China Vanke Co., Ltd.
2011 Third Quarterly Report
§1 Important Notice
1.1 The Board, the Supervisory Committee, Directors, members of the Supervisory Committee and
senior management of the Company warrant that in respect of the information contained in this
Quarterly 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 Quarterly Report.
1.2 None of the Directors, members of the Supervisory Committee and senior management fails to
assure or disputes with the authenticity, accuracy and completeness of the contents of this Quarterly
Report.
1.3 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. 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
behalf of him.
1.4 This quarterly financial report of the Company has not been audited.
1.5 The Company’s Chairman Wang Shi, Director and President Yu Liang, and Executive Vice
President and Supervisor of Finance Wang Wenjin declare that the financial report contained in this
Quarterly Report is warranted to be true and complete.
§2 Basic Corporate Information
2.1 Major accounting data and financial indicators
(Unit: RMB)
As at 30 September 2011 As at 31 December 2010 Change(+/-)
Total assets 283,542,338,427 215,984,662,720 31.28%
Shareholders’equity(excluding
46,895,708,485 44,232,676,791 6.02%
non-controlling interests)
Total Shares 10,995,210,218 10,995,210,218 -
Net assets per share 4.27 4.02 6.22%
1
From July to From January to
Change(+/-) Change(+/-)
September 2011 September 2011
Revenue 8,716,003,957 65.39% 27,602,969,484 30.91%
Profit attributable to equity shareholders
606,055,521 31.89% 3,583,910,174 9.53%
of the Company
Net cash inflow from operating activities - - (1,495,378,788) -23.85%
Net cash inflow from operating activities
- - (0.14) -23.85%
per share
Basic earnings per share 0.055 30.95% 0.326 9.40%
Diluted earnings per share 0.055 30.95% 0.326 9.40%
Increase 0.15 Decrease 0.54
Return on equity 1.30% 7.85%
percentage points percentage point
Note: 1. The net assets and net profit used to calculate the above-mentioned indicators refer to the equity attributable to
equity shareholders of the Company and profit attributable to equity shareholders of the Company respectively.
2. The above-mentioned return on equity was calculated using weighted average method.
2.2 Total number of shareholders and shareholdings of the top 10 shareholders of non-restricted
tradable shares as at the end of the reporting period
As at the end of 30 September 2011, the total number of shareholders of the Company was 988,210
(including 964,520 holders of A shares and 23,690 holders of B shares).
Total number of shareholders as at the end of the reporting period 988,210
Shareholdings of the top 10 shareholders of non-restricted tradable shares
Total number of non-restricted tradable
No. Name of shareholders (in full) shares held as at the end of the reporting Class
period
1 China Resources Co., Limited (“CRC”) 1,619,094,766 A Share
2 Liu Yuansheng 133,791,208 A Share
China Construction Bank–Bosera
3 Thematic Sector Equity Securities 123,999,920 A Share
Investment Fund
E Fund Shenzhen Stock Exchange 100
4 123,494,211 A Share
Exchange-Traded Fund
Bosera Value Growth Securities
5 100,000,000 A Share
Investment Fund
Industrial and Commercial Bank of
China–Rongtong Shenzhen Stock
6 92,632,626 A Share
Exchange 100 Index Securities
Investment Fund
103 Portfolio of National Social Security
7 84,499,885 A Share
Fund, PRC
China Life Insurance Company Limited–
8 Dividend Distribution–Individual 76,008,315 A Share
Dividend-005L-FH002 Shen
HTHK/CMG FSGUFP-CMG First State
9 71,304,758 B Share
China Growth FD
10 UBS AG 69,555,899 A Share
As at the end of 30 September 2011, the total number of shares of the Company was 10,995,210,218
shares, including 9,680,254,750 A shares and 1,314,955,468 B shares.
