China Merchants Property Development Co., Ltd. The 3rd Quarterly Report 2011 (Full text) Stock Code: 000024, 200024 Stock ID: CMPD, CMPD B Announcement No. 【CMPD】2011-025 China Merchants Property Development Co., Ltd. The 3rd Quarterly Report 2011 (Full text) §1 Important Declaration 1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. 1.2 The 3rd Quarterly Report is not audited by CPA. 1.3 Mr. Lin Shaobin - the legal representative, Mr. Huang Peikun – the chief financial officer, and Ms. Xu Yixia – the manager of accounting department declare: the financial reports carried in this report is secured for its truthfulness and completeness. 1.4 This report is prepared both in English and Chinese. When there is any conflict in understanding, the Chinese version shall prevail. §2 Company Profile 2.1 Financial highlights In RMB Yuan 2011.9.30 2010.12.31 Extent of Change (%) Gross Assets (RMB) 71,675,215,687 59,818,240,763 19.82% Owners’ equity attributable to the 20,164,782,237 18,207,431,836 10.75% shareholders of the listed company (yuan) Capital shares (shares) 1,717,300,503 1,717,300,503 0.00% Net asset per share attributable to the shareholders of the listed company 11.74 10.60 10.75% (Yuan/share) Changed over the same Changed over the same Jul-Sept 2011 Jan-Sept 2011 period of last year (%) period of last year (%) Turnover (yuan) 4,380,778,392 68.26% 12,472,263,536 30.13% Net profit attributable to shareholders of the 615,944,786 63.51% 2,084,532,197 46.09% listed company (yuan) Net Cash flow generated by business - - -2,741,396,512 -22.49% operation (RMB) Net Cash flow per share generated by - - -1.60 -22.49% business operation (yuan/share) Basic earnings per share (Yuan/share) 0.36 63.51% 1.21 46.09% Diluted earnings per share (Yuan/share) 0.36 63.51% 1.21 46.09% Weighted average net 3.11% Increased by 0.94% 10.86% Increased by 2.45% income/asset ratio (%) Weighted average net income/asset ratio less non-recurring 3.11% Increased by 0.96% 10.86% Increased by 2.47% gain/loss(%) 1 China Merchants Property Development Co., Ltd. The 3rd Quarterly Report 2011 (Full text) Non-recurring gain and loss items √ applicable □ not applicable In RMB Yuan Non-recurring gain and loss items Amount Gain/loss of non-current assets -497,045 Government subsidies accounted into current gain/loss account, other than those closely related to the Company’s common business, comply with the national policy and continues 1,619,000 to enjoy at certain fixed rate or amount. Other non-business income and expenditures other than the above -1,703,461 Influenced amount of minority shareholders’ equity -493,530 Influenced amount of income tax 117,084 Total -957,952 2.2 Total of shareholders and the top 10 holders of unconditional shares in shares Total shareholders at the end of the report period 67,964 (accounts) Top ten holders of the shares without subscription limitation Amount of unconditional shares Full name of shareholder Categories held at the end of report term CM Zhangzhou Development Zone Ltd. 34,760,600 A shares National Social Insurance Foundation 102 Portfolio 23,436,423 A shares Shangtou Morgan China Advantages Securities 20,270,000 A shares Investment Fund CNCA A/C COMPAGNIE FINANCIERE EDMOND 18,882,045 B shares DE ROTHSCHILD Fuguo Tianrui Fine Blend Open Fund 17,099,671 A shares Nuo’an Value Growth Stock & Securities Investment 17,091,616 A shares Fund Shangtou Morgan Internal Power Stock Investment 13,899,848 A shares Fund China Life Insurance Ltd. – conventional insurance 13,159,919 A shares product –005L-CT001 BOCI SECURITIES LIMITED 12,392,660 B shares Yinhua – Dow Joans 88 Fine Selected Securities 12,099,687 A shares Investment Fund 2 China Merchants Property Development Co., Ltd. The 3rd Quarterly Report 2011 (Full text) §3 Significant Events 3.1 Details and causations of major change in major accounting subjects and financial indices √ applicable □ not applicable In RMB Yuan Changed Items 2011.09.30 2010.12.31 Major causes by % Transactional Increased by handover of NDF contracts in the period and 2,492,009 846,539 194% financial assets fluctuation of NDF market