China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 1 China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (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 None of the directors, supervisors, nor senior executives is holding uncertain opinion or disagreement over the truthfulness, accuracy, and completeness over the 1st Quarterly Report. 1.3 All of the directors presented the board meeting at which this 1st Quarterly Report was examined. 1.4 The financial statements carried in this report are not audited. 1.5 Mr. Sun Chengming - 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. §2 Company Profile 2.1 Financial highlights In RMB Yuan Ended this report term Ended previous year Changed by (%) Gross Assets 38,598,921,791 37,437,014,995 3.10% Shareholders’ equity attributable to shareholders of the Company 15,031,325,420 14,862,746,365 1.13% Share capital 1,717,300,503 1,717,300,503 0.00% Net asset per share attributable to shareholders of the Company 8.75 8.65 1.16% This report term Same period last year Changed by (%) Turnover 823,094,572 562,947,686 46.21% Net profit attributable to the shareholders of the listed company 170,579,055 36,961,879 361.50% Cash flow generated by business operation, net 94,612,265 -1,376,427,361 106.87% Net Cash flow per share generated by business operation 0.06 -1.63 103.68% Basic gains per share 0.10 0.03 233.33% Diluted gains per share 0.10 0.03 233.33% Net earnings / asset 1.13% 0.47% Increased by 0.66 percent Net earnings / capital ratio after deducting of non-recurring gain/loss 1.08% 0.45% Increased by 0.63 percent Non-recurring gain and loss items Amount of the period from the beginning of year to the end of report term Total 8,070,653China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 2 Statements on non-recurring gain/loss items: In RMB Yuan Non-recurring gain and loss items Amount of the period from the beginning of year to the end of report term Other non-business gain/expenditure (net) 8,224,964 Impact of income tax and minor shareholders’ gains/losses -154,311 Total 8,070,653 2.2 Total of shareholders and the top 10 holders of unconditional shares In Shares Total of shareholders 37,647 Top 10 holders of unconditional shares Name of the shareholder Unconditional shares Category of shares Changsheng Tongde Growth Stock Investment Fund 15,846,269 A shares Penghua Power Growth Combined Stock Investment Fund 15,707,980 A shares Penghua Fine Management Stock Investment Fund 15,000,000 A shares Yifangda Value Growth Combined Stock Investment Fund 14,203,392 A shares Yinhua Core Value Best Choice Stock Investment Fund 13,000,074 A shares Guangfa Great Growth Combined Stock Investment Fund 12,417,302 A shares Dacheng Blue Chip Steady Growth Stock Investment Fund 11,695,587 A shares Bank of Communication Schroder Fund 11,149,022 A shares Jinshun Changcheng Dingyi Open Stock Investment Fund 10,907,806 A shares Jiashi Scheme Best Choice Combined Stock Investment Fund 10,106,498 A sharesChina Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 3 §3 Significant Events 3.1 Details and causations of major change in major accounting subjects and financial indices √ applicable □ not applicable In RMB Yuan Items 2009.03.31 2008.12.31 Changed by (±%) Major causes Transactional financial assets 36,121,243 97,331,980 -62.89% Influenced by fluctuation of future USD rate, gains from stock contract fluctuation decreased Prepayment received 3,810,741,112 2,731,472,693 39.51% Increase of advances received for selling of properties Employees’ wage payable 62,952,182 121,900,048 -48.36% Wages drawn at end of last year paid in this term Tax payable 156,719,583 270,545,613 -42.07% Tax paid Interest payable 22,592,131 41,051,205 -44.97% Interest due paid Non-current liability due in 1 year 3,685,038,000 1,810,099,402 103.58% Increasing of long-term borrowings due in 1 year Items Jan-Mar 2009 Jan-Mar 2008 