China Vanke Co., Ltd.
2011 Interim Report
(For the six months ended 30 June 2011)
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.
Chairman Wang Shi, Director Yu Liang, Director Sun Jianyi, Director Shirley L. Xiao, Independent Director Qi
Daqing, Independent Director Zhang Liping, Independent Director Paul Chan Mo Po attended the board meeting
in person.Deputy Chairman Qiao Shibo 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. Director Wang Yin was not able to attend the board meeting in person due to
his business engagements and had authorised Director Shirley L. Xiao to represent him and vote on his behalf at
the board meeting. Independent Director Hua Sheng 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 his
behalf 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 ………………………………………………………………………….……………5
Significant Events…………………………………………………………………………………..…..14
Financial statements (unaudited) ………………………………………………………………………22
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”, “Securities Daily” and an English media in Hong Kong.
Website for publication of the interim report: 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
Major Financial Indicators（Unit: RMB）
Financial Indicators Jan.-Jun. 2011 Jan.-Jun. 2010 Change（+/-）
Revenue 18,886,965,527 15,816,254,224 19.41%
Profit from operating activities 6,001,032,670 4,759,015,616 26.10%
Share of profits less losses of associates
7,773,409 94,439,940 -91.77%
and jointly controlled entities
Profit before income tax 5,866,823,818 4,840,884,715 21.19%
Income tax expense (2,614,306,284) (1,680,063,826) 55.61%
Profit for the period 3,252,517,534 3,160,820,889 2.90%
Profit attributed to minority 274,662,881 348,322,316 -21.15%
Profit attributable to equity
2,977,854,653 2,812,498,573 5.88%
shareholders of the Company
Basic earnings per share 0.27 0.26 3.85%
Diluted earnings per share 0.27 0.26 3.85%
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II. Change in Share Capital and Shareholdings of Major Shareholders
1. Change in Share Capital (as at 30 June 2011)
Unit: Share
Before the Change Increase / decrease After the Change
(+, -） Percentage
Class of Share Percentage of
Quantity Quantity of
shareholding
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
19,364,778 0.18% +2,311,646 21,676,424 0.20%
persons
4. Shares held by foreign investors
Total number of restricted shares 19,364,778 0.18% +2,311,646 21,676,424 0.20%
II. Non-restricted Shares
1. RMB-denominated ordinary
9,660,889,972 87.86% -2,311,646 9,658,578,326 87.84%
shares (A shares)
2. Domestic listed foreign shares (B
1,314,955,468 11.96% 0 1,314,955,468 11.96%
shares)
Total number of
10,975,845,440 99.82% -2,311,646 10,973,533,794 99.80%
non-restricted shares
III. Total Number of Shares 10,995,210,218 100.00% 0 10,995,210,218 100.00%
Note: Change in the senior management staff of the Company during the reporting period led to corresponding change in the number
of restricted tradable shares and non-restricted tradable shares of the Company.
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 2011)
Unit: Share
Total number of shareholders 1,018,112 (including 995,866 holders of A shares and 22,246 holders of B Shares)
Shareholdings of the top 10 shareholders
Classification Percentage of Total Number of Number of
Name of shareholder of shareholdings number of restricted pledged or
shareholder shares held shares held lock-up shares
China Resources Co., Limited State-owned 0 0
14.73% 1,619,094,766
(“CRC”) legal person
Liu Yuansheng Others 1.22% 133,791,208 0 0
Bosera Theme Industry Stock
Others 1.14% 125,043,403 0 0
Securities Investment Fund
E Fund Shenzhen Stock Exchange 100
Others 0.98% 107,892,676 0 0
Exchange-Traded Fund
Bosera Value Growth Securities
Others 0.91% 100,000,000 0 0
Investment Fund
Rongtong Shenzhen Stock Exchange 0 0
Others 0.79% 87,231,358
100 Index Securities Investment Fund
UBS AG Others 0.73% 80,800,552 0 0
National Social Security Fund –
Others 0.71% 78,040,223 0 0
Portfolio 103
Toyo Securities Asia Limited - A/C Foreign
0.63% 69,347,376 0 0
Client shareholder
Staff Committee of China Vanke Co.,
Others 0.61% 67,168,517 0 0
Ltd.
Shareholdings of the top 10 holders of non-restricted shares
Name of shareholder Number of non-restricted shares held Class of shares
Ordinary RMB-denominated
CRC 1,619,094,766
shares (A shares)
Ordinary RMB-denominated
Liu Yuansheng 133,791,208
shares (A shares)
Bosera Theme Industry Stock Ordinary RMB-denominated
125,043,403
Securities Investment Fund shares (A shares)
E Fund Shenzhen Stock Exchange 100 Ordinary RMB-denominated
107,892,676
Exchange-Traded Fund shares (A shares)
Bosera Value Growth Securities Ordinary RMB-denominated
100,000,000
Investment Fund shares (A shares)
Rongtong Shenzhen Stock Exchange Ordinary RMB-denominated
87,231,358
100 Index Securities Investment Fund shares (A shares)
3
Ordinary RMB-denominated
UBS AG 80,800,552
shares (A shares)
National Social Security Fund – Ordinary RMB-denominated
78,040,223
Portfolio 103 shares (A shares)
Toyo Securities Asia Limited - A/C Domestic listed foreign shares (B
69,347,376
Client shares)
Staff Committee of China Vanke Co., Ordinary RMB-denominated
67,168,517
Ltd. shares (A shares)
“Bosera Theme Industry Stock Securities Investment Fund”, “Bosera Value Growth
Securities Investment Fund” and “National Social Security Fund – Portfolio 103” are
Remarks on the connected relationship
managed by Bosera Asset Management Co., Ltd. Apart from the above-mentioned
or action in concert of the
relationships, it is not known as to whether there are other connections or persons
aforementioned shareholders
deemed to be acting in concert under “the Measures for the Administration of the
Takeover of Listed Companies” among the above-mentioned shareholders.
3. Bond holdings of the Company’s top 10 bondholders (as at 30 June 2011)
(1) Name of the top 10 bondholders of 08 Vanke G1 bonds and their bond holdings
No. Bondholder No. of bonds held
New China Life Insurance Company – Dividend Distribution – Individual Dividend –
1 5,548,262
018L-FH002 Shen
2 China Petroleum Finance Co., Ltd. 4,157,662
3 China Pacific Insurance (Group) Co., Ltd. 3,433,312
China Ping An Property and Casualty Insurance Company Limited – Traditional –
4 2,698,727
General Insurance Products
5 China Life Insurance Company Ltd. 2,619,042
6 Taiping General Insurance Co., Ltd. 1,003,216
7 China Life Pension Company Ltd. – Internal Resources 1,000,000
8 CNPC Pension Scheme - ICBC 994,145
China Life Property and Casulty Insurance Company Ltd. – Traditional – General
9 820,000
Insurance Products
10 China Property & Casualty Reinsurance Company Ltd. 776,162
Note: China Life Property and Casulty Insurance Company Limited, which manages “China Life Property and Casulty
Insurance Company Ltd. – Traditional – General Insurance Products”, and China Life Pension Company Limited, which
manages “China Life Pension Company Ltd. – Internal Resources”, are subsidaries of China Life Insurance Company
Limited. China Petroleum Finance Co., Ltd is the subsidiary of CNPC, which is the appointor 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 Credit Tianli Bond Securities Investment Fund 2,196,450
2 Harvest Stable Earning Bond Securities Investment Fund 1,662,209
3 Fullgoal Tianfeng Surging Income Bond Securities Investment Fund 1,230,000
4 China AMC Bond Investment Fund 1,117,021
5 China Ping An Trust & Investment Co. Ltd – CMB Furui Life Individual 902,223
6 National Social Security Fund – Portfolio 801 849,388
7 ICBC Credit Suisse Asset Management Co., Ltd – ICBC – Assets of Specific Clients 826,141
China Ping An Trust & Investment Co., Ltd. – Bank Comm Furui Life Dividend
8 742,569
Distribution
9 CNPC Pension Scheme - ICBC 615,886
10 China AMC Classic Allocation Fund 550,000
Note: “ICBC Credit Suisse Credit Tianli Bond Securities Investment Fund” and “ICBC Credit Suisse Asset Management Co.,
Ltd – ICBC – Assets of Specific Clients” are managed by ICBC Credit Suisse Asset Management Co., Ltd. “China AMC Bond
Investment Fund” and “China AMC Classic Allocation Fund” are managed by China AMC Fund. “China Ping An Trust &
Investment Co. Ltd – CMB Furui Life Individual” and "China Ping An Trust & Investment Co. Ltd – Bank Comm Furui Life
Dividend Distribution ” are managed by China Ping An Trust & Investment 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.
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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: Share
Name Capacity 31-Dec-2010 30-Jun-10
Wang Shi Chairman 6,817,201 6,817,201
Yu Liang Director, President 4,106,245 4,106,245
Chairman of the Supervisory
Ding Fuyuan 2,018,408 2,018,408
Committee
Sun Jianyi Director 692,236 692,236
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
Director,
Shirley L. Xiao 1,446,849 1,446,849
Executive Vice President
Wang Wenjin Executive Vice President 1,343,591 1,343,591
Du Jing Executive Vice President 735,812 735,812
Zhou Weijun Executive Vice President 1,038,065 1,038,065
Yuan Boyin Executive Vice President 207,664 207,664
Member of the Supervisory
Zhou Qingping 20,000 20,000
Committee
Note: 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 Wang Shi, Mr Qiao Shibo, Mr Yu Liang, Mr Sun Jianyi, Mr Wang Yin, Ms
Shirley L. Xiao, Mr Jiang Wei were elected as the directors of the sixteenth session of the Board and Mr Qi
Daqing, Mr Zhang Liping, Mr Paul Chan Mo Po and Mr Hua Sheng were elected as the independent directors of
the sixteenth session of the Borad at the Company’s 2010 Annual General Meeting.
During the reporting period, Mr Xu Hongge and Mr Liu Aiming resigned as executive vice presidents of the
Company. The Board appointed Mr Du Jing, Mr Zhou Weijun, Mr Yuan Boyin and Mr Mao Daqing as executive
vice presidents.
IV. Directors’ Report
1. Management Discussion and Analysis
Changes in market environment and the Company’s judgment
Market adjustment continued to deepen during the reporting period. At the beginning of the year, the area of
residential properties sold in major cities rose due to a relatively large amount of new projects put on sale at the
end of 2010. However, market transactions sharply declined with the launch of a new round of policies and
implementation of austerity measures in various regions. The sales area of commodity housing in 14 major cities
(Shenzhen, Guangzhou, Dongguan, Foshan, Shanghai, Suzhou, Wuxi, Hangzhou, Nanjing, Beijing, Tianjin,
Shenyang, Chengdu, and Wuhan) grew by 15.3 per cent in the first quarter of 2011 but dropped by 11.1 per cent
in the subsequent quarter when compared with those of the corresponding periods of 2010. The sales area of
commodity housing in five core cities (Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou) during the first
half of 2011 decreased by 3.8 per cent and 54.1 per cent respectively when compared with those of the
corresponding periods of 2010 and 2009. When juxtaposed with the growth in new housing supply, the decline in
transactions was even more significant. In the second quarter of 2011, the approved pre-sales area in the 14 cities
increased by 78.3 per cent from that of the first quarter of 2011, while sales area of commodity housing decreased
by 16.3 per cent from those of the first quarter.
With sales slowdown and increased new housing supply, the inventory of new housing units in major cities has
been on an upward trend since the beginning of the year. Moreover, affected by policies such as purchase
restriction on residential properties, credit control, sales restriction on residential properties, the nature of
customer demand was also changing. While investment-driven residential property purchase was restricted and
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the period for market absorption of high end products was prolonged, the percentage of sales of ordinary
commodity housing to first time home buyers and buyers for improving living conditions for the first time
continued to increase. Intensified market competition had raised requirements for enterprises in respect of its
operational capabilities including product positioning, price-performance, and sales and marketing.
History shows that the availability of statistics on investment in property development might lag behind to a
certain extent. Although the growth rate of investment in property development across the country during the first
half of the year remained at a high level of 32.9 per cent, indicating no significant change from that of the same
period last year, the growth rate of investment in core cities had sharply declined when compared to that year-on-
year. The property investment growth rate in Beijing slid from 24.1 per cent in the full year of 2010 to 3.7 per cent
in the first half of 2011, and in Shanghai, the growth rate dropped from 35.5 per cent to 9.4 per cent. A similar
situation occurred in the second quarter of 2008 (in the second quarter of 2008, the growth rate of investment in
property development across the country was 34 per cent, while that in the five core cities was 7 per cent). The
impact of market fluctuation on enterprises’ investment capability and desire to invest may be reflected in
statistics that will be available in subsequent periods, while the implications of investment and construction
slowdown may be manifested in the housing supply in the following year.
Since the beginning of 2011, China's central bank had thrice raised the RMB benchmark deposit and lending rates,
leading to a year-on-year decrease in the scale of all kinds of financing in the first half of the year and further
credit crunch. According to statistics on the sources of property investment capital, the year-on-year growth rate in
domestic loans during the first half of 2011 was 6.8 per cent, which was close to the historical low in the second
half of 2008. The tightening of funding sources has posed challenges to an enterprise’s capital strength and
financial stability. Yet, the tightening of capital flow may also give rise to opportunities for project development.
In this respect, enterprises with relatively sufficient capital resources could leverage this advantage.
During the reporting period, the land market cooled down as enterprises became increasingly prudent in
investment. In the 16 major cities where statistics are accessible by the public (Shenzhen, Guangzhou, Dongguan,
Foshan, Shanghai, Hangzhou, Nanjing, Suzhou, Ningbo, Beijing, Tianjin, Shenyang, Dalian, Wuhan, Chengdu,
and Chongqing), the area of land for residential use put on sale and sold in the first half of 2011 dropped by 18.5
per cent and 25.3 per cent respectively from those of corresponding period of last year, and decreased by 50.4 per
cent and 39.0 per cent from those of the second half of 2010. Although failed auctions were not often seen,
transactions completed at the reserve price became a commonplace. With further manifestation of the relevant
policies’ implications, adjustment in land markets will continue and good opportunities for land acquisition may
arise in those cities with relatively severe adjustment. The Company will remain flexible to capture these
opportunities, while adhering to its prudent investment principle.
The Company’s operation and management
On the front of product positioning, the Company continued to focus on mainstream products, including housing
units that target end-users and small and mid-sized ordinary residential properties. The Company had also adhered
to quick turnover strategy and used the speed at which sales were achieved as a major control indicator of sales
performance. Furbished units were the major products of the Company put on sale during the period. They were
well received by end users and displayed satisfactory sales performance. During the first half of 2011, the
Company realized a sales area of 5,655,000 sq m, with a sales amount of RMB65.65 billion, representing
increases of 76.7 per cent and 78.6 per cent respectively from those of the corresponding period of 2010. For the
first half of 2011, the Company’s sales amount accounted for 2.67 per cent of the sales amount of commodity
housing in the PRC.
Owing to variation in project completion dates, this year most of the project completion dates will occur in the
fourth quarter, only a limited amount of area was booked during the first half of the year. During the reporting
period, the Company realized a revenue of RMB18.89 billion, with a net profit of RMB2.98 billion, representing
increases of 19.4 per cent and 5.9 per cent respectively from those of the corresponding period of last year. The
Company’s booked area and booked revenue amounted to 1,383,000 sq m and RMB18.1 billion respectively,
representing a decrease of 8.1 per cent and an increase of 16.6 per cent respectively from those of the
corresponding period of last year. In view of the gradual completion and recognition of projects in the fourth
quarter, the year-on-year growth rate of the booked area for the full year 2011 is expected to be significantly
higher than that of the first half of the year.
Owing to the time lag between revenue recognition and sales, there was a further increase in area sold but not yet
booked during the reporting period. As at the end of the reporting period, included in the consolidated statements
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was an area of 10.22 million sq m sold but not yet booked, with an aggregate contract amount of approximately
RMB118.7 billion.
As the Company’s product positioning was in line with the prevailing market demand characteristics, the
Company continued to maintain a good inventory structure. As at the end of the reporting period, among the
Company’s different types of inventories, completed properties (properties ready for sale) accounted for only 2.8
per cent.
During the period under review, the booked gross margin of the Company’s property business was 33.9 per cent,
which was higher than 31.9 per cent achieved in the same period last year as a result of the delay in revenue
recognition. The net margin was 15.8 per cent, which was slightly lower than 17.8 per cent for the same period
last year. The decrease in net margin was mainly due to the substantital increase in distribution expenses and
administrative expenses, as a result of a significant year-on-year growth in sales in the first half of 2011. During
the reporting period, the Company continued to strengthen cost control. The administrative expenses in the first
half of 2011 accounted for 1.38 per cent of the sales amount, representing a decrease of 0.19 percentage point
year-on-year, while the distribution expenses accounted for 1.46 per cent of the sales amount, representing a
decrease of 0.19 percentage point year-on-year.
At the beginning of the year, the Company estimated that the floor area commencing construction of existing
projects would amount to 13,290,000 sq m for the full year. As at the end of June 2011, the actual floor area
commencing construction amounted to 7,590,000 sq m. As the Company’s current inventory level remains
healthy, it has not made any adjustment to its planned area commencing construction for the full year. However,
in order to be able to respond to possible changes in the market environment, the Company will strengthen its
research on changes in customers’ demand under new market conditions, while adhering to its mainstream
product positioning. The Company will flexibly adjust its product mix, improve decoration of its furbished units
and raise price-performance.
