year
|
|
Amount
|
|
|
|
US$
|
|
2016
|
|
|
20,173,709
|
|
2017
|
|
|
118,578,292
|
|
2018
|
|
|
121,347,173
|
|
Less: current portion of long-term bank loans
|
|
|
246,239,374
|
|
Total: long-term bank loans
|
|
|
13,859,800
|
|
|
*
|
Pursuant to the loan contracts, if the Group achieves an agreed upon sales target from the sales of the underlying real estate properties under development, the Group has an obligation to repay the loan before the maturity date. Therefore, the respective current portions of these loans have been classified as current liabilities as of December 31, 2015.
|
|
**
|
These loans were paid in full during 2015.
|
As of December 31, 2015, except when otherwise indicated, the Group’s long term bank loans were all
denominated in RMB and were mainly secured by the Group’s real estate properties under development with net book value of
US$
93,755,346 (December 31, 2014: US$35,766,700), land
use rights with net book value of US$424,058,251 (December 31, 2014: US$507,962,175) and restricted cash with net book value of
nil (December 31, 2014: US$24,513,809).
The
interest rates of these bank loans are adjustable based on the range of 111% to 195%
of the PBOC prime rate. The weighted average interest rate on long-term bank loans as of December 31, 2015 was 7.23% (December
31, 2014: 7.43%).
12. Other long-term debt
As of December 31, 2014 and 2015, other long-term
debt consisted of the following:
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
May 2018 Senior Secured Notes due on May 3, 2018 at 13.25%
|
|
|
200,000,000
|
|
|
|
190,519,754
|
|
June 2019 Senior Secured Notes due on June 6, 2019 at 13%
|
|
|
200,000,000
|
|
|
|
200,000,000
|
|
Corporate bonds due in December 28, 2020 at 7.5%
|
|
|
-
|
|
|
|
152,962,917
|
|
Shandong Xinyuan collateralized debt due on November 28, 2015 at 12.3%*
|
|
|
33,885,787
|
|
|
|
-
|
|
Henan Wanzhuo collateralized debt due on November 28, 2015 at 12.41%*
|
|
|
34,688,992
|
|
|
|
-
|
|
Collateralized loan due on April 3, 2016 at 11%
|
|
|
40,807,321
|
|
|
|
38,453,246
|
|
Collateralized loan due on December 23, 2017 at 11%
|
|
|
81,312,306
|
|
|
|
61,221,818
|
|
Collateralized loan due on July 9, 2017 at 9%
|
|
|
65,370,159
|
|
|
|
54,484,415
|
|
Collateralized loan due on December 31, 2016 at 12.5%
|
|
|
1,650,597
|
|
|
|
69,129,605
|
|
Collateralized loan due on June 30, 2017 at 12.5%
|
|
|
-
|
|
|
|
3,079,956
|
|
Collateralized loan due on March 31, 2017 at 11%
|
|
|
-
|
|
|
|
38,499,446
|
|
Collateralized loan due on November 20, 2016 at 12.5%
|
|
|
-
|
|
|
|
46,199,335
|
|
Collateralized loan due on June 30, 2017 at 11.8%
|
|
|
-
|
|
|
|
17,709,745
|
|
Collateralized loan due on July 15, 2017 at 11.8%
|
|
|
-
|
|
|
|
14,583,590
|
|
Collateralized loan due on June 25, 2017 at 12%*******
|
|
|
-
|
|
|
|
69,299,002
|
|
Collateralized loan due on September 17, 2017 at 9%
|
|
|
-
|
|
|
|
10,779,844
|
|
|
|
|
|
|
|
|
|
|
Non-controlling shareholder’s loan due on June 25, 2016 at 11.5%**
|
|
|
81,312,306
|
|
|
|
-
|
|
Non-controlling shareholder’s loan due on June 30, 2016 at 11.24%***
|
|
|
111,946,394
|
|
|
|
28,489,590
|
|
Non-controlling shareholder's loan due on March 13, 2017 at 10.98%****
|
|
|
-
|
|
|
|
81,002,834
|
|
Non-controlling shareholder's loan due on May 13, 2017 at 11%*****
|
|
|
-
|
|
|
|
35,881,483
|
|
Fortress Credit Co. LLC loan due on June 9, 2017 at 7.25% plus LIBOR******
|
|
|
25,668,594
|
|
|
|
96,306,200
|
|
Kent EB-5 LLC loan due on January 23, 2020 at 5.95% ********
|
|
|
-
|
|
|
|
10,000,000
|
|
Kent EB-5 LLC loan due on April 30, 2020 at 5.95% ********
|
|
|
-
|
|
|
|
5,000,000
|
|
Kent EB-5 LLC loan due on June 25, 2020 at 5.95% ********
|
|
|
-
|
|
|
|
5,000,000
|
|
Kent EB-5 LLC loan due on August 4, 2020 at 5.95% ********
|
|
|
-
|
|
|
|
5,000,000
|
|
Kent EB-5 LLC loan due on August 20, 2020 at 5.95%********
|
|
|
-
|
|
|
|
5,000,000
|
|
Kent EB-5 LLC loan due on October 1, 2020 at 5.95% ********
|
|
|
-
|
|
|
|
10,000,000
|
|
Kent EB-5 LLC loan due on November 23, 2020 at 5.95% ********
|
|
|
-
|
|
|
|
10,000,000
|
|
Others
|
|
|
750,988
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total principal of other long-term debt
|
|
|
877,393,444
|
|
|
|
1,258,602,780
|
|
Accrued interest
|
|
|
723,382
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
878,116,826
|
|
|
|
1,258,602,780
|
|
Less: current portion of other long-term debt
|
|
|
(301,912,335
|
)
|
|
|
(348,594,822
|
)
|
|
|
|
|
|
|
|
|
|
Total other long-term debt
|
|
|
576,204,491
|
|
|
|
910,007,958
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
The May 2018 Senior Secured Notes and the June 2019 Senior Secured
Notes are senior secured pari passu obligations of the Company.
As of December 31, 2015, the contractual maturities of these debts
are as follows:
Year
|
|
Amount
|
|
|
|
US$
|
|
2016
|
|
|
182,271,775
|
|
2017
|
|
|
482,848,334
|
|
2018
|
|
|
190,519,754
|
|
2019
|
|
|
200,000,000
|
|
2020 and thereafter
|
|
|
202,962,917
|
|
Less: current portion of other long term debt
|
|
|
348,594,822
|
|
Total: Other long-term debt
|
|
|
910,007,958
|
|
|
*
|
Pursuant to the agreements with Cinda Asset Management Corporation, this other long-term debt is secured by the Group’s 100% equity interest of Henan Xinyuan. Per the agreements, from February 28, 2014 to November 28, 2015, Shandong Xinyuan and Henan Wanzhuo, respectively, are required to make quarterly payments to repay the outstanding principal amount and related interest expense. This other long-term debt was paid in full in November 2015.
|
|
**
|
Pursuant to the agreements with CITIC Trust Co., Ltd. entered into on May 27, 2014, which is the non-controlling shareholder of Shanghai Junxin, this other long-term debt is secured by the Group’s 51% equity interest in Shanghai Junxin and the Group’s land use rights.
This other long-term debt was paid in full in January 2015.
|
|
***
|
Pursuant to the agreements with Shenzhen Ping’an Dahua Huitong Wealth Management Co., Ltd. entered into on June 24, 2014, which is the non-controlling shareholder of Jinan Wanzhuo, this other long-term debt is secured by the Group’s 95% equity interest in Jinan Wanzhuo and the Group’s land use rights with net book value of US$111,663,215 (December 31, 2014: US$139,355,006).
|
|
****
|
Pursuant to the agreements with Shenzhen Ping’an Dahua Huitong Wealth Management Co., Ltd. entered into on March 10, 2015, which is the non-controlling shareholder of Zhengzhou Shengdao, this other long-term debt is secured by the Group’s 80% equity interest in Zhengzhou Shengdao and the Group’s land use rights with net book value of US$136,098,821 (December 31, 2014: nil)
|
|
*****
|
Pursuant to the agreements with Wanxiang Trustee Co., Ltd. entered into on May 9, 2015, which is the non-controlling shareholder of Henan Quansheng, this other debt is secured by the Group’s 90% equity interest in Henan Quansheng and the Group’s land use rights with net book value of US$41,295,897 (December 31, 2014: nil) and Group’s real estate properties under development with net book value of US$7,345,027 (December 31, 2014: nil). In addition, Wanxiang Trustee Co., Ltd. has the right to request early repayment at any time and the trust loan has been reclassified to current
liabilities as of December 31, 2015.
|
|
******
|
Pursuant to the agreements with Fortress Credit Co. LLC entered into on June 9, 2014, this other long-term debt amounting to US$165 million in total with US$96.3 million utilized, is denominated in US$ and is secured by the deposit of US$29,918,940 (December 31, 2014: US$29,973,017). This deposit is classified as restricted cash on the consolidated balance sheets as of December 31, 2015.
|
|
*******
|
Pursuant to the agreements with Ping An Trust Co., Ltd., this other long-term debt is secured by the Group’s 100% equity interest of Shandong Renju.
|
|
********
|
Pursuant to the agreements with Kent EB-5 LLC entered into on September 23, 2014, this other long-term debt amounting to US$50 million in total, is denominated in US$ with mature dates vary from January 23, 2020 to November 23, 2020.
|
As of December 31, 2015, except when otherwise
indicated, the Group’s other long-term debt were all denominated in RMB and were mainly secured by the Group’s real
estate properties under development with net book value of US$128,389,745 (December 31, 2014: US$54,625,305), land use rights with
net book value of US$731,783,438 (December 31, 2014: US$324,684,850) and real estate properties held for lease with net book value
of US$36,550,198 (December 31, 2014: US$38,280,864).
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
May 2018 Senior Secured Notes
On May 3, 2013, the Company issued the senior
notes with an aggregate principal amount of US$200,000,000 due on May 3, 2018 at a coupon rate of 13.25% per annum payable semi-annually.
Interest is payable on May 3 and November 3 of each year, commencing November 3, 2013.
The issuance costs of US$4,951,785 were capitalized
as deferred charges in the consolidated balance sheets and are amortized as interest expense using the effective interest method
through the maturity date of the notes. The effective interest rate of May 2018 Senior Secured Notes is 14.44%.
The May 2018 Senior Secured Notes were issued
pursuant to an indenture, dated May 3, 2013, between, the Company, the “Subsidiary Guarantors” identified below and
Citicorp International Limited, as trustee and collateral agent (the “May 2018 Indenture”). The Company’s obligations
under the May 2018 Indenture and the May 2018 Senior Secured Notes have been guaranteed by certain of the Company’s wholly-owned
subsidiaries, Xinyuan Real Estate, Ltd., Xinyuan International Property Investment Co., Ltd., Victory Good Development Ltd., South
Glory International Ltd., Elite Quest Holdings Ltd. and Xinyuan International (HK) Property Investment Co., Limited (the “Subsidiary
Guarantors”) and will be guaranteed by such other future subsidiaries of the Company as is set forth in and in accordance
with the terms of the May 2018 Indenture. The Company’s obligations under the May 2018 Indenture and the May 2018 Senior
Secured Notes are secured by a pledge of the capital stock of the Company’s wholly-owned subsidiaries, Xinyuan Real Estate,
Ltd. and Xinyuan International Property Investment Co., Ltd., and the obligations of Xinyuan Real Estate, Ltd. as a Subsidiary
Guarantor are secured by a pledge of the capital stock of its wholly-owned subsidiaries, Victory Good Development Ltd., South
Glory International Ltd. and Elite Quest Holdings Ltd.
The Company may redeem the May 2018 Senior
Secured Notes, in whole or in part, at 106.6250% and 103.3125% of principal amount, plus accrued and unpaid interest, if any, to
(but excluding) the redemption date during the 12 month period commencing on May 3, 2016 and May 3, 2017, respectively.
At any time prior to May 3, 2016, the Company
may at its option redeem the May 2018 Senior Secured Notes, in whole but not in part, at a redemption price equal to 100.0% of
the principal amount of the May 2018 Senior Secured Notes plus the Applicable Premium as of, and accrued and unpaid interest, if
any, to (but not including) the redemption date. “Applicable Premium” means with respect to any Note at any redemption
date, the greater of (i) 1.00% of the principal amount of such Note and (ii) the excess of (A) the present value at such redemption
date of the redemption price of such Note on May 3, 2016, plus all required remaining scheduled interest payments due on such Note
through May 3, 2016 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to
the Adjusted Treasury Rate (as defined in the May 2018 Indenture) plus 100 basis points, over (B) the principal amount of such
Note on such redemption date.
At any time prior to May 3, 2016, the Company
may redeem up to 35% of the aggregate principal amount of the May 2018 Senior Secured Notes with the net cash proceeds of one or
more sales of the Company’s common shares in certain equity offerings, within a specified period after the equity offering,
at a redemption price of 113.25% the principal amount of the May 2018 Senior Secured Notes, plus accrued and unpaid interest, if
any, to (but not including) the redemption date, provided that at least 65% of the aggregate principal amount of the May 2018 Senior
Secured Notes issued on May 3, 2013 remain outstanding after each such redemption.
The Company has evaluated and determined that
there was no embedded derivative requiring bifurcation from the May 2018 Senior Secured Notes under the requirements of ASC815
“Derivatives and Hedging
“. The embedded redemption options and repurchase features did not qualify for derivative
accounting because the embedded derivatives were considered clearly and closely related to the characteristics of the May 2018
Senior Secured Notes.
The May 2018 Indenture, as amended, contains certain covenants that, among others, restrict the Company’s
ability and the ability of the Company’s Restricted Subsidiaries (as defined in the May 2018 Indenture) to incur additional
debt or to issue preferred stock, to make certain payments or investments, to pay dividends or purchase or redeem capital stock,
to sell assets (including limitations on the use of proceeds of asset sales), to grant liens on the collateral securing the May
2018 Senior Secured Notes or other assets, to make certain other payments and to engage in transactions with affiliates and holder
of more than 10% of the Company’s Common Shares, subject to certain qualifications and exceptions and satisfaction, in certain
circumstances of specified conditions, such as a Fixed Charge Coverage Ratio (as defined in the May 2018 Indenture) of
2.75
to 1.0 (reduced from 3.0 to 1.0 effective February 2016).
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
In February 2015,
through a consent
solicitation to the holders of the May 2018 Secured Notes, the Company amended the May 2018 Indentures (collectively, known as
the “Indentures”) to provide it with additional flexibility in pursuing new business opportunities and new sources
of capital. The amendments to the Indentures include: (i) to incur additional Indebtedness (as defined in the Indentures) in furtherance
of the Company's business plans; (ii) make certain Restricted Payments (as defined in the Indentures) and Permitted Investments
(as defined in the Indentures); and (iii) make certain deemed Investments (as defined in the Indentures) without having to satisfy
the Fixed Charge Coverage Ratio (as defined in the Indentures) requirement. The amendments also amend (i) the “Limitation
on Issuances of Guarantees by Restricted Subsidiaries” covenant in the Indentures to the extent that the Company believes
necessary as a result of the amendments to other covenants and (ii) the “Limitation on Asset Sales” covenant in the
Indentures to remove the Fixed Charge Coverage Ratio requirement for Asset Dispositions (as defined in the Indentures). The amendments
also amended certain related definitions in the Indentures. The amendments did not result in debt extinguishment accounting.