Changed (± %) Major causes Turnover 823,094,572 562,947,686 46.21% Increasing of merchandise property transferred in Total operation cost 621,694,607 420,481,166 47.85% Increasing of transferring cost of merchandise property Business tax and surcharge 88,109,440 64,281,328 37.07% Increasing of merchandise property transferred in Sales expense 48,031,506 28,327,589 69.56% Expanding of business scale Financial expenses -15,277,204 10,581,939 -244.37% Increasing of interest income Investment income 79,670,156 -1,695,894 4797.83% Adjustment of profit equity on affiliates Non-business income 12,605,745 7,590,457 66.07% Anticipation liabilities transferred back 3.2 Progress of significant events, their influence, countermeasures, and analysis □applicable √ not applicableChina Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 4 3.3 Fulfilling of commitment issues made by the Company, shareholder, or substantial controller √ applicable □ not applicable Commitments Content of Commitments Status of fulfilling Commitment in share equity relocation The original non-negotiable shares shall not been traded or transferred in 24 months since the trading right been granted. Shares placed in Shenzhen Stock Exchange in 12 months upon the above 24 months shall not exceed 5% of the total shares of the Company. In 36 months upon the above 24 months, the price of A-shares of the Company shall not be lower than 120% of the arithmetical average in 30 days prior to the publishing of share reallocation announcement. Promise kept by CMSIZ in the report term Commitment of not to sell the shares When previous increasing of shareholding, CMSIZ and its subsidiaries promised not to reduce their shareholding in the Company until September 24, 2010. China Merchants Zhangzhou Development Zone Co., Ltd. subscribed the 37,878,788 shares in 2008, and promised not to put these shares on sale in one year since purchased. Promises kept by CMSIZ and its subsidiaries In the report term, China Merchants Zhangzhou Development Zone Co., Ltd. has been keeping the promise. Commitment made in acquisition report or equity alternation report Not applicable Not applicable Commitment made in major asset restructuring Not applicable Not applicable Commitment made at issuing Not applicable Not applicable Other commitment (including supplementary commitment) CMSIZ, the controlling shareholder of the Company, promised not to conduct or participate with 3rd parties in any business or activities possibly competing with the Company in terms of business, new commodities and new technology in any forms (including but not limited to direct operation, indirect operation, joint investment). Never use the information obtained from the Company to conduct or participate in and competitive activities against the Company. In the report term, CMSIZ was fully acting as committed. 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 3.5.2 Holding of shares in other listed companies √ applicable □ not applicable In RMB Yuan Stock Code Stock ID Initial investment Share portion Book value at the end of term Gain/loss of the report term Change of owners’ equity in the report term 000004 ST Guonong 1,572,275.00 0.58% 1,743,773 0 0China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 5 3.5.3 Summary of accepting investigations, communications, and visiting in the report term Time/date Place Way Visitors Main content involved and material provided Jan 07 Shekou Shenzhen Research Fortress、OCH-ZIFF、Goldman Sachs Jan 08 Shekou Shenzhen Telephone conference Organized by Orient Securities Jan 09 Shanghai Strategy meeting Organized by Everbright Securities Jan 13 Shekou Shenzhen Research China Life Investment Jan 14 Shekou Shenzhen Research Yifangda Fund Feb 06 Shekou Shenzhen Research Hong Kong Huili Fund Feb 10 Shekou Shenzhen Research Changsheng Fund Feb 11 Shekou Shenzhen Group research Organized by Everbright