2.3 Bond holdings of the Company’s top 10 bondholders as at the end of reporting period
(1) Name of the top 10 bondholders of 08 Vanke G1 bonds and their bondholdings
No. Bondholder No. of bonds held
New China Life Insurance Company–Dividend Distribution–Individual
1 5,548,262
Dividend–018L –FH002 Shen
2 China Petroleum Finance Co., Ltd. 4,157,662
3 China Pacific Insurance (Group) Co. Ltd. 3,433,312
2
4 China Ping An Property and Casualty Insurance Company Limited – Traditional – 2,698,727
General Insurance Products
5 China Life Insurance Company Ltd. 2,619,042
6 Taiping General Insurance Company Limited 1,003,216
7 China Life Pension Company Limited–Internal Resources 1,000,000
8 CNPC Pension Scheme–ICBC 949,288
China Life Property and Casualty Insurance Company Limited–Traditional–General
9 820,000
Insurance Products
10 China Property & Casualty Reinsurance Company Ltd. 776,162
(2) Name of the top 10 bondholders of 08 Vanke G2 bonds and their bondholdings
No. Bondholder No. of bonds held
1 CCB–ICBC Credit Suisse Credit Tianli Bond Securities Investment Fund 2,096,420
2 ICBC–Harvest Stable Earning Bond Securities Investment Fund 1,641,028
3 China Ping An Trust & Investment Co. Ltd.–CMB Furui Life Individual 1,550,057
4 Bank of Communications–China AMC Bond Investment Fund 1,039,002
5 ICBC Credit Suisse Asset Management Co., Ltd.–ICBC–Assets of Specific Clients 876,141
6 801 Portfolio of National Social Security Fund, PRC 849,518
7 CCB–Fullgoal Tianfeng Surging Income Bond Securities Investment Fund 650,000
8 Agricultural Bank of China Retirement Benefit Liabilities–Agricultural Bank 645,187
9 China Merchants Bank–China AMC Classic Allocation Fund 550,000
10 CNPC Pension Scheme - ICBC 540,158
§3 Management Discussion and Analysis
During the reporting period, supply of commodity housing in major cities gradually increased, as
sales slowed down. In the third quarter, the approved pre-sales area of commodity housing in 14 cities
including Shenzhen, Guangzhou, Dongguan, Foshan, Shanghai, Suzhou, Wuxi, Hangzhou, Nanjing,
Beijing, Tianjin, Shenyang, Chengdu and Wuhan increased by 5.1% when compared with that of the
same period last year, while the sales area in the above-mentioned cities dropped by 20.9%
year-on-year. As a result, the average sales area to average approved pre-sales area ratio (sales
area/approved pre-sales area) of the 14 cities mentioned above dropped to 0.6 in the third quarter.
September was the peak season for the launch of residential units. The approved pre-sales area of
commodity housing in the above-mentioned 14 cities in September increased by 45.6% when
compared with that in August, while the sales area remained flat compared with the previous month.
The increased supply of new housing and slowdown in sales had raised the inventory level of
commodity housing available for sale, with inventories of new house available for sale in certain
cities reaching record high since 2010. Traditionally, the period before, during and after October is the
peak season for the launch of new housing. Hence, it is expected that the supply of new housing will
continue to increase over some time in future, increasing inventory pressure on the market.
The aforesaid changes in the market environment took place as we had predicted.
During the period under review, the property industry continued to face tight capital flow since the
start of the year. From January to September, among the sources of funds for property development
investment in the PRC, domestic loans only accounted for 16.2%, which was the lowest over the years.
Owing to the dual effects of sales slowdown and tightened credit, companies’ investment desire and
capacity had weakened. As the market adjustment continues to deepen, the overall construction
activities may further decline, which may have adverse effect on the supply of housing in the next two
years.
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During the reporting period, the relevant house purchase restrictions already imposed on some cities
remained in place, and such house purchase restrictions were extended to certain second and third tier
cities. The restrictions had bigger impact on investment-driven demand and demand for upmarket
properties. For China Vanke, which focuses on ordinary housing for end-users, the impact was
relatively small. The Company’s sales performance in the third quarter was significantly better than
the market’s average. This advantage of the Company is expected to continue to manifest itself in
future.
During the reporting period, land supply in major cities increased compared with the first and second
quarters. However, affected by the adjustment in the commodity housing market, companies were
getting more cautious in respect of land acquisition. The percentage of premium in the land market
continued to drop, while the number of failed auctions further increased, and most of the land lots
changed hands at reserve price. The above phenomena attested to the Company’s earlier judgment,
and provided to the Company an opportunity for acquiring land at relatively more favourable terms
when compared with those in the first half of the year. Nonetheless, since the current reserve price of
land in major cities has yet to decline significantly, the Company will remain prudent in acquiring
new projects.