June 2019 Senior Secured Notes
On December 6, 2013, the Company issued the
senior notes with an aggregate principal amount of US$200,000,000 due June 6, 2019 at a coupon rate of 13% per annum payable semi-annually.
Interest is payable on June 6 and December 6 of each year, commencing June 6, 2014.
The issuance costs of US$4,431,292 were
capitalized as deferred charges in the consolidated balance sheets and are amortized as interest expense using the effective interest
method through the maturity date of the notes. The effective interest rate of June 2019 Senior Secured Notes is 14.05%.
The June 2019 Senior Secured Notes were issued
pursuant to an indenture, dated December 6, 2013, between, the Company, the “Subsidiary Guarantors” identified below
and Citicorp International Limited, as trustee and collateral agent (the “June 2019 Indenture”). The Company’s
obligations under the June 2019 Indenture and the June 2019 Senior Secured Notes have been guaranteed by certain of the Company’s
wholly-owned subsidiaries, Xinyuan Real Estate, Ltd., Xinyuan International Property Investment Co., Ltd., Victory Good Development
Ltd., South Glory International Ltd., Elite Quest Holdings Ltd. and Xinyuan International (HK) Property Investment Co., Limited
(the “Subsidiary Guarantors”) and will be guaranteed by such other future subsidiaries of the Company as is set forth
in and in accordance with the terms of the June 2019 Indenture. The Company’s obligations under the June 2019 Indenture and
the June 2019 Senior Secured Notes are secured by a pledge of the capital stock of the Company’s wholly-owned subsidiaries,
Xinyuan Real Estate, Ltd. and Xinyuan International Property Investment Co., Ltd., and the obligations of Xinyuan Real Estate,
Ltd. as a Subsidiary Guarantor are secured by a pledge of the capital stock of its wholly-owned subsidiaries, Victory Good Development
Ltd., South Glory International Ltd. and Elite Quest Holdings Ltd.
The Company may redeem the June 2019 Senior
Secured Notes, in whole or in part, at 106.5% and 103.25% of principal amount, plus accrued and unpaid interest, if any, to (but
excluding) the redemption date during the 12 month period commencing on June 6, 2017 and June 6, 2018, respectively.
At any time prior to June 6, 2017, the Company
may at its option redeem the June 2019 Senior Secured Notes, in whole but not in part, at a redemption price equal to 100.0% of
the principal amount of the June 2019 Senior Secured Notes plus the Applicable Premium as of, and accrued and unpaid interest,
if any, to (but not including) the redemption date. “Applicable Premium” means with respect to any Note at any redemption
date, the greater of (i) 1.00% of the principal amount of such Note and (ii) the excess of (A) the present value at such redemption
date of the redemption price of such Note on June 6, 2017, plus all required remaining scheduled interest payments due on such
Note through June 6, 2017 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal
to the Adjusted Treasury Rate (as defined in the June 2019 Indenture) plus 100 basis points, over (B) the principal amount of such
Note on such redemption date.
At any time prior to June 6, 2017, the Company
may redeem up to 35% of the aggregate principal amount of the June 2019 Senior Secured Notes with the net cash proceeds of one
or more sales of the Company’s common shares in certain equity offerings, within a specified period after the equity offering,
at a redemption price of 113% the principal amount of the June 2019 Senior Secured Notes, plus accrued and unpaid interest, if
any, to (but not including) the redemption date, provided that at least 65% of the aggregate principal amount of the June 2019
Senior Secured Notes issued on December 6, 2013 remain outstanding after each such redemption.
The Company has evaluated and determined that
there was no embedded derivative requiring bifurcation from the June 2019 Senior Secured Notes under the requirements of ASC 815.
The embedded redemption options and repurchase features did not qualify for derivative accounting because the embedded derivatives
were considered clearly and closely related to the characteristics of the June 2019 Secured Senior Notes.
The June 2019 Indenture, as amended, contains certain covenants that, among others, restrict the Company’s
ability and the ability of the Company’s Restricted Subsidiaries (as defined in the June 2019 Indenture) to incur additional
debt or to issue preferred stock, to make certain payments or investments, to pay dividends or purchase or redeem capital stock,
to sell assets (including limitations on the use of proceeds of asset sales), to grant liens on the collateral securing the June
2019 Senior Secured Notes or other assets, to make certain other payments and to engage in transactions with affiliates and holder
of more than 10% of the Company’s Common Shares, subject to certain qualifications and exceptions and
the
satisfaction, in certain circumstances of specified conditions, such as a Fixed Charge Coverage Ratio (as defined in the June 2019
Indenture) of 2.75 to 1.0 (reduced from 3.0 to 1.0 effective February 2016).
In February 2015,
through a consent
solicitation to the holders of the June 2019 Secured Notes, the Company amended the June 2019 Indentures (collectively, known as
the “Indentures”) to provide it with additional flexibility in pursuing new business opportunities and new sources
of capital. The amendments to the Indentures include: (i) to incur additional Indebtedness (as defined in the Indentures) in furtherance
of the Company's business plans; (ii) make certain Restricted Payments (as defined in the Indentures) and Permitted Investments
(as defined in the Indentures); and (iii) make certain deemed Investments (as defined in the Indentures) without having to satisfy
the Fixed Charge Coverage Ratio (as defined in the Indentures) requirement. The amendments also amend (i) the “Limitation
on Issuances of Guarantees by Restricted Subsidiaries” covenant in the Indentures to the extent that the Company believes
necessary as a result of the amendments to other covenants and (ii) the “Limitation on Asset Sales” covenant in the
Indentures to remove the Fixed Charge Coverage Ratio requirement for Asset Dispositions (as defined in the Indentures). The amendments
also amended certain related definitions in the Indentures. The amendments did not result in debt extinguishment accounting.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
Convertible Note
On September 19, 2013, the Company issued and
sold a senior secured Convertible Note in the aggregate principal amount of US$75,761,009 at par. Until redemption in November
2014, the Convertible Note bore interest at 5.00% per annum payable semi-annually. Interest was payable on March 19 and September
19 of each year, commencing March 19, 2014. The final maturity date of the Convertible Note was September 19, 2018.
The Convertible Note was convertible at the
option of the holder at any time in integral multiples of $100,000 to 25,253,670 ordinary shares (12,626,835 ADS) at an initial
conversion price of $3.00 per Common Share ($6.00 per ADS). The initial conversion price was subject to adjustments for share splits,
reverse splits, share dividends and distributions, certain issuances (or deemed issuances) of Common Shares for consideration less
than the conversion price then in effect, and certain Extraordinary Cash Dividends (as defined in the Convertible Note).
The Company’s obligations under the Convertible
Note were guaranteed by certain of the Company’s wholly-owned subsidiaries, Xinyuan Real Estate, Ltd., Xinyuan International
Property Investment Co., Ltd., Victory Good Development Limited, South Glory International Limited, Elite Quest Holdings Limited
and Xinyuan International (HK) Property Investment Co., Limited (each, a “CN Subsidiary Guarantor” and collectively,
the “CN Subsidiary Guarantors”) and was to be guaranteed by such other future subsidiaries of the Company as was set
forth in and in accordance with the terms of the Convertible Note. The Company’s obligations under the Convertible Note were
secured by a pledge of the capital stock of the Company’s wholly-owned subsidiaries, Xinyuan Real Estate, Ltd. and Xinyuan
International Property Investment Co., Ltd., and the obligations of Xinyuan Real Estate, Ltd. as a CN Subsidiary Guarantor were
secured by a pledge of the capital stock of its wholly-owned subsidiaries, Victory Good Development Limited, South Glory International
Limited and Elite Quest Holdings Limited. The CN Subsidiary Guarantors the same “Subsidiary Guarantors” of the Company’s
May 2018 Senior Secured Notes and June 2019 Senior Secured Notes (collectively, the “Senior Secured Notes”), and the
shares of the subsidiaries pledged to secure the obligations of the Company and of Xinyuan Real Estate, Ltd. as a CN Subsidiary
Guarantor have also been pledged as collateral with respect to the Company’s Senior Secured Notes. In connection with the
issuance of the Convertible Note, the Company entered into an Intercreditor Agreement with Citicorp International Limited, as trustee
under the indenture for the Senior Secured Notes, the purchaser of the Convertible Note and Xinyuan Real Estate, Ltd., pursuant
to which Citicorp International Limited acted as Shared Security Agent for the holders of the Senior Secured Notes and the Convertible
Note.
The Convertible Note was not redeemable in
whole or in part at the option of the Company. However, upon an event of default, the holders could require the Company to redeem
the Convertible Note at a redemption price equal to the greater of (i) 150% of the outstanding principal amount, plus accrued and
unpaid interest to the redemption date and (ii) an amount equal to (A) the outstanding principal divided by two, multiplied by
the conversion price then in effect, times (B) the closing price of the Common Shares, plus accrued and unpaid interest to the
redemption date.
Following a Change of Control or a Fundamental
Transaction, the Company was required to make an offer to purchase all outstanding Convertible Note at a purchase price equal to
150% of the principal amount thereof plus accrued and unpaid interest to the payment date. A “Change of Control” was
defined in the Convertible Note to include certain mergers, consolidations or asset sales with persons who are not or are not controlled
by Permitted Holders, certain share acquisitions by persons or groups other than Permitted Holders, a majority of the Company’s
directors ceasing to be persons who are not, or who were not approved by, the current directors, and the adoption of a plan relating
to the liquidation or dissolution of the Company. “Permitted Holders” were Mr. Zhang Yong, Chairman of the Company,
Ms. Yang Yuyan, his wife, and entities in which one or both of them owns 90% of the capital stock. A “Fundamental Transaction”
was defined in the Convertible Note to include a consolidation or merger of the Company with or into, or a sale, lease, license
or other transfer or of the Company’ assets to, another person, a business combination in which another person acquires more
than 50% of the Company’s voting stock, and a reorganization or recapitalization of the Company or reclassification of the
Common Shares.
The Company has evaluated and determined that
there was no embedded derivative requiring bifurcation from the Convertible Note under the requirements of ASC815. The Company
evaluated and determined that the embedded conversion option, redemption options and anti-dilution feature do not require bifurcation
from the Convertible Note under the requirements of ASC 815-10 because they are clearly and closely related to the debt host instrument.
Beneficial conversion features (“BCF”) exist when the conversion price of the Convertible Note is lower than the fair
value of the ordinary share at the commitment date. Since the Convertible Note was convertible from inception but contain conversion
terms that change upon the occurrence of a future event, the contingent beneficial conversion feature was measured at the commitment
date but not recognized until the contingency is resolved. No BCF was recognized because the conversion price is greater than the
fair value of the Company’s ordinary shares at the commitment date.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
The Convertible Note contained certain covenants that, among others,
restricted the Company’s ability and the ability of the Company’s Restricted Subsidiaries (as defined in the Convertible
Note) and, in certain cases, all of its subsidiaries, to incur additional debt or to issue preferred stock, to make certain payments
or investments, to pay dividends or purchase of redeem capital stock, to sell assets (including limitations on the use of proceeds
of asset sales), to grant liens on the collateral securing the Convertible Note or other assets, to make certain other payments
or to engage in transactions with affiliates, subject to certain qualifications and exceptions and satisfaction, in certain circumstances,
of specified conditions, such as a Consolidated Fixed Charge Coverage Ratio (as defined in the Convertible Note) of 3.0 to 1.0
(which was also to be maintained as of the end of each fiscal quarter of the Company while the Convertible Note is outstanding).
On November 21, 2014, pursuant to a note redemption
agreement entered into with TPG Asia, the Company redeemed the Convertible Note in full for a total redemption amount of $86,272,849
consisting of the entire outstanding principal balance, interest to the redemption date and debt extinguishment loss amounting
to US$9,848,931, equal to the 13% of the outstanding principal amount. In connection with the redemption, the Company agreed with
TPG Asia to waivers of the covenants requiring the Company to maintain a Fixed Charge Coverage Ratio of not less than 3.0 to 1.0
and limiting the ability of the Company and its Restricted Subsidiaries to incur indebtedness, except under limited circumstances.
Onshore Corporate Bonds
On December 28, 2015, Xinyuan (China) Real
Estate, Ltd. issued the first tranche of the onshore corporate bonds with an aggregate principal amount of RMB1 billion (US$154
million) due on December 28, 2020 (the "First Tranche Bonds") at a coupon rate of 7.5% per annum payable annually. Interest
is payable on December 28 of each year, commencing December 28, 2015. Given that First Tranche Bonds is debt in its legal form
and is not a derivative in its entirety, it has been classified as other long-term debt. The Company has evaluated and determined
that there was no embedded derivative requiring bifurcation from the First Tranche Bonds under the requirements of ASC 815 "Derivatives
and Hedging ". The First Tranche Bonds were issued at par. Upon the third anniversary of the issuance of each tranche of bonds, Xinyuan (China) Real Estate Ltd may
increase the applicable coupon rate and the holders have the right within a specified time period to require the Company to repurchase
the bonds following the Company’s announcement of whether it intends to increase the interest rate.
13. Corporate aircraft capital lease
On October 23, 2012, the Group entered into
an agreement with Minsheng Hongtai (Tianjin) Aircraft Leasing Co., Ltd. (“Minsheng”) to lease a corporate aircraft.
The corporate aircraft was delivered on September 12, 2013, and the capital lease commenced on September 15, 2013 (the “Commencement
Date”). The lease has an eight year term and expires on September 15, 2021. The Group has to make 32 quarterly lease payments
of US$1,426,435 starting from the Commencement Date. In 2012, Henan Xinyuan paid a deposit in the amount of US$6.7 million to Minsheng.
Upon the expiration of the lease agreement, the deposit in the amount of US$6.7 million may be used as full and final payment to
Minsheng to purchase the corporate aircraft. The effective interest rate for the capital lease obligation is 10.47%.
Capital lease obligations are summarized as follows:
|
|
December 31,
2015
|
|
|
|
US$
|
|
Capital lease obligations, net of current maturities
|
|
|
18,111,007
|
|
Current maturities of capital lease obligations
|
|
|
3,065,612
|
|
Total capital lease obligations
|
|
|
21,176,619
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
14. Customer deposits
Customer deposits consisted of amounts received
from customers for the pre-sale of residential units in the PRC.
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Advances for real estate properties under development
|
|
|
1,021,782,194
|
|
|
|
1,255,600,108
|
|
Add: increase in revenue recognized in excess of amounts received from customers
|
|
|
6,346,284
|
|
|
|
18,940,748
|
|
Less: recognized as progress billings (see Note 4)
|
|
|
(920,965,080
|
)
|
|
|
(1,210,089,345
|
)
|
|
|
|
|
|
|
|
|
|
Total net balance
|
|
|
107,163,398
|
|
|
|
64,451,511
|
|
Customer deposits are typically funded up to
40% - 80% by mortgage loans made by banks to the customers. Until the customer obtains legal title to the property, the banks have
a right to seek reimbursement from the Group for any defaults by the customers. The Group holds certain cash balances in restricted
cash accounts at the relevant banks (see Note 2 (f)). The Group, in turn, has a right to withhold transfer of title to the customer
until outstanding amounts are fully settled.