During the reporting period, the Company added 22 newly developed projects. The site area of the newly added
projects attributable to China Vanke’s equity holding amounted to approximately 2.22 million sq m (the planned
GFA attributable to China Vanke’s equity holding amounted to approximately 4.23 million sq m). The average
premium of the floor area was around RMB2,823/sq m. The Company also took part in four city rejuvenation
projects. According to the current planning conditions, the site area of these projects attributable to China Vanke’s
equity holding amounted to approximately 510,000 sq m (the planned GFA attributable to China Vanke’s equity
holding amounted to approximately 1.61 million sq m). The estimated average redevelopment costs and premium
of the floor area was around RMB1,729/sq m. As at the end of the reporting period, the planned GFA attributable
to China Vanke’s equity holding amounted to 35,850,000 sq m. In the first half of the year, the Company entered
the new markets of Wuhu, Qinhuangdao, Taiyuan and Jizhong. Up till now, the Company has established
presence in 50 cities, further consolidating and strengthening its edge in geographical diversification. In the
second half of the year, the Company will keep an eye on any possible adjustments in the land market and take a
flexible approach in capturing opportunities for land acquisition while adhering to a prudent investment principle.
In order to drive business development, the Company will actively explore innovative collaboration mechanisms.
Through a balanced risk-benefit collaborative model, the Company will strive to effectively allocate social
resources to maximise their utilisation.
Since the beginning of the year, the overall capital flow has been tightened. As the Company has always pursued
stable operations, it was able to maintain a healthy financial position. The Company’s prudent investment strategy
and better-than-market sales performance had further increased its capital strength. As at the end of the reporting
period, the Company’s cash and cash equivalents amounted to RMB40.78 billion, which represented an 9.7 per
cent increase from that at the end of the first quarter of 2011 and was significantly higher than the sum of
RMB23.04 billion of short-term borrowings and long-term borrowings due within one year. Total liabilities after
deducting advance receipts accounted for 36.9 per cent of total assets. Net gearing ratio continued to remain at a
relatively low level of 20.8 per cent. The sound financial and cash position ensures the Company’s safe and sound
operations, while enabling it to better capture any opportunities arising from a changing market environment. In
order to enhance the efficiency of capital utilisation, the Company will, for a long period of time in the future,
make it a priority to tie investment, financing in with project operation. It will actively expands funding sources,
rationally seize the right moment for investment and continues to optimise capital management.
Expansion in the scale of construction has brought new challenges to the Company with respect to quality of
construction works. Faced with these challenges, the Company has standardized its systems and strengthened
quality control, while making attempts to form strategic collaboration with formidable construction companies.
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All these were aimed to turn challenges brought by scale to economies of scale. During the reporting period, the
Company entered into strategic collaboration agreement with China Construction Fourth Engineering Division
Corporation. The agreement signifies the Company’s first step in developing large-scale strategic contracting.
During the reporting period, the Company continued to implement green strategy and promote energy saving and
environmental protection in the residential market. Starting from June 2011, all the Company’s new construction
projects meeting planning conditions are designed and constructed in accordance with standards not lower than
those set for One-Star green building. In addition, the Company has started to prepare for the construction of a
green construction park in Beijing and has signed an MOU with UK-based BRE (Building Research
Establishment) for collaboration on this project. Upon completion, the project will become the world’s largest
eco--friendly construction park and the most advanced platform for promoting green ideology in the PRC. Such a
move will further enhance the competitive advantages of China Vanke’s products in green architecture.
In the first half of the year, the Company approved and implemented “A-Share Stock Option Incentive Scheme”.
The introduction of the Stock Option Incentive Scheme will complement the Company’s incentive instruments
with a long-term plan, while establishing a check-and-balance mechanism between shareholders and professional
management team through linking up their interests. The Scheme will further improve the Company’s corporate
governance structure.
Talents are society’s assets. In different stages of life, managers may also pursue more enriching experiences and
their diverse dreams. With the continued development in the industry, professional management staff are faced
with more opportunities, and their turnover rate therefore increases. In the first half of 2011, two executive vice
presidents left the Company to start their own business or pursue other endeavours. While this shows that
professional managers from China Vanke are recognised by society, it also alerts the Company to pay more
attention to competition for talents. In order to attract and retain high calibre people, the Company will further
strengthen its corporate culture and competitive edge in institution establishment. Meanwhile, it will continue to
explore ways to fine-tune its remuneration and incentive mechanism, so as to increase its talent attraction. The
Company will also put more emphasis on recruitment and training of human resources, as well as team building
among the management staff. All these are to ensure the free choice of managers and the Company’s stable
operation are appropriately balanced.
In the first half of the year, the Company was named as “The Most Respectable Enterprise in China” by Economic
Observer and Management Case Center of Peking University for the 8th consecutive time. The Company also
won the No. 1 title of the “Top 10 Among China's Leading 100 Property Developers in 2011, Overall” selected by
Enterprise Research Institute of the Development Research Center of the State Council, Institute of Real Estate
Studies of Tsinghua University and China Index Academy. In addition, the Company was named as one of the
“Best Employers in China 2011” by global renowned human resources management and consulting company Aon
Hewitt.
Subsequent events:
Beijing Vanke Company Limited, a wholly-owned subsidiary of the Company, and Minmetals Land Limited
jointly established Langfang Wenheng Shengye Real Estate Development Co., Ltd. (廊坊万恒盛业房地产开发
有限公司) and Langfang Kuangshi Jiye Real Estate Development Co., Ltd. (廊坊旷世基业房地产开发有限公
司) for the development of the Xianghe Huanqing City Project acquired through the open market in 2010. As the
local government had violated the laws in the transfer process of the land for the relevant project, it rectified its
mistakes and decided to rescind the transfer of the land for the project after the reporting period, and made full
compensation the companies to ensure that their legitimate interests were not prejudiced . This incident will not
have significant impact on the Company.
2. Principal operations of the Company during the reporting period
(1) The scope and operations of the Company’s core business
Due to variation in project completion dates, the completed area from January to June was 1,070,000 sq m,
representing 14.7 per cent of the planned completed area of 7,290,000 sq m for the full year of 2011. Affected by
this factor, the booked area of the Company for the first half of the year was 1,383,000 sq m, representing a
decrease of 8.1 per cent when compared with that of the same period last year. The booked revenue amounted to
RMB18.1 billion, representing an increase of 16.6 per cent from that of the same period last year, which was
considerably lower than the growth rate of sales. With more projects to be completed and booked in the fourth
8
quarter of 2011, it is expected that the growth rate of the booked revenue for the full year will be significantly
higher than that of the first half of 2011.
Since the projects booked in the first quarter of 2011 were mostly concentrated in cities such as Shanghai,
Guangzhou and Shenzhen, with gross margin of 35.1 per cent, the gross margin of the Company’s property
business for the first half of 2011 was 33.9%, representing an increase of 2.0 percentage points when compared
with that of the same period last year.
Unit: RMB ‘000
Revenue Cost of sales Gross margin
Sector
Amount Change Amount Change % Change
Up by 2.00
Property sales 18,371,709.03 18.40% 10,714,956.40 9.20% 33.94
percentage point
Property Up by 23.15
515,256.50 71.93% 283,975.82 21.08% 44.89
management percentage point
Up by 2.49
Total 18,886,965.53 19.41% 10,998,932.22 9.48% 34.24
percentage point
Note: Business tax and surcharges had been deducted from the gross margin.
（2）Comparison of major assets & liabilities and key operating indicators
Item 30-Jun-11 31-Dec-10 Change (+/-) Reasons for change
Investment properties 190,561.41 129,176.20 47.52% Increase in investment properties
Increase in investment for
Interest in associates 1,559,140.90 1,035,875.90 50.51%
associates entities
Properties under development 111,704,090.57 78,982,068.16 41.43% Increase in newly added projects
Completed properties for sale 4,752,181.45 5,290,716.12 -10.18% Delivery of more properties
Loans and borrowings (Current) 23,039,093.71 16,783,690.79 37.27% Change in debt structure
Increase in investment for the
development of projects with
Trade and other payables 143,679,994.56 106,138,344.68 35.37%
associates and jointly controlled
entities
Item Jan-Jun2011 Jan-Jun2010 Change(+/-) Reasonsforchange
Increased in sales from property
Revenue 18,886,965.53 15,816,254.22 19.41%
development
Distribution expenses 956,748.19 606,401.58 57.77% Enlargement of sales scale
Administrative expenses 904,669.17 575,447.94 57.21% Expansion of the Company
Finance costs 517,591.64 386,171.72 34.03% Relatively increase in interest cost
Share of profits less losses More profits recognised from
30,061.45 17,667.87 70.15%
of associates associates
Share of profits less losses
Less profits recognised from
of jointly controlled (22,288.04) 76,772.07 -129.03%
jointly controlled entities
entities
Income tax expense 2,614,306.28 1,680,063.83 55.61% Increased in booked revenue
（3）the Company’s core business by investment region
Booked Booked Revenue from
Percen Percen Percen Net profit Percen
Region area revenue core businesses
tage tage tage ('000) tage
(sqm) ('000) ('000)
Shenzhen Region 441,585 32% 6,779,366 37% 7,026,267 38% 1,308,841 41%
Shanghai Region 325,849 24% 6,304,577 35% 6,331,342 34% 1,402,103 44%
Beijing Region 309,342 22% 2,876,117 16% 2,876,117 16% 343,474 11%
Chengdu Region 305,903 22% 2,137,983 12% 2,137,983 12% 133,945 4%
Total 1,382,679 100% 18,098,043 100% 18,371,709 100% 3,188,363 100%
Note: Cities in which projects had been booked: Shenzhen region including Shenzhen, Guangzhou, Dongguan, Foshan, Zhuhai,
Zhongshan, Xiamen, Fuzhou, Haikou and Changsha; Shanghai region including Shanghai, Hangzhou, Suzhou, Wuxi, Nanjing,
Ningbo and Nanchang; Beijing region including Beijing, Shenyang, Dalian, and Changchun; Chengdu region including Chengdu,
Wuhan and Chongqing.
3. Investment of the Company
(1) Use of proceeds from the capital market
9
Public issue of A Shares in 2007
Having obtained the approval from the relevant authorities, the Company issued a prospectus regarding the public
issue of A shares on 22 August 2007. The Company issued 317,158,261 shares (par value: RMB1 per share) at an
issue price of RMB31.53 per share, raising proceeds of RMB9,999,999,969.33. After deducting issuing expenses
of RMB63,398,268.11, the net proceeds amounted to RMB9,936,601,701.22 and were received on 30 August
2007. Shenzhen Nanfang-Minhe CPA Firm Co., Ltd (深圳南方民和会计师事务所) had prepared and filed a
capital verification report (Shen Nan Yan Zi (2007) No. 155).
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
Funds used for investment during the
173,560
Total amount of proceeds 9,936,600 reporting period
Accumulated funds used 9,780,548
Funds
Is there used for Does it
Significant
any Planned investment Accumulated Investment Income achieve
Investment projects change in
change in investment during the funds used progress realised estimated
feasibility
project reporting income
period
Jinse Yazhu (former
No 700,000 0 700,000 100% 272,497 Yes No
Zhonglin Project), Shanghai
Wujiefang Project, Pudong,
No 1,200,000 125,440 1,185,790 98.82% (4,979) Yes No
Shanghai
West Spring Butterfly
Garden (former Jiangcun No 700,000 0 700,000 100% 357,493 Yes No
Project), Hangzhou
Liangzhu Project, Yuhang
No 1,700,000 0 1,700,000 100% 469,645 Yes No
District, Hangzhou
Golden Town Project,
No 1,636,600 0 1,636,600 100% 937,483 Yes No
Yinzhou District, Ningbo
The Dream Town (former
Nanzhuang Project), No 900,000 0 900,000 100% 400,242 Yes No
Foshan
Everest Town (former
Science City H3 Project), No 600,000 0 600,000 100% 151,543 Yes No
Guangzhou
The Paradiso (former
Jinshazhou Project), No 800,000 0 800,000 100% 333,067 Yes No
Guangzhou
Zhuhai Hotel Project,
No 650,000 9,460 649,500 99.92% 179,904 Yes No
Xiangzhou District, Zhuhai
Anpin Street Project, Baixia
No 650,000 38,660 508,658 78.26% - Yes No
District, Nanjing
Stratford (former
Huangjiayu Project), No 400,000 0 400,000 100% 46,498 No No
Nanjing
Total No 9,936,600 173,560 9,780,548 98.43% 3,143,393 Yes No
1) The work progress of Nanjing Anpin Street Project was affected due to the
government’s plan to preserve the city’s heritage. The Company has finished the progress
of submitting planning and construction reports for approval. The overall development
plan of the project has been adjusted accordingly. 2) All the units of Stratford Project in
Remarks on delay and
Nanjing were basicially sold out and delivered in 2010. Accumulative net margin of the
failure to achieve estimated
Stratford Project was 9.95%. Although the income generated from this project did not
income (by project)
reach the estimated level stated in the prospectus, the income of other projects financed by
the raised proceeds exceeded the estimated level. It is expected that the overall return from
the projects financed by the raised proceeds will be higher that the estimated level stated
in the prospectus.
Remarks on reasons and
procedures for changes (by No changes
project)
As of 30 June 2011, the Company had applied RMB9,780.55 million of the proceeds in
Application of the balance accordance with the prospectus. The amount represented 98.4% of the net proceeds of
of the proceeds RMB9,936.6 million. The balance of proceeds of RMB156.05 million will be applied in
accordance with the progress of project development.
10
(2) Use of capital not from the capital market
A. Major equity investment
1) During the reporting period, the Company promoted and established 14 new subsidiaries, each with registered
capital of over RMB30 million. The details are as follows:
Unit: ’000
Registered Actual
capital investment by
No. Company Currency Scope of business
(original China Vanke
currency) (RMB)
Nantong Vanke Investment Co., Ltd. (南通万
1 RMB 50,000.00 50,000.00 Property development
科投资有限公司)
Wuhu Vanke Wanjia Real Estate Co., Ltd.
2 RMB 30,000.00 30,000.00 Property development
(芜湖万科万嘉房地产有限公司)
Wuhu Vanke Wandong Real Estate Co., Ltd.
3 RMB 30,000.00 30,000.00 Property development
(芜湖万科万东房地产有限公司)
Wenzhou Vanke Litian Property Co., Ltd.
4 RMB 50,000.00 50,000.00 Property development
(温州万科力天置业有限公司)
Qinhuangdao Vanke Real Estate Development
5 RMB 60,000.00 60,000.00 Property development
Co., Ltd. (秦皇岛万科房地产开发有限公司)
Dalian Vanke Paradiso Development Co., Ltd.
6 USD 200,000.00 720,000.00 Property development
(大连万科金域蓝湾开发有限公司)
Shenyang Vanke Dongban Property Co., Ltd.
7 RMB 1,700,000.00 1,105,000.00 Property development
(沈阳万科东阪置业有限公司)
Tianjin Vanke Jiangjian Property Investment
8 RMB 100,000.00 51,000.00 Property development
Co., Ltd.(天津万科疆建置业投资有限公司)
Chongqing Wanxu Property Co., Ltd.
9 RMB 225,000.00 225,000.00 Property development
(重庆万旭置业有限公司)
Jiangxi Vanke Yida Property Investment Co.,
10 Ltd. RMB 100,000.00 50,000.00 Property development
(江西万科益达置业投资有限公司)
Changchun Vanke New City Real Estate
11 Development Co., Ltd. RMB 100,000.00 51,000.00 Property development
(长春万科新城房地产开发有限公司)
Rizhao Vanke Real Estate Development Co.,
12 RMB 100,000.00 100,000.00 Property development
Ltd. (日照万科房地产开发有限公司)
Zhejiang ZhenanVanke Real Estate Co., Ltd.
13 RMB 100,000.00 100,000.00 Property development
(浙江浙南万科房地产有限公司)
Chengdu Vanke Kaibin Land Planning and
Land planning and
14 Design Co., Ltd. (成都万科凯宾土地整理有限 USD 130,000.00 176,000.00
design
公司)
Total 2,798,000.00
In addition, the Company had established another 21 new subsidiaries, with a total amount of investment of
RMB194.25 million.
2). The companies that the Company acquired during the reporting period are as follows:
A. On 1 April 2011, the Company acquired 100% equity interests of Guangzhou Panyu Xiangxin Real Estate Co.,
Ltd. for a total cash consideration of RMB3.1 billion.
B. On 9 May 2011, the Group acquired 100% equity interests of Hong Kong Future Vision Investment Ltd. (香港
鸿弘投资有限公司) for a total cash consideration of USD22.66 million.
C. On 9 March 2011, the Company acquired 100% equity interests of Wuhan Yongli Property Co., Ltd. for a total
cash consideration of RMB36 million.
During the reporting period, the Company acquired another 7 companies for a total consideration of RMB24.69
million.
3） In order to support the business development of its majority-owned subsidiaries, the Company increased the
capital of 12 companies by approximately RMB1,632 million during the reporting period. Of the total
amount, RMB1,040 million was for Guangzhou Wanyi Real Estate Co., Ltd., RMB225 million for Beijing
Zhuzong Vanke Real Estate Development Co., Ltd., and RMB180 million for Hefei Vanke Property Co.,
Ltd.