Securities Feb 12 Shekou Shenzhen Research Hongta Securities Feb 19 Shekou Shenzhen Research Tiger Asia Management L.L.C. Feb 19 Shekou Shenzhen Group research Organized by Guotai Jun’an Feb 24 Shekou Shenzhen Research Taikang Asset Management Feb 25 Shekou Shenzhen Group research Organized by CITIC Securities Feb 27 Shekou Shenzhen Research GE Asset Management Mar 31 Shekou Shenzhen Online meeting Organized by Zhongtou Securties Introduction of the Company’s business operation; Development of the industry; Providing published announcement and information, and project brochures 3.5.4 Statement on other significant events √ applicable □ not applicable (1) The Company didn’t provide any capital to the controlling shareholder, nor illegal providing of external guarantees. (2) In the report term, according to the authorization of the Board, provided Foshan Xincheng Property Co., Ltd. – one of the indirect controlled subsidiaries, of guarantee for RMB50 million of bank loan. The share of joint liabilities was RMB25 million according to shareholding portion. The guarantee term was started since the contract takes effect and ended at two years upon expiration of the liability period under the contract.China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 6 §4 Attachments 4.1 Balance Sheet Prepared by: China Merchants Properties Development Co., Ltd. March 31 2009 RMB Yuan Items ConsolidaEtnedd ofP taerremnt company ConsoBliedgaitnendi ngP aorfe ntetr cmo mpany Current asset: Monetary capital 7,214,081,504 3,878,627,162 7,389,133,547 4,728,619,945 Settlement provision Outgoing call loan Transactional financial assets 36,121,243 0 97,331,980 0 Notes receivable Account receivable 73,501,946 0 107,177,879 0 Prepayment 37,251,927 0 28,316,856 0 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable 0 4,924,375 0 0 Dividend receivable 0 3,030,848,071 0 3,030,848,071 Other account receivable 682,151,045 14,546,386,486 778,506,128 14,588,369,018 Repurchasing of financial assets Inventories 25,352,782,222 0 23,869,301,251 0 Non-current asset due in 1 year 30,097 0 40,129 0 Other current asset 235,281,713 0 227,596,742 0 Total of current asset 33,631,201,697 21,460,786,094 32,497,404,512 22,347,837,034 Non-current assets Loans and payment on other’s behalf disbursed Disposable financial asset 1,743,773 1,743,773 1,743,773 1,743,773 Expired investment in possess Long-term receivable 1,000,793,830 865,862,737 971,960,034 838,808,511 Long-term share equity investment 808,525,269 1,442,068,686 771,232,269 1,442,068,686 Investment real estate 2,602,226,145 0 2,632,975,770 0 Fixed assets 276,856,261 314,887 284,573,922 320,838 Construction in process 43,767,508 0 39,614,982 0 Engineering goods Fixed asset disposal Production physical assets Gas & petrol Intangible assets 83,083 0 94,212 0 R&D expense Goodwill Long-term amortizable expenses 192,169,008 301,956 196,539,294 349,732 Differed income tax asset 41,555,217 0 40,876,227 0 Other non-current asset Total of non-current assets 4,967,720,094 2,310,292,039 4,939,610,483 2,283,291,540 Total of assets 38,598,921,791 23,771,078,133 37,437,014,995 24,631,128,574 Current liabilities Short-term loans 3,201,632,812 2,638,325,000 3,613,956,278 2,806,081,100 Loan from Central Bank Deposit received and hold for others Call loan received Trade off financial liabilities 13,825,675 0 0 0China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 7 Notes payable 133,759,939 0 143,287,841 0 Account payable 1,729,026,371 0 1,863,688,472 0 Prepayment received 3,810,741,112 0 2,731,472,693 0 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 62,952,182 1,361,874 121,900,048 4,237,517 Dividend payable 8,778,785 0 8,778,785 0 Tax payable 156,719,583 777,759 270,545,613 291,820 Interest payable 22,592,131 18,642,305 41,051,205 36,025,186 Other account payable 3,473,191,312 1,806,818,176 3,154,569,035 2,688,993,082 Reinsurance