15. Income taxes
(a) Corporate income tax (“CIT”)
Under the current law of the Cayman Islands,,
the Company is not subject to income tax.
The Company’s PRC subsidiaries are subject
to income tax at the statutory rate of 25% in accordance to the PRC Corporate Income Tax Laws and regulations. Further, under the
same tax guidance, dividends paid by PRC enterprises out of profits earned post-2007 to non-PRC tax resident investors are subject
to PRC dividend withholding tax of 10%. A lower withholding tax rate may be applied based on applicable tax treaty with certain
jurisdictions.
The
Company’s HK subsidiaries are subject to income tax at the statutory rate of 16.5% in accordance to the HK Corporate Income
Tax Laws and regulations. For the years ended December 31, 2013, 2014 and 2015, the Company did not make any provisions for
Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented.
Under the Hong Kong tax law, the Company’s HK subsidiaries are exempted from income tax on its foreign-derived income and
there are no withholding taxes in Hong Kong on remittance of dividends.
The Company’s US subsidiaries are subject
to income tax at the statutory rate of 42% in accordance to the US Corporate Income Tax Laws and regulations.
The Company’s Malaysian subsidiaries
are subject to income tax at the statutory rate of 25% in accordance to the Malaysia Corporate Income Tax Laws and regulations.
There
is no provision for income taxes for the Company’s US and Malaysian subsidiaries because these subsidiaries were in a cumulative
loss positions for all the periods presented.
Income before income tax expenses consists
of:
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
PRC
|
|
|
246,985,362
|
|
|
|
112,781,760
|
|
|
|
154,833,605
|
|
Non PRC
|
|
|
(36,969,248
|
)
|
|
|
(33,727,777
|
)
|
|
|
(35,840,702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
210,016,114
|
|
|
|
79,053,983
|
|
|
|
118,992,903
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
Income tax expenses for the years ended December
31, 2013, 2014 and 2015 are summarized as follows:
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
CIT tax expense
|
|
|
68,625,597
|
|
|
|
20,791,855
|
|
|
|
48,523,618
|
|
Land Appreciation Tax (“LAT”) expense
|
|
|
36,727,785
|
|
|
|
(3,771,248
|
)
|
|
|
23,223,407
|
|
Deferred tax (benefit)/expense
|
|
|
(21,693,532
|
)
|
|
|
13,537,011
|
|
|
|
(19,235,707
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
83,659,850
|
|
|
|
30,557,618
|
|
|
|
52,511,318
|
|
The Group’s income tax expense differs from the tax expense
computed by applying the statutory CIT rate of 25% for the years ended December 31, 2013, 2014 and 2015, are as follows:
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
CIT at rate of 25%
|
|
|
52,504,028
|
|
|
|
19,763,496
|
|
|
|
29,748,226
|
|
Tax effect of non-deductible expenses
|
|
|
3,490,593
|
|
|
|
6,535,308
|
|
|
|
2,028,153
|
|
Unrecognized tax benefits
|
|
|
5,465,293
|
|
|
|
(8,628,537
|
)
|
|
|
(6,354,200
|
)
|
LAT expense
|
|
|
36,727,785
|
|
|
|
(3,771,248
|
)
|
|
|
23,223,407
|
|
CIT benefit of LAT
|
|
|
(9,171,919
|
)
|
|
|
942,812
|
|
|
|
(5,805,852
|
)
|
Changes in valuation allowance
|
|
|
-
|
|
|
|
-
|
|
|
|
4,274,501
|
|
International rate difference
|
|
|
9,089,244
|
|
|
|
10,681,232
|
|
|
|
6,075,360
|
|
Income tax on undistributed earnings of PRC subsidiaries
|
|
|
3,500,000
|
|
|
|
440,464
|
|
|
|
3,675,156
|
|
Adjustment of estimated income tax accruals
|
|
|
(18,059,102
|
)
|
|
|
3,953,417
|
|
|
|
(4,412,050
|
)
|
Others
|
|
|
113,928
|
|
|
|
640,674
|
|
|
|
58,617
|
|
Actual income tax expense
|
|
|
83,659,850
|
|
|
|
30,557,618
|
|
|
|
52,511,318
|
|
Income tax on undistributed earnings of
PRC subsidiaries represents accrued withholding tax related to the portion of the Group’s retained earnings that were not
considered permanently reinvested.
(b) Unrecognized tax benefit
The following table summarizes the activities
related to the Group’s unrecognized tax benefits:
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Balance at January 1
|
|
|
8,842,239
|
|
|
|
16,313,513
|
|
|
|
14,005,004
|
|
Additions for tax positions of current year
|
|
|
16,313,513
|
|
|
|
6,400,006
|
|
|
|
11,592,738
|
|
Movement in current year due to foreign exchange rate fluctuation
|
|
|
-
|
|
|
|
(79,978
|
)
|
|
|
(313,640
|
)
|
Reductions for tax positions of prior years
|
|
|
-
|
|
|
|
(4,125,703
|
)
|
|
|
(3,669,272
|
)
|
Lapse of stature of limitations
|
|
|
(8,842,239
|
)
|
|
|
(4,502,834
|
)
|
|
|
(3,772,547
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31
|
|
|
16,313,513
|
|
|
|
14,005,004
|
|
|
|
17,842,283
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
The movement in the liability for
unrecognized tax benefits of US$16,313,513 in 2013 was mainly due to Henan Xinyuan with the application of the deemed profit method
by the local tax authority of Zhengzhou city related to the Zhengzhou Modern City project upon completion of the development project.
The Group believes that the possibility exists for reinterpretation of the application of the tax regulations by higher tax authorities
in the PRC, potentially overturning the decision made by the local tax authority to apply the deemed profit method. Because of
the uncertainty surrounding whether the application of the deemed profit method for Zhengzhou Modern City project will be re-evaluated
and the taxes adjusted, the difference between the taxes due based on taxable income calculated according to statutory taxable
income method and the taxes due based on the deemed profit method has been recorded as an additional receivable or payable and
has been included in unrecognized tax benefits. The remaining change of US$8,842,239 was recognized as a reduction of unrecognized
tax benefits due to the expiration of the statute of limitations period for Henan Xinyuan.
The movement in the liability for unrecognized
tax benefits of US$6,400,006 in 2014 was partly due to Henan Xinyuan with the application of the deemed profit method by the local
tax authority of Zhengzhou city related to the Zhengzhou Modern City project upon completion of the development project. The Group
believes that the possibility exists for reinterpretation of the application of the tax regulations by higher tax authorities in
the PRC, potentially overturning the decision made by the local tax authority to apply the deemed profit method. Because of the
uncertainty surrounding whether the application of the deemed profit method for Zhengzhou Modern City project will be re-evaluated
and the taxes adjusted, the difference between the taxes due based on taxable income calculated according to statutory taxable
income method and the taxes due based on the deemed profit method has been recorded as an additional receivable or payable and
has been included in unrecognized tax benefits. The remaining balance of the current year movement in the liability for unrecognized
tax benefits were mainly due to deemed interest income from subsidiaries of the Company during the year. The movement in the liability
for unrecognized tax benefits of US$79,978 was due to the fluctuation of US$/RMB exchange rate, and therefore was recorded as other
comprehensive income arising from the foreign currency translation. The remaining change of US$4,502,834 was recognized as a reduction
of unrecognized tax benefits due to the expiration of the statute of limitations period, and the amount of US$4,125,703 was recognized
due to the receipt of the official tax invoice in 2014.
The current year movement in the liability
for unrecognized tax benefits of US$11,592,738 in 2015 was due to deemed interest income from subsidiaries of the Company during
the year. The movement in the liability for unrecognized tax benefits of US$313,640 was due to the fluctuation of US$/RMB exchange
rate, and therefore was recorded as other comprehensive income arising from the foreign currency translation. The remaining change
of US$3,772,547 was recognized as a reduction of unrecognized tax benefits mainly due to the expiration of the statute of limitations
period, and the amount of US$3,669,272 was recognized due to the availability for taxation deductions in 2015.
As of December 31, 2014 and 2015, unrecognized
tax benefits of US$8,582,351 and US$1,993,721, respectively, if ultimately recognized, will impact the effective tax rate. The
Group anticipates new unrecognized tax benefits, related to tax positions similar to those giving rise to its existing unrecognized
tax benefits, to originate after December 31, 2015. It is possible that the amount of uncertain tax positions will change in the
next twelve months, however, an estimate of the range of the possible outcomes cannot be made at this time.
The PRC income tax returns for fiscal year
2012 through fiscal year 2015 remain open to potential examination. In addition, local tax authorities may exercise broad discretion
in applying the tax law, thus potentially exposing the PRC subsidiaries to audits of tax years outside the general statute of limitations.
It is the Group’s continuing practice
to recognize interest and penalties related to uncertain tax positions in interest expenses and other expenses, respectively. For
the years ended December 31, 2013, 2014 and 2015, no interests and penalties have been recognized under ASC 740-10 as management
believes that there will be no interest and penalties charged relating to a re-evaluation of a tax levy method.
(c) LAT
Since January 1, 1994, LAT has been
applicable at progressive tax rates ranging from 30% to 60% on the appreciation of land values, with an exemption provided for
the sales of ordinary residential properties if the appreciation values do not exceed certain thresholds specified in the relevant
tax laws. However, prior to September 2004, the local tax authority in Zhengzhou city did not impose the regulation on real estate
companies in its area of administration. Since September 2004, the local tax authority has levied the LAT at the rate of 0.8% or
1.0% against total cash receipts from sales of real estate properties, rather than according to the progressive rates. In early
2007, the national PRC tax authorities clarified the regulations to require the full payment of LAT in accordance with the progressive
rates.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
For the years ended December 31, 2013,
2014 and 2015, the Group has made provision for LAT with respect to properties sold up to December 31, 2015 in accordance
with the requirements set forth in the relevant PRC tax laws and regulations.
In prior years, the Company has settled
the LAT for three of its projects based on the deemed profit method, which was approved by the local tax bureau. Out of the three
projects, one project was liquidated on April 6, 2012 and the statute of limitations of another project expired as of December
31, 2013. The statute of limitations of the remaining project expired on April 27, 2014. Based on the above, there is no longer
a contingency related to the LAT of the three projects settled in the prior years as of December 31, 2014 and 2015.
(d) Deferred tax
The tax effects of temporary differences
that give rise to the Group’s net current deferred tax assets and liabilities as of December 31, 2014 and 2015 are as follows:
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Current deferred tax assets:
|
|
|
|
|
|
|
|
|
Tax loss carried forward
|
|
|
4,947,176
|
|
|
|
9,858,503
|
|
Accruals and provisions
|
|
|
5,554,948
|
|
|
|
6,269,775
|
|
Deemed interest income
|
|
|
3,276,136
|
|
|
|
14,868,874
|
|
Unrealized profit at consolidation
|
|
|
-
|
|
|
|
2,946,297
|
|
Allowance for deferred tax assets
|
|
|
-
|
|
|
|
(4,274,501
|
)
|
|
|
|
|
|
|
|
|
|
Total current deferred tax assets
|
|
|
13,778,260
|
|
|
|
29,668,948
|
|
|
|
|
|
|
|
|
|
|
Current deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Revenue recognized based on percentage of completion
|
|
|
(31,868,998
|
)
|
|
|
(38,623,934
|
)
|
Real estate properties accelerated cost deduction
|
|
|
(1,360,518
|
)
|
|
|
(1,282,034
|
)
|
Taxable temporary differences arising from business combinations and asset acquisitions
|
|
|
(71,705,371
|
)
|
|
|
(47,409,723
|
)
|
Others
|
|
|
(45,532
|
)
|
|
|
(45,532
|
)
|
|
|
|
|
|
|
|
|
|
Total current deferred tax liabilities
|
|
|
(104,980,419
|
)
|
|
|
(87,361,223
|
)
|
|
|
|
|
|
|
|
|
|
Net current deferred tax liabilities
|
|
|
(91,202,159
|
)
|
|
|
(57,692,275
|
)
|
The tax effects of temporary differences
that give rise to the Group’s net long-term deferred tax assets and liabilities as of December 31, 2014 and 2015 are as follows:
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Long-term deferred tax assets:
|
|
|
|
|
|
|
|
|
Tax loss carried forward
|
|
|
2,727,890
|
|
|
|
5,553,093
|
|
Revenue recognition of real estate lease income on a straight-line basis
|
|
|
8,767,201
|
|
|
|
8,955,776
|
|
Others
|
|
|
2,146,517
|
|
|
|
979,688
|
|
|
|
|
|
|
|
|
|
|
Total long-term deferred tax assets
|
|
|
13,641,608
|
|
|
|
15,488,557
|
|
|
|
|
|
|
|
|
|
|
Long-term deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Income tax on undistributed earnings of PRC subsidiaries
|
|
|
(9,825,083
|
)
|
|
|
(13,500,239
|
)
|
|
|
|
|
|
|
|
|
|
Total long-term deferred tax liabilities
|
|
|
(9,825,083
|
)
|
|
|
(13,500,239
|
)
|
|
|
|
|
|
|
|
|
|
Net long-term deferred tax assets
|
|
|
3,816,525
|
|
|
|
1,988,318
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Certain of the Company’s PRC subsidiaries
have PRC tax net operating loss carry forwards of US$39.4 million (2014: US$19.8 million) which will expire in one to five years,
if unutilized. Losses incurred in the U.S. amounting to US$9.0 million (2014: US$5.9 million) will expire in 20 years.
During 2014 and 2015, the Company has
considered its operational funding needs, future development initiatives and its dividend distribution plan and is permanently
reinvesting all but US$98.3 million and US$332.9 million (including US$197.9 million that may be remitted on a tax-free basis
that is within the parent company’s control and presently available) of its PRC subsidiaries earnings as at December 31,
2014 and 2015, respectively. Accordingly, the Company accrued deferred income tax liabilities of US$9.83 million and US$13.5 million
for the withholding tax liability associated with the distribution of retained earnings that are not permanently reinvested as
at December 31, 2014 and 2015, respectively. As of December 2014 and 2015, the total amount of undistributed earnings from the
Company’s PRC subsidiaries that are considered to be permanently reinvested were US$683.7 million and US$509.1 million,
and the related unrecognized deferred tax liabilities were approximately US$68.4 million and US$50.9 million, respectively.
For each PRC subsidiary, deferred tax assets
have been netted against deferred tax liabilities by current classification, as the reversal of the underlying temporary differences
is expected to occur in the same future periods.
In assessing the ability to realize the
deferred tax assets, the Group has considered whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become deductible. Accordingly, the Group recorded valuation allowance
amounting nil and US$4,274,501 as of December 31, 2014 and 2015, respectively.
