Xinhua Department Store involved in construction land use rights transfer contract dispute; the first instance court ordered compensation of 45 million yuan

China All Technology Co., Ltd. (Stock Code: 002264, Stock Abbreviation: China All) recently announced that it lost the first instance in a dispute over a construction land use rights transfer contract. The court ordered the company to compensate the Sha County Natural Resources Bureau of Sanming City (hereinafter referred to as “Sha County Natural Resources Bureau”) for expected benefits loss of 45 million yuan. The company stated it will file an appeal, and the final outcome of the case remains uncertain.

The announcement shows that the case originated from a land transfer matter in 2013. That year, China All acquired the state-owned construction land use rights for the Sha County Jinsha Avenue Urban Complex project and issued a “Letter of Commitment,” promising that within three years of project completion and official operation, the A zone centralized commercial project in Sha County would pay an average annual circulation tax of over 15 million yuan, with a cash compensation if not fulfilled. Later, China All established a wholly owned subsidiary, Sha County Huadu Real Estate Co., Ltd. (hereinafter referred to as “Huadu Real Estate”), and transferred the land use rights to Huadu Real Estate. According to the relevant change agreement, the tax commitments and main store occupancy requirements still fell under China All’s responsibility.

However, to date, Huadu Real Estate has only completed development of the B zone land, while the A zone commercial complex has not yet been completed or officially opened. Sha County Natural Resources Bureau filed a lawsuit, demanding China All and Huadu Real Estate jointly compensate for losses of 45 million yuan.

Regarding this case, China All raised multiple defenses in its response, including that the plaintiff lacked standing, the conditions for fulfilling the circulation tax commitment had not been met, and the lawsuit was time-barred. After review, the Sha County People’s Court of Sanming City issued a first-instance judgment on March 13, 2026, ordering China All to pay Sha County Natural Resources Bureau 45 million yuan for expected benefits loss, and rejected other claims from the bureau.

China All emphasized in the announcement that this is a first-instance judgment, and the company will appeal to the Intermediate People’s Court of Sanming City, Fujian Province. The case has not yet become effective. Out of caution, the company plans to recognize an estimated liability based on the first-instance judgment. The impact of this litigation on the company’s 2025 profit or future profits is uncertain, and the final effect will depend on the judgment, enforcement, and auditor verification results.

Additionally, the announcement discloses that as of the date of this notice, the company and its subsidiaries have one small unresolved litigation case (filed by a subsidiary as plaintiff), involving approximately 2.6 million yuan, which does not meet the disclosure threshold for material litigation.

The company stated it will fulfill its disclosure obligations according to the case progress and advises investors to be aware of investment risks.

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Editor: Xiao Lang Kuai Bao