China Vanke Co., Ltd.
2010 Interim Report
(For the six months ended 30 June 2010)
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.
Director Wang Yin and Director Jiang Wei were not able to attend the board meeting in
person due to their 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 her business engagements
and had authorised 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 his business engagements and had authorised Independent
Director Qi Daqing to represent him and vote on behalf of him at the board meeting.
The Company’s interim financial statements have not been audited.
Chairman Wang Shi, Director and President Yu Liang, and Executive Vice President and
Supervisor of Finance Wang Wenjin, declare that the interim financial statements contained
in the interim report is warranted to be true and complete.
Basic Corporate Information …………………………………………………………………………2
Change in Share Capital and Shareholdings of Major Shareholders ..…………………………………3
Directors, Members of Supervisory Committee, Senior Management ………………..………………5
Directors’ Report ………………………………………………………………………….……………6
Significant Events…………………………………………………………………………………..…..14
Financial statements (unaudited) ………………………………………………………………………212
I. Basic Corporate Information
1. Company Name (Chinese): 万科企业股份有限公司 (“万科”)
Company Name (English): China Vanke Co., Ltd. (“Vanke”)
2. Registered address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen,
the People’s Republic of China
Postal code: 518083
Office address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the
People’s Republic of China
Postal code: 518083
Website: www.vanke.com
E-mail address: IR@vanke.com
3. Legal representative: Wang Shi
4. Secretary of the Board: Tan Huajie
E-mail address: IR@vanke.com
Securities Affairs Representative: Liang Jie
E-mail address: IR@vanke.com
Contact Address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian 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 interim reports: www.cninfo.com.cn
Place for interim report collection: The 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. 2010 Jan.-Jun. 2009 Change（+/-）
Revenue 15,816,254,224 20,553,477,931 -23.05%
Profit from operating activities 4,759,015,616 4,564,464,977 4.26%
Profit before income tax 4,840,884,715 4,497,394,176 7.64%
Profit attributable to equity
shareholders 2,812,498,573 2,524,392,406 11.41%
Basic EPS 0.26 0.23 13.04%
Diluted EPS 0.26 0.23 13.04%
Return on equity 7.07% 7.31% Down by 0.24
percentage point
Net cash generated from operating
activities (9,514,421,179) 9,821,584,634 -196.87%
Net cash generated from operating
activities per share (0.87) 0.89 -197.75%3
Financial Indicators 30-Jun-10 31-Dec-09 Change（+/-）
Current assets 152,924,799,637 130,742,083,769 16.97%
Current Liabilities 85,884,688,461 68,058,279,848 26.19%
Total assets 160,875,948,287 138,027,359,150 16.55%
shareholder's equity 39,772,953,744 37,375,888,061 6.41%
Net assets per share 3.62 3.40 6.47%
(2) Difference between IFRSs and PRC accounting standards on net profit and eqity（Unit: RMB）
Item Prepared in accordance with
IFRS
Prepared in accordance with
PRC Accounting Standards
Net profit attributable to equity
shareholders of the Company 2,812,498,573 2,812,498,573
Equity attributable to equity
shareholders of the Company 39,772,953,744 39,772,953,744
Remarks on the differences There is no difference.
II. Change in Share Capital and Shareholdings of Major Shareholders
1. Change in Share Capital (as at 30 June 2010)
Unit: Share
Before the Change After the Change
Class of Share Quantity
Percentage
of
shareholding
Increase / decrease
（+, -）
Quantity
Percentage
of
shareholding
I. Restricted Shares
1. State-owned and
State-owned legal person shares
2. Shares held by domestic non-
State-owned legal persons
3. Shares held by domestic
natural persons 24,159,840 0.22% +15,000 24,174,840 0.22%
4. Shares held by foreign
investors
Total number of restricted
shares 24,159,840 0.22% +15,000 24,174,840 0.22%
II. Non-restricted Shares
1. RMB-denominated ordinary
shares (A shares) 9,656,094,910 87.82% -15,000 9,656,079,910 87.82%
2. Domestic listed foreign
shares (B shares) 1,314,955,468 11.96% 0 1,314,955,468 11.96%
Total number of
non-restricted shares 10,971,050,378 99.78% -15,000 10,971,035,378 99.78%
III. Total Number of Shares 10,995,210,218 100.00% 0 10,995,210,218 100.00%
Note: Since the Company’s shares held by the newly elected supervisors are subject to regulation in accordance with the
relevant requirements, there has been an increase in the Company’s 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 2010)
Unit: Share
Total number of shareholders 1,492,336 (including 1,456,960 holders of A shares and 35,376 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
lock-up shares
CRC State-owned
legal person 14.73% 1,619,094,766 0 0
E Fund Shenzhen Stock Exchange 100
Exchange-Traded Fund
(易方达深证100交易型开放式指数证
券投资基金)
Others 1.44% 158,408,257
0 04
Gaohua – HSBC – Goldman Sachs &
Co
Others 1.26% 138,188,110 0 0
Liu Yuansheng Others 1.22% 133,791,208 0 0
China Life Insurance Company
Limited– Dividend Distribution–
Individual Dividend- 005L-FH002
Shen
Others
1.02% 111,741,448 0 0
Rongtong Shenzhen Stock Exchange
100 Index Securities Investment Fund
(融通深证100指数证券投资基金)
Others
0.95% 104,453,413
0 0
Morgan Stanley & Co. International
PLC
Others 0.90% 98,484,131 0 0
HTHK/CMG FSGUFP-CMG First
State China Growth FD
Foreign
shareholder 0.84% 92,825,068 0 0
Toyo Securities Asia Limited-A/C
Client
Foreign
shareholder 0.78% 86,135,044 0 0
UBS AG Others 0.63% 69,747,105 0 0
Shareholdings of the top 10 holders of non-restricted shares
Name of shareholder Number of non-restricted shares held Class of shares
CRC 1,619,094,766
Ordinary RMB-denominated
shares
(A shares)
E Fund Shenzhen Stock Exchange 100
Exchange-Traded Fund
(易方达深证100交易型开放式指数证
券投资基金)
158,408,257
Ordinary RMB-denominated
shares
(A shares)
Gaohua – HSBC – Goldman Sachs &
Co 138,188,110
Ordinary RMB-denominated
shares
(A shares)
Liu Yuansheng 133,791,208
Ordinary RMB-denominated
shares
(A shares)
China Life Insurance Company
Limited– Dividend Distribution–
Individual Dividend- 005L-FH002
Shen
111,741,448
Ordinary RMB-denominated
shares
(A shares)
Rongtong Shenzhen Stock Exchange
100 Index Securities Investment Fund
(融通深证100指数证券投资基金)
104,453,413
Ordinary RMB-denominated
shares
(A shares)
Morgan Stanley & Co. International
PLC 98,484,131
Ordinary RMB-denominated
shares
(A shares)
HTHK/CMG FSGUFP-CMG First
State China Growth FD 92,825,068 Domestic listed foreign shares
(B shares)
Toyo Securities Asia Limited-A/C
Client 86,135,044 Domestic listed foreign shares
(B shares)
UBS AG 69,747,105
Ordinary RMB-denominated
shares
(A shares)
Remarks on the connected relationship
or action in concert of the
aforementioned shareholders
Nil
3. Bond holdings of the Company’s top 10 bondholders (as at 30 June 2010)
(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-018LFH002
Shen 5,548,262
2 China Petroleum Finance Co., Ltd 4,157,662
3 China Pacific Insurance (Group) Co., Ltd. 3,433,312
4 China Life Insurance Company Limited 2,619,042
5 China Ping An Life Insurance Company Limited – Traditional – General Insurance
Products 2,218,7275
6 China Life Property and Casualty Insurance Company Limited –Traditional – General
Insurance Products 1,820,000
7 CNPC Pension Scheme - ICBC 1,010,622
8 China Life Pension Company Limited – Internal Resources 1,000,000
9 China Property & Casualty Reinsurance Company Ltd. 776,162
10 Ping An Property and Casualty Insurance Company of China –Investment-oriented
Insurance Products 751,630
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. China Petroleum Finance Co., Ltd is the subsidiary of CNPC, which is the custodian of CNPC Pension
Scheme – ICBC. Apart from the above-mentioned relationships, it is not known as to whether there are other
connections or persons deemed to be acting in concert under the Measures for the Administration of the Takeover of
Listed Companies among the above-mentioned 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 Asset Management Co., Ltd – ICBC – Assets of Specific Clients(工
银瑞信基金公司－工行－特定客户资产)
2,385,995
2 ICBC Credit Suisse Credit Tianli Bond Securities Investment Fund 2,346,450
3 China National Machinery Import & Export Corporation 1,946,689
4 206 Portfolio of National Social Security Fund, PRC 1,430,218
5 Fullgoal Tianfeng Surging Income Bond Securities Investment Fund 1,364,700
6 CNPC Pension Scheme - ICBC 972,256
7 801 Portfolio of National Social Security Fund, PRC 959,778
8 China AMC Growth Securities Investment Fund 935,737
9 Harvest Stable Growth Open-end Securities Investment Fund 709,998
10 UBS AG 660,308
Note: “ICBC Credit Suisse Asset Management Co., Ltd – ICBC – Assets of Specific Clients” and “ICBC Credit Suisse
Credit Tianli Bond Securities Investment Fund” are managed by ICBC Credit Suisse Asset Management Co., Ltd.
Apart from the above-mentioned relationship, it is not known as to whether there are other connections or persons
deemed to be acting in concert under the Measures for the Administration of the Takeover of Listed Companies 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.
III Directors, Members of Supervisory Committee, 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 31-Dec-09 30-Jun-10
Wang Shi Chairman 6,817,201 6,817,201
Yu Liang Director, President 4,106,245 4,106,245
Ding Fuyuan Chairman of the Supervisory
Committee 2,018,408 2,018,408
Sun Jianyi Director 692,236 692,236
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 1,446,8496
Wang Wenjin Executive Vice President 1,343,591 1,343,591
Zhou Qingping Member of the Supervisory
Committee 20,000 20,000
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
During the reporting period, Mr Zhou Qingping was elected by the Company’s Staff Committee as the
Staff Representative Supervisor, Mr Ding Fuyuan and Mr Wu Ding were elected as Supervisor by the
Company’s 2009 Annual General Meeting.
During the reporting period, Mr Song Lin resigned as Director and Deputy Chairman of the Board. The
Board nominated Mr Qiao Shibo as Director candidate and Mr Zhang Liping as independent Director
candidate.
IV Directors’ Report
1. Management Discussion and Analysis
Changes in operating environment and the Company’s judgement
During the reporting period, there were drastic changes in the market environment. From January to April
2010, the sales area and sales amount of commodity housing in the PRC increased by 30.3 per cent and
51.5 per cent from those of the same period last year respectively. The market continued the growth
momentum seen in 2009. However, in response to the “Notice regarding determination to curb rapidly
rising housing price in certain cities” promulgated by the State Council in the middle of April, the sales
area and sales amount of commodity housing in the PRC in May and June dropped by 5.9 per cent and
11.1 per cent respectively from those of the same period of last year. With respect to the 14 major cities
closely monitored by China Vanke, the sales area and sales amount of commodity housing decreased by
62.4 per cent and 59.8 per cent from those of the same period of the previous year respectively. By looking
at the properties transacted, investment property demand was dwindling, and the sales of large and highend
commodity housing had significantly slowed down, while the proportion of small to medium sized
ordinary commodity housing had further increased. In addition, the housing price in certain cities, where
investment demand accounted for a larger percentage and the price increased too fast previously, showed
signs of weakening.
Compared with those of recent years, the current inventory levels of new housing units in most of the cities
remain low. However, as a result of the slide in sales, the decline in new home inventory in major cities
that has continued since the market recovery in 2009 has started to end. In June, the sales area of
commodity housing to approved pre-sales area of new housing ratio of the 14 major cities closely
monitored by the Company dropped to less than 1, which was the lowest since January 2009. With the
peak season for launching new properties in the second half of 2010, it is expected that the rise in the
inventory level of new properties available for sale will speed up.
During the first half of 2010, the floor area commencing construction and investment amount for
development of commodity housing in the PRC continued to increase by 65.4 per cent and 34.4 per cent
respectively when compared with those of the same period last year. From past experiences, the adjustment
in floor area commencing construction and investment for development generally lags behind the change
in transaction volume. Slow trading activities and rising inventory level may put pressure on property
developers in respect of inventory and capital shortage, which will hinder the investment ability of the
developers. This in turn will slow down land acquisition and new construction activities, thereby affecting
the housing supply in the subsequent year.
In respect of the land market, although there was no change in land supply between the first and second
quarters, the area of land sold declined significantly in the second quarter when compared with that of the
first quarter. In spite of the fact that the reserve price at land auctions remained high, the average
transaction price and premium to reserve price ratio had dropped considerably. With the market
restoring rationality, developers had adjusted their overoptimistic expectations for the future and their7
interest in land purchase waned. In the second quarter, the average land sales price in certain first tier cities
dropped significantly, while the second and third tier cities saw relatively small decline in price. In
response to the rapidly rising housing price and fierce competition for land in certain popular cities, the
Company has since 2009 remained cautious. The prevailing market adjustment, to certain extent, proves
the Company is right in its judgement of the land market, and will create favourable conditions for the
Company to acquire land in these cities.
Company’s operation and management
During the reporting period, the Company strove to consolidate its mainstream market position. With an
aim to maintain active transactions, the Company proactively increased sales and achieved satisfactory
results. The Company realised accumulative sales area of 3,202,000 sq m, with sales amounting to
RMB36.77 billion, which was up by 19.5 per cent from that in the same period of the previous year. As at
the end of the reporting period, the Company’s sales accounted for 2.18 per cent of commodity housing
sales in the entire country. In terms of market share, the Company’s rankings in 15 cities rose when
compared with those in 2009. The Company climbed to first in the rankings in Beijing, Tianjin and
Qingdao, and remained top of the rankings in Shenzhen, Wuxi, Shenyang, Wuhan and Zhenjiang.
Completion dates vary with each property project. At the beginning of the year, the Company had planned
to complete a floor area of 5,040,000 sq m for the full year. As at the end of June 2010, the actual floor
area completed amounted to 1,280,000 sq m, accounting for only 25.4 per cent of the planned floor area
completed for the entire year. As a result, the Company’s booked area and booked revenue during the
reporting period amounted to 1,505,000 sq m and RMB15.52 billion respectively, representing decreases
of 39.4 per cent and 23.9 per cent from those of the same period last year respectively. The Company’s
revenue amounted to RMB15.82 billion, representing a decrease of 23.1 per cent from that of the same
period last year. Most of the Company’s projects will be completed in the second half of the year. With the
gradual completion and recognition of these projects, it is expected that the booked revenue and revenue in
the second half of 2010 will grow significantly when compared to those in the first half of the year.
As a large number of units sold during the tough period in 2008 were booked in the interim period of 2009,
the profit margin for the 2009 interim period was at its lowest in recent years. Putting this into perspective,
the net profit in the first half of 2010 was higher than that of the same period last year. During the
reporting period, the Company’s net profit amounted to RMB2.81 billion, representing an increase of 11.4
per cent from that of the same period of the previous year.
In the first half of the year, the Company’s sales went well, but not many of the properties sold were
recognised, leading to a significant growth in properties sold but not yet booked. As at the end of the
reporting period, there was an area of 5,300,000 sq m sold but not yet booked, with an aggregate contract
amount of approximately RMB57.3 billion, representing increases of 41.3 per cent and 50.0 per cent
respectively when compared to those at the beginning of the year. This has laid a solid foundation for
growth in operating results in the future.
During the reporting period, gross margin of the Company’s property business was 31.94 per cent, up by
5.93 percentage points from that of the same period of previous year. Owing to the time lag in revenue
recognition in the property industry, the rise in gross margin mainly reflected the rebound in project
margin brought by market recovery in 2009. To a certain extent, the increase in gross margin also reflected
the results of the Company’s efforts to control cost and improve profitability in recent years.
According to the latest market and sales conditions, the Company made an assessment during the reporting
period of the projects for which provisions for diminution in value had been made. Based on the
assessment results, the Company reversed the provisions for diminution in value of RMB166.88 million
and RMB81.5 million for the Paradiso Project, Nanjing and Haiyue Huicheng Project, Chengdu
respectively. The provisions for diminution in value made for the other two projects, namely Golden
Lingyu, Chengdu and Golden Rongjun, Fuzhou, remained unchanged.
As at the end of the reporting period, among the Company’s different types of inventories, completed
properties (completed properties ready for sale) accounted for approximately 4.7 per cent, indicating a
further reduction from 5.9 per cent as at the end of 2009. The inventory structure has therefore further
improved.
During the reporting period, the Company continued to leverage the edge of its geographical
diversification and control the risks of land acquisition, tried to acquire projects at reasonable price. The8
new projects that the Company acquired during the first half of the year were mostly located in the second
and third tier cities of the PRC, where growth in housing price and land price was relatively less
significant. The Company entered the new markets of Kunming, Guiyang, Tangshan and Jilin, and
acquired a total number of 38 new projects during the reporting period. The planned GFA of the newly
added projects attributable to China Vanke’s equity holding amounted to 8.93 million sq m. The average
accommodation value of the newly added projects continued to remain at a relatively low level of around
RMB2,300. The Company will keep an eye on any opportunities possibly arising from market adjustment,
especially the opportunities for acquiring projects in first tier cities at reasonable prices.
In the second half of 2009, the Company warned that housing prices in certain popular cities had grown
too fast and took into consideration of possible market adjustments in its plan for newly commenced
construction for 2010. As such, the Company did not have to consider adjusting its plan for newly
commenced projects even though there had been drastic changes in the market environment during the
reporting period. The development of the Company’s projects is currently progressing according to
schedule and construction of certain newly added projects acquired during the year will commence in
2010.