16. Share-based compensation
As of December 31, 2015, the Company has
four share-based compensation plans under which awards may be granted to both employees and non-employees, which are described
below. Compensation cost of US$4,904,626 (2013: US$676,303, 2014: US$3,232,940) was charged against income comprising of general
and administrative expenses of US$4,904,626 (2013: US$676,303, 2014: US$3,232,940) for those plans with a corresponding credit
to additional paid-in capital in the year ended December 31, 2015, of which, US$4,407,999 (2013: US$427,989, 2014: US$2,736,313)
was related to the options granted to employees. The compensation cost is regarded as a permanent difference for income tax purposes
as the options were granted by the Company, which is registered in Cayman, a tax free jurisdiction. Hence, no tax benefit was recognized
upon the recognition of compensation cost. The Company has a policy of using authorized shares in the existing pool to satisfy
any future exercise of share options and shares repurchased held by a third party trustee to satisfy the RSUs granted under the
2014 RSU plan.
2007 Equity Incentive Plan (the “Plan”)
On August 11, 2007, the Company granted
share options to purchase up to 6,125,374 common shares to its directors and employees, at exercise prices ranging from US$0.0001
to US$2.50 per share. These options have a weighted average grant date fair value of US$2.67 per option, and a total expected compensation
cost, net of expected forfeitures, of US$15,564,801. These options have vesting periods based on length of service ranging from
10 to 60 months and will expire no later than August 10, 2017. These options are performance-based and did not begin vesting
until the Company’s IPO was in effect. However, upon the effectiveness of the IPO, these awards had an immediate vesting
of all shares that would have vested between the grant date and the effectiveness of the IPO.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
2007 Long Term Incentive Plan (the “2007 Plan”)
In November 2007, the Company adopted the
2007 Plan which provides for the grant of options, restricted shares, restricted stock units, stock appreciation rights and other
stock-based awards to purchase its common shares. The maximum aggregate number of common shares which may be issued pursuant to
all awards, including options, is 10 million common shares, subject to adjustment to account for changes in the capitalization
of the Company.
On July 1, 2013, under the 2007 Plan, the
Company granted share options with service conditions to purchase up to 600,000 common shares to one director, at an exercise price
of US$2.105 per share. These options have a weighted average grant date fair value of US$0.72 per option and a total expected compensation
cost, net of expected forfeitures, of US$431,687. These options will have vesting periods based on length of service of 36 months
and will expire no later than July 1, 2023.
On August 7, 2013, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 400,000 common shares to one employee, at an exercise
price of US$2.475 per share. These options have a weighted average grant date fair value of US$0.84 per option and a total expected
compensation cost, net of expected forfeitures, of US$337,655. These options will have vesting periods based on length of service
of 36 months and will expire no later than August 7, 2023.
On September 3, 2013, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 600,000 common shares to one employee, at an exercise
price of US$2.86 per share. These options have a weighted average grant date fair value of US$0.96 per option and a total expected
compensation cost, net of expected forfeitures, of US$578,159. These options will have vesting periods based on length of service
of 36 months and will expire no later than September 3, 2023.
On September 5, 2013, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 600,000 common shares to one employee, at an exercise
price of US$2.92 per share. These options have a weighted average grant date fair value of US$1.0 per option and a total expected
compensation cost, net of expected forfeitures, of US$602,604. These options will have vesting periods based on length of service
of 36 months and will expire no later than September 5, 2023. This share option was forfeited on November 15, 2013 because the
employee resigned.
On November 8, 2013, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 400,000 common shares to one employee, at an exercise
price of US$3.185 per share. These options have a weighted average grant date fair value of US$1.03 per option and a total expected
compensation cost, net of expected forfeitures, of US$412,735. These options will have vesting periods based on length of service
of 36 months and will expire no later than November 8, 2023.
On June 25, 2014, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 600,000 common shares to one employee, at an exercise
price of US$2.045 per share. These options have a weighted average grant date fair value of US$0.52 per option and a total expected
compensation cost, net of expected forfeitures, of US$311,098. These options have vesting periods based on length of service of
36 months and will expire no later than June 25, 2024.
On June 30, 2014, under the 2007 Plan,
the Company granted share options to purchase up to 907,000 common shares to six employees, at an exercise price of US$1.21 per
share. These options have a weighted average grant date fair value of US$0.81 per option and a total expected compensation cost,
net of expected forfeitures, of US$734,181. These options became vested and exercisable immediately.
On February 26, 2015, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 200,000 common shares to one employee, at an exercise
price of US$1.255 per share. These options have a weighted average grant date fair value of US$0.36 per option and a total expected
compensation cost, net of expected forfeitures, of US$71,853. These options have vesting periods based on length of service of
36 months and will expire no later than February 26, 2025.
On April 10, 2015, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 600,000 common shares to one employee, at an exercise
price of US$1.605 per share. These options have a weighted average grant date fair value of US$0.52 per option and a total expected
compensation cost, net of expected forfeitures, of US$312,671. These options have vesting periods based on length of service of
36 months and will expire no later than April 10, 2025.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
On July 1, 2015, under the 2007 Plan, the
Company granted share options with service conditions to purchase up to 1,200,000 common shares to two employees, at an exercise
price of US$1.71 per share. These options have a weighted average grant date fair value of US$0.48 per option and a total expected
compensation cost, net of expected forfeitures, of US$577,836. These options have vesting periods based on length of service of
36 months and will expire no later than July 1, 2025.
On September 30, 2015, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 200,000 common shares to one employee, at an exercise
price of US$1.39 per share. These options have a weighted average grant date fair value of US$0.50 per option and a total expected
compensation cost, net of expected forfeitures, of US$100,243. These options have vesting periods based on length of service of
36 months and will expire no later than September 30, 2025.
On November 6, 2015, under the 2007 Plan,
the Company granted share options with service conditions to purchase up to 200,000 common shares to one employee, at an exercise
price of US$1.81 per share. These options have a weighted average grant date fair value of US$0.61 per option and a total expected
compensation cost, net of expected forfeitures, of US$122,109. These options have vesting periods based on length of service of
36 months and will expire no later than November 6, 2025.
2015 Long Term Incentive Plan (the “2015 Plan”)
In June 2015, the Company approved the
2015 Stock Option Plan to provide grant of options to purchase shares of company stock with maximum aggregate number of 20 million
common shares, subject to adjustment to account for changes in the capitalization of the Company.
On July 1, 2015, under the 2015 Plan, the
Company granted share options with service conditions to purchase up to 6,574,600 common shares to twenty-two employees, at an
exercise price of US$1.71 per share. These options have a weighted average grant date fair value of US$0.48 per option and a total
expected compensation cost, net of expected forfeitures, of US$3,165,867. These options have vesting periods based on length of
service of 34 months and will expire no later than July 1, 2025.
On July 29, 2015, under the 2015 Plan,
the Company granted share options with service conditions to purchase up to 81,600 common shares to one employee, at an exercise
price of US$1.71 per share. These options have a weighted average grant date fair value of US$0.42 per option and a total expected
compensation cost, net of expected forfeitures, of US$34,294. These options have vesting periods based on length of service of
33 months and will expire no later than July 29, 2025.
Assumptions
The Company assumed the forfeiture ratios
of 10% for non-executive employees and 0% for executives in arriving at the total compensation expense. All outstanding unvested
stock options as of December 31, 2015 under the Plan, the 2007 Plan and the 2015 Plan were related to executives and therefore,
are expected to vest in full.
The fair value of each option is estimated
on the date of grant using the Dividend Adjusted Black-Scholes option-pricing model that uses the assumptions noted below.
|
|
Options Granted in
2013
Under the 2007 Plan
|
|
|
Options Granted in
2014
Under the 2007 Plan
|
|
|
Options Granted in
2015
Under the 2007 Plan
|
|
|
Options Granted in
2015
Under the 2015 Plan
|
|
Average risk-free rate of return
|
|
|
1.43
|
%
|
|
|
2.5
|
%
|
|
|
1.82-1.92
|
%
|
|
|
1.57-1.92
|
%
|
Expected term
|
|
|
6 Years
|
|
|
|
5-6 Years
|
|
|
|
6 Years
|
|
|
|
6 Years
|
|
Volatility rate
|
|
|
55.7
|
%
|
|
|
40.5-41.4
|
%
|
|
|
46.3-55.2
|
%
|
|
|
55.0-55.9
|
%
|
Dividend yield
|
|
|
5
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
The risk-free rate for periods within the
expected life of the option is based on the implied yield rates of U.S treasury yield curve in effect at the time of grant. The
expected life of options represents the period of time the granted options are expected to be outstanding. The Company had limited
historical exercise data. Therefore, the expected life was estimated as the average of the contractual term and the vesting period.
The dividend yield was based on the Company’s dividend distribution plan. The expected volatility was based on the historical
daily stock price of the Company, annualized.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Share Option Activity
The following table is a summary of the
Company’s share option activity under the Plan (in US$, except options):
Options under the Plan
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Remaining
Contractual
Life (Years)
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, January 1, 2015
2.50 (exercise price)
|
|
|
560,594
|
|
|
|
2.5
|
|
|
|
2.58
|
|
|
|
-
|
|
0.0001 (exercise price)
|
|
|
23,800
|
|
|
|
0.0001
|
|
|
|
2.58
|
|
|
|
28,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted to employee
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
Expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/Cancelled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.50 (exercise price)
|
|
|
3,298
|
|
|
|
2.5
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.50 (exercise price)
|
|
|
557,396
|
|
|
|
2.5
|
|
|
|
1.58
|
|
|
|
-
|
|
0.0001 (exercise price)
|
|
|
23,800
|
|
|
|
0.0001
|
|
|
|
1.58
|
|
|
|
43,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as at December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.50 (exercise price)
|
|
|
557,396
|
|
|
|
2.5
|
|
|
|
1.58
|
|
|
|
|
|
0.0001 (exercise price)
|
|
|
23,800
|
|
|
|
0.0001
|
|
|
|
1.58
|
|
|
|
43,909
|
|
The aggregate intrinsic value in the table
above represents the total intrinsic value (the aggregate difference between the Company’s closing stock price of US$1.85
per common share as of December 31, 2015 and the exercise price for in-the-money options) that would have been received by the
option holders if all in-the-money options had been exercised on December 31, 2015. All the options were fully vested as of December
31, 2012.
As of December 31, 2015, there was no unrecognized
compensation cost related to unvested share-based compensation arrangements granted to employees and non-employees under the Plan.
The following table is a summary of the
Company’s share option activity under the 2007 Plan (in US$, except options):
Options Under the 2007 Plan
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Remaining
Contractual
Life (Years)
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, January 1, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.0 (exercise price)
|
|
|
792,056
|
|
|
|
7.00
|
|
|
|
2.83
|
|
|
|
-
|
|
2.975 (exercise price)
|
|
|
180,000
|
|
|
|
2.975
|
|
|
|
3.50
|
|
|
|
-
|
|
1.87 (exercise price)
|
|
|
93,334
|
|
|
|
1.87
|
|
|
|
4.25
|
|
|
|
-
|
|
1.21 (exercise price)
|
|
|
860,000
|
|
|
|
1.21
|
|
|
|
5.95
|
|
|
|
-
|
|
1.085 (exercise price)
|
|
|
100,000
|
|
|
|
1.085
|
|
|
|
6.50
|
|
|
|
9,500
|
|
1.64 (exercise price)
|
|
|
300,000
|
|
|
|
1.64
|
|
|
|
7.87
|
|
|
|
-
|
|
1.595 (exercise price)
|
|
|
200,000
|
|
|
|
1.595
|
|
|
|
7.87
|
|
|
|
-
|
|
2.105 (exercise price)
|
|
|
600,000
|
|
|
|
2.105
|
|
|
|
8.50
|
|
|
|
-
|
|
2.86 (exercise price)
|
|
|
600,000
|
|
|
|
2.86
|
|
|
|
8.67
|
|
|
|
-
|
|
2.045 (exercise price)
|
|
|
600,000
|
|
|
|
2.045
|
|
|
|
9.48
|
|
|
|
|
|
1.21 (exercise price)
|
|
|
907,000
|
|
|
|
1.21
|
|
|
|
9.50
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.255(exercise price)
|
|
|
200,000
|
|
|
|
1.255
|
|
|
|
9.16
|
|
|
|
118,000
|
|
1.605(exercise price)
|
|
|
600,000
|
|
|
|
1.605
|
|
|
|
9.27
|
|
|
|
144,000
|
|
1.71(exercise price)
|
|
|
1,200,000
|
|
|
|
1.710
|
|
|
|
9.50
|
|
|
|
162,000
|
|
1.39(exercise price)
|
|
|
200,000
|
|
|
|
1.390
|
|
|
|
9.75
|
|
|
|
91,000
|
|
1.81(exercise price)
|
|
|
200,000
|
|
|
|
1.810
|
|
|
|
9.85
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.21 (exercise price)
|
|
|
6,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
2,400
|
|
1.21 (exercise price)
|
|
|
17,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
6,800
|
|
1.21 (exercise price)
|
|
|
2,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
634
|
|
1.21 (exercise price)
|
|
|
4,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
1,220
|
|
1.21 (exercise price)
|
|
|
2,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
817
|
|
1.21 (exercise price)
|
|
|
5,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
1,999
|
|
1.21 (exercise price)
|
|
|
4,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
1,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited/Cancelled (employee)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.045 (exercise price)
|
|
|
600,000
|
|
|
|
2.045
|
|
|
|
-
|
|
|
|
-
|
|
1.21 (exercise price)
|
|
|
100,000
|
|
|
|
1.21
|
|
|
|
-
|
|
|
|
-
|
|
1.64 (exercise price)
|
|
|
100,000
|
|
|
|
1.64
|
|
|
|
-
|
|
|
|
-
|
|
1.595 (exercise price)
|
|
|
200,000
|
|
|
|
1.595
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.0 (exercise price)
|
|
|
792,056
|
|
|
|
7.00
|
|
|
|
1.83
|
|
|
|
-
|
|
2.975 (exercise price)
|
|
|
180,000
|
|
|
|
2.975
|
|
|
|
2.50
|
|
|
|
-
|
|
1.87 (exercise price)
|
|
|
93,334
|
|
|
|
1.87
|
|
|
|
3.25
|
|
|
|
-
|
|
1.21 (exercise price)
|
|
|
754,000
|
|
|
|
1.21
|
|
|
|
4.95
|
|
|
|
478,790
|
|
1.085 (exercise price)
|
|
|
100,000
|
|
|
|
1.085
|
|
|
|
5.50
|
|
|
|
76,000
|
|
1.64 (exercise price)
|
|
|
200,000
|
|
|
|
1.64
|
|
|
|
6.87
|
|
|
|
41,000
|
|
1.595 (exercise price)
|
|
|
-
|
|
|
|
1.60
|
|
|
|
6.87
|
|
|
|
-
|
|
2.105 (exercise price)
|
|
|
600,000
|
|
|
|
2.105
|
|
|
|
7.50
|
|
|
|
-
|
|
2.86 (exercise price)
|
|
|
600,000
|
|
|
|
2.86
|
|
|
|
7.67
|
|
|
|
-
|
|
2.045 (exercise price)
|
|
|
-
|
|
|
|
2.045
|
|
|
|
8.48
|
|
|
|
-
|
|
1.21 (exercise price)
|
|
|
873,000
|
|
|
|
1.21
|
|
|
|
8.50
|
|
|
|
554,355
|
|
1.255(exercise price)
|
|
|
200,000
|
|
|
|
1.255
|
|
|
|
9.16
|
|
|
|
118,000
|
|
1.605(exercise price)
|
|
|
600,000
|
|
|
|
1.605
|
|
|
|
9.27
|
|
|
|
144,000
|
|
1.71(exercise price)
|
|
|
1,200,000
|
|
|
|
1.71
|
|
|
|
9.50
|
|
|
|
162,000
|
|
1.39(exercise price)
|
|
|
200,000
|
|
|
|
1.39
|
|
|
|
9.75
|
|
|
|
91,000
|
|
1.81(exercise price)
|
|
|
200,000
|
|
|
|
1.81
|
|
|
|
9.85
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as at December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.0 (exercise price)
|
|
|
792,056
|
|
|
|
7.00
|
|
|
|
1.83
|
|
|
|
-
|
|
2.975 (exercise price)
|
|
|
180,000
|
|
|
|
2.98
|
|
|
|
2.50
|
|
|
|
-
|
|
1.87 (exercise price)
|
|
|
93,334
|
|
|
|
1.87
|
|
|
|
3.25
|
|
|
|
-
|
|
1.21 (exercise price)
|
|
|
754,000
|
|
|
|
1.21
|
|
|
|
4.95
|
|
|
|
478,790
|
|
1.085 (exercise price)
|
|
|
100,000
|
|
|
|
1.09
|
|
|
|
5.50
|
|
|
|
76,000
|
|
1.64 (exercise price)
|
|
|
200,000
|
|
|
|
1.64
|
|
|
|
6.87
|
|
|
|
41,000
|
|
2.105 (exercise price)
|
|
|
400,000
|
|
|
|
2.11
|
|
|
|
7.50
|
|
|
|
-
|
|
2.86 (exercise price)
|
|
|
400,000
|
|
|
|
2.86
|
|
|
|
7.67
|
|
|
|
-
|
|
1.21 (exercise price)
|
|
|
873,000
|
|
|
|
1.21
|
|
|
|
8.50
|
|
|
|
554,355
|
|
1.255(exercise price)
|
|
|
132,000
|
|
|
|
1.26
|
|
|
|
9.16
|
|
|
|
77,880
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
The aggregate intrinsic value
in the table above represents the total intrinsic value (the aggregate difference between the Company’s closing stock price
of US$1.85 per common share as of December 31, 2015 and the exercise price for in-the-money options) that would have been received
by the option holders if all in-the-money options had been exercised on December 31, 2015. As of December 31, 2015, there was US$1,133,257
of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted to employees, under
the 2007 Plan. The cost is expected to be recognized using a straight-line method over a weighted-average period of 2.16 years.
