China Vanke Co., Ltd.
2009 Interim Report
(For the six months ended 30 June 2009)
Important Notice: The Board of Directors, the Supervisory Committee and the Directors, members of the
Supervisory Committee and senior management of the Company warrant that in respect of the information
contained in this report, there are no misrepresentations or misleading statements, or material omission, and
individually and collectively accept full responsibility for the authenticity, accuracy and completeness of the
information contained in this report.
Vice Chairman Song Lin, Director Wang Yin and Director Jiang Wei were not able to attend the board
meeting in person due to business engagements and had authorised Director Yu Liang to represent them and
vote on behalf of them at the board meeting. Independent Director Judy Tsui Lam Sin Lai was not able to
attend the board meeting in person due to business engagements and had authorized Independent Director
David Li Ka Fai to represent her and vote on her behalf at the board meeting. Independent Director Charles
Li was not able to attend the board meeting in person due to business engagements and had authorised
Independent Director Qi Daqing to represent him and vote on his behalf at the board meeting.
The finanical report of the Company’s interim report has not been audited.
Chairman Wang Shi, Director and President Yu Liang, and Executive Vice President and Supervisor of
Finance Wang Wenjin, declare that the financial report contained in the interim report is warranted to be
true and complete.
Basic Corporate Information……………………………………………………………………2
Changes in Share Capital and Shareholdings of Major Shareholders..………………………3
Directors, Members of the Supervisory Committee, Senior Management……………………5
Directors’ Report..………………………………………………………………….……………6
Significant Events.…………………………………………………………………………..…..14
Financial and Accounting Reports (unaudited)…………………………………………….... 202
I. Basic Corporate Information
1. Company Name (Chinese): 万科企业股份有限公司
Company Name (English): China Vanke Co., Ltd. (“Vanke”)
2. Registered address:
Vanke East Coast Buildings C02, Dameisha, Yantian District
Shenzhen, the People’s Republic of China
Postal code: 518083
Office address:
Vanke Architecture Research Centre
No. 63 Meilin Road, Futian District
Shenzhen, the People’s Republic of China
Postal code: 518049
Website: www.vanke.com
E-mail address: IR@vanke.com
3. Legal representative: Wang Shi
4. Secretary to the Company’s Board of Directors: Varjak H.Tan
E-mail address: IR@vanke.com
Securities Affairs Representative: Liang Jie
E-mail address: IR@vanke.com
Contact Address:
Vanke Architecture Research Centre
No. 63 Meilin Road, Futian District
Shenzhen, the People’s Republic of China
Telephone Number: 0755-25606666
Fax Number: 0755-25531696
5. Media for disclosure of information: “China Securities Journal”, “Securities Times”, “Shanghai
Securities News” and an English medium in Hong Kong.
Website for publication of regular reports: www.cninfo.com.cn
Location where the Company’s interim report is available for inspection: Office of the Company’s
Board of Directors
6. Stock exchange on which the Company’s shares are listed: Shenzhen Stock Exchange
Company’s share abbreviation and stock codes on the stock exchange:
Vanke A 000002
Vanke B 200002
08 Vanke G1 112005
08 Vanke G2 112006
7. Major Financial Data and Indicators
(1) Major Financial Indicators（Unit: RMB）
Financial Indicators Jan.-Jun. 2009 Jan.-Jun. 2008 Change（+/-）
Revenue 20,553,477,931 16,246,106,110 26.51%
Profit from operating activities 4,564,464,977 4,484,930,226 1.77%
Profit before income tax 4,497,394,176 4,323,755,521 4.02%
Profit attributable to equity shareholders 2,524,392,406 2,061,055,712 22.48%
Basic EPS 0.230 0.187 22.99%
Diluted EPS 0.230 0.187 22.99%
Return on equity 7.31% 6.87%
Up by 0.44
percentage point
Net cash generated from operating activities 9,821,584,634 (1,488,888,723) 759.66%3
Net cash generated from operating activities per share 0.89 (0.14) 735.71%
Financial Indicators 30 June 2009 31 December 2008 Change（+/-）
Current assets 120,534,983,170 114,806,203,716 4.99%
Current Liabilities 63,926,388,187 65,390,862,716 -2.24%
Total assets 126,246,135,399 120,586,410,234 4.69%
shareholder's equity 34,521,271,885 31,891,925,262 8.24%
Net assets per share 3.14 2.90 8.28%
(2) Difference between IFRSs and PRC accounting standards on net profit and eqity
Net profit attributable to
equity shareholders of the
Company
Equity attributable to
equity shareholders of
Item the Company
Jan. - Jun. 2009 As at 30 June 2009
Prepared in accordance with IFRS 2,524,392,406.54 34,521,271,885.59
Prepared in accordance with PRC Accounting Standards 2,524,392,406.54 34,521,271,885.59
Remarks on the differences There is no difference.
II. Changes in Share Capital and Shareholdings of Major Shareholders
1. Changes in the share capital of the Company (Unit: shares; as at 30 June 2009)
Balance at the beginning of the reporting
period
Balance at the end of the reporting
period
Class of shares
Quantity Percentage
Changes
during the
reporting
period (+,
-)
Quantity Percentage
I. Restricted shares
1. State-owned shares and
State-owned legal person
shares
264,000,000 2.40% 0 264,000,000 2.40%
2. Shares held by domestic
non-State-owned legal
persons
3. Shares held by domestic
natural persons 26,037,098 0.24% -1,877,258 24,159,840 0.22%
4. Shares held by foreign
investors
Total number of
restricted shares 290,037,098 2.64% -1,877,258 288,159,840 2.62%
II. Non-restricted shares
1. RMB-denominated
ordinary shares (A shares) 9,390,217,652 85.40% +1,877,258 9,392,094,910 85.42%
2. Domestic listed foreign
shares (B shares) 1,314,955,468 11.96% 0 1,314,955,468 11.96%
Total number of nonrestricted
shares 10,705,173,120 97.36% +1,877,258 10,707,050,378 97.38%
III. Total number of
shares 10,995,210,218 100.00% 0 10,995,210,218 100.00%
Note: During the reporting period, the Shenzhen office of China Securities Depository & Clearing Corporation Limited, according to
regulations, lifted the selling restrictions on certain restricted shares held by senior management, leading to a decrease of 1,877,258
shares in the number of restricted tradable shares held by the Company’s domestic natural persons and a corresponding increase in
the Company’s non-restricted tradable shares.
2. The shareholdings of the Company’s top 10 shareholders and the shareholdings of the top 10
holders of non-restricted shares (as at 30 June 2009)4
Total number of shareholders 865,153 (including 834,131 holders of A shares and 31,022 holders of B shares)
Shareholdings of the top 10 shareholders
Name of shareholder
Classification
of
shareholder
Percentage of
shareholdings
Total number of
shares held
Number of
restricted
shares held
Number of
pledged or
locked-up
shares
China Resources Co., Limited
(“CRC”) State-owned 14.73% 1,619,094,766 264,000,000 0
Liu Yuansheng Others 1.22% 133,791,208 0 0
Bosera Emerging Growth
Stock Securities Investment
Fund
Others 0.86% 94,999,800 0 0
TOYO Securities Asia
Limited - A/C Client.
Foreign
shareholder 0.83% 91,805,741 0 0
Rongtong Shenzhen Stock
Exchange 100 Index
Securities Investment Fund
Others 0.83% 91,581,674 0 0
Bosera Value Growth
Securities Investment Fund Others 0.83% 91,000,000 0 0
Bosera Theme Industry Stock
Securities Investment Fund Others 0.82% 90,000,000 0 0
Bosera Third Industry Growth
Stock Securities Investment
Fund
Others 0.77% 85,000,000 0 0
HTHK/CMG FSGUFP-CMG
First State China Growth FD
Foreign
shareholder 0.69% 76,161,115 0 0
CCB Optimizing Allocation
Mixed Security Investment
Fund (建信优化配置混合型
证券投资基金)
Others 0.69% 75,979,918 0 0
Shareholdings of the top 10 shareholders of non-restricted shares
Name of shareholder Number of non-restricted shares held Class of shares
CRC 1,355,094,766 Ordinary RMB-denominated shares (A
shares)
Liu Yuansheng 133,791,208 Ordinary RMB-denominated shares (A
shares)
Bosera Emerging Growth
Stock Securities Investment
Fund
94,999,800 Ordinary RMB-denominated shares (A
shares)
TOYO Securities Asia
Limited - A/C Client. 91,805,741 Domestic listed foreign shares (B shares)
Rongtong Shenzhen Stock
Exchange 100 Index
Securities Investment Fund
91,581,674 Ordinary RMB-denominated shares (A
shares)
Bosera Value Growth
Securities Investment Fund 91,000,000 Ordinary RMB-denominated shares (A
shares)
Bosera Theme Industry Stock
Securities Investment Fund 90,000,000 Ordinary RMB-denominated shares (A
shares)
Bosera Third Industry Growth
Stock Securities Investment
Fund
85,000,000 Ordinary RMB-denominated shares (A
shares)
HTHK/CMG FSGUFP-CMG
First State China Growth FD 76,161,115 Domestic listed foreign shares (B shares)
CCB Optimizing Allocation
Mixed Security Investment
Fund (建信优化配置混合型
证券投资基金)
75,979,918 Ordinary RMB-denominated shares (A
shares)
Remarks on the connected
relationship or action in
concert of the aforementioned
shareholders
Bosera Emerging Growth Stock Securities Investment Fund, Bosera Value Growth
Securities Investment Fund, Bosera Theme Industry Stock Securities Investment Fund and
Bosera Third Industry Growth Stock Securities Investment Fund are both managed by
Bosera Fund Management. Apart from the above-mentioned ralationships, it is not known
as to whether there are other connections or be the action-in-concert people specified in
Administration of theTakeover of Listed Companies Procedures among the abovementioned
shareholders.5
3. Bond holdings of the Company’s top 10 bondholders as at the end of reporting period
(1) Name of the top 10 bondholders of 08 Vanke G1 bonds and their bond holdings
No. Bondholder No. of bonds held
1 New China Life Insurance Company–Dividend Distribution–Individual
Dividend-018L-FH002 Shen 5,548,262
2 China Pacific Life Insurance Company Limited 3,433,312
3 China Ping An Life Insurance Company Limited – Traditional –General
Insurance Products 2,218,727
4 China Life Property and Casualty Insurance Company Limited–Traditional–
General Insurance Products 1,820,000
5 China Life Insurance Company Limited 1,770,000
6 China Petroleum Finance Co., Ltd (中油财务有限责任公司) 1,557,137
7 China Life Pension Company Limited–Internal Resources 1,000,000
8 Ping An Property and Casualty Insurance Company of China–Investmentoriented
Insurance Products 999,995
9 China Reinsurance (Group) Corporation 776,162
10
Generali China Life Insurance Co., Ltd – Investment Products – Stock Account
(中意人寿保险有限公司－投连产品－股票账户) 713,500
Note: China Ping An Life Insurance Company Limited, which manages “China Ping An Life Insurance Company Limited–
Traditional–General Insurance Products”, and Ping An Property and Casualty Insurance Company of China, which manages “Ping
An Property and Casualty Insurance Company of China–Investment-oriented Insurance Products”, are subsidiaries of Ping An
Insurance (Group) Company Of China, Limited. China Life Property and Casualty Insurance Company Limited, which manages
“China Life Property and Casualty Insurance Company Limited–Traditional–General Insurance Products”, and China Life Pension
Company Limited, which manages “China Life Pension Company Limited–Internal Resources”, are subsidiaries of China Life
Insurance Company Limited. Apart from the above-mentioned ralationships, it is not known as to whether there are other connections
or be the action-in-concert people specified in Administration of theTakeover of Listed Companies Procedures among the abovementioned
bondholders.
（2）Name of the top 10 bondholders of 08 Vanke G2 bonds and their bondholdings
No. Bondholder No. of bonds held
1 ICBC/Credit Suisse Credit Tianli Bond Securities Investment Fund 2,346,450
2 Bank of Communications Schroder Principal-Protected Mixed Securities
Investment Fund 1,824,607
3
China National Machinery Import & Export Corporation (中国机械进出口
（集团）有限公司)
1,691,844
4 CITIC Securities Ltd 1,650,000
5 Fullgoal Tianfeng Surging Income Bond Securities Investment Fund 1,420,000
6 206 Portfolio of National Social Security Fund, PRC 1,030,459
7
Harvest Bonds Open Securities Investment Fund (嘉实债券开放式证券投资基
金)
767,664
8 801 Portfolio of National Social Security Fund, PRC 709,778
9 202 Portfolio of National Social Security Fund, PRC 700,000
10 ChinaAMC Stable Growth Mixed Securities Investment Fund 630,501
Note: ChinaAMC Stable Growth Mixed Securities Investment Fund is managed by China Asset Management Company Limited,
whose controlling shareholder is Citic Securities Company Limited. Apart from the above-mentioned ralationships, it is not known as
to whether there are other connections among the above-mentioned bondholders.。
4. Changes in controlling shareholder and beneficial controller
There was neither controlling shareholder nor beneficial controller in the Company, and this situation remained
the same during the reporting period.6
III. Directors, Members of the Supervisory Committee and Senior Management
1. Changes in the shareholdings of Directors, members of the Supervisory Committee and senior
management during the reporting period (Unit: shares)
Name Capacity No. of shares held at the
beginning of the reporting
period
No. of shares held at the
end of the reporting period
Wang Shi Chairman 6,817,201 6,817,201
Yu Liang Director, President 4,106,245 4,106,245
Ding Fuyuan Convenor of the Supervisory
Committee 2,018,408 2,018,408
Sun Jianyi Director 692,236 692,236
Zhang Li Member of the Supervisory
Committee 1,036,204 1,036,204
Liu Aiming Executive Vice President 1,650,978 1,650,978
Ding Changfeng Executive Vice President 1,487,660 1,487,660
Xie Dong Executive Vice President 1,487,660 1,487,660
Zhang Jiwen Executive Vice President 1,548,950 1,548,950
Mo Jun Executive Vice President 1,548,950 1,548,950
Xu Hongge Executive Vice President 1,650,978 1,650,978
Shirley L. Xiao Director, Executive Vice
President 1,446,849 1,446,849
Wang Wenjin Executive Vice President 1,343,591 1,343,591
Notes: Save for the above-mentioned persons, other Directors, members of the Supervisory Committee and senior
management of the Company did not hold any of the Company’s shares.
2. Appointment of Directors, members of the Supervisory Committee and senior management of the
Company during the reporting period
Varjak H. Tan was appointed as Secretary of the Board of Directors at the fourth meeting of the fifteenth Board
held on 6 March 2009.
IV. Directors’ Report
1. Management Discussion and Analysis
Changes in operating environment and the Company’s judgment
In 2008, the world encountered an economic crisis rarely seen in history. Consumer confidence in economic
outlook, income and wealth growth had hit rock bottom, while the property market entered a period of adjustment,
with property price moving downward. A large number of home purchasers had withhold their purchase plans,
piling up substantial demand from end-users.
Since the end of 2008, this piled up demand has started to unleash under the influence of several factors. These
factors include: sharp decline in property prices in certain cities after significant market adjustment and
corresponding increase in the purchasing power of property buyers; the promulgation of a series of policies to
stabilise the property market since the beginning of the fourth quarter of 2008, including preferential terms for
mortgage loans and home purchase tax, which further ease pressure on home buyers. In addition, effect of the
State’s revitalization plan was reflected in the expectations of an improving economy. Owing to the impact of the
abovementioned factors, the residential property market quickly rebounded from rock bottom in the first quarter
of this year.
Entering the second quarter, there were clear signs of a stable economy, indicating the effect of the moderately
relaxed credit policy. The strengthened stock market produced positive effect on wealth, while inflation
expectations, to some extent, also stimulated housing demand, leading to a robust residential property market.
Demand for self-use housing remained the key driver of residential property sales during the reporting period.
Over 80 per cent of the Company’s product sales were attributable to first time home purchasers buyers seeking an
upgrade in living conditions. However, as market rebound was expected, different types of housing demand
emerged. In the second quarter, the share of large units in the total sales volume increased.7
With the rise in transaction volume, the overall property price began to pick up. However, the price adjustment
varied with each region, and certain districts started to see a relatively sharp rise in their housing prices. Such a
price upsurge was mainly attributable to fast declining inventory levels and insufficient new supply in the short
run, which is different from the excessive rise in housing prices in 2007 when the market was filled with overly
optimistic sentiment.
Statistics showed that housing price in major cities was relatively stable in the first quarter of 2009, and the
market was in a stage of clearing inventory. In the second quarter of 2009, against the backdrop of rising
transaction volume, housing inventory levels in various regions declined significantly. In addition, new housing
supply was unable to meet market demand in the short run, due to decrease in housing construction by property
developers as a result of the market adjustment in 2008. According to the statistics compiled by China Vanke
based on its supply and sales of residential properties in 14 major cities, in the first half of 2009, the actual presales
area to approved pre-sales area ratio of commodity housing in the 14 cities was 1.65 in average, which far
exceeds 0.74 of the same period of 2008 and 1.23 of the same period of 2007.
Driven by rising market confidence and sales rebound, enterprises’ investment appetite returned during the
reporting period. Corporations accelerated the pace of project development, and unless a tremendous market
change emerges, the market supply at the end of 2009 is expected to grow significantly. By that time, the problem
of insufficient new housing supply will be alleviated.
Since April and May, the land market has become more active. The frequent occurrence of failed auctions in 2008
has stopped and over 50% of the transactions were closed with premium. Scenes of intense bidding returned in
core cities. Robust land market reflected rising confidence in enterprises and market and improvement in financial
situation. Moreover, the quantity supplied of land in core cities has been consistently lower than the quantity of
land used for residential property development and sales volume of housing. To certain extent, this has intensified
competition for land, prompting speculations on the land price of certain projects. Thus, while China Vanke will
be aggressive with respect to project acquisition, it will also adhere to a “careful selection” strategy. The Company
will thoroughly consider price reasonableness and feasibility of risk management, and will make stringent
assessment of project profitability.
Although the market recovered quickly during the reporting period, China Vanke will not be lax in improving its
operations. Taking a long-term perspective, an enterprise should rely on its management, innovation and ability to
continue to generate profits for sustainable development instead of gains from the market. Facing the various
uncertainties and new challenges of the macro environment, industry trends and competitions, the Company’s
management will persevere with its established development strategy to enhance its professionalism, swift the
Company’s development focus from “scale and speed” to “quality and efficiency”, in order to enhance its ability
to create value for its shareholders.
Company’s response and operating results
During the reporting period, the Company’s revenue and net profit amounted to RMB20.6 billion and RMB2.52
billion respectively, representing increases of 26.5 per cent and 22.5 per cent from those of the same period of the
previous year respectively.
From January to June 2009, the Company realised sales area of 3,488,000 sq m, with a sales revenue of
RMB30.76 billion, representing increases of 31.2 per cent and 27.5 per cent from those in the same period of the
previous year respectively. Geographically, the Company realised a sales area of 1,101,000 sq m and a sales
revenue of RMB10.44 billion in the Pearl River Delta region, representing increases of 46.3 per cent and 38.8 per
cent when compared to those of the same period of previous year respectively. In the Yangtze River Delta region,
the Company realised a sales area of 929,000 sq m and a sales revenue of RMB9.83 billion, representing increases
of 1.4% and 0.5% when compared to those of the same period of previous year respectively. The Company
realised a sales area of 1,026,000 sq m and a sales revenue of RMB7.47 billion in the Bohai-Rim region,
representing increases of 64.2 per cent and 59.8 per cent when compared to those of the same period of previous
year respectively. The other regions of the Company contributed a sales area of 431,000 sq m and a sales revenue
of RMB3.01 billion, representing increases of 18.7 per cent and 40.3 per cent when compared to those of the same
period of previous year respectively.
In the first half of the year, the booked area and booked revenue of the Company amounted to 2,485,000 sq m and8
RMB20.39 billion respectively, representing increases of 19.4 per cent and 27.3 per cent from those of the same
period last year respectively. At the end of the reporting period, the Company had an area of 4,091,000 sq m sold
but not yet booked, which involved a total contract amount of approximately RMB32.18 billion.
From January to June 2009, the Company’s booked gross margin dropped by 3.2 percentage points from that of
the same period of previous year to 26.0 per cent. In the real estate industry, revenue recognition generally lags
behind the developer’s incurring of land costs. The decline in booked gross margin reflected the rise of land
premium in the previous years as well as the change in property price during the adjustment period in 2008.The
Company’s management realised that a precise understanding of customer needs becomes increasingly important
with the residential property sector exhibiting obvious traits of the manufacturing industry. Only by having an
accurate analysis of customer needs can the Company allocate its construction costs more efficiently and
effectively enhance market recognition of its product value. This is also one of the important steps for the
Company’s major approaches in its move from scale and speed-oriented growth to quality and efficiency-oriented
expansion.
During the reporting period, the Company continued to intensify its cost control measures. It stepped up efforts to
standardise regulation, extended the application of cost benchmarking, and increased the use of central purchasing
to make purchases in order to benefit from bulk purchase. The results of the Company’s efforts made in improving
cost control will be gradually reflected in the future.
At the beginning of the reporting period, the Company proposed to lower its administrative expenses and
distribution costs as a percentage of revenue in 2009 by 20% when compared with that of 2008. Through
simplifying management process, adopting stringent control and supervision of expense budget, strengthening
market and customers research in marketing, and modifying its advertising strategy. As a result, the Company’s
administrative expenses and distribution costs in the first half of 2009 decreased by 30% and 22% respectively
from those of the same period last year. The aggregate amount of administrative expenses and distribution costs as
a percentage of revenue decreased by 42.0% from that of the same period last year.
At the end of the reporting period, the Company, according to the latest market and sales situation, made an
assessment of the projects for which provision for diminution in value was made at the end of 2008. At the end of
the first quarter of 2009, the Company adjusted the provision for diminution in value of Jinyu Tixiang Project in
Nanjing from RMB63.59 million to RMB49.57 million. According to the current situation, the Company further
adjusted the provision for diminution in value of the project to RMB27.81 million. In addition, the provisions for
diminution in value of Aureate City, Guangzhou, Hupo Junyuan, Shanghai, Golden City, Wuxi have all been
reversed. The provision for diminution in value of Holiday Dew Garden, Tianjin has been adjusted from
RMB70.23 million to RMB44.26 million. The aforementioned adjustments increased the profit attributable to
equity holders of the Company by RMB162.34 million. The assessment of the other eight projects made at the end
of 2008 remained unchanged.
Changes of provision for diminution in value of inventories
（Unit: RMB’000）
No. City Project name
Provision as
at 31 Dec.
2008
Provision as
at 30 Jun.