As at the end of the reporting period, the cash and cash equivalents held by the Company further increased
to RMB19.11 billion from RMB17.92 billion as at the end of the first quarter of 2010. Although the
Company’s net debt ratio increased from 36.4 per cent in the first quarter of 2010 to 40.8 per cent, it was
still relatively low when compared to industry level. The sound financial and capital position is positive
for the Company to maintain safe operations under various market conditions and to capture any market
opportunities.
During the reporting period, the Company conducted a review and analysis of the market changes and its
operation and management experience in the past few years. Based on the results of the review and
analysis, the Company will in the second half of the year further fine-tune its development plan and
business focus for the next three to fives years. The Company will not only strive to maintain its
positioning targeting at the mainstream residential property market, but will also put more emphasis on the
improvement of operation efficiency and return on investment.
Following the end of its nation-wide tender offer for building and decorative materials for C-grade
furbished units in 2009, the Company during the reporting period carried out its first centralised
procurement for standardised materials for Grades A and B furbished units, in order to further expand the
scope of standardised product categories. Through research and development of standardised product
categories for furbished units and centralising nation-wide tender purchase, the Company expects to better
leverage on economies of scale, promote integration of premium resources in the supply chain and become
more competitive in decorative materials. The Company will continue to fine-tune certain standardised
product categories in all aspects, including product inventory, style, decoration, landscape and functions,
provide products with high price performance ratio that fit for the Company’s scale of development and
increase operation efficiency and product competitiveness.
During the reporting period, the World Expo, Shanghai unveiled, welcoming visitors from all over the
world. Up to the present, visitor arrivals to China Vanke Pavilion at the Expo reached approximately
600,000. The high recognition and accolade from the government, media, peer companies and tourists
further improved the brand image of China Vanke. Under the backdrop of low carbon economy, China
Vanke Pavilion, being the Company’s important platform to promote green ideology, can help the
Company to improve brand awareness and competitiveness in green architecture and propel the Company
to complete its transformation into a green enterprise.
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 sales area and sales revenue of the Company amounted to 3,202,000 sq m and
RMB36.77 billion respectively.
Since completion dates vary with each property project, the actual floor area completed between January
and June 2010 amounted to 1,280,000 sq m, accounting for only 25.4% per cent of the planned floor area
completed of 5,040,000 sq m for the full year. As a result, the booked area and booked revenue of the
Company’s property projects in the first half of 2010 were 1,505,000 sq m and RMB15.52 billion9
respectively, representing decreases of 39.4 per cent and 23.9 per cent respectively when compared with
those of the corresponding period of the previous year. The gross margin from the property business was
31.94 per cent, up by 5.93 percentage points from that of the same period last year.
（Unit:RMB’000）
Sector Revenue Cost of sales Gross margin
Amount Change Amount Change % Change
Property sales
15,516,559.89 -23.90% 9,812,363.07 -33.27% 31.94 Up by 5.93
percentage point
Property
management
299,694.33 83.20% 234,526.38 73.23% 21.74 Up by 4.50
percentage point
Total
15,816,254.22 -23.05% 10,046,889.45 -32.30% 31.75 Up by 5.81
percentage point
Note: Gross margins are calculated after land appreciation tax.
(2) Comparison of major assets and liabilities and operating metrics (Unit: RMB’000)
Item 30-Jun-10 31-Dec-09 Change
(+/-) Reasons for change
Investment properties 124,381.46 228,143.16 -45.48%
Disposal of subsidary
Interest-bearing
borrowings(Current liabilities) 13,416,327.82 8,628,670.48 55.49%
Change in debt structure
Trade and other payables 68,331,120.74 55,244,411.87 23.69%
Increase in investment for the development
of projects with associates and jointly
controlled entities
Item Jan-Jun 2010 Jan-Jun 2009 Change
(+/-) Reasons for change
Revenue
15,816,254.22 20,553,477.93
-23.05%
Difference in booked time of property
development
Cost of sales
10,046,889.45 14,840,848.43
-32.30%
Difference in booked time of property
development
Other income
206,654.65 53,561.48
285.83%
Income from disposal of certain finacial ass
ets
Financial income
373,600.88 134,732.21
177.29%
Increase in dividends from investment of
cost method
Share of profits less losses of
jointly controlled entities 76,772.07 (18,330.04)
518.83%
More profits recognised from jointly
controlled entities
Profit attributable to equity
shareholders of the Company 2,812,498.57 2,524,392.41
11.41%
Net profit increased in the reporting 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(%)
Netprofit
（RMB'000） Change(%)
BookedArea
（'000sqm）
Change(
%)
Pearl River Delta Region
Shenzhen 2,771,200.47 17.86% 593,575.20 20.25% 146.86 9.76%
Guangzhou 467,615.11 3.01% 18,236.17 0.62% 38.70 2.57%
Dongguan 467,201.90 3.01% 95,285.18 3.25% 45.78 3.04%
Foshan 803,059.75 5.18% 241,258.81 8.23% 111.90 7.43%
Hainan 187,140.59 1.21% 20,504.26 0.70% 5.94 0.39%
others 73,155.50 0.47% 1,075.95 0.04% 5.35 0.36%
Sub-total 4,769,373.32 30.74% 969,935.57 33.09% 354.52 23.55%
Yangtze River Delta Region
Shanghai 3,416,177.73 22.01% 701,611.32 23.94% 252.02 16.74%10
Suzhou 708,693.14 4.57% 88,979.38 3.04% 57.68 3.83%
Hangzhou 1,336,623.70 8.61% 287,463.92 9.81% 125.50 8.34%
Nanjing 166,918.84 1.08% 101,090.73 3.45% 18.93 1.26%
Ningbo 1,008,181.20 6.50% 343,279.53 11.71% 109.52 7.28%
Wuxi 318,746.50 2.05% 3,009.81 0.10% 47.58 3.16%
others 79,498.89 0.52% 23,223.58 0.80% 17.19 1.14%
Sub-total 7,034,839.99 45.34% 1,548,658.27 52.85% 628.41 41.75%
Bohai-rim Region
Beijing 1,088,106.86 7.01% 96,841.88 3.30% 139.01 9.24%
Tianjin 236,833.34 1.53% 33,794.67 1.15% 19.97 1.33%
Shenyang 541,392.54 3.49% 93,541.83 3.19% 90.10 5.99%
others 145,717.23 0.93% (43,294.48) -1.48% 22.47 1.48%
Sub-total 2,012,049.97 12.96% 180,883.90 6.16% 271.56 18.04%
Central and Western Region
Chengdu 400,457.60 2.58% 69,696.34 2.38% 69.95 4.65%
Wuhan 923,904.34 5.95% 134,012.37 4.57% 127.83 8.49%
Xian 286,394.26 1.85% 41,500.26 1.42% 41.65 2.77%
others 89,540.42 0.58% (13,812.03) -0.47% 11.34 0.75%
Sub-total 1,700,296.62 10.96% 231,396.95 7.90% 250.76 16.66%
Total 15,516,559.89 100.00% 2,930,874.69 100.00% 1,505.25 100.00%
Note: “Others” under Pearl River Delta Region includes Zhuhai, Zhongshan, Changsha, Xiamen, Fuzhou; “Others” under
Yangtze River Delta Region includes: Nanchang, Zhenjiang, Hefei; “Others” under Bohai-rim Region includes: Dalian,
Qingdao, Yantai, Taiyuan, Changchun; “Others” under Central and Western Region includes: Chongqing, Guiyang,
Kunming. Anshan was included in Shenyang .
3. Investment of the Company
（1）Use of proceeds from the capital market
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)
Fund used during the
Total amount of proceeds 9,936,600 reporting period 48,150
Accumulated fund used 9,563,030
Investment project Change
in project
Planned
investment
amount
Actual
investmen
t made
Investment
made during
the reporting
period
Progress
Estimated profit
margin
(net margin of
the entire
project)
Net
margin on
booked
sales
Golden Yazhu, Shanghai
(former Zhonglin project)
No 700,000 700,000 0 100% 14.94% 20.00%
Wujiefang Project, Pudong,
Shanghai
No
1,200,000 1,050,750 6,150
Constructio
n not yet
commenced
10.34% -
West Spring Butterfly Garden,
Hangzhou (former Jiangcun
project)
No
700,000 700,000 0 42% 10.12% 18.03%
Liangzhu project, Yuhang
District, Hangzhou
No 1,700,000 1,700,000 0 38% 10.29% 15.00%11
Golden Town project, Qinzhou
District, Ningbo
No 1,636,600 1,636,600 0 90% 11.42% 18.20%
The Dream Town, Foshan
(former Nanzhuang project）
No 900,000 900,000 0 45% 17.08% 18.50%
Everest Town, Guangzhou
(former Science City H3
project)
No 600,000 600,000 0 100% 9.20% 11.48%
The Paradiso, Guangzhou
(former Jinshazhou project)
No 800,000 800,000 0 60% 13.70% 10.41%
Zhuhai Hotel project,
Xiangzhou District, Zhuhai
No 650,000 628,340 40,960 22% 11.73% -
Anpin Street, Baixia District,
Nanjing
No
650,000 447,340 1,040
Constructio
n not yet
commenced
12.09% -
Stratford, Nanjing (former
Huangjiadun project)
No 400,000 400,000 0 100% 20.54% 11.40%
Total - 9,936,600 9,563,030 48,150 - - -
Remarks on failure to reach
progress target and estimated
gains (by project)
1. Affected by the government’s adjustment in road planning for World Expo,
construction of Wujiefang Project in Shanghai did not commence as scheduled. The
Company is in the progress of submitting planning reports for approval. It is expected
that construction will commence in the fourth quarter of 2010, and the overall
development plan will be adjusted according to the progress of the project. The plot
ratio and height of Anpin Street Project, Nanjing had to be reduced due to
government policy to preserve the old town, affecting the construction
commencement schedule and investment return. The Company is in the progress of
submitting planning reports for approval. It is expected that construction will
commence in the second half of 2010. The overall development plan will be adjusted
according to the progress of the project.
2. In view of the current sales progress and market forecast, the earnings to be
generated from Stratford project, Nanjing will not reach the estimated level stated in
the prospectus. And other investment projects financed by the raised proceeds are
expected to have a return rate above the estimated return rate. The overall return from
the investment projects financed by the raised proceeds is expected to exceed the
estimated level 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 2010, the Company had applied RMB9,563,030,000 of the proceeds in
accordance with the prospectus. The amount represented 96.24 per cent of the net
proceeds of RMB9,936,600,000 . The remaining balance of RMB373,570,000 will be
fully used in accordance with the progress of the project development.
（2）Use of capital not from the capital market
Major equity investment
1）During the reporting period, the Company promoted and established 12 new subsidiaries, each with
registered capital of over RMB30 million. The details are as follows:
(Unit:’000)
No. Newly established company Currency Registered
capital
Actual investment by
China Vanke (RMB)
Scope of
business
1 Xi’an Vanke Kaizhou Property Co., Ltd.
(西安万科恺洲置业有限公司) USD 132,000.00 987,074.58 Property
development
2 Ningbo Wangang Real Estate Co., Ltd.
(宁波万港房地产开发有限公司) RMB 603,750.00 603,750.00 Property
development
3 Shanghai Puhui Property Co., Ltd.
(上海浦汇置业有限公司) RMB 290,000.00 290,000.00 Property
development
4 Shenyang Vanke Dongman Property Co.,
Ltd.(沈阳万科东漫置业有限公司) USD 70,000.00 229,360.32 Property
development
5 Tangshan Vanke Real Estate Co., Ltd.
(唐山万科房地产开发有限公司) RMB 200,000.00 200,000.00 Property
development
6 Fuzhou Wanrong Real Estate Co., Ltd.
(福州市万榕房地产开发有限公司)
RMB 160,000.00 160,000.00 Property
development
7 Guiyang Vanke Real Estate Co., Ltd.
(贵阳万科房地产有限公司)
RMB 100,000.00 100,000.00 Property
development12
8
Jilin Vanke River Bank Real Estate Co.,
Ltd.
(吉林市万科滨江房地产开发有限公司)
RMB
100,000.00 100,000.00 Property
development
9
Wuhan Liantou Vanke Real Estate Co.,
Ltd.
(武汉联投万科房地产有限公司)
RMB
200,000.00 100,000.00 Property
development
10 Xi’an Vanke South Property Co., Ltd.
(西安万科南部置业有限公司)
RMB 100,000.00 85,000.00 Property
development
11
Langfang Wanheng Shengye Real Estate
Co., Ltd.
(廊坊万恒盛业房地产开发有限公司)
USD 50,000.00 69,630.00 Property
development
12 Yantai Vanke Real Estate Co., Ltd.
(烟台万科房地产开发有限公司) RMB 30,000.00 30,000.00 Property
development
Total 2,954,814.90
2）The companies the Group acquired during the reporting period are shown as follows:
A．On 26 February 2010, the Company acquired 100% equity interest of Kunming Xinhemin Real Estate
Co., Ltd. for a total cash consideration of RMB335.78 million.
B．On 26 March 2010, the Company acquired 75% equity interest of Shanghai Zhongfang River Bank
Property Co., Ltd. for a total cash consideration of RMB152.20 million.
C．On 20 April 2010, the Company acquired 100% equity interest of Shenzhen Vanke Jiuzhou Real
Estate Co., Ltd. for a total cash consideration of RMB98.20 million.
During the reporting period, the Company acquired another 14 companies for a total consideration of
RMB236.59 million.
3）During the reporting period, in order to support the business development of its subsidiaries, the
Company increased the capital of 10 subsidaries by approximately RMB2,049 million. Of the total
amount, RMB476 million was for Wuhan Wanwei Real Estate Co., Ltd., RMB357 million for Foshan
Nanhai Vanke Paradiso Real Estate Co., Ltd., RMB315 million for Tianjin Wanbin Vanke Real Estate Co.,
Ltd.. Capital injection to other companies during the period under review amounted to RMB901 million.
Other investments
During the reporting period, the Company acquired 38 new projects, with an aggregated planned GFA of
11,958,273 sq m, of which approximately 8,925,965 sq m was attributable to China Vanke’s equity
holding. Details of the projects are as follows:
City Project Location Equity
interest
Site Area
(sq m)
Planned
GFA
(sq m)
GFA
attributable to
China
Vanke’s
equity holding
(sq m)
Progress
Huizhou
Subsequent phase
of Shuangyue
Bay
Huidong 67% 327,000 490,500 328,635 Pre-construction
Phase II of
Chencun Project Shunde 100% 117,854 294,636 294,636 Pre-construction
Lunjiao Project Shunde 100% 80,571 241,712 241,712 Under
construction
Foshan
Project F04 Shunde 50% 30,382 75,954 37,977 Pre-construction
Guangzhou Tianhe Yupin
Porject Baiyun 100% 22,297 120,850 120,850 For sale
The Paradiso
Songshan Lake
Songshan
Dongguan Lake 51% 136,151 381,000 194,310 Pre-construction
Humen Zitai
Project Humen 100% 60,570 151,426 151,426 Pre-construction13
Chang’an Project Chang’an 100% 75,654 258,112 258,112 Pre-construction
Changsha Machine Tool
Factory Project Tianxin 70% 99,770 232,761 162,933 Pre-construction
Shanghai New
Village Project Taijiang 100% 93,359 445,703 445,703 Pre-construction
Fuzhou Yongtai Red Cliff
Project Yongtai 51% 392,000 382,048 194,844 Pre-construction
Zhongshan Tanzhou Project Tanzhou 100% 32,103 126,932 126,932 Pre-construction
Xinchang C4
Project
Pudong New
District 100% 99,209 148,814 148,814 Pre-construction
Shanghai Zhonggu Project Qingpu 100% 116,524 145,266 145,266 Pre-construction
Guangfulin
Project Songjiang 45% 130,970 104,778 47,150 Pre-construction
Hangzhou Caozhuang
Gongjian Jianggan 50% 68,564 150,841 75,571 Pre-construction
Jishi Port Project Yinzhou 100% 95,242 171,435 171,435 Pre-construction
Ningbo Zhenhai Lvhe
Project Zhenhai 49% 226,777 488,148 239,193 Pre-construction
Zhenjiang Bailongshan
Project Runzhou 60% 285,683 416,448 249,869 Pre-construction
Wuxi Xincheng Road
Project Binhu 100% 154,119 385,299 385,299 Pre-construction
Suzhou Wuyishan Road
Project
Suzhou New
District 36% 164,532 143,626 51,705 Pre-construction
Nanchang Chaoyangzhou
Project Xihu 50% 21,818 76,362 38,181 Pre-construction
Beijing
Land Lot No 3,
Changyang
Project
Fangshan 50% 78,325 157,992 78,996 Pre-construction
Tangshan South Lake
Project Lu’nan 100% 153,527 101,462 101,462 Pre-construction
Dalian Land Lot C of
Glamorous City Ganjinzi 100% 50,083 98,900 98,900 Pre-construction
Tianjin Tianjin Port
Project
Binhai New
District 51% 149,520 371,750 189,593 Pre-construction
Vanke Blue
Mountain Dadong 60% 74,527 222,520 133,512 Under
construction
Gear Wheel Plant
Shenyang Projec Tiexi 70% 66,356 180,363 126,254 Pre-construction
Sihai Logistic
Project Tiexi 100% 40,971 102,013 102,013 Pre-construction
Jilin Binjiang Project Jilin 65% 728,139 2,155,020 1,400,763 Pre-construction
Qingdao Licang Project Licang 100% 141,273 265,321 265,321 Pre-construction
Wuhan Yangtze River
Village Project Hongshan 100% 135,600 470,400 470,400 Pre-construction
Chengdu Phase I, Wulong
Mountain Xindu 100% 345,174 346,214 346,214 Pre-construction
The Paradiso
Qujiang
Qujiang
New District 55% 152,667 386,876 212,782 Under
Xi’an Chang’an the construction
Dream Town Chang’an 85% 186,849 617,610 524,969 Under
construction
Kunming Jinyu Tixiang Panlong 100% 104,724 267,084 267,084 Pre-construction
King Metropolis Xiaohe 51% 322,899 581,218 296,421 Pre-construction
Guiyang
The Paradiso Yunyan 100% 80,352 200,880 200,880 Pre-construction
Total 5,642,134 11,958,273 8,925,965 -
From the end of the reporting period to the date of announcement of this report, the Company acquired 4
new projects, with a planned GFA of 1,816,015 sq m, of which 1,316,440 sq m of planned GFA is in
proportion to China Vanke’s equity holding. Details are as follows:14
City Project Location Equity
Interest
Site Area
(sq m)
Currently
planned
GFA (sq m)
Planned GFA
in proportion
to Vanke’s
equity holding
( sq m)
Progress
Shenzhen Buji Sandy Bay
Project
Longgang
District 65% 104,870 481,215 312,790 Pre-construction
Dalian
Land lot D/E of
Glamorous
Project
Ganjingzi
District 100% 68,400 129,800 129,800 Pre-construction
Langfan Xianghe Project
Phase II Xianghe 50% 264,900 662,300 331,150 Pre-construction
Wuhan Wanzihu Project Hankou
District 100% 102,500 542,700 542,700 Pre-construction
Total 540,670 1,816,015 1,316,440 -
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.