fee payable Insurance contract provision Entrusted trading of securities Entrusted selling of securities Non-current liability due in 1 year 3,685,038,000 1,430,000,000 1,810,099,402 1,550,000,000 Other current liability 500,648,847 77,559 459,072,398 77,559 Total of current liability 16,798,906,749 5,896,002,673 14,218,421,770 7,085,706,264 Non-current liabilities Long-term borrowings 5,227,315,907 3,910,000,000 6,807,315,907 3,610,000,000 Bond payable Long-term payable 35,422,124 0 33,285,411 0 Special payable Expected liabilities 83,076,298 0 90,466,298 0 Differed income tax liability 34,300 34,300 34,300 34,300 Other non-recurring liabilities 8,058,856 0 7,984,305 0 Total of non-current liabilities 5,353,907,485 3,910,034,300 6,939,086,221 3,610,034,300 Total of liability 22,152,814,234 9,806,036,973 21,157,507,991 10,695,740,564 Owners’ equity (or shareholders’ equity) Capital paid in (or share capital) 1,717,300,503 1,717,300,503 1,717,300,503 1,717,300,503 Capital reserves 8,546,544,784 8,928,070,623 8,548,544,784 8,928,070,622 Less: Shares in stock Surplus reserves 670,226,504 619,275,111 670,226,504 619,275,111 Common risk provision Retained profit 4,028,641,341 2,700,394,923 3,858,062,286 2,670,741,774 Different of foreign currency translation 68,612,288 0 68,612,288 0 Total of owner’s equity belong to the parent company 15,031,325,420 13,965,041,160 14,862,746,365 13,935,388,010 Minor shareholders’ equity 1,414,782,137 0 1,416,760,639 0 Total of owners’ equity 16,446,107,557 13,965,041,160 16,279,507,004 13,935,388,010 Total of liabilities and owners’ equity 38,598,921,791 23,771,078,133 37,437,014,995 24,631,128,574China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 8 4.2 Income Statement of the report term Prepared by: China Merchants Property Development Co., Ltd. Jan-Mar 2009 RMB Yuan Current term Same period last year Items Consolidated Parent company Consolidated Parent company I. Total revenue 823,094,572 0 562,947,686 0 Incl. Business income 823,094,572 0 562,947,686 0 Interest income - - Insurance fee earned - - Fee and commission received - - II. Total business cost 621,694,607 -29,653,149 420,481,166 15,835,483 Incl. Business cost 462,419,443 0 280,937,967 0 Interest expense - - Fee and commission paid - - Insurance discharge payment - - Net claim amount paid - - Net insurance policy reserves provided - - Insurance policy dividend paid - - Reinsurance expenses - - Business tax and surcharge 88,109,440 0 64,281,328 0 Sales expense 48,031,506 0 28,327,589 0 Administrative expense 38,405,719 4,300,933 36,344,419 4,568,152 Financial expenses -15,277,204 -33,954,082 10,581,939 11,267,331 Asset impairment loss 5,703 7,924 - Plus: Gains from change of fair value (“-“ for loss) -76,006,380 0 -76,529,799 0 Investment gain (“-“ for loss) 79,670,156 0 -1,695,894 0 Incl. Investment gains from affiliates 37,293,000 0 -1,657,304 0 Gains from currency exchange (“-“ for loss) - - III. Operational profit (“-“ for loss) 205,063,741 29,653,149 64,240,827 -15,835,483 Plus: Non business income 12,605,745 0 7,590,457 0 Less: Non-business expenses 503,277 0 184,167 0 Incl. Loss from disposal of non-current assets 190,055 0 97,102 0 IV. Gross profit (“-“ for loss) 217,166,209 29,653,149 71,647,117 -15,835,483 Less: Income tax expenses 48,487,567 0 38,882,775 0 V. Net profit (“-“ for net loss) 168,678,642 29,653,149 32,764,342 -15,835,483 Net profit attributable to the owners of parent company 170,579,055 36,961,879 Minor shareholders’ equity -1,900,413 -4,197,537 VI. Earnings per share: (I) Basic earnings per share 0.10 0.03 (II) Diluted earnings per share 0.10 0.03China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 9 4.3 Cash Flow Statement from the beginning of year to the end of report term. Prepared by: China Merchants Property Development Co., Ltd. Jan-Mar 2009 RMB Yuan Current term Same period last year Items Consolidated