Total fair value of options vested during the year ended December 31, 2013, 2014 and 2015 was US$430,438, US$1,206,372, and US$633,113,
respectively.
The following table is a summary of the
Company’s share option activity under the 2015 Plan (in US$, except options):
Options Under the 2015 Plan
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Remaining
Contractual
Life (Years)
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.71(exercise price)
|
|
|
81,600
|
|
|
|
1.71
|
|
|
|
9.58
|
|
|
|
11,016
|
|
1.71(exercise price)
|
|
|
6,574,600
|
|
|
|
1.71
|
|
|
|
9.50
|
|
|
|
887,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.71(exercise price)
|
|
|
81,600
|
|
|
|
1.71
|
|
|
|
9.58
|
|
|
|
11,016
|
|
1.71(exercise price)
|
|
|
6,574,600
|
|
|
|
1.71
|
|
|
|
9.50
|
|
|
|
887,571
|
|
The aggregate intrinsic value
in the table above represents the total intrinsic value (the aggregate difference between the Company’s closing stock price
of US$1.85 per common share as of December 31, 2015 and the exercise price for in-the-money options) that would have been received
by the option holders if all in-the-money options had been exercised on December 31, 2015. As of December 31, 2015, there was
US$2,560,637 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted to employees,
under the 2015 Plan. The cost is expected to be recognized using a straight-line method over a weighted-average period of 2.5
years. Total fair value of options vested during the year ended December 31, 2015 was US$639,524.
2014 Restricted Stock Unit Plan (the “2014 RSU Plan”)
On May 23, 2014, the Board of Directors
approved the 2014 RSU Plan, which is administered by the Compensation Committee of the Board of Directors. The 2014 RSU Plan provides
for discretionary grants of restricted stock units, or RSUs, to or for the benefit of participating employees. The maximum number
of common shares that may be delivered to 2014 RSU Plan participants in connection with RSUs granted under the 2014 RSU Plan is
10,000,000, subject to adjustment if the Company's outstanding common shares are increased, decreased, changed into or exchanged
for a different number or kind of shares or securities of the Company through a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar transaction.
On May 23, 2014, the Company established
a trust that is governed by a third party trustee and deposited US$7,042,725 into the trust. The trustee used the funds to acquire
4,234,884 common shares in the open market. The awards vest ratably over a three year service vesting period. The aggregate fair
value of the restricted shares granted at the grant date shall be recognized as compensation expense using the straight-line method.
The shares held by the third party trustee are legally outstanding as of December 31, 2015.
On April 10, 2015, under the 2014 RSU
Plan, the Company deposited $3,259,998 into the trust. The trustee used the funds to acquire 2,076,964 common shares from the
open market. The awards vest ratably over a three year service vesting period. The aggregate fair value of the restricted shares
granted at the grant date shall be recognized as compensation expense using the straight-line method. The shares held by the third
party trustee are legally outstanding as of December 31, 2015.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
The weighted average grant-date fair value
of restricted shares granted during the years ended December 31, 2014 and 2015 was US$2.01 and US$1.605, respectively, which was
derived from the fair value of the underlying ordinary shares.
Other awards
On December 29, 2014, EMG granted the Share
Option to a selling shareholder. No compensation expense was recorded as of December 31, 2014 and 2015 since the performance conditions
underlying the Share Option were not met.
17. Other payables and accrued liabilities
The components of other payables and accrued
liabilities are as follows:
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Contract deposit
|
|
|
22,484,500
|
|
|
|
31,740,289
|
|
Accrued expense
|
|
|
19,893,141
|
|
|
|
22,170,906
|
|
Deed tax and maintenance fund withheld for customers
|
|
|
266,382
|
|
|
|
13,318,504
|
|
Bidding deposit
|
|
|
1,698,002
|
|
|
|
1,881,217
|
|
Welfare payable
|
|
|
1,697,794
|
|
|
|
1,590,932
|
|
Other tax payable
|
|
|
8,606,598
|
|
|
|
701,721
|
|
Accrued aircraft operating expense
|
|
|
752,574
|
|
|
|
8,445,279
|
|
Accrued interest expense
|
|
|
11,582,212
|
|
|
|
14,178,760
|
|
Others
|
|
|
7,106,887
|
|
|
|
12,098,761
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
74,088,090
|
|
|
|
106,126,369
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
18. Related party and employee transactions
(a) Amounts due from related party
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Shaanxi Zhongmao Economy Development Co., Ltd.
|
|
|
125,374,349
|
|
|
|
45,072,727
|
|
Beijing Ruihao Rongtong Real estate development Co., Ltd.
|
|
|
-
|
|
|
|
10,816,284
|
|
Beijing Starry Sky Cinema Co., Ltd
|
|
|
-
|
|
|
|
2,741,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,374,349
|
|
|
|
58,630,172
|
|
As of December 31, 2014, this balance
represents a receivable due from Shaanxi Zhongmao related to advances for operational needs without any fixed payments terms, which
mainly consisted of the amount of US$104,410,477 for acquiring parcels of land in Xi’an. In 2015, the Company advanced US$146,042,251
to Shaanxi Zhongmao and Shaanxi Zhongmao repaid US$221,558,534 of the outstanding balance. This balance is unsecured, bears no
interest, and is expected to be repaid in one year.
As of December 31,2015, the balance due
from Ruihao Rongtong and Beijing Starry Sky Cinema are related to advances for operational needs without any fixed payments terms.
This balance is unsecured, bears no interest, and is expected to be repaid in one year.
(b) Amounts due from employees
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
US$
|
|
|
US$
|
|
Advances to employees
|
|
|
50,057
|
|
|
|
350,919
|
|
The balance represents cash advances to
employees for traveling expenses and other expenses. The balances are unsecured, bear no interest and have no fixed payment terms.
(c) Others
For the year ended December 31, 2015,
total directors’ remuneration amounted to US$8,549,672 (2013: US$9,690,085; 2014: US$8,145,311).
All other related party transactions have
been disclosed in Notes 1, 2a) and 12.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
19. Equity
(i) As at December 31, 2015, the Company’s
authorized share capital was 500 million common shares, par value US$0.0001 per share (December 31, 2014: 500 million
common shares).
(ii) During the year ended December 31,
2013, 15,124 options were exercised at US$2.5 per share under the Plan.
(iii) During the year ended December 31,
2013, 406,666 options were exercised at US$1.87 per share under the 2007 Plan.
(iv) During the year ended December 31,
2013, 200,000 options were exercised at US$1.8 per share under the 2007 Plan.
(v) During the year ended December 31,
2013, 4,082,020 options were exercised at US$1.21 per share under the 2007 Plan.
(vi) On July 12, 2013, the Board of Directors
unanimously authorized management to repurchase up to US$60 million of the Company’s shares (the 2013 Repurchase Program)
from the approval date to the end of 2015.
(vii) During the year ended December 31,
2013, 2,629,716 common shares were repurchased at a total cost of US$5,767,159.
(viii) On September 19, 2013, the Company
had purchased a cumulative total of 14,264,896 treasury shares for a consideration of US$19,434,281 with a weighted average price
of US$1.36 per share. On September 19, 2013, 12,000,000 out of the 14,264,896 treasury shares were issued to TPG Asia as part of
the TPG Private Placement and the Company received gross proceeds of approximately US$32,880,000 from the issuance of the treasury
shares.
(ix) During the year ended December 31,
2013, the Company distributed quarterly dividends of US$0.025 per common share to common shareholders amounting to a total of US$14,724,740.
(x) During the year ended December 31,
2014, 33,000 options were exercised at US$1.21 per share under the 2007 Plan.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
(xi) During the year ended December 31,
2014, 9,025,690 common shares were repurchased at a total cost of US$17,610,787.
(xiii) During the year ended December 31,
2014, 4,234,884 common shares were repurchased at a total cost of US$7,042,725 under the 2014 RSU Plan, which were granted to employees
and directors (note 16).
(xiv) During the year ended December 31,
2014, the Company distributed quarterly dividends of US$0.025 per common share to common shareholders amounting to a total of US$15,288,919.
(xv) During the year ended December 31,
2015, 40,000 options were exercised at US$1.21 per share under the 2007 Plan.
(xvi) During the year ended December 31,
2015, 2,179,902 common shares were repurchased at a total cost of US$3,349,172.
(xvii) During the year ended December 31,
2015, 2,076,964 common shares were repurchased at a total cost of US$3,259,998 under the 2014 RSU Plan, which were granted to employees
and directors.
(xviii) During the year ended December
31, 2015, the Company distributed quarterly dividends of US$0.025 per common share to common shareholders amounting to a total
of US$14,751,704.
20. Earnings per share
Basic and diluted net earnings per share
for each period presented are calculated as follows:
|
|
December 31,
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
126,356,264
|
|
|
|
48,515,730
|
|
|
|
66,482,107
|
|
Net income attributable to Xinyuan Real Estate Co., Ltd. Shareholders – basic
|
|
|
126,356,264
|
|
|
|
48,515,730
|
|
|
|
66,482,107
|
|
Interest expense associated with the Convertible Note
|
|
|
798,984
|
|
|
|
2,690,572
|
|
|
|
-
|
|
Net income attributable to Xinyuan Real Estate Co., Ltd. shareholders – diluted
|
|
|
127,155,248
|
|
|
|
51,206,302
|
|
|
|
66,482,107
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares outstanding, basic*
|
|
|
145,733,028
|
|
|
|
151,935,765
|
|
|
|
142,625,427
|
|
Convertible Note (Note 12)
|
|
|
2,038,808
|
|
|
|
24,561,789
|
|
|
|
-
|
|
Stock options
|
|
|
1,692,720
|
|
|
|
620,681
|
|
|
|
348,603
|
|
Restricted stock units
|
|
|
-
|
|
|
|
-
|
|
|
|
3,513,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares outstanding-diluted
|
|
|
149,464,556
|
|
|
|
177,118,235
|
|
|
|
146,487,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.87
|
|
|
|
0.32
|
|
|
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
0.85
|
|
|
|
0.29
|
|
|
|
0.45
|
|
* The
restricted
shares repurchased by the trustee that are unvested are excluded from the number of shares outstanding for purposes of computing
basic earnings per share in accordance with ASC 260. However, these unvested restricted shares are factored into the computation
of diluted earnings per share using the treasury stock method.
During the year ended December 31, 2015,
11,878,986 (2013: 1,123,723; 2014: 4,086,084) stock options were excluded from the calculation of earnings per share because their
effect would be anti-dilutive.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
21. Segment reporting
The Group’s long-lived assets and
revenue are mainly located in and derived from the PRC. Starting in 2012, a small portion of the Group’s long-lived assets
and revenue are located in and derived from the United States. The Group considers that each of its individual property developments
is a discrete operating segment. The Group has aggregated its segments on a provincial basis as property development projects undertaken
within a province have similar expected economic characteristics, type of properties offered, customers and market and regulatory
environment. The Group’s reportable operating segments are comprised of Henan Province, Shandong Province, Jiangsu Province,
Sichuan Province, Beijing, Hainan Province, Hunan Province, Shanghai, and Tianjin in the PRC; and the United States.
Each geographic operating segment is principally
engaged in the construction and development of residential real estate units. The “other” category relates to investment
holdings, property management services, installation of intercom systems, landscaping, engineering and management, real estate
sale, purchase and lease activities. The accounting policies of the various segments are the same as those described in Note 2,
“Summary of Significant Accounting Policies”.
The Group’s chief operating decision
maker relies upon net sales, gross profit and net income when making decisions about allocating resources and assessing performance
of the Group. Net sales for geographic segments are generally based on the location of the project development. Net income for
each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment.
Capital expenditures for each segment includes cost for acquisition of subsidiaries, purchase of aircraft, vehicles, fixtures and
furniture and computer network equipment and accumulation of properties held for lease related to newly completed projects.