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 long-standing trust and win-win relationships with its investors.
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, according to the relevant requirements, established a system to
make claims against those liable for material errors in annual report information disclosure and started a
special intiative focused on basic financial managment, thereby further improving its corporate
governance.
The Company’s actual corporate governance practice showed no deviation from the requirements of the
relevant documents issued by the CSRC.
2. Implementation of the Company’s proposal on dividend distribution for the previous year
and profit appropriation for the interim period of 2010
Dividend distribution for the year 2009 was approved at the 2009 Annual General Meeting held on 23
March 2010. The proposal on the dividend distribution was: based on the total share capital as at the close
of the market on the record date of the Company, a cash dividend of RMB0.70 (including tax; after
deducting tax, a cash dividend of RMB0.63 would be paid for every 10 existing shares beneficially held by
individual shareholders, investment funds and non-resident enterprises holding A shares; for non-resident
enterprise shareholders holding B shares, a cash dividend of RMB0.63 would be paid for every 10 existing
shares; other holders of B shares were not subject to taxation for the time being) would be paid to all the
shareholders on the basis of every 10 existing shares held.
The aforesaid proposal was implemented during the reporting period: the record date for A shares was 17
May 2010, and ex-dividend date was 18 May 2010, while the last trading day of B shares was 17 May
2010, ex-dividend date was 18 May 2010, and the record date was 20 May 2010. For details on the15
implementation of the proposal, please refer to the announcement published in China Securities Journal,
Securities Times, Shanghai Securities News, cninfo.com.cn and irasia.com on 10 May 2010.
The Company will not carry out profit appropriation nor the transfer of capital surplus reserve to share
capital for the interim period of 2010.
3. Implementation of The Restricted Stock Incentive Plan
As the incentive plan for year 2007 under Phase One Restricted Stock Incentive Plan did not meet the
condition for stock price performance target, the termination of the incentive plan was confirmed in the
announcement dated 5 January 2010. All of the 46,551,761 Vanke A shares held by the incentive plan for
year 2007 were sold on the secondary market within the tradable window period. The total amount of
funds, together with the accrued interest, under the incentive plan for year 2007, in an aggregate amount of
RMB468,728,083.89 was transferred to the Company’s designated account during the reporting period.
Termination of the implementation of the incentive plan for year 2007 was completed. The implementation
of Phase One Restricted Stock Incentive Plan had completed.
Please refer to the announcements published in China Securities Journal, Securities Times, Shanghai
Securities News and cninfo.com.cn on 5 January 2010 and 27 January 2010 for details.
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 investment
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
- - - 43,480,910.81 (61,866,882.60)
600697
Changchun
Eurasia Group
Co., Ltd
819,957.78 0.19% 7,530,072.06 36,584,997.03 (34,197,694.34)
600680 Shanghai
Potevio Co., Ltd
2,780,251.55 0.35% 12,600,640.00 19,508,737.51 (22,541,483.49)
600751
SST Tianjin
Marine Shipping
Co., Ltd.
143,600.00 0.04% 143,600.00 - -
Total 3,743,809.33 - 20,274,312.06 99,574,645.35 (118,606,060.43)
Note:1. The above-mentioned equity interests are legal person shares held by the Company over the years. Up till now, SST
Tianjin Marine Shipping Co., Ltd has not undergone share reform.16
2. During the reporting period, all the equity interests held in Shenzhen Development Bank Co., Ltd – A by the Company
and part of the equity interests held in Changchun Eurasia Group Co., Ltd and Shanghai Potevio Co., Ltd. by the Company
had been disposed. Gains from the disposal of the equity interests have been recognised as “investment income”. The change
in fair value of the remaining equity interests at the end of the reporting period led to a decrease in “available-for-sale
finance assets”, and a corresponding decrease 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 have any material assets from other companies
under its custodial management, sub-contract or lease any assets from other companies, nor were
the Company’s material assets put under custodial management of, 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:
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
Chengdu Vanke Real
Estate Co., Ltd.
(“Chengdu Vanke”)
Chengdu Vanke Yihang
Vanke Binjiang Estate
Development Co. Ltd(成都一
航万科滨江房地产有限公
司) (49%)
RMB19.5 million
Provided a guarantee in
proportion to the
Company’s equity holding
(15%) for a bank loan of
RMB130 million
16 March 2010 to
15 March 2013
2
Zhejiang Vanke Nandu
Real Estate Company
Limited
Hangzhou Wan Kun Real
Estate Company Ltd(杭州万
坤置业有限公司)(51%)
RMB17.352
million
Provided a guarantee in
proportion to the
Company’s equity holding
(51%) for a construction
guarantee of RMB34.023
million
30 June 2010 to
30 December
2011
During the reporting period, the amount of new guarantees made by the Company and its majority-owned
subsidiaries was RMB37 million, and the amount of guarantees withdrawn was RMB90 million. As at the
end of the reporting period, the outstanding amount of guarantees made by the Company was RMB1,188
million, accounting for 2.99 per cent of the Company’s net assets. The outstanding amount of guarantees
made by the Company and its majority-owned subsidiaries for other majority-owned subsidiaries was
RMB1,153 million, while the outstanding amount of guarantees made by the Company and its majorityowned
subsidiaries for associated companies was RMB35 million, and 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 guarantees17
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’s controlling 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.
11. Meeting with investors
Type of meeting Date Location Approach Classification of visitors
Issues discussed
and information
provided
China Jianyin
Investment
Securities meeting
2010.1 Shenzhen
Face to
Face
Meeting
Investors including securities companies, funds,
etc
China Galaxy
Securities meeting
2010.1 Beijing
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Deutsche Bank
meeting
2010.1 Beijing
Face to
Face
Meeting
Investors including securities companies, funds,
etc
UBS meeting 2010.1 Shanghai
Face to
Face
Meeting
Investors including securities companies, funds,
etc
HSBC meeting 2010.1 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Annual results
presentation
2010.3
Hong Kong,
Shenzhen
(Shanghai,
Beijing)
Face to
Face
Meeting
Investors including securities companies, funds,
individual investors, etc
CLSA meeting 2010.3 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Credit Suisse
meeting
2010.3 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
BNP meeting 2010.3 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Daiwa Securities
meeting
2010.3 Tokyo
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Credit Suisse
meeting
2010.3 Hong Kong
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.18
Macquarie meeting 2010.4 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Daiwa Securities
meeting
2010.4 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Deutsche Bank
meeting
2010.5 Singapore
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Morgan Stanley
meeting
2010.5 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
BOC international
meeting
2010.5 Qingdao
Face to
Face
Meeting
Investors including securities companies, funds,
etc
CLSA meeting 2010.5 Shanghai
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Shenjin Wanguo
meeting
2010.5 Hong Kong
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Greatwall
Securities meeting
2010.5 Beijing
Face to
Face
Meeting
Investors including securities companies, funds,
etc
UBS meeting 2010.5 Huhehaote
Face to
Face
Meeting
Investors including securities companies, funds,
etc
China Jianyin
Investment
Securities meeting
2010.5 Shanghai
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Essence Securities
meeting
2010.6 Beijing
Face to
Face
Meeting
Investors including securities companies, funds,
etc
JP Morgan meeting 2010.6 Beijing
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Everbright
Securities meeting
2010.6 Shenzhen
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Guosen Securities
meeting
2010.6 Shenzhen
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Changjiang
Securities meeting
2010.6 Yichang
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Credit Suisse
meeting
2010.6 Shanghai
Face to
Face
Meeting
Investors including securities companies, funds,
etc
Guotai Junan
meeting
2010.6 Qingdao
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.19
Securities
Companies
During
the
reporting
period
Shenzhen,
Guangzhou,
Zhongshan,
Zhuhai, Fuzhou,
Changsha,
Haikou,
Shanghai,
Nanjiing,
Suzhou,
Hangzhou,
Beijing, Tianjin,
Shenyang,
Dalian, Anshan,
Qingdao, Wuhan,
Chengdu,
Chongqing,
Xi’an etc.
Small
group or
one-onone
Shenyin Wanguo, CLSA, Southwest Securities,
Citi, Huatai United Securities, Changjiang
Securities, UBS, CICC, Bohai Securities, Daiwa
Securities, Everbright Securities, China Galaxy
Securities, Credit Suisse, Essence Securities, China
Jianyin Investment Securities, ABN Amro Bank,
JP Morgan, Merrill Lynch, RBS, Morgan Stanley,
Greatwall Securities, Mitsubishi UFJ Securities,
Goldman Sachs GaoHua, CITIC Securities,
Guangfa Securities, CSC Securities, Nomura
Securities, Deutsche Bank, Macquarie, Hong Kong
First Shanghai Securities Co., Ninjing Securities,
Computershare, Meiwa Securities Co.,Ltd, 82
Securities Co., Ltd, CEBM Group Ltd, BNP, Piper
Jaffray Asia Securities Limited, Phillip Securites
Group, DBS Vickers, Aviate Global, Auerbach
Grayson, Samsung Securities, Yuanta Securities
etc.20
Funds and other
investment
companies and
individual investors
During
the
reporting
period
Shenzhen,
Guangzhou,
Zhongshan,
Zhuhai, Fuzhou,
Changsha,
Haikou,
Shanghai,
Nanjing, Suzhou,
Hangzhou,
Beijing, Tianjin,
Shenyang,
Dalian, Anshan,
Qingdao, Wuhan,
Chengdu,
Chongqing,
Xi’an etc.
Small
group or
one-onone
China AMC, Taikang Life, Yinhua Fund, China
Universal Fund, First-Trust Fund, China
Merchants Fund, Penghua Fund, Bank of
Communications Schroders Fund, Cephei
Investment, CCB Principal Asset Management, E
Fund, Congrong Investment, Rongtong Fund,
Bosera Fund , Hanwha Securities Co., Ltd,
Fullgoal Fund , bocgi, China Taiping insurance,
Fuh Hwa Securities Investment Trust, Franklin
Templeton Sealand Fund, SYWG BNP Paribas
Asset Management Co., Ltd, Fortune SGAM
Fund , Allianz Fund, Zeal Asset Management
Limited, Shanghai Hao Tong Investment
Consulting Co., Ltd, Shenzhen Huize Zhangfu
investment consulting Co, Perry Capital,
Government of Singapore Investment Corporation
Pte Ltd Avenue Capital, Caxton Associates, GSI
Management Limited, Wellington, University of
Pennsylvania, Orange Capital, Merchant Gates,
LaSalle Investment Management, Deutsche Asset
Management, T. Rowe Price International, JF
Asset Management, Martin Currie Investment
Management, Grand River Investments, First State
Investments, Oaktree Capital Management,
Western Asset Management, Keefe Bruyette &
Woods, Mitsubishi UFJ Asset Management, Ballie
Gifford, Duquesne Capital Mgt, Pyrford
International, Christensen, Pictet Asset
Management, Goldman Sachs Principal Strategies,
Chugoku Bank, Robeco,Clairvoyance Capital,
Morgan Stanley Asset Mgt, AllianzBerstein, Weitz
Funds, Partner Funds, Tiger Asia Asset, Hamblin
Watsa, Henderson TR Pacific, One Investment &
Trinity Street, Jupiter, State Teachers Retirement
System of Ohio, Broad Peak Investment Advisers
Pte Ltd., BT Investment Management, GMO,
Invesco Hong Kong Limited, GLG Partners,
Capital Research, NPJ Asset Management,
Algebris, Noonday Asset Management, Equinox
Partners, Highbridge, LaSalle, Primero Asset
Mgmt, Pacific Eagle, UOB AM, DBS Asset Mgmt,
Winnington, VL AM, Nomura Asset Management,
Emerging Markets Management L.L.C., Value
Partners, Public Mutual Investment Management,
FrontPoint Partners, William Blair, Marsico
Capital Mgmt. , Mason Capital Mgmt LLC, RHG
Capital LP, WRA Invs LLC, Brandes Investment
Management, Maverick Capital, RCM Asia
Pacific, Keywise, Brevan Howard, SunAmerica,
Blackrock, Thornburg Investment, Northern Trust,
AP3, Franklin Templeton, Mapple Brown Abbott,
Perennial Value, ING etc.
12. Corporate bonds and related matters
During the reporting period, the Company kept a good credit standing. 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 continued to assign an AAA credit rating to the secured corporate bonds, “08 Vanke G1”, and
AA+ credit rating to the unsecured bonds, “08 Vanke G2”, and AA+ credit rating to the Company as a
whole, and raised the rating outlook from stable to positive.
13. Investment in derivatives21
Remarks on risk analysis and management of derivative
positions during the year under review (including but not
limited to market risk, liquidity risk, credit risk, operational risk
and legal risk, etc.)
In order to limit the risk associated with the fluctuations of interest
rate, the Company entered into an interest rate swap (“IRS”)
agreement to hedge floating rate foreign currency loan. The Company
would charge the counterparty an interest according to a floating rate,
in order to pay the floating-rate interest to the original lender, and pay
a fixed rate to the counterparty.
IRS is used to control the risk arising from the change in interest rate
by fixing a forward interest rate on the notional amount during the
term of the foreign currency loan.
Change in market price or fair value of the derivatives invested
during the year under review, as well as the method, related
assumptions and parameters used to analyse the fair value of
derivatives should be disclosed
The effect of the change in the IRS value on the Company’s profit or
loss during the reporting period amounted to RMB(5,810,671.18). The
value of the IRS was determined based on the fair value assessed on
30 June 2010.
Remarks on whether there has been a material change in the
accounting policy and accounting measurement principles for
the Company’s derivatives during the year under review as
compared with those of the previous reporting year
Nil
Special advice on derivative investment and risk control by
independent directors, sponsors and financial advisors
The Company’s independent directors are of the view that financial
instruments such as IRS reduced the probable loss associated with
foreign currency loan in the event of significant fluctuations in interest
rate. The relevant arrangement of the Company has been prudent and
reasonable.
Derivative positions as at the end of the reporting period
Unit: RMB’000
Type of contracts
Contract amount as at
the beginning of the
period
Contract amount as
at the end of the
period
Profit/loss during the
reporting period
Contract amount as at
the end of the period as
a percentage of the
Company’s net assets
as at the end of the
reporting period
Interest rate swap (IRS)
agreement 462,610.55 1,740,917.12 (5,810.67) 4.38%
Total 462,610.55 1,740,917.12 (5,810.67) 4.38%
VI. Financial statements (unaudited)22
China Vanke Co., Ltd.
萬科企業股份有限公司
30 June 201023
Consolidated income statement
for the year ended 30 June 2010
(Expressed in Renminbi Yuan)
Note 2010
Jan. – Jun
2009
Jan. – Jun
Revenue 7 15,816,254,224 20,553,477,931
Cost of sales (10,046,889,448) (14,840,848,429)
Gross profit 5,769,364,776 5,712,629,502
Other income 8 206,654,647 53,561,476
Distribution costs (606,401,577) (551,447,479)
Administrative expenses (575,447,943) (581,874,279)
Other operating expenses 9 (35,154,287) (68,404,243)
Profit from operations 4,759,015,616 4,564,464,977
-------------------- --------------------
Finance income 373,600,878 134,732,205
Finance costs (386,171,719) (346,839,320)
Net finance costs 11 (12,570,841) (212,107,115)
-------------------- --------------------
Share of profits less losses of associates 21 17,667,867 163,366,356
Share of profits less losses
of jointly controlled entities 22 76,772,073 (18,330,042)
Profit before income tax 4,840,884,715 4,497,394,176
Income tax 12(a) (1,680,063,826) (1,397,166,922)
Profit for the year 3,160,820,889 3,100,227,254
Attributable to:
Equity shareholders of the Company 2,812,498,573 2,524,392,406
Minority interests 348,322,316 575,834,848
Profit for the year 3,160,820,889 3,100,227,254
Basic and diluted earnings per share 14 0.26 0.23
..