prices Long-term share 847,232,601 597,610,091 42% Increase of investment in affiliates equity investment Construction in 57,093,544 23,327,061 145% Increase of expenditures for power supply facilities process Differed income tax 285,273,849 460,455,365 -38% Disburse of partial taxes asset Short-term loans 2,436,858,409 1,172,132,283 108% Expanding of business scale Trade off financial Decreased by handover of NDF contracts in the period and 13,506,986 20,824,615 -35% liabilities fluctuation of NDF market prices Notes payable - 275,616,189 -100% Repaying of due notes Employees’ wage 128,052,049 207,232,511 -38% Disburse of employees’ wages payable payable Interest payable 151,131,670 109,123,639 38% Increase of total borrowing Dividend payable 360,988,522 124,209,948 191% Increase of dividend payable Non-current liability 4,507,386,972 2,357,741,683 91% Transferring in of long term borrowings due in 1 year Long-term payable 78,365,312 58,587,176 34% Increase of mainbody maintainance fund Jan-Sept. Changed Items Jan-Sept 2011 Major causes 2010 by % Turnover 12,472,263,536 9,584,685,607 30% Increase of property clearance Business tax and 2,234,957,796 1,126,992,261 98% Increased along with increase of property clearance income surcharge Sales expense 285,999,689 163,617,872 75% Expanding of business scale Administrative 226,762,007 155,641,596 46% Expanding of business scale expense Financial expenses -26,790,947 -2,793,807 859% Increase of exchange gains Income from change 8,963,099 -860,876 1141% Increased by fluctuation of NDF fair markets of fair value Investment income 58,294,066 38,558,420 51% Increase of investment returns from affiliates Income tax expenses 946,818,003 585,673,458 62% Increase of total profit Minor shareholders’ 653,710,054 361,821,446 81% Net profit from joint projects increaased equity 3.2 Progress of significant events, their influence, countermeasures, and analysis 3.2.1 None-standard opinions □applicable √ not applicable 3.2.2 Illegal providing of capital or guarantees to the holding shareholder or its related parties or external parties □applicable √ not applicable 3.2.3 Signing and execution of major business contracts □applicable √ not applicable 3 China Merchants Property Development Co., Ltd. The 3rd Quarterly Report 2011 (Full text) 3.2.4 Misc. □applicable √ not applicable 3.3 Fulfilling of commitment issues made by the Company, shareholder, or substantial controller √ applicable □ not applicable The Commitments Content of Commitments Status of fulfilling undertaker In the report term, Commitment in share Will input properties including high quality lands to support the CMSIZ CMSIZ was fully equity relocation Company’s development after the share equity relocation. acting as committed. CMSIZ, the controlling shareholder of the Company, promised not to conduct or participate with 3rd parties in any business or activities Other commitments possibly competing with the Company in terms of business, new In the report term, (including CMSIZ commodities and new technology in any forms (including but not CMSIZ was fully supplementary limited to direct operation, indirect operation, joint investment). Never acting as committed. commitments) use the information obtained from the Company to conduct or participate in and competitive activities against the Company. 3.4 Estimated accumulative profit from the year beginning to the end of the next report period may be of deficits; or in comparison with the same period of the previous year, give the warning of great change and the notice to the reasons. □applicable √ not applicable 3.5 Major events needs to be explained 3.5.1 Investment in securities □applicable √ not applicable 4 China Merchants Property Development Co., Ltd. The 3rd Quarterly Report 2011 (Full text) 3.5.2 Reception of investigations, communications, or interviews √ applicable □ not applicable Main content involved and material Time/date Place Way Visitors provided Shekou Telephone 2011.07.03 Orient Securities Shenzhen communication Shekou Telephone 2011.07.05 Individual investors Shenzhen communication Shekou 2011.07.07 Field