2009
1 Shanghai Hupo Junyuan 65,780 -
2 Guangzhou Aureate City 87,390 -
3 Wuxi Golden City 53,910 -
4 Nanjing JinyuTixiang 63,590 27,814
5 Tianjin Holiday Dew Garden 70,230 44,258
6 Fuzhou Golden Rongjun 152,166 152,166
7 Chengdu Jinrun Huafu 31,530 31,530
8 Nanjing Aureate City 80,060 80,060
9 Beijing Aureate City 121,120 121,120
10 Wuhan
Yuanfang (former
Aureate City) 40,284 40,284
11 Chengdu Haiyue Huicheng 81,500 81,5009
12 Chengdu Golden Lingyu 216,120 216,120
13 Nanjing The Paradiso 166,880 166,880
Total 1,230,560 961,732
Since the fourth quarter of last year, the Company has insisted on “building inventory based on sales”, adjusting
project launch plan according to sales progress and adjusting construction commencement schedule according to
project launch plan. In view of the rapid recovery of the market, the Company has adjusted its planned area for
newly commenced construction for the year from 4.03 million sq m set at the beginning of the year to 5.85 million
sq m, representing an increase of 45.2%.
During the reporting period, the Company adhered to the principle of “careful selection and capturing
opportunities”, and acquired 15 new projects, with a total planned gross floor area (the “GFA”) attributable to
China Vanke’s equity holding of 3.332 million sq m. From the end of the reporting period to the date of the
announcement of this report, a total planned GFA attributable to China Vanke’s equity holding increased by
814,000 sq m. Up to the date of announcement of this report, the aggregate increase in total planned GFA in
proportion to China Vanke’s equity holding in 2009 was 4.146 million sq m. As at the date of announcement of
this report, the GFA of the projects under planning in proportion to China Vanke’s equity holding amounted to
20.79 million sq m.
Amid market rebound, sales in first tier cities recovered with remarkable speed and growth rate. Outlook for first
tier cities was more optimistic. This led to intensified competition for land in first tier cities than in any other
cities. In order to secure profitability of projects, the Company’s newly acquired projects during the year are
mainly located in Shenyang, Anshan, Qingdao, Wuxi, Foshan, Xiamen, Fuzhou, Chongqing, etc.
During the reporting period, the Company’s financial position further improved. As at the end of the reporting
period, the cash and cash equivalents of by the Company amounted to RMB26.9 billion, up by RMB6.9 billion
from that at the end of 2008. The Company’s net debt ratio was 10.7%, representing a decrease of 22.4 percentage
points when compared to that at the end of 2008.
At the beginning of the year, the Company mentioned that it would further expand its source of funding, and
would consider equity financing at an appropriate timing. The Company will take full account of the level of
acceptance by the capital market and investors, and will ensure the financing exercise will lead to profit growth
for its shareholders when considering the timing, scope and method of financing. At present, the Company is
actively exploring a feasible approach for financing.
2. Principal operations of the Company during the reporting period
(1) The scope and operations of the Company’s core businesses
The Company specialises in property development with commodity housing as its major products. During the
reporting period, the booked area and booked revenue from the Company’s property projects were 2,485,000 sq m
and RMB20.39 billion respectively, representing increases of 19.4 per cent and 27.28 per cent respectively when
compared with those of the corresponding period of the previous year. The gross margin from the property
business was26.01 per cent, down by 3.22 percentage points from that of the same period last year.
（Unit: ’000 RMB）
Sector Revenue Cost of sales Gross margin
Amount Change Amount Change % Change
Property sales 20,389,885 27.28% 14,705,465 46.32% 26.01
Down by 3.22
percentage point
Property management
and others 163,593 -27.88% 135,383 -13.08% 17.24
Down by 12.28
percentage point
Total 20,553,478 26.51% 14,840,849 45.42% 25.94
Down by 3.29
percentage point
Note: Gross margins are exclusive of land appreciation tax, business tax and surcharges.10
(2) Comparison of major assets and liabilities and operating metrics (Unit: ’000 RMB )
Financial indicators 30-Jun-09 31-Dec-08 Change
(+/-) Reasons for change
Cash and cash equivalents 26,880,424 19,978,286 34.55%
Increase in cash received from sales and
increase in cash deposit
Completed properties for
sale 5,476,279 7,890,962 -30.60% Delivery of more properties
Investment properties 168,374 198,395 -15.13% Disposal of certain investment properties
Construction in progress 236,610 188,587 25.46% Increase in cost of Vanke Center
Interest in associates 566,788 508,175 11.53%
The invested entity gained profit during the
period
Shareholders' equity 34,521,272 31,891,925 8.24% Increase in net profit
Financial indicators Jan-Jun 2009 Jan-Jun 2008 Change
(+/-) Reasons for change
Revenue 20,553,478 16,246,106 26.51% Increase in sales volume of properties
Cost of sales 14,840,848 10,205,844 45.42%
Increase in sales volume of properties and
increase of cost of land
Distribution costs 551,447 709,183 -22.24%
Revising marketing strategy and performing
stringent control over sales expenses
Administrative expenses 581,874 834,559 -30.28%
No expenses from employee's stock incentive
plan charged to the period
Financial income 134,732 165,087 -18.39% No foreign exchange gain
Share of profits less losses
of associates 163,366 1,766 9150.62%
The invested entity gained profit during the
period
Income taxation 1,397,167 2,017,085 -30.73% Decrease in accrued land appreciation tax
Profit for the period 3,100,227 2,306,670 34.40% Growth in profit before taxation
Profit attributable to equity
shareholders of the
Company 2,524,392 2,061,056 22.48% Growth in net profit for the period
（3）Analysis of the core businesses by geographical regions
The revenue and profits from the core operations of the property business by geographical regions during the
reporting period are as follows:
Revenue （RMB
'000） Change
Net profit （RMB
'000） Change
Booked Area（'000
sq m） Change
Pearl River Delta Region
Shenzhen 1,260,846 6.18% 55,913 2.01% 161.2 6.49%
Guangzhou 1,674,000 8.21% 291,694 10.47% 209.5 8.43%
Dongguan 1,065,866 5.23% 30,396 1.09% 65.9 2.65%
Zhuhai 70,430 0.35% 7,810 0.28% 6.5 0.26%
Zhongshan 42,676 0.21% (1,662) -0.06% 11.1 0.45%
Foshan 910,854 4.47% 145,805 5.23% 151.9 6.11%
Changsha 61,352 0.30% 632 0.02% 11.9 0.48%
Xiamen 442,271 2.17% 90,344 3.24% 35.8 1.44%
Hainan 296,124 1.45% (60,607) -2.18% 32.2 1.29%
Sub-total 5,824,419 28.57% 560,325 20.10% 686.0 27.60%
Yangtze River Delta Region
Shanghai 2,863,940 14.05% 446,223 16.02% 393.9 15.85%
Suzhou 463,826 2.27% 77,730 2.79% 37.9 1.53%
Hangzhou 3,193,107 15.66% 481,513 17.28% 273.3 11.00%
Nanjing 729,799 3.58% 85,397 3.07% 73.0 2.94%
Nanchang 94,522 0.46% 34,251 1.23% 28.6 1.15%
Ningbo 643,573 3.16% 141,047 5.06% 60.4 2.43%11
Zhenjiang 2,277 0.01% (3,590) -0.13% 1.5 0.06%
Wuxi 224,006 1.10% 11,415 0.41% 45.7 1.84%
Hefei - - (1,503) -0.05% - -
Sub-total 8,215,050 40.29% 1,272,483 45.68% 914.3 36.79%
Bohai-rim Region
Beijing 790,803 3.88% 117,871 4.23% 83.2 3.35%
Tianjin 1,597,479 7.83% 229,092 8.22% 179.1 7.21%
Shenyang 665,825 3.27% 95,166 3.42% 131.3 5.28%
Dalian 235,317 1.15% 2,595 0.09% 29.5 1.19%
Qingdao 163,925 0.80% (2,469) -0.09% 36.0 1.45%
Changchun 17,996 0.09% (12,777) -0.46% 1.7 0.07%
Sub-total 3,471,345 17.02% 429,478 15.41% 460.8 18.54%
Others
Chengdu 2,295,112 11.26% 455,484 16.35% 337.1 13.56%
Wuhan 583,958 2.86% 75,927 2.74% 87.1 3.50%
Chongqing - - (3,933) -0.14% - -
Xi'an - - (3,895) -0.14% - -
Sub-total 2,879,070 14.12% 523,583 18.81% 424.2 17.07%
Total 20,389,885 100.00% 2,785,869 100.00% 2485.3 100%
Note: Anshan was included in Shenyang and Fuzhou was included in Shenzhen.
3. Investment of the Company
（1）Use of proceeds from the capital market
A. Public issue of A shares in 2007
Having obtained the approval from the relevant authorities, on 22 August 2007, the Company published the
prospectus for the public issue of A shares. 317,158,261 A shares (with a nominal value of RMB1 per share) were
issued at an issue price of RMB31.53 per share. The total proceeds raised from the public issue were
RMB9,999,999,969.33. After deducting the issue expenses of RMB63,398,268.11, the net proceeds amounted to
RMB9,936,601,701.22, which were received on 30 August 2007 and were certified and filed under Shennan
Yanzi (2007) No. 155 by Shenzhen Nanfang Minhe CPA (深圳南方民和会计师事务所).
Details on the investment amount, investment gain, development progress of the projects as at the end of the
reporting period are as follows: (Unit: RMB ’000)
Total amount of proceeds 9,936,600 FAucncdu musueldat eddu rfiunngd t hues eyde ar 9,748733,,166400
Investment project Change in
project
Planned
investment
amount
Actual
investment
made
Progress
Promised
yield
(net margin
of the entire
project)
Net margin
of the
booked
portion
Currently
estimated
net margin
of the entire
project
Golden Yazhu, Shanghai (former
Zhonglin project)
No 700,000 700,000 100% 14.94% 19.52% 19.47%
Wujiefang Project, Pudong,
Shanghai
No
1,200,000 1,044,250
Construction
not yet
commenced
10.34% 19.35%
West Spring Butterfly Garden,
Hangzhou (former Jiangcun
project)
No
700,000 700,000 32% 10.12% 17.13% 19.65%
Liangzhu project, Yuhang District,
Hangzhou
No 1,700,000 1,700,000 33% 10.29% 8.40% 12.58%
Golden Town project, Qinzhou
District, Ningbo
No 1,636,600 1,636,600 72% 11.42% 16.99% 18.77%
The Dream Town, Foshan (former
Nanzhuang project）
No 900,000 900,000 32% 17.08% 21.10% 17.58%12
Everest Town, Guangzhou (former
Science City H3 project) No 600,000 600,000 87% 9.20% 2.54% 5.61%
The Paradiso, Guangzhou (former
Jinshazhou project)
No 800,000 800,000 42% 13.70% 8.65% 9.71%
Zhuhai Hotel project, Xiangzhou
District, Zhuhai
No
650,000 546,490
Construction
not yet
commenced
11.73% 15.25%
Anpin Street, Baixia District,
Nanjing
No
650,000 446,300
Construction
not yet
commenced
12.09% 3.00%
Stratford, Nanjing (former
Huangjiadun project)
No 400,000 400,000 96% 20.54% 8.60% 10.21%
Total - 9,936,600 9,473,640 - - - -
Remarks on failure to reach
progress target and estimated gains
(by project)
1. Construction of Wujiefang Project did not commence as scheduled due to the effect of the
adjustment in road planning for World Expo by the government of Shanghai. All the factors
previously affecting the project now no longer exist. To maximize the land value of the
project, the Company is fine-tuning the development plan of the project according to market
demand, and is actively preparing for construction of the project. Construction of Zhuhai
Hotel, Xiangzhou District, Zhuhai did not commence as scheduled due to the effect of the
adjustment in the overall planning of the town centre by Zhuhai Municipal Government. The
Company has received the planning permit for construction works of the residential section
and is now applying for the construction permit while actively preparing for construction of
the project. The plot ratio and height of Anpin Street Project, Nanjing had to be reduced due
to government policy to preserve old town, affecting the construction commencement
schedule and investment return. The overall planning of the project is now basically
finalised. The Company is applying for the planning permit and is engaged in negotiations
of relevant matters while actively preparing for construction of the project.
2. Based on sales performance up till now and market forecast, Everest Town project,
Guangzhou, The Paradiso project, Guangzhou, Anpin Street project, Nanjing ,and Stratford
project, Nanjing are expected to generate a profit less than that as stated in the prospectus.
Other investment projects financed by the proceeds are expected to generate a profit higher
than the estimated gains. Using the weighted average method, the total gains from the
investment projects financed by the proceeds are expected to exceed the estimated gains
stated in the prospectus.
Remarks on reasons and
procedures for the change (by
project)
No change.
Use of the remaining balance of
the proceeds
As at 30 June 2009, the Company had applied RMB9.474 billion of the proceeds in accordance
with the prospectus. The amount represented 95 per cent of the net proceeds of RMB9.937
billion. The remaining balance of RMB46 3million will be fully used in accordance with the
progress of the project development.
（2）Use of capital not from the capital market
① Major equity investment
1）During the reporting period , the Company promoted and established two new subsidiaries. The details are as
follows:
Companies Currency Registered capital Equity
interest Core business
1
Qingdao Vanke Company Limited (青島
万科企业有限公司) RMB 50,000,000.00 100% Property development
2
Shenyang Vanke Jinyu Xijun Real Estate
Development Co., Ltd. (沈阳万科金域曦
郡房地产开发有限公司)
RMB 10,000,000.00 100% Property development
2） The major companies the Company acquired during the reporting period are as follows:
A. The procedure for acquiring Wuhan Wangjiadun Xiandaicheng Real Estate Development Co., Ltd. (武汉王家
墩现代城房地产开发有限公司) was completed during the reporting period and the financial statements of
Wuhan Wangjiadun Xiandaicheng Real Estate Development Co., Ltd. were included in the Company’s
consolidated financial statements.13
B. The Company acquired 100 per cent equity interests of Charm Crystal Limited (耀晶有限公司) for a total
investment amount of HK$1,000.
3）During the reporting period, the Company increased the capital of four subsidiaries by an aggregate amount of
RMB136 million to facilitate their business development. Of this amount, RMB69 million was injected into the
capital of Wuxi Dongcheng Real Estate Co., Ltd. (无锡东城房地产有限公司), RMB40 million was injected into
the capital of Jiangxi Vanke Qingshanhu Real Estate Development Co., Ltd. (江西万科青山湖房地产发展有限
公司), and USD4 million was injected into the capital of Fuyang Spring Bay Property Company Limited (富阳泉
水湾置业有限公司). During the reporting period, the Company increased the capital of other companies by
HK$99,000.
② Other Investments
During the reporting period, the Company had 15 new projects, with a total planned GFA of
approximately 4,080,000 sq m, of which approximately 3,330,000 sq m of planned GFA is in proportion to
China Vanke’s equity holding. The details of the projects are as follows:
City Project Location
Percenta
ge of
sharehol
ding
Site Area
(sq m）
Planned
GFA (sq
m)
Planned GFA
in proportion
to Vanke’s
equity holding
( sq m)
Progress
Guangzho
u
Le Bonheur（大坦沙项
目）
Liwan
District 100% 38,111 135,689 135,689 On sale
The Paradiso
Nanhai
Foshan District 55% 221,035 574,690 316,080 Pre-construction
Chencun Project
Shunde
District 100% 38,986 134,891 134,891 Pre-construction
Xiamen Huxin Island Project
Huli
District 100% 95,098 199,710 199,710 Pre-construction
Fuzhou Paper Box Plant Project
Cangsha
n District 100% 16,168 35,570 35,570 Pre-construction
Shanghai Land Lot No. 35, Qibao
Minhang
District 51% 39,366 69,913 35,656 Pre-construction
Wuxi Southern land lot of
Golden City
New
district 55% 102,170 306,510 168,581 Pre-construction
Jinyu Guoji (金域国际)
Tiexi
Shenyang District 100% 27,580 108,581 108,581 Pre-construction
Wulihe Project
Shenhe
District 55% 83,175 276,048 151,826 Pre-construction
Anshan Dongan Project
Tiedong
District 100% 303,700 530,560 530,560 Pre-construction
King Metropolis （ 双山
南山地块）
North
Qingdao District 100% 68,153 221,057 221,057 Pre-construction
The Dream Town（ 308
国道以北地块）
Sifang
District 55% 154,607 434,161 238,789 Pre-construction
Gaoxinyuan Zone I
Project
Yubei
District 100% 138,071 376,737 376,737 Pre-construction
Gaoxinyuan Zone H
Project
Yubei
Chongqin District 100% 41,448 145,068 145,068 Pre-construction
g
Chongqing Jiaotong
University (Yuzhong
campus) Project
Yuzhong
District
100% 105,463 533,486 533,486
Pre-construction
Total 1,473,131 4,082,671 3,332,280
From the end of the reporting period to the date of announcement of this report, the Company acquired four new
projects, with a planned GFA of 1,176,000 sq m, of which 814,000 sq m of planned GFA is in proportion to China
Vanke’s equity holding. The total land premium is RMB3.52 billion. Details are as follows:14
City Project Location
Percenta
ge of
sharehol
ding
Site
Area (sq
m)
Currently
planned
GFA (sq
m)
Planned GFA
in proportion
to Vanke’s
equity
holding
( sq m)
Progress
Zhongsh
an Land lot at Kuchong Eastern district 100% 76,387 87,960 87,960 Preconstruction
Wuhan Last phase of City Garden
Dongxihu
District 100% 230,972 346,800 346,800 Preconstruction
Foshan Land lot at Dengzhou,
Shunde Shunde District 49% 284,036 710,092 347,945 Preconstruction
Guangzh
ou Land Lot B04, Jinshazhou Baiyun District 100% 17,207 30,973 30,973 Preconstruction
Total 608,602 1,175,825 813,678 -
4. Comparison between the actual operating results during the reporting period and the planned
targets at the beginning of the period
The Company’s actual operating results during the reporting period did not deviate much from the planned targets
at the beginning of the period.
5. Adjustment in operation plan for the second half of the year
In view of the rapid recovery of the market, the Company has adjusted its planned area for newly commenced
construction for the year from 4.03 million sq m set at the beginning of the year to 5.85 million sq m, representing
an increase of 45.2%.
V. Significant events
1. Corporate governance
As one of the first companies listed in the PRC, the Company has always abided by its corporate values: to pursue
simplicity, to be transparent, to be regulated and responsible. It continues to explore ways to raise its corporate
governance standard. With a foundation built on sound corporate governance, China Vanke has established longstanding
trust and win-win relationships with its investors.
The Company’s actual corporate governance practice showed no deviation from the requirements of the relevant
documents issued by the CSRC.
As the Company’s single largest shareholder, CRC and its connected companies have remained independent of
the Company in respect of operations, employees, assets, organisation and finance, thereby ensuring the
Company’s operation autonomy.
During the reporting period, the Company amended the implementation details of the Audit Committee according
to the relevant requirements. The Company will continue to commit to improving its corporate governance
through adopting various measures, thereby providing a solid foundation for the Company’s healthy long-term
development.
2. Implementation of the Company’s proposal on dividend distribution for the previous year and
profit appropriation for the interim period of 2009
Dividend distribution for the year 2008 was approved at the 2008 Annual General Meeting held on 10 April 2009.
The proposal on the dividend distribution was: based on the total share capital as at the close of the market on the
registration day for entitlement of the Company, a cash dividend of RMB0.50 (including tax; after deducting tax,
a cash dividend of RMB0.45 is paid for every 10 existing shares beneficially held by individual shareholders,
investment funds, and qualified foreign institutional investors of A shares; for other non-resident enterprises, the
Company will not withhold nor pay the income tax on their behalf – the taxpayer shall pay the tax in the place
where the income is received; B shares are not subject to taxation for the time being) will be paid to all the
shareholders on the basis of every 10 existing shares held.15
The aforesaid proposals were implemented during the reporting period: the registration day for entitlement for A
shares was 5 June 2009, and ex-dividend date was 8 June 2009, while the last trading day of B shares was 5 June
2009, ex-dividend date was 8 June 2009, and the registration day for entitlement was 10 June 2009. For details on
the implementation of the proposals, please refer to China Securities Journal, Securities Times, Shanghai
Securities News on 27 May 2009 and irasia.com.
The Company will not carry out profit appropriation nor the transfer of capital surplus reserve to share capital for
the interim period of 2009.
3. Implementation of The Restricted Stock Incentive Plan
(1) Incentive plan for year 2008
Since the Company’s net profit after extraordinary gains or losses in 2008 declined by 15.61% compared with that
of 2007, the performance target of “over 15% increase in net profit after extraordinary gains or losses” as
stipulated in Provision 12 of Phase One of The Restricted Stock Incentive Plan could not be reached. On 14 April
2009, the Company made an announcement regarding termination of the implementation of the restricted stock
incentive plan for year 2008. All of 60,925,820 Vanke A shares which had been held by the incentive plan for
year 2008 were sold on the secondary market within trading days of the window period, and the proceeds from the
sale amounted to RMB620,003,685.63. During the reporting period, RMB620,656,308.20 (being the total amount
of funds under the incentive plan for year 2008, together with accrued interest) had been transferred to the
Company’s designated account. Termination of the implementation of the incentive plan for year 2008 was
completed.
Please refer to the announcements on China Securities Journal, Securities Times, Shanghai Securities News and
cninfo.com.cn on 14 April 2009 and 26 May 2009 for details.
(2) The Incentive plan for year 2007
Since the average closing price of Vanke A shares in 2008 after ex-right price backward adjustment was lower
than that in 2007, the incentive plan for year 2007 did not meet the condition for stock price performance target of
Phase One Restricted Stock Incentive Plan, and the incentive plan for year 2007 therefore entered into a
supplementary vesting period.
During the reporting period, 46,341,761 Vanke A shares held by the incentive plan for year 2007 were entitled to
a dividement payment of RMB2,317,088.05. Pursuant to the requirements of Phase One Restricted Stock
Incentive Plan, the incentive plan used the related funds to purchase additional 210,000 Vanke A shares from the
secondary market. As at the end of the reporting period, the incentive plan for year 2007 held a total of 46,551,761
Vanke A shares.
If, at the beginning of 2010, the average price of China Vanke A shares in 2009 after ex-right price backward
adjustment is greater than the average price in 2007 after ex-right price backward adjustment, the shares held by
the incentive plan for year 2007 can be transferred to the beneficiaries; if the stock price performance target can
not be reached, vesting for the incentive plan for year 2007 will be cancelled. Shares held by the incentive plan for
year 2007 will be sold on the market within the prescribed period after an announcement regarding the
confirmation of the termination of the incentive plan for year 2007 is made, and the proceeds from the sale will be
transferred to the Company.
4. Material litigation and arbitration
During the reporting period, the Company was not involved in any material litigation and arbitration.
5. Significant acquisition and disposal of assets
During the reporting period, there were no significant acquisition and disposal of assets by the Company.