No single customer accounted for more than
10% of net sales for the years ended December 31, 2013, 2014 and 2015.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Summary information by operating segment
is as follows:
December 31, 2013
|
|
Henan
|
|
|
Shandong
|
|
|
Jiangsu
|
|
|
Anhui
|
|
|
Sichuan
|
|
|
Beijing
|
|
|
United
States
|
|
|
Others
|
|
|
Consolidated
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net real estate sales
|
|
|
378,087,120
|
|
|
|
290,511,011
|
|
|
|
186,224,891
|
|
|
|
-
|
|
|
|
13,489,121
|
|
|
|
-
|
|
|
|
6,614,490
|
|
|
|
-
|
|
|
|
874,926,633
|
|
Real estate lease income
|
|
|
2,098,415
|
|
|
|
196,596
|
|
|
|
576,457
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,118,298
|
|
|
|
5,989,766
|
|
Other revenue
|
|
|
242,368
|
|
|
|
84,040
|
|
|
|
479,202
|
|
|
|
-
|
|
|
|
183,026
|
|
|
|
-
|
|
|
|
15,520
|
|
|
|
15,817,501
|
|
|
|
16,821,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
380,427,903
|
|
|
|
290,791,647
|
|
|
|
187,280,550
|
|
|
|
-
|
|
|
|
13,672,147
|
|
|
|
-
|
|
|
|
6,630,010
|
|
|
|
18,935,799
|
|
|
|
897,738,056
|
|
Cost of real estate sales
|
|
|
(225,443,661
|
)
|
|
|
(220,570,567
|
)
|
|
|
(135,087,692
|
)
|
|
|
-
|
|
|
|
(3,107,736
|
)
|
|
|
-
|
|
|
|
(6,002,345
|
)
|
|
|
(723,634
|
)
|
|
|
(590,935,635
|
)
|
Cost of real estate lease income
|
|
|
(1,602,225
|
)
|
|
|
(129,059
|
)
|
|
|
(323,012
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
458,065
|
|
|
|
(1,596,231
|
)
|
Other costs
|
|
|
3,553,561
|
|
|
|
(512
|
)
|
|
|
3,359,189
|
|
|
|
-
|
|
|
|
(56,418
|
)
|
|
|
-
|
|
|
|
(550
|
)
|
|
|
(13,063,594
|
)
|
|
|
(6,208,324
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
(223,492,325
|
)
|
|
|
(220,700,138
|
)
|
|
|
(132,051,515
|
)
|
|
|
-
|
|
|
|
(3,164,154
|
)
|
|
|
-
|
|
|
|
(6,002,895
|
)
|
|
|
(13,329,163
|
)
|
|
|
(598,740,190
|
)
|
Gross profit
|
|
|
156,935,578
|
|
|
|
70,091,509
|
|
|
|
55,229,035
|
|
|
|
-
|
|
|
|
10,507,993
|
|
|
|
-
|
|
|
|
627,115
|
|
|
|
5,606,636
|
|
|
|
298,997,866
|
|
Operating expenses
|
|
|
(39,956,831
|
)
|
|
|
(6,925,944
|
)
|
|
|
(11,766,051
|
)
|
|
|
(12,908
|
)
|
|
|
(936,011
|
)
|
|
|
(6,670,853
|
)
|
|
|
(1,359,841
|
)
|
|
|
(17,594,048
|
)
|
|
|
(85,222,487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income/(loss)
|
|
|
116,978,747
|
|
|
|
63,165,565
|
|
|
|
43,462,984
|
|
|
|
(12,908
|
)
|
|
|
9,571,982
|
|
|
|
(6,670,853
|
)
|
|
|
(732,726
|
)
|
|
|
(11,987,412
|
)
|
|
|
213,775,379
|
|
Interest income
|
|
|
9,121,573
|
|
|
|
749,616
|
|
|
|
216,008
|
|
|
|
129
|
|
|
|
11,819
|
|
|
|
736,400
|
|
|
|
3,098
|
|
|
|
842,844
|
|
|
|
11,681,487
|
|
Interest expense
|
|
|
(778,032
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,084,500
|
)
|
|
|
(16,862,532
|
)
|
Share of loss in an equity investee
|
|
|
(117,188
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(117,188
|
)
|
Other operating income/expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,538,968
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,538,968
|
|
Income/(loss) before income taxes
|
|
|
125,205,100
|
|
|
|
63,915,181
|
|
|
|
43,678,992
|
|
|
|
(12,779
|
)
|
|
|
9,583,801
|
|
|
|
(4,395,485
|
)
|
|
|
(729,628
|
)
|
|
|
(27,229,068
|
)
|
|
|
210,016,114
|
|
Income tax (expense)/benefit
|
|
|
(46,673,642
|
)
|
|
|
(13,936,301
|
)
|
|
|
(16,640,499
|
)
|
|
|
(40,107
|
)
|
|
|
(2,749,642
|
)
|
|
|
1,212,316
|
|
|
|
(44,335
|
)
|
|
|
(4,787,640
|
)
|
|
|
(83,659,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
|
78,531,458
|
|
|
|
49,978,880
|
|
|
|
27,038,493
|
|
|
|
(52,886
|
)
|
|
|
6,834,159
|
|
|
|
(3,183,169
|
)
|
|
|
(773,963
|
)
|
|
|
(32,016,708
|
)
|
|
|
126,356,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,903,564
|
|
|
|
147,053
|
|
|
|
548,699
|
|
|
|
52,166
|
|
|
|
3,652
|
|
|
|
311,673
|
|
|
|
174
|
|
|
|
170,141
|
|
|
|
3,137,122
|
|
Capital expenditure
|
|
|
6,672,173
|
|
|
|
184,084
|
|
|
|
91,784,366
|
|
|
|
-
|
|
|
|
-
|
|
|
|
936,906
|
|
|
|
116,597
|
|
|
|
405,009
|
|
|
|
100,099,135
|
|
Equity investment
|
|
|
5,967,905
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,967,905
|
|
Real estate properties held for sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,524,041
|
|
|
|
-
|
|
|
|
5,524,041
|
|
Real estate properties development completed
|
|
|
665,410
|
|
|
|
555,797
|
|
|
|
19,244,890
|
|
|
|
287,165
|
|
|
|
507,026
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,260,288
|
|
Real estate properties under development
|
|
|
190,143,709
|
|
|
|
37,201,975
|
|
|
|
441,295,792
|
|
|
|
-
|
|
|
|
-
|
|
|
|
198,205,122
|
|
|
|
65,672,108
|
|
|
|
-
|
|
|
|
932,518,706
|
|
Real estate properties held for lease
|
|
|
48,011,607
|
|
|
|
3,602,956
|
|
|
|
7,712,857
|
|
|
|
846,903
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
235,858
|
|
|
|
60,410,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-lived assets
|
|
|
106,014,797
|
|
|
|
4,694,369
|
|
|
|
12,200,324
|
|
|
|
847,318
|
|
|
|
1,649,862
|
|
|
|
1,664,134
|
|
|
|
113,296
|
|
|
|
10,387,542
|
|
|
|
137,571,642
|
|
Total assets
|
|
|
928,034,862
|
|
|
|
314,799,152
|
|
|
|
482,414,252
|
|
|
|
9,494,401
|
|
|
|
88,642,444
|
|
|
|
184,288,291
|
|
|
|
6,530,771
|
|
|
|
367,895,419
|
|
|
|
2,382,099,592
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
December 31, 2014
|
|
Henan
|
|
|
Shandong
|
|
|
Jiangsu
|
|
|
Sichuan
|
|
|
Beijing
|
|
|
Hainan
|
|
|
Hunan
|
|
|
Shanghai
|
|
|
United
States
|
|
|
Others
|
|
|
Consolidated
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Net real estate sales
|
|
|
310,236,873
|
|
|
|
192,437,765
|
|
|
|
175,960,358
|
|
|
|
9,912,254
|
|
|
|
188,579,891
|
|
|
|
6,526,065
|
|
|
|
4,109,978
|
|
|
|
-
|
|
|
|
4,921,331
|
|
|
|
141,377
|
|
|
|
892,825,892
|
|
Real estate lease income
|
|
|
2,991,909
|
|
|
|
218,320
|
|
|
|
651
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,725,306
|
|
|
|
4,936,186
|
|
Other revenue
|
|
|
110,500
|
|
|
|
110,166
|
|
|
|
57,357
|
|
|
|
29,585
|
|
|
|
11,717
|
|
|
|
391
|
|
|
|
244
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,665,635
|
|
|
|
21,985,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
313,339,282
|
|
|
|
192,766,251
|
|
|
|
176,018,366
|
|
|
|
9,941,839
|
|
|
|
188,591,608
|
|
|
|
6,526,456
|
|
|
|
4,110,222
|
|
|
|
-
|
|
|
|
4,921,331
|
|
|
|
23,532,318
|
|
|
|
919,747,673
|
|
Cost of real estate sales
|
|
|
(210,789,926
|
)
|
|
|
(146,862,778
|
)
|
|
|
(138,838,903
|
)
|
|
|
(9,125,435
|
)
|
|
|
(133,519,235
|
)
|
|
|
(4,137,467
|
)
|
|
|
(3,632,997
|
)
|
|
|
-
|
|
|
|
(4,643,722
|
)
|
|
|
977,293
|
|
|
|
(650,573,170
|
)
|
Cost of real estate lease income
|
|
|
(2,574,534
|
)
|
|
|
29,388
|
|
|
|
(575,529
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(52,540
|
)
|
|
|
(3,173,215
|
)
|
Other costs
|
|
|
(1,804,955
|
)
|
|
|
(1,303,518
|
)
|
|
|
(391,538
|
)
|
|
|
(16,975
|
)
|
|
|
(364,326
|
)
|
|
|
(17
|
)
|
|
|
(32,560
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,921,843
|
)
|
|
|
(23,835,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
(215,169,415
|
)
|
|
|
(148,136,908
|
)
|
|
|
(139,805,970
|
)
|
|
|
(9,142,410
|
)
|
|
|
(133,883,561
|
)
|
|
|
(4,137,484
|
)
|
|
|
(3,665,557
|
)
|
|
|
-
|
|
|
|
(4,643,722
|
)
|
|
|
(18,997,090
|
)
|
|
|
(677,582,117
|
)
|
Gross profit
|
|
|
98,169,867
|
|
|
|
44,629,343
|
|
|
|
36,212,396
|
|
|
|
799,429
|
|
|
|
54,708,047
|
|
|
|
2,388,972
|
|
|
|
444,665
|
|
|
|
-
|
|
|
|
277,609
|
|
|
|
4,535,228
|
|
|
|
242,165,556
|
|
Operating expenses
|
|
|
(58,981,130
|
)
|
|
|
(8,891,116
|
)
|
|
|
(12,928,183
|
)
|
|
|
(3,229,614
|
)
|
|
|
(27,689,927
|
)
|
|
|
(3,855,809
|
)
|
|
|
(3,234,163
|
)
|
|
|
(2,353,439
|
)
|
|
|
(5,783,635
|
)
|
|
|
(18,169,045
|
)
|
|
|
(145,116,061
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income/(loss)
|
|
|
39,188,737
|
|
|
|
35,738,227
|
|
|
|
23,284,213
|
|
|
|
(2,430,185
|
)
|
|
|
27,018,120
|
|
|
|
(1,466,837
|
)
|
|
|
(2,789,498
|
)
|
|
|
(2,353,439
|
)
|
|
|
(5,506,026
|
)
|
|
|
(13,633,817
|
)
|
|
|
97,049,495
|
|
Interest income
|
|
|
10,797,806
|
|
|
|
903,353
|
|
|
|
471,254
|
|
|
|
8,312
|
|
|
|
375,674
|
|
|
|
4,974
|
|
|
|
16,913
|
|
|
|
9,647
|
|
|
|
-
|
|
|
|
1,989,389
|
|
|
|
14,577,322
|
|
Interest expense
|
|
|
(471,635
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(27,729,132
|
)
|
|
|
(28,200,767
|
)
|
Net realized gain on short-term investments
|
|
|
3,128,014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,128,014
|
|
Share of income (loss) in an equity investee
|
|
|
(1,691,897
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,691,897
|
)
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,848,931
|
)
|
|
|
(9,848,931
|
)
|
Exchange gains
|
|
|
706,108
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
706,108
|
|
Unrealized income on short-term investments
|
|
|
120,146
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,887
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
122,033
|
|
Other income
|
|
|
-
|
|
|
|
3,212,606
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,212,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) before income taxes
|
|
|
51,777,279
|
|
|
|
39,854,186
|
|
|
|
23,755,467
|
|
|
|
(2,421,873
|
)
|
|
|
27,395,681
|
|
|
|
(1,461,863
|
)
|
|
|
(2,772,585
|
)
|
|
|
(2,343,792
|
)
|
|
|
(5,506,026
|
)
|
|
|
(49,222,491
|
)
|
|
|
79,053,983
|
|
Income tax benefit /(expense)
|
|
|
1,897,892
|
|
|
|
(9,997,111
|
)
|
|
|
(3,452,056
|
)
|
|
|
681,784
|
|
|
|
(18,646,689
|
)
|
|
|
(737,457
|
)
|
|
|
(543,422
|
)
|
|
|
(505,771
|
)
|
|
|
2,243,056
|
|
|
|
(1,497,844
|
)
|
|
|
(30,557,618
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
|
53,675,171
|
|
|
|
29,857,075
|
|
|
|
20,303,411
|
|
|
|
(1,740,089
|
)
|
|
|
8,748,992
|
|
|
|
(2,199,320
|
)
|
|
|
(3,316,007
|
)
|
|
|
(2,849,563
|
)
|
|
|
(3,262,970
|
)
|
|
|
(50,720,335
|
)
|
|
|
48,496,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
5,056,099
|
|
|
|
255,701
|
|
|
|
684,087
|
|
|
|
38,685
|
|
|
|
446,531
|
|
|
|
95,456
|
|
|
|
24,944
|
|
|
|
35,727
|
|
|
|
147,349
|
|
|
|
213,543
|
|
|
|
6,998,122
|
|
Capital expenditure
|
|
|
6,317,246
|
|
|
|
187,745
|
|
|
|
175,551
|
|
|
|
296,976
|
|
|
|
57,767
|
|
|
|
698,842
|
|
|
|
242,276
|
|
|
|
371,198
|
|
|
|
10,130,497
|
|
|
|
217,835
|
|
|
|
18,695,933
|
|
Real estate properties development for sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,185,217
|
|
|
|
-
|
|
|
|
1,185,217
|
|
Real estate properties development completed
|
|
|
10,174,728
|
|
|
|
778,376
|
|
|
|
1,069,768
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
286,127
|
|
|
|
12,308,999
|
|
Real estate properties under development
|
|
|
122,442,706
|
|
|
|
230,512,631
|
|
|
|
476,026,887
|
|
|
|
213,243,863
|
|
|
|
124,555,677
|
|
|
|
80,188,420
|
|
|
|
145,738,966
|
|
|
|
192,275,659
|
|
|
|
119,947,878
|
|
|
|
9,642,365
|
|
|
|
1,714,575,052
|
|
Real estate properties held for lease
|
|
|
45,892,107
|
|
|
|
5,053,480
|
|
|
|
17,464,831
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
813,330
|
|
|
|
69,223,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-lived assets
|
|
|
91,997,422
|
|
|
|
7,323,161
|
|
|
|
23,139,244
|
|
|
|
10,904,402
|
|
|
|
3,896,449
|
|
|
|
690,086
|
|
|
|
528,484
|
|
|
|
761,721
|
|
|
|
11,488,178
|
|
|
|
10,338,428
|
|
|
|
161,067,575
|
|
Total assets
|
|
|
868,110,770
|
|
|
|
501,351,668
|
|
|
|
642,378,579
|
|
|
|
125,561,644
|
|
|
|
427,431,672
|
|
|
|
52,944,306
|
|
|
|
99,029,288
|
|
|
|
197,356,138
|
|
|
|
36,990,997
|
|
|
|
280,371,172
|
|
|
|
3,231,526,234
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
December 31, 2015
|
|
Henan
|
|
|
Shandong
|
|
|
Jiangsu
|
|
|
Sichuan
|
|
|
Beijing
|
|
|
Hainan
|
|
|
Hunan
|
|
|
Shanghai
|
|
|
Tianjin
|
|
|
United
States
|
|
|
Others
|
|
|
Consolidated
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Net
real estate sales
|
|
|
251,681,188
|
|
|
|
186,222,554
|
|
|
|
371,469,943
|
|
|
|
36,372,298
|
|
|
|
166,775,534
|
|
|
|
3,534,278
|
|
|
|
42,191,276
|
|
|
|
70,058,447
|
|
|
|
4,631,258
|
|
|
|
1,530,000
|
|
|
|
-
|
|
|
|
1,134,466,776
|
|
Real estate
lease income
|
|
|
4,484,591
|
|
|
|
202,892
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