In the third quarter, the Company realised sales area of 2,822,000 sq m, with sales amount of
RMB32.07 billion, representing an increase of 0.5% and a decrease of 7.4% respectively from those
of the corresponding period of 2010. The tremendous change in market environment had somewhat
affected the Company’s sales performance. However, the Company’s focus on small and medium
sized, furbished units for end users has put it in an advantageous position, with sales performance
significantly better than the overall market. From January to September 2011, the Company’s
accumulated sales area and sales amount reached 8,412,000 sq m and RMB97.08 billion respectively,
representing increases of 39.9% and 35.9% respectively from those of the corresponding period of
2010.
In the third quarter, the Company realised booked area and booked revenue of 986,000 sq m and
RMB8.42 billion respectively, representing increases of 50.5% and 55.9% year-on-year respectively.
Since the majority of the residential units to be booked for the year 2011 will be recognised in the
fourth quarter, the booked area for the first three quarters only accounted for a relatively small portion.
From January to September 2011, the Company’s booked area and booked revenue amounted to
2,369,000 sq m and RMB26.49 billion respectively, representing increases of 9.7% and 26.6% when
compared with those of the same period last year respectively.
For the first nine months of 2011, the Company realized revenue of RMB27.60 billion, representing
an increase of 30.9% from that of the same period last year. Of the total, the revenue realised in the
third quarter was RMB8.72 billion, representing a year-on-year growth of 65.4%.
For the third quarter, the Company realized net profit of RMB606 million, representing an increase of
31.9% from that of the same period last year. Since the area booked for the first three quarters
continued to be lower than the area sold, while the amount of expenses incurred during the reporting
period mainly corresponded with the scale of operation and sales, the growth in net profit for the first
three quarters was lower than that of booked revenue. From January to September 2011, the
Company realized accumulated net profit of RMB3.58 billion, representing an increase of 9.5% when
compared with that of the corresponding period of 2010. With more projects to be completed and
4
recognized in the fourth quarter, it is expected that the year-on-year growth rate of the booked area for
the full year of 2011 will be significantly higher than that of the first nine months.
Also, since the total area booked was significantly less than the total area sold for the first three
quarters, there was a further increase in the total area sold but not yet booked of the Company. As at
the end of the reporting period, included in the consolidated statements was a total area of 12,080,000
sq m sold but not yet booked, with an aggregate contract amount of approximately RMB138 billion,
representing increases of 18.2% and 16.3% respectively when compared with those in the interim
period.
Due to effective product positioning and active sales promotion, the Company continued to maintain
a healthy inventory structure. As at the end of September, among the Company’s different types of
inventories, completed properties (completed properties ready for sale) amounted to RMB5.53 billion,
accounting for only 2.9%. Such results were attributable to the right prediction made by the Company
at the start of the year about the market trends for the full year. While in the first half of 2011 the
number of residential projects launched in the market as a whole was relatively small, the Company
intended to accelerate its sales activities. Comparing to the market in general, the Company had a
relatively balanced schedule for its project launch for the year. The sales pressure on the Company in
the second half of the year will be lower compared to the pressure of the overall market.
Since sales pressure and inventory pressure on the Company were comparatively lower, the Company
did not see the need to make any downward adjustment to its planned area commencing construction.
From January to September 2011, the floor area commencing construction of the Company amounted
to 11,390,000 sq m, representing 85.7% completion of the full year target. It is expected that the
Company’s actual area commencing construction for the full year may slightly exceed the area
planned at the beginning of the year. Since the construction progress of a small number of projects
was affected by occasional factors, it is expected that the completed area for the full year may be
lower than what had been planned at the start of the year. However, the difference should be very
small.
Under the backdrop of tightened capital flow, the Company maintained a strong financial and cash
position. As at the end of the reporting period, the Company’s cash and cash equivalents amounted to
RMB33.9 billion, which far exceeded the aggregate amount of short-term interest-bearing borrowings
of RMB23.78 billion. The Company’s net gearing ratio continued to remain at a relatively low level
of 30.29% compared with the industry average. Affected by the growth in advance receipts, the
Company’s gearing ratio rose to 79.00% from that of the interim period. Excluding advance receipts,
the Company’s other borrowings actually accounted for 35.68% of its total assets. Of the
interest-bearing borrowings, long-term borrowings accounted for 54.23%. The Company had a solid
financial structure.
Having sufficient cash gives the Company an advantage. Nevertheless, the Company continued to
adhere to its prudent land acquisition principle that “the Company would rather forgo the opportunity
than making wrong acquisition”. During the reporting period, the Company had a total of 18 new
projects, with a site area attributable to China Vanke’s equity holding of approximately 1,149,000 sq
m and corresponding planned GFA of approximately