6. Other matters in relation to investment16
6.1 Securities investments
□ Applicable √ Not applicable
6.2 Equity interests held in other listed companies
（Unit: RMB）
Stock
code
Stock
abbreviation
Initial
investment
amount
Percentage of
shareholding
Balance as at the
end of the
reporting period
Gains/(losses)
during the
reporting period
Changes in
equity
attributable to
equity
shareholders
during the
reporting period
000001
Shenzhen
Development
Bank Co., Ltd –
A
11,582,347.80 0.10% 65,763,734.40 - 37,252,051.20
600697
Changchun
Eurasia Group
Co., Ltd
5,070,000.00 1.18% 35,399,342.64 - 8,248,572.94
600680 Shanghai
Potevio Co., Ltd 8,722,080.97 1.11% 39,021,192.80 - 14,887,433.34
600751
S*ST Tianjin
Marine Shipping
Co., Ltd.
143,600.00 0.04% 143,600.00 - -
Total 25,518,028.77 140,327,869.84 - 60,388,057.48
Note:
1. The above-mentioned equity interests are legal person shares of the Company over the years. Up till now, the S*ST Tianjin Marine
Shipping Co., Ltd has not undergone share reform, and Changchun Eurasia Group Co., Ltd is still subject to a lock-up period.
2. The change in fair value of equity interests at the end of the reporting period led to an increase in “available-for-sale finance
assets”, and a corresponding increase in “capital reserve”.
6.3 Shareholding in non-listed financial corporations and companies planning for listing
No.
7. Major connected transactions
During the reporting period, the Company was not involved in any major connected transactions.
8. Major contracts and their implementation
（1） During the reporting period, the Company did not put any material assets under custodial management,
sub-contract or lease any assets from other companies, nor were the Company’s material assets put under
custodial management, subcontracted or leased by other companies.
（2） During the reporting period, the Company did not have any entrustment of financial management.
（3） Details on the new guarantees made by the Company during the reporting period are as follows:17
No.
Guarantor
(% of equity interest
held by China Vanke )
Company for which
guarantee was granted
(% of equity interest held
by China Vanke )
Guarantee
amount Remarks Guarantee
Period
1 China Vanke Co., Ltd.
Tianjin Xinghai Real Estate
Development Co., Ltd (55%)
(天津兴海房地产开发有限
公司)
RMB16.5 million
Provided a guarantee in
proportion to the
Company’s equity
holding (55%) for a bank
loan of RMB30 million
27 March 2009 to
26 March 2010
2 China Vanke Co., Ltd. Shenzhen Vanke Real Estate
Co., Ltd. (100%) RMB120 million
Provided a guarantee in
proportion to the
Company’s equity
holding (100%) for a
bank loan of RMB120
million
29 April 2009 to
29 April 2012
During the reporting period, the amount of new guarantees made by the Company and its majority-owned
subsidiaries was RMB137 million, and the amount of guarantees terminated was RMB1,166 million. As at the end
of the reporting period, the outstanding amount of guarantees made by the Company was RMB1,192 million,
accounting for 3.45 per cent of the Company’s net assets. (The amount of guarantees at the beginning of the
reporting period changed slightly because of the exchange rate adjustment.) The outstanding amount of bank loan
guarantees made by the Company and its majority-owned subsidiaries for other majority-owned subsidiaries was
RMB1,094 million, the outstanding amount of bank loan guarantees made by the Company and its majorityowned
subsidiaries for associated companies was RMB98 million, the outstanding amount of external guarantees
made by the Company and its majority-owned subsidiaries was zero.
The Company did not provide guarantee for shareholders, beneficial controller and its connected parties, nor did
it, directly or indirectly, provide guarantee for companies with an assets-liabilities ratio exceeding 70 per cent.
9. Specific elaboration and independent opinions of the independent directors on the use of capital by
connected parties and external guarantees
There had been no non-operational use of capital by the controlling shareholder or other connected parties of the
Company.
During the reporting period, the Company, in strict compliance with the related rules, regulated its external
guarantee activities in order to control risks. There was no violation against the “Notice regarding the regulation
of external guarantees by listed companies”. The Company’s guarantees had been made to meet its production and
operational needs and the requirements for reasonable use of capital. The procedures for the determination of
guarantees are legal and reasonable without prejudice to the interests of the Company and its shareholders.
10. Undertaking
China Resources National Corporation (“CRNC”) – the parent company of CRC, being the Company’s original
single largest shareholder and the present single largest shareholder, gave a significant undertaking to the
Company in 2001: CRNC would provide as much support to the Company as it did in the past, as long as such
support was beneficial to the Company’s development, and that it would remain impartial in the event of any
competition between the investment projects of the Company and that of CRNC and its subsidiaries, and in the
event of any disagreements or disputes arising from horizontal competition. CRNC has fulfilled its undertaking.
Shareholders holding more than 5% of equity interests in the Company did not make additional undertaking for
their restricted shares in 2008. For the Company’s private placing of A shares in 2006, CRC, a shareholder
holding more than 5% of the Company’s equity interests, undertook to be subject to a lock-up period of 36 months
for the subscribed shares of its own accord. CRC holds 264,000,000 restricted tradable shares of the Company
from private placing, representing 2.4 per cent of the Company’s total number of shares. The lock-up period of
these shares will expire on 26 December 2009.
11. Meeting with investors18
Type of
meeting
Date Location Approach Classification of visitors
Issues discussed and
information provided
Goldman Sachs
meeting 2009.1 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
UBS meeting 2009.1 Shanghai Face to Face Meeting Investors including securities companies,
funds, etc
Deutsche Bank
meeting 2009.1 Beijing Face to Face Meeting Investors including securities companies,
funds, etc
Ping An
Securities
meeting
2009.1 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
United
Securities
meeting
2009.1 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
Merrill Lynch
meeting 2009.1 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
Daiwa Securities
meeting 2009.2 Tokyo Face to Face Meeting Investors including securities companies,
funds, etc
CLSA meeting 2009.2 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
CITIC Securities
meeting 2009.2 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
China Merchants
Securities
meeting
2009.2 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
Annual results
presentation 2009.3
Hong Kong,
Shenzhen
(Shanghai,
Beijing)
Face to Face Meeting Investors including securities companies,
funds, individual investors, etc
CLSA meeting 2009.3 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
Credit Suisse
meeting 2009.3 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
UBS meeting 2009.3 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
Shenyin
Wanguo meeting 2009.4 Beijing Face to Face Meeting Investors including securities companies,
funds, etc
Deutsche Bank
meeting 2009.5 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
Macquarie
meeting 2009.5 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
BOC
International
meeting
2009.5 Chengdu Face to Face Meeting Investors including securities companies,
funds, etc
CICC meeting 2009.5 Beijing Face to Face Meeting Investors including securities companies,
funds, etc
CLSA meeting 2009.5 Hong Kong Face to Face Meeting Investors including securities companies,
funds, etc
Ping An
Securities
meeting
2009.5 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
JP Morgan
meeting 2009.6 Beijing Face to Face Meeting Investors including securities companies,
funds, etc
Essence
Securities
meeting
2009.6 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
CITIC Securities
meeting 2009.6 Chengdu Face to Face Meeting Investors including securities companies,
funds, etc
Guotai Junan
meeting 2009.6 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
China Merchants
Securities
meeting
2009.6 Shenzhen Face to Face Meeting Investors including securities companies,
funds, etc
Industrial
Securities
meeting
2009.6 Shanghai Face to Face Meeting Investors including securities companies,
funds, etc
(I) Major issues
discussed:
(1) The Company’s
daily operations;
(2) The Company’s
development
strategies;
(3) The Company’s
opinion on the changes
in the industry.
(II) Major information
provided:
Published information
including the
Company’s regular
reports.19
Greatwall
Securities
meeting
2009.6 Beijing Face to Face Meeting Investors including securities companies,
funds, etc
UBS meeting 2009.6 Beijing Face to Face Meeting Investors including securities companies,
funds, etc
Note: The above-mentioned meetings included one-on-one meetings, small group meetings and large group presentation.
The Company received or met with investors from over 50 companies.
Securities
Companies
During
the
reporting
period
Shenzhen,
Dongguan,
Guangzhou,
Suzhou,
Shanghai,
Hangzhou,
Nanjiing, Wuxi,
Tianjin,
Shenyang,
Beijing, Wuhan,
Chengdu,
Chongqing,
Changsha, etc.
Small group or oneon-
one
Goldman Sachs, Shenjin Wanguo, CLSA,
UBS, Macquarie, First Shanghai Securities
Co., JP Morgan, Morgan Stanley,
Everbright Securities, Citi, Goldman Sachs
Gaohua, CITIC Securities, Deutsche Bank,
Credit Suisse, Nomura Securities,
Changjiang Securities, CICC, BOC
International, Hongta Securities, Donghai
Securities 、Guodu Securities, China
Merchants Securities, ABN Amro,
Mitsubishi UFJ, Essence Securities, United
Securities, Ping An Securities, Royal Bank
of Scotland, BNP, DBS Vickers, Researchworks,
etc.
Funds and other
investment
companies and
individual
investors
During
the
reporting
period
Shenzhen,
Dongguan,
Guangzhou,
Suzhou,
Shanghai,
Hangzhou,
Nanjing, Wuxi,
Tianjin,
Shenyang,
Beijing, Wuhan,
Chengdu,
Chongqing,
Changsha, etc.
Small group or oneon-
one
China Galaxy Securities Company
Limited, Dalian Chenxi Investment
Company (大连晨曦投资公司), China
Life, E Fund, China AMC, Greenwoods
Asset Management, Harvest Fund, Fortis
Haitong Investment, Bosera Fund, Fullgoal
Fund, Southern Fund, China Universal
Fund, China Life Franklin Asset
Management Co., Limited, Mirae Fund,
Zhonghai Fund, Taikang Life, Runhui
Investment, Bank of Communications
Schroder Fund, Dacheng Fund, Lion Fund,
Invesco Great Wall Fund, Guangfa Fund,
Hua An Fund, Rongtong Fund, Fuh Hwa
Securities Investment Trust, Ignis
Investment Services Limited, Emerging
Markets Mgmt LLC, Fortress Investment
Group, ING Real Estate, Cohen & Steers,
Galleon Asia, JPMorgan Asset
Management, Fidelity, Bain Capital,
Portman Holdings, UBS AG, UBS Global
Asset Management, Rexiter, American
Century Investment, CM Asia Pacific,
Hamon Asset Management Limited,
Blackstone Group Asia Limited, Fox-Pitt,
Sansar, Oppenheimer Fund, Acru Asset
Management, HT Capital, MFC Global
Investment Management, Broad Peak
Investment, Sloane Robinson, Alliance
Bernstein, Lansdowne, Templeton,
Marshall Wace, T Rowe Price, Robeco,
Kingdon Capital, TPG－Axon, Tiger Asia,
Montpelier Asset Management, Joho
Partner, Newton Investment Management,
BEA Union Investment, JF Asset
Management, Farallon, Hellman &
Friedman, Capital, PMA, Soros Capital
Management, Partner Fund, Keywise
Capital, Blue Ridge, Norges Bank, APG
Investments, Janus Capital, MICH
Investments, Highbridge, Sumitomo Trust
& Banking, TY Advisor, Piper Jaffray &
Co. , Triskele Capital Management
Limited, Marverick Capital, Bennelong,
Dragon Back, Union Investment
Privatfords GMBH, AMP Capital,
Henderson Global Marvin & Palmer,20
Harding Loevner LLC, UOB Kay Hian,
GLG Partners LP, DIAM Asset
Management, Nomura Securities, TIAA
CREF, GMO, Owl Creek Asset
Management,Buena Vista Fund,Dodge and
Cox US,Tiedemann,Aberdeen,Tiburon
Partners,Clairvoyance,Mirae Asset Inv
Mgmt,SAC Capital,ABC-CA Fund
Mgmt,Daiwa Asset Management,Fair
Asset Management,NPJ AM,Boyer Allan
Investment Management,GE Asset
Management,Jupiter Asset Management
Ltd,Kelusa Capital,Alpine Woods
Capital,GIC,Kylin Fund,orange capital
partners,Wellington,Black Rock,Allegiant
Asset Management Company,TIAACREF,
Lazard Asset Management,Putnam
Investments,William Blair,Kingdom,TRowe
Price,emperor investments ,etc.
12. Corporate bonds and related matters
During the reporting period, the Company’s credit standing was relatively stable. The Company’s issued
bonds, including “08 Vanke G1” (Bond code: 112005) and “08 Vanke G2” (Bond code: 112006), had been
tracked and rated by China Chengxin Securities Rating Co., Ltd. (中诚信证券评估有限公司). The rating
company renewed its AAA credit rating for the secured corporate bonds, “08 Vanke G1”, and AA+ credit
rating for the unsecured bonds, “08 Vanke G2”, and AA+ credit rating for the Company as a whole, and
assigned the Company a stable rating outlook. The Company will pay the first year interest on its corporate
bonds on 7 September 2009, and such interest payment will be funded by internal resources.
VI. Financial and Accounting Reports (unaudited)21
China Vanke Co., Ltd.
萬科企業股份有限公司
30 June 2009China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
22
Consolidated income statement
for the period ended 30 June 2009
(Expressed in Renminbi Yuan)
Note 2009
Jan. – Jun
2008
Jan. – Jun
Revenue 7 20,553,477,931 16,246,106,110
Cost of sales (14,840,848,429) (10,205,843,769)
Gross profit 5,712,629,502 6,040,262,341
Other income 8 53,561,476 41,685,283
Distribution costs (551,447,479) (709,183,337)
Administrative expenses (581,874,279) (834,558,734)
Other expenses 9 (68,404,243) (53,275,327)
Profit from operating activities 4,564,464,977 4,484,930,226
Financial income 11 134,732,205 165,087,195
Financial expenses 11 (346,839,320) (348,042,936)
Net finance costs 11 (212,107,115) (182,955,741)
Share of profits less losses of associates 20 163,366,356 1,765,632
Share of profits less losses of jointly
controlled entities 21 (18,330,042) 20,015,404
Profit before income tax 4,497,394,176 4,323,755,521
Income tax 13(a) (1,397,166,922) (2,017,085,451)
Profit for the period 3,100,227,254 2,306,670,070
Attributable to:
Equity shareholders of the Company 2,524,392,406 2,061,055,712
Minority interests 30 575,834,848 245,614,358
Profit for the period 3,100,227,254 2,306,670,070
Earnings per share
Basic earnings per share 14 0.230 0.187
Diluted earnings per share 14 0.230 0.187China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
23
Consolidated statement of comprehensive income
for the period ended 30 June 2009
(Expressed in Renminbi Yuan)
Note 2009
Jan. – Jun
2008
Jan. – Jun
Profit for the period 3,100,227,254 2,306,670,070
Other comprehensive income for the period
(after tax and reclassification adjustments)
Exchange differences on translation
of financial statements of foreign subsidiaries 12 230,369 130,804,522
Available-for-sale securities, net movement
in the fair value reserve 12 48,310,446 (64,787,076)
Total comprehensive income for the period 3,148,768,069 2,372,687,516
Attributable to:
Equity shareholders of the Company 2,572,933,221 2,127,073,158
Minority interests 30 575,834,848 245,614,358
Total comprehensive income for the period 3,148,768,069 2,372,687,516
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
24
Consolidated balance sheet at 30 June 2009
(Expressed in Renminbi Yuan)
Note 30 June 2009 31 December 2008
ASSETS
Non-current assets
Property, plant and equipment 16 1,188,018,836 1,290,600,931
Investment properties 17 168,374,069 198,394,767
Construction in progress 18 236,609,988 188,587,023
Interest in associates 20 566,788,286 508,175,188
Interest in jointly controlled entities 21 1,870,479,117 1,888,809,160
Other financial assets 22 234,101,486 256,158,816
Deferred tax assets 23(a) 1,446,780,447 1,449,480,633
Total non-current assets 5,711,152,229 5,780,206,518
Current assets
Inventories 24 34,285,742 48,111,356
Properties held for development 25 33,330,999,772 34,131,859,032
Properties under development 25 45,762,666,607 44,340,453,697
Completed properties for sale 25 5,476,278,613 7,890,962,140
Trade and other receivables 26 9,050,328,893 8,416,531,561
Cash and cash equivalents 27 26,880,423,543 19,978,285,930
Total current assets 120,534,983,170 114,806,203,716
TOTAL ASSETS 126,246,135,399 120,586,410,234
EQUITY
Share capital 28 10,995,210,218 10,995,210,218
Reserves 29 24,012,197,083 22,146,755,978
Awarded Shares purchased for the
Employees’ Share Award Scheme 35 (486,135,416) (1,250,040,934)
Total equity attributable to equity
shareholders of the Company 34,521,271,885 31,891,925,262
Minority interests 30 7,283,669,810 6,926,624,219
TOTAL EQUITY 41,804,941,695 38,818,549,481
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
25
Consolidated balance sheet at 30 June 2009 (continued)
(Expressed in Renminbi Yuan)
Note 30 June 2009 31 December 2008
LIABILITIES
Non-current liabilities
Interest-bearing borrowings and bonds 31 19,220,323,341 14,942,136,092
Deferred tax liabilities 23(b) 1,244,364,769 1,380,487,627
Other long term liabilities 32 19,724,960 12,644,850
Provisions 34 30,392,447 41,729,468
Total non-current liabilities 20,514,805,517 16,376,998,037
Current liabilities
Interest-bearing borrowings 31 12,126,809,557 17,866,342,910
Financial derivatives 3,544,200 1,694,880
Trade and other payables 33 48,366,045,359 43,979,207,733
Current taxation 13(c) 3,429,989,071 3,543,617,193
Total current liabilities 63,926,388,187 65,390,862,716
TOTAL LIABILITIES 84,441,193,704 81,767,860,753
TOTAL EQUITY AND LIABILITIES 126,246,135,399 120,586,410,234
Approved and authorised for issue by the board of directors on 31 July 2009.
)
)
) Directors
)
)
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the period ended 31 December 2008
26
Consolidated statement of change in equity
for the period ended 30 June 2009
(Expressed in Renminbi Yuan)
Attributable to equity shareholders of the company
Share capital
Share
premium
(note 29 (a))
Foreign
exchange
reserve
Statutory
reserves
(note 29 (b))
Employee
share-based
compensatio
n reserve
(note 29 (c))
Awarded shares
purchased for
the employees'
share award
scheme
(note 35)
Revaluation
reserve
(note 29 (d))
Capital reserve
arising from
stepped
acquisitions
Capital reserve
arising from
disposal of
awarded shares
(note 35)
Retained
profits Total
Minority
interests Total equity
Balance at 1
January 2009 10,995,210,218 8,826,644,405 277,307,760 6,581,984,978 473,226,067 (1,250,040,934) 44,647,125 (241,332,344) - 6,184,277,987 31,891,925,262 6,926,624,219 38,818,549,481
Changes in equity
for the six months
ended 30 June
2009
Dividend approved
in respect of the
previous year - - - - - - - - - (549,760,511) (549,760,511) (128,533,121) (678,293,632)
Capitalisation issue - - - - - - - - - - - (90,256,136) (90,256,136)
Equity settled
share-based
transactions - - - - - 763,905,518 - - (143,249,210) - 620,656,308 - 620,656,308
Reserve of
acquisition of
minority interest - - - - - - - (14,482,395) - - (14,482,395) - (14,482,395)
Total
comprehensive
income for the
period - - 230,369 - - - 48,310,446 - - 2,524,392,406 2,572,933,221 575,834,848 3,148,768,069
Balance at 30
June 2009 10,995,210,218 8,826,644,405 277,538,129 6,581,984,978 473,226,067 (486,135,416) 92,957,571 (255,814,739) (143,249,210) 8,158,909,882 34,521,271,885 7,283,669,810 41,804,941,695
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the period ended 31 December 2008
27
Consolidated statement of change in equity
for the period ended 30 June 2009 (continued)
(Expressed in Renminbi Yuan)
Attributable to equity shareholders of the company
Share capital
Share premium
(note 29 (a))
Foreign
exchange
reserve
Statutory
reserves
(note 29 (b))
Employee
share-based
compensation
reserve
(note 29 (c))
Awarded shares
purchased for
the employees'
share award
scheme
(note 35)
Revaluation
reserve
(note 29 (d))
Capital reserve
arising from
stepped
acquisitions Retained profits Total
Minority
interests Total equity
Balance at 1 January 2008 6,872,006,387 12,949,848,236 147,798,941 5,395,470,156 453,690,000 (466,541,546) 134,801,554 (241,332,344) 4,032,906,217 29,278,647,601 4,640,875,428 33,919,523,029
Changes in equity for the six
months ended 30 June 2008
Dividend approved in respect
of the previous year - - - - - - - - (696,995,302) (696,995,302) (63,439,074) (760,434,376)
Capitalisation issue 4,123,203,831 (4,123,203,831) - - - - - - - - 980,002,362 980,002,362
Equity settled share-based
transactions - - - - 308,476,379 (997,251,454) - - (688,775,075) - (688,775,075)
Total comprehensive income
for the period - - 130,804,522 - - - (64,787,076) - 2,061,055,712 2,127,073,158 245,614,358 2,372,687,516
Balance at 30 June 2008 and
1 July 2008 10,995,210,218 8,826,644,405 278,603,463 5,395,470,156 762,166,379 (1,463,793,000) 70,014,478 (241,332,344) 5,396,966,627 30,019,950,382 5,803,053,074 35,823,003,456
Changes in equity for the six
months ended 31 December
2008
Dividend approved in respect
of the previous year - - - - - - - - - - (141,212,428) (141,212,428)
Capitalisation issue - - - - - - - - - - 903,698,806 903,698,806
Equity settled share-based
transactions - - - - (288,940,312) 213,752,066 - - 1,711,866 (73,476,380) - (73,476,380)
Transfer from retained profits - - - 1,186,514,822 - - - - (1,186,514,822) - -
Total comprehensive income
for the period - - (1,295,703) - - - (25,367,353) - 1,972,114,316 1,945,451,260 361,084,767 2,306,536,027
Balance at 31 December 2008 10,995,210,218 8,826,644,405 277,307,760 6,581,984,978 473,226,067 (1,250,040,934) 44,647,125 (241,332,344) 6,184,277,987 31,891,925,262 6,926,624,219 38,818,549,481
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
28
Condensed consolidated cash flow statement
for the period ended 30 June 2009
(Expressed in Renminbi Yuan)
2009 2008
Jan. – Jun Jan. – Jun
Operating activities
Cash received from customers 27,326,850,631 21,952,546,322
Cash paid to suppliers (11,498,223,641) (16,079,764,320)
Cash paid to and for employees (656,464,889) (1,850,285,760)
Cash paid for taxes (3,534,320,990) (4,624,472,477)
Cash generated from other operating
activities 788,899,488 1,546,511,369
Cash used in other operating activities (2,605,155,965) (2,433,423,857)
Net cash generated from/(used in)
operating activities 9,821,584,634 (1,488,888,723)
Investing activities
Acquisitions of subsidiaries, net of cash
acquired (252,880,464) (1,768,566,734)
Acquisitions of interest in associates,
jointly controlled entities and other
investments - (731,273,193)
Acquisitions of property, plant and
equipment and construction in progress (19,369,517) (228,756,900)
Prepayment for investments (13,912,578) -
Proceeds from disposal of property, plant
and equipment 84,177,822 3,412,609
Proceeds from sales of investments 80,060,000 306,000
Dividends received 134,830,514 32,426,533
Proceeds from other investment activities 144,202,567 122,869,659
Net cash generated from/(used in)
investing activities 157,108,344 (2,569,582,026)
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
29
Condensed consolidated cash flow statement
for the period ended 30 June 2009 (continued)
(Expressed in Renminbi Yuan)
2009 2008
Jan. – Jun Jan. – Jun
Financing activities
Capital injections from minority interests
of subsidiaries - 356,507,408
Proceeds from loans and borrowings 11,039,015,369 10,545,464,342
Repayment of loans and borrowings (12,382,381,037) (6,614,274,805)
Interests and dividends paid (1,733,306,033) (1,842,913,054)
Net cash generated from/(used in)
financing activities (3,076,671,701) 2,444,783,891
Net increase/(decrease) in cash and cash
equivalents 6,902,021,277 (1,613,686,858)
Cash and cash equivalents at 1 January 19,978,285,930 17,046,504,584
Effect of foreign exchange rates 116,336 (62,972,096)
Cash and cash equivalents at 30 June 26,880,423,543 15,369,845,630
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
30
Notes to the consolidated financial statements
(Expressed in Renminbi Yuan)
1 Reporting entity
China Vanke Co., Ltd (the “Company”) is a company domiciled in the People’s Republic of
China (the “PRC”). The consolidated financial statements of the Company for the period
ended 30 June 2009 comprise the Company and its subsidiaries (together referred to as the
“Group”) and the Group’s interests in associates and jointly controlled entities. The Group is
primarily involved in the development and sale of properties in the PRC (see note 7).