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
24
Consolidated statement of comprehensive income
for the year ended 30 June 2010
(Expressed in Renminbi Yuan)
Note 2010
Jan. – Jun
2009
Jan. – Jun
Profit for the year 3,160,820,889 3,100,227,254
-------------------- --------------------
Other comprehensive income
for the year (after tax and
reclassification adjustments) 13
Exchange differences on translation
of financial statements of
foreign subsidiaries 47,738,002 230,369
Available-for-sale securities: net
movement in the fair value reserve (93,939,754) 48,310,446
(46,201,752) 48,540,815
-------------------- --------------------
Total comprehensive income for the year 3,114,619,137 3,148,768,069
Attributable to:
Equity shareholders of the Company 2,766,296,821 2,572,933,221
Minority interests 348,322,316 575,834,848
Total comprehensive income for the year 3,114,619,137 3,148,768,069
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
25
Consolidated balance sheet at 30 June 2010
(Expressed in Renminbi Yuan)
Note 30 June 2010 31 December 2009
ASSETS
Non-current assets
Property, plant and equipment 16 1,368,151,947 1,387,295,710
Lease prepayments 17 81,141,162 81,966,326
Investment properties 18 124,381,463 228,143,158
Construction in progress 19 720,431,028 593,208,234
Interest in associates 21 763,129,420 709,512,280
Interest in jointly controlled entities 22 3,461,127,756 2,763,877,398
Other financial assets 23 108,509,013 255,622,796
Deferred tax assets 24(a) 1,324,276,861 1,265,649,479
Total non-current assets 7,951,148,650 7,285,275,381
-------------------- --------------------
Current assets
Inventories 25 61,175,949 59,998,046
Properties held for development 26 50,867,768,617 44,230,838,396
Properties under development 26 55,663,253,400 40,901,289,915
Completed properties for sale 26 5,302,302,514 5,311,972,269
Trade and other receivables 27 21,918,984,424 17,235,320,841
Financial derivatives - 740,471
Cash and cash equivalents
and pledged deposits 28 19,111,314,733 23,001,923,831
Total current assets 152,924,799,637 130,742,083,769
-------------------- --------------------
TOTAL ASSETS 160,875,948,287 138,027,359,150
EQUITY
Share capital 29 10,995,210,218 10,995,210,218
Reserves 30 28,777,743,526 26,866,813,259
Awarded Shares purchased for the
Employees’ Share Award Scheme 35 - (486,135,416)
Total equity attributable to equity
shareholders of the Company 39,772,953,744 37,375,888,061
Minority interests 8,646,855,033 8,032,624,393
TOTAL EQUITY 48,419,808,777 45,408,512,454
-------------------- --------------------
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
26
Consolidated balance sheet at 30 June 2010 (continued)
(Expressed in Renminbi Yuan)
Note 30 June 2010 31 December 2009
LIABILITIES
Non-current liabilities
Interest-bearing borrowings and bonds 31 25,432,564,762 23,296,534,102
Deferred tax liabilities 24(b) 1,096,540,551 1,221,268,786
Other long term liabilities 32 8,735,986 8,408,145
Provisions 34 33,609,750 34,355,815
Total non-current liabilities 26,571,451,049 24,560,566,848
-------------------- --------------------
Current liabilities
Interest-bearing borrowings 31 13,416,327,820 8,628,670,478
Financial derivatives 5,070,200 -
Trade and other payables 33 68,331,120,744 55,244,411,867
Current taxation 12(c) 4,132,169,697 4,185,197,503
Total current liabilities 85,884,688,461 68,058,279,848
-------------------- --------------------
TOTAL LIABILITIES 112,456,139,510 92,618,846,696
-------------------- --------------------
TOTAL EQUITY AND LIABILITIES 160,875,948,287 138,027,359,150
Approved and authorized for issue by the board of directors on 6 August 2010.
)
)
) Directors
)
)
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
27
Consolidated statement of changes in equity
For the year ended 30 June 2010
(Expressed in Renminbi Yuan)
Attributable to equity shareholders of the Company
Employee
Foreign share-based ’
Share Share exchange Statutory compensation Revaluation Retained Total Minority Total equity
Note capital premium reserve reserves reserve reserve Other reserves profits interests
Balance at 1 January 2010 10,995,210,218 8,826,644,405 276,721,079 8,737,841,437 (156,158,559) 107,604,654 (220,373,917) 8,808,398,744 37,375,888,061 8,032,624,393 45,408,512,454
Changes in equity for the
six months ended 30 June 2010:
Dividend declared-2010 15 - - - - - - - (771,376,582) (771,376,582) (202,820,584) (974,197,166)
Capital injections from
minority interests of subsidiaries - - - - - - - - - 468,728,908 468,728,908
Equity settled share-based
transactions 30(b) - - - - 468,728,084 - - - 468,728,084 - 468,728,084
Acquisitions of minority interests - - - - - - (66,582,640) - (66,582,640) - (66,582,640)
Total comprehensive income
for the year - - 47,738,002 - - (93,939,754) - 2,812,498,573 2,766,296,821 348,322,316 3,114,619,137
Balance at 30 June 2 010 1 0,995,210,218 8 ,826,644,405 324,459,081 8,737,841,437 312,569,525 13,664,900 (286,956,557) 1 0,849,520,735 3 9,772,953,744 8,646,855,033 , 48,419,808,777China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
28
Consolidated statement of changes in equity (continued)
For the year ended 30 June 2009
(Expressed in Renminbi Yuan)
Attributable to equity shareholders of the Company
Awarded shares
Employee purchased for
Foreign share-based Employees’
Share Share exchange Statutory compensation Revaluation Retained Share Award Minority
capital premium reserve reserves reserve reserve Other reserves profits Scheme Total 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 44,647,125 (241,332,344) 6,184,277,987 (1,250,040,934) 31,891,925,262 6,926,624,219 38,818,549,481
Changes in equity for the
six months ended 30 June 2009:
Transfer of retained profits - - - - - - (14,482,395) - - (14,482,395) - (14,482,395)
Dividend declared-2009 - - - - - - - (549,760,511) - (549,760,511) (128,533,121) (678,293,632)
Capital injections from
minority interests of subsidiaries - - - - - - - - - - (90,256,136) (90,256,136)
Equity settled share-based
transactions - - - - - - (143,249,210) - 763,905,518 620,656,308 - 620,656,308
Total comprehensive income
for the year - - 230,369 - - 48,310,446 - 2,524,392,406 - 2,572,933,221 575,834,848 3,148,768,069
Balance at 30 June 2 009 1 0,995,210,218 8,826,644,405 277,538,129 6,581,984,978 473,226,067 92,957,571 (399,063,949 ) 8,158,909,882 (486,135,416) 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 year ended 30 June 2010
29
Consolidated cash flow statement
for the year ended 30 June 2010
(Expressed in Renminbi Yuan)
2010 2009
Note Jan. – Jun Jan. – Jun
Cash flows from operating activities
Cash receipts from customers 28,870,516,221 27,326,850,631
Cash paid to suppliers (29,123,479,748) (11,498,223,641)
Cash paid to and for employees (1,025,738,335) (656,464,889)
Cash paid for other taxes (4,385,820,679) (3,534,320,990)
Cash generated from other operating activities 2,659,393,935 788,899,488
Cash used in other operating activities (6,509,292,573) (2,605,155,965)
Net cash generated from / (used in)
operating activities (9,514,421,179) 9,821,584,634
-------------------- --------------------
Cash flows from investing activities
Acquisitions of subsidiaries,
net of cash acquired 5 188,165,014 (252,880,464)
Acquisitions of interest in associates, jointly
controlled entities and other investments (1,453,342,441) (13,912,578)
Acquisitions of property, plant and
equipment and construction in progress (40,828,007) (19,369,517)
Proceeds from disposals of subsidiaries 6 20,112,929 -
Proceeds from disposal of property,
plant and equipment 438,616 84,177,822
Proceeds from sales of investments 138,303,746 80,060,000
Proceeds from other investment activities 131,453,581 144,202,567
Dividends received 439,521,967 134,830,514
Net cash used in investing activities (576,174,595) 157,108,344
-------------------- --------------------
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
30
Consolidated cash flow statement (continued)
for the year ended 30 June 2010
(Expressed in Renminbi Yuan)
2010 2009
Note Jan. – Jun Jan. – Jun
Cash flows from financing activities
Capital injections from minority interests
of subsidiaries 1,134,963,387 -
Proceeds from loans and borrowings 11,911,335,211 11,039,015,369
Repayment of loans and borrowings (5,067,889,566) (12,382,381,037)
Dividend and interest paid (1,886,222,183) (1,733,306,033)
Net cash (used in) / generated from
financing activities 6,092,186,849 (3,076,671,701)
-------------------- --------------------
Net increase in cash and cash equivalents (3,998,408,925) 6,902,021,277
Cash and cash equivalents at 1 January 22,002,774,938 19,978,285,930
Effect of foreign exchange rate changes (4,982,697) 116,336
Cash and cash equivalents at balance sheet date 17,999,383,316 26,880,423,543
The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
31
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 year
ended 30 June 2010 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 authorized for issue by the
Company’s board of directors on 6 August 2010.
(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
(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 year ended 30 June 2010
32
2 Basis of preparation (continued)
(d) Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs requires management to
make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Information about significant areas of estimation uncertainty and critical judgements in
applying accounting policies that have the most significant effect on the amounts recognised
in the consolidated financial statements is included in the following notes:
?Notes 16, 17 18 and 19 – depreciation and impairment of property, plant and
equipment , lease prepayments , investment properties and construction in progress.
?Note 26 – write down of properties
?Note 27 – impairment of trade debtors and other receivables
?Note 41 – accounting estimates and judgements
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 unrealised profits arising from intra-group transactions are eliminated in
full in preparing the consolidated financial statements. Unrealised losses resulting from
intra-group transactions are eliminated in the same way as unrealised gains but only to the
extent that there is no evidence of impairment.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
33
3 Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(i) Subsidiaries and minority interests (continued)
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(r) and 3(t) 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 the
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 note 3(h)(i)). The Group’s share of the post-acquisition, posttax
results of the investees and any impairment losses for the year are recognised in the
consolidated income statement, whereas the Group’s share of the post-acquisition post-tax
items of the investees’ other comprehensive income is recognised in the consolidated
statement of comprehensive income.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
34
3 Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(ii) Associates and jointly controlled entities (continued)
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.
Unrealised 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 unrealised losses provide evidence of an impairment of the asset
transferred, in which case they are recognised 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 equity.
(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 or
jointly controlled entity and the investment as a whole is tested for impairment whenever
there is objective evidence of impairment (see note 3(h)).China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
35
3 Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(iv) Goodwill (continued)
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 recognised 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 in other comprehensive income and accumulated
separately in equity 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 as part of the profit or loss on disposal.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
36
3 Significant accounting policies (continued)
(c) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are
originated. All other financial assets (including assets designated at fair value through profit
or loss) are recognised initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from
the asset expire, or it transfers the rights to receive the contractual cash flows on the financial
asset in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in transferred financial assets that is created or
retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the balance sheet
when, and only when, the Group has a legal right to offset the amounts and intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial assets: loans and receivables and
available-for-sale financial assets.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are recongnised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition loans and receivables
are measured at amortised cost using the effective interest method, less any impairment
losses.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as
available-for-sale. 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)) and
foreign currency differences on available-for-sale equity instruments, are recognised in other
comprehensive income and presented within equity in the fair value reserve. When an
investment is derecognised, the cumulative gain or loss in equity is transferred to profit or
loss.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued on the date that they are originated. All
other financial liabilities (including liabilities designated at fair value through profit or loss)
are recognised initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged
or cancelled or expire.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
37
3 Significant accounting policies (continued)
(c) Financial instruments (continued)
(ii) Non-derivative financial liabilities (continued)
Financial assets and liabilities are offset and the net amount presented in the balance sheet
when, and only when, the Group has a legal right to offset the amounts and intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial liabilities: loans and borrowings, and
trade and other payables.
Such financial liabilities are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition these financial liabilities are measured at
amortised cost using the effective interest method.
(iii) Derivative financial instruments
Derivative financial instruments are recognised initially at fair value; attributable transaction
costs are recognised in the profit or loss when incurred. Subsequent to initial reorganisation,
derivatives are measured at fair values, and all changes in its fair value are recognised
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.
(iv) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
ordinary shares are recognised as a deduction from equity, net of any tax effects.
(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(n)). Purchased software
that is integral to the functionality of the related equipment is capitalised 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 recognised net within “other income” in profit or loss.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
38
3 Significant accounting policies (continued)
(d) Property, plant and equipment (continued)
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised 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 derecognised. The costs of the day-to-day servicing of
property, plant and equipment are recognised 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 follows:
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.
(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(n)).
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 34 years.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
39
3 Significant accounting policies (continued)
(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
capitalised (see note 3(n)), and an appropriate proportion of production overheads incurred
during the periods of construction and installation. Capitalisation 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.
(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 year ended 30 June 2010
40
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 measured 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 in other comprehensive income.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
41
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 was 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 an impairment loss
previously recognised no longer exists or may have decreased:
- investment properties;
- property, plant and equipment;
- construction in progress; and
- lease prepayments.
If any such indication exists, the asset’s recoverable amount is estimated. In addition, for
goodwill, intangible assets that are not yet available for use and intangible assets that have
indefinite useful lives, 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 year ended 30 June 2010
42
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 cashgenerating
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(n)). 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 year ended 30 June 2010
43
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 completed properties for sale 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 writedown
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 year ended 30 June 2010
44
3 Significant accounting policies (continued)
(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.
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) Lease prepayments
Payments made under operating leases are recognised in profit or loss on a straight-line basis
over the term of the lease. Lease incentives received are recognised as an integral part of the
total lease expense, over the term of the lease.
(n) 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 year ended 30 June 2010
45
3 Significant accounting policies (continued)
(o) 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 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 entitle 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.
When the Scheme expires, the related costs of the Awarded Shares disposed are credited to
Awarded shares purchased for the Employee’s share award scheme, and the disposal gains or
losses are credited to Capital reserve arising from disposal of awarded shares.
(p) 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 in other comprehensive
income or directly in equity, in which case the relevant amounts of tax are recognised in
other comprehensive income or directly in equity, respectively.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
46
3 Significant accounting policies (continued)
(p) Income tax (continued)
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.
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.
The limited exceptions to recognition of deferred tax assets and liabilities are those
temporary difference arising from goodwill not deductible for tax purposes, 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.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
47
3 Significant accounting policies (continued)
(p) Income tax (continued)
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; or
- 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.
(q) 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)).
(r) 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(u), 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.
(s) 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 statement of cash flows.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
48
3 Significant accounting policies (continued)
(t) 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.
(u) 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(u)(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(u)(iii). Contingent liabilities acquired in a business
combination that cannot be reliably fair valued are disclosed in accordance with note
3(u)(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.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
49
3 Significant accounting policies (continued)
(u) Financial guarantees issued, provisions and contingent liabilities (continued)
(iii) Other provisions and contingent liabilities (continued)
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.
(v) 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.
(w) 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.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
50
3 Significant accounting policies (continued)
(x) Operating segments
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 and geographical locations.
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.
4 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) 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.
(ii) Property, plant and equipment, lease prepayment, investment properties, construction
in progress, 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 is based on market
values. The market value of these properties is the estimated amount for which an
item 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 and willingly. The fair value of items of property,
plant and equipment, lease prepayment, investment properties, construction in
progress, properties held for development, properties under development and
completed properties for sale is based on the quoted market prices for similar items
when available and replacement cost when appropriate.
(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.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
51
5 Acquisitions of subsidiaries
(i) Acquisitions of subsidiaries by the Group during the year ended 30 June 2010:
(a) Pursuant to an equity transfer agreement dated 29 December 2009, the Group
acquired a 51% equity interest in Yongtaiyouxin Property Development Co., Ltd
(“Yongtaiyouxin”) at a consideration of RMB 19.75 million Yongtaiyouxin is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 1 March 2010.(note)
(b) Pursuant to an equity transfer agreement dated 5 March 2010, the Group acquired a
51% equity interest in Guiyang Vanke Jinjia Real Estate Co., Ltd. (“Guiyangjingjia”)
at a consideration of RMB 4.59 million. Guiyangjingjiais principally engaged in
property development and sale The acquisition was completed on 22 March 2010 .
(c) Pursuant to an equity transfer agreement dated 26 February 2010, the Company
acquired a 100% equity interest in Kunming Xinhemin North Town Real Estate Co
Ltd (“Xinhemin”) at a consideration of RMB 335.78 million. Xinheming principally
engaged in property development and sale The acquisition was completed on 26
February 2010.
(d) Pursuant to an equity transfer agreement dated 1 March 2010, the Group acquired a
75% equity interest in Shanghai Zhongfang Binjiang Real Estate Co Ltd
(“Zhongfangbinjiang”) at a consideration of RMB 152.2 million. Zhongfangbinjiang
is principally engaged in property development and sale. The acquisition was
completed on 26 March 2010.
(e) Pursuant to an equity transfer agreement dated 27 August 2009, the Group acquired a
90% equity interest in Shenzhen Guangshengrong Investment Co Ltd
(“Guangshengrong”) at a consideration of RMB 45 million. Guangshengrong is
principally engaged in investment holding. The acquisition was completed on 5
February 2010.
(f) Pursuant to an equity transfer agreement dated 30 December 2009, the Group
acquired a 60% equity interest in Shenzhen Hechenghongye Investment Management
Company Limited (“Hechenghongye”) at a consideration of RMB 6 million.
Hechenghongye is principally engaged in investment holding. The acquisition was
completed on 21 January 2010.
(g) Pursuant to an equity transfer agreement dated 28 December 2009, the Group
acquired a 95% equity interest in Tianjin Eco-city Wanhong Property Company
Limited (“Tianjin Eco-city”) at a consideration of RMB 28.5 million. Tianjin Eco-city
is principally engaged in property development and sale. The acquisition was
completed on 1 January 2010.