11
(2) Other investments
During the reporting period, the Company acquired 22 new projects, with a site area attributable to China Vanke’s
equity holding of approximately 2,220,000 sq m (planned GFA of approximately 4,230,000 sq m). Details of the
projects are as follows:
GFA
attributable to
Percentage
Site Area Planned GFA China
City Project Location of Progress
(sq m) (sq m) Vanke’s
shareholding
equity holding
(sq m)
Pre-
Shenzhen Langqi Project Longgang 100% 41,487 22,380 22,380 construction
Tangxia Pre-
Dongguan Spring Dew Mansion Town 51% 128,144 256,129 130,626 construction
Land Lot Nos. 1-3 of Songshan Pre-
Dongguan Songhu Center Lake Zone 34% 95,506 73,872 25,116 construction
Land Lot No. 4 of Songshan Pre-
Dongguan Songhu Center Lake Zone 25% 30,084 30,084 7,521 construction
Pre-
Guangzhou Sunshine City Panyu 100% 340,002 570,743 570,743 construction
Pre-
Shanghai Jiading Juyuan Project Jiading 100% 90,013 180,026 180,026 construction
Songjiang Ledu Road Pre-
Shanghai Project Songjiang 100% 67,932 108,691 108,691 construction
Pre-
Hangzhou Fuyang Golf Land Lot A Fuyang 20% 69,941 104,912 20,982 construction
Pre-
Hangzhou Fuyang Golf Land Lot B Fuyang 20% 69,989 83,987 16,797 construction
Pre-
Hangzhou Fuyang Golf Land Lot C Fuyang 20% 68,244 68,244 13,649 construction
Pre-
Hangzhou Fuyang Golf Land Lot D Fuyang 20% 59,933 59,933 11,987 construction
Golden Milestone Pre-
Suzhou Project Jinchang 49% 99,093 247,732 121,389 construction
Mudu Quemeibin Pre-
Suzhou Project Wuzhong 55% 144,535 361,338 198,736 construction
Under
Wuhu The Dream Town, Jiujiang 100% 274,404 493,926 493,926 construction
Binhai New Pre-
Tianjin East Coast District 51% 255,000 382,500 195,075 construction
Under
Qinhuangdao Holiday Town Qinhuangdao 48% 270,549 642,357 308,331 construction
Hunnan New Pre-
Shenyang Tomorrow Square District 65% 199,319 597,957 388,672 construction
Jingyue
Development Pre-
Changchun Jingyue Dream Town Zone 51% 350,965 1,048,330 534,648 construction
Pre-
Qingdao Qingdao Town Jiaonan City 34% 938,849 719,522 244,637 construction
Pre-
Taiyuan Jinyu International Wanbolin 100% 49,407 173,075 173,075 construction
Pre-
Jinzhong University City Project Yingze 51% 218,143 486,180 247,952 construction
Land Lot No. 3 of Pre-
Xi’an Dream Town Chang’an 60% 113,231 352,803 211,682 construction
Total 3,974,770 7,064,721 4,226,641 —
In addition, the Company was involved in four urban redevelopment projects during the reporting period.
According to the current planning conditions, the site area attributable to China Vanke’s equity holding amounted
to approximately 510,000 sq m (planned GFA attributable to China Vanke’s equity holding was approximately
1,610,000 sq m).
12
GFA
attributable to
Percentage
Site Area Planned GFA China
City Project Location of Progress
(sq m) (sq m) Vanke’s
shareholding
equity holding
(sq m)
Under
Shenzhen Shajing Project Baoan 55% 77,265 254,930 140,212 construction
Taiyuan Zitai (紫台) Yingze 51% 95,687 334,876 170,787 Pre-construction
Changzheng Village Pre-construction
Wuhan Project Hongshan 100% 282,235 871,721 871,721
Vanke Golden City Pre-construction
Wuhan Package B Hongshan 100% 138,500 426,072 426,072
Total 593,687 1,887,599 1,608,792 -
From the end of the reporting period to the date of announcement of this report, the Company acquired five new
projects, with site area attributable to China Vanke’s equity holding of 310,000 sq m (the planned GFA
attributable to China Vanke’s equity holding was 617,000 sq m) . Details are as follows:
GFA
Percentage Site Area Planned GFA attributable to
City Project Location of (sq m) (sq m) China Vanke’s Progress
shareholding equity holding
(sq m)
Pukou Yanshan Pre-
Nanjing Pukou 100% 62,300 100,000 100,000
Avenue Project construction
Pre-
Changsha Gaozheng Project Yuhua 60% 40,360 177,043 106,826
construction
Phase I, Pilot
Pre-
Putian District of Yuhu Licheng 100% 148,010 302,290 302,290
construction
New City]
Xishan Villa Pre-
Dalian Ganzijin 55% 90,400 113,300 62,315
Project construction
Pre-
Tianjin Shilinyuan Project Jinnan 40% 63,600 114,500 45,800
construction
Total 404,670 807,133 617,231 —
In addition, the Company was recently involved in one more urban redevelopment project. According to the
current planning conditions, the site area attributable to China Vanke’s equity holding amounted to 15,000 sq m
(planned GFA attributable to China Vanke’s equity holding was approximately 92,000 sq m). Details are as
follows:
GFA
attributable to
Percentage of Site Area Planned GFA
City Project Location China Vanke’s Progress
shareholding (sq m) (sq m)
equity holding
(sq m)
Vanke Diamond
Plaza (万科钻石广 Pre-
Chengdu Chenghua 100% 15,404 92,422 92,422
construction
场)
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.
13
V. Significant events
1. Corporate governance
As one of the first batch of companies listed in the PRC, the Company has always abided by its corporate values:
to pursue simplicity, to be transparent, to be regulated and to be 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.
The Company continued to persist in maintaining complete independence from its single largest shareholder,
CRC, and its connected companies in respect of business operation, staff, assets, organisation and finance, to
ensure independence in its business integrity and operation autonomy. The Company had not taken any actions
that violated the code on corporate governance practices such as reporting to CRC on any undisclosed
information.
The Company had strengthened the management of inside information. During the period under review, no insider
who had access to inside information had violated the laws to engage in insider trading. There had been no
discrepancy between the Company’s governance and the relevant requirements of China Securities Regulatory
Commission.
As a key pilot company to implement the Notes on Basic Criteria of Enterprise Internal Control and its
implementation guidelines, the Company had proactively enhanced its internal control. During the reporting
period, the Company formulated a proposal on the implementation of the Basic Criteria of Enterprise Internal
Control, which was announced upon approval by the Board. The Company set up a committee for the
development of internal control in order to incorporate the implementation of the Basic Criteria of Enterprise
Internal Control into the Company’s internal control system. The Company adopted a management approach of
“effective internal control” and attached great importance to taking effective actions to eliminate or minimise
actual risks, in order to improve overall internal control. The Company appointed KPMG Huazhen Certified
Public Accountants to perform audit of internal control. During the reporting period, the Company organised
meetings on the implementation of the Basic Criteria of Enterprise Internal Control and organised several staff
training programmes on internal control to increase awareness and understanding of internal control within the
Company. China Vanke also requested all the departments at the headquarters and frontline companies to
complete the mapping of their existing internal control standards against the Basic Criteria of Enterprise Internal
Control. Thhe Company compared the existing system with each of the requirements specified in the relevant
documents of the Basic Criteria of Enterprise Internal Control, especially the 18 implementation guidelines, and
compiled records of the mapping results. Those aspects of the existing system that deviated from the Basic
Criteria had been rectified. In future, the Company will push ahead with the implementation of the Basic Criteria
of Enterprise Internal Control according to the implementation proposal, in order to enhance internal control and
assessment ability and further improve its corporate governance.
2. Implementation of the Company’s proposal on dividend distribution for the previous year and profit
appropriation for the interim period of 2011
Proposal on dividend distribution for the year 2010 was approved at the 2010 Annual General Meeting held on 31
March 2011. 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 RMB1.0 (including tax; after deducting tax, a cash
dividend of RMB0.9 would be paid for every 10 existing shares beneficially held by individual shareholders,
investment funds and non-resident enterprises holding A shares; for individual shareholders and non-resident
enterprise shareholders holding B shares, a cash dividend of RMB0.9 would be paid for every 10 existing shares
held) 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 26 May
2011, and ex-dividend date was 27 May 2011, while the last trading day of B shares was 26 May 2011, ex-
dividend date was 27 May 2011, and the record date was 31 May 2011. For details on the implementation of the
proposal, please refer to the announcement published in China Securities Journal, Securities Times, Shanghai
Securities News, www.cninfo.com.cn and irasia.com on 20 May 2011.
The Company will not carry out profit appropriation nor the transfer of capital surplus reserve to share capital for
the interim period of 2011.
14
3. Implementation of the A-Share Stock Option Incentive Scheme
(1) Relevant procedures for the implementation of the A-Share Stock Option Incentive Scheme and overview of
the scheme
The twelfth meeting of the fifteenth session of the Board of China Vanke held on 21 October 2010 approved the
A-Share Stock Option Incentive Scheme of China Vanke Co., Ltd. (Draft). The scheme had been filed with China
Securities Regulatory Commission. After revisions by the Company, the A-Share Stock Option Incentive Scheme
(Revised Draft) (the “Scheme”) was submitted to the Board and was approved through voting by correspondence
on 18 March 2011. China Securities Regulatory Commission has no objection to the Scheme. On 8 April 2011,
the first extraordinary general meeting of the Company in 2011 was held and approved the A-Share Stock Option
Incentive Scheme of China Vanke Co., Ltd. (Revised Draft). Implementation of the Scheme thus commenced.
The A-Share Stock Option Incentive Scheme uses stock option as an incentive instrument. Each stock option
confers the right to purchase one A-share of China Vanke at the exercise price within the designated exercise
period. When the Company and the beneficiaries of the Scheme fulfill the conditions for granting the options, the
Company will grant stock options to the beneficiaries according to the Scheme. No stock options should be
exercised during the vesting period, which is one year from the grant date. Thereafter, the granted stock options
can be exercisable in three exercise periods. 40% of the options granted shall be exercisable during the first
exercise period, another 30% and the remaining 30% shall be exercisable in the second and third exercise periods
respectively. The right to exercise the stock options in each corresponding exercise period is subject to the
fulfillment of the vesting conditions by the Company and the beneficiaries of the Scheme. The stock options will
lapse if they fail to vest because the performance targets are not achieved and if they are not exercised even after
the expiry of the exercise periods.
The schedule for exercising the stock options is as follows:
Percentage of
Stage Schedule
options exercisable
First A period commencing from the first trading day after a 12-month
exercise period commencing from the grant date up to the last trading day of 40%
period the 36 months from the grant date of the Scheme
Second A period commencing from the first trading day after a 24-month
exercise period commencing from the grant date up to the last trading day of 30%
period the 48 months from the grant date of the Scheme
Third A period commencing from the first trading day after a 36-month
exercise period commencing from the grant date up to the last trading day of 30%
period the 60 months from the grant date of the Scheme
(2) Options granted under the A-Share Stock Option Incentive Scheme
The second meeting of the sixteenth session of the Board of China Vanke held on 18 April 2011 approved the
resolution regarding matters in relation to the granting of stock options under the A-share Stock Option Incentive
Scheme. The meeting confirmed that the conditions for granting stock options under the A-share Stock Option
Incentive Scheme had been fulfilled and determined 25 April 2011 as the date of grant of stock options. The
seventh Supervisory Committee of China Vanke had verified and given its opinion on the list of beneficiaries of
the Scheme.
On 9 May 2011, the registration of the grant of stock options under the A-Share Stock Option Incentive Scheme
of China Vanke Co., Ltd. was completed. The Company granted an aggregate of 108,435,000 stock options to 810
beneficiaries. The maximum number of shares that may be issued upon the exercise in full of all the granted stock
options in future represent 0.9862 per cent of the Company’s current total issued share capital.
The abbreviation of the stock options granted under the Scheme is VankeJLC1, and the stock option code is
037015.
(3) Adjustment of exercise price of stock options and the implementation procedures for the A-Share Stock
Options Incentive Scheme during the reporting period
15
The initial exercise price of the stock options under the A-Share Stock Options Incentive Scheme was RMB8.89,
which was subject to adjustment according to the relevant requirements of the Scheme should distribution of
dividends, transfer of capital surplus reserve to share capital or other conditions occur within the validity period.
On 27 May 2011 the Company implemented the proposal on dividend distribution for the year 2010. A cash
dividend of RMB1.0 (including tax) would be paid to all the shareholders on the basis of every 10 existing shares
held. Pursuant to the resolution regarding granting the Board the authority to handle matters relating to the
Company’s Stock Option Incentive Scheme approved by the first extraordinary general meeting in 2011, the
Board resolved to make corresponding adjustment to the exercise price of the A-share stock options. The exercise
price after adjustment is RMB8.79.
(4) Impact of implementation of the A-Share Stock Option Incentive Scheme on the financial position and
operating results in the period under review and subsequent years
The introduction of the Stock Option Incentive Scheme will complement the Company’s incentive instruments
with a long-term plan, while establishing a check-and-balance mechanism between shareholders and professional
management team through linking up their interests. The Scheme will further improve the Company’s corporate
governance structure and strengthen the Company’s competitiveness.
Accounting treatments for the A-Share Stock Option Incentive Scheme as equity-settled share-based payment are
carried out in accordance with the “Accounting Standard for Business Enterprises No. 11 – Share-based
payment”. On each balance sheet date within the vesting period, the Company shall included, based on the best
estimate of the number of vested stock options, the services obtained from the beneficiaries during the period in
the costs and expenses as well as in the capital surplus reserves at the fair value of the stock options on the grant
date. During the exercise period of the stock options, the Company shall make no adjustment to the relevant costs,
expenses or the capital surplus reserves which have been recognised. On each balance sheet date, based on the
actual number of options exercised, the capital surplus reserves recognised shall be settled.
A-Share Stock Option Incentive Scheme adopts Black-Scholes option pricing model to estimate the fair value of
the stock options on the grant date. According to the assessment results, the fair value of the stock options in the
first exercise period is RMB79.18 million, the fair value of the stock options in the second exercise period is
RMB88.94 million, while the fair value of the stock options in the third exercise period is RMB110.97 million.
During the reporting period, according to the straight-line method, the cost of stock options of RMB26.08 million
amortised by the Company for the first, second and third exercise periods shall be included in the costs and
expenses, while the Company’s capital surplus reserves increased by RMB26.08 million. Please refer to the notes
to the financial statements for details on the accounting treatments.
For details, please refer to the announcements published on China Securities Journal, Securities Times, Shanghai
Securities News and www.cninfo.com.cn on 25 October 2010, 23 March 2011, 9 April 2011, 20 April 2011, 10
May 2011 and 21 May 2011.
4. Material Litigation and Arbitration
During the reporting period, the Company did not involve in any material litigation or arbitration.
5. Major Acquisition and Disposal of Assets
During the reporting period, the Company did not have any major acquisition or disposal of assets.
6. Other investments
6.1 Investment of securities
□Applicable √Not applicable
16
6.2 Equity interests held in other listed companies
Unit: RMB
Booked Changes in equity
Initial value as at Gains/(losses) attributable to
Stock Stock Percentage of
investment the end of during the equity holders
code abbreviation shareholdings
amount the reporting reporting period during the
period reporting period
600751 SST Tianjin 143,600.00 0.04% 143,600.00 - -
Marine Shipping
Co., Ltd.
Total 143,600.00 0.04% 143,600.00 - -
Note: Equity interests held in SST Tianjin Marine Shipping Co., Ltd are legal person shares held by the Company over the years. Up
till now, it has not undergone share reform.
6.3 Shareholding in non-listed financial corporations and companies planning for listing
Nil.
7. Major connected transactions
During the reporting period, the Company’s first extraordinary general meeting authorised the Board to determine,
within the scope set out below, cooperation with China Resources (Holdings) Co., Ltd and its connected
companies (collectively “CRH”), including entering into a loan agreement with Zhuhai City Commercial Bank
Co., Ltd., using the funds under China Resources SZITIC Trust Co., Ltd. and Harvest Capital Partners Limited,
and joint investment with China Resources SZITIC Trust Co., Ltd. and Harvest Capital Partners Limited. The
total sum of the loan amount, funds to be utilised and the joint investment amount shall not be more than
RMB4.42 billion (i.e. not more than 10% of the Company’s audited net assets value as at the end of 2010). The
authorisation is valid for a period of one year commencing from the date of passing of the relevant resolution in
the first extraordinary general meeting.
The cooperations will fully leverage CRH’s financial strengths and platform, which will be beneficial to the
Company to broaden its financing channels, strengthen its ability to avert risk, accelerate its development,
enhance return on assets, and create synergies to achieve a win-win situation. During the reporting period, the
details of coorporation were yet to work out.
8. Major contracts and their implementation
(1) During the reporting period, the Company was not subject to any material entrustment, sub-contracting or
leasing arrangements involving assets of other companies, nor were any other companies entitled to any
entrustment, sub-contracting or leasing arrangements involving assets of the Company.
(2) During the reporting period, the Company did not have any entrustment investment arrangements.