2 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with the
International Financial Reporting Standards (“IFRSs”) promulgated by the International
Accounting Standards Board (“IASB”).
The consolidated financial statements were approved and authorised for issue by the
Company’s board of directors on 31 July 2009.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except
for the following:
?financial instruments at fair value through profit or loss are measured at fair value
?available-for-sale financial assets are measured at fair value
The methods used to measure fair values are discussed further in note 5.
(c) Functional and presentation currency
The consolidated financial statements are presented in Renminbi Yuan, which is the Group’s
functional currency.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
31
2 Basis of preparation (continued)
(d) Use of estimates and judgments
The preparation of financial statements in conformity with IFRSs requires management to
make judgments, estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and in any
future periods affected.
Information about significant areas of estimation uncertainty and critical judgments in
applying accounting policies that have the most significant effect on the amounts recognized
in the consolidated financial statements is included in the following notes:
?Note 16 and 17 – depreciation and impairment of property, plant and equipment and
investment properties
?Note 25 – write down of properties
?Note 26 – impairment of trade debtors and other receivables
?Note 40 – accounting estimates and judgmentsChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
32
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented
in these consolidated financial statements, and have been applied consistently by Group
entities.
(a) Basis of consolidation
(i) Subsidiaries and minority interests
Subsidiaries are entities controlled by the Group. Control exists when the Group has the
power to govern the financial and operating policies of an entity so as to obtain benefits from
its activities. In assessing control, potential voting rights that presently are exercisable are
taken into account.
An investment in a subsidiary is consolidated into the consolidated financial statements from
the date that control commences until the date that control ceases. Intra-group balances and
transactions and any unrealized profits arising from intra-group transactions are eliminated in
full in preparing the consolidated financial statements. Unrealized losses resulting from
intra-group transactions are eliminated in the same way as unrealized gains but only to the
extent that there is no evidence of impairment.
Minority interests represent the portion of the net assets of subsidiaries attributable to
interests that are not owned by the Company, whether directly or indirectly through
subsidiaries, and in respect of which the Group has not agreed any additional terms with
holders of those interests which would result in the Group as a whole having a contractual
obligation in respect of those interests that meets the definition of a financial liability.
Minority interests are presented in the consolidated balance sheet within equity, separately
from equity attributable to the equity shareholders of the Company. Minority interests in the
results of the Group are presented on the face of the consolidated income statement as an
allocation of the total profit or loss for the year between minority interests and the equity
shareholders of the Company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a
subsidiary, the excess, and any further losses applicable to the minority, are charged against
the Group’s interest except to the extent that the minority has a binding obligation to, and is
able to, make additional investment to cover the losses. If the subsidiary subsequently
reports profits, the Group’s interest is allocated all such profits until the minority’s share of
losses previously absorbed by the Group has been recovered.
Loans from holders of minority interests and other contractual obligations towards these
holders are presented as financial liabilities in the consolidated balance sheet in accordance
with notes 3(q) and 3(s) depending on the nature of the liability.
(ii) Associates and jointly controlled entities
An associate is an entity in which the Group has significant influence, but not control or joint
control, over its management, including participation in the financial and operating policy
decisions.
A jointly controlled entity is an entity which operates under a contractual arrangement
between the Group and other parties, where the contractual arrangement establishes that theChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
33
3 Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(ii) Associates and jointly controlled entities (continued)
Group and one or more of the other parties share joint control over the economic activity of
the entity.
An investment in an associate or a jointly controlled entity is accounted for in the
consolidated financial statements under the equity method, unless it is classified as held for
sale (or included in a disposal group of that is classified as held for sale). Under the equity
method, the investment is initially recorded at cost and adjusted thereafter for the post
acquisition change in the Group’s share of investees’ net assets and any impairment loss
relating to the investment (see notes 3(h)(i)). The Group’s share of the post-acquisition, posttax
results of the investees and any impairment losses for the year are recognized in the
consolidated income statement.
When the Group’s share of losses exceeds its interest in the associate or the jointly controlled
entity, the Group’s interest is reduced to nil and recognition of further losses is discontinued
except to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the associate or the jointly controlled entity. For this purpose, the
Group’s interest is the carrying amount of the investment under the equity method together
with the Group’s long-term interests that in substance form part of the Group’s net
investment in the associate or the jointly controlled entity.
Unrealized profits and losses resulting from transactions between the Group and its
associates and jointly controlled entities are eliminated to the extent of the Group’s interest in
the investee, except where unrealized losses provide evidence of an impairment of the asset
transferred, in which case they are recognized immediately in profit or loss.
(iii) Business combinations
When an acquisition is completed by a series of successive transactions, each significant
transaction is considered individually for the purpose of the determination of the fair value of
the identifiable assets, liabilities and contingent liabilities acquired and hence for the
goodwill associated with the acquisition.
The fair values of the identifiable assets and liabilities acquired can vary at the date of each
transaction. When a transaction results in taking over the control of the entity, the interests
of the entity previously recorded in the Group’s financial statements are revalued on the basis
of the fair values of the identifiable assets and liabilities at the transaction date. Any
revaluation surplus/deficits are recorded in equity.
When control already exists at the date of addition in interest in an entity, no fair value
adjustment is made to the identifiable assets, liabilities and contingent liabilities of the entity.
Any difference between the considerations and the carrying amount of interests previously
recorded in the Group’s financial statements is dealt with in equity.
Where the Group decreases its interest in a subsidiary without losing control, any gain or loss
on the partial disposal is recognised in profit or loss.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
34
3 Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(iv) Goodwill
Goodwill represents the excess of the cost of a business combination or an investment in an
associate or a jointly controlled entity over the Group’s interest in the net fair value of the
acquiree’s identifiable assets, liabilities and contingent liabilities.
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a
business combination is allocated to cash-generating units and is tested annually for
impairment (see note 3(h)). In respect of associates or jointly controlled entities, the carrying
amount of goodwill is included in the carrying amount of the interest in the associate jointly
controlled entity and the investment as a whole is tested for impairment whenever there is
objective evidence of impairment (see note 3(h)).
Any excess of the group’s interest in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities over the cost of a business combination or an investment
in an associate or a jointly entity is recognized immediately in profit or loss.
On disposal of a cash generating unit, an associate or a jointly controlled entity during the
year, and attributable amount of purchased goodwill is included in the calculation of the
profit or loss on disposal.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of
Group entities at exchange rates at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the reporting date are retranslated to the
functional currency at the exchange rate at that date. The foreign currency gain or loss on
monetary items is the difference between amortised cost in the functional currency at the
beginning of the period, adjusted for effective interest and payments during the period, and
the amortised cost in foreign currency translated at the exchange rate at the end of the period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at
fair value are retranslated to the functional currency at the exchange rate at the date that the
fair value was determined. Foreign currency differences arising on retranslation are
recognised in profit or loss.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated to Renminbi at exchange rate at the reporting date. The
income and expenses of foreign operations are translated to Renminbi at exchange rates at
the dates of the transactions.
Foreign currency differences are recognised directly in equity. Such differences have been
recognised in the foreign exchange reserve. When a foreign operation is disposed of, in part
of in full, the relevant amount in the foreign exchange reserve is transferred to profit or loss.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
35
3 Significant accounting policies (continued)
(c) Financial instruments
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities,
trade and other receivables, including cash and cash equivalents, bonds and interest-bearing
borrowings, and trade and other payables.
Non-derivative financial instruments are recognized initially at fair value plus, for
instruments not at fair value through profit or loss, any directly attributable transaction costs.
Subsequent to initial recognition non-derivative financial instruments are measured as
described below.
Available-for-sale financial assets
The Group’s investments in equity securities and certain debt securities are classified as
available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair
value and changes therein, other than impairment losses (see note 3(h)), are recognized
directly in equity. When an investment is derecognized, the cumulative gain or loss in equity
is transferred to profit or loss.
Others
Other non-derivative financial instruments are measured at amortized cost using effective
interest rate method, less any impairment losses.
(ii) Derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction
costs are recognized in the profit or loss when incurred. Subsequent to initial reorganization,
derivatives are measured at fair values, and all changes in its fair value are recognized
immediately in profit or loss.
Embedded derivatives are separated from the host contract and accounted for separately if
the economic characteristics and risks of the host contract and the embedded derivative are
not closely related, a separate instrument with the same terms as the embedded derivative
would meet the definition of a derivative, and the combined instrument is not measured at
fair value through profit or loss.
(iii) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
ordinary shares are recognized as a deduction from equity, net of any tax effects.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
36
3 Significant accounting policies (continued)
(d) Property, plant and equipment
(i) Recognition and measurement
Hotel and other properties held for own use, plant and equipment are measured at cost less
accumulated depreciation and accumulated impairment losses. Cost includes expenditure
that is directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to
bringing the assets to a working condition for their intended use, and the costs of dismantling
and removing the items and restoring the site on which they are located, and an appropriate
proportion of production overheads and borrowing costs (see note 3(m)). Purchased software
that is integral to the functionality of the related equipment is capitalized as part of that
equipment.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and
equipment, and are recognized net within “other income” or “other expenses” in profit or
loss.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognized in the
carrying amount of the item if it is probable that the future economic benefits embodied
within the part will flow to the Group and its cost can be measured reliably. The carrying
amount of the replaced part is derecognized. The costs of the day-to-day servicing of
property, plant and equipment are recognized in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated to write-off the cost of items of property, plant and equipment, less
their estimated residual value, if any, using the straight line method over their estimated
useful lives as follow:
Estimated
residual value
as a percentage
Year of costs
Hotel buildings 34 4%
Other buildings 12.5 - 25 4%
Improvements to premises 5 years or over terms of leases -
Plant and machinery 5 - 10 4%
Furniture, fixtures and equipment 5 - 10 4%
Motor vehicles 5 4%
Both the useful life of an asset and its residual value, if any, are reviewed annually.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
37
3 Significant accounting policies (continued)
(e) Investment properties
Investment properties are land and buildings which are owned or held under a leasehold
interest (see note 3(g)) to earn rental income and/or for capital appreciation. These include
land held for a currently undetermined future use and property that is being constructed or
developed for future use as investment property.
Investment properties are stated in the consolidated balance sheet at cost less accumulated
depreciation and impairment losses (see note 3(h)). The cost of self-constructed assets
includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs
of dismantling and removing the items and restoring the site on which they are located, and
an appropriate proportion of production overheads and borrowing costs (see note 3(m)).
Any gain or loss arising from the retirement or disposal of an investment property is
recognised in profit or loss. Rental income from investment property is accounted for as
described in note 3(l)(iii).
Depreciation is calculated to write off the cost of items of investment properties, less their
estimated residual value of 4% of costs, using straight line method over their estimated
useful lives of 12.5 to 40 years.
(f) Construction in progress
Construction in progress represents items of property, plant and equipment or investment
properties under construction and pending installation, and is stated at cost less impairment
losses (see note 3(h)). Cost comprises cost of materials, direct labour, borrowing costs
capitalized (see note 3(m)), and an appropriate proportion of production overheads incurred
during the periods of construction and installation. Capitalization of those costs ceases and
the construction in progress is transferred to property, plant and equipment or investment
properties, as appropriate, when the asset is substantially ready for its intended use. No
depreciation is provided in respect of construction in progress.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
38
3 Significant accounting policies (continued)
(g) Leased assets
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if
the Group determines that the arrangement conveys a right to use a specific asset or assets
for an agreed period of time in return for a payment or a series of payments. Such a
determination is made based on an evaluation of the substance of the arrangement and is
regardless of whether the arrangement takes the legal form of a lease. Leases which do not
transfer substantially all the risks and rewards of ownership to the Group are classified as
operating leases.
Where the Group has the use of assets held under operating leases, payments made under the
leases are charged to profit or loss in equal instalments over the accounting periods covered
by the lease term, except where an alternative basis is more representative of the pattern of
benefits to be derived from the leased asset. Lease incentives received are recognised in
profit or loss as an integral part of the aggregate net lease payments made.
Contingent rentals are charged to profit or loss in the accounting period in which they are
incurred.
The cost of acquiring land held under an operating lease is amortised on a straight-line basis
over the period of the lease term except where the property is held for development, under
development or completed and held for sale (see notes 3(j) and 3(k)).
(h) Impairment of assets
(i) Impairment of investments in debt and equity securities and other receivables
Investments in debt and equity securities and other current and non-current receivables that
are stated at cost or amortised cost or are classified as available-for-sale securities are
reviewed at each balance sheet date to determine whether there is objective evidence of
impairment. Objective evidence of impairment includes observable data that comes to the
attention of the Group about one or more of the following loss events:
- significant financial difficulty of the debtor;
- a breach of contract, such as a default or delinquency in interest or principal
payments;
- it becoming probable that the debtor will enter bankruptcy or other financial
reorganisation;China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
39
3 Significant accounting policies (continued)
(h) Impairment of assets (continued)
(i) Impairment of investments in debt and equity securities and other receivables (continued)
- significant changes in the technological, market, economic or legal environment that
have an adverse effect on the debtor; and
- a significant or prolonged decline in the fair value of an investment in an equity
instrument below its cost.
If any such evidence exists, any impairment loss is determined and recognised as follows:
- For investments in associates and jointly controlled entities recognised using the
equity method, the impairment loss is measure by comparing the recoverable amount
of the investment as a whole with its carrying amount in accordance with note
3(h)(ii). The impairment loss is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount in accordance with note 3(h)(ii).
- For unquoted securities that are carried at cost, the impairment loss is measured as the
difference between the carrying amount of the financial asset and the estimated future
cash flows, discounted at the current market rate of return for a similar financial asset
where the effect of discounting is material. Impairment losses for securities are not
reversed.
- For trade and other current receivables and other financial assets carried at amortised
cost, the impairment loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the
financial asset’s original effective interest rate (i.e. the effective interest rate
computed at initial recognition of these assets), where the effect of discounting is
material. This assessment is made collectively where financial assets carried at
amortised cost share similar risk characteristics, such as similar past due status, and
have not been individually assessed as impaired. Future cash flows for financial
assets which are assessed for impairment collectively are based on historical loss
experience for assets with credit risk characteristics similar to the collective group.
If in a subsequent period the amount of an impairment loss decreases and the decrease
can be linked objectively to an event occurring after the impairment loss was
recognised, the impairment loss is reversed through profit or loss. A reversal of an
impairment loss shall not result in the asset’s carrying amount exceeding that which
would have been determined had no impairment loss been recognised in prior years.
- For available-for-sale securities, the cumulative loss that has been recognised directly
in equity is reclassified to profit or loss. The amount of the cumulative loss that is
recognised in profit or loss is the difference between the acquisition cost (net of any
principal repayment and amortisation) and current fair value, less any impairment loss
on that asset previously recognised in profit or loss.
Impairment losses recognised in profit or loss in respect of available-for-sale equity
securities are not reversed through profit or loss. Any subsequent increase in the fair
value of such assets is recognised directly in equity.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
40
3 Significant accounting policies (continued)
(h) Impairment of assets (continued)
(i) Impairment of investments in debt and equity securities and other receivables (continued)
Impairment losses in respect of available-for-sale debt securities are reversed if the
subsequent increase in fair value can be objectively related to an event occurring after the
impairment loss were recognised. Reversals of impairment losses in such circumstances are
recognised in profit or loss.
Impairment losses are written off against the corresponding assets directly, except for
impairment losses recognised in respect of trade debtors and bills receivable included within
trade and other receivables, whose recovery is considered doubtful but not remote. In this
case, the impairment losses for doubtful debts are recorded using an allowance account.
When the Group is satisfied that recovery is remote, the amount considered irrecoverable is
written off against trade debtors and bills receivable directly and any amounts held in the
allowance account relating to that debt are reversed. Subsequent recoveries of amounts
previously charged to the allowance account are reversed against the allowance account.
Other changes in the allowance account and subsequent recoveries of amounts previously
written off directly are recognised in profit or loss.
(ii) Impairment of other assets
Internal and external sources of information are reviewed at each balance sheet date to
identify indications that the following assets may be impaired or, except in the case of
goodwill, an impairment loss previously recognised no longer exists or may have decreased:
- investment properties;
- property, plant and equipment; and
- construction in progress.
If any such indication exists, the asset’s recoverable amount is estimated. In addition, for
goodwill, the recoverable amount is estimated annually whether or not there is any indication
of impairment.
- Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market
assessments of time value of money and the risks specific to the asset. Where an
asset does not generate cash inflows largely independent of those from other assets,
the recoverable amount is determined for the smallest group of assets that generates
cash inflows independently (i.e. a cash-generating unit).China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
41
3 Significant accounting policies (continued)
(h) Impairment of assets (continued)
(ii) Impairment of other assets (continued)
- Recognition of impairment losses
An impairment loss is recognised in profit or loss whenever the carrying amount of an
asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount.
Impairment losses recognised in respect of cash-generating units are allocated first to
reduce the carrying amount of any goodwill allocated to the cash-generating unit (or
group of units) and then, to reduce the carrying amount of the other assets in the unit
(or group of units) on a pro rata basis, except that the carrying value of an asset will
not be reduced below its individual fair value less costs to sell, or value in use, if
determinable.
- Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has
been a favourable change in the estimates used to determine the recoverable amount.
An impairment loss in respect of goodwill is not reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would
have been determined had no impairment loss been recognised in prior years.
Reversals of impairment losses are credited to profit or loss in the year in which the
reversals are recognised.
(i) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using
the weighted average cost formula and comprises all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an
expense in the period in which the related revenue is recognised. The amount of any writedown
of inventories to net realisable value and all losses of inventories are recognised as an
expense in the period the write-down or loss occurs. The amount of any reversal of any
write-down of inventories is recognised as a reduction in the amount of inventories
recognised as an expense in the period in which the reversal occurs.
(j) Properties under development and properties held for development
Properties under development are stated at the lower of cost and net realisable value. The
cost of properties under development and properties held for development comprise
specifically identified cost, including the acquisition cost of land, aggregate cost of
development, materials and supplies, wages and other direct expenses, an appropriate
proportion of overheads and borrowing costs capitalised (see note 3(m)). Net realisable
value represents the estimated selling price less the estimated costs of completion and the
estimated costs to be incurred in selling the properties.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
42
3 Significant accounting policies (continued)
(k) Completed properties for sale
Completed properties for sale are stated at the lower of cost and net realisable value. Cost is
determined by apportionment of the total development costs for that development project
attributable to the unsold properties. Net realisable value represents the estimated selling
price less the estimated costs to be incurred in selling the properties.
The cost of completed properties for sale comprises all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present location and condition.
When properties are sold, the carrying amount of those properties is recognised as an expense
in the period in which the related revenue is recognised. The amount of any write-down of
properties to net realisable value and all losses of properties are recognised as an expense in
the period the write-down or loss occurs. The amount of any reversal of any write-down of
properties is recognised as a reduction in the amount of properties recognised as an expense
in the period in which the reversal occurs.
(l) Revenue recognition
Provided it is probable that the economic benefits will flow to the Group and the revenue and
costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as
follows:
(i) Sale of properties
Revenue from the sale of completed properties for sale is recognised upon the signing
of the sale and purchase agreement and the receipt of the deposits pursuant to the sale
and purchase agreement or the achievement of status ready for hand-over to
customers as stipulated in the sales and purchase agreements, whichever is the later.
Deposits and instalments received on properties sold prior to the date of revenue
recognition are included in the consolidated balance sheet under sales deposits
received in advance.
(ii) Provision of services
Revenue from services is recognised when services are rendered.
(iii) Rental income from operating leases
Rental income receivable under operating leases is recognised in profit or loss in
equal instalments over the periods covered by the lease term, except where an
alternative basis is more representative of the pattern of benefits to be derived from
the use of the leased asset. Lease incentives granted are recognised in profit or loss as
an integral part of the aggregate net lease payments receivable. Contingent rentals are
recognised as income in the accounting period in which they are earned.
(iv) Interest income
Interest income is recognised as it accrues using the effective interest method.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
43
(l) Revenue recognition (continued)
(v) Dividend income
-Dividend income from unlisted investments is recognised when the shareholder’s
right to receive payment is established.
-Dividend income from listed investments is recognised when the share price of the
investment goes ex-dividend.
(vi) Government grants
Government grants are recognised initially as deferred income when there is
reasonable assurance that they will be received and that the Group will comply with
the conditions attaching to them. Grants that compensate the Group for expenses
incurred are recognised as other sundry income in profit or loss on a systematic basis
in the same periods in which the expenses are incurred. Grants that compensate the
Group for the cost of an asset are deducted in arriving at the carrying amount of the
asset and consequently are effectively recognised in profit or loss over the useful life
of the asset by way of reduced depreciation expense.
(vii) Construction revenue
The construction revenue is recognized by refernce to the stage of completion of the
contruction activity at the end of the reporting period, only when the following
conditions are met,
?It is the buyer who can make decision to the design of the main construction
before the construction activity, and make decision to change the design during
the construction activity;
?The outcome of the construction contract can be estimated reliably.