1,885,780
|
|
|
|
6,573,263
|
|
Other
revenue
|
|
|
1,396,463
|
|
|
|
30,659
|
|
|
|
308,026
|
|
|
|
80,142
|
|
|
|
318,271
|
|
|
|
8,157
|
|
|
|
2,332
|
|
|
|
-
|
|
|
|
1,333
|
|
|
|
-
|
|
|
|
21,138,576
|
|
|
|
23,283,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
257,562,242
|
|
|
|
186,456,105
|
|
|
|
371,777,969
|
|
|
|
36,452,440
|
|
|
|
167,093,805
|
|
|
|
3,542,435
|
|
|
|
42,193,608
|
|
|
|
70,058,447
|
|
|
|
4,632,591
|
|
|
|
1,530,000
|
|
|
|
23,024,356
|
|
|
|
1,164,323,998
|
|
Cost of
real estate sales
|
|
|
(160,197,316
|
)
|
|
|
(149,867,847
|
)
|
|
|
(305,417,991
|
)
|
|
|
(32,313,894
|
)
|
|
|
(118,868,527
|
)
|
|
|
(2,337,677
|
)
|
|
|
(30,095,959
|
)
|
|
|
(62,366,015
|
)
|
|
|
(3,534,525
|
)
|
|
|
(1,243,112
|
)
|
|
|
-
|
|
|
|
(866,242,863
|
)
|
Cost of
real estate lease income
|
|
|
(2,202,367
|
)
|
|
|
(285,974
|
)
|
|
|
(1,416,157
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(51,824
|
)
|
|
|
(3,956,322
|
)
|
Other
costs
|
|
|
160,449
|
|
|
|
(376,070
|
)
|
|
|
(641,646
|
)
|
|
|
(3,615
|
)
|
|
|
(835,555
|
)
|
|
|
(324
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,424
|
)
|
|
|
-
|
|
|
|
(19,429,522
|
)
|
|
|
(21,134,707
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
cost of revenue
|
|
|
(162,239,234
|
)
|
|
|
(150,529,891
|
)
|
|
|
(307,475,794
|
)
|
|
|
(32,317,509
|
)
|
|
|
(119,704,082
|
)
|
|
|
(2,338,001
|
)
|
|
|
(30,095,959
|
)
|
|
|
(62,366,015
|
)
|
|
|
(3,542,949
|
)
|
|
|
(1,243,112
|
)
|
|
|
(19,481,346
|
)
|
|
|
(891,333,892
|
)
|
Gross
profit
|
|
|
95,323,008
|
|
|
|
35,926,214
|
|
|
|
64,302,175
|
|
|
|
4,134,931
|
|
|
|
47,389,723
|
|
|
|
1,204,434
|
|
|
|
12,097,649
|
|
|
|
7,692,432
|
|
|
|
1,089,642
|
|
|
|
286,888
|
|
|
|
3,543,010
|
|
|
|
272,990,106
|
|
Operating
expenses
|
|
|
(51,882,922
|
)
|
|
|
(13,528,548
|
)
|
|
|
(15,826,805
|
)
|
|
|
(3,672,935
|
)
|
|
|
(32,178,776
|
)
|
|
|
(6,617,557
|
)
|
|
|
(5,090,601
|
)
|
|
|
(4,346,174
|
)
|
|
|
(10,002,768
|
)
|
|
|
(4,971,109
|
)
|
|
|
(19,336,890
|
)
|
|
|
(167,455,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income/(loss)
|
|
|
43,440,086
|
|
|
|
22,397,666
|
|
|
|
48,475,370
|
|
|
|
461,996
|
|
|
|
15,210,947
|
|
|
|
(5,413,123
|
)
|
|
|
7,007,048
|
|
|
|
3,346,258
|
|
|
|
(8,913,126
|
)
|
|
|
(4,684,221
|
)
|
|
|
(15,793,880
|
)
|
|
|
105,535,021
|
|
Interest
income
|
|
|
23,284,854
|
|
|
|
237,687
|
|
|
|
442,560
|
|
|
|
18,752
|
|
|
|
331,042
|
|
|
|
3,968
|
|
|
|
45,592
|
|
|
|
134,580
|
|
|
|
2,966
|
|
|
|
-
|
|
|
|
1,735
|
|
|
|
24,503,736
|
|
Interest
expense
|
|
|
21,612,239
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,587,083
|
|
|
|
(59,480,738
|
)
|
|
|
(20,281,416
|
)
|
Net realized
gain on short-term investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
603,078
|
|
|
|
603,078
|
|
Share
of income in an equity investee
|
|
|
2,234,635
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,234,635
|
|
Loss on
extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exchange
gains
|
|
|
403,286
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
403,286
|
|
Unrealized
income on short-term investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,443
|
|
|
|
49,443
|
|
Other
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,677,244
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,950
|
|
|
|
1,264,926
|
|
|
|
5,945,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss)
before income taxes
|
|
|
90,975,100
|
|
|
|
22,635,353
|
|
|
|
48,917,930
|
|
|
|
480,748
|
|
|
|
15,541,989
|
|
|
|
(731,911
|
)
|
|
|
7,052,640
|
|
|
|
3,480,838
|
|
|
|
(8,910,160
|
)
|
|
|
12,905,812
|
|
|
|
(73,355,436
|
)
|
|
|
118,992,903
|
|
Income
tax benefit /(expense)
|
|
|
(16,234,099
|
)
|
|
|
(9,901,175
|
)
|
|
|
(32,061
|
)
|
|
|
(1,344,687
|
)
|
|
|
(13,479,368
|
)
|
|
|
163,491
|
|
|
|
(5,634,909
|
)
|
|
|
(1,259,900
|
)
|
|
|
1,739,065
|
|
|
|
2,825,203
|
|
|
|
(9,352,878
|
)
|
|
|
(52,511,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income/(loss)
|
|
|
74,741,001
|
|
|
|
12,734,178
|
|
|
|
48,885,869
|
|
|
|
(863,939
|
)
|
|
|
2,062,621
|
|
|
|
(568,420
|
)
|
|
|
1,417,731
|
|
|
|
2,220,938
|
|
|
|
(7,171,095
|
)
|
|
|
15,731,015
|
|
|
|
(82,708,314
|
)
|
|
|
66,481,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
5,569,343
|
|
|
|
400,733
|
|
|
|
1,542,209
|
|
|
|
64,082
|
|
|
|
515,150
|
|
|
|
208,486
|
|
|
|
76,304
|
|
|
|
83,175
|
|
|
|
3,839
|
|
|
|
50,985
|
|
|
|
237,358
|
|
|
|
8,751,664
|
|
Capital
expenditure
|
|
|
4,249,718
|
|
|
|
172,853
|
|
|
|
31,524
|
|
|
|
-
|
|
|
|
33,952,563
|
|
|
|
127,550
|
|
|
|
146,074
|
|
|
|
-
|
|
|
|
52,401
|
|
|
|
136,065
|
|
|
|
256,824
|
|
|
|
39,125,572
|
|
Real estate
properties development for sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Real estate
properties development completed
|
|
|
4,775,131
|
|
|
|
-
|
|
|
|
19,301,428
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,076,559
|
|
Real estate
properties under development
|
|
|
313,105,983
|
|
|
|
275,709,393
|
|
|
|
307,172,930
|
|
|
|
223,653,822
|
|
|
|
62,561,492
|
|
|
|
101,059,710
|
|
|
|
157,166,855
|
|
|
|
155,309,860
|
|
|
|
57,207,564
|
|
|
|
226,208,448
|
|
|
|
8,165,744
|
|
|
|
1,887,321,801
|
|
Real estate
properties held for lease
|
|
|
42,511,937
|
|
|
|
4,487,714
|
|
|
|
23,416,217
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
716,714
|
|
|
|
71,132,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
long-lived assets
|
|
|
221,202,024
|
|
|
|
6,683,031
|
|
|
|
27,947,425
|
|
|
|
9,036,881
|
|
|
|
6,958,865
|
|
|
|
553,186
|
|
|
|
468,620
|
|
|
|
391,481
|
|
|
|
751,519
|
|
|
|
13,009,709
|
|
|
|
11,420,981
|
|
|
|
298,423,722
|
|
Total
assets
|
|
|
1,064,084,941
|
|
|
|
457,041,948
|
|
|
|
655,880,819
|
|
|
|
206,485,216
|
|
|
|
346,527,256
|
|
|
|
135,047,439
|
|
|
|
110,988,357
|
|
|
|
128,502,762
|
|
|
|
19,201,186
|
|
|
|
166,888,356
|
|
|
|
270,739,159
|
|
|
|
3,561,387,439
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for number
of shares data)
22. Commitments and contingencies
Commitments
Operating lease commitments
The Group leases certain of its office
properties under non-cancellable operating lease arrangements. The terms of the leases do not contain rent escalation, or contingent
rent, renewal, or purchase options. There are no restrictions placed upon the Group by entering into these leases.
As of December 31, 2015, the Group had
the following operating lease obligations falling due in:
|
|
Amount
|
|
|
|
US$
|
|
2016
|
|
|
3,113,503
|
|
2017
|
|
|
1,732,005
|
|
2018
|
|
|
1,326,668
|
|
2019
|
|
|
781,985
|
|
2020
|
|
|
562,477
|
|
2021 and thereafter
|
|
|
143,218
|
|
|
|
|
|
|
Total
|
|
|
7,659,856
|
|
Capital lease commitments
The Group leases a corporate aircraft under
a non-cancellable capital lease arrangement. The terms of the lease do not contain contingent rent clauses.
As of December 31, 2015, the Group had
the following minimum lease payments (excluding the portion of the payments representing executory costs, including any profit
thereon) falling due in:
|
|
Amount
|
|
|
|
US$
|
|
2016
|
|
|
5,106,207
|
|
2017
|
|
|
5,106,207
|
|
2018
|
|
|
5,106,207
|
|
2019
|
|
|
5,106,207
|
|
2020 and thereafter
|
|
|
7,659,311
|
|
Total minimum lease payments
|
|
|
28,084,139
|
|
Less interest
|
|
|
(6,907,520
|
)
|
Capital lease obligations
|
|
|
21,176,619
|
|
Less current maturities of capital lease obligations
|
|
|
(3,065,612
|
)
|
Long-term capital lease obligations
|
|
|
18,111,007
|
|
Other commitments
As of December 31, 2015, the Group had
outstanding commitments with respect to non-cancellable construction contracts for real estate development and land use rights
purchases as follows:
|
|
Amount
|
|
|
|
US$
|
|
2016
|
|
|
237,174,797
|
|
2017
|
|
|
154,945,910
|
|
2018
|
|
|
35,408,090
|
|
2019
|
|
|
34,442,583
|
|
2020 and thereafter
|
|
|
-
|
|
|
|
|
|
|
Total
|
|
|
461,971,380
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Contingencies
As at December 31, 2015, the Group provided
guarantees of US$1,513,664,015 (2014: US$1,305,598,342), in favor of its customers in respect of mortgage loans granted by banks
to such customers for their purchases of the Group’s properties where the underlying real estate ownership certificates can
only be provided to the banks on a time delay manner due to administrative procedures in the PRC. 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 bank 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 loan and ends upon issuance of real estate ownership certificate which will generally be available within
six to twelve months after the purchaser takes possession of the relevant property. The Group paid US$359,551, US$1,478,386, and
US$555,969 to satisfy guarantee obligations related to customer defaults for the years ended December 2013, 2014 and 2015, respectively.
The fair value of the guarantees is not
significantly different than the net realizable value of the properties and management considers that in case of default in payments,
the net realizable value of the related properties can cover the repayment of the outstanding mortgage principal together with
the accrued interest and penalty and therefore no provision has been made for the guarantees.
In the prior years, the Group has settled the LAT for three of its projects based on the deemed profit method,
which was approved by the local tax bureau. Out of the three projects, one project was liquidated on April 6, 2012 and the statute
of limitations of another project expired as of December 31, 2013. The statute of limitations of the remaining project expired
on April 27, 2014. Based on the above, there is no longer a contingency related to LAT for the three projects settled in the prior
years as of December 31,
2014 and 2015.
On May 30, 2014, the Zhengzhou Modern City
project developed by Henan Xinyuan Real Estate Co., Ltd., completed the LAT final settlement with the local tax bureau. The Company
received a tax clearance certificate, which confirmed that the Company’s accrual under the deemed profit method was adequate
and there was no additional tax adjustments assessed by the local tax bureau as of May 30, 2014. Based on the above, management
performed a reassessment and concluded that the likelihood of the deemed profit method being overturned is only reasonably possible,
and accordingly reversed the LAT liability accrued for the project amounting to US$16.2 million as of December 31, 2014. The Group’s
estimate for the reasonably possible contingency related to the Zhengzhou Modern City project amounted to US$16.2 million as of
December 31, 2015.
23. Concentration of risk
The Group’s operations are conducted
mainly in the PRC. Starting in 2012, a small portion of the Group’s operations is conducted in the United States. Accordingly,
the Group’s business, financial condition and results of operations is primarily influenced by the political, economic and
legal environments in the PRC and by the general state of the PRC economy.
The Group’s operations in the PRC
are subject to special considerations and significant risks. These include risks associated with, among others, the political,
economic and legal environments and foreign currency exchange. The Group’s results may be adversely affected by changes in
the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
The Group transacts most of its business
in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the
PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign
currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’
invoices, shipping documents and signed contracts.
On July 21, 2005,
the PRC government changed its decade-old policy of pegging the value of the RMB to the US$. Under the new policy, the RMB is permitted
to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For RMB against US$, there was appreciation
of approximately 2.9% in the year ended December 31, 2013, depreciation of 2.4% in the year ended December 31, 2014 and
depreciation of 4.4% in the year ended December 31, 2015, respectively. It is difficult to predict how market forces or PRC or
US government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.