(3) Details on the new guarantees made by the Company during the reporting period are as follows:
No. Guarantor Name of companies
(% of equity interest being guaranteed Guaranteed
held by China Vanke ) (% of equity interest Remarks Term of guarantee
amount
held by China Vanke)
Shenzhen Vanke Real Dongguan Xinwan Real Provided a guarantee in 12 January 2011 to
Estate Co., Ltd. (100%) Estate Development Co., proportion to the 12 January 2013
Ltd. Company’s equity holding
1 RMB25.5 million
东莞市新万房地产开发 (51%) for a bank loan of
有限公司(51%) RMB50 million
Shenzhen Vanke Real Dongguan Xinwan Real Provided a guarantee in 12 January 2011 to
Estate Co., Ltd. (100%) Estate Development Co., proportion to the 12 January 2013
2 Ltd. RMB51 million Company’s equity holding
东莞市新万房地产开发 (51%) for a bank loan of
有限公司(51%) RMB100 million
17
Dongguan Xinwan Real Provided a guarantee in 22 March 2011 to 22
Estate Development Co., proportion to the March 2013
Shenzhen Vanke Real Ltd. Company’s equity holding
3 RMB102 million
Estate Co., Ltd. (100%) 东莞市新万房地产开发 (51%) for a bank loan of
有限公司(51%) RMB200 million
Shenzhen Haixuan Provided a guarantee for a 31 March 2011 to 6
Shenzhen Vanke Real Investment bank loan of RMB130 December 2011
4 RMB130 million
Estate Co., Ltd. (100%) Development Company million
Limited (100%)
Shenzhen Vanke Real Shanghai Vanke Real Provided a guarantee for a 24 March 2011 to 24
5 RMB700 million
Estate Co., Ltd. (100%) Estate Co., Ltd. (100%) loan of RMB700 million September 2013
2 April 2011 to 2
Shenzhen Vanke Real Shanghai Vanke Real Provided a guarantee for a
6 RMB700 million October 2013
Estate Co., Ltd. (100%) Estate Co., Ltd. (100%) loan of RMB700 million
Wuxi Dingan Real
Estate Co., Ltd. 11 April 2011 to 11
Shenzhen Vanke Real Provided a guarantee for a
7 无锡鼎安房地产有限公 RMB1 billion April 2013
Estate Co., Ltd. (100%) loan of RMB1 billion
司(100%)
Shenzhen Vanke Real
Estate Co., Ltd. (100%), Wuhan Vanke Real Provided a guarantee for a 29 April 2011 to 29
8 RMB1.5 billion
Shanghai Vanke Real Estate Co., Ltd. (100%) loan of RMB1.5 billion April 2013
Estate Co., Ltd. (100%)
Dongguan Vanke Real Dongguan Changan
Provided a guarantee for a 11 May 2011 to 10
9 Estate Company Limited Vanke Real Estate Co., RMB300 million
loan of RMB300 million May 2013
(100%) Ltd. (100%)
Ningbo Vanke Real
Shenzhen Vanke Real Provided a guarantee for a 12 May 2011 to 12
10 Estate Development Co. RMB600 million
Estate Co., Ltd. (100%) loan of RMB600 million November 2012
Ltd. (100%)
Provided a guarantee in
Changchun Vanke
Changchun Wanrun Real proportion to the
Xizhigu Real Estate 3 June 2011 to 3 June
11 Estate Development Co., RMB 75 million Company’s equity holding
Development Co., Ltd. 2014
Ltd. (100%) (50%) for a bank loan of
(50%)
RMB150 million
Provided a guarantee in
Beijing Zhuzong Vanke
proportion to the
Beijing Vanke Company Real Estate 20 May 2011 to 19
12 RMB500 million Company’s equity holding
Limited (100%) Development Co., Ltd. May 2013
(50%) for a bank loan of
(50%)
RMB1 billion
Nanjing Vanke Property
Co., Ltd. Nanjing Wanhui
Provided a guarantee for a 26 May 2011 to 25
13 Property Co., Ltd. RMB50 million
南京万科置业有限公司 loan of RMB50 million July 2011
(100%)
(100%)
Hangzhou Liangzhu
Shenzhen Vanke Real Provided a guarantee for a 14 June 2011 to 14
14 New Town RMB1.2 billion
Estate Co., Ltd. (100%) loan of RMB1.2 billion June 2013
Development Co., Ltd.
(100%)
During the reporting period, the amount of new guarantees provided by the Company and its majority-owned subsidiaries was
RMB6,934 million, and the amount of guarantees withdrawn was RMB0. As at the end of the reporting period, the outstanding
amount of guarantees provided by the Company was RMB10,147 million, accounting for 22.94 per cent of the audited net assets
attributable to shareholders of the Company at the end of 2010. The outstanding amount of guarantees provided by the Company and
its majority-owned subsidiaries for other majority-owned subsidiaries was RMB9,031 million; the outstanding amount of guarantees
provided by the Company and its majority-owned subsidiaries for associated and joint venture companies was RMB1,116 million.
The Company and its majority-owned subsidiaries did not have any external guarantees.
During the reporting period, the Company did not provide guarantee for shareholders, beneficial controller and its
connected parties, nor did it have any overdue guarantees or gurantees involving litigation.
9. Specific elaboration and independent opinions of the independent directors on the use of capital
and external guarantees by connected parties
There had been no non-operational use of capital by the controlling shareholder or other connected parties of the
Company.
18
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 determining the provision
of guarantees are legal and reasonable, without prejudice to the interests of the Company and its shareholders.
10. Undertakings
China Resources National Corporation (“CRNC”), the parent company of CRC, being the Company’s original
single largest shareholder and the present single largest shareholder, gave a significant undertaking to the
Company in 2001: CRNC would provide as much support to the Company as it did in the past, as long as such
support was beneficial to the Company’s development, and that it would remain impartial in the event of any
competition between the investment projects of the Company and that of CRNC and its subsidiaries, and in the
event of any disagreements or disputes arising from horizontal competition. CRNC had fulfilled its undertaking.
11. Details on the Company’s investor meetings
Issues
discussed
Type of meeting Date Location Approach Types of investors and
information
provided
Deutsche Bank Face to face Investors including securities companies, (I) Major
2011.1 Beijing issues
meeting meeting funds, etc
Face to face Investors including securities companies, discussed:
UBS Meeting 2011.1 Shanghai (1) The
meeting funds, etc
Company’s
Hong Kong, daily
Annual results Shenzhen Face to face Investors including securities companies, operations;
2011.3
presentation (Shanghai, meeting funds, individual investors, etc (2)The
Beijing) Company’s
Face to face Investors including securities companies, development
CLSA meeting 2011.3 Hong Kong meeting strategies;
funds, etc
(3)The
Credit Suisse Face to face Investors including securities companies,
2011.3 Hong Kong Company’s
Securities meeting meeting funds, etc opinion on
Face to face Investors including securities companies, the
BNP meeting 2011.3 Hong Kong meeting funds, etc changes in
Qilu Securities Face to face Investors including securities companies, the
2011.3 Shenzhen meeting industry.
meeting funds, etc
(II) Major
Credit Suisse Face to face Investors including securities companies,
2011.3 Hong Kong information
Securities meeting meeting funds, etc provided:
Essence Securities Face to face Investors including securities companies, Published
2011.4 Beijing meeting information
meeting funds, etc
Face to face Investors including securities companies, including the
Macquarie meeting 2011.5 Hong Kong meeting Company’s
funds, etc
regular
Face to face Investors including securities companies,
CLSA meeting 2011.5 Beijing meeting reports.
funds, etc
Morgan Stanley Face to face Investors including securities companies,
2011.5 Hong Kong meeting
meeting funds, etc
Guohua meeting (高 Face to face
meeting Investors including securities companies,
华证券活动 (京高 2011.5 Shenzhen
funds, etc
华？)
Mirae Asset Face to face Investors including securities companies,
2011.5 Shenzhen meeting
Securities meeting funds, etc
Face to face Investors including securities companies,
JP Morgan meeting 2011.6 Beijing meeting funds, etc
Face to face Investors including securities companies,
CLSA meeting 2011.6 Hong Kong meeting funds, etc
Guosen Securities Face to face Investors including securities companies,
2011.6 Shanghai
meeting meeting funds, etc
19
Huatai United Face to face Investors including securities companies,
2011.6 Shanghai
Securities meeting meeting funds, etc
Nomura Securities Face to face Investors including securities companies,
2011.6 Singapore
meeting meeting funds, etc
Sinolink Securities Face to face Investors including securities companies,
2011.6 Sanya
meeting meeting funds, etc
Ping An Securities Face to face Investors including securities companies,
2011.6 Shenzhen
meeting meeting funds, etc
Credit Suisse Face to face Investors including securities companies,
2011.6 Chongqing
meeting meeting funds, etc
Face to face Investors including securities companies,
UBS meeting 2011.6 Qingdao
meeting funds, etc
Essence Securities Face to face Investors including securities companies,
2011.6 Shanghai
meeting meeting 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.
Shenzhen, Shenjin Wanguo, CLSA, Orient Securities, Guosen
Guangzhou, Securities, Nomura Securities, CITIC Securities, Deutsche
Dongguan, Foshan, Bank, Citi, UBS, Goldman Sachs, Credit Suisse Securities,
Zhuhai, Xiamen, Guangfa Securities, Huatai United Securities, JP Morgan,
Fuzhou, Sanya, Changjiang Securities, Haitong Securities, Yuanta
Changsha, Securities, Essence Securities, Merrill Lynch, Goldman
Shanghai, Nanjing, Sachs Gaohua, Great Wall Securities, Mitsubishi UFJ
During Morgan Stanley Securities, Rising Securities, BOC
Wuxi, Hangzhou, Small group
Securities the International, Everbright Securities, China Jianyin
Ningbo, Hefei, or one-on-
companies reporting Investment Securities, Sinolink Securities, Qilu Securities,
Beijing, Tianjin, one
period Samsung Securities, Dongxing Securities, Morgan Stanley,
Shenyang, Dalian,
Anshan, Qingdao, CICC, HSBC, Daiwa Securities, Macquarie, RBS, Guotai
Yantai, Wuhan, Junan, MasterLink Securities, KGI Securities, Minsheng
Securities, CCB International Securities, BNP, Jefferies,
Chengdu,
Barclays Capital, Religare Capital Markets, ISI Group,
Chongqing,
DBS Vickers, Korea Investment & Securities, Keefe,
Xi’an, Kunming,
Bruyette & Woods etc.
Guiyang etc.
20
Yinhua Fund, China Universal Asset Management, China
AMC, Orient Fund, Pacific Assets Management, CCB
Principal Asset Management, Guotai AMC, China Post
Fund, Bank of Communications Schroders Fund,
Changsheng Fund, Rongtong Fund, Fullgoal Fund,
Wellington Asset Management, CDH Investments, China
International Fund Management, Baoying Fund, Orient
Securities Asset Management, Power Corporation of
Canada, Southern Fund, Taikang Life, Fortis Haitong
Fund, ICBC Credit Suisse Asset Management, Dacheng
Fund, Hua An Fund, Guangfa Fund, Bosera Fund, Harvest
Fund, Supreme Master Investment Limited, First State
Investments, Franklin Templeton Investments, Taiping
Assets Management, Bank of China Investment
Management, ABN AMRO Teda Fund, China Life,
Fortune SGAM Fund, Upstone Assets, Goldman Sachs
(Asia), 亚洲投资协会, Invesco Great Wall Fund, Baring
Asset Management, First Beijing Company, LionRock
Capital, Capital Research, Brevan Howard, Prudential,
Adage Capital, Millennium Management LLC, SAC,
Apollo, GIC, DNB Asset, Pangu Capital Ltd, Sekker and
Advisors, Trivest Advisors, Value Investors Management,
Clairvoyance Capital, Alliance Berstein, GMO, Janus,
Bernstein, Invesco, GENESIS, Prime Capital
Management, Prime Capital Management, Pacific Eagle
Shenzhen,
Asset Mgmt, Chilton Investment, Blue Pool Capital,
Guangzhou, Mitsubishi UFJ, Value Partners, TIAA-CREF, Och-Ziff,
Dongguan, Foshan, Union Investment, Sumitomo Trust & Banking (Tokyo),
Zhuhai, Xiamen, Henderson Investment, AMP Capital, JF AM, Point State,
Fuzhou, Highbridge Capital, Broad Peak, Tiger Asia, Daiwa SB
Sanya,Changsha, Investments, Capital World, Fidelity Investment, Heitman,
Funds and other Shanghai, Nanjing, Citic Securities, Taurus, Ginger Capital, Urdang, Zeal
During
investment Wuxi, Hangzhou, Small group Asset Mgmt, UBS Asset Management, PGGM, GE
the
companies and Ningbo, Hefei, or one-on- Capital, GE Asset Management, Blackrock, Pelargos
reporting
individual Beijing, Tianjin, one Capital B.V, Eton Park, Capital Research Global, Hyundai
period
investors Shenyang, Dalian, Asset Management, Samsung Investment Trust
Anshan, Qingdao, Management, Samsung Life Insurance, Taurus Investment
Yantai, Wuhan, Management, Woori Asset Management, GS Asset Co. ,
Chengdu, KTB Asset Management, PCA Investment Korea,
Chongqing, Shinyoung Asset Management, Tube Asset Investment
Xi’an, Kunming, Advisory, Cosmo Investment Management, Sky
Guiyang etc. Investment Advisors, Consus Asset Management, ING
Investment Management Korea, LIG Insurance Co., Mirae
Asset Life Insurance, Causeway Capital, RREEF, Everest
Capital Limited, Lombard Odier Darier Hentsch & Cie,
Yuanta Securities Investment Trust Co Ltd, Absolute
Partners Management Limited, Harvest Global
Investments Limited, Amundi Hong Kong Limited, TB
Alternative Assets Ltd, Hang Seng Investment
Management Limited, Pinpoint Asset Management
Company Ltd, Susquehanna Ireland Limited, Pharo
Management (UK) LLP, China Life Trustees Limited,
Shin Kong Investment Trust Co Ltd, Nomura Asset
Management Hong Kong Ltd, Pictet Asset Management
Limited, NeubergerBerman, CBRE Richard Ellis,
Templeton Emerging Markets, Aizawa, Banco BBM,
Moon Capital, Aeris International, J Capital Research,
Lansdowne Partners Limited, UOB, LaSalle, Basic AM,
Capital Dynamics, Blue Ridge Asset Management, Caxton
Investment Co, Pyramis Asset Management, Armature
Capital, Barclays Capital, Thornburg Investment
Management, TT International, Perennial Investment
Partners Limited, Dai-ichi Life Group (Janpan) , Omnix
Capital Limited, Templeton Investment Counsel, Morgan
Stanley Investment Management, Paradice Investment
Australia, Mastholm AM etc.
21
12. Corporate bonds and related matters
During the reporting period, the Company maintained a good credit standing. The Company’s issued bonds,
including “08 Vanke G1” (Bond code: 112005) and “08 Vanke G2” (Bond code: 112006), was tracked and rated
by China Chengxin Securities Rating Co., Ltd. (中诚信证券评估有限公司) (“China Chengxin”) during the
period under review. The rating company continued to assign an AAA credit rating to the Company’s secured
corporate bonds “08 Vanke G1”, and raised the rating for non-secured corporate bonds “08 Vanke G2” and the
Company’s overall corporate credit rating to AAA respectively. China Chengxin gave a stable outlook rating to
the Company.
13. Investment in derivatives
In order to limit the risk associated with the fluctuations of interest
rate, the Company entered into an interest rate swap (“IRS”)
Remarks on risk analysis and management of derivative agreement to hedge floating rate foreign currency loan. The Company
positions during the reporting period (including but not limited would charge the counterparty an interest according to a floating rate,
to market risk, liquidity risk, credit risk, operational risk and in order to pay the floating-rate interest to the original lender, while
legal risk, etc.) paying a fixed rate to the counterparty. In terms of the term and
amount of the foreign currency loan, IRS limits the risk of fluctuations
of interest rate through fixed forward rate.
Change in market price or fair value of the derivatives invested The effect of the change in the IRS value on the Company’s profit or
during the reporting period, as well as the method, related loss during the reporting period amounted to RMB3,627,849.49. The
assumptions and parameters used to analyse the fair value of value of the IRS was determined based on the fair value assessed on
derivatives should be disclosed 30 June 2011
Remarks on whether there has been a material change in the
accounting policy and accounting measurement principles for
Nil
the Company’s derivatives during the reporting period as
compared with those of the previous reporting period
The Company’s independent directors are of the view that financial
instruments such as IRS prevent the possible loss associated with
Special advice on derivative investment and risk control by
foreign currency loan in the event of significant fluctuations in interest
independent directors, sponsors or financial advisors
rate. The relevant arrangement of the Company had been prudent and
reasonable.
Derivative positions as at the end of the reporting period
Unit: RMB’000
Contract amount as at
the end of the period as
Contract amount as at Contract amount as
Profit/loss during the a percentage of the
Type of contracts the beginning of the at the end of the
reporting period Company’s net assets
period period
as at the end of the
reporting period
Interest rate swap
1,249,109.39 889,845.00 3,627.85 1.54%
(IRS) agreement
Total 1,249,109.39 889,845.00 3,627.85 1.54%
XI. Financial Report (Unaudited)
22
China Vanke Co., Ltd.
萬科企業股份有限公司
30 June 2011
23
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated income statement
for the six months ended 30 June 2011
(Expressed in Renminbi Yuan)
2011 2010
Note Jan.–Jun. Jan.–Jun.
Revenue 7 18,886,965,527 15,816,254,224
Cost of sales (10,998,932,223) (10,046,889,448)
Gross profit 7,888,033,304 5,769,364,776
Other income 8 47,661,182 206,654,647
Distribution expenses (956,748,185) (606,401,577)
Administrative expenses (904,669,169) (575,447,943)
Other expenses 9 (73,244,462) (35,154,287)
Results from operating activities 6,001,032,670 4,759,015,616
Finance income 375,609,383 373,600,878
Finance costs (517,591,644) (386,171,719)
Net finance costs 11 (141,982,261) (12,570,841)
Share of profits less losses of associates 20 30,061,451 17,667,867
Share of profits less losses of jointly
21 (22,288,042) 76,772,073
controlled entities
Profit before income tax 5,866,823,818 4,840,884,715
Income tax expense 12(a) (2,614,306,284) (1,680,063,826)
Profit for the period 3,252,517,534 3,160,820,889
Attributable to:
Equity shareholders of the Company 2,977,854,653 2,812,498,573
Minority interests 274,662,881 348,322,316
Profit for the period 3,252,517,534 3,160,820,889
Basic and diluted earnings per share 14 0.27 0.26
The accompanying notes form part of these financial statements.
24
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated statement of comprehensive income
for the six months ended 30 June 2011
(Expressed in Renminbi Yuan)
2011 2010
Note
Jan. – Jun. Jan. – Jun.
Profit for the period 3,252,517,534 3,160,820,889
Other comprehensive income for the
13
period
Foreign currency translation differences
- foreign operations 13(a) 88,446,161 47,738,002
Net change in fair value of available-for-sale 13(b)
financial assets - (93,939,754)
Total comprehensive income for the period 3,340,963,695 3,114,619,137
Attributable to:
Equity shareholders of the Company 3,066,300,814 2,766,296,821
Minority interests 274,662,881 348,322,316
Total comprehensive income for the period 3,340,963,695 3,114,619,137
The accompanying notes form part of these financial statements.
