China Metro-Rural (NYSE AMEX:CNR)

GeoTeam® Note: 2011 vs. 2010 vs. 2009  EPS in $:  $0.40 vs. $0.34 vs. $0.15.

CHINA METRO-RURAL HOLDINGS LIMITED

CONDENSED CONSOLIDATED INCOME STATEMENT

GeoTeam® Note: 6 months 2009 EPS in dollars equates to about $0.05

On July 9, 2010, China Metro-Rural Holdings Limited, or the Company, filed its Annual Report on Form 20-F for the year ended March 31, 2010, or the 2010 Form 20-F, with the U.S. Securities and Exchange Commission, or the Commission.

On July 28, 2010, the Company announced its decision to distribute its entire equity interest in Man Sang International Limited, or MS IL, to the Company’s shareholders, or the Distribution. In line with the accounting policies of the Company and its subsidiaries, or the Group, the results attributable to MS IL were shown as discontinued operations in the Group’s unaudited condensed consolidated interim financial information for the six months ended September 30, 2010.

In the Form 6-K furnished to the Commission on October 28, 2010, announcing the Company’s consolidated results for the six months ended September 30, 2010, the Company classified the release of translation reserve resulting from the Distribution within the continuing operation on the condensed consolidated income statement. However, the release of translation reserve was a result of the distribution of the shares of MS IL which carried out the discontinued operations. Accordingly, the Group’s results of operations for the six months ended September 30, 2010 included in the unaudited condensed consolidated interim financial statements in this Form 6-K reflect the release of translation reserve as a component of discontinued operations on the condensed consolidated income statement.

As a result of the Distribution, which was subsequent to the filing with the Commission of the 2010 Form 20-F, the Company re-presented in a separate report on Form 6-K furnished on January 18, 2011, or the Related 6-K Report, its consolidated financial statements for the three years ended March 31, 2010 to reflect the presentation of such financial statements, distinguishing between the Group’s continuing operation and discontinued operations. In addition, management’s discussion and analysis of the Group’s financial performance for the three years ended March 31, 2010 was re-presented, distinguishing between the Company’s continuing and discontinued operations. The Related 6-K Report is being furnished to the Commission contemporaneously with this Form 6-K.

In addition, this Form 6-K supplements the Related 6-K Report in respect of the Group’s results of operations for the six months months ended September 30, 2010, and includes a full set of unaudited condensed consolidated interim financial information and related management’s discussion and analsysis of the Group’s performance for the six months ended September 30, 2010.

The information included in the exhibits to this Form 6-K (which includes the Group’s condensed consolidated interim financial information for the six months ended September 30, 2010, as well as management’s review and analysis thereof) should be read in conjunction with the Related 6-K Report. This Form 6-K and the Related 6-K Report should also be read in conjunction with the 2010 Form 20-F.

Exhibits

• 99.1    Management’s Discussion and Analysis of Financial Condition and Results of Operations 
• 99.2    Unaudited Condensed Consolidated Interim Results of Operations of China Metro- Rural Holdings Limited for the six months ended September 30, 2009 and September 30, 2010, and notes thereto.
  

Also see related filing discussing fiscal 2010 full year results including the consent  PRICEWATERHOUSECOOPERS in EX-99.7.

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED INCOME STATEMENT

For the years ended March 31, 2010, 2009 and 2008

Despite signs of stabilization in economic conditions following a series of stimulus measures, there is still a high degree of economic uncertainty which makes it difficult for us to assess credit and capital markets, the future direction of economic conditions and the further effects these factors could have on the global economy. Customers remain cautious about increasing their levels of inventories, which adversely affects demand for our products in our Pearl Operations. In the meantime, investor demand for real estate in the PRC has declined significantly reflecting a reduction of capital invested in the market. A further recessionary economic cycle, higher levels of unemployment, higher consumer debt levels, or other economic factors could further adversely affect our results of operations.

Looking ahead, we anticipate the global economic environment will continue to stabilize and recover slowly over the coming year. We will continue to monitor the effects of the financial crisis in the markets where we operate and to adopt appropriate business and financial management policies in order to capture business growth opportunities when economic conditions improve.

Source: SEC Form (For the quarterly period ended June 30, 2009, Page 2)

"We believe that the majority of markets where we operate will be negatively affected by the financial crisis through the first half of fiscal year 2010. We will continue to monitor the effects of the financial crisis in the markets where we operate and to adopt the appropriate business and financial management policies to ensure that we are able to further develop our market share in our core markets."

Source: Third Quarter 10Q For the fiscal year ended March 31, 2009, page 49)

Pearl Operations

Economic conditions have recently deteriorated significantly in many countries and regions, including the markets in which we conduct our Pearl Operations, and may remain depressed for the foreseeable future. If unfavorable economic conditions continue to challenge the consumer environment, our business, results of operations, financial condition and cash flows could be adversely affected. Our Pearl Operations in Europe have exhibited a relatively strong performance during the first three quarters of fiscal year 2009. However, we do not expect to maintain these performance levels in the short-term due to a recent deterioration of economic conditions. As a result, we are in the process of adopting more conservative policies, including shortening the credit terms we provide to our customers and closely monitoring our customer’s payment history, to ensure that we maintain adequate liquidity to fund our operations. Our Pearl Operations are geographically diverse and we believe we are well-positioned to react to deteriorating global market conditions.

Real Estate Operations

 During the nine months ended December 31, 2008, conditions in the PRC real estate market deteriorated significantly. The deterioration was largely due to macroeconomic policies and austerity measures implemented by the PRC Government with respect to the PRC real estate market, as well as a material downturn in the global financial market, which has resulted in tightened monetary policy in the PRC and worldwide. As the economic crisis has accelerated in the United States and Europe, the PRC Government has launched and announced various financial stimulus plans to limit the impact on the domestic economy. These plans include: elimination of barriers to access credit for businesses; support for small and medium-sized enterprises; the promotion of additional lending by China’s three policy banks (China Development Bank, China Export and Import Bank and China Agricultural Development Bank); reductions in housing down payment requirements and cuts in mortgage rates to promote the residential property market; and exemptions on real estate sales tax to certain homeowners. We believe that the property industry as a whole will benefit from such plans.

Source: Third Quarter 10Q (For the quarterly period ended December 31, 2008)