research Lianhe Huatai, Jiashi Fund Shenzhen Shekou 2011.07.07 Field research Guotai Junan and its clients Shenzhen Shekou 2011.08.09 Field research CITIC Securities and its clients Shenzhen Shekou Construction Bank International and its 2011.08.10 Field research Shenzhen clients Shekou Telephone 2011.08.09 JEFFERIES Shenzhen communication Shekou Dongguan Securities, No.1 Securites, 2011.08.19 Field research Shenzhen Anbang Asset Management Shekou 2011.08.25 Field research Zhongtou Securities (1) Company business operation Shenzhen Shekou situation 2011.08.26 Field research Xiangcai Securities Shenzhen (2) Industrial development Shekou discussion 2011.09.07 Field research British Investment Co. Shenzhen (3) To provide announcements and Shekou Telephone promotion brochures 2011.09.08 Individual investors Shenzhen communication (4) Visiting the sites of properties on Shekou Telephone sale, providing the prospectus 2011.09.08 Guotai Junan Shenzhen communication Shekou Telephone 2011.09.09 Ping’an Securities Shenzhen communication Shekou 2011.09.09 Field research Guoxin Securities and its clients Shenzhen Shekou Telephone 2011.09.15 Ruixin Fangzheng Shenzhen communication Shekou Telephone 2011.09.15 Orient Securities Shenzhen communication Shekou Telephone 2011.09.16 Individual investors Shenzhen communication 2011.09.16 Beijing Field research Investor Shekou Telephone 2011.09.16 Jinli Investment Shenzhen communication Shekou 2011.09.16 Field research CITIC Securities and its clients Shenzhen 2011.09.24 Shanghai Field research Minsheng Securities Shekou Telephone 2011.09.28 Ping’an Securities Shenzhen communication 5 China Merchants Property Development Co., Ltd. The 3rd Quarterly Report 2011 (Full text) 3.6 Investment in derivate financial instruments √ applicable □ not applicable In the report term, the major market risks of derivate investment products were the impacts of fluctuation of NDF contracts on the fair values. However the Company’s purpose to involve in NDF trade was to lockup the exchange rate and avoid the risks brought by borrowing of foreign currencies, thus it Statement on analyzing and controlling of risks with was on the basis of real borrowings in foreign currency, its trading amount derivate investment in the report term (including but not and timing are matching with the borrowings of foreign currency and covers limited to market risks, liquidity risks, credit risks, the risks. The exchange rate of the future contract has been fixed as soon as operation risks, and legal risks. been traded, therefore the risks are under control. The Company has established the “Regulations of Trade of Derivate Financial Instruments” which limited the categories, scale, authorization, operation procedures, risk control, and information disclosure over the derivate instruments. It provides a systematic ground for controlling of risks. At end of December 2011, the 1-year RMB/USD NDF has quoted equal to 0.71% of devalue, while at end of December 2010, it was 2.26% of increase, Change of derivate instrument market price or fair fluctuation of fair value of NDF in September 2011 caused RMB8.96 million value, information disclosing on the fair value, relative of gains, whereas the NDF contract handover has caused losses of RMB23.13 estimation and setting of indexes million. Market price basis is adopted by the Company in analyzing of derivate instrument fair value, and the fair values are adjusted at end of each month. Statement on major alternation in accounting polices and accounting basis on derivate instruments comparing None with last year Particular comments of the independent directors on Not applicable investment of derivate instruments and risk controlling 3.6.1 Derivate financial instrument stock at end of report term √ applicable □ not applicable In RMB Yuan Amount of the contract Amount of the contract Amount of the contract Gain/loss in the Category of contracts at end of term on the net at beginning of term at end of term report term asset (%) NDFContracts 2,337,860,822 1,143,882,000 -14,161,928 5.67% Total 2,337,860,822 1,143,882,000 -14,161,928 5.67% 6