25
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated balance sheet
(Expressed in Renminbi Yuan)
Note 30 Jun. 2011 31 Dec. 2010
ASSETS
Non-current assets
Property, plant and equipment 16 1,600,039,277 1,625,695,230
Investment properties 17 190,561,410 129,176,195
Construction in progress 18 898,256,796 764,282,141
Interest in associates 20 1,559,140,902 1,035,875,902
Interest in jointly controlled entities 21 3,461,225,978 3,374,074,020
Other financial assets 22 489,159,806 488,565,309
Deferred tax assets 23(a) 1,935,106,184 1,643,158,028
Other non-current asset 1,055,992,715 1,055,992,715
Total non-current assets 11,189,483,068 10,116,819,540
Current assets
Inventories 24 45,885,306 93,090,534
Properties held for development 25 55,205,163,279 49,314,694,209
Properties under development 25 111,704,090,570 78,982,068,164
Completed properties for sale 25 4,752,181,449 5,290,716,117
Trade and other receivables 26 37,624,915,670 34,370,341,244
Cash and cash equivalents 27 40,779,468,534 37,816,932,912
Total current assets 250,111,704,808 205,867,843,180
TOTAL ASSETS 261,301,187,876 215,984,662,720
EQUITY
Share capital 28 10,995,210,218 10,995,210,218
Reserves 29 35,209,322,671 33,237,466,573
Total equity attributable to equity
shareholders of the Company 46,204,532,889 44,232,676,791
Minority interests 11,602,949,738 10,353,522,851
TOTAL EQUITY 57,807,482,627 54,586,199,642
The accompanying notes form part of these financial statements.
26
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated balance sheet(continued)
(Expressed in Renminbi Yuan)
Note 30 Jun. 2011 31 Dec. 2010
LIABILITIES
Non-current liabilities
Loans and borrowings 30 29,773,300,951 30,611,643,798
Deferred tax liabilities 23(b) 1,069,998,205 1,086,104,338
Other non-current liabilities 31 10,554,510 8,816,121
Provisions 33 45,437,746 41,107,323
Total non-current liabilities 30,899,291,412 31,747,671,580
-
Current liabilities
Loans and borrowings 30 23,039,093,713 16,783,690,787
Financial derivatives 10,545,369 15,054,493
Trade and other payables 32 143,679,994,562 106,138,344,681
Current tax liabilities 12(c) 5,864,780,193 6,713,701,537
Total current liabilities 172,594,413,837 129,650,791,498
TOTAL LIABILITIES 203,493,705,249 161,398,463,078
TOTAL EQUITY AND LIABILITIES 261,301,187,876 215,984,662,720
Approved and authorized for issue by the board of directors on 5 August 2011.
）
）
）Directors
）
）
The accompanying notes form part of these financial statements.
27
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated statement of changes in equity
For the six months ended 30 June 2011
(Expressed in Renminbi Yuan)
Attributable to equity shareholders of the Company
Foreign Employee Shar
Change in Equity for the six Note Share capital
Share
exchange
Statutory
e-based compensa
Revaluation
Other reserves Retained profits Total
Minority
Total equity
months ended 30 Jun. 2011 premium reserves reserve interests
reserve ti-on reserve
Balance at 1 January 2011 10,995,210,218 8,826,644,405 390,131,926 10,587,706,329 473,226,067 771,108 (511,297,571 ) 13,470,284,309 44,232,676,791 10,353,522,851 54,586,199,642
Dividend to owners of the Company 15 - - - - - - - (1,099,521,022) (1,099,521,022) - (1,099,521,022)
Dividends to non-controlling interests - - - - - - - - - (525,092,459) (525,092,459)
Capital injections from minority interests
- - - - - - - - - 900,796,219 900,796,219
of subsidiaries
Non-controlling interests arising from
acquisitions of non-wholly owned - - - - - - - - - 734,950,000 734,950,000
subsidiary
Equity settled share-based transactions 34 - - - - - - 26,081,585 - 26,081,585 - 26,081,585
Acquisitions of non-controlling interests - - - - - - (21,005,279) - (21,005,279) (214,389,754) (235,395,033)
Disposals of non-controlling interests - - - - - - - - - - -
Other movement in non-controlling
- - - - - - - - - 78,500,000 78,500,000
interests
Total comprehensive income for the six - - 88,446,161 - - - - 2,977,854,653 3,066,300,814 274,662,881 3,340,963,695
months period
Balance at 30 June 2011 10,995,210,218 8,826,644,405 478,578,087 10,587,706,329 473,226,067 771,108 (506,221,265) 15,348,617,940 46,204,532,889 11,602,949,738 57,807,482,627
28
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated statement of changes in equity (continued)
For the year ended 31 December 2010
(Expressed in Renminbi Yuan)
Attributable to equity shareholders of the Company
Employee Awarded shares
Foreign exchange Statutory share-based Revaluation Retained purchased for Non-controlling
Change in Equity in 2010 Note Share capital Share premium Other reserve Total Total equity
reserve reserves compensation reserve earnings employees’ share interests
reserve award scheme
Balance at 1 January 2010 10,995,210,218 8,826,644,405 276,721,079 8,737,841,437 473,226,067 107,604,654 (363,623,127) 8,808,398,744 (486,135,416) 37,375,888,061 8,032,624,393 45,408,512,454
Transfer of retained earnings - - - 1,849,864,892 - - - (1,849,864,892) - - - -
Dividend to owners of the Company 15 - - - - - - - (769,664,716) - (769,664,716) - (769,664,716)
Dividends to non-controlling interests - - - - - - - - - - (1,022,809,351) (1,022,809,351)
Capital injections from non-controlling
- - - - - - - - - - 900,024,038 900,024,038
interests of subsidiaries
Non-controlling interests arising from
acquisitions of non-wholly owned
- - - - - - - - - - 1,504,670,237 1,504,670,237
subsidiary
Equity settled share-based transactions - - - - - - (17,407,332) (1,711,866) 486,135,416 467,016,218 467,016,218
Acquisitions of non-controlling interests - - - - - - (130,267,112) - - (130,267,112) (305,717,961) (435,985,073)
Disposals of non-controlling interests - - - - - - - - - - (318,921,473) (318,921,473)
Other movement in non-controlling
- - - - - - - - - - 7,169,501 7,169,501
interests
Total comprehensive income for the year - - 113,410,847 - - (106,833,546) - 7,283,127,039 - 7,289,704,340 1,556,483,467 8,846,187,807
Balance at 31 December 2010 10,995,210,218 8,826,644,405 390,131,926 10,587,706,329 473,226,067 771,108 (511,297,571) 13,470,284,309 - 44,232,676,791 10,353,522,851 54,586,199,642
The accompanying notes form part of these financial statements.
29
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated cash flow statement
for the six months ended 30 June 2011
(Expressed in Renminbi Yuan)
2011 2010
Note Jan. – Jun. Jan. – Jun.
Cash flows from operating activities
Cash receipts from customers 50,406,825,400 28,870,516,221
Cash paid to suppliers (38,777,093,351) (29,123,479,748)
Cash paid to and for employees (1,461,654,240) (1,025,738,335)
Cash paid for other taxes (9,510,508,795) (4,385,820,679)
Cash generated from other operating
activities 7,004,980,023 2,659,393,935
Cash used in other operating activities (3,836,700,190) (6,509,292,573)
Net cash generated from / (used in)
operating activities 3,825,848,847 (9,514,421,179)
Cash flows from investing activities
Acquisitions of subsidiaries, net of cash
(2,832,609,183) 188,165,014
required 5
Acquisitions of interest in associates, jointly
(398,260,500) (1,453,342,441)
controlled entities and other investments
Acquisitions of property, plant and
(124,039,946) (40,828,007)
equipment and construction in progress
Cash paid for other investment activities - -
Proceeds from disposals of subsidiaries 6 (42,569,163) 20,112,929
Proceeds from disposal of property, plant
328,599 438,616
and equipment
Proceeds from sales of investments 76,700,000 138,303,746
Proceeds from other investment activities 197,207,554 131,453,581
Dividends received 15,216,215 439,521,967
Net cash used in investing activities (3,108,026,424) (576,174,595)
The accompanying notes form part of these financial statements.
30
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
Consolidated cash flow statement (continued)
for the six months ended 30 June 2011
(Expressed in Renminbi Yuan)
2011 2010
Note Jan. – Jun. Jan. – Jun.
Cash flows from financing activities
Capital injections from minority
1,804,652,556 1,134,963,387
interests of subsidiaries
Proceeds from loans and borrowings 14,003,077,865 11,911,335,211
Repayment of loans and borrowings (8,497,000,000) (5,067,889,566)
Dividends paid to equity shareholder (1,018,124,006) (771,376,582)
Dividends paid to minority
shareholder (214,960,544) (68,928,292)
interest paid (1,835,046,472) (1,045,917,309)
Net cash (used in) / generated from
financing activities 4,242,599,399 6,092,186,849
Net increase in cash and cash
equivalents 4,960,421,822 (3,998,408,925)
Cash and cash equivalents at 1
January 35,096,935,416 22,002,774,938
Effect of foreign exchange rate
changes (10,587,288) (4,982,697)
Cash and cash equivalents at
balance sheet date 40,046,769,950 17,999,383,316
The accompanying notes form part of these financial statements.
31
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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 six
months ended 30 June 2011 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 5 August 2011.
(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.
32
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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 and 18 – depreciation and impairment of property, plant and equipment ,
investment properties and construction in progress.
Note 25 – write down of properties
Note 26 – 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.
33
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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, post-
tax 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.
34
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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)).
35
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
36
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
37
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
38
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
39
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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;
40
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
41
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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).
42
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
3 Significant accounting policies (continued)
(h) Impairment of assets (continued)
(ii) Impairment of other assets (continued)
- Recognition of impairment losses
An impairment loss is recognised in profit or loss whenever the carrying amount of
an asset, or the cash-generating unit to which it belongs, exceeds its recoverable
amount. Impairment losses recognised in respect of cash-generating units are
allocated first to reduce the carrying amount of any goodwill allocated to the cash-
generating unit (or group of units) and then, to reduce the carrying amount of the
other assets in the unit (or group of units) on a pro rata basis, except that the carrying
value of an asset will not be reduced below its individual fair value less costs to sell,
or value in use, if determinable.
- Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has
been a favourable change in the estimates used to determine the recoverable amount.
An impairment loss in respect of goodwill is not reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would
have been determined had no impairment loss been recognised in prior years.
Reversals of impairment losses are credited to profit or loss in the year in which the
reversals are recognised.
(i) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using
the weighted average cost formula and comprises all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an
expense in the period in which the related revenue is recognised. The amount of any write-
down 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.
43
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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 write-
down of properties to net realisable value and all losses of properties are recognised as an
expense in the period the write-down or loss occurs. The amount of any reversal of any
write-down of properties is recognised as a reduction in the amount of properties recognised
as an expense in the period in which the reversal occurs.
(l) Revenue recognition
Provided it is probable that the economic benefits will flow to the Group and the revenue and
costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as
follows:
(i) Sale of properties
Revenue from the sale of completed properties for sale is recognised upon the signing
of the sale and purchase agreement and the receipt of the deposits pursuant to the sale
and purchase agreement or the achievement of status ready for hand-over to
customers as stipulated in the sales and purchase agreements, whichever is the later.
Deposits and instalments received on properties sold prior to the date of revenue
recognition are included in the consolidated balance sheet under sales deposits
received in advance.
(ii) Provision of services
Revenue from services is recognised when services are rendered.
(iii) Rental income from operating leases
Rental income receivable under operating leases is recognised in profit or loss in
equal instalments over the periods covered by the lease term, except where an
alternative basis is more representative of the pattern of benefits to be derived from
the use of the leased asset. Lease incentives granted are recognised in profit or loss as
an integral part of the aggregate net lease payments receivable. Contingent rentals are
recognised as income in the accounting period in which they are earned.
(iv) Interest income
Interest income is recognised as it accrues using the effective interest method.
44
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
45
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
46
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
47
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
48
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
49
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
50
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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.
51
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
5 Acquisitions of subsidiaries
(i) Acquisitions of subsidiaries by the Group during the six months ended 30 June 2011:
(a) Pursuant to an equity transfer agreement 25 September 2010, the Company acquired a
50% equity interest in Shenzhen Haixuan Investment Development Company Limited
("Haixuan") with a consideration of RMB 5 Million. Haixuan is principally engaged
in property development and sale. The acquisition was completed on 24 March 2011.
After the acquisition, the Company holds a 100% equity interest in Haixuan. (note)
(b) Pursuant to an equity transfer agreement 27 January 2011, the Company acquired a
100% equity interest in Wuhan Yongli Property Company Limited ("Yongli") with a
consideration of RMB 36 Million. Yongli is principally engaged in property
development and sale. The acquisition was completed on 9 March 2011. (note)
(c) Pursuant to an equity transfer agreement 10 Janauray 2011, the Company acquired a
100% equity interest in Winble Capital Limited ("Winble") with a consideration of
HKD 1,000. Winble is principally engaged in investment holding. The acquisition
was completed on 10 Janauray 2011.
(d) Pursuant to an equity transfer agreement 23 December 2010, the Group acquired a
100% equity interest in Guangzhou Panyu Xiangxin Real Estate Company Limited
("Panyu Xiangxin") with a consideration of RMB 3,100 Million. Panyu Xiangxin is
principally engaged in property development and sale. The acquisition was completed
on 1 April 2011. (note)
(e) Pursuant to an equity transfer agreement 20 January 2011, the Group acquired a 70%
equity interest in Sanya Vanke Zhongshi Real Estate Company Limited ("Zhongshi")
with a consideration of RMB 14 Million. Zhongshi is principally engaged in property
development and sale. The acquisition was completed on 26 April 2011.
(f) Pursuant to an equity transfer agreement 21 June 2011, the Group acquired a 51%
equity interest in Shanxi HanBo Industrial Company Limited ("Shanxi HanBo") with
a consideration of RMB 5.1 Million. Shanxi HanBo is principally engaged in
property development and sale. The acquisition was completed on 24 June 2011.
(g) Pursuant to an equity transfer agreement 23 December 2010, the Group acquired a
34% equity interest in Dongguan ShengHong Industrial Investment Company
Limited ( "ShengHong") with a consideration of RMB 0.34 Million. ShengHong is
principally engaged in property development and sale. The acquisition was completed
on 11 May 2011. (note)
(h) Pursuant to an equity transfer agreement 23 December 2010, the Group acquired a
25% equity interest in Dongguan Zhongwanguangda Industrial Investment Company
Limited ( "Zhongwanguangda") with a consideration of RMB 0.25 Million.
Zhongwanguangda is principally engaged in property development and sale. The
acquisition was completed on 11 May 2011. (note)
52
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
5 Acquisitions of subsidiaries (continued)
(i) Acquisitions of subsidiaries by the Group during the six months ended 30 June 2011:
（Continued）
(i) Pursuant to an equity transfer agreement 9 May 2011, the Group acquired a 100%
equity interest in Future Vision Investments Limited ("Future Vision") with a
consideration of USD 22,662,135. Future Vision is principally engaged in investment
holding. The acquisition was completed on 9 May 2011.
(j) Pursuant to an equity transfer agreement 1Janauray 2011, the Group acquired a100%
equity interest in Glorious Profit Investments Limited with a consideration of HKD
1.Glorious Profit is principally engaged in investment. The acquisition was
completed on 1Janauray 2011.
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 3,313,214,006
Cash acquired (705,397,323)
Considerations prepaid in prior years (5,000,000)
Considerations to be paid subsequent to 30 June 2011 (335,100,000)
Considerations paid in 2011 2,267,716,683
Cash paid for acquisitions in prior years 564,892,500
Net cash outflow 2,832,609,183
All subsidiaries set out above were acquired from third parties.
6 Disposal of subsidiaries
(i) Disposal of subsidiaries by the Group during the six months ended 30 June 2011:
(a) On 25 January 2011, the Group disposed of 69.58% equity interest in Shenzhen
Oriental Xinyue Industry Company Limited (“Xinyue”), which was previously
wholly owned by the Group, to an independent party, at a consideration of RMB 25
million. Subsequent to the transfer, Xinyue became an associate of the Group.
53
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
6 Disposal of subsidiaries (continued)
(i) Disposal of subsidiaries by the Group during the six months ended 30 June 2011: (continued)
Effect of the disposal on individual assets and liabilities of the Group for the six months
ended 30 June 2011
Cash and cash equivalents 42,569,163
Trade and other receivables 728,111,672
Properties held for development, properties under development
35,348,727
and completed properties for sales
Property, plant and equipment 11,816
Other long-term liabilities 61,775
Trade and other payables (768,039,508)
Minority interests (11,542,396)
Net assets and liabilities disposed of by the Group 26,397,700
Loss on disposal of subsidiaries (1,240,469)
Considerations received in prior years -
Considerations to be received subsequent to June 2011 -
Considerations received, satisfied in cash -
Cash disposed of (42,569,163)
Net cash outflow (42,569,163)
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.
54
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
7 Operating segments (continued)
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.
(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.