The above revenue is net of the relevant taxes and is after the deduction of any trade
discounts. No revenue is recognised if there are significant uncertainties regarding recovery
of the consideration due, associated costs or the possible return of goods.
(m) Borrowing costs
Borrowing costs are expensed in profit or loss in the period in which they are incurred,
except to the extent that they are capitalised as being directly attributable to the acquisition,
construction or production of an asset which necessarily takes a substantial period of time to
get ready for its intended use or sale.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences
when expenditure for the asset is being incurred, borrowing costs are being incurred and
activities that are necessary to prepare the asset for its intended use or sale are in progress.
Capitalisation of borrowing costs is suspended or ceases when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale are interrupted or
complete.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
44
3 Significant accounting policies (continued)
(n) Employee benefits
(i) Short term employee benefits and contributions to defined contribution retirement plans
Salaries, annual bonuses, paid annual leave and the cost of non-monetary benefits are
accrued in the year in which the associated services are rendered by employees. Where
payment or settlement is deferred and the effect would be material, these amounts are stated
at their present values.
The Group’s contributions to defined contribution retirement plans administrated by the PRC
government are recognised as an expense when incurred according to the contribution
defined by the plans.
(ii) Share based payments
The Group has adopted an equity-settled Employees’ Share Award Scheme (the “Scheme”)
for its employees (note 35) and the Group’s policy for the Scheme is set out below.
The fair value of the shares granted to the employees (the “Awarded Shares”) is recognised
as an employee cost with a corresponding increase in employee share based compensation
reserve within equity. The fair value is measured at grant date using the Monte-Carlo option
pricing model, taking into account the terms and conditions upon which the Awarded Shares
were granted. As the employees have to meet vesting conditions before becoming
unconditionally entitled to the Awarded Shares, the total estimated fair value of the Awarded
Shares is spread over the vesting period, taking into account the probability that the Awarded
Shares will vest. As the duration of the vesting period depends on the market price of the
Company’s A shares, the estimation on the vesting period is reviewed at each balance sheet
date. Any adjustment to the employee cost recognised in prior years is charged / credited to
the profit or loss for the year of review with a corresponding adjustment to the compensation
reserve.
The Group’s contribution to the Scheme is stated at cost and is presented as a contra account,
namely, Awarded Shares purchased for the Employees’ Share Award Scheme, within equity.
When the Awarded Shares are transferred to the awardees upon vesting, the related costs of
the Awarded Shares vested are credited to Awarded shares purchased for the Employee’s
Share Award Scheme with a corresponding adjustment to the employee share based
compensation reserve.
(o) Income tax
Income tax for the year comprises current tax and movements in deferred assets and
liabilities. Current tax and movement in deferred tax assets and liabilities are recognised in
profit or loss except to the extent that they relate to items recognised directly in equity, in
which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable
in respect of previous years.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
45
3 Significant accounting policies (continued)
(o) Income tax (continued)
Deferred tax assets and liabilities arise from deductible and taxable temporary differences
respectively, being the differences between the carrying amounts of assets and liabilities for
financial reporting purposes and their tax bases. Deferred tax assets also arise from unused
tax losses and unused tax credits.
Apart from certain limited exceptions, all deferred tax liabilities and all deferred tax assets to
the extent that it is probable that future taxable profits will be available against which the
asset can be utilised, are recognised. Future taxable profits that may support the recognition
of deferred tax assets arising from deductible temporary differences include those that will
arise from the reversal of existing taxable temporary differences, provided those differences
relate to the same taxation authority and the same taxable entity, and are expected to reverse
either in the same period as the expected reversal of the deductible temporary difference or in
periods into which a tax loss arising from the deferred tax asset can be carried back or
forward. The same criteria is adopted when determining whether existing taxable temporary
differences support the recognition of deferred tax assets arising from unused tax losses and
credits, that is, those differences are taken into account if they relate to the same taxation
authority and the same taxable entity, and are expected to reverse in a period, or periods, in
which the tax loss or credit can be utilised.
No temporary differences are recognised on the initial recognition of goodwill. In addition,
the following temporary differences are not provided for: the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit (provided they are not part of a
business combination), and temporary differences relating to investments in subsidiaries to
the extent, in the case of taxable differences, the Group controls the timing of the reversal
and it is probable that the differences will not reverse in the foreseeable future, or in the case
of deductible differences, unless it is probable that they will reverse in the future.
The amount of deferred tax recognised is measured based on the expected manner of
realisation or settlement of the carrying amount of the assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities
are not discounted.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is
reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow the related tax benefit to be utilised. Any such reduction is reversed to the
extent that it becomes probable that sufficient taxable profits will be available.
Additional income taxes that arise from the distribution of dividends are recognised when the
liability to pay the related dividends is recognised.
Current tax balances and deferred tax balances, and movements therein, are presented
separately from each other and are not offset. Current tax assets are offset against current tax
liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the
Group has the legally enforceable right to set off current tax assets against current liabilities
and the following additional conditions are met:
- in the case of current tax assets and liabilities, the Company or the Group intends
either to settle on a net basis, or to realise the asset and settle the liability
simultaneously; orChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
46
3 Significant accounting policies (continued)
(o) Income tax (continued)
- in the case of deferred tax assets and liabilities, if they relate to income taxes levied
by the same taxation authority on either:
- the same taxable entity; or
- different taxable entities, which, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to be settled or
recovered, intend to realise the current tax assets and settle the current tax
liabilities on a net basis or realise and settle simultaneously.
(p) Trade and other receivables
Trade and other receivables are initially recognised at fair value and thereafter at amortised
cost less impairment losses for bad and doubtful debts (see note 3(h)), except where the
receivables are interest-free loans made to related parties without any fixed repayment terms
or the effect of discounting would be immaterial. In such cases, the receivables are stated at
cost less impairment losses for bad and doubtful debts (see note 3(h)).
(q) Trade and other payables
Trade and other payables are initially recognised at fair value. Except for financial guarantee
liabilities measured in accordance with note 3(t), trade and other payables are subsequently
stated at amortised cost unless the effect of discounting would be immaterial, in which case
they are stated at cost.
(r) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, and demand deposits with
banks. Bank overdrafts that are repayable on demand and form an integral part of the
Group’s cash management are included as a component of cash and cash equivalents for the
purpose of the consolidated cash flow statement.
(s) Interest-bearing borrowings and bonds
Interest-bearing borrowings and bonds are recognised initially at fair value, less attributable
transaction costs. Subsequent to initial recognition, interest-bearing borrowings/bonds are
stated at amortised cost with any difference between cost and redemption value being
recognised in the profit or loss over the period of the borrowings/bonds, together with any
interest and fees payable, using the effective interest method.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
47
3 Significant accounting policies (continued)
(t) Financial guarantees issued, provisions and contingent liabilities
(i) Financial guarantees issued
Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified
payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder
incurs because a specified debtor fails to make payment when due in accordance with the
terms of a debt instrument.
Where the Group issues a financial guarantee, the fair value of the guarantee (being the
transaction price, unless the fair value can otherwise be reliably estimated) is initially
recognised as deferred income within trade and other payables. Where consideration is
received or receivable for the issuance of the guarantee, the consideration is recognised in
accordance with the Group’s policies applicable to that category of asset. Where no such
consideration is received or receivable, an immediate expense is recognised in profit or loss
on initial recognition of any deferred income.
The amount of the guarantee initially recognised as deferred income is amortised in profit or
loss over the term of the guarantee as income from financial guarantees issued. In addition,
provisions are recognised in accordance with note 3(t)(iii) if and when (i) it becomes
probable that the holder of the guarantee will call upon the group under the guarantee, and
(ii) the amount of that claim on the Group is expected to exceed the amount currently carried
in trade and other payables in respect of that guarantee i.e. the amount initially recognised,
less accumulated amortisation.
(ii) Contingent liabilities acquired in business combinations
Contingent liabilities acquired as part of a business combination are initially recognised at
fair value, provided the fair value can be reliably measured. After their initial recognition at
fair value, such contingent liabilities are recognised at the higher of the amount initially
recognised, less accumulated amortisation where appropriate, and the amount that would be
determined in accordance with note 3(t)(iii). Contingent liabilities acquired in a business
combination that cannot be reliably fair valued are disclosed in accordance with note 3(t)(iii).
(iii) Other provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain timing or amount when the Group
has a legal or constructive obligation arising as a result of a past event, it is probable that an
outflow of economic benefits will be required to settle the obligation and a reliable estimate
can be made. Where the time value of money is material, provisions are stated at the present
value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount
cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote. Possible obligations, whose existence
will only be confirmed by the occurrence or non-occurrence of one or more future events, are
also disclosed as contingent liabilities unless the probability of outflow of economic benefits
is remote.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
48
3 Significant accounting policies (continued)
(u) Related parties
For the purposes of these financial statements, a party is considered to be related to the
Group if:
(i) the party has the ability, directly or indirectly through one or more intermediaries, to
control the Group or exercise significant influence over the Group in making financial
and operating policy decisions, or has joint control over the Group.
(ii) the Group and the party are subject to common control;
(iii) the party is an associate of the Group or a joint venture in which the Group is a
venturer;
(iv) the party is a member of key management personnel of the Group, or a close family
member of such an individual, or is an entity under the control, joint control or
significant influence of such individuals;
(v) the party is close family member of a party referred to in (i) or is an entity under the
control, joint control or significant influence of such individuals; or
(vi) the party is a post-employment benefit plan which is for the benefit of employees of
the Group or of any entity that is a related party of the Group.
Close family members of an individual are those family members who may be expected to
influence, or be influenced by, that individual in their dealings with the entity.
(v) Earnings per share
The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares outstanding during the period.
There were no dilutive ordinary shares during the years ended 30 June 2009 and 31
December 2008; therefore, dilutive earnings per share are not presented.
(w) Segment reporting
Operating segments, and the amounts of each segment item reported in the financial
statements are identified from the financial information provided regularly to the group’s
most senior executive management for the purposes of allocating resources to, and assessing
the performance of, the group’s various lines of business.
Individually material operating segments are not aggregated for the financial reporting
purposes unless the segments have similar economic characteristics and are similar in respect
of the nature of products and services, the nature of production processes, the type or class of
customers, the methods used to distribute the products or provide the services, and the nature
of the regulatory environment. Operating segments which are not individually material may
be aggregated if they share a majority of these criteria.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
49
4 Changes in accounting policies
In the current period, the Company has applied the following new and revised International
Financial Reporting Standards (“IFRSs”) in these financial statements.
(1) IFRSs 8 Operating Segments
IFRS 8 becomes effective for annual periods beginning on or after 1 January 2009. As of 1
January 2009 the Company determines and presents operating segments based on the
information that internally is provided to the chief operating decision maker for the purposes
of allocating resources to the segments and assessing their performance. Comparative
segment information has been re-presented in conformity with the transitional requirement of
IFRSs 8. The change in accounting policy only impacts presentation and disclosure aspects;
there is no impact on earnings per share.
(2) IAS 1 Presentation of Financial Statements
The revised IAS 1 becomes effective for annual periods beginning on or after 1 January
2009. As a result, the Company presents in the consolidated statement of change in equity all
owner changes in equity, whereas all non-owner changes in equity are presented in the
consolidated statement of comprehensive income. This presentation has been applied in
these financial statements as of and for the six months period ended on 30 June 2009.
Comparative information has been re-presented in conformity with the revised standards.
Since the change in accounting policy only impacts presentation and disclosure aspects, there
is no impact on earnings per share.
The Group has not applied any new standard or interpretation that is not yet effective for the
current accounting period (see note 41).
5 Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair
value, for both financial and non-financial assets and liabilities. Fair values have been
determined for measurement and or disclosure purposes based on the following methods.
When applicable, further information about the assumptions made in determining fair values
is disclosed in the notes specific to that asset or liability.
(i) Property, plant and equipment, properties held for development, properties under
development and completed properties for sale
The fair value of property, plant and equipment, properties held for development, properties
under development and completed properties for sale recognised as a result of business
combination is based on market values. The market value of property is the estimated
amount for which a property could be exchanged on the date of valuation between a willing
buyer and a willing seller in an arm’s length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without compulsion. The market value
of items of plant, equipment, fixtures and fittings is based on the quoted market prices for
similar items.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
50
5 Determination of fair values (continued)
(ii) Investment property
The fair value of investment properties, which is determined for disclosure purposes in note
17, is estimated by the directors having regard to recent market transactions of similar
properties in the same location as the Group’s investment properties.
(iii) Investments in debt and equity securities
The fair value of listed available-for-sale financial assets is determined by reference to their
quoted closing bid price at the reporting date without any deduction for transaction
costs. There is no quoted market price in an active market for the unlisted equity and debt
securities and thus their fair value cannot be reliably estimated.
(iv) Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash
flows, discounted at the market rate of interest at the reporting date.
(v) Derivatives
The fair value of financial derivatives, namely non-deliverable forward contracts, is estimated
by discounting the difference between the contractual forward price and the current forward
price for the residual maturity of the contract using a risk-free interest rate.
(vi) Interest bearing financial instruments
The fair value of interest bearing amounts is estimated at the present value of future cash
flows, discounted at current market interest rates for similar financial instruments and it
approximates carrying value as at 30 June 2009 and 31 December 2008.
(vii) Non-derivative financial liabilities
The fair value of non-derivative financial liabilities, which is determined for disclosure
purposes, is calculated based on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date. Given the terms of non-interest
bearing and no fixed repayment terms for certain amounts due from associates and jointly
controlled entities, their fair value cannot be reliably estimated.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
51
6 Acquisitions of subsidiaries
Acquisitions of subsidiaries by the Group during the period ended 30 June 2009:
(a) Pursuant to an equity transfer agreement dated 6 January 2008, the Company acquired
a 90% equity interest in Wu Han Wangjiadun Morden City Real Estate Development
Co., Ltd. "Wangjiadun" with a consideration of RMB 368 Million. The acquisition
was completed on 31 May 2009. Upon acquisition date, the total assets and total
liabilities of Wangjiadun were RMB 780 million and RMB371 million respectively
(note).
Note: In the circumstances, the acquired subsidiaries’ major assets are properties under
development. The directors consider that the purpose of acquiring above subsidiary is
solely to acquire the underlying properties.
(b) Pursuant to an equity transfer agreement dated 1 April 2009, the Company acquired a
100% equity interest in Charm Crystal Limited with a consideration of HKD 1,000.
Upon acquisition date, the total assets and total liabilities of Charm Crystal Limited
were HKD 2,249.29 and HKD 1,674.29 respectively.
The acquisitions had the following effect on the Group’s assets and liabilities on acquisition
date:
Recognised
Carrying Values on
amount Adjustments acquisitions
Cash and cash equivalents 4,464 - 4,464
Properties held for development,
properties under development
and completed properties for sales 570,870,456 209,374,491 780,244,947
Trade and other payables (370,874,634) - (370,874,634)
Minority interests (19,999,978) (20,937,449) (40,937,427)
Net identifiable assets and liabilities 180,000,308 188,437,042 368,437,350
Considerations, satisfied in cash 368,437,350
Cash acquired (4,464)
Considerations prepaid in prior years (368,436,468)
Considerations to be paid subsequent to June 2009 (882)
Net cash outflow (4,464)
All subsidiaries set out above were acquired from third parties.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
52
7 Segment reporting
As of 1 January 2009 the Company determines and presents operating segments based on the information that internally is provided to the chief
operating decision maker for the purposes of allocating resources to the segments and assessing their performance. Comparative segment
information has been re-presented in conformity with the transitional requirement of IFRSs 8.
An analysis of the revenue of the Group within the PRC is set out below:
Real Estate Development
for the six months ended
30 June 2009 Beijing region
(note (1))
Shenzhen
region
(note (2))
Shanghai
region
(note (3))
Others
(note (4))
Property
Management Others Eliminations Total
Revenue from external revenue 3,472,717,731 5,826,722,651 8,218,298,653 2,873,283,969 156,420,228 6,034,699 - 20,553,477,931
Inter-segment revenue - - - - 201,722,477 164,422,262 (366,144,739) -
Reportable segment revenue 3,472,717,731 5,826,722,651 8,218,298,653 2,873,283,969 358,142,705 170,456,961 (366,144,739) 20,553,477,931
Reportable segment profit 642,224,476 897,932,348 2,105,486,037 920,412,138 194,177,870 (290,423,013) (237,341,433) 4,232,468,423
Reportable segment assets 25,024,929,763 41,629,572,480 41,395,545,072 12,552,558,466 693,623,570 60,221,708,752 (55,271,802,704) 126,246,135,399
Reportable segment liabilities 19,525,275,120 34,585,311,107 35,026,443,799 10,254,964,037 512,239,199 33,265,018,017 (48,728,057,575) 84,441,193,704China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
53
7 Segment reporting (continued)
Real Estate Development
for the six months ended
30 June 2008 Beijing region
(note (1))
Shenzhen
region
(note (2))
Shanghai
region
(note (3))
Others
(note (4))
Property
Management Others Eliminations Total
Revenue from external revenue 5,142,549,155 5,421,927,694 4,867,208,235 665,254,391 144,783,022 4,383,613 - 16,246,106,110
Inter-segment revenue - - - - 223,854,594 13,099,440 (236,954,034) -
Reportable segment revenue 5,142,549,155 5,421,927,694 4,867,208,235 665,254,391 368,637,616 17,483,053 (236,954,034) 16,246,106,110
Reportable segment profit 1,510,940,533 1,975,958,260 1,013,916,562 168,844,887 19,934,030 (323,897,439) (217,219,500) 4,148,477,333
Reportable segment assets 19,976,436,069 41,812,562,372 44,581,649,501 10,642,382,482 618,636,453 61,447,496,150 (66,554,857,287) 112,524,305,740
Reportable segment liabilities 14,640,284,883 35,416,636,139 40,625,601,675 8,760,353,561 488,851,517 38,049,855,476 (61,280,280,966) 76,701,302,285
Notes:
(1) Beijing region represents Beijing, Tianjin, Shenyang, Changchun, Dalian, Anshan, and Qingdao.
(2) Shenzhen region represents Shenzhen, Guangzhou, Zhuhai, Zhongshan, Huizhou, Foshan, Dongguan, Hainan, Changsha, Xiamen and Fuzhou.
(3) Shanghai region represents Shanghai, Nanjing, Wuxi, Suzhou, Zhejiang, Ningbo, Zhenjiang, Kunshan, Hefei and Nanchang.
(4) Other represents Chengdu, Xi’an, Chongqing, and Wuhan.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
54
8 Other income
2009
Jan-Jun
2008
Jan-Jun
Forfeited deposits and compensation from
customers 7,465,219 6,641,152
Gain on disposals of subsidiaries 7,176,572 116,218
Gain on disposals of interest in associates 406,596 -
Gain on disposals of other investments 60,000 601,533
Gain on disposals of property, plant and equipment 1,301,084 4,367,678
Government subsidies 7,067,158 19,151,553
Other sundry income 30,084,847 10,807,149
53,561,476 41,685,283
9 Other expenses
2009
Jan-Jun
2008
Jan-Jun
Compensation to customers 11,427,022 12,238,244
Provision for doubtful debts 18,067,010 9,768,106
Donations 24,509,714 25,147,688
Penalties 2,735,546 993,685
Net unrealized loss on financial derivatives 1,849,320 3,016,728
Realised loss on financial derivatives 2,728,093 -
Other sundry expenses 7,087,538 2,110,876
68,404,243 53,275,327
10 Personnel expenses
2009
Jan-Jun
2008
Jan-Jun
Wages, salaries and other staff costs 471,757,082 346,898,085
Contributions to defined contribution plans 44,521,893 48,779,027
Equity-settled share-based compensation - 308,476,380
516,278,975 704,153,492China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
55
11 Net finance costs
2009
Jan-Jun
2008
Jan-Jun
Interest income 122,577,386 122,869,658
Dividend income 12,154,819 -
Net foreign exchange gain - 42,217,537
Finance income 134,732,205 165,087,195
Interest expense and borrowing costs 1,143,840,250 932,074,076
Less：Interest capitalized (798,139,224) (584,031,140)
Foreign exchange loss 1,138,294 -
Finance expenses 346,839,320 348,042,936
Net finance costs (212,107,115) (182,955,741)
Interest expense and other borrowing costs have been capitalised at an average rate of 6.3%
(2008: 7.0%) per annum.
12 Other comprehensive income
Disclosure of tax effects relating to each component of other comprehensive income
Jan. - Jun. 2009
Before-tax
amount
Tax
(expense)
Net-of-tax
amount
Exchange differences on translation
of financial statements of foreign subsidiaries 230,369 - 230,369
Available-for-sale finance assets: 60,388,057 (12,077,611) 48,310,446
Other comprehensive income for the period 60,618,426 (12,077,611) 48,540,815
Jan. - Jun. 2008
Before-tax
amount
Tax
benefit
Net-of-tax
amount
Exchange differences on translation
of financial statements of foreign subsidiaries 130,804,522 - 130,804,522
Available-for-sale finance assets: (78,889,436) 14,102,360 (64,787,076)
Other comprehensive income for the period 51,915,086 14,102,360 66,017,446China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
56
13 Taxation
(a) Taxation in the consolidated income statement represents:
2009
Jan - Jun
2008
Jan - Jun
Current tax
PRC Enterprise Income Tax
Provision for the period 1,162,020,154 1,398,247,132
Land Appreciation Tax 380,647,052 1,030,231,356
1,542,667,206 2,428,478,488
Deferred tax
Fair value adjustments arising from business
combinations
PRC Enterprise Income Tax (73,942,237) (57,197,726)
Land Appreciation Tax (74,258,233) (34,432,225)
Accrual for Land Appreciation Tax (13,876,941) (186,656,472)
Tax losses (93,879,551) (53,859,788)
Provision for diminution in value of
properties 54,960,940 9,609,752
Accruals for construction costs 51,185,710 (73,377,993)
Other temporary differences 4,310,028 (15,478,585)
(145,500,284) (411,393,037)
Total 1,397,166,922 2,017,085,451
The provision for PRC Corporate Income Tax is calculated based on the estimated taxable
income at the rates applicable to each company in the Group. The income tax rates
applicable to the principal subsidiaries in the PRC range between 20% and 25%.
According to the China's Corporate Income Tax ("CIT") Law that was passed by the Standing
Committee of the Tenth National People's Congress ("NPC") on 16 March 2007 and the
Notice of the State Council on the Transitional Preferential Policy regarding implementation
of the CIT Law (Guo Fa [2007] No.39) issued on 26 December 2007, income tax rate is
revised to 25% with effect from 1 January 2008. For certain enterprises that are entitled to
preferential income tax rate of 15% before the implementation of the CIT Law, the income
tax rate applicable will be 18%, 20%, 22%, 24% and 25% in 2008, 2009, 2010, 2011, and
2012 and thereafter respectively.