(h) Pursuant to an equity transfer agreement dated 4 May 2010, the Group acquired a
25% equity interest in Dalian Vanke Charming City Property Development Company
Limited (“Charming”) at a consideration of RMB 98.59 million. Charming is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 30 June 2010. After the acquisition,
the Company holds a 55% equity interest in Charming. (note)China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
52
5 Acquisitions of subsidiaries (continued)
(i) Acquisitions of subsidiaries by the Group during the year ended 30 June 2010:
（Continued）
(i) Pursuant to an equity transfer agreement dated 25 February 2010, the Group acquired
a 65% equity interest in Shenzhen Julongwan Investment Development Company
Limited (“Julongwan”) at a consideration of RMB 6.5 million. Julongwan is
principally engaged in investment holding. The acquisition was completed on 1 May
2010.
(j) Pursuant to an equity transfer agreement dated 1 May 2010, the Company acquired a
51% equity interest in Zhuhai Jingyu Green Engineering Company Limited (“Zhuhai
Jingyu”) at a consideration of RMB 2.55 million. Zhuhai Jingyu is principally
engaged in green engineering. The acquisition was completed on 20 May 2010.
(k) Pursuant to an equity transfer agreement dated 8 April 2010, the Company acquired a
80% equity interest in Shenzhen Jinhui Property Development Co Ltd (“Shenzhen
Jinhui”) at a consideration of RMB 24 million. Shenzhen Jinhui is principally
engaged in holding properties held for development and properties under
development. The acquisition was completed on 6 May 2010 (note).
(l) Pursuant to an equity transfer agreement dated 14 April 2010, the Company acquired
a 100% equity interest in Shenzhen Jiuzhou Property Development Co Ltd
(“Shenzhen Jiuzhou”) at a consideration of RMB 98.2 million. Shenzhen Jiuzhou is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 20 April 2010 (note).
(m) Pursuant to an equity transfer agreement dated 30 December 2009, the Group
acquired a 60% equity interest in Shenzhen Wanjialian Investment Development
Company Ltd. (“Wanjialian”) at a consideration of RMB 0.6 million. Wanjialian is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 17 June 2010 (note).
(n) Pursuant to an equity transfer agreement dated 8 January 2010, the Group acquired a
100% equity interest in Citi Victory Limited. (“Citi Victory”) at a consideration of
HKD1000. Citi Victory is principally engaged in investment holding. The acquisition
was completed on 8 January 2010.
(o) Pursuant to an equity transfer agreement dated 8 January 2010, the Group acquired a
100% equity interest in Full Act Limited. (“Full Act.”) at a consideration of
HKD1000. Full Act. is principally engaged in investment holding. The acquisition
was completed on 8 January 2010.
(p) Pursuant to an equity transfer agreement dated 8 January 2010, the Group acquired a
100% equity interest in Gain Honour Limited. (“Gain Honour”) at a consideration of
HKD1000. Gain Honour is principally engaged in investment holding. The
acquisition was completed on 8 January 2010.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
53
5 Acquisitions of subsidiaries (continued)
(i) Acquisitions of subsidiaries by the Group during the year ended 30 June 2010:
（Continued）
(q) Pursuant to an equity transfer agreement dated 13 October 2009, the Group acquired a
51% equity interest in Dongguan Zhongwan Property Development Company Ltd
(“Zhongwan”) at a consideration of RMB 0.51 million. Zhongwan is principally
engaged in holding properties held for development and properties under
development. The acquisition was completed on 1 January 2010 (note).
Note: In the circumstances, the acquired subsidiaries’ major assets are properties held for
development, properties under development and / or completed properties for sale.
The directors consider that the purpose of acquiring those subsidiaries is solely to
acquire the underlying properties.
The acquisitions had the following effect on the Group’s cash flow on acquisition dates:
Considerations, satisfied in cash 873,418,856
Cash acquired (755,092,855)
Considerations prepaid in prior years (231,348,715)
Considerations to be paid subsequent to June 2010 (80,510,000)
Net cash outflow (193,532,714)
All subsidiaries set out above were acquired from third parties.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
54
5 Acquisitions of subsidiaries (continued)
(ii) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009:
(a) Pursuant to an equity transfer agreement dated 1 April 2009, the Group acquired a
100% equity interest in Charm Crystal Limited (“Charm Crystal”) at a consideration
of HKD 1,000. Charm Crystal is principally engaged in investment holding. The
acquisition was completed on 1 April 2009.
(b) Pursuant to an equity transfer agreement dated 6 January 2008, the Group acquired a
90% equity interest in Wu Han Wangjiadun Morden City Real Estate Development
Co., Ltd. (“Wangjiadun”) at a consideration of RMB 368 million. Wangjiadun is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 31 May 2009 (note).
(c) Pursuant to an equity transfer agreement dated 28 July 2009, the Company acquired a
100% equity interest in Leadway Capital Limited Limited (“Leadway”) at a
consideration of HKD 1,000. Leadway holds a 45% equity interest in Wuhan Wanwei
Consultancy Company Limited. The acquisition was completed on 28 July 2009.
(d) Pursuant to an equity transfer agreement dated 24 August 2009, the Group acquired a
100% equity interest in Trendell Limited (“Trendell”) at a consideration of RMB 140
million. Trendell is principally engaged in investment holding. The acquisition was
completed on 24 August 2009. After the acquisition, the Company holds a 80%
equity interest in Dongguan Vanke Property Management Company Limited.
(e) Pursuant to an equity transfer agreement dated 3 September 2009, the Group acquired
a 80% equity interest in Chengdu Tongtai Property Development Company Limited
(“Tongtai”) at a consideration of RMB 1.52 million. Tongtai is principally engaged in
holding properties held for development and properties under development. The
acquisition was completed on 3 September 2009 (note).
(f) Pursuant to an equity transfer agreement dated 4 September 2009, the Group acquired
a 100% equity interest in Hangzhou Yuanhao Investment Management Company
Limited (“Yuanhao”) at a consideration of RMB 1.2 million. Yuanhao is principally
engaged in investment holding. The acquisition was completed on 4 September 2009.
(g) Pursuant to an equity transfer agreement dated 4 September 2009, the Group acquired
a 100% equity interest in Hangzhou Hangchen Investment Management Company
Limited (“Hangchen”) at a consideration of RMB 1.2 million. Hangchen is
principally engaged in investment holding. The acquisition was completed on 4
September 2009.
(h) Pursuant to an equity transfer agreement dated 11 September 2009, the Group
acquired a 100% equity interest in Ample Avenue Investments Limited (“Ample”) at
a consideration of RMB 103 million. Ample holds a 45% equity interest in Tianjin
Vanke Xinlicheng Company Limited. The acquisition was completed on 11
September 2009.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
55
5 Acquisitions of subsidiaries (continued)
(ii) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009
(continued):
(i) Pursuant to an equity transfer agreement dated 25 September 2009, the Group
acquired a 100% equity interest in Pro Ocean Limited (“Pro Ocean”) at a
consideration of RMB 881.1. Pro Ocean is principally engaged in investment holding.
The acquisition was completed on 25 September 2009.
(j) Pursuant to an equity transfer agreement dated 25 September 2009, the Company
acquired a 100% equity interest in Double Falcon Limited (“Double Falcon”) at a
consideration of HKD 1,000. Double Falcon is principally engaged in investment
holding. The acquisition was completed on 25 September 2009.
(k) Pursuant to an equity transfer agreement dated 25 September 2009, the Company
acquired a 100% equity interest in Glorious Pacific Limited (“Glorious Pacific”) at a
consideration of HKD 1,000. Glorious Pacific is principally engaged in investment
holding. The acquisition was completed on 25 September 2009.
(l) Pursuant to an equity transfer agreement dated 25 September 2009, the Company
acquired a 100% equity interest in Likeford Limited (“Likeford”) at a consideration
of HKD 1,000. Likeford is principally engaged in investment holding. The
acquisition was completed on 25 September 2009.
(m) Pursuant to an equity transfer agreement dated 29 September 2009, the Group
acquired a 70% equity interest in Hunan Vanke Heshun Property Company Limited
(“Heshun”) at a consideration of RMB 36 million. Heshun is principally engaged in
holding properties held for development and properties under development. The
acquisition was completed on 14 October 2009 (note).
(n) Pursuant to an equity transfer agreement dated 30 September 2009, the Group
acquired a 90% equity interest in Shenzhen Construction Holding of Longgang
Property Co., Ltd. (“Longgang”) at a consideration of RMB 99 million. Longgang is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 30 October 2009 (note).
(o) Pursuant to an equity transfer agreement dated 2 November 2009, the Group acquired
a 100% equity interest in Guangzhou Yinye Junrui Real Estate Co., Ltd (“Yinye
Junrui”) at a consideration of RMB 55 million. Yinye Junrui is principally engaged in
holding properties held for development and properties under development. The
acquisition was completed on 2 November 2009 (note).
(p) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
acquired a 100% equity interest in Star Top Development Limited (“Star Top”) at a
consideration of RMB 0.88. Star Top is principally engaged in investment holding.
The acquisition was completed on 10 November 2009.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
56
5 Acquisitions of subsidiaries (continued)
(ii) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009
(continued):
(q) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
acquired a 100% equity interest in Well Keen Limited (“Well Keen”) at a
consideration of RMB 0.88. Well Keen is principally engaged in investment holding.
The acquisition was completed on 10 November 2009.
(r) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
acquired a 100% equity interest in Bloom Gain Limited (“Bloom”) at a consideration
of RMB 0.88. Bloom is principally engaged in investment holding. The acquisition
was completed on 10 November 2009.
(s) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
acquired a 100% equity interest in Hopewin Investments Limited (“Hopewin”) at a
consideration of RMB 0.88. Hopewin is principally engaged in investment holding.
The acquisition was completed on 10 November 2009.
(t) Pursuant to an equity transfer agreement dated 10 November 2009, the Company
acquired a 100% equity interest in Best Cheer Investments Limited (“Best Cheer”) at
a consideration of RMB 0.88 . Best cheer is principally engaged in investment
holding. The acquisition was completed on 10 November 2009.
(u) Pursuant to an equity transfer agreement dated 19 November 2009, the Group
acquired a 95% equity interest in Guangzhou Linhai Real Estate Co.,Ltd. (“Linhai”)
at a consideration of RMB 45 million. Linhai is principally engaged in holding
certain properties held for development and properties under development. The
acquisition was completed on 19 November 2009 (note).
(v) Pursuant to an equity transfer agreement dated 25 November 2009, the Group
acquired a 12.39% equity interest in Dongguan Xintong Industry and Investment
Company Limited (“Xintong”) at a consideration of RMB 1.2 million. Xintong is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 25 November 2009. After the
acquisition, the Company holds a 51% equity interest in Xintong (note).
(w) Pursuant to an equity transfer agreement dated 15 December 2009, the Group
acquired a 95% equity interest in Qingyuan Hongmei Investment Company Limited
(“Hongmei”) at a consideration of RMB 266 million. Hongmei is principally engaged
in holding properties held for development and properties under development. The
acquisition was completed on 15 December 2009 (note).
(x) Pursuant to an equity transfer agreement dated 17 December 2009, the Group
acquired a 95% equity interest in Chengdu Jinlan Property Company Limited
(“Jinlan”) at a consideration of RMB 9.5 million. Jinlan is principally engaged in
holding properties held for development and properties under development. The
acquisition was completed on 17 December 2009 (note).China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
57
5 Acquisitions of subsidiaries (continued)
(ii) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009
(continued):
(y) Pursuant to an equity transfer agreement dated 31 December 2009, the Group
acquired a 65% equity interest in Shanghai Pangzhi Investment Management
Company Limited (“Pangzhi”) at a consideration of RMB 568 million. Pangzhi is
principally engaged in holding properties held for development and properties under
development. The acquisition was completed on 31 December 2009 (note).
Note: In the circumstances, the acquired subsidiaries’ major assets are properties held for
development, properties under development and / or completed properties for sale.
The directors consider that the purpose of acquiring those subsidiaries is solely to
acquire the underlying properties.
The acquisitions had the following effect on the Group’s cashflow on acquisition dates:
Considerations, satisfied in cash 1,696,235,078
Cash acquired (380,511,555)
Considerations prepaid in prior years (388,436,843)
Considerations to be paid subsequent to 2009 (101,997,528)
Net cash outflow in 2009 825,289,152
All subsidiaries set out above were acquired from third parties.
6 Disposal of subsidiaries
(i) Disposal of subsidiaries by the Group during the year ended 30 June 2010:
(a) On 1 January 2010, the Group disposed of 100% equity interest in Xiamen Xinlu
Orient Trading Company Limited to an independent party, at a consideration of
RMB194 million. A gain of RMB59 million arose from the disposal.
(b) On 20 May 2010, the Group disposed of 50% equity interest in Changchun Vanke
Xizhigu Property Development Company Limited, which was previously wholly
owned by the Group, to an independent party, at a consideration of RMB4 million.
(c) On 31 May 2010, the Group disposed 85% equity interest in Guangzhou Yinyejunrui
Property Development Company Limited., which was previously 100% owned by the
Group, to an independent party, at a consideration of RMB47 million.
(d) On 30 June 2010, the Group disposed of 51% equity interest in Changchun Vanke
Jingcheng Property Development Company Limited, which was previously wholly
owned by the Group, to an independent party, at a consideration of RMB251 million.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
58
6 Disposal of subsidiaries (continued)
(i) Disposal of subsidiaries by the Group during the year ended 30 June 2010: (continued)
Effect of the disposal on individual assets and liabilities of the Group for the year ended 30
June 2010
Cash and cash equivalents 30,739,071
Trade and other receivables 83,757,886
Properties held for development,
properties under development and
completed properties for sales 2,306,869,650
Investment properties 101,509,070
Property, plant and equipment 285,834
Other long-term investment 8,353,930
Interest-bearing loans and borrowings (134,900,000)
Trade and other payables (2,193,721,834)
Minority interests (15,446,204)
Net assets and liabilities disposed of by the Group 187,447,403
Gain on disposal of subsidiaries 62,784,054
Considerations to be paid subsequent to June 2010 -
Considerations received, satisfied in cash 50,852,000
Cash disposed of 30,739,071
Net cash inflow 20,112,929
(ii) Disposals of a subsidiary by the Group during the year ended 31 December 2009:
(a) On 31 July 2009, the Group disposed of 90% equity interest in Nanjing Hengbang
Property Co., Ltd., which was previously 90% owned by the Group, to an
independent party, at a consideration of RMB10 million.
(b) On 23 July 2009, the Group disposed of equity interest in Shenzhen Hengfeng
Property Co., Ltd. to an independent party, at a consideration of RMB27 million.
(c) On 20 August 2009, the Group disposed of 65% equity interest in Ningbo Jinsheng
Property Co., Ltd., which was previously 75% owned by the Group, to an
independent party, at a consideration of RMB13 million. The Group is subject to
receive an additional consideration depending on the future performance of Ningbo
Jinsheng Property Co., Ltd.
(d) On 31 October 2009, the Group disposed of 90% equity interest in Hangzhou
Qianjiangwan Garden Property Co., Ltd., which was previously 90% owned by the
Group, to an independent party, at a consideration of RMB27 million.
(e) On 30 November 2009, the Group disposed 100% equity interest in Shanghai Caohua
Property Co., Ltd., which was previously wholly owned by the Group, to an
independent party, at a consideration of RMB102 million.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
59
7 Operating segments
The Group manages its business by divisions, which are organised by a mixture of both
business lines (products and services) and geography. In a manner consistent with the way in
which information is reported internally to the Group’s most senior executive management
for the purpose of resource allocation and performance assessment, the Group has presented
the following five reportable segments.
?Property development (Beijing Region / Shenzhen Region / Shanghai Region /
Chengdu Region): given the importance of the property development division to the
Group, the Group’s property development business is segregated further into four
reportable segments on a geographical basis, as the divisional managers for each of
these regions report directly to the senior executive team. All four segments derive
their revenue from development and sale of residential properties. The properties are
mainly sold to individual customers; therefore, the Group does not have major
customers. Currently the Group’s activities in this regard are also carried out in
mainland China. Details about the specific cities covered by each region are set out in
note 7(b).
?Property management services: this segment provides house keeping services to the
property development segment, as well as the external property developers. Currently
the Group’s activities in this regard are also carried out in mainland China.
Although the operating segment of property management services does not meet any of the
quantitative thresholds specified in IFRS 8, Operating Segments, management believes that
information about the segment would be useful to users of the financial statements.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
60
7 Operating segments (continued)
(a) Segment results, assets and liabilities
For the purpose of assessing segment performance and allocating resources between
segments, the Group’s senior executive management monitors the results, assets and
liabilities attributable to each reportable segment on the following bases:
(i) Segment assets and liabilities
Segment assets include all tangible, intangible assets, other investments and current
assets with the exception of deferred tax assets and other corporate assets. Segment
liabilities include trade creditors, accruals, interest-bearing borrowings and bonds,
and the provision for the estimated losses to be borne by the Group in relation to the
property management projects.
(ii) Segment revenue and expenses
Revenue and expenses are allocated to the reportable segments with reference to sales
generated by those segments and the expenses incurred by those segments or which
otherwise arise from the depreciation or amortisation of assets attributable to those
segments.
(iii) Segment profit
The measure used for reporting segment profit is the profit before PRC corporate
income tax expense, excluding share of profit or loss of associates or jointly
controlled entities and other non-operating income and expense, but including the
profit arising from the inter-segment transactions. Land appreciation tax is deducted
from segment profit for the review by the Group’s senior executive management for it
is considered directly attributable to the sale of properties.