Parent company Consolidated Parent company I. Net cash flow from business operation Cash received from sales of products and providing of services 1,907,252,226 0 1,156,901,464 0 Net increase of customer deposits and capital kept for brother company Net increase of loans from central bank Net increase of inter-bank loans from other financial bodies Cash received against original insurance contract Net cash received from reinsurance business Net increase of client deposit and investment Net increase of trade financial asset disposal Cash received as interest, processing fee, and commission Net increase of inter-bank fund received Net increase of repurchasing business Tax returned 2,496 0 373 0 Other cash received from business operation 511,295,947 0 801,791,332 23,921,551 Sub-total of cash inflow from business activities 2,418,550,669 0 1,958,693,169 23,921,551 Cash paid for purchasing of merchandise and services 1,608,732,603 0 2,776,152,584 0 Net increase of client trade and advance Net increase of savings in central bank and brother company Cash paid for original contract claim Cash paid for interest, processing fee and commission Cash paid for policy dividend Cash paid to staffs or paid for staffs 149,212,811 4,535,598 176,431,750 7,647,178 Taxes paid 293,683,061 59,112 171,798,456 14,598,569 Other cash paid for business activities 272,309,929 732,577,450 210,737,740 1,847,239,729 Sub-total of cash outflow from business activities 2,323,938,404 737,172,160 3,335,120,530 1,869,485,476 Cash flow generated by business operation, net 94,612,265 -737,172,160 -1,376,427,361 -1,845,563,925 II. Cash flow generated by investing Cash received from investment retrieving 0 0 40,702,143 40,702,143 Cash received as investment gains Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets 23,214 0 14,780 0 Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 41,836,353 0 10,010,125 0 Sub-total of cash inflow due to investment activities 41,859,567 0 50,727,048 40,702,143 Cash paid for construction of fixed assets, intangible assets and other long-term assets 10,796,020 0 34,411,618 0China Merchants Property Development Co., Ltd. The 1st Quarterly Report 2009 (Complete Version) 10 Cash paid as investment 0 0 20,000,000 30,000,000 Net increase of loan against pledge Net cash received from subsidiaries and other operational units 4,000,000 0 136,787,960 0 Other cash paid for investment activities Sub-total of cash outflow due to investment activities 14,796,020 0 191,199,578 30,000,000 Net cash flow generated by investment 27,063,547 0 -140,472,530 10,702,143 III. Cash flow generated by financing Cash received as investment 0 0 126,985,250 0 Incl. Cash received as investment from minor shareholders 0 0 126,985,250 0 Cash received as loans 1,222,780,648 950,000,000 2,266,522,283 1,747,136,100 Cash received from bond placing Other financing-related cash received Subtotal of cash inflow from financing activities 1,222,780,648 950,000,000 2,393,507,533 1,747,136,100 Cash to repay debts 1,340,066,114 937,756,100 410,627,556 291,136,100 Cash paid as dividend, profit, or interests 176,520,818 125,066,909 163,783,751 112,900,965 Incl. Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities Subtotal of cash outflow due to financing activities 1,516,586,932 1,062,823,009 574,411,307 404,037,065 Net cash flow generated by financing -293,806,284 -112,823,009 1,819,096,226 1,343,099,035 IV. Influence of exchange rate alternation on cash and cash equivalents -150,831 2,386 -1,547,610 81,458 V. Net increase of cash and cash equivalents -172,281,303 -849,992,783 300,648,725 -491,681,289 Plus: Balance of cash and cash equivalents at the beginning of term 7,358,057,106 4,728,619,945 3,544,984,914 2,454,024,042 VI. Balance of cash and cash equivalents at the end of term 7,185,775,803 3,878,627,162 3,845,633,639 1,962,342,753 4.4 Auditors’ Report Auditor’s opinion: not audited.