Land Appreciation Tax is levied on properties developed by the Group for sale, at
progressive rates ranging from 30% to 60% on the appreciation of land value, which under
the applicable regulations is calculated based on the proceeds of sales of properties less
deductible expenditures including lease charges of land use rights, borrowing costs and
relevant property development expenditures.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
57
13 Taxation (continued)
(b) Taxation recognized directly in equity
2009
Jan - Jun
2008
Jan - Jun
Arising from fair value adjustments on
available-for-sale securities (note 23(b))
12,077,611 (14,102,360)
(c) Current taxation in the consolidated balance sheet represents:
30 Jun. 2009 31 Dec. 2008
Corporate Income tax
Brought forward balance 103,616,161 1,359,800,654
Provision for the period 1,162,020,154 2,631,939,752
PRC Corporate Income Tax paid (1,244,787,034) (3,888,124,245)
20,849,281 103,616,161
Land appreciation tax
Brought forward balance 3,440,001,032 2,020,375,156
Provision for the period 380,647,052 2,161,307,854
Land appreciation tax paid (411,508,294) (741,681,978)
3,409,139,790 3,440,001,032
Total 3,429,989,071 3,543,617,193
Land Appreciation Tax provisions have been made pursuant to Guo Shui Fa (2006) No 187
Circular of State Administration of Taxation on Relevant Issues of Settlement and
Management of Land Appreciation Tax for Real Estate Developers. The management
consider the timing of settlement is dependent on the implementation practice of local tax
bureau. As a result of the uncertainty of timing of payment of Land Appreciation Tax, the
provisions have been recorded as current liabilities as at 30 June 2009 and 31 December
2008.
14 Basic earnings per share
The calculation of basic earnings per share is based on the net profit for the period
attributable to equity shareholders of the Company of RMB2,524,392,406
(2008:RMB2,061,055,712) and on the weighted average number of ordinary shares
outstanding during the period of 10,995,210,218 (2008: 10,995,210,218) shares.
15 Dividends
A cash dividend of RMB0.05 per share, resulting in a dividend payment of
RMB549,760,511 in respect of the year ended 31 December 2008 was declared during the
period ended 30 June 2009.
A cash dividend of RMB0.1 per share, resulting in a dividend payment of RMB 687,200,639
in respect of the year ended 31 December 2007 was declared during the period ended 30
June 2008.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
58
16 Property, plant and equipment
Hotel and Furniture,
other buildings Improvements Plant and fixtures and Motor
held for own use to premises machinery equipment vehicles Total
Cost:
At 1 January 2008 571,015,951 52,060,424 25,250,395 146,038,119 96,310,218 890,675,107
Additions:
- via acquisitions of
subsidiaries 2,854,256 - - 3,606,227 1,066,429 7,526,912
- transfer from
completed
properties for sale 483,677,655 - - - - 483,677,655
- others 237,404,662 37,196,242 1,686,605 40,932,376 13,341,598 330,561,483
Disposals (20,683,753) (13,115,878) (710,164) (10,096,065) (20,568,167) (65,174,027)
At 31 December 2008 1,274,268,771 76,140,788 26,226,836 180,480,657 90,150,078 1,647,267,130
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 1 January 2009 1,274,268,771 76,140,788 26,226,836 180,480,657 90,150,078 1,647,267,130
Additions: 2,511,280 1,349,233 125,733 3,867,714 694,538 8,548,498
Disposals (57,770,341) (3,024,299) (7,113,080) (15,458,835) (4,954,991) (88,321,546)
At 30 June 2009 1,219,009,710 74,465,722 19,239,489 168,889,536 85,889,625 1,567,494,082
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
59
16 Property, plant and equipment (continued)
Hotel and Furniture,
other buildings Improvements Plant and fixtures and Motor
held for own use to premises machinery equipment vehicles Total
Accumulated
depreciation and
impairment loss:
At 1 January 2008 123,530,957 33,414,027 8,672,051 79,512,155 63,468,711 308,597,901
Additions:
- via business
combinations 896,542 - - 1,505,882 304,265 2,706,689
Charge for the year 33,241,383 6,048,379 1,260,969 25,235,806 11,135,083 76,921,620
Written back on
disposals (7,039,351) (811,464) (234,146) (6,795,685) (16,679,365) (31,560,011)
At 31 December 2008 150,629,531 38,650,942 9,698,874 99,458,158 58,228,694 356,666,199
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 1 January 2009 150,629,531 38,650,942 9,698,874 99,458,158 58,228,694 356,666,199
Additions: - - - - - -
Charge for the period 20,868,109 4,157,193 688,876 12,605,858 5,005,731 43,325,767
Written back on
disposals (650,679) - (1,806,716) (14,711,970) (3,347,355) (20,516,720)
At 30 June 2009 170,846,961 42,808,135 8,581,034 97,352,046 59,887,070 379,475,246
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net book value:
At 30 June 2009 1,048,162,749 31,657,587 10,658,455 71,537,490 26,002,555 1,188,018,836
At 30 June 2008 1,123,639,240 37,489,846 16,527,962 81,022,499 31,921,384 1,290,600,931China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
60
17 Investment properties
30 Jun. 2009 31 Dec. 2008
Cost:
At 1 January 225,849,490 290,242,224
Addition 120,000 74,164,374
Disposals (31,694,027) (138,557,108)
At balance sheet date 194,275,463 225,849,490
Accumulated depreciation
and impairment loss:
At 1 January 27,454,723 13,151,649
Charge for the period 4,080,510 14,540,704
Provision for impairment loss
Written back on disposals (5,633,839) (237,630)
At balance sheet date 25,901,394 27,454,723
Net book value:
At balance sheet date 168,374,069 198,394,767
Investment properties comprise certain commercial properties that are leased to external
parties. The directors, having regard to recent market transactions of similar properties in the
same location as the Group’s investment properties, consider the estimated fair value of the
investment properties to be RMB 278,163,208 (2008: RMB316,581,608).
The Group leases out investment properties under operating leases. The leases typically run
for an initial period of two to five years. None of the leases includes contingent rentals.
The Group’s total future minimum lease payments under non-cancellable operating leases are
receivable as follows:
30 Jun. 2009 31 Dec. 2008
Within 1 year 11,532,528 10,317,612
After 1 year but within 5 years 42,530,776 32,692,959
A fter 5 years 95,731,467 75,950,458
149,794,771 118,961,029
18 Construction in progress
30 Jun. 2009 31 Dec. 2008
At 1 January 188,587,023 271,270,240
Additions 48,022,965 89,427,277
Transferred out to property, plant and equipment - (109,211,201)
T ransferred out to properties under developm ent - (62,899,293 )
236,609,988 188,587,023
Construction in progress represents self-constructed office premises under construction.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
61
19 Principal subsidiaries
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Anshan Vanke Property
Development Co., Ltd. Anshan USD5,172,700 100.00% - 100.00% Property
development
Anshan Vanke Property
Management Company
Limited
Anshan RMB3,000,000 100.00% - 100.00% Property
management
Beijing Chaoyang Vanke
Property Development
Company Limited
Beijing RMB200,000,000 60.00% 60.00% - Property
development
Beijing Huayuhong
Consultancy Company
Limited
Beijing RMB100,000 100.00% - 100.00% Enterprise
Management
Beijing Vanke Wonderland
Real Estate Development
Company Limited
Beijing RMB10,000,000 100.00% - 100.00% Property
development
Beijing Vanke Enterprises
Shareholding Company
Limited
Beijing RMB1,000,000,000 100.00% 90.00% 10.00% Property
development
Beijing Vanke Haikai Real
Estate Development
Company Limited
Beijing RMB10,000,000 100.00% - 100.00% Property
development
Beijing Vanke Property
Company Limited Beijing USD18,400,000 100.00% - 100.00% Property
development
Beijing Vanke Property
Management Company
Limited
Beijing RMB22,000,000 100.00% - 100.00% Property
management
Beijing Vanke Zhongliang
Jiarifengjing Real Estate
Development Company
Limited (note)
Beijing RMB830,000,000 50.00% - 50.00% Property
development
Beijing Wanxin Investment
Development Company
Limited
Beijing RMB30,000,000 100.00% - 100.00% Investment
Changchun Vanke Real Estate
Company Limited Changchun RMB50,000,000 100.00% 95.00% 5.00% Property
development
Changchun Wanrun Real
Estate Company Limited Changchun RMB10,000,000 100.00% - 100.00% Property
development
Changchun Vanke Property
Management Company
Limited
Changchun RMB3,000,000 100.00% - 100.00% Property
management
Changsha Hongcheng Real
Estate Development
Company Limited
Changsha RMB20,000,000 80.00% - 80.00% Property
development
Changsha Vanke Property
Management Company
Limited
Changsha RMB5,000,000 100.00% - 100.00% Property
management
Changsha Vanke Real Estate
Company Limited Changsha RMB20,000,000 100.00% - 100.00% Property
development
Changsha Nandu Property
Management Company
Limited
Changsha RMB500,000 100.00% - 100.00% Property
management
Changsha Sihai Property
Company Limited Changsha RMB8,000,000 80.00% - 80.00% Property
development
Chengdu Vanke Beifu Property
Company Limited Chengdu RMB10,000,000 100.00% - 100.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
62
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Chengdu Vanke Chenghua
Property Company Limited Chengdu USD75,142,857 100.00% - 100.00% Property
development
Chengdu Vanke Guanghua
Property Company Limited Chengdu USD131,428,571 100.00% - 100.00% Property
development
Chengdu Vanke Guobin
Property Company Limited Chengdu USD140,000,000 60.00% - 60.00% Property
development
Chengdu Vanke Jinjiang
Property Company Limited Chengdu RMB10,000,000 100.00% - 100.00% Property
development
Chengdu Vanke Property
Development Company
Limited
Chengdu USD12,100,000 60.00% - 60.00% Property
development
Chengdu Vanke Property
Management Company
Limited
Chengdu RMB5,000,000 100.00% - 100.00% Property
management
Chengdu Vanke Real Estate
Company Limited Chengdu RMB80,000,000 100.00% 90.00% 10.00% Property
development
Chengdu Vanke Huadong Real
Estate Company Limited Chengdu RMB77,680,000 90.00% - 90.00% Property
development
Chongqing Yu Development
Coral Property Company
Limited
Chongqing RMB100,000,000 51.00% - 51.00% Property
development
Vanke (Chongqing) Real Estate
Company Limited Chongqing RMB80,000,000 100.00% 100.00% - Property
development
Dalian Vanke City Real
Property Company Limited Dalian USD42,000,000 55.00% - 55.00% Property
development
Dalian Vanke Jinxiu Flower
City Development Company
Limited
Dalian RMB70,000,000 100.00% 65.00% 35.00% Property
development
Dalian Vanke Real Estate
Development Company
Limited
Dalian RMB32,000,000 100.00% - 100.00% Property
development
Dalian Vanke Property
Management Company
Limited
Dalian RMB3,860,000 100.00% - 100.00% Property
management
Dalian Vanke Property
Company Limited Dalian RMB30,000,000 100.00% 100.00% 0.00% Property
development
Dongguan Songshanju
Property Company Limited Dongguan RMB10,000,000 100.00% - 100.00% Property
development
Dongguan Sunshine Real
Estate Company Limited Dongguan RMB25,000,000 100.00% - 100.00% Property
development
Dongguan Vanke Construction
Research Company Limited Dongguan RMB20,000,000 100.00% 100.00% - Construction
research
Dongguan Vanke Real Estate
Company Limited Dongguan RMB20,000,000 100.00% - 100.00% Property
development
Dongguan Xinwan Property
Development Company
Limited
Dongguan RMB10,000,000 51.00% - 51.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
63
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Dongguan New Century
Mingshangju Commercial
Real Estate Development
Company Limited
Dongguan RMB1,000,000 51.00% - 51.00% Property
development
Dongguan Songhuju Property
Company Limited Dongguan RMB10,000,000 100.00% - 100.00% Property
development
Dongguan Vanke Property
Management Company
Limited
Dongguan RMB5,000,000 100.00% - 100.00% Property
management
Foshan Vanke Property
Management Company
Limited
Foshan RMB3,000,000 100.00% - 100.00% Property
management
Foshan Shunde District Vanke
Property Company Limited Foshan RMB10,000,000 100.00% - 100.00% Property
development
Foshan Vanke Investment
Company Limited Foshan RMB10,000,000 100.00% - 100.00% Property
development
Foshan Vanke Property
Company Limited Foshan RMB20,000,000 100.00% 20.00% 80.00% Property
development
Foshan Vanke Real Estate
Company Limited Foshan RMB80,000,000 100.00% - 100.00% Property
development
Foshan Nanhai District
Jinyuhuating Propoerty
Company Limited
Foshan USD44,000,000 55.00% - 55.00% Property
development
Vanke Property (Hong Kong)
Company Limited Hong Kong USD9,500,000 100.00% - 100.00% Investment
Fuzhou Vanke Real Estate
Company Limited Fuzhou RMB20,000,000 100.00% 40.00% 60.00% Property
development
Fuyang Quanshuiwan Property
Company Limited Hangzhou USD49,000,000 100.00% - 100.00% Property
development
Fuyang Vanke Real Estate
Development Company
Limited
Hangzhou RMB300,000,000 100.00% - 100.00% Property
development
Guangzhou Fusheng
Decoration Engineering
Company Limited
Guangzhou RMB10,000,000 100.00% - 100.00% Decoration and
Design
Guangzhou Pengwan Property
Company Limited (note) Guangzhou RMB200,000,000 50.00% - 50.00% Property
development
Guangzhou Vanke Property
Company Limited Guangzhou RMB30,000,000 100.00% - 100.00% Property
development
Guangzhou Vanke Property
Management Company
Limited
Guangzhou RMB5,000,000 100.00% - 100.00% Property
management
Guangzhou Vanke Real Estate
Company Limited Guangzhou RMB50,000,000 100.00% - 100.00% Property
development
Guangzhou Vanke Star
Property Company Limited
(note)
Guangzhou USD18,600,000 50.00% - 50.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
64
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Guangzhou Vanke Suidong
Real Estate Company
Limited
Guangzhou RMB10,000,000 100.00% - 100.00% Property
development
Guangzhou Wanxin Property
Company Limited Guangzhou HKD760,000,000 100.00% - 100.00% Property
development
Top Glory International
Property (Guangzhou)
Company Limited
Guangzhou HKD85,550,000 100.00% - 100.00% Property
development
Hainan Fuchun Dongfang Real
Estate Development
Company Limited
Hainan RMB20,000,000 100.00% - 100.00% Property
development
Hangzhou Vanke Property
Management Company
Limited
Hangzhou RMB2,000,000 100.00% - 100.00% Property
management
Hangzhou Bailuwan Holiday
Hotel Company Limited Hangzhou RMB10,000,000 100.00% - 100.00% Hotel
Investment
Hangzhou Vanke Property
Company Limited Hangzhou RMB320,000,000 100.00% - 100.00% Property
development
Hangzhou Vanke Rongda Real
Estate Company Limited Hangzhou RMB30,000,000 55.00% - 55.00% Property
development
Hangzhou Yuhang Xindu Real
Estate Development
Company Limited
Hangzhou RMB20,000,000 100.00% - 100.00% Property
development
Hangzhou Qianjiangwan
Gargen Company Limited Hangzhou RMB30,000,000 90.00% - 90.00% Property
development
Zhejiang Vanke Nandu Real
Estate Company Limited Hangzhou RMB150,000,000 100.00% - 100.00% Property
development
Hangzhou Changyuan Tourist
Development Company
Limited
Hangzhou RMB90,000,000 100.00% - 100.00% Tourism
Hangzhou Liangzhu Culture
Town Development
Company Limited
Hangzhou RMB30,000,000 100.00% - 100.00% Property
development
Hangzhou Linlu Real Estate
Development Company
Limited
Hangzhou RMB170,000,000 100.00% - 100.00% Property
development
Hangzhou Nandu Yousheng
Real Estate Development
Company Limited
Hangzhou RMB10,000,000 60.00% - 60.00% Property
development
Hangzhou Wankun Property
Development Company
Limited
Hangzhou RMB350,000,000 51.00% - 51.00% Property
development
Hangzhou Yindu Property
Company Limited Hangzhou RMB20,000,000 100.00% - 100.00% Property
development
Hefei Vanke Property Company
Limited Hefei RMB20,000,000 100.00% 100.00% - Property
development
Tander China Investment
Company Limited Hong Kong HKD10,000 100.00% - 100.00% Investment
Euston Capital Limited Hong Kong HKD1,000 100.00% - 100.00% Investment
Ample Gain Capital Ltd Hong Kong HKD1,000 100.00% - 100.00% Investment
Vanke Real Estate (Hong
Kong) Company Limited Hong Kong HKD15,600,000 100.00% - 100.00% InvestmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
65
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Huizhou Liwan Real Estate
Company Limited Huizhou RMB10,000,000 67.00% - 67.00% Property
development
Huizhou Vanke Property
Company Limited Huizhou RMB10,000,000 100.00% - 100.00% Property
development
Huizhou Vanke Real Estate
Company Limited Huizhou RMB10,000,000 100.00% - 100.00% Property
development
Jiangxi Vanke Yida Property
Management Company
Limited
Nanchang RMB1,000,000 90.00% - 90.00% Property
management
Jiangxi Vanke Qingshanhu
Real Estate Development
Company Limited (note)
Nanchang RMB100,000,000 50.00% 50.00% - Property
development
Jiangxi Vanke Yida Property
Development Company
Limited (note)
Nanchang RMB20,000,000 50.00% 50.00% - Property
development
Kunshan Jiahua Investment
Company Limited Kunshan RMB50,000,000 100.00% - 100.00% Property
development
Nanjing Vanke Property
Management Company
Limited
Nanjing RMB4,500,000 100.00% - 100.00% Property
management
Nanjing Hengyue Property
Company Limited Nanjing RMB10,000,000 100.00% - 100.00% Property
development
Nanjing Hengbang Real Estate
Development Company
Limited
Nanjing USD2,000,000 90.00% - 90.00% Property
development
Nanjing Jinyu Blue Property
Company Limited Nanjing RMB90,000,000 100.00% - 100.00% Property
development
Nanjing Vanke Property
Company Limited Nanjing RMB150,000,000 100.00% - 100.00% Property
development
Nanjing Yunjie Real Estate
Development Company
Limited
Nanjing RMB10,000,000 100.00% - 100.00% Property
development
Nanjing Fuchun East Real
Estate Development
Company Limited
Nanjing USD2,000,000 90.00% - 90.00% Property
development
Ningbo Jinsheng Property
Company Limited Ningbo RMB20,000,000 75.00% - 75.00% Property
development
Ningbo Vanke Property
Management Company
Limited
Ningbo RMB3,000,000 100.00% - 100.00% Property
management
Ningbo Vanke Real Estate
Company Limited Ningbo RMB150,000,000 100.00% - 100.00% Property
development
Qingdao Da Shan Real Estate
Development Company
Limited
Qingdao RMB100,000,000 60.00% - 60.00% Property
development
Qingdao Haoren Property
Company Limited Qingdao USD18,680,000 55.00% - 55.00% Property
development
Qingdao Vanke Real Estate
Company Limited Qingdao RMB20,000,000 100.00% 100.00% - Property
development
Qingdao Vanke Yinshengtai
Real Estate Development
Co., Ltd
Qingdao RMB100,000,000 80.00% 80.00% - Property
development
Qingdao Vanke Qiye Company
Limited Qingdao RMB50,000,000 100.00% - 100.00% Property
development
Shanghai Blue Mountain
Property Company Limited Shanghai RMB10,000,000 100.00% - 100.00% Property
development
Shanghai Boxuan Decoration
Engineering Company
Limited
Shanghai RMB5,000,000 100.00% - 100.00% Decoration and
DesignChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
66
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Shanghai Hongjun Property
Management Company
Limited
Shanghai RMB5,000,000 100.00% - 100.00% Property
Management
Shanghai Jiaminglvhua
Decoration Engineering
Company Limited.