(iv) Inter-segment transactions
Inter-segment sales are priced with reference to prices charged to external parties for
similar services.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
61
7 Operating segments (continued)
(a) Segment results, assets and liabilities (continued)
Real Estate Development
Beijing Region Shenzhen Region Shanghai Region Chengdu Region Property
(note(1)) (note(2)) (note(3)) (note(4)) Management Total
For the year ended 30 June 2010
Revenue from external revenue,
before sales taxes 2,149,126,918 5,095,505,275 7,475,581,482 1,800,925,849 243,227,276 16,764,366,800
Inter-segment revenue - - - - 191,521,452 191,521,452
Reportable segment revenue,
before sales taxes 2,149,126,918 5,095,505,275 7,475,581,482 1,800,925,849 434,748,728 16,955,888,252
Reportable segment profit 304,453,596 1,638,422,692 2,318,984,037 328,607,518 56,540,674 4,647,008,517
Interest income 20,102,939 19,819,303 16,515,825 7,029,393 8,796,574 72,264,034
Interest expense 93,863,691 91,946,523 66,202,812 26,227,330 4,900,125 283,140,481
Share of profits less losses of associates
and jointly controlled entities (note (5)) 807,870 (816,231) 73,919,000 1,890,272 - 75,800,911
Reportable segment assets
(including investment in joint ventures) 36,988,534,841 47,859,493,449 45,601,239,974 23,320,009,267 2,260,460,140 156,029,737,671
Reportable segment liabilities 28,044,564,525 37,622,400,832 35,757,761,584 18,318,663,407 1,251,787,191 120,995,177,540China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
62
7 Operating segments (continued)
(a) Segment results, assets and liabilities (continued)
Real Estate Development
Beijing Region Shenzhen Region Shanghai Region Chengdu Region Property
(note(1)) (note(2)) (note(3)) (note(4)) Management Total
For the year ended 30 June 2009
Revenue from external revenue,
before sales taxes 3,679,208,099 6,178,984,103 8,727,677,755. 3,047,527,999 168,868,545 21,802,266,501
Inter-segment revenue - - - - 201,722,477 201,722,477
Reportable segment revenue,
before sales taxes 3,679,208,099 6,178,984,103 8,727,677,755 3,047,527,999 370,591,022 22,003,988,978
Reportable segment profit 706,482,418 908,462,362 1,962,998,177 846,806,159 33,178,898 4,457,928,014
Interest income 9,008,570 20,255,093 13,039,673 7,709,903 4,419,326 54,432,565
Interest expense 8,298,174 50,978,754 54,576,629 36,882,581 19,162,213 169,898,351
Share of profits less losses of associates
and jointly controlled entities (note (5)) (18,022,980) (2,132,809) 151,907,469 256,471 - 132,008,151
Reportable segment assets
(including investment in joint ventures) 24,724,571,174 40,877,864,204 40,831,620,355 12,433,310,150 697,822,262 119,565,188,145
Reportable segment liabilities 19,224,916,531 33,833,602,831 34,462,519,082 10,135,715,721 516,437,890 98,173,192,055China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
63
7 Operating segments (continued)
(b) Reconciliation of reportable segment revenues, profit or loss, assets and liabilities
2010 2009
Jan-Jun Jan-Jun
Revenue
Reportable segment revenue 16,955,888,252 22,003,988,978
Unallocated head office and corporate revenue 27,384,851 170,808,188
Sales taxes (950,076,226) (1,255,174,496.48)
Elimination of inter-segment revenue (216,942,653) (366,144,739)
Consolidated turnover 15,816,254,224 20,553,477,931
Profit
Reportable segment profit 4,647,008,517 4,457,928,014
Elimination of inter-segment profit (881,109,052) (271,396,434)
Share of profits less losses of
associates and jointly controlled entities 94,439,940 145,036,315
Other income 206,654,647 53,561,476
Other operating expenses,
excluding provision for doubtful debts (18,908,745) (50,337,232)
Dividend income 236,573,500 12,154,819
Unallocated head office and corporate expenses (136,518,456) (155,941,601)
Land appreciation tax 692,744,364 306,388,819
Consolidated profit before taxation 4,840,884,715 4,497,394,176
Assets
Reportable segment assets 156,029,737,671 119,565,188,145
Elimination of inter-segment receivables (81,934,719,276) (55,271,802,705)
Exchange Loss - 1,287,775,238
Deferred tax assets 363,283,736 438,431,467
Unallocated head office and corporate assets 86,417,646,156 60,226,543,254
Consolidated total assets 160,875,948,287 126,246,135,399
Liabilities
Reportable segment liabilities 120,995,177,540 98,173,192,055
Elimination of inter-segment payables (65,263,322,452) (48,694,002,575)
Deferred tax liabilities 363,283,736 438,431,467
Exchange Loss - 1,287,775,238
Unallocated head office and corporate liabilities 56,361,000,686 33,235,797,519
Consolidated total liabilities 112,456,139,510 84,441,193,704China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
64
7 Operating segments (continued)
Notes:
(1) Beijing region represents Beijing, Tianjin, Shenyang, Anshan, Dalian, Qingdao,
Changchun, Yantai, Jilin, and Taiyuan.
(2) Shenzhen region represents Shenzhen, Guangzhou, Dongguan, Foshan, Zhuhai,
Zhongshan, Changsha, Xiamen, Fuzhou, Huizhou, and Hainan.
(3) Shanghai region represents Shanghai, Hangzhou, Suzhou, Wuxi, Ningbo, Nanjing,
Zhenjiang, Nanchang and Hefei.
(4) Chengdu Region represents Chengdu, Wuhan, Xi’an, and Chongqing, Kunming, and
Guiyang.
(5) Share of profits less losses of associates and jointly controlled entities that is
attributable to head office and not allocated to the respective segments is RMB
18,639,027 (2009: RMB 13,028,165).
8 Other income
2010 2009
Jan-Jun Jan-Jun
Forfeited deposits and compensation from customers 8,063,534 7,465,219
Gain on disposals of subsidiaries 62,784,054 7,176,572
Gain on disposals of interest in associates - 406,596
Gain on disposals of other investment 100,937,645 60,000
Gain on disposals of property, plant and equipment 561,971 1,301,084
Other sundry income 34,307,443 37,152,005
206,654,647 53,561,476
9 Other operating expenses
2010 2009
Jan-Jun Jan-Jun
Provision for doubtful debts 16,245,542 18,067,010
Donations 6,541,885 24,509,714
Loss on disposals of property, plant and equipment 871,183 -
Realised and unrealised loss on financial derivatives 5,810,671 4,577,413
Penalties 1,140,705 2,735,546
Other sundry expenses 4,544,301 18,514,560
35,154,287 68,404,243China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
65
10 Personnel expenses
2010 2009
Jan-Jun Jan-Jun
Wages, salaries and other staff costs 550,442,059 471,757,082
Contributions to defined contribution plans 63,016,667 44,521,893
613,458,726 516,278,975
As stipulated by the regulations of the PRC, the Group participates in various defined
contribution retirement plans organised by municipal and provincial governments for its
employees. The Group is required to make contributions to the retirement plans at the rates
ranged from 10% to 22% (2009: from 10% to 22%) of the salaries, bonuses and certain
allowances of the employees. A member of the plan is entitled to a pension equal to a fixed
proportion of the salary prevailing at the member’s retirement date. The Group has no other
material obligation for the payment of pension benefits associated with these plans beyond
the annual contributions described above.
11 Finance income and finance costs
2010 2009
Jan-Jun Jan-Jun
Interest income 137,027,378 122,577,386
Dividend income 236,573,500 12,154,819
Finance income 373,600,878 134,732,205
-------------------- --------------------
Interest expense and other borrowing costs 1,176,514,037 1,143,840,250
Less: Interest capitalised (801,337,555) (798,139,224)
Finance costs 375,176,482 345,701,026
Foreign exchange loss 10,995,237 1,138,294
-------------------- --------------------
Net finance costs (12,570,841) (212,107,115)China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
66
12 Taxation
(a) Taxation in the consolidated income statement represents:
2010 2009
Jan-Jun Jan-Jun
Current tax
PRC Corporate Income Tax
- Provision for the year 1,090,488,185 1,162,020,154
Land Appreciation Tax 748,264,949 380,647,052
1,838,753,134 1,542,667,206
-------------------- --------------------
Deferred tax
Fair value adjustments arising from
business combinations
- PRC Corporate Income Tax (44,541,340) (73,942,237)
- Land Appreciation Tax (55,520,585) (74,258,233)
Accrual for Land Appreciation Tax 66,593,912 (13,876,941)
Tax losses (165,043,240) (93,879,551)
Provision for diminution in value of properties 62,246,316 54,960,940
Accruals for construction costs (27,581,226) 51,185,710
Other temporary differences 5,156,856 4,310,028
(158,689,307) (145,500,284)
-------------------- --------------------
1,680,063,826 1,397,166,922
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 22% and 25% (2009:
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. As at 30 June 2010 and 2009, deferred tax
assets and liabilities are calculated based on the applicable income tax rates enacted by the
NPC from 1 January 2008.
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 year ended 30 June 2010
67
12 Taxation (continued)
(a) Taxation in the consolidated income statement represents (continued):
The following is a reconciliation between tax expense and accounting profit at applicable tax
rates:
2010 2009
Jan-Jun Jan-Jun
Profit before income tax 4,840,884,715 4,497,394,176
Less: Land Appreciation Tax 692,744,364 306,388,819
4,148,140,351 4,191,005,357
Notional tax on profit before taxation
calculated at effective income tax rate
of the relevant group subsidiaries concerned 983,564,693 1,073,072,452
Non-taxable income (48,616,142) (34,598,132)
Non-deductible expenses 51,639,753 1,629,468
Effect of tax losses not recognised 33,603,070 62,414,522
Recognition of previously unrecognised tax losses (29,495,496) (3,765,512)
Effect of unused tax losses recognised in prior years 295,494 -
Effect of temporary difference not recognised - 947,005
Effect of change in tax rates on deferred
tax in respect of current year
temporary differences (3,671,910) (8,921,700)
PRC Corporate Income Tax 987,319,462 1,090,778,103
Land Appreciation Tax 692,744,364 306,388,819
Actual total tax expense 1,680,063,826 1,397,166,922
(b) Taxation recognised directly in equity
2010 2009
Jan-Jun Jan-Jun
Arising from fair value adjustments on
available-for-sale securities (note 24(c)) (24,666,306) 12,077,611
Others - -
(24,666,306) 12,077,611China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
68
12 Taxation (continued)
(c) Current taxation in the consolidated balance sheet represents:
2010 2009
Jan-Jun Jan-Jun
Corporate Income Tax 564,879,634 720,023,458
Land Appreciation Tax 3,567,290,063 3,465,174,045
4,132,169,697 4,185,197,503
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
considers the timing of settlement is dependent on the practice of local tax bureaus. 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 2010 and 31 December 2009.
13 Other comprehensive income
(a) Tax effects relating to each component of other comprehensive income
Jan-Jun.2010 Jan-Jun.2009
Before- Tax Net-of- Before- Tax Net-oftax
expense tax tax benefit tax
amount amount amount amount
Exchange differences
on translation of
financial statements of
overseas subsidiaries 47,738,002 - 47,738,002 230,369 - 230,369
Available-for-sale
securities: net
movement in fair
value reserve (118,606,060) 24,666,306 (93,939,754) 60,388,057 (12,077,611) 48,310,446
O thers - - - - - -
Other comprehensive
Income (70,868,058 ) 24,666,306 (46,201,752 ) 60,618,426 (12,077,611 ) 48,540,815China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
69
13 Other comprehensive income (continued)
(b) Reclassification adjustments relating to components of other comprehensive income
2010 2009
Jan-Jun Jan-Jun
RMB RMB
Available-for sale securities:
Gains/(loss) arising during the period (2,183,281) 48,310,446
Less: Reclassification adjustments
for gains included in profit 91,756,473 -
Net movement in the fair value reserve during the
year recognised in other comprehensive income (93,939,754) 48,310,446
14 Basic and diluted earnings per share
The calculation of basic and diluted earnings per share is based on the net profit for the year
attributable to equity shareholders of the Company of 2,812,498,573 (2009: 2,524,392,406)
and on the weighted average number of ordinary shares outstanding during the year of
10,995,210,218 (2009: 10,995,210,218) shares.
There were no dilutive potential shares during the years presented above.
15 Dividends
A cash dividend of RMB0.07 per share, resulting in a dividend payment of RMB
769,664,716 in respect of the year ended 31 December 2009 was declared and paid during
the reporting period ended 30 June 2010. As the dividends of RMB1,711,866 under the 2007
Employees’ Share Award Scheme were reversed, the accumulated dividends paid amounted
to RMB 771,376,582 during the reporting period
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.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
70
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 2009 1,274,268,771 76,140,788 26,226,836 180,480,657 90,150,078 1,647,267,130
Additions:
- via acquisitions of
subsidiaries - - - 1,829,457 - 1,829,457
- others 286,578,946 8,874,508 262,924 15,328,150 7,879,982 318,924,510
Disposals (157,500,457) (14,958,775) (284,494) (9,929,704) (9,908,872) (192,582,302)
At 31 December 2009 1,403,347,260 70,056,521 26,205,266 187,708,560 88,121,188 1,775,438,795
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 1 January 2010 1,403,347,260 70,056,521 26,205,266 187,708,560 88,121,188 1,775,438,795
Additions:
- via acquisitions of
subsidiaries - - - 3,949,950 - 3,949,950
- others 16,418,148 900,813 487,663 8,983,125 16,866,980 43,656,729
Disposals (17,030,949) (2,715,093) (38,750) (6,049,517) (7,454,695) (33,289,004)
At 30 June 2010 1,402,734,459 68,242,241 26,654,179 194,592,118 97,533,473 1,789,756,470
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
71
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 2009 150,629,531 38,650,942 9,698,874 99,458,158 58,228,694 356,666,199
Additions:
- via acquisitions of
subsidiaries - - - 630,938 - 630,938
Charge for the year 43,582,084 5,720,427 1,368,366 26,715,773 9,897,271 87,283,921
Written back
on disposals (28,034,425) (13,159,161) (218,800) (7,231,490) (7,794,097) (56,437,973)
At 31 December 2009 166,177,190 31,212,208 10,848,440 119,573,379 60,331,868 388,143,085
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 1 January 2010 166,177,190 31,212,208 10,848,440 119,573,379 60,331,868 388,143,085
Additions:
- via acquisitions of
subsidiaries - - - 246,213 - 246,213
Charge for the year 29,306,035 3,166,755 751,659 11,075,475 5,070,480 49,370,404
Written back
on disposals (3,612,647) (1,968,104) (22,320) (5,117,829) (5,434,279) (16,155,179)
At 30 June 2010 191,870,578 32,410,859 11,577,779 125,777,238 59,968,069 421,604,523
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net book value:
At 30 June 2010 1,210,863,881 35,831,382 15,076,400 68,814,880 37,565,404 1,368,151,947
At 31 December 2009 1,237,170,070 38,844,313 15,356,826 68,135,181 27,789,320 1,387,295,710China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
72
17 Lease prepayments
30 Jun.2010 31 Dec.2009
At 1 January 81,966,326 -
Additions - 82,516,436
Amortisation for the year (825,164) (550,110)
A t bal ance sheet date -------8-1--,-1-4--1-,-1--6-2- -------8--1-,-9-6--6-,-3--2-6-
Leasehold land of the Group is held in the PRC. At 30 June 2010, the remaining lease term
of the land is 50 years.
18 Investment properties
30 Jun.2010 31 Dec.2009
Cost:
At 1 January 256,641,320 225,849,490
Transfer from completed properties for sale - 117,043,338
Disposals (122,325,448) (86,251,508)
At balance sheet date 134,315,872 256,641,320
-------------------- --------------------
Accumulated depreciation
and impairment loss:
At 1 January 28,498,162 27,454,723
Charge for the year 2,252,625 7,738,355
Written back on disposals (20,816,378) (6,694,916)
At balance sheet date 9,934,409 28,498,162
-------------------- --------------------
Net book value:
At balance sheet date 124,381,463 228,143,158
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 RMB130,298,067 (2009: RMB258,970,079).
The Group leases out investment properties under operating leases. The leases typically run
for an initial period of two to twenty 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.2010 31 Dec.2009
Within 1 year 4,549,064 11,881,321
After 1 year but within 5 years 43,139,010 45,034,409
After 5 years 67,114,663 97,352,090
114,802,737 154,267,820China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
73
19 Construction in progress
30 Jun.2010 31 Dec.2009
At 1 January 593,208,234 188,587,023
Additions 127,222,794 622,987,458
Transferred out to property, plant and equipment - (218,366,247)
T ransferred out to properties under developm ent - -
720,431,028 593,208,234
Construction in progress represents self-constructed office premises and owner managed
hotel under construction.