55
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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 six months ended 30 June 2011
Revenue from external revenue,
before sales taxes 3,133,634,307 7,568,063,932 6,723,807,357 2,264,285,337 298,004,932 19,987,795,865
Inter-segment revenue - - 237,376 - 261,053,608 261,290,984
Reportable segment revenue,
before sales taxes 3,133,634,307 7,568,063,932 6,724,044,733 2,264,285,337 559,058,540 20,249,086,849
Reportable segment profit 274,492,166 2,076,160,389 2,076,362,092 76,224,194 (8,070,194) 4,495,168,647
Interest income 22,191,821 5,580,555 17,303,678 25,397,724 1,574,445 72,048,223
Interest expense 25,802,708 30,195,421 165,196,292 56,795,991 2,049 277,992,461
Share of profits less losses of associates
and jointly controlled entities (note (5)) (8,732,211) 2,477,863 (8,493,108) 7,627,524 - (7,119,932)
Reportable segment assets 77,245,185,711 84,126,720,640 74,716,283,837 41,610,385,281 1,387,562,778 279,086,138,247
Reportable segment liabilities 65,248,116,279 72,864,899,896 64,618,795,185 38,241,490,130 1,290,561,036 242,263,862,526
56
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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 six months 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 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 1,251,787,191 120,995,177,540
57
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
7 Operating segments (continued)
(b) Reconciliation of reportable segment revenues, profit or loss, assets and liabilities
2011 2010
Jan-Jun Jan-Jun
Revenue
Reportable segment revenue 20,249,086,849 16,955,888,252
Unallocated head office and corporate revenue 72,770,654 27,384,851
Sales taxes (1,101,872,550) (950,076,226)
Elimination of inter-segment revenue (333,019,426) (216,942,653)
Consolidated turnover 18,886,965,527 15,816,254,224
Profit
Reportable segment profit 4,495,168,647 4,647,008,517
Elimination of inter-segment profit (36,292,630) (881,109,052)
Share of profits less losses of
associates and jointly controlled entities 7,773,409 94,439,940
Other income 47,661,182 206,654,647
Other expenses,
excluding provision for doubtful debts (4,805,845) (18,908,745)
Dividend income 15,266,215 236,573,500
Unallocated head office and corporate expenses (72,962,320) (136,518,456)
Land appreciation tax 1,415,015,160 692,744,364
Consolidated profit before taxation 5,866,823,818 4,840,884,715
Assets
Reportable segment assets 279,427,047,409 156,029,737,671
Elimination of inter-segment receivables (134,365,538,608) (81,934,719,276)
Deferred tax assets 1,935,106,184 363,283,736
Unallocated head office and corporate assets 114,304,572,891 86,417,646,156
Consolidated total assets 261,301,187,876 160,875,948,287
Liabilities
Reportable segment liabilities 242,263,862,526 120,995,177,540
Elimination of inter-segment payables (120,925,595,834) (65,263,322,452)
Deferred tax liabilities 1,069,998,205 363,283,736
Unallocated head office and corporate liabilities 81,085,440,352 56,361,000,686
Consolidated total liabilities 203,493,705,249 112,456,139,510
58
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
7 Operating segments (continued)
Notes:
(1) Beijing region represents Beijing, Tianjin, Shenyang, Anshan, Dalian, Qingdao,
Changchun, Yantai, Jilin, Taiyuan, Tangshan, Langfang and Fushun.
(2) Shenzhen region represents Shenzhen, Guangzhou, Qingyuan, Dongguan, Foshan,
Zhuhai, Zhongshan, Changsha, Xiamen, Fuzhou, Huizhou, and Hainan.
(3) Shanghai region represents Shanghai, Hangzhou, Suzhou, Wuxi, Ningbo, Nanjing,
Zhenjiang, Nanchang, Hefei, Yangzhou, Jiaxing, Wuhu and Nantong.
(4) Chengdu Region represents Chengdu, Wuhan, Xi’an, and Chongqing, Kunming, and
Guiyang and Wulumuqi.
(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
RMB14,893,340 (2010: RMB 18,639,027).
8 Other income
2011 2010
Jan.–Jun. Jan.–Jun.
Forfeited deposits and compensation from customers 9,862,643 8,063,534
Gain/(Loss) on disposals of subsidiaries (1,240,469) 62,784,054
Gain on acquisitions of subsidiaries 450,017 -
Gain on disposals of minority interests of subsidiary 5,200,000 -
Gain on disposals of other investment 881,275 100,937,645
Gain on disposals of property, plant and equipment 280,254 561,971
Other sundry income 32,227,462 34,307,443
47,661,182 206,654,647
9 Other expenses
2011 2010
Jan-Jun Jan-Jun
Provision for doubtful debts 68,438,617 16,245,542
Donations 1,443,640 6,541,885
Loss on disposals of property, plant and equipment 475,164 871,183
Net unrealised loss on financial derivatives (3,627,849) 5,810,671
Penalties 1,749,473 1,140,705
Other sundry expenses 4,765,417 4,544,301
73,244,462 35,154,287
59
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
10 Personnel expenses
2011 2010
Jan-Jun Jan-Jun
Wages, salaries and other staff costs 647,623,936 550,442,059
Contributions to defined contribution plans 91,989,414 63,016,667
Equity-settled share-based compensation 26,081,585 -
765,694,935 613,458,726
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% (2010: 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
2011 2010
Jan-Jun Jan-Jun
Interest income 349,416,148 137,027,378
Dividend income 15,266,215 236,573,500
Foreign exchange gain 10,927,020 -
Financing income 375,609,383 373,600,878
Interest expense and borrowing costs 1,857,312,467 1,176,514,037
Less：Interest capitalised (1,339,720,823) (801,337,555)
Finance costs 517,591,644 375,176,482
Foreign exchange loss - 10,995,237
Financing expenses 517,591,644 386,171,719
Net financing costs (141,982,261) (12,570,841)
Interest expense and other borrowing costs have been capitalised at an average rate of 7.4%
(2010: 7.6%) per annum.
60
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
12 Taxation
(a) Taxation in the consolidated income statement represents:
2011 2010
Current tax Jan-Jun Jan-Jun
PRC Enterprise Income Tax
Provision for the six months period 1,501,143,595 1,090,488,185
Land Appreciation Tax 1,421,216,977 748,264,949
2,922,360,572 1,838,753,134
Deferred tax
Fair value adjustments arising from business
combinations
- PRC Enterprise Income Tax (14,569,304) (44,541,340)
- Land Appreciation Tax (6,201,817) (55,520,585)
Accrual for Land Appreciation Tax (52,707,948) 66,593,912
Tax losses (208,018,044) (165,043,240)
Provision for diminution in value of properties - 62,246,316
Accruals for construction costs (19,187,762) (27,581,226)
Other temporary differences (7,369,413) 5,156,856
(308,054,288) (158,689,307)
2,614,306,284 1,680,063,826
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 24% and 25% (2010:
between 22% 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.
61
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
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:
2011 2010
Jan-Jun Jan-Jun
Profit before income tax 5,866,823,818 4,840,884,715
Less: Land Appreciation Tax 1,415,015,160 692,744,364
4,451,808,658 4,148,140,351
Notional tax on profit before taxation calculated at
effective income tax rate of the relevant group 1,086,513,366 983,564,693
subsidiaries concerned
Non-taxable income (2,067,604) (48,616,142)
Non-deductible expenses 81,422,218 51,639,753
Effect of tax losses not recognised 34,582,006 33,603,070
Recognition of previously unrecognised tax losses (1,046,115) (29,495,496)
Effect of unused tax losses recognised in prior years - 295,494
Effect of change in tax rates on deferred tax in
(112,747) (3,671,910)
respect of current year temporary differences
PRC Corporate Income Tax 1,199,291,124 987,319,462
Land Appreciation Tax 1,415,015,160 692,744,364
Actual total tax expense 2,614,306,284 1,680,063,826
(b) Taxation recognized directly in equity
2011 2010
Jan-Jun Jan-Jun
Arising from fair value adjustments on
available-for-sale securities (note 23(b)) - (24,666,306)
62
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
12 Taxation (continued)
(c) Current taxation in the consolidated balance sheet represents:
30 Jun. 2011 31 Dec. 2010
Corporate Income Tax 719,260,327 1,677,498,217
Land Appreciation Tax 5,145,519,866 5,036,203,320
5,864,780,193 6,713,701,537
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 2011
and 31 December 2010.
13 Other comprehensive income
(a) Tax effects relating to each component of other comprehensive income
Jan-Jun.2011 Jan-Jun.2010
Before- Tax Net-of- Before- Tax Net-of-
tax expense tax tax benefit tax
amount amount amount amount
Exchange differences
on translation of
financial statements of
overseas subsidiaries 88,446,161 - 88,446,161 47,738,002 - 47,738,002
Available-for-sale
securities: net
movement in fair
value reserve (118,606,060) 24,666,306 (93,939,754)
Other comprehensive
Income 88,446,161 - 88,446,161 (70,868,058) 24,666,306 (46,201,752)
63
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
13 Other comprehensive income (continued)
(b) Reclassification adjustments relating to components of other comprehensive income
2011 2010
Jan-Jun Jan-Jun
RMB RMB
Available-for sale securities:
Gains/(loss) arising during the period - (2,183,281)
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)
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 RMB2,977,854,653(2010:
2,812,498,573) and on the weighted average number of ordinary shares outstanding during
the year of 10,995,210,218 (2010: 10,995,210,218) shares.
There were no dilutive potential shares during the years presented above.
15 Dividends
A cash dividend of RMB 0.10 per share, resulting in a dividend payment of RMB
1,099,521,022 in respect of the year ended 31 December 2010 was declared and paid during
the reporting period ended 30 June 2011.
A cash dividend of RMB 0.07 per share, resulting in a dividend payment of RMB
769,664,715 in respect of the year ended 31 December 2009 was declared and paid during the
year ended 31 December 2010.
64
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
16 Property, plant and equipment
Hotel and other
Improvements Plant and Furniture fixtures
buildings held Motor vehicles Total
to premises machinery and equipment
for own use
Cost:
At 1 January 2010 1,485,863,696 70,056,521 26,205,266 187,708,560 88,121,188 1,857,955,231
Additions 328,253,317 18,673,900 1,594,310 26,835,907 23,042,503 398,399,937
Disposals (128,580,968) (3,756,875) (620,128) (11,150,925) (10,354,929) (154,463,825)
At 31 December 2010 1,685,536,045 84,973,546 27,179,448 203,393,542 100,808,762 2,101,891,343
At 1 January 2011 1,685,536,045 84,973,546 27,179,448 203,393,542 100,808,762 2,101,891,343
Additions:
via acquisitions of
- - - 1,168,262 2,306,778 3,475,040
subsidiaries
others 27,121,495 15,338,386 1,540,757 17,230,705 14,152,205 75,383,548
Disposals (46,949,740) (2,902,132) (274,873) (4,063,496) (4,643,983) (58,834,224)
At 30 June 2011 1,665,707,800 97,409,800 28,445,332 217,729,013 112,623,762 2,121,915,707
65
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
16 Property, plant and equipment (continued)
Hotel and other Furniture
Improvements Plant and
buildings held fixtures and Motor vehicles Total
to premises machinery
for own use equipment
Accumulated depreciation
and impairment loss:
At 1 January 2010 166,727,300 31,212,208 10,848,440 119,573,379 60,331,868 388,693,195
Charge for the year 59,567,105 18,387,544 2,103,299 18,498,107 13,005,762 111,561,817
Written back on disposals (1,792,661) (3,678,689) (515,275) (9,999,578) (8,072,696) (24,058,899)
At 31 December 2010 224,501,744 45,921,063 12,436,464 128,071,908 65,264,934 476,196,113
At 1 January 2011 224,501,744 45,921,063 12,436,464 128,071,908 65,264,934 476,196,113
Additions:
via acquisitions of
- - - 757,307 62,798 820,105
subsidiaries
Charge for the period 25,896,954 7,691,150 888,972 12,675,094 6,350,262 53,502,432
on disposals (115,376) (1,453,430) (155,686) (3,120,640) (3,797,088) (8,642,220)
At 31 June 2011 250,283,322 52,158,783 13,169,750 138,383,669 67,880,906 521,876,430
Net book value:
At 30 Jun. 2011 1,415,424,478 45,251,017 15,275,582 79,345,344 44,742,856 1,600,039,277
At 31 Dec. 2010 1,461,034,301 39,052,483 14,742,984 75,321,634 35,543,828 1,625,695,230
66
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
17 Investment properties
30 Jun.2011 31 Dec.2010
Cost:
At 1 January 150,400,720 256,641,320
Addition 65,060,776 15,216,622
Disposals - (121,457,222)
At balance sheet date 215,461,496 150,400,720
Accumulated depreciation
and impairment loss:
At 1 January 21,224,525 28,498,162
Charge for the period 3,675,561 5,245,393
Written back on disposals - (12,519,030)
At balance sheet date 24,900,086 21,224,525
Net book value:
At balance sheet date 190,561,410 129,176,195
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 RMB196,205,136 (2010: RMB147,471,563).
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.2011 31 Dec.2010
Within 1 year 10,602,247 2,737,406
After 1 year but within 5 years 42,145,420 6,211,900
After 5 years 23,032,347 5,354,500
75,780,014 14,303,806
67
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
18 Construction in progress
30 Jun.2011 31 Dec.2010
At 1 January 764,282,141 593,208,234
Additions 140,485,549 183,514,194
Transfer to properties under development (6,490,000) -
Transfer to property, plant and equipment (20,894) (12,440,287)
898,256,796 764,282,141
Construction in progress represents self-constructed office premises and owner managed
hotel under construction.