Shanghai RMB2,000,000 100.00% - 100.00% Decoration and
Design
Shanghai Jinchuan Property
Development Company
Limited
Shanghai RMB100,000,000 100.00% - 100.00% Property
development
Shanghai Jinhua Property
Development Company
Limited
Shanghai RMB100,000,000 100.00% - 100.00% Property
development
Shanghai Junke Investment
Management Company
Limited
Shanghai RMB350,000,000 100.00% - 100.00% Investment
Shanghai Liantu Investment
Management and
Consultancy Company
Limited
Shanghai RMB1,000,000 100.00% - 100.00%
Investment
trading and
Consultancy
services
Shanghai Luolian Property
Company Limited. Shanghai RMB470,000,000 100.00% - 100.00% Property
development
Shanghai Meilanhuafu
Property Company Limited Shanghai RMB700,000,000 100.00% - 100.00% Property
development
Shanghai Vanke Investment
Management Company
Limited
Shanghai RMB204,090,000 100.00% 100.00% - Property
development
Shanghai Tianyi Property
Development Company
Limited
Shanghai RMB50,000,000 90.00% - 90.00% Property
development
Shanghai Vanke Baobei
Property Company Limited Shanghai RMB10,000,000 100.00% - 100.00% Property
development
Shanghai Vanke Baonan
Property Company Limited Shanghai RMB10,000,000 100.00% - 100.00% Property
development
Shanghai Vanke Baoshan
Property Company Limited Shanghai RMB50,000,000 100.00% - 100.00% Property
development
Shanghai Hengda Property
Shareholding Company
Limited
Shanghai RMB141,348,200 99.80% - 99.80% Property
development
Shanghai Vanke Property
Management Company
Limited
Shanghai RMB10,000,000 100.00% - 100.00% Property
management
Shanghai Vanke Pudong
Property Company Limited Shanghai RMB160,000,000 100.00% - 100.00% Property
development
Shanghai Vanke Real Estate
Company Limited Shanghai RMB800,000,000 100.00% - 100.00% Property
development
Shanghai Vanke Xiangnan
Property Company Limited Shanghai RMB10,000,000 100.00% - 100.00% Property
development
Shanghai Vanke Zhongshi
Property Company Limited
(note)
Shanghai RMB20,000,000 50.00% - 50.00% Property
development
Shanghai Xiangda Real Estate
Development Company
Limited
Shanghai RMB1,783,000,000 75.00% - 75.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
67
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and
operation
Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Shanghai Zhonglin Property
Development Company
Limited
Shanghai RMB20,000,000 100.00% - 100.00% Property
development
Shanghai Vanke Changning
Property Company Limited Shanghai RMB30,000,000 100.00% - 100.00% Property
development
Shanghai Caohua Investment
Company Limited Shanghai RMB78,000,000 100.00% - 100.00% Property
development
Shanghai Landa Property
Company Limited Shanghai RMB10,000,000 100.00% - 100.00% Property
development
Shanghai Dijie Property
Company Limited (note) Shanghai RMB20,000,000 50.00% - 50.00% Property
development
Shanghai Jingyuan Property
Company Limited Shanghai RMB31,180,000 55.00% - 55.00%
Property
development
and
management
Shanxi Hualian Property
Development Company
Limited
Xi'an RMB367,850,000 51.00% - 51.00% Property
development
Shenyang East Property
Development Company
Limited
Shenyang RMB10,000,000 80.00% - 80.00% Property
development
Shenyang Vanke Jinyuxijun
Property Development
Company Limited
Shenyang RMB10,000,000 100.00% - 100.00% Property
development
Shenyang Vanke Property
Development Company
Limited
Shenyang RMB10,000,000 75.00% - 75.00% Property
development
Shenyang Vanke Hunnan Real
Estate Company Limited Shenyang RMB10,000,000 100.00% - 100.00% Property
development
Shenyang Vanke Property
Management Company
Limited
Shenyang RMB10,000,000 100.00% - 100.00% Property
management
Shenyang Vanke Real Estate
Development Company
Limited
Shenyang RMB100,000,000 100.00% 95.00% 5.00% Property
development
Shenyang Vanke Wonderland
Company Limited Shenyang RMB10,000,000 100.00% - 100.00% Property
development
Shenyang Vanke Xinshu
Property Company Limited Shenyang USD15,800,000 100.00% - 100.00% Property
development
Shenyang Vanke Jinyu Blue
Bay Property Development
Company Limited
Shenyang RMB578,150,000 100.00% - 100.00% Property
development
Shenyang Vanke Hunnan Jinyu
Property Development
Company Limited
Shenyang RMB1,022,520,258 100.00% - 100.00% Property
development
Shenyang Zhengdayongfeng
Real Estate Development
Company Limited
Shenyang RMB8,000,000 100.00% - 100.00% Property
development
Guangdong Shangcheng
Construction Company
Limited Shenzhen RMB20,000,000 100.00% - 100.00%
Decoration and
design,
engineering,
Property
development
Shenzhen Vanke Daolin
Investment Development
Company Limited
Shenzhen RMB20,000,000 100.00% - 100.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
68
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Shenzhen East Xinyue Property
Company Limited Shenzhen RMB10,000,000 100.00% - 100.00% Property
development
Shenzhen East Zunyu Real
Estate Company Limited Shenzhen RMB10,000,000 100.00% - 100.00% Property
development
Shenzhen Fuchun East (Group)
Company Limited Shenzhen RMB14,600,000 90.00% - 90.00% Property
development
Shenzhen Fuchun East Real
Estate Company Limited Shenzhen RMB158,000,000 100.00% - 100.00% Property
development
Shenzhen Vanke Hengda
Property Company Limited Shenzhen RMB96,375,000 100.00% - 100.00% Property
development
Shenzhen Longcheer Yacht
Club Company Limited Shenzhen RMB57,100,000 100.00% - 100.00% Club Service
Shenzhen Vanke City Real
Estate Development
Company Limited
Shenzhen USD12,100,000 100.00% - 100.00% Property
development
Shenzhen Vanke City Scenery
Property Company Limited Shenzhen RMB120,000,000 100.00% - 100.00% Property
development
Shenzhen Vanke East Coast
Property Development
Company Limited
Shenzhen RMB10,000,000 100.00% - 100.00% Property
development
Shenzhen Vanke Real Estate
Company Limited Shenzhen RMB600,000,000 100.00% 95.00% 5.00% Property
development
Shenzhen Vanke East Coast
Real Estate Development
Company Limited
Shenzhen RMB10,000,000 100.00% - 100.00% Property
development
Shenzhen Vanke Financial
Consultancy Company
Limited
Shenzhen RMB15,000,000 100.00% 95.00% 5.00%
Investment
trading and
consultancy
services
Shenzhen Vanke Hengfeng Real
Estate Company Limited Shenzhen RMB51,871,586 55.00% - 55.00% Property
development
Shenzhen Vanke Huayu Garden
Real Estate Development
Company Limited
Shenzhen RMB95,909,045 60.00% - 60.00% Property
development
Shenzhen Vanke Jiuzhou
Property Company Limited Shenzhen RMB10,000,000 90.00% - 90.00% Property
development
Shenzhen Vanke Nancheng
Real Estate Company
Limited
Shenzhen RMB10,000,000 90.00% - 90.00% Property
development
Shenzhen Vanke Fifth Garden
Company Limited Shenzhen RMB200,000,000 100.00% - 100.00% Property
development
Zhejiang Nandu Property
Group Company Limited Hangzhou RMB300,000,000 100.00% - 100.00% Property
development
Shenzhen Vanke Property
Company Limited Shenzhen RMB80,000,000 100.00% - 100.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
69
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Shenzhen Vanke Property
Management Company
Limited
Shenzhen RMB10,000,000 100.00% 95.00% 5.00% Property
management
Shenzhen Vanke Xingye
Property Company Limited Shenzhen RMB62,413,230 95.00% - 95.00% Property
development
Shenzhen Vanke Xizhigu Real
Estate Company Limited Shenzhen RMB10,000,000 60.00% - 60.00% Property
development
Shenzhen Wanzhuang
Investment Development
Company Limited
Shenzhen RMB10,000,000 100.00% - 100.00% Decoration and
design
Shenzhen Yili Real Estate
Development Company
Limited
Shenzhen RMB39,000,000 100.00% - 100.00% Property
development
Wanxuan Property (Shenzhen)
Company Limited Shenzhen USD10,000,000 100.00% - 100.00% Property
development
Suzhou Huihua Investment and
Property Company Limited Suzhou RMB355,000,000 51.00% - 51.00% Property
development
Suzhou Nandu Jianwu
Company Limited Suzhou RMB300,000,000 70.00% 70.00% - Property
development
Suzhou Vanke Property
Company Limited Suzhou USD42,500,000 55.00% - 55.00% Property
development
Jiangsu Sunan Vanke Real
Estate Company Limited Suzhou RMB30,000,000 100.00% - 100.00% Property
development
Suzhou Vanke Zhongliang
Property Company Limited Suzhou RMB230,000,000 51.00% - 51.00% Property
development
Tianjin Binhai Fashion
Property Company Limited Tianjin RMB160,000,000 100.00% - 100.00% Property
development
Tianjin Shangmei Landscape
and Decoration
Engineering Company
Limited.
Tianjin RMB5,000,000 100.00% - 100.00% Engineering and
Design
Tianjin Vanke Property
Management Company
Limited
Tianjin RMB10,000,000 100.00% - 100.00% Property
management
Tianjin Vanke Real Estate
Company Limited Tianjin RMB390,000,000 100.00% - 100.00% Property
development
Tianjin Vanke Xingye
Development Company
Limited
Tianjin RMB60,000,000 100.00% 15.00% 85.00% Property
development
Tianjin Vanke Xinhu Property
Company Limited Tianjin RMB17,000,000 100.00% 75.00% 25.00% Property
development
Tianjin Vanke Xinlicheng
Company Limited Tianjin RMB230,000,000 55.00% - 55.00% Property
development
Tianjin Vanke Xinrui Real
Estate Company Limited Tianjin RMB120,000,000 100.00% - 100.00% Property
development
Tianjin Wanbin Real Estate
Development Company
Limited
Tianjin RMB140,000,000 100.00% - 100.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
70
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Tianjin Wanfu Investment
Company Limited Tianjin RMB10,000,000 100.00% - 100.00% Investment
Tianjin Wanju Decoration
Engineering Company
Limited
Tianjin RMB2,000,000 100.00% - 100.00%
Decoration,
engineering and
design
Tianjin Wansheng Investment
Company Limited Tianjin RMB80,000,000 100.00% - 100.00% Investment
Tianjin Wantai Fashion
Property Company Limited Tianjin RMB200,000,000 96.00% - 96.00% Property
development
Tianjin Wanzhu Investment
Company Limited Tianjin RMB20,000,000 100.00% - 100.00% Investment
Tianjin Xinfeng Time
Investment Company
Limited
Tianjin RMB10,000,000 80.00% - 80.00% Investment
Tianjin Xinghai Real Estate
Development Company
Limited
Tianjin RMB15,000,000 55.00% - 55.00% Property
development
Tianjin Zhongtian Wanfang
Investment Company
Limited
Tianjin RMB20,000,000 100.00% - 100.00% Investment
Wuhan Guohao Property
Company Limited Wuhan RMB10,000,000 55.00% - 55.00% Property
development
Wuhan Vanke Property
Management Company
Limited
Wuhan RMB12,000,000 100.00% - 100.00% Property
management
Wuhan Vanke Real Estate
Company Limited Wuhan RMB150,000,000 100.00% 95.00% 5.00% Property
development
Wuhan Vanke Tiancheng Real
Estate Co., Ltd Wuhan USD12,100,000 55.00% - 55.00% Property
development
Wuhan Vanke Tianrun Real
Estate Company Limited Wuhan USD57,600,000 100.00% - 100.00% Property
development
Wuhan Wangjiadun Morden
City Property Company
Limited
Wuhan RMB200,000,000 90.00% - 90.00% Property
development
Wuhan Wanwei Consultancy
Company Limited Wuhan RMB10,000,000 55.00% - 55.00%
Enterprise
management
and consultancy
Wuxi Dingan Real Estate
Company Limited Wuxi RMB10,000,000 100.00% - 100.00% Property
development
Wuxi Dongcheng Real Estate
Company Limited Wuxi USD99,600,000 55.00% - 55.00% Property
development
Wuxi Vanke Property
management Company
Limited
Wuxi RMB3,000,000 100.00% - 100.00% Property
management
Wuxi Vanke Real Estate
Company Limited Wuxi RMB300,000,000 60.00% 60.00% - Property
development
Wuxi Wansheng Real Estate
Development Company
Limited
Wuxi USD49,200,000 55.00% - 55.00% Property
development
Wuxi Xinwan Real Estate
Company Limited Wuxi RMB126,000,000 70.00% - 70.00% Property
development
Xiamen Vanke Real Estate
Company Limited Xiamen RMB50,000,000 100.00% - 100.00% Property
development
Xiamen Hengbang Real Estate
Development Company
Limited
Xiamen RMB50,000,000 100.00% - 100.00% Property
developmentChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
71
19 Principal subsidiaries (continued)
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Xiamen Fuchun East Real
Estate Development
Company Limited
Xiamen RMB10,000,000 100.00% - 100.00% Property
development
Xiamen Vanke Star Property
Company Limited Xiamen USD2,333,000 55.00% - 55.00% Property
development
Xiamen Vanke Property
Management Company
Limited
Xiamen RMB3,000,000 100.00% - 100.00% Property
management
Xi'an Vanke Cheng'nan
Property Company Limited Xi'an RMB10,000,000 100.00% - 100.00% Property
development
Xi'an Vanke Real Estate
Company Limited Xi'an RMB20,000,000 100.00% - 100.00% Property
development
Xian Vanke Property
Management Company
Limited
Xi'an RMB500,000 100.00% - 100.00% Property
management
Zhenjiang Rundu Property
Company Limited Zhenjiang RMB10,000,000 100.00% - 100.00% Property
development
Zhenjiang Runnan Property
Company Limited Zhenjiang RMB50,000,000 100.00% - 100.00% Property
development
Zhenjiang Runqiao Property
Company Limited Zhenjiang RMB10,000,000 100.00% - 100.00% Property
development
Zhenjiang Runzhong Property
Company Limited Zhenjiang RMB10,000,000 100.00% - 100.00% Property
development
Zhongshan Vanke Real Estate
Company Limited Zhongshan USD12,000,000 100.00% - 100.00% Property
development
Zhuhai Vanke Property
Management Company
Limited
Zhuhai RMB3,000,000 100.00% - 100.00% Property
management
Zhuhai Vanke Real Estate
Company Limited Zhuhai RMB10,000,000 100.00% - 100.00% Property
development
Zhuhai Zhubin Property
Development Company
Limited
Zhuhai RMB109,000,000 100.00% - 100.00% Property
development
Zhuhai Wanmao Real Estate
Development Company
Limited
Zhuhai USD33,400,000 55.00% - 55.00% Property
development
Note: The directors consider these entities as subsidiaries of the Group as the Group has the
power to govern the financial and operating policies of these entities.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
72
20 Interest in associates
Details of the Group’s principal associates at 30 June 2009 are as follows:
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital
held by
the
Group
held by
the
Company
held by a
subsidiary
Principal
activities
Beijing Jinyu Vanke Property
Development Company Limited Beijing RMB100,000,000 49.00% - 49.00%
Property
development
Beijing Vanke Consultancy
Company Limited Beijing RMB100,000 20.00% - 20.00%
Corporation
consultation
Shanghai Zhongfang Binjiang Real
Estate Company Limited Shanghai RMB200,000,000 25.00% - 25.00%
Property
development
Wuhan Golf City Gardern Real
Estate Company Limited (note) Wuhan RMB219,000,000 15.00% - 15.00%
Property
development
Shanghai Nandu White Horse Real
Estate Company Limited (note) Shanghai RMB27,000,000 15.00% - 15.00%
Property
development
Chengdu Yihang Vanke Binjiang
Real Estate Company Limited
(note) Chengdu RMB140,000,000 15.00% - 15.00%
Property
development
Hefei Yihang Vanke Real Estate
Company Limited Hefei RMB101,500,000 29.60%
- 50.00%
Property
development
Suzhou Zhonghang Vanke
Changfeng Real Estate Company
Limited Suzhou RMB200,000,000 21.60% - 21.60%
Property
development
Beihai Wanda Real Estate Company
Limited Beihai RMB20,000,000 40.00% - 40.00%
Property
development
Hangzhou Star Real Estate
Company Limited Hangzhou RMB50,000,000 20.00% - 20.00%
Property
development
Changsha Oriental City Real Estate
Company Limited Changsha RMB20,000,000 20.00% - 20.00%
Property
development
Dongguan Vanke Real Estate
Company Limited Dongguan RMB83,000,000 20.00% - 20.00%
Property
development
Shanghai Wansheng Real Estate
Company Limited Shanghai RMB5,737,400 50.00% - 50.00%
Property
management
Shanghai Zunyi Property
Management Company Limited Shanghai RMB3,000,000 30.00% - 30.00%
Property
management
Note: Except for the 15% equity interest held directly, the Group also hold 34% effective equity
interest in these associates through a jointly controlled entity.
Summ ary financi al information on associates:
Equity
attributable
Assets Liabilities to parent Revenue Profit
2009
100 per cent 7,188,930,749 4,907,973,361 2,280,957,388 3,751,460,389 739,586,034
Group’s effective interest 2,940,650,880 2,373,862,594 566,788,286 902,227,489 163,366,356
2008
100 per cent 7,312,096,864 5,435,615,027 1,876,481,837 2,283,305,003 601,706,907
Group’s effective interest 2,963,597,886 2,455,422,698 508,175,188 818,977,888 219,115,497China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
73
21 Interest in jointly controlled entities
Details of the Group’s principal jointly controlled entities at 30 June 2009 are as follows:
Percentage of interest
Name of company
Place of
establishment
and operation Paid in capital
held by the
Group
held by the
Company
held by a
subsidiary
Principal
activities
Shenyang Yong Da Property Company
Limited Shenyang RMB93,431,369 49.00% - 49.00%
Property
development
Hangzhou Nandu Songcheng Property
Company Limited Hangzhou RMB130,000,000 50.00% - 50.00%
Property
development
Shanghai Jialai Real Estate
Development Company Limited Shanghai RMB180,000,000 49.00% - 49.00%
Property
development
Zhonghang Vanke Company Limited Beijing RMB1,000,000,000 40.00% 40.00% -
Property
development
Shenyang Vanke Shengbao Consultancy
Company Limited Shenyang RMB1,048,763 20.00% - 20.00%
Corporation
consultation
Dongguan Xintong Industry Company
Limited Dongguan RMB10,000,000 38.61% - 38.61%
Property
development
Dongguan Vanke Property Company
limited Dongguan RMB83,000,000, 50.00% - 50.00%
Property
development
Dalian Vanke Charming City Property
Development Company Limited Dalian RMB 340,000,000 5.00% - 50.00%
Property
development
Wuhan Vanke Qinganju Property
Development Limited Wuhan RMB100,000,000 100.00% - 100.00%
Property
development
Summary financial information on jointly controlled entities – Group’s effective interest
30 Jun. 2009 31 Dec.2008
Non-current assets 400,797,536 374,540,476
Current assets 4,074,606,372 3,360,015,120
Non-current liabilities (82,208,834) (19,600,000)
Current liabilities (2,522,715,957) (1,826,146,436)
Net assets 1,870,479,117 1,888,809,160
Income 138,779,472 466,170,606
Expenses (157,109,514) (475,550,240)
Loss for the period (18,330,042) (9,379,634)China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
74
22 Other financial assets
30 Jun. 2009 31 Dec. 2008
Available-for-sale securities in the PRC
Equity securities
- Unlisted 89,153,616 88,740,921
- Listed in the PRC 144,947,870 84,559,813
Debt securities
- Unlisted - 82,858,082
234,101,486 256,158,816
23 Deferred tax assets / liabilities
(a) Deferred tax assets
Deferred tax assets are attributable to the items detailed as follows:
30 Jun. 2009 31 Dec. 2008
Tax losses 235,805,007 141,925,456
Impairment loss of trade and other receivables 12,246,258 8,323,552
Provision for diminution in value of properties 242,285,075 309,492,273
Accruals for construction costs 123,974,291 175,160,001
Accrual for Land Appreciation Tax 798,695,551 784,818,610
Other temporary differences 33,774,265 29,760,741
1,446,780,447 1,449,480,633
Movements in deferred tax assets:
30 Jun. 2009 31 Dec. 2008
At 1 January 1,449,480,633 604,057,419
Transferred to consolidated income statement (2,700,186) 845,423,214
At balance sheet date 1,446,780,447 1,449,480,633China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
75
23 Deferred tax assets / liabilities (continued)
(a) Deferred tax assets (continued)
Deferred tax assets have not been recognised in respect of the following items:
30 Jun. 2009 31 Dec. 2008
Tax losses 1,056,207,050 917,582,959
Other temporary differences 143,940,298 148,199,000
1,200,147,348 1,065,781,959
The tax losses expire between 2010 and 2014. The deductible temporary differences will not
expire under current the tax legislation. The above deferred tax assets have not been
recognised because it is not probable that future taxable profit will be available against which
the Group can utilise the benefits therefore.
(b) Deferred tax liabilities
Deferred tax liabilities are attributable to the items detailed as follows:
30 Jun. 2009 31 Dec. 2008
Fair value adjustments on
available-for-sale securities 22,623,382 10,545,770
Fair value adjustments arising from
business combinations 1,221,741,387 1,369,941,857
1,244,364,769 1,380,487,627
Movements in deferred tax liabilities:
30 Jun. 2009 31 Dec. 2008
At 1 January 1,380,487,627 1,567,060,453
Recognized in equity (note 13(b)) 12,077,611 (19,106,620)
Arising from business combinations - -
Transfer out upon disposals of subsidiaries - -
Transferred to consolidated income statement (148,200,469) (167,466,206)
At balance sheet date 1,244,364,769 1,380,487,627China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
76
24 Inventories
30 Jun. 2009 31 Dec. 2008
Raw materials 34,285,742 43,917,023
Finished goods - 4,194,333
34,285,742 48,111,356
Inventories recognized as cost of sales for the period 3,662,253 16,309,805
25 Properties held for development, properties under development and completed
properties for sale
(a) The analysis of carrying value of land held for property development for sale is as follows:
30 Jun. 2009 31 Dec. 2008
With lease term of 50 years or more 51,667,099,477 54,737,002,663
With lease term of less than 50 years 3,416,047,097 3,906,402,115
55,083,146,574 58,643,404,778
(b) The analysis of the amount of completed properties for sale recognized as an expense is as
follows:
30 Jun. 2009 30 Jun. 2008
Carrying amount of properties sold 14,924,704,108 10,043,199,951
Write down of properties - -
Reversal of write-down of properties (240,713,169) -
14,683,990,939 10,043,199,951
The reversal of write-down of properties made in prior years arose due to an increase in the
estimated net realisable value of certain completed properties as a result of recovery in
certain regional property markets.
(c) Included in properties held for development, property under development and completed
properties for sale an amount of RMB33,331 million (2008: RMB34,131 million) is not
expected to be recovered within one year.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
77
26 Trade and other receivables
30 Jun. 2009 31 Dec.2008
Debtors and other receivables 3,594,127,539 2,943,528,935
Less: allowance for doubtful debts (154,037,936) (141,023,757)
3,440,089,603 2,802,505,178
Amount due from associates and jointly controlled
entities 1,465,850,067 1,617,804,867
Less: allowance for doubtful debts (1,438,296) (1,438,296)
1,464,411,771 1,616,366,571
Prepaid taxes 1,287,775,238 837,140,813
Deposits and prepayments 2,858,052,281 3,160,518,999
9,050,328,893 8,416,531,561
Note: Deposits and prepayments represent deposits paid for purchasing properties held for
development and prepayments to contractors for constructions.
The Group’s credit policy is set out in note 39(b).
All of the trade and other receivables, apart from deposits of RMB807 million (2008:
RMB658 million) are expected to be recovered within one year.
Apart from the amounts due from associates of RMB273million (2008: RMB314 million)
which are interest bearing at market interest rate, amounts due from associates and jointly
controlled entities are interest free, unsecured and have no fixed terms of repayment. The
interest income received from associates during the period amounted to RMB6 million (2008
Jan - Jun: RMB16 million).
Deposits and prepayments mainly represented tendering deposits for acquisitions of land and
prepayment for land and development costs of projects undertaken by the Group.
Impairment of trade debtors and other receivables
Impairment losses in respect of trade debtors and other receivables are recorded using an
allowance account unless the Group is satisfied that recovery of the amount is remote, in
which case the impairment loss is written off against trade debtors and bills receivable
directly.
The movements in the allowance for specific doubtful debts during the period are as follows:
30 Jun. 2009 31 Dec.2008
At 1 January 142,462,053 105,704,325
Impaired loss recognised 18,067,010 37,552,195
Uncollectible amounts written off (5,052,831) (794,467)
At balance sheet date 155,476,232 142,462,053China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
78
26 Trade and other receivables (continued)
Impairment of trade debtors and other receivables (continued)
At 30 June 2009, the Group’s trade debtors and other receivables of RMB155 million, (2008:
RMB142 million) were individually determined to be impaired. The individually impaired
receivables related to customers that were in financial difficulties and management assessed
that only a portion of the receivables is expected to be recovered. Consequently, specific
allowances for doubtful debts of RMB155 million (2008: RMB142 million) were recognised.
The Group does not hold any collateral over these balances.
27 Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balance with banks. The balance
includes deposits with banks of RMB15 million (2008: RMB8 million) with restriction for
designated purposes.
28 Share capital
30 Jun. 2009 31 Dec. 2008
Number of Nominal Number of Nominal
shares value shares value
Registered, issued and fully paid:
A shares of RMB1 each 9,680,254,750 9,680,254,750 9,680,254,750 9,680,254,750
B share s of RMB1 each 1,314,955,468 1,314,955,468 1,314,955,468 1,314,955,468
10,995,210,218 10,995,210,218 10,995,210,218 10,995,210,218
The holders of A and B share are entitled to receive dividends as declared from time to time
and are entitled to one vote per share at general meetings of the Company.
A summary of the movements in the Company’s share capital during the period is as follows:
Issued share capital
A shares B shares Total
At 1 January 2008 6,050,159,219 821,847,168 6,872,006,387
Capitalisation of share
pre mium (note) 3,630,095,531 493,108,300 4,123,203,831
At 31 December 2008 9,680,254,750 1,314,955,468 10,995,210,218
At 1 January 2009 and
30 Jun e 2009 9,680,254,750 1,314,955,468 10,995,210,218China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
79
29 Reserves
The amount of the Group’s reserves and the movements therein for the current and prior
years are represented in the consolidated statement of changes in equity on page 6 to 7 of the
financial statements.
Notes:
(a) Share premium
During the period ended 30 June 2009, the Company issued nil shares (2008: 4,123,203,831
shares) with a par value of RMB1 each to all shareholders (2008: in the ratio of 6 shares for
every 10 shares held) upon capitalisation of share premium.
(b) Statutory reserves
Statutory reserves include the following items:
(i) Statutory surplus reserve
According to the PRC Company Law, the Company is required to transfer 10% of its
profit after taxation, as determined under PRC Accounting Regulations, to statutory
surplus reserve until the reserve balance reaches 50% of the registered capital. The
transfer to this reserve must be made before distribution of a dividend to shareholders.
Statutory surplus reserve can be used to make good previous years’ losses, if any, and
may be converted into share capital by the issue of new shares to equity shareholders
in proportion to their existing shareholdings or by increasing the par value of the
shares currently held by them, provided that the balance after such issue is not less
than 25% of the registered capital.
For the period ended 30 June 2009, the Company transferred RMB nil (2008:
RMB158,201,976), being 10% of the Company’s current period’s net profit as
determined in according with the PRC Accounting Rules and Regulations, to this
reserve.
(ii) Discretionary surplus reserve
The appropriation to the discretionary surplus reserve is subject to the shareholders’
approval. The utilisation of the reserve is similar to that of the statutory surplus
reserve.
For the period ended 30 June 2009, the directors proposed to transfer RMB nil (2008:
RMB1,028,312,846), being nil (2008: 65%) of the Company’s current period’s net
profit as determined in accordance with the PRC Accounting Rules and Regulations,
to this reserve.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
80
29 Reserves (continued)
Notes (continued):
(c) Employee share-based compensation reserve
Employee share-based compensation reserve comprises the fair value of the shares awarded
under the Employees’ Share Award Scheme (see note 35) to the employees of the Company
recognised in accordance with the accounting policy adopted for equity compensation
benefits in note 3(n)(ii).
The reserve of 2006 Scheme and 2007 Scheme have been completely amortised to income
statement of the year ended 31 December 2007, and the year ended 31 December 2008. The
2008 Scheme has been terminated due to that the non-market performance condition can not
be achieved(see note 35).
(d) Revaluation reserve
Revaluation reserve comprises the cumulative net change in fair value of available-for-sale
securities held at the balance sheet date and is dealt with in accordance with the accounting
policy in note 3(c)(i).
30 Minority interests
30 Jun. 2009 31 Dec. 2008
At 1 January 6,926,624,219 4,640,875,428
Profit attributable to minority interests for the period 575,834,848 606,699,125
Capital injections from minority interests of subsidiaries (164,754,389) 695,603,280
Dividends paid to minority interests (128,533,121) (204,651,502)
Minority interests arising from acquisitions of
non-wholly owned subsidiaries 80,937,427 560,417,984
Acquisitions of minority interests (6,439,174) (122,028,497)
Increase in minority interests resulting from
disposal of partial interest in a subsidiary - 839,030,034
Decrease in minority interests resulting from change of a
non-wholly owned subsidiary to a jointly controlled entity - (19,882,996)
Decrease in minority interests resulting from
liquidation of subsidiaries - (65,009,125)
Others - (4,429,512)
At balance sheet date 7,283,669,810 6,926,624,219China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
81
31 Interest-bearing borrowings and bonds
This note provides information about the contractual terms of the Group’s interest-bearing
borrowings and bonds. For more information about the Group’s exposure to interest rate and
foreign exchange risks, please refer to note 39.
30 Jun. 2009 31 Dec. 2008
Non-current
Secured or guaranteed
- bank loans (note (a)) 1,445,400,000 1,553,110,000
- corporate bonds (note (b)) 2,904,790,933 2,894,365,250
-------------------- --------------------
4,350,190,933 4,447,475,250
-------------------- --------------------
Unsecured
- bank loans (note (a)) 6,975,967,717 7,621,010,095
- corporate bonds (note (b)) 2,875,895,247 2,873,650,747
- other borrowings (note (c)) 5,018,269,444 -
14,870,132,408 10,494,660,842
-------------------- --------------------
19,220,323,341 14,942,136,092
At 30 June 2009, non-current interest-bearing borrowings and bonds were repayable as
follows:
30 Jun. 2009 31 Dec. 2008
After 1 year but within 2 years 12,523,108,599 7,876,887,677
After 2 years but within 5 years 6,697,214,742 7,065,248,415
19,220,323,341 14,942,136,092
30 Jun. 2009 31 Dec. 2008
Current
Secured
- bank loans (note (a)) 78,430,000 60,000,000
- current portion of long term bank loans (note (a)) 680,857,860 363,995,220
- other borrowings (note (c)) - 120,000,000
759,287,860 543,995,220
-------------------- --------------------
Unsecured
- bank loans (note (a)) 80,000,000 190,000,000
- current portion of long term bank loans (note (a)) 4,829,783,753 5,792,489,356
- other borrowings (note (c)) 1,982,866,944 4,351,968,334
- current portion of long term other borrowings 4,474,871,000 6,987,890,000
11,367,521,697 17,322,347,690
-------------------- --------------------
12,126,809,557 17,866,342,910China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
82
31 Interest-bearing borrowings and bonds (continued)
Notes:
(a) Bank loans
The interest rate of bank loans ranges from 4.17% to 10.00% in 2009 (2008: from 4.86% to
10.00%).
(b) Corporate bonds
‘2009
No.101688 No.101699
Corporate
bonds
Corporate
bonds
issued in 2008 issued in 2008
Proceeds from issue of corporate
bonds of RMB100 each 2,900,000,000 3,000,000,000
Carrying value at 1 January 2009 2,873,650,747 2,894,365,250
Transaction costs amortized 2,244,500 10,425,683
Carrying value at balance sheet date 2,875,895,247 2,904,790,933
On 6 September 2008, the Company issued two series of corporate bonds, namely the “No.
101688 Bonds” and the “No. 101699 Bonds”, amounting to RMB5,900 million. Both Bonds
are listed on the Shenzhen Stock Exchange.
The No. 101688 Bonds are with no guarantee and are interests bearing at a rate of 7% per
annum payable in arrears on 6 September 2009, 2010 and 2011. In accordance with the
terms of the No. 101688 Bonds, on 6 September 2011 the Company has the option to adjust
upward the interest rate of the Bonds for the next two years by 0-100 points and each of the
Bond is, at the option of the bondholder, redeemable at its par value of RMB 100 each on the
same date. If not being redeemed on 6 September 2011, the Bonds are repayable on 6
September 2013 and the interest for the next two years is payable in arrear on 6 September
2012 and 2013 respectively.
The No. 101699 Bonds are guaranteed by the China Construction Bank Shenzhen branch and
are repayable on 6 September 2013. The Bonds are interest bearing at a rate of 5.5% per
annum payable in arrears on 6 September 2009, 2010, 2011, 2012 and 2013 respectively.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
83
31 Interest-bearing borrowings and bonds (continued)
Notes: (continued)
(c) Other borrowings
30 Jun. 2009 31 Dec. 2008
Non-current
Proceeds 5,207,340,634 -
Transaction costs (189,071,190) -
5,018,269,444 -
-------------------- ---------------------
Current
Proceeds 2,000,000,000 4,520,000,000
Transaction costs (17,133,056) (48,031,666)
1,982,866,944 4,471,968,334
Other borrowings represent interest bearing borrowings raised from third party lenders
through trust companies at market interest rate. The interest rate of other borrowings ranges
from 5.0% to 5.4% in 2009 (2008: 4.86% to 10%).
32 Other long term liabilities
Other long term liabilities at 30 June 2009 and 31 December 2008 mainly represented
consideration payable in connection with acquisitions of subsidiaries and was due for
settlement by instalments in 2011and 2010 respectively.
33 Trade and other payables
30 Jun. 2009 31 Dec.2008
Trade payable 12,572,139,549 12,895,962,837
Amounts due to associates 8,004,675 21,277,927
Amounts due to jointly
controlled entities 761,708,321 841,977,518
Deposits received in advance 29,979,748,630 23,945,755,140
Other payables and accrued
expenses 4,998,789,413 6,225,573,623
Other taxes 45,654,771 48,660,688
Total 48,366,045,359 43,979,207,733China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
84
34 Provisions
30 Jun. 2009 31 Dec. 2008
Balance at 1 January 41,729,468 37,962,953
Provisions made during the period 6,880,858 8,300,215
Provisions used during the period (18,217,879) (4,533,700)
Balance at 31 December 30,392,447 41,729,468
The balance represents the estimated losses to be borne by the Group in relation to the
property management projects.
35 Employees’ share award scheme
Pursuant to a shareholders’ resolution passed on 30 May 2006, the Company adopted an
Employees’ Share Award Scheme (the “Scheme”) for each of the years ended 31 December
2006, 2007 and 2008 under which certain employees of the Group, including certain
directors of the Company, will be entitled to certain A shares of the Company if the vesting
conditions as set out in the Scheme are met.
Details of the Awarded Shares purchased by the trust under the Scheme are as follows:
Scheme for the year ended Scheme for the year ended Scheme for the year ended
31 December 2008 31 December 2007 31 December 2006
(The 2008 Scheme) (The 2007 Scheme) (The 2006 Scheme) Total
Number of Aggregate Number of Aggregate Number of Aggregate Number of Aggregate
shares amount shares amount shares amount shares amount
purchased paid purchased paid purchased paid purchased paid
At 1 January 2008 - - 17,229,468 242,994,816 43,740,250 223,546,730 60,969,718 466,541,546
Purchased through
the trust 37,804,258 763,905,518 11,533,195 243,140,600 - - 49,337,453 1,007,046,118
New shares through
bonus issue 22,682,555 - 17,257,598 - 17,282,420 - 57,222,573 -
Dividend reinvested
through the trust 439,007 - 321,500 - 424,700 - 1,185,207 -
Distribution of Awarded
Shares - - - - (61,447,370) (223,546,730) (61,447,370) (223,546,730)
At 31 December 2008 60,925,820 763,905,518 46,341,761 486,135,416 - - 107,267,581 1,250,040,934
At 1 January 2009 60,925,820 763,905,518 46,341,761 486,135,416 - - 107,267,581 1,250,040,934
Repurchased through
the trust (note i) (60,925,820) (620,656,308) - - - - (60,925,820) (620,656,308)
Transfer-out of deficit
sold awarded shares - (143,249,210) - - - - - (143,249,210)
Dividend reinvested
through the trust - - 210,000 - - - 210,000 -
At 30 June 2009 - - 46,551,761 486,135,416 - - 46,551,761 486,135,416China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
85
35 Employees’ share award scheme (continued)
Details of the Awarded Shares purchased by the trust under the Scheme are as follows:
(continued)
Note:
(i) On 14 April 2009, the Group announced the termination of the 2008 employees’
share award scheme as the 2008 Scheme’s non-market performance condition of over
15% year-to-year profit growth was not achieved. The awarded shares under the
scheme were completely resold in stock market, and the proceed of
RMB620,656,308 was refunded to the Company.
36 Material related party transactions
(a) Reference should be made to the following notes regarding related parties:
Associates (note 20)
Jointly controlled entities (note 21)
Key management personnel (see note (b) below)
Post-employment benefit plans (note 10)
(b) Key management personnel compensations
The key management personnel compensations are as follows:
2009 2008
Jan. – Jun. Jan. – Jun.
Short-term employee benefits 4,224,400 4,241,250
4,224,400 4,241,250
The above compensations are included in “personnel expenses” (see note 10).China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
86
37 Commitments
(a) Commitments outstanding at 31 December not provided for in the financial statements
were as follows:
30 Jun. 2009 31 Dec. 2008
Contracted for 16,412,093,985 23,202,031,151
Commitments mainly related to land and development costs for the Group’s properties under
development.
(b) At 30 June 2009, the total future minimum lease payments under non-cancellable
operating leases are payable as follows:
30 Jun. 2009 31 Dec. 2008
Within 1 year 28,089,463 32,497,446
After 1 year but within 2 years 17,892,994 20,784,514
After 2 year but within 5 years 11,122,234 30,333,962
After 5 years 7,730,966 4,735,353
64,835,657 88,351,275
The Group is the lessee in respect of a number of properties held under operating leases. The
leases typically run for an initial period of two to ten years. None of the leases includes
contingent rentals. During the period, the operating lease expense of the Group amounted to
RMB19 million (2008 Jan – Jun: RMB29 million).China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
87
38 Contingent liabilities
(i) As at the balance sheet date, the Group has issued guarantees to banks to secure the mortgage
arrangement of property buyers. The outstanding guarantees to the banks amounted to
RMB21,940 million (2008: RMB17,969 million), including guarantees of RMB21,371
million (2008: RMB17,452 million) which will be terminated upon the completion of the
transfer procedures with the buyers in respect of the legal title of the properties, and
guarantees of RMB569 million (2008: RMB517 million) which will be terminated upon full
repayment of mortgage loans by buyers to the banks.
The directors do not consider it probable that the Group will sustain a loss under these
guarantees as the bank has the rights to sell the property and recover the outstanding loan
balance from the sale proceeds if the property buyers default payment. The Group has not
recognised any deferred income in respect of these guarantees as its fair value is considered
to be minimal by the directors.
(ii) As at 30 June 2009, a subsidiary of the Group was sued by a contractor for repayment of
deposit paid and construction cost payable, which amounted to RMB39 million, plus accrual
of interest thereon. The relevant PRC court has yet to decide on the case. The directors do
not consider it probable that the Group will sustain a compensation loss in this respect.
39 Financial risk management
Exposure to interest rate, credit, liquidity, and currency risks arises in the normal course of
the Group’s business. The risks are limited by the Group’s financial management policies
and practices described below.
(a) Interest rate risk
The Group’s interest rate risk arises primarily from its borrowings and bonds. Borrowings
and bonds issued at variable rates and at fixed rates expose the Group to cash flow interest
rate risk and fair value interest rate risk respectively. The interest rate and terms of
repayment of bank loans, borrowings and bonds of the Group are disclosed in note 31 to the
financial statements.
At 30 June 2009, it is estimated that a general increase of 0.5% in interest rates, with all other
variables held constant, would decrease the Group’s profit after tax by approximately
RMB16,750,169 (2008: RMB48,754,734).
The sensitivity analysis above has been determined assuming that the change in interest rates
had occurred at the balance sheet date and had been applied to the exposure to interest rate
risk for non-derivative financial instruments in existence at that date.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
88
39 Financial risk management (continued)
(b) Credit risk
The Group’s credit risk is primarily attributable to trade and other receivables and other
financial assets. Management has a credit policy in place and the exposures to these credit
risks are monitored on an ongoing basis.
In respect of trade receivables, credit risk is minimised as the Group normally receives full
payment from buyers before the transfer of property ownership.
In respect of other receivables and other financial assets, the Group reviews the exposures
and closely monitors the recoverability of the balances on an ongoing basis. Normally, the
Group does not obtain collateral from debtors. The impairment losses on bad and doubtful
accounts are within management’s expectation.
(c) Liquidity risk
The Group’s policy is to regularly monitor current and expected liquidity requirements and
its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash
and adequate committed lines of funding from major financial institutions to meet its
liquidity requirements in the short and longer terms.China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
89
39 Financial risk management (continued)
(c) Liquidity risk (continued)
The following table details the remaining contractual maturities at the balance sheet date of the Group’s non-derivative financial liabilities,
which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on
rates current at the balance sheet date) and the earliest date the Group can be required to pay:
30 Jun. 2009
Carrying amount Total contractual
undiscounted cash flow
Within 1 year or on
demand
More than 1 year but less
than 2 year
More than 2 years but
less than 5 years
Interest-bearing borrowings 25,566,446,719 25,701,447,796 12,165,551,695 12,619,367,538 916,528,563
Corporate bonds 5,780,686,179 7,433,333,333 368,000,000 368,000,000 6,697,333,333
Creditors and accrued charges 17,570,928,962 17,570,928,962 17,570,928,962 - -
Amounts due to jointly controlled
entities and associates 769,712,996 769,712,996 769,712,996 - -
Other long term liabilities 19,724,960 19,724,960 - - 19,724,960
31 Dec. 2008
Carrying amount Total contractual
undiscounted cash flow
Within 1 year or on
demand
More than 1 year but less
than 2 year
More than 2 years but
less than 5 years
Interest-bearing borrowings 27,040,463,005 28,614,049,859 18,958,810,394 8,343,262,843 1,311,976,622
Corporate bonds 5,768,015,997 7,614,880,000 368,000,000 368,000,000 6,878,880,000
Creditors and accrued charges 19,121,536,460 19,121,536,460 19,121,536,460 - -
Amounts due to jointly controlled
entities and associates 863,255,445 863,255,445 863,255,445 - -
Other long term liabilities 12,644,850 12,644,850 - 2,946,875 9,697,975China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
90
39 Financial risk management (continued)
(d) Foreign exchange risk
The Group is exposed to foreign currency risk primarily on borrowings that are denominated
in a currency other than the functional currency of the operations to which they relate. The
currencies giving rise to this risk are primarily United States dollars and Hong Kong dollars.
Cash and cash equivalents denominated in a currency other than the functional currency of
the entity to which they relate are as follows:
30 Jun. 2009 31 Dec. 2008
United States Dollars USD 301,347,106 USD 420,141,957
Hong Kong Dollars HKD 9,095,235 HKD 7,049,434
Interest-bearing borrowings denominated in a currency other than the functional currency of
the entity to which they relate are as follows:
30 Jun. 2009 31 Dec. 2008
United States Dollars USD 2,305,037,212 USD 2,144,568,751
Hong Kong Dollars HKD - HKD 134,930,700
Financial assets at fair value through profit or loss denominated in a currency other than the
functional currency of the entity to which they relate are as follows:
30 Jun. 2009 31 Dec. 2008
United States Dollars USD 3,544,200 USD 1,694,880
Sensitivity analysis
The following table indicates the approximate change in the Group’s profit after tax and
other components of consolidated equity in response to reasonably possible changes in the
foreign exchange rates to which the Group has significant exposure at the balance sheet date.
The sensitivity analysis includes balances between group companies where the denomination
of the balances is in a currency other than the functional currencies of the lender or the
borrower.
30 Jun. 2009 31 Dec. 2008
Increase / (decrease)
Increase/(decrea
se) in foreign
exchange rates
Effect on profit
after tax and
retained profits
Effect on other
components of
equity
Effect on profit
after tax and
retained profits
Effect on other
components of
equity
United States Dollars 10% (150,010,943) (150,206,618) (112,192,264) (113,246,603)
United States Dollars (10%) 150,010,943 150,206,618 112,192,264 113,246,603
Hong Kong Dollars 10% 682,143 (263,172,731) (9,718,976) (220,462,035)
Hong Kong Dollars (10%) (682,143) 263,172,731 9,718,976 220,462,035China Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
91
39 Financial risk management (continued)
(d) Foreign exchange risk (continued)
Sensitivity analysis (continued)
The sensitivity analysis has been determined assuming that the change in foreign exchange
rates had occurred at the balance sheet date and had been applied to each of the group
entities’ exposure to currency risk for non-derivative financial instruments in existence at that
date, and that all other variables, in particular interest rates, remain constant. The Group has
entered into certain non-deliverable forwards to hedge its exchange risk and the above
analysis has taken into account the effect brought from the non-deliverable forwards.
(e) Equity price risk
The Group is exposed to equity price changes arising from equity investments classified as
available-for-sale equity securities (see note 22). The Group monitors the performance of the
available-for-sale equity securities regularly.
40 Accounting estimates and judgments
Key sources of estimation uncertainty
(i) Impairment provision for properties held for development
As explained in note 3(h), the Group makes impairment provision for properties held
for development taking into account the Group’s estimates of the recoverable amount
from such properties. Given the volatility of the PRC property market, the actual
recoverable amount may be higher or lower than that estimated at the balance sheet
date. Any increase or decrease in the provision would affect profit or loss in future
years.
(ii) Impairment provision for completed properties for sale and properties under
development
As explained in notes 3(j) and 3(k), the Group’s completed properties for sale and
properties under development are stated at the lower of cost and net realisable value.
Based on the Group’s recent experience and the nature of the subject properties, the
Group makes estimates of the selling prices, the costs of completion in case for
properties under development, and the costs to be incurred in selling the properties.
Given the volatility of the PRC property market and the unique nature of individual
properties, the actual outcomes in terms of costs and revenue may be higher or lower
than that estimated at the balance sheet date. Any increase or decrease in the
provision would affect profit or loss in future yearsChina Vanke Co., Ltd.
Financial statements for the period ended 30 June 2009
92
40 Accounting estimates and judgments (continued)
Key sources of estimation uncertainty (continued)
(iii) Land appreciation tax
As explained in note 13(a), land appreciation tax is levied on properties developed by
the Group for sale, at progressive rates ranging from 30% to 60% on the appreciation
of land value, which under the applicable regulations is calculated based on the
proceeds of sales of properties less deductible expenditures including lease charges of
land use rights, borrowing cost and relevant property development expenditures.
Given the uncertainties of the calculation basis of land appreciation tax to be
interpreted local tax bureau, the actual outcomes may be higher or lower than that
estimated at the balance sheet date. Any increase or decrease in estimates would
affect profit or loss in future years.
41 Possible impact of amendments, new standards and interpretations issued but
not yet effective for the period ended 30 June 2009
Up to date of issue of these financial statements, the IASB has issued a number if
amendments, new standards and interpretations which are not yet effective for the period
ended 30 June 2009 and which have not been adopted in these financial statements.
Effective for accounting periods
beginning on or after
IFRS 3(Revised), Business combinations 1 July 2009
Amendments to IAS 27, Consolidated and separate financial statements 1 July 2009
The Group is in the process of making an assessment of what the impact of these
amendments, new standards and new interpretations is expected to be in the period of initial
application.
So far it has concluded that the adoption of them is unlikely to result in a restatement of the
Group’s results of operations and financial position.
42 Comparative figures
Certain comparative figures have been reclassified to confirm with the current period’s
presentation.