20 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% - 100%
Property
development
Beijing Chaoyang Vanke
Property Development
Company Limited Beijing RMB200,000,000 60% 60% -
Property
development
Beijing Vanke Enterprises
Shareholding Company
Limited Beijing RMB1,000,000,000 100% 90% 10%
Property
development
Beijing Vanke Property
Management Company
Limited Beijing RMB22,000,000 100% - 100%
Property
management
Beijing Zhongliang Vanke
Jiarifengjing Real Estate
Development Company
Limited (note) Beijing RMB830,000,000 50% - 50%
Property
development
Changchun Vanke Real Estate
Company Limited Changchun RMB50,000,000 100% 95% 5%
Property
development
Changsha Vanke Property
Management Company
Limited Changsha RMB5,000,000 100% - 100%
Property
management
Chengdu Vanke Chenghua
Property Company Limited Chengdu RMB554,479,142 100% - 100%
Property
development
Chengdu Vanke Guanghua
Property Company Limited Chengdu USD131,428,571 100% - 100%
Property
development
Chengdu Vanke Guobin
Property Company Limited Chengdu USD140,000,000 60% - 60%
Property
development
Chengdu Vanke Huadong Real
Estate Company Limited Chengdu RMB77,680,000 90% - 90%
Property
development
Chengdu Vanke Jinjiang
Property Company Limited Chengdu RMB10,000,000 100% - 100%
Property
development
Chengdu Vanke Property
Management Company
Limited Chengdu RMB5,000,000 100% - 100%
Property
management
Chengdu Vanke Real Estate
Company Limited Chengdu RMB80,000,000 100% 90% 10%
Property
development
Chongqing Yu Development
Coral Property Company
Limited Chongqing RMB20,300,000 51% - 51%
Property
developmentChina Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
74
20 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
Dalian Vanke City Property
Company Limited Dalian USD42,000,000 55% - 55%
Property
development
Dalian Vanke Real Estate
Development Company
Limited Dalian RMB32,000,000 100% - 100%
Property
development
Dongguan Songhuju Property
Company Limited Dongguan RMB10,000,000 100% - 100%
Property
development
Dongguan Vanke Construction
Research Company Limited Dongguan RMB20,000,000 100% 100% -
Construction
research
Dongguan Vanke Property
Management Company
Limited Dongguan RMB5,000,000 100% - 100%
Property
management
Dongguan Vanke Real Estate
Company Limited Dongguan RMB20,000,000 100% - 100%
Property
development
Dongguan Xintong Industry
Investment Company Limited Dongguan RMB10,000,000 51% - 51%
Property
development
Dongguan Xinwan Property
Development Company
Limited Dongguan RMB10,000,000 51% - 51%
Property
development
Foshan Nanhai District
Jinyulanwan Propoerty
Company Limited Foshan USD190,000,000 55% - 55%
Property
development
Foshan Vanke Real Estate
Company Limited Foshan RMB80,000,000 100% - 100%
Property
development
Fuyang Vanke Real Estate
Development Company
Limited Hangzhou RMB300,000,000 100% - 100%
Property
development
Fuzhou Vanke Real Estate
Company Limited Fuzhou RMB20,000,000 100% 100% -
Property
development
Guangzhou Pengwan Property
Company Limited (note) Guangzhou RMB200,000,000 50% - 50%
Property
development
Guangzhou Vanke Property
Management Company
Limited Guangzhou RMB5,000,000 100% 100%
Property
management
Guangzhou Vanke Real Estate
Company Limited Guangzhou RMB50,000,000 100% - 100%
Property
development
Guangzhou Wanxin Property
Company Limited Guangzhou HKD760,000,000 100% - 100%
Property
development
Guiyang Vanke Real Estate
Company Limited Guiyang RMB100,000,000 100% 100% -
Property
development
Hainan Fuchun East Real Estate
Development Company
Limited Hainan RMB20,000,000 100% - 100%
Property
development
Hainan Vanke Property
Development Company
Limited Haikou RMB10,000,000 100% 100% -
Property
development
Hangzhou Liangzhu Culture
Town Development Company
Limited Hangzhou RMB30,000,000 100% - 100%
Property
development
Hangzhou Liangzhu Egret Bay
Holiday Hotel Company
Limited Hangzhou RMB10,000,000 100% - 100% Service
Hangzhou Linlu Property
Development Company
Limited Hangzhou RMB170,000,000 100% - 100%
Property
development
Hangzhou Vanke Junyuan
Property Company Limited Hangzhou USD66,660,000 100% - 100%
Property
development
Hangzhou Vanke Property
Company Limited Hangzhou RMB320,000,000 100% - 100%
Property
developmentChina Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
75
20 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
Hangzhou Wankun Property
Development Company
Limited Hangzhou RMB350,000,000 51% - 51%
Property
development
Hefei Vanke Property Company
Limited Hefei RMB20,000,000 100% 100% -
Property
development
Huizhou Vanke Property
Company Limited Huizhou RMB10,000,000 100% - 100%
Property
development
Jiangsu Sunan Vanke Real
Estate Company Limited Suzhou RMB30,000,000 100% 100% -
Property
development
Kunming Vanke Property
Development Co., Ltd. Kunming RMB20,000,000 100% 100% -
Property
development
Nanjing Hengyue Property
Company Limited Nanjing RMB10,000,000 100% - 100%
Property
development
Nanjing Jinyu Blue Property
Company Limited Nanjing RMB90,000,000 100% - 100%
Property
development
Nanjing Vanke Property
Company Limited Nanjing RMB150,000,000 100% 100% -
Property
development
Ningbo Jiangbei Vanke
Property Company Limited Ningbo RMB675,000,000 100% - 100%
Property
development
Ningbo Vanke Real Estate
Company Limited Ningbo RMB150,000,000 100% 100% -
Property
development
Qingdao Da Shan Real Estate
Development Company
Limited Qingdao RMB100,000,000 60% - 60%
Property
development
Qingdao Vanke Real Estate
Company Limited Qingdao RMB20,000,000 100% 100% -
Property
development
Qingdao Vanke Yinshengtai
Real Estate Development Co.,
Ltd Qingdao RMB100,000,000 80% 80% -
Property
development
Qingyuan Hongmei Investment
Company Limited Qingyuan RMB280,000,000 95% - 95%
Property
development
Shanghai Dijie Property
Company Limited (note) Shanghai RMB20,000,000 50% - 50%
Property
development
Shanghai Hengda Property
Shareholding Company
Limited Shanghai RMB141,348,200 99.8% - 99.8%
Property
development
Shanghai Luolian Property
Company Limited. Shanghai RMB470,000,000 100% - 100%
Property
development
Shanghai Meilanhuafu Property
Company Limited Shanghai RMB700,000,000 100% - 100%
Property
development
Shanghai Tianyi Property
Development Company
Limited Shanghai RMB50,000,000 90% - 90%
Property
development
Shanghai Vanke Baobei
Property Company Limited Shanghai RMB10,000,000 100% - 100%
Property
development
Shanghai Vanke Investment
Management Company
Limited Shanghai RMB204,090,000 100% 100% -
Property
development
Shanghai Vanke Property
Management Company
Limited Shanghai RMB12,260,000 100% - 100%
Property
management
Shanghai Vanke Pudong
Property Company Limited Shanghai RMB160,000,000 100% - 100%
Property
development
Shanghai Vanke Real Estate
Company Limited Shanghai RMB800,000,000 100% - 100%
Property
developmentChina Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
76
20 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 Xiangda Real Estate
Development Company
Limited Shanghai RMB1,783,000,000 75% - 75%
Property
development
Shanxi Hualian Property
Development Company
Limited Xi'an RMB367,850,000 51% - 51%
Property
development
Shenyang Vanke Hunnan Jinyu
Property Development
Company Limited Shenyang RMB1,022,520,258 100% - 100%
Property
development
Shenyang Vanke Jinyu Blue
Bay Property Development
Company Limited Shenyang RMB578,150,000 100% - 100%
Property
development
Shenyang Vanke Property
Management Company
Limited Shenyang RMB10,000,000 100% - 100%
Property
management
Shenyang Vanke Real Estate
Development Company
Limited Shenyang RMB100,000,000 100% 95% 5%
Property
development
Shenyang Vanke Tianqinwan
Property Company Limited Shenyang USD99,980,000 55% - 55%
Property
development
Shenzhen Fuchun East (Group)
Company Limited Shenzhen RMB14,600,000 90% - 90%
Property
development
Shenzhen Fuchun East Real
Estate Company Limited Shenzhen RMB158,000,000 100% - 100%
Property
development
Shenzhen Longcheer Yacht
Club Company Limited Shenzhen RMB57,100,000 100% - 100% Club Service
Shenzhen Vanke City Scenery
Property Company Limited Shenzhen RMB120,000,000 100% - 100%
Property
development
Shenzhen Vanke Daolin
Investment Development
Company Limited Shenzhen RMB20,000,000 100% - 100%
Property
development
Shenzhen Vanke Financial
Consultancy Company
Limited Shenzhen RMB15,000,000 100% 95% 5%
Investment
trading and
Consultancy
services
Shenzhen Vanke Nancheng
Real Estate Company Limited Shenzhen RMB10,000,000 90% - 90%
Property
development
Shenzhen Vanke Property
Management Company
Limited Shenzhen RMB50,000,000 100% 95% 5%
Property
management
Shenzhen Vanke Real Estate
Company Limited Shenzhen RMB600,000,000 100% 95% 5%
Property
development
Shenzhen Vanke Xingye
Property Company Limited Shenzhen RMB62,413,230 100% - 100%
Property
development
Shenzhen Vanke Xizhigu Real
Estate Company Limited Shenzhen RMB10,000,000 60% - 60%
Property
development
Suzhou Huihua Investment and
Property Company Limited Suzhou RMB355,000,000 51% - 51%
Property
development
Suzhou Nandu Jianwu
Company Limited Suzhou RMB300,000,000 70% 70% -
Property
development
Suzhou Vanke Zhongliang
Property Company Limited Suzhou RMB230,000,000 51% - 51%
Property
development
Taiyuan Vanke Real Estate
Company Limited Taiyuan RMB20,000,000 100% 100%
Property
developmentChina Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
77
20 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
Tander China Investment
Company Limited Hong Kong HKD10,000 100% - 100% Investment
Tianjin Vanke Property
Management Company
Limited Tianjin RMB10,000,000 100% - 100%
Property
management
Tianjin Vanke Real Estate
Company Limited Tianjin RMB390,000,000 100% 15% 85%
Property
development
Tianjin Vanke Xinlicheng
Company Limited Tianjin RMB230,000,000 100% - 100%
Property
development
Tianjin Wanbin Real Estate
Development Company
Limited Tianjin RMB455,000,000 100% - 100%
Property
development
Tianjin Wanfu Investment
Company Limited Tianjin RMB10,000,000 100% - 100%
Property
development
Tianjin Wanzhu Investment
Company Limited Tianjin RMB20,000,000 100% - 100%
Property
development
Tianjin Zhongtian Wanfang
Investment Company Limited Tianjin RMB20,000,000 100% - 100%
Property
development
Vanke (Chongqing) Real Estate
Company Limited Chongqing RMB100,000,000 100% 100% -
Property
development
Vanke Property (Hong Kong)
Company Limited Hong Kong USD9,500,000 100% - 100% Investment
Vanke Real Estate (Hong Kong)
Company Limited Hong Kong HKD15,600,000 100% 80% 20% Investment
Wuhan Guohao Property
Company Limited Wuhan RMB10,000,000 55% - 55%
Property
development
Wuhan Vanke Property
Management Company
Limited Wuhan RMB12,000,000 100% - 100%
Property
management
Wuhan Vanke Real Estate
Company Limited Wuhan RMB150,000,000 100% 95% 5%
Property
development
Wuhan Vanke Tianrun Real
Estate Company Limited Wuhan USD57,600,000 100% - 100%
Property
development
Wuhan Wangjiadun Morden
City Property Company
Limited Wuhan RMB200,000,000 90% - 90%
Property
development
Wuxi Dongcheng Real Estate
Company Limited Wuxi USD149,400,000 100% - 100%
Property
development
Wuxi Vanke Real Estate
Company Limited Wuxi RMB300,000,000 60% 60% -
Property
development
Wuxi Wansheng Real Estate
Development Company
Limited Wuxi USD49,200,000 55% - 55%
Property
development
Xiamen Vanke Real Estate
Company Limited Xiamen RMB50,000,000 100% - 100%
Property
development
Xi'an Vanke Real Estate
Company Limited Xi'an RMB20,000,000 100% 100% -
Property
development
Yantai Vanke Property
Development Co., Ltd. Yantai RMB30,000,000 100% 100% -
Property
development
Zhejiang Vanke Nandu Real
Estate Company Limited Hangzhou RMB150,000,000 100% - 100%
Property
development
Zhenjiang RunduProperty
Company Limited Zhenjiang RMB10,000,000 100% - 100%
Property
development
Zhenjiang Runnan Property
Company Limited Zhenjiang RMB50,000,000 100% - 100%
Property
developmentChina Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
78
20 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
Zhenjiang Runqiao Property
Company Limited Zhenjiang RMB10,000,000 100% - 100%
Property
development
Zhenjiang Runzhong Property
Company Limited Zhenjiang RMB10,000,000 100% - 100%
Property
development
Zhuhai Vanke Real Estate
Company Limited Zhuhai RMB10,000,000 100% 100% -
Property
development
Zhuhai Zhubin Property
Development Company
Limited Zhuhai RMB109,000,000 95% - 95%
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.
21 Interest in associates
Details of the Group’s principal associates at 30 June 2010 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 RMB190,000,000 49.00% - 49.00%
Property
development
Beijing Vanke Consultancy
Company Limited Beijing RMB100,000 20.00% - 20.00%
Corporation
consultation
Wuhan Golf City Gardern
Real Estate Company
Limited (note) Wuhan RMB219,000,000 49.00% - 49.00%
Property
development
Shanghai Nandu White Horse
Real Estate Company
Limited (note) Shanghai RMB27,000,000 49.00% - 49.00%
Property
development
Chengdu Yihang Vanke
Binjiang Real Estate
Company Limited (note) Chengdu RMB140,000,000 49.00% - 49.00%
Property
development
Hefei Yihang Vanke Real
Estate Company Limited
(note) Hefei RMB101,500,000 50.00% 50.00%
Property
development
Suzhou Zhonghang Vanke
Changfeng Real Estate
Company Limited (note) Suzhou RMB280,000,000 49.00% - 49.00%
Property
development
Changsha Oriental City Real
Esteate Company Limited Changsha RMB20,000,000 20.00% - 20.00%
Property
development
Shanghai Zunyi Property
Management Company
Limited Shanghai RMB3,000,000 30.00% - 30.00%
Property
management
Foshan Shunde District
Zhonghang Vanke Property
Company Limited Foshan RMB600,000,000 15.00% - 15.00%
Property
development
Shenzhen Mingjue Investment
Development Company
Limited Shenzhen RMB15,000,000 45.00% - 45.00%
Investment and
ConsultationChina Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
79
21 Interest in associates (continued)
Details of the Group’s principal associates at 30 June 2010 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
Xiamen Wantefu Property
Development Company
Limited Xiamen RMB400,000,000 30.00% - 30.00%
Property
development
Guangzhou Yinyejunrui
Property Development
Company Limited (note) Guangzhou RMB10,000,000 49.90% - 49.90%
Property
development
Shanghai Jingyuan Property
Development Company
Limited Shanghai RMB30,000,000 45.00% - 45.00%
Property
development
Langfang Kuangshijiye
Property Development
Company Limited Langfang USD50,000,000 49.00% - 49.00%
Property
development
Changchun Vanke Jingcheng
Property Development
Company Limited changchun RMB10,000,000 49.00% - 49.00%
Property
development
Note: Except for the equity interest held directly, the Group also hold effective equity
interest in these associates through the jointly controlled entity Zhonghang Vanke
Company Limited.
Summary financial information on associates:
Equity
attributable
Assets Liabilities to parent Revenue Profit
2010
100 per cent 14,625,684,023 12,262,413,942 2,363,270,081 362,087,173 18,745,718
Group’s effective in ter est 5,376,431,042 4,613,301,622 763,129,420 177,375,167 17,667,867
2009
100 per cent 10,271,806,802 8,013,212,222 2,258,594,580 7,412,023,684 1,562,276,704
Group’s effective interest 4,220,037,527 3,510,525,247 709,512,280 2,276,229,781 392,250,939China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
80
22 Interest in jointly controlled entities
Details of the Group’s principal jointly controlled entities at 30 June 2010 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 (note 1) Shenyang RMB197,235,443 49.00% - 49%
Property
development
Hangzhou Nandu Songcheng
Property Company Limited Hangzhou RMB130,000,000 50.00% - 50%
Property
development
Shanghai Jialai Real Estate
Development Company
Limited (note 1) Shanghai RMB180,000,000 49.00% - 49.00%
Property
development
Zhonghang Vanke Company
Limited(note 1) Beijing RMB3,000,000,000 40.00% 40.00% -
Property
development
Dongguan Vanke Property
Company limited Dongguan RMB10,000,000, 50.00% - 50.00%
Property
development
Wuhan Vanke Qinganju
Property Development
Limited(note 1) Wuhan RMB100,000,000 30.00% - 30.00%
Property
development
Yunnan Vanke City Property
Company Limited (note 2) Kunming RMB10,000,000, 51.00% 51.00% -
Property
development
Changsha Lingyu Real Estate
Development Company
Limited (note 1) Changsha RMB100,000,000 60.00% 60.00%
Property
development
Changsha Lingyu Investment
Company Limited(note 1) Changsha RMB100,000,000 60.00% 60.00%
Property
development
Beijing Zhongliang Vanke Real
Estate Development Company
Limited (note 1) Beijing RMB800,000,000 50.00% - 50.00%
Property
development
Changchun Vanke Xizhigu
Real Estate Development
Company Limited Changchun RMB8,000,000 50.00% - 50.00%
Property
development
Shanghai Anhong Real Estate
Investment Company Limited
(note 2) Shanghai RMB5,000,000 65.00% - 65.00%
Property
development
Kunshan Vanke Fujie Real
Estate Development Company
Limited Kunshan RMB20,000,000 50.00% - 50.00%
Property
development
Tianjin Diwan Investment
Company Limited (note 2) Tianjin RMB39,215,700 40.00% - 40.00%
Property
development
Hangzhou Xiangge Investment
Management Company
Limited (note 2) Hangzhou RMB2,000,000 50.00% - 50.00%
Investment and
Consultation
Notes:
(1) A contractual arrangement between the Group and the counterparty of these entities
establishes joint control over the financial and operating policies of these entities.