19 Principal subsidiaries
Place of Percentage of interest
No. Name of company establishment and Paid in capital held by the
operation Principal activities
Group
Anshan Vanke Property Development
1
Co., Ltd. Anshan USD5,172,700 100% Property development
Beijing Chaoyang Vanke Property
2 Development Company Limited Beijing RMB200,000,000 60% Property development
Beijing Vanke Enterprises Shareholding
3 Company Limited Beijing RMB2,000,000,000 100% Property development
Beijing Vanke Property Management
4 Company Limited Beijing RMB22,000,000 100% Property management
Beijing Zhongliang Vanke Jiarifengjing
Real Estate Development Company
5
Limited (note) Beijing RMB830,000,000 50% Property development
Changchun Vanke Real Estate Company
6 Limited Changchun RMB50,000,000 100% Property development
Changsha Vanke Property Management
7 Company Limited Changsha RMB5,000,000 100% Property management
Chengdu Vanke Chenghua Property
8 Company Limited Chengdu RMB554,479,142 100% Property development
Chengdu Vanke Guanghua Property
9 Company Limited Chengdu USD131,428,571 100% Property development
Chengdu Vanke Guobin Property
10 Company Limited Chengdu USD140,000,000 60% Property development
Chengdu Vanke Huadong Real Estate
11 Company Limited Chengdu RMB77,680,000 90% Property development
Chengdu Vanke Jinjiang Property
12 Company Limited Chengdu RMB10,000,000 100% Property development
Chengdu Vanke Property Management
13 Company Limited Chengdu RMB5,000,000 100% Property management
Chengdu Vanke Real Estate Company
14 Limited Chengdu RMB80,000,000 100% Property development
Chongqing Yu Development Coral
15 Property Company Limited Chongqing RMB20,000,000 51% Property development
68
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
19 Principal subsidiaries (continued)
Place of Percentage of interest
Name of company establishment and Paid in capital held by the
No. Principal activities
operation Group
Dalian Vanke City Property Company
16 Limited Dalian USD42,000,000 55% Property development
Dalian Vanke Real Estate Development
17 Company Limited Dalian RMB32,000,000 100% Property development
Dongguan Songhuju Property Company
18 Limited Dongguan RMB10,000,000 100% Property development
Dongguan Vanke Construction Research
19 Company Limited Dongguan RMB20,000,000 100% Construction research
Dongguan Vanke Property Management
20 Company Limited Dongguan RMB5,000,000 100% Property management
Dongguan Vanke Real Estate Company
21 Limited Dongguan RMB20,000,000 100% Property development
Dongguan Xintong Industry Investment
22 Company Limited Dongguan RMB10,000,000 51% Property development
Dongguan Xinwan Property
23 Development Company Limited Dongguan RMB10,000,000 51% Property development
Foshan Nanhai District Jinyulanwan
24 Propoerty Company Limited Foshan USD190,000,000 55% Property development
Foshan Vanke Real Estate Company
25 Limited Foshan RMB80,000,000 100% Property development
Fushun Vanke Property Development
Fushun RMB10,000,000 100% Property development
26 Co., Ltd.
Fuyang Vanke Real Estate Development
27 Company Limited Hangzhou RMB300,000,000 100% Property development
Fuzhou Vanke Real Estate Company
28 Limited Fuzhou RMB20,000,000 100% Property development
Guangzhou Pengwan Property Company
29 Limited (note) Guangzhou RMB200,000,000 50% Property development
Guangzhou Vanke Property Management
30 Company Limited Guangzhou RMB5,000,000 100% Property management
Guangzhou Vanke Real Estate Company
31 Limited Guangzhou RMB1,000,000,000 100% Property development
Guangzhou Wanxin Property Company
32 Limited Guangzhou HKD760,000,000 100% Property development
Guiyang Vanke Real Estate Company
33 Limited Guiyang RMB100,000,000 100% Property development
Hainan Fuchun East Real Estate
34 Development Company Limited Hainan RMB20,000,000 100% Property development
Hainan Vanke Property Development
35 Company Limited Haikou RMB10,000,000 100% Property development
Hangzhou Liangzhu Culture Town
36 Development Company Limited Hangzhou RMB30,000,000 100% Property development
Hangzhou Vanke Hotel Management
37 Company Limited Hangzhou RMB10,000,000 100% Hotel management
Hangzhou Linlu Property Development
38 Company Limited Hangzhou RMB170,000,000 100% Property development
Hangzhou Vanke Junyuan Property
39 Company Limited Hangzhou USD66,660,000 100% Property development
Hangzhou Vanke Property Company
40 Limited Hangzhou RMB320,000,000 100% Property development
69
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
19 Principal subsidiaries (continued)
Place of Percentage of interest
Name of company establishment Paid in capital held by the
No. Principal activities
and operation Group
Hangzhou Wankun Property
41 Development Company Limited Hangzhou RMB350,000,000 51% Property development
42 Hefei Vanke Property Company Limited Hefei RMB200,000,000 100% Property development
Huizhou Vanke Property Company
43 Limited Huizhou RMB10,000,000 100% Property development
Jiangsu Sunan Vanke Real Estate
44 Company Limited Suzhou RMB30,000,000 100% Property development
Jiaxing Vanke Property Development
45 Co., Ltd. Jiaxing RMB100,000,000 100% Property development
Kunming Vanke Property Development
46 Co., Ltd. Kunming RMB20,000,000 100% Property development
Nanjing Hengyue Property Company
47 Limited Nanjing RMB10,000,000 100% Property development
Nanjing Jinyu Blue Property Company
48 Limited Nanjing RMB90,000,000 100% Property development
Nanjing Vanke Property Company
49 Limited Nanjing RMB150,000,000 100% Property development
Nantong Vanke Property Development
50 Co., Ltd. Nantong RMB8,000,000 100% Property development
Ningbo Jiangbei Vanke Property
51 Company Limited Ningbo RMB675,000,000 100% Property development
Ningbo Vanke Real Estate Company
52 Limited Ningbo RMB150,000,000 100% Property development
Qingdao Da Shan Real Estate
53 Development Company Limited Qingdao RMB100,000,000 60% Property development
Qingdao Vanke Real Estate Company
54 Limited Qingdao RMB20,000,000 100% Property development
Qingdao Vanke Yinshengtai Real Estate
55 Development Co., Ltd Qingdao RMB100,000,000 80% Property development
Qingyuan Hongmei Investment
56 Company Limited Qingyuan RMB280,000,000 95% Property development
Shanghai Dijie Property Company
57 Limited (note) Shanghai RMB20,000,000 50% Property development
Shanghai Hengda Property Shareholding
58 Company Limited Shanghai RMB141,348,200 100% Property development
Shanghai Luolian Property Company
59 Limited. Shanghai RMB470,000,000 100% Property development
Shanghai Meilanhuafu Property
60 Company Limited Shanghai RMB700,000,000 100% Property development
Shanghai Tianyi Property Development
61 Company Limited Shanghai RMB50,000,000 90% Property development
Shanghai Vanke Baobei Property
62 Company Limited Shanghai RMB10,000,000 100% Property development
Shanghai Vanke Investment
63 Management Company Limited Shanghai RMB204,090,000 100% Property development
Shanghai Vanke Property Management
64 Company Limited Shanghai RMB12,260,000 100% Property management
Shanghai Vanke Pudong Property
65 Company Limited Shanghai RMB160,000,000 100% Property development
Shanghai Vanke Real Estate Company
66 Limited Shanghai RMB800,000,000 100% Property development
70
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
19 Principal subsidiaries (continued)
Place of
Percentage of interest
No. Name of company establishment Paid in capital
held by the
and operation Principal activities
Group
Shanghai Xiangda Real Estate Development
67 Company Limited Shanghai RMB1,783,000,000 75% Property development
Shanxi Hualian Property Development
68 Company Limited Xi'an RMB367,850,000 51% Property development
Shenyang Vanke Hunnan Jinyu Property
69 Development Company Limited Shenyang RMB1,022,520,258 100% Property development
Shenyang Vanke Jinyu Blue Bay Property
70 Development Company Limited Shenyang RMB578,150,000 100% Property development
Shenyang Vanke Property Management
71 Company Limited Shenyang RMB10,000,000 100% Property management
Shenyang Vanke Real Estate Development
72 Company Limited Shenyang RMB100,000,000 100% Property development
Shenyang Vanke Tianqinwan Property
73 Company Limited Shenyang USD99,980,000 55% Property development
Shenzhen Fuchun East (Group) Company
74 Limited Shenzhen USD 14,600,000 100% Property development
Shenzhen Fuchun East Real Estate Company
75 Limited Shenzhen RMB158,000,000 100% Property development
Shenzhen Longcheer Yacht Club Company
76 Limited Shenzhen RMB57,100,000 100% Club Service
Shenzhen Vanke City Scenery Property
77 Company Limited Shenzhen RMB120,000,000 100% Property development
Shenzhen Vanke Daolin Investment
78 Development Company Limited Shenzhen RMB20,000,000 100% Property development
Shenzhen Vanke Financial Consultancy Investment trading and
79 Company Limited Shenzhen RMB15,000,000 100% Consultancy services
Shenzhen Vanke Nancheng Real Estate
80 Company Limited Shenzhen RMB10,000,000 100% Property development
Shenzhen Vanke Property Management
81 Company Limited Shenzhen RMB50,000,000 100% Property management
Shenzhen Vanke Real Estate Company
82 Limited Shenzhen RMB600,000,000 100% Property development
Shenzhen Vanke Xingye Property Company
83 Limited Shenzhen RMB62,413,230 100% Property development
Shenzhen Vanke Xizhigu Real Estate
84 Company Limited Shenzhen RMB10,000,000 60% Property development
Suzhou Huihua Investment and Property
85 Company Limited Suzhou RMB355,000,000 51% Property development
86 Suzhou Nandu Jianwu Company Limited Suzhou RMB300,000,000 70% Property development
Suzhou Vanke Zhongliang Property Company
87 Limited Suzhou RMB230,000,000 51% Property development
88 Taiyuan Vanke Real Estate Company Limited Taiyuan RMB60,000,000 100% Property development
71
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
19 Principal subsidiaries (continued)
Place of Percentage of interest
No. Name of company establishment Paid in capital held by the
and operation Principal activities
Group
Tander China Investment Company
89 Limited Hong Kong HKD10,000 100% Investment
Tangshan Vanke Property Development
90 Co., Ltd. Tangshan RMB200,000,000 100% Property development
Tianjin Vanke Property Management
91 Company Limited Tianjin RMB10,000,000 100% Property management
Tianjin Vanke Real Estate Company
92 Limited Tianjin RMB390,000,000 100% Property development
Tianjin Vanke Xinlicheng Company
93 Limited Tianjin RMB230,000,000 100% Property development
Tianjin Wanbin Real Estate Development
94 Company Limited Tianjin RMB455,000,000 60% Property development
Tianjin Wanfu Investment Company
95 Limited Tianjin RMB192,000,000 100% Property development
Tianjin Wanzhu Investment Company
96 Limited Tianjin RMB20,000,000 100% Property development
Tianjin Zhongtian Wanfang Investment
97 Company Limited Tianjin RMB20,000,000 100% Property development
Vanke (Chongqing) Real Estate Company
98 Limited Chongqing RMB100,000,000 100% Property development
Vanke Property (Hong Kong) Company
99 Limited Hong Kong USD9,500,000 100% Investment
Vanke Real Estate (Hong Kong) Company
100 Limited Hong Kong HKD15,600,000 100% Investment
Wuhan Guohao Property Company
101 Limited Wuhan RMB10,000,000 55% Property development
Wuhan Vanke Property Management
102 Company Limited Wuhan RMB12,000,000 100% Property management
Wuhan Vanke Real Estate Company
103 Limited Wuhan RMB150,000,000 100% Property development
Wuhan Vanke Tiancheng Real Estate
104 Company Limited Wuhan USD12,100,000 55% Property development
Wuhan Wangjiadun Morden City Property
105 Company Limited Wuhan RMB200,000,000 100% Property development
Wuxi Dongcheng Real Estate Company
106 Limited Wuxi USD149,400,000 100% Property development
107 Wuxi Vanke Real Estate Company Limited Wuxi RMB300,000,000 60% Property development
Wuxi Wansheng Real Estate Development
108 Company Limited Wuxi USD49,200,000 100% Property development
Xiamen Vanke Real Estate Company
109 Limited Xiamen RMB50,000,000 100% Property development
110 Xi'an Vanke Real Estate Company Limited Xi'an RMB20,000,000 100% Property development
Xinjiang Vanke Real Estate Company
111 Limited Wulumuqi RMB100,000,000 100% Property development
Yangzhou Wanwei Property Company
112 Limited yangzhou RMB550,000,000 65% Property development
Yantai Vanke Property Development Co.,
113 Ltd. Yantai RMB30,000,000 100% Property development
Zhejiang Vanke Nandu Real Estate
114 Company Limited Hangzhou RMB150,000,000 100% Property development
Zhenjiang RunduProperty Company
115 Limited Zhenjiang RMB20,000,000 100% Property development
Zhenjiang Runnan Property Company
116 Limited Zhenjiang RMB50,000,000 100% Property development
72
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
19 Principal subsidiaries (continued)
Place of
Percentage of interest
No. Name of company establishment Paid in capital
held by the
and operation Principal activities
Group
Zhenjiang Runqiao Property Company
117 Limited Zhenjiang RMB10,000,000 100% Property development
Zhenjiang Runzhong Property Company
118 Limited Zhenjiang RMB10,000,000 100% Property development
Zhuhai Vanke Real Estate Company
119 Limited Zhuhai RMB10,000,000 100% Property development
Zhuhai Zhubin Property Development
120 Company Limited Zhuhai RMB109,000,000 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.
20 Interest in associates
Details of the Group’s principal associates at 30 June 2011 are as follows:
Place of Percentage of interest
No. Name of company establishment and Paid in capital held by the
operation Principal activities
Group
Beijing Jinyu Vanke Property
1 Development Company Limited Beijing RMB190,000,000 49% Property development
Wuhan Golf City Gardern Real Estate
2 Company Limited (note1) Wuhan RMB219,000,000 49% Property development
Shanghai Nandu White Horse Real Estate
3 Company Limited (note1) Shanghai RMB27,000,000 49% Property development
Chengdu Yihang Vanke Binjiang Real
4 Estate Company Limited (note1) Chengdu RMB140,000,000 49% Property development
Hefei Yihang Vanke Real Estate Company
5 Limited (note2) Hefei RMB101,500,000 50% Property development
Suzhou Zhonghang Vanke Changfeng Real
6 Estate Company Limited (note1) Suzhou RMB280,000,000 49% Property development
Changsha Oriental City Real Esteate
7 Company Limited Changsha RMB20,000,000 20% Property development
Shanghai Zunyi Property Management
8 Company Limited Shanghai RMB3,000,000 30% Property management
Foshan Shunde District Zhonghang Vanke
9 Property Company Limited Foshan RMB600,000,000 15% Property development
Xiamen Wantefu Property Development
10 Company Limited Xiamen RMB890,000,000 30% Property development
Guangzhou Yinyejunrui Property
11 Development Company Limited (note1) Guangzhou RMB10,000,000 49% Property development
Shanghai Jingyuan Property Development
12 Company Limited Shanghai RMB555,000,000 45% Property development
Langfang Kuangshijiye Property
13 Development Company Limited (note2) Langfang USD55,000,000 50% Property development
Shanghai Vanke Changning Property
14 Development Company Limited (note1) Shanghai RMB30,000,000 49% Property development
Shanghai Chongwan Property
15 Development Company Limited (note1) Shanghai RMB265,000,000 49% Property development
Shenyang Zhongtie Vanke Langyu
Property Development Company Limited
16 (note2) Shenyang RMB100,000,000 51% Property development
73
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
20 Interest in associates (continued)
Details of the Group’s principal associates at 30 June 2011 are as follows:
Place of Percentage of interest
No. Name of company establishment Paid in capital held by the
and operation Principal activities
Group
Chongqing Wanbin Property
17 Development Company Limited Chongqing RMB40,000,000 45% Property development
Suzhou Kejian Property Development
18 Limited (note1) Nanjing RMB300,000,000 49% Property development
Shenzhen Oriental Xinyue Industry
Shenzhen RMB36,157,231 30% Property development
19 Company Limited
Beijing Wukuang Vanke Real Estate
20 Company Limited Beijing RMB50,000,000 49% Property development
Beijing Wuyuan Kesheng Property
21 Development Company Limited Beijing RMB50,000,000 49% Property development
Notes:
(1) Except for the 15% equity interest held directly, the Group also hold 34% effective
equity interest in these associates through a jointly controlled entity.
(2) Pursuant to the voting rights in the board of directors, the Group has significant
influence in these entities.
Summary financial information on associates:
2011
Equity (attribute
Assets Liabilities Revenue Profit
to parent)
100 per cent 29,279,946,817 24,689,378,399 4,590,568,419 550,880,087 52,944,950
Group’s effective interest 12,535,648,911 10,976,508,009 1,559,140,902 10,691,008,188 30,061,451
2010
Equity (attribute
Assets Liabilities Revenue Profit
to parent)
100 per cent 18,944,068,998 16,041,669,436 2,902,399,562 2,132,331,659 259,959,560
Group’s effective interest 7,936,100,353 6,900,224,451 1,035,875,902 6,802,932,796 135,391,172
74
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
21 Interest in jointly controlled entities
Details of the Group’s principal jointly controlled entities at 30 June 2011are as follows:
Place of Percentage of interest
Name of company establishment and Paid in capital held by the
No. Principal activities
operation Group
Shanghai Jialai Real Estate Development
1 Company Limited (note 1) Shanghai RMB180,000,000 49% Property development
2 Zhonghang Vanke Company Limited (note 1) Beijing RMB3,000,000,000 40% Property development
3 Dongguan Vanke Property Company limited Dongguan RMB10,000,000 50% Property development
Wuhan Vanke Qinganju Property
4 Development Limited (note 1) Wuhan RMB100,000,000 30% Property development
Yunnan Vanke City Property Company
5 Limited (note 2) Kunming RMB10,000,000 51% Property development
Changsha Lingyu Real Estate Development
6 Company Limited (note 2) Changsha RMB100,000,000 60% Property development
Changsha Lingyu Investment Company
7 Limited (note 2) Changsha RMB100,000,000 60% Property development
Beijing Zhongliang Vanke Real Estate
8 Development Company Limited Beijing RMB800,000,000 50% Property development
Changchun Vanke Xizhigu Real Estate
9 Development Company Limited Changchun RMB50,000,000 50% Property development
Shanghai Anhong Real Estate Investment
10 Company Limited (note 2) Shanghai RMB5,000,000 65% Property development
Tianjin Diwan Investment Company Limited
11 (note 1) Tianjin RMB39,215,700 40% Property development
Hanzhou Xiangge Investment Management Investment and
12 Company Limited Hanzhou RMB2,000,000 50% Comsultation
Hangzhou Dongshang Property
13 Development Company Limited Hangzhou RMB20,000,000 50% Property development
Beijing Wanxin Investment Development
14 Company Beijing RMB740,000,000 50% Investment
Zhuhai Haiyu Property Development
15 Company Limited Zhuhai RMB63,800,000 50% Property development
Shenzhen Mingjue Investment Development
16 Company Limited (note1) Shenzhen RMB15,000,000 50% Property development
Changchun Vanke Jingcheng Real Estate
17 Development Company Limited (note 1) Changchun RMB230,000,000 10% Property development
Tianjin Songke Real Estate Development
18 Company Limited Tianjin RMB20,000,00 49% Property development
Beijing Jingtou Vanke Real Estate
19 Development Company Limited Beijing RMB10,000,000 50% Property development
20 Fuyang Yongtong property limited (note1) Fuyang RMB10,000,000 20% Property development
Shenzhen Wan Hongjia investment and
21 Development Company Limited (note1) Shenzhen RMB1,000,000 44% Property development
Pingdu Vanke Property Development
22 Company Limited (note2) Qingdao RMB200,000,000 51% Property development
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.
75
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
21 Interest in jointly controlled entities (continued)
Summary of financial information on jointly controlled entities – Group’s effective interest
30 Jun.2011 31 Dec.2010
Non-current assets 1,199,270,552 1,007,854,238
Current assets 13,333,137,531 11,412,122,663
Non-current liabilities (1,898,968,552) (1,696,033,060)
Current liabilities (9,172,213,553) (7,349,869,821)
Net assets 3,461,225,978 3,374,074,020
Income 248,374,909 736,608,594
Expenses (270,662,951) (580,296,720)
Profit for the period (22,288,042) 156,311,874
22 Other financial assets
30 Jun.2011 31 Dec.2010
Available-for-sale securities in the PRC
Equity securities
- Unlisted 484,396,206 483,801,709
- Listed in the PRC 4,763,600 4,763,600
489,159,806 488,565,309
Unlisted equity securities include RMB 400,000,000 share of interest in an unquoted trust
plan, which is measured at cost because it does not have a quoted market price in an active
market and its fair value cannot be reliably measured.
76
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
23 Deferred tax assets / (liabilities)
(a) Deferred tax assets
Deferred tax assets are attributable to the items detailed as follows:
30 Jun.2011 31 Dec.2010
Tax losses 704,309,146 496,291,102
Impairment loss of trade and other receivables 30,923,796 23,576,692
Provision for diminution in value of properties 1,852,014 1,852,014
Accruals for construction costs 184,094,523 164,906,761
Accrual for Land Appreciation Tax 844,235,589 791,527,641
Other temporary differences 169,691,116 165,003,818
1,935,106,184 1,643,158,028
Deferred tax assets have not been recognised in respect of the following temporary
differences:
30 Jun.2011 31 Dec.2010
Tax losses 1,013,662,918 913,360,587
Deductible temporary differences 81,120,889 80,904,533
1,094,783,807 994,265,120
The tax losses expire between 2011 and 2016. 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.
77
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
23 Deferred tax assets / (liabilities) (continued)
(b) Deferred tax liabilities
Deferred tax liabilities are attributable to the items detailed as follows:
30 Jun.2011 31 Dec.2010
Fair value adjustments arising from
business combinations (1,023,041,591) (1,043,812,713)
Others (46,956,614) (42,291,625)
(1,069,998,205) (1,086,104,338)
(c) Movements in deferred taxation, net:
30 Jun.2011 31 Dec.2010
At 1 January 557,053,690 44,380,693
Transferred to consolidated income statement (note 12(a)) 308,054,289 484,369,980
Recognised in other comprehensive income (note 13(a)) - 28,303,017
At balance sheet date 865,107,979 557,053,690
24 Inventories
30 Jun.2011 31 Dec.2010
Raw materials 45,885,306 93,090,534
Inventories recognised as cost of sales for the period - 14,611,519
25 Properties held for development, properties under development and completed
properties for sale
(a) The analysis of carrying value of land held for property development for sale is as follows:
30 Jun.2011 31 Dec.2010
With lease term of 50 years or more 81,558,746,067 74,120,183,049
With lease term of less than 50 years 9,714,303,041 8,117,186,497
91,273,049,108 82,237,369,546
78
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
25 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. 2011 31 Dec. 2010
Carrying amount of properties sold 10,708,754,582 29,629,562,621
Reversal of write-down of properties - 616,667,200
10,708,754,582 30,246,229,821
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.