To the extent that the Company needs to
convert US$ into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against US$
would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides
to convert RMB into US$ for the purpose of making payments for dividends on ordinary shares, strategic acquisitions or investments
or other business purposes, appreciation of US$ against RMB would have a negative effect on the US$ amount available to the Company.
In addition, a significant depreciation of the RMB against the US$ may significantly reduce the US$ equivalent of the Company’s
earnings or losses.
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
During parts of 2011 and 2012 the Group
offered certain homebuyers seller-financing arrangements. All the homebuyers entered into such arrangement were subject to credit
verification procedures. In addition, accounts receivable balances are unsecured, but monitored on an ongoing basis via the Group’s
management reporting procedures. The Group provided longer payment terms, ranging between six months to two years to particular
home buyers after applying strict credit requirements based on the Group’s credit policy. In the second half of 2012, execution
of seller-financed contracts dropped significantly to the point that the Group did not offer seller-financed contracts to second
home buyers starting in the fourth quarter of 2012. Commencing in the second quarter of 2014, the Group again offer seller-financed
contracts. As of December 31, 2015, there is no concentration of credit risk with respect to receivables. In 2013, PRC banks tightened
the conditions on which mortgage loans are extended to homebuyers. Therefore, mortgage loans for homebuyers have been subject to
longer processing periods or even denied by the banks. The Group monitors its homebuyers’ outstanding mortgage loans on an
ongoing basis via the Group’s management reporting procedures and took the position that contracts with underlying mortgage
loans with processing periods exceeding one year cannot be recognized as revenue under the percentage of completion method (see
Note 2(h) for further detail). As a result, the Group reversed contracted sales of the amounts related to apartments of which mortgage
loans with processing periods exceeding one year when recognizing revenue under the percentage of completion method.
In addition, no single customer or supplier
accounted for more than 10% of revenue or project expenditures for the years ended December 31, 2013, 2014 and 2015.
24. Accumulated other comprehensive
income
The movement of accumulated other comprehensive
income is as follows:
|
|
Foreign currency
translation adjustments
|
|
|
|
US$
|
|
Balance as of January 1, 2012
|
|
|
79,859,172
|
|
Other comprehensive income
|
|
|
2,140,848
|
|
Balance as of December 31, 2012
|
|
|
82,000,020
|
|
Other comprehensive income
|
|
|
25,910,940
|
|
Balance as of December 31, 2013
|
|
|
107,910,960
|
|
Other comprehensive loss
|
|
|
(3,353,952
|
)
|
Balance as of December 31, 2014
|
|
|
104,557,008
|
|
Other comprehensive loss
|
|
|
(73,605,171
|
)
|
Balance as of December 31, 2015
|
|
|
30,951,837
|
|
During the year ended December 31, 2015,
the entire unrealized gain associated with the available for sale securities amounting to US$146,929 was reclassified from accumulated
other comprehensive income to net income as a result of the disposal of
available-for-sale
securities.
25. Non-controlling interests
As of December 31, 2014 and 2015,
the non-controlling interests consisted of the following:
|
|
Ownership
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
|
|
|
|
US$
|
|
|
US$
|
|
Beijing Economy Cooperation Ruifeng Investment Co., Ltd.
|
|
|
10
|
%
|
|
|
19,392
|
|
|
|
18,819
|
|
Kunming Huaxia Xinyuan Real Estate Co., Ltd.
|
|
|
20
|
%
|
|
|
48
|
|
|
|
-
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
26. Subsequent events
On January 15, 2016, Henan Xinyuan Quansheng
Real Estate Co., Ltd. acquired a parcel of land in Zhengzhou, Henan Province for a purchase price of RMB420.3 million, equivalent
to US$64.0 million.
On
February 18, 2016, Henan Xinyuan
Real Estate, Ltd. acquired
a parcel of land in Zhengzhou, Henan Province for a purchase price of RMB679.2 million, equivalent to US$104.0 million.
On January 14, 2016, the Company acquired
a parcel of land, located on 10th Avenue and between 44th Street and 45th Street, in Midtown Manhattan
for US$57.5 million.
On January 27, 2016, Xinyuan (China) Real
Estate, Ltd. issued the second tranche of the onshore corporate bonds with an aggregate principal amount of US$107 million due
on January 27, 2021 (the “Second Tranche Bonds”) at a coupon rate of 7.47% per annum payable annually. Interest is
payable on January 27 of each year, commencing January 27, 2016.
On March 14, 2016, Xinyuan (China) Real
Estate, Ltd. issued the third tranche of the onshore corporate bonds with an aggregate principal amount of US$77 million due on
March 14, 2021 (the “Third Tranche Bonds”) at a coupon rate of 7.09% per annum payable annually. Interest is payable
on March 14 of each year, commencing March 14, 2016.
In February 2016, through a consent solicitation
to the holders of the May 2018 Secured Notes and the June 2019 Secured Notes, we amended the Indentures to give us additional flexibility
in pursuing new business opportunities and new sources of capital. The amendments to the Indentures include: (i) amend the provisions
relating to future Subsidiary Guarantors, JV Subsidiary Guarantors and pledged subsidiary Capital Stock (each, as defined in the
Indentures); (ii) amend the “Limitation on Indebtedness and Preferred Stock” covenant; (iii) amend the “Limitation
on Transactions with Shareholders and Affiliates” covenant and the provisions relating to “Designation of Restricted
Subsidiaries and Unrestricted Subsidiaries”; (iv) amend the definition of “Permitted Investment” and the “Limitation
on Restricted Payments” covenant; and (v) remove the “Limitation on the Company’s Business Activities”
covenant and amend the related definitions and provisions. The amendments also clarify certain other provisions in the Indentures.
27. Condensed financial information of the Company
The condensed financial statements of Xinyuan
Real Estate Co., Ltd. (the “Company”) have been prepared in accordance with U.S. GAAP. Under the PRC laws and regulations,
the Company’s PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the Company in
the form of dividend payments, loans or advances. The amounts restricted include paid-in capital and statutory reserves, as determined
pursuant to PRC generally accepted accounting principles, totaling US$387,450,518 as of December 31, 2015 (2014: US$379,829,487).
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Condensed Balance Sheets
|
|
Year ended December 31
|
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
4,392,766
|
|
|
|
1,295,835
|
|
Other deposits and prepayments
|
|
|
1,774,032
|
|
|
|
2,389,045
|
|
Other current assets
|
|
|
233,474
|
|
|
|
28
|
|
Due from subsidiaries
|
|
|
585,756,827
|
|
|
|
592,565,997
|
|
Total current assets
|
|
|
592,157,099
|
|
|
|
596,250,905
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
-
|
|
|
|
-
|
|
Deferred charges
|
|
|
7,428,245
|
|
|
|
8,154,290
|
|
Investments in subsidiaries
|
|
|
900,701,691
|
|
|
|
962,901,445
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
1,500,287,035
|
|
|
|
1,567,306,640
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Short-term bank loan
|
|
|
130,024,345
|
|
|
|
222,226,246
|
|
PRC income tax payable
|
|
|
13,388
|
|
|
|
13,388
|
|
PRC other tax payable
|
|
|
902,190
|
|
|
|
902,190
|
|
Other payable and accrued liabilities
|
|
|
8,715,979
|
|
|
|
8,194,395
|
|
Payroll and welfare payables
|
|
|
-
|
|
|
|
|
|
Other long-term debt due within one year
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
139,655,902
|
|
|
|
231,336,219
|
|
|
|
|
|
|
|
|
|
|
Other long-term debt
|
|
|
400,000,000
|
|
|
|
400,000,000
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
539,655,902
|
|
|
|
631,336,219
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
Common shares, $0.0001 par value:
|
|
|
|
|
|
|
|
|
Authorized-500,000,000 shares, issued and outstanding-144,879,900 shares for 2015 (2014: 147,019,802 shares)
|
|
|
15,831
|
|
|
|
15,835
|
|
Treasury shares
|
|
|
(20,696,268
|
)
|
|
|
(24,045,440
|
)
|
Additional paid-in capital
|
|
|
530,670,112
|
|
|
|
531,233,336
|
|
Retained earnings
|
|
|
450,641,458
|
|
|
|
428,766,690
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity
|
|
|
960,631,133
|
|
|
|
935,970,421
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
1,500,287,035
|
|
|
|
1,567,306,640
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Condensed Statements of Comprehensive Income
|
|
Year ended December 31
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Sales tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
(16,494,847
|
)
|
|
|
(8,860,382
|
)
|
|
|
(10,301,067
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(16,494,847
|
)
|
|
|
(8,860,382
|
)
|
|
|
(10,301,067
|
)
|
Interest expense
|
|
|
(24,635,780
|
)
|
|
|
(58,515,706
|
)
|
|
|
(58,576,635
|
)
|
Interest income
|
|
|
749,408
|
|
|
|
1,289,907
|
|
|
|
3,533
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
(9,848,931
|
)
|
|
|
-
|
|
Equity in profit of subsidiaries, net
|
|
|
166,737,483
|
|
|
|
124,450,842
|
|
|
|
135,356,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations before income taxes
|
|
|
126,356,264
|
|
|
|
48,515,730
|
|
|
|
66,482,107
|
|
Income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders
|
|
|
126,356,264
|
|
|
|
48,515,730
|
|
|
|
66,482,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax of nil
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
25,910,940
|
|
|
|
(3,353,952
|
)
|
|
|
(73,605,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income/(loss) attributable to shareholders
|
|
|
152,267,204
|
|
|
|
45,161,778
|
|
|
|
(7,123,064
|
)
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
Condensed Statements of Cash Flows
|
|
Year ended December 31
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
126,356,264
|
|
|
|
48,515,730
|
|
|
|
66,482,107
|
|
Adjustment to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in profit of subsidiaries, net
|
|
|
(166,737,483
|
)
|
|
|
(124,450,842
|
)
|
|
|
(135,356,276
|
)
|
Accretion of long-term debt
|
|
|
288,220
|
|
|
|
-
|
|
|
|
-
|
|
Stock based compensation expense
|
|
|
160,549
|
|
|
|
1,912,471
|
|
|
|
3,326,175
|
|
Amortization of deferred financing cost
|
|
|
640,565
|
|
|
|
1,620,695
|
|
|
|
2,378,767
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
9,848,931
|
|
|
|
-
|
|
Other deposits and prepayments
|
|
|
(12,690,088
|
)
|
|
|
10,916,056
|
|
|
|
(615,013
|
)
|
Other current assets
|
|
|
(278,908
|
)
|
|
|
45,434
|
|
|
|
233,446
|
|
Other assets
|
|
|
98,294
|
|
|
|
-
|
|
|
|
-
|
|
Other payable and accrued liabilities
|
|
|
8,081,370
|
|
|
|
(737,739
|
)
|
|
|
(521,582
|
)
|
Payroll and welfare payables
|
|
|
5,149,011
|
|
|
|
(5,149,011
|
)
|
|
|
-
|
|
Accrued interest
|
|
|
(1,352,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(40,284,206
|
)
|
|
|
(57,478,275
|
)
|
|
|
(64,072,376
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in due from a subsidiary
|
|
|
(150,361,777
|
)
|
|
|
(140,334,182
|
)
|
|
|
(6,809,170
|
)
|
Proceeds from short-term bank loans
|
|
|
45,000,000
|
|
|
|
130,024,345
|
|
|
|
207,805,203
|
|
Repayments of short-term bank loans
|
|
|
(70,000,000
|
)
|
|
|
(35,000,000
|
)
|
|
|
(115,603,302
|
)
|
Proceeds from other long-term debts
|
|
|
475,761,009
|
|
|
|
-
|
|
|
|
-
|
|
Repayment of other long-term debts
|
|
|
(40,000,000
|
)
|
|
|
(75,761,009
|
)
|
|
|
-
|
|
Issuance of treasury shares
|
|
|
32,792,232
|
|
|
|
-
|
|
|
|
-
|
|
Purchase of treasury shares
|
|
|
(5,767,160
|
)
|
|
|
(17,610,787
|
)
|
|
|
(3,349,172
|
)
|
Dividends to shareholders
|
|
|
(14,724,740
|
)
|
|
|
(15,288,919
|
)
|
|
|
(14,751,704
|
)
|
Deferred charges
|
|
|
(9,585,309
|
)
|
|
|
-
|
|
|
|
(3,104,812
|
)
|
Purchase of shares under RSU plan
|
|
|
-
|
|
|
|
(7,042,725
|
)
|
|
|
(3,259,998
|
)
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
(9,848,931
|
)
|
|
|
-
|
|
Proceeds from exercise of stock options
|
|
|
5,060,918
|
|
|
|
1,080,530
|
|
|
|
48,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) financing activities
|
|
|
268,175,173
|
|
|
|
(169,781,678
|
)
|
|
|
60,975,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/ (decrease) in cash and cash equivalents
|
|
|
227,890,967
|
|
|
|
(227,259,953
|
)
|
|
|
(3,096,931
|
)
|
Cash and cash equivalents, at the beginning of the year
|
|
|
3,761,752
|
|
|
|
231,652,719
|
|
|
|
4,392,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, at end of the period
|
|
|
231,652,719
|
|
|
|
4,392,766
|
|
|
|
1,295,835
|
|
XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(All amounts stated in US$, except for
number of shares data)
(a) Basis of presentation
In the company-only financial statements,
the Company’s investment in subsidiaries is stated at cost plus its equity interest in undistributed earnings of subsidiaries
since inception. The company-only financial statements should be read in conjunction with the Company’s consolidated financial
statements.
The Company records its investment in its
subsidiaries under the equity method of accounting as prescribed in ASC 323 “
Investment-Equity Method and Joint Ventures
” (“ASC 323”). Such investment is presented on the balance sheet as “Investments in subsidiaries”
and share of the subsidiaries’ profit or loss as “Equity in profit of subsidiaries, net” on the condensed statements
of comprehensive income.
The subsidiaries did not pay any dividends
to the Company for the periods presented.
(b) Related party transactions
As of December 31, 2014 and 2015,
the Company had US$525,946,603 and US$521,416,425 due from its wholly-owned subsidiaries. These amounts mainly reflect intercompany
loans from the Company to Xinyuan (China) Real Estate, Ltd. (“WFOE”) and XIN Development Group International Inc. (“XIN
Development”). While intercompany loans have no fixed payments terms, the Company has a legal enforceable right to demand
payment at any time, and the WFOE and the XIN Development have the ability to repay the outstanding balance on demand.
In 2013, the Company also entered into
a separate loan facility agreement with XIN Development. Pursuant to the agreement, the Company will provide a loan facility to
XIN Development for the period from July 1, 2013 to January 18, 2017 amounting to US$50,000,000 at 17.5% per annum. As of December
31, 2015, the Company has US$71,149,572 (2014: US$59,810,224) including accrued interest of US$22,047,693 (2014: US$10,708,345),
due from XIN Development under this loan facility.
(c) Commitments
The Company does not have significant commitments
or long-term obligations as of the period end presented.