(2) The Group is entitled to 50% voting right of the entity as the board of directors are
appointed by the Group and the counterpart equally.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
81
22 Interest in jointly controlled entities (continued)
Summary of financial information on jointly controlled entities – Group’s effective interest
30 Jun.2010 31 Dec.2009
Non-current assets 634,331,049 413,738,553
Current assets 7,481,729,134 6,212,322,249
Non-current liabilities (41,650,000) (82,050,000)
Current liabilities (4,613,282,427) (3,780,133,404)
Net assets 3,461,127,756 2,763,877,398
Income 377,215,935 969,474,034
Expenses (300,443,862) (819,864,110)
Profit for the year 76,772,073 149,609,924
23 Other financial assets
30 Jun.2010 31 Dec.2009
Available-for-sale securities in the PRC
Equity securities
- Unlisted 83,614,701 91,993,324
- Listed in the PRC 24,894,312 163,629,472
108,509,013 255,622,796China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
82
24 Deferred tax assets / (liabilities)
(a) Deferred tax assets
Deferred tax assets are attributable to the items detailed as follows:
30 Jun.2010 31 Dec.2009
Tax losses 454,867,992 289,824,752
Impairment loss of trade and other receivables 13,469,287 17,811,958
Provision for diminution in value of properties 93,923,814 156,170,130
Accruals for construction costs 172,702,315 145,121,089
Accrual for Land Appreciation Tax 508,815,810 575,409,722
Other temporary differences 80,497,643 81,311,828
1,324,276,861 1,265,649,479
Deferred tax assets have not been recognised in respect of the following temporary
differences:
30 Jun.2010 31 Dec.2009
Tax losses 672,756,743 1,006,670,048
Other temporary differences 78,410,794 158,420,591
751,167,537 1,165,090,639
The tax losses expire between 2011 and 2015. The deductible temporary differences will not
expire under the current 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 therefrom.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
83
24 Deferred tax assets / (liabilities) (continued)
(b) Deferred tax liabilities
Deferred tax liabilities are attributable to the items detailed as follows:
30 Jun.2010 31 Dec.2009
Fair value adjustments on
available-for-sale securities (3,636,707) (28,303,017)
Fair value adjustments arising from
business combinations (1,092,903,844) (1,192,965,769)
(1,096,540,551) (1,221,268,786)
(c) Movements in deferred taxation, net:
30 Jun.2010 31 Dec.2009
At 1 January 44,380,693 68,993,006
Transferred to consolidated income statement (note 12(a)) 158,689,307 (6,855,066)
Recognised in other comprehensive income (note 13(a)) 24,666,306 (17,757,247)
At balance sheet date 227,736,306 44,380,693
25 Inventories
30 Jun.2010 31 Dec.2009
Raw materials 61,175,949 59,998,046
Inventories recognised as cost of sales for the year 5,002,633 11,432,652
26 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.2010 31 Dec.2009
With lease term of 50 years or more 73,041,949,080 56,788,947,082
With lease term of less than 50 years 4,914,097,193 3,624,287,723
77,956,046,273 60,413,234,805China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
84
26 Properties held for development, properties under development and completed
properties for sale (continued)
(b) The analysis of the amount of completed properties for sale recognised as an expense is as
follows:
30 Jun. 2010 31 Dec. 2009
Carrying amount of properties sold 10,060,743,066 34,219,897,859
Write down of properties - 150,693
Reversal of write-down of properties (248,380,000) (616,565,282)
9,812,363,066 33,603,483,270
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.
27 Trade and other receivables
30 Jun. 2010 31 Dec. 2009
Debtors and other receivables 6,417,140,941 4,381,802,497
Less: allowance for doubtful debts (178,896,385) (163,638,185)
6,238,244,556 4,218,164,312
-------------------- --------------------
Amount due from associates and jointly
controlled entities 5,920,786,504 4,281,498,407
Less: allowance for doubtful debts (499,886) (661,378)
5,920,286,618 4,280,837,029
-------------------- --------------------
Prepaid taxes 3,324,492,830 1,979,482,542
-------------------- --------------------
Deposits and prepayments 6,435,960,420 6,756,836,958
-------------------- --------------------
21,918,984,424 17,235,320,841
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 RMB401million (2009:
RMB374 million), are expected to be recovered within one year.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
85
27 Trade and other receivables (continued)
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 year are as follows:
30 Jun. 2010 31 Dec. 2009
At 1 January 164,299,563 142,462,053
Impairment loss recognised 16,245,542 28,275,933
Uncollectible amounts written off (1,148,834) (6,438,423)
At balance sheet date 179,396,271 164,299,563
At 30 June 2010, the Group’s trade debtors and other receivables of RMB179 million, (2009:
RMB164 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 RMB179 million (2009: RMB164 million) were recognised.
The Group does not hold any collateral over these balances.
28 Cash and cash equivalents and pledged deposits
Cash and cash equivalents and pledged deposits consist of cash on hand and balances with
banks. The balance includes deposits with banks of RMB1,112 million with restriction for
designated purposes.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
86
29 Share capital
30 Jun. 2010 31 Dec. 2009
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 2010 is as follows:
Issued share capital
A shares B shares Total
At 1 J anuary 2010 9,680,254,750 1,314,955,468 10,995,210,218
At 30 June 2010 9,680,254,750 1,314,955,468 10,995,210,218
There were no movements in share capital during 2010.
30 Reserves
(a) 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 year ended 30 June 2010, the Company transferred RMB nil (2009:
RMB287,447,528), being 10% of the Company’s current year’s net profit as
determined in according with the PRC Accounting Rules and Regulations, to this
reserve.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
87
30 Reserves (continued)
(a) Statutory reserves (continued)
(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 year ended 30 June 2010, the directors proposed to transfer RMB nil (2009:
RMB1,868,408,931), being nil (2009: 65%) of the Company’s current year’s net
profit as determined in accordance with the PRC Accounting Rules and Regulations,
to this reserve.
(b) Employee share-based compensation reserve
As the market performance condition could not be met, the Employees’ Share Award
Scheme for year 2007 was terminated. All the Awarded shares held under the 2007 Scheme
were sold in the capital market. The proceeds from the sale of shares, together with interest,
amounted to RMB468,728,084, were returned to the Company on 25 January 2010. The
dividends of RMB1,711,866 under the 2007 Scheme were reversed. As of now, the
implementation of the Company's Employees’ Share Award Scheme has been completed.
(c) 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 as stated in note 3(c)(i).
(d) Capital management
The Group’s primary objectives when managing capital are to safeguard the Group’s ability
to continue as a going concern, so that it can continue to provide returns for shareholders and
benefits for other stakeholders, by pricing its properties commensurately with the level of
risk and by securing access to finance at a reasonable cost.
The Group actively and regularly reviews and manages its capital structure to maintain a
balance between the higher shareholder returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position, and makes
adjustments to the capital structure in the light of changes in economic conditions, inclusive
latest market trend, land price, cash flow and profit forecasts. In order to maintain a sound
capital position, the Group may adjust the amount of dividends payable to shareholders, issue
new shares, issue bonds or raise new debt financing.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
88
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. 2010 31 Dec. 2009
Non-current
Secured or guaranteed
- bank loans (note (a)) 5,038,196,770 2,300,254,991
- corporate bonds (note (b)) 2,926,001,721 2,915,228,176
- other borrowings(note(c)) - 1,200,000,000
-------------------- --------------------
7,964,198,391 6,415,483,167
-------------------- --------------------
Unsecured
- bank loans 5,825,335,341 5,218,451,222
- corporate bonds (note (b)) 2,881,215,419 2,878,507,630
- other borrowings (note (c)) 8,761,815,611 8,784,092,083
17,468,366,371 16,881,050,935
-------------------- --------------------
25,432,564,762 23,296,534,102
At 30 June, non-current interest-bearing borrowings and bonds were repayable as follows:
30 Jun. 2010 31 Dec. 2009
After 1 year but within 2 years 14,128,307,858 15,934,138,520
After 2 years but within 5 years 11,304,256,904 7,362,395,582
25,432,564,762 23,296,534,102China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
89
31 Interest-bearing borrowings and bonds (continued)
30 Jun. 2010 31 Dec. 2009
Current
Secured or guaranteed
- bank loans (note (a)) 80,000,000 150,000,000
- current portion of long term bank loans (note (a)) 1,400,677,342 1,258,730,915
- current portion of long term other borrowings (note (c)) 1,200,000,000 -
2,680,677,342 1,408,730,915
-------------------- --------------------
Unsecured
- bank loans 943,308,333 1,038,256,111
- current portion of long term bank loans 5,864,000,000 6,181,683,452
- current portion of long term other borrowings (note (c)) 3,928,342,145 -
10,735,650,478 7,219,939,563
-------------------- --------------------
13,416,327,820 8,628,670,478
Notes:
(a) Bank loans
The secured or guaranteed bank loans of RMB6,519 million as at 30 June 2010(2009:
RMB3,709 million) are secured over certain properties held for development and
properties under development with aggregate carrying value of RMB3,878 million
(2009: RMB3,496 million), the Group’s interests in certain subsidiaries.
The interest rate of bank loans ranges from 4.86% to 8.33% in 2010 (2009: from
4.86% to 8.33%).
(b) Corporate bonds
2009
Corporate bonds Corporate bonds
No.101688 No.101699
Brought forward value at 1 January 2,873,650,747 2,894,365,250
Transaction costs amortised 4,856,883 20,862,926
Carrying value at 31 December 2,878,507,630 2,915,228,176China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
90
31 Interest-bearing borrowings and bonds (continued)
Notes (continued):
(b) Corporate bonds (continued)
2010
Corporate bonds Corporate bonds
No.101688 No.101699
Brought forward value at 1 January 2,878,507,630 2,915,228,176
Transaction costs amortised 2,707,789 10,773,545
Carrying value at 30 June 2,881,215,419 2,926,001,721
In 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.
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.
(c) Other borrowings
30 Jun. 2010 31 Dec. 2009
Non-current
Proceeds 9,000,000,000 10,200,000,000
Transaction costs (238,184,389) (215,907,918)
8,761,815,611 9,984,092,082
-------------------- ---------------------
Current
Proceeds - -
- -
-------------------- ---------------------
Current portion of long term other borrowings
Proceeds 5,200,000,000 -
Transaction costs (71,657,855) -
5,128,342,145 -
-------------------- ---------------------China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
91
31 Interest-bearing borrowings and bonds (continued)
Notes (continued):
(c) Other borrowings (continued)
Other borrowings represent interest bearing borrowings raised from third party
lenders through trust companies at market interest rate. The interest rate of these
borrowings ranges from5.00% to 5.40% in 2010 (2009: 4.90% to 5.40%).
Other borrowings of RMB nil as at 30 June 2010(2009: RMB 1,200 million) were
guaranteed by a third party.
32 Other long term liabilities
Other long term liabilities at 30 June 2010 and 2009 mainly represented consideration
payable in connection with acquisitions of subsidiaries and was due for settlement by
instalments in 2011 and 2012.
33 Trade and other payables
2010 2009
Trade payable 13,345,146,051 16,300,047,906
Amounts due to associates 230,636,309 24,046,337
Amounts due to jointly controlled entities 1,057,778,820 900,009,782
Deposits received in advance 45,384,939,824 31,734,801,164
Other payables and accrued expenses 8,212,101,845 6,101,542,047
Other taxes 100,532,392 183,964,631
Total 68,331,120,744 55,244,411,867
34 Provisions
2010 2009
Balance at 1 January 34,355,815 41,729,468
Provisions made during the year 2,025,106 2,667,737
Provisions used during the year (2,771,171) (10,041,390)
Balance at balance sheet date 33,609,750 34,355,815
The balance represents the estimated losses to be borne by the Group in relation to the
property management projects.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
92
35 Employees’ share award scheme
Pursuant to a shareholders’ resolution passed on 30 May 2006, the Company adopted an
Employees’ Share Award Scheme for each of the years ended 31 December 2006, 2007 and
2008. The vesting conditions of the 2006 Scheme had been met, and the relevant awarded
shares were transferred to the eligible employees’ accounts in 2008. The implementation of
the 2008 Scheme was terminated because the non-market performance condition could not be
met in 2008. The proceeds from the sale of the shares under the 2008 Scheme were
transferred to the Company on 25 May 2009. The implementation of the 2007 Scheme was
terminated because the market performance condition could not be met during the waiting
period. The proceeds from the sale of the shares under the 2007 Scheme were transferred to
the Company on 25 January 2010. As of now, the implementation of the Company's
Employees’ Share Award Scheme has been completed.
36 Material related party transactions
(a) Reference should be made to the following notes regarding related parties:
Associates (note 21, 27 & 33)
Jointly controlled entities (note 22, 27 & 33)
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:
2010 2009
Jan. – Jun. Jan. – Jun.
Short-term employee benefits 5,310,268 4,224,400
The above compensations are included in “personnel expenses” (see note 10).
The Group also provides non-monetary employee benefits to the key management personnel
in the form of purchase discount on sale of the Group’s properties to them. Details of such
transactions are as follows:
2010 2009
Jan. – Jun. Jan. – Jun.
Sales of properties to the key management personnel 5,132,112 -
Related cost of sales (2,621,867) -
Gross profit 2,510,345 -
All the above were approved by the Board of Directors as a kind of employment benefits to
the key management personnel.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
93
37 Commitments
(a) Commitments outstanding at 30 June not provided for in the financial statements were as
follows:
30 Jun. 2010 31 Dec. 2009
Contracted for 35,554,732,403 25,845,776,320
Commitments mainly related to land and development costs for the Group’s properties under
development.
(b) At 30 June 2010, the total future minimum lease payments under non-cancellable
operating leases are payable as follows:
30 Jun. 2010 31 Dec. 2009
Within 1 year 17,515,899 25,616,859
After 1 year but within 2 years 9,931,914 9,172,514
After 2 year but within 5 years 11,316,365 4,619,928
After 5 years - -
38,764,179 39,409,301
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
RMB20 million (2009: RMB36 million).
38 Contingent liabilities
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
RMB22,381 million (2009: RMB22,083 million), including guarantees of RMB22,060
million (2009: RMB21,272 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 RMB320 million (2009: RMB811 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 recovers 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.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
94
39 Financial risk management
Exposure to interest rate, credit, liquidity, currency risks and equity price risk 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 2010, 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
RMB52 million (2009: RMB12 million).
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. The analysis is
performed on the same basis for 2009.
(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 year ended 30 June 2010
95
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:
2010
Total contractual More than 1 More than 2
Carrying undiscounted Within 1 year year but less years but less
amount cash flow or on demand than 2 year than 5 years
Interest-bearing borrowings 33,041,675,441 35,899,374,777 14,702,381,333 15,488,399,766 5,708,593,679
Corporate bonds 5,807,217,141 7,065,333,333 368,000,000 368,000,000 6,329,333,333
Creditors and accrued charges 24,202,976,532 24,202,976,532 24,202,976,532 - -
Amounts due to jointly controlled
entities and associates 1,288,415,129 1,288,415,129 1,288,415,129 - -
Other long term liabilities 8,735,986 8,735,986 - - 8,735,986
2009
Total contractual More than 1 More than 2
Carrying undiscounted Within 1 year year but less years but less
amount cash flow or on demand than 2 year than 5 years
Interest-bearing borrowings 26,131,468,775 28,828,225,766 10,235,713,530 16,974,290,816 1,618,221,420
Corporate bonds 5,793,735,806 7,249,333,333 368,000,000 368,000,000 6,513,333,333
Creditors and accrued charges 22,401,589,953 22,401,589,953 22,401,589,953 - -
Amounts due to jointly controlled
entities and associates 924,056,119 924,056,119 924,056,119 - -
Other long term liabilities 8,408,145 8,408,145 - - 8,408,145
(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. 2010 31 Dec. 2009
United States Dollars 1,496,958,094 806,368,281
Hong Kong Dollars 16,072,731 8,147,723
Interest-bearing borrowings denominated in a currency other than the functional currency of
the entity to which they relate are as follows:
30 Jun. 2010 31 Dec. 2009
United States Dollars 4,493,137,913 2,602,202,906
Hong Kong Dollars - -China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
96
39 Financial risk management (continued)
(d) Foreign exchange risk (continued)
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. 2010 31 Dec. 2009
United States Dollars - -
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.2010 31 Dec.2009
Increase / (decrease) Effect on profit Effect on other Effect on profit Effect on other
in foreign after tax and components of after tax and components of
exchange rates retained profits equity retained profits equity
United States Dollars 10% 224,713,486 224,524,564 134,687,597 134,492,028
United States Dollars (10%) (224,713,486) (224,524,564) (134,687,597) (134,492,028)
Hong Kong Dollars 10% (1,205,455) (331,028,698) (611,079) (213,039,426)
Hong Kong Dollars (10%) 1,205,455 331,028,698 611,079 213,039,426
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.
(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 23). The Group monitors the performance of the
available-for-sale equity securities regularly.
40 Non-adjusting post balance sheet events
After the balance sheet date the directors proposed a final dividend, further details of which
are disclosed in note 15.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
97
41 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 years.
(iii) Land appreciation tax
As explained in note 12(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 by the 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.China Vanke Co., Ltd.
Financial statements for the year ended 30 June 2010
98
42 Possible impact of amendments, new standards and interpretations issued but
not yet effective for the year ended 30 June 2010
Up to date of issue of these financial statements, the IASB has issued a number of
amendments, new standards and interpretations which are not yet effective for the year ended
30 June 2010 and which have not been adopted in these financial statements.
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.
In addition, the following developments are expected to result in amended disclosures in the
financial statements, including restatement of comparative amounts in the first period of
adoption:
Effective for
accounting periods
beginning on or after
IFRS 9, Financial Instruments 1 January 2013
Amendments to IAS 24, Related Party Disclosures 1 January 2011