26 Trade and other receivables
30 Jun. 2011 31 Dec. 2010
Debtors and other receivables 10,146,089,419 10,438,706,738
Less: allowance for doubtful debts (262,802,802) (196,807,448)
9,883,286,617 10,241,899,290
-------------------- --------------------
Amount due from associates and jointly
controlled entities 8,515,549,680 6,291,361,109
Less: allowance for doubtful debts (1,401,033) (922,620)
8,514,148,647 6,290,438,489
-------------------- --------------------
Prepaid taxes 9,185,555,192 4,900,760,138
-------------------- --------------------
Deposits and prepayments 10,041,925,214 12,937,243,327
-------------------- --------------------
37,624,915,670 34,370,341,244
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 38(b).
All of the trade and other receivables, apart from deposits of RMB889million (2010:
RMB693million), are expected to be recovered within one year.
Deposits and prepayments mainly represent tendering deposits for acquisitions of land and
prepayment for land and development costs of projects undertaken by the Group.
79
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
26 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. 2011 31 Dec. 2010
At 1 January 197,730,068 164,299,563
Impairment loss recognized 68,438,617 71,216,196
Uncollectible amounts written off (1,964,850) (37,785,691)
At 30 June 264,203,835 197,730,068
At 30 June 2011, the Group’s trade debtors and other receivables of RMB264 million, (2010:
RMB198 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 RMB264 million (2010: RMB198 million) were recognised.
The Group does not hold any collateral over these balances.
Trade debtors and other receivables that are not impaired
The ageing analysis of trade debtors and other receivables that are neither individually nor
collectively considered to be impaired are as follows:
30 Jun. 2011 31 Dec. 2010
Neither past due nor impaired 15,095,110,534 14,703,122,236
Less than 1 year past due 3,302,324,730 1,829,215,543
18,397,435,264 16,532,337,779
Receivables that were neither past due nor impaired relate to a wide range of customers for
whom there was no recent history of default.
Receivables that were past due but not impaired relate to a number of independent debtors
that have a good track record with the Group. Based on past experience, management
believes that no impairment allowance is necessary in respect of these balances as there has
not been a significant change in credit quality and the balances are still considered fully
recoverable. The Group does not hold any collateral over these balances.
80
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
27 Cash and cash equivalents and pledged deposits
30 Jun. 2011 31 Dec. 2010
- Cash in hand 805,166,005 1,993,017
- Deposits at banks 39,967,225,331 37,809,601,086
- Other cash equivalents 7,077,198 5,338,809
40,779,468,534 37,816,932,912
Cash and cash equivalents and pledged deposits consist of cash on hand and balances with
banks. The balance includes deposits with banks of RMB 2,720 million (2009: RMB 999
million) and RMB 374 million (2009: RMB 403 million) unused proceeds raised in prior
year share allotment with restriction for designated purposes.
28 Share capital
30 Jun. 2011 31 Dec. 2010
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 shares 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 2011 is as follows:
Issued share capital
A shares B shares Total
At 1 January 2011 9,680,254,750 1,314,955,468 10,995,210,218
At 30 June 2011 9,680,254,750 1,314,955,468 10,995,210,218
There were no movements in share capital during 2011.
81
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
29 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 period ended 30 June 2011, the Company transferred RMB nil (2010:
RMB308,310,815), 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.
(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 six months ended 30 June 2011, the directors proposed to transfer RMB nil
(2010: RMB1,541,554,007), being nil (2010: 50%) 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
Employee share-based compensation reserve comprises the fair value of the shares awarded
under the Employees’ share award scheme (see note 34) to the employees of the Company
recognised in accordance with the accounting policy adopted for equity compensation
benefits as stated in note 3(o)(ii).
During the reporting period ended 30 June 2011, equity-based employee benefits of RMB
26,081,585 were charged to the consolidated income statement and with the corresponding
amount credited to the reserve, which was related to the 2011 Scheme.
82
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
29 Reserves (continued)
(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.
30 Loans and borrowings
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. 2011 31 Dec. 2010
Non-current
Secured or guaranteed
- bank loans (note (a)) 4,917,062,375 4,926,229,291
- corporate bonds (note (b)) 2,948,601,416 2,937,122,406
- other borrowings(note(c)) 8,279,631,667 1,600,000,000
16,145,295,458 9,463,351,697
Unsecured
- bank loans (note (a)) 8,741,074,208 11,746,440,000
- corporate bonds (note (b)) 2,886,931,285 2,884,022,101
- other borrowings (note (c)) 2,000,000,000 6,517,830,000
13,628,005,493 21,148,292,101
29,773,300,951 30,611,643,798
At 30 June, non-current interest-bearing borrowings and bonds were repayable as follows:
30 Jun. 2011 31 Dec. 2010
After 1 year but within 2 years 16,477,180,550 19,850,291,042
After 2 years but within 5 years 13,296,120,401 10,761,352,756
29,773,300,951 30,611,643,798
83
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
30 Interest-bearing borrowings and bonds (continued)
30 Jun. 2011 31 Dec. 2010
Current
Secured or guaranteed
- bank loans (note (a)) - 80,000,000
- current portion of long term bank loans (note (a)) 2,196,063,713 1,395,690,787
2,196,063,713 1,475,690,787
Unsecured
- bank loans (note (a)) 1,509,200,000 1,300,000,000
- entrusted bank loan from jointly controlled entity( note 98,000,000 98,000,000
(a))
- current portion of long term bank loans (note (a)) 9,718,000,000 3,710,000,000
- current portion of long term other borrowings (note (c)) 9,517,830,000 10,200,000,000
20,843,030,000 15,308,000,000
23,039,093,713 16,783,690,787
Notes:
(a) Bank loans
The secured or guaranteed bank loans of RMB1,271 million as at 30 June 2011(2010:
RMB6,402 million) are secured over certain properties held for development and
properties under development with aggregate carrying value of RMB4,472 million
(2010: RMB1,076 million), the Group’s interests in certain subsidiaries.
The secured or guaranteed bank loans of RMB42 million as at 30 June 2011(2010:
RMB nil) are secured over certain property, plant and equipment with aggregate
carrying value of RMB243 million (2010: RMB nil), the Group’s interests in certain
subsidiaries.
The interest rate of bank loans ranges from 4.86% to 8.33% in 2011 (2010: from
4.86% to 10.20%).
(b) Corporate bonds
2011
Corporate bonds Corporate bonds
No.101688 No.101699
Brought forward value at 1 January 2,884,022,101 2,937,122,406
Transaction costs amortised 2,909,184 11,479,010
Carrying value at 30 June 2,886,931,285 2,948,601,416
84
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
30 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 5,514,471 21,894,230
Carrying value at 31 December 2,884,022,101 2,937,122,406
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. 2011 31 Dec. 2010
Non-current
Proceeds 10,590,400,000 8,117,830,000
Transaction costs (310,768,333) -
10,279,631,667 8,117,830,000
Current portion of long term other borrowings
Proceeds 9,517,830,000 10,200,000,000
85
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
30 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 from5.76% to 11.80% in 2011 (2010: 5.04% to 10.05%).
31 Other non-current liabilities
Other non-current liabilities mainly represent the amounts that hold on behalf of the owners
committees in the property management sector.
32 Trade and other payables
30 Jun.2011 31 Dec.2010
Trade payable 18,435,021,487 16,923,777,819
Amounts due to associates and jointly controlled entities 3,048,901,244 2,148,384,968
Deposits received in advance 107,073,555,083 74,405,197,319
Other payables and accrued expenses 14,980,277,683 12,348,724,974
Other taxes 142,239,065 312,259,601
Total 143,679,994,562 106,138,344,681
33 Provisions
30 Jun.2011 31 Dec.2010
Balance at 1 January 41,107,323 34,355,815
Provisions made during the six months period 18,818,680 14,351,190
Provisions used during the six months period (14,488,257) (7,599,682)
Balance at 30 June 45,437,746 41,107,323
The balance represents the estimated losses to be borne by the Group in relation to the
property management projects.
86
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
34 Employees’ share award scheme
1) Background of the Scheme
Total number of shares granted during the 108,435,000
reporting period
Total number of shares exercised during the -
reporting period
Total number of shares forfeited during the -
reporting period
The range of exercise price and remaining At 30 June 2011, the exercise
contractual life of the share options price of the share options
outstanding at the end of the reporting period outstanding was RMB8.79 per
share, and their remaining
contractual life was 4 years and
10 months.
The range of exercise price and remaining At 30 June 2011, no other equity
contractual life of other equity instruments instruments for Group.
outstanding at the end of the reporting period
On 18 April 2011, the board of directors of Group has passed the proposal related to grant A-
share share options incentive plan, and confirmed the grant date of this A-share share options
incentive plan (“incentive plan”) as at 25 April 2011. The Group granted total of 108.435
million share options representing 0.9862% of the total number of shares with the total fair
value assessed as RMB 279.09 million. The first year after the date of grant was waiting
period which should not be exercised. Then the share options will be granted in three
exercise periods, and the number of share options available for exercising in the first, second
and third exercise period were 40%, 30% and 30% of the total share options granted. At 30
June 2011, the number of 2,800,500 share options has forfeited as the demission of
employees, and the fair value of the outstanding inventive plan has been adjusted
respectively.
2) Share-base payment by equity-settled
The model for share options fair value on Black-Scholes option pricing model
grant date
The assumption for the number of Assumptions based on the number of
outstanding share options available for of outstanding share options
exercising available for exercising on the
balance sheet date and the
percentage of employees demission
in the reporting period.
The reason of significant difference in this Not applicable
reporting period compared with last
reporting period
The accumulated amount in reserves for RMB 26,081,585
share-base payment by equity-settled
The accumulated amount in expenses for RMB 26,081,585
share-base payment by equity-settled
87
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
34 Employees’ share award scheme (continued)
2) Share-base payment by equity-settled (continued)
On each balance sheet date during waiting period, the share-based expense related to share
options is recognized as administrate expenses and reserves by the requisite service from
incentive employees according to the fair value of share options on grant date which is based
on the assumption for the number of outstanding share options available for exercising. The
recognised administrate expenses and reserves will be not adjusted during the exercising
period. The reserves are recognised according to the outstanding share options available for
exercising on each balance sheet date. In this reporting period, the cost of incentive plan has
been amortised of RMB 26.08 million in administrate expenses and increased the reserves as
the same amount accordingly.
3) Share-base payment by cash-settled
No Share-base payment by cash-settled in the reporting period.
4) Share-base payment on service
No Share-base payment on service in the reporting period.
5) The changes and termination of share-base payment
No changes and termination of share-base payment in the reporting period.
88
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
35 Material related party transactions
(a) Reference should be made to the following notes regarding related parties:
Associates (note 20, 26 & 32)
Jointly controlled entities (note 21, 26 & 32)
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:
2011 2010
Jan. – Jun. Jan. – Jun.
Short-term employee benefits 5,858,819 5,310,268
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:
2011 2010
Jan. – Jun. Jan. – Jun.
Sales of properties to the key management personnel 4,643,958 5,132,112
Related cost of sales (2,502,935) (2,621,867)
Gross profit 2,141,023 2,510,245
Estimated fair value of the properties
sold to the key management personnel 4,643,958 5,132,112
All the above were approved by the Board of Directors as a kind of employment benefits to
the key management personnel.
In 2010 the Group launched the Excellence Bonus Plan (the “Plan”) as a supplement to the
existing employee remuneration system. The bonus amount attributable to each year is
determined by reference to the key performance indicator of Economic Value Added in the
corresponding year.
89
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
36 Commitments
(a) Commitments outstanding at 30 June not provided for in the financial statements were as
follows:
30 Jun. 2011 31 Dec. 2010
Construction and development contracts 38,415,227,492 19,939,290,788
Land agreements 15,252,503,794 19,829,659,037
53,667,731,286 39,768,949,825
Commitments mainly related to land and development costs for the Group’s properties under
development.
(b) At 30 June 2011, the total future minimum lease payments under non-cancellable
operating leases are payable as follows:
30 Jun. 2011 31 Dec. 2010
Within 1 year 29,969,580 24,570,464
After 1 year but within 2 years 27,821,110 20,546,767
After 2 year but within 5 years 35,156,737 32,852,954
92,947,427 77,970,185
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
RMB43 million (2010: RMB68 million).
37 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
RMB26,857 million (2010: RMB20,299 million), including guarantees of RMB26,754
million (2010: RMB20,184 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 RMB103 million (2010: RMB115 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.
90
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
38 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 2011, 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
RMB23 million (2010: RMB14 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 2010.
(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.
91
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
38 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:
2011-06-30
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
Loans and borrowings 52,812,394,664 58,107,827,058 26,076,040,302 18,251,026,842 13,780,759,913
Creditors and accrued charges 33,557,538,235 33,557,538,235 33,557,538,235 - -
Amounts due to jointly controlled
entities and associates 3,048,901,244 3,048,901,244 3,048,901,244 - -
Other non-current liabilities 385,313,713 385,313,713 374,759,203 - 10,554,510
2010-12-31
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
Loans and borrowings 47,395,334,585 51,864,254,960 19,066,509,124 21,491,838,083 11,305,907,753
Creditors and accrued charges 29,584,762,394 29,584,762,394 29,584,762,394 - -
Amounts due to jointly controlled
entities and associates 2,148,384,968 2,148,384,968 2,148,384,968 - -
Other non-current liabilities 8,816,121 8,816,121 - - 8,816,121
(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. 2011 31 Dec. 2010
United States Dollars 280,344,566 282,659,984
Hong Kong Dollars 14,445,801 15,734,761
Japanese Yen 12,345,200 192,437,536
Interest-bearing borrowings denominated in a currency other than the functional currency of
the entity to which they relate are as follows:
30 Jun. 2011 31 Dec. 2010
United States Dollars 4,979,487,198 4,530,407,777
92
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
38 Financial risk management (continued)
(d) Foreign exchange risk (continued)
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.2011 31 Dec.2010
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% 352,435,697 352,185,503 318,581,085 318,397,848
United States Dollars (10%) (352,435,697) (352,185,503) (318,581,085) (318,397,848)
Hong Kong Dollars 10% (1,083,435) (390,087,393) (1,180,107) (376,740,966)
Hong Kong Dollars (10%) 1,083,435 390,087,393 1,180,107 376,740,966
JPY 10% (925,890) - (14,432,815) -
JPY (10%) 925,890 - 14,432,815 -
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) Accounting classifications and fair values
Fair values versus carrying amounts
The fair values of the financial assets and liabilities, together with the carrying amounts
shown in the statement of the financial position, are as follows:
30 June 2011 Other Total
Loans and Available- financial carrying
In millions of RMB Trading receivables for-sale liabilities amount Fair value
Trade and other receivables - 37,625 - - 37,625 37,625
Cash and cash equivalents
and pledged deposits - 40,779 - - 40,779 40,779
Other financial assets - - 489 - 489 489
Other non-current assets - 1,056 - - 1,056 1,056
- 79,460 489 - 79, 949 79, 949
Loans and borrowings - - - (52,812) (52,812) (52,812)
Financial derivatives (11) - - - (11) (11)
Trade and other payables - - - (143,680) (143,680) (143,680)
(11) - - (196,492) (196,503) (196,503)
93
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
38 Financial risk management (continued)
(e) Accounting classifications and fair values (continued)
Fair values versus carrying amounts (continued)
31 December 2010 Other Total
Loans and Available- financial carrying
In millions of RMB Trading receivables for-sale liabilities amount Fair value
Trade and other receivables - 34,370 - - 34, 370 34, 370
Cash and cash equivalents
and pledged deposits - 37,817 - - 37,817 37,817
Other financial assets - - 489 - 489 489
Other non-current assets - 1,056 - - 1,056 1,056
- 73,243 489 - 73,732 73, 732
Loans and borrowings - - - (47,395) (47,395) (47,395)
Financial derivatives (15) - - - (15) (15)
Trade and other payables - - - (106,138) (106,138) (106,138)
(15) - - (153,533) (153,548) (153,548)
Fair values hierarchy
The table below analyses financial instruments carried at fair value, by valuation method.
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data
(observable inputs).
30 June 2011
In millions of RMB Level 1 Level 2 Level 3 Total
Financial derivatives (11) - - (11)
31 December 2010
In millions of RMB Level 1 Level 2 Level 3 Total
Financial derivatives (15) - - (15)
94
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
39 Non-adjusting post balance sheet events
The Xianghe Huanqing City project was acquired through the open market in September
2010, and was developed by Langfang Wan Heng Sheng Ye Real Estate Development Co.,
Ltd., which was a wholly-owned subsidiary of the Group. As at June 30th 2011, the book
value of the project was RMB 218million, and the consideration of land use right was totally
paid off. As the local government had violated the laws in the transfer process of the land use
right, the government rectified its mistakes and decided to rescind the transfer of the land use
right after the reporting period, and to make compensation to the Group to protect the legal
interest. This event will not have significant impact on the consolidated income statement of
the Group.
40 Comparative figures
Certain comparative figures have been reclassified to conform with the current periods’
presentation.
41 Accounting estimates and judgments
Key sources of estimation uncertainty
(i) Impairment provision for properties held for development, properties under development
and completed properties for sale
As explained in notes 3(j) and 3(k), the Group’s properties held for development,
properties under development and completed properties for sale 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 cases for properties held for development and 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.
(ii) 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.
95
China Vanke Co., Ltd.
Financial statements for the six months ended 30 June 2011
42 Possible impact of amendments, new standards and interpretations issued but
not yet effective for the six months ended 30 June 2011
Up to date of issue of the consolidated financial statements, the IASB has issued a number of
amendments, new standards and interpretations which are not yet effective for the six months
ended 30 June 2011 and which have not been adopted in the consolidated 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
Amendments to IFRS 7, Financial instruments:
Disclosures - Transfers of financial assets 1 July 2011
IFRS 9, Financial Instruments 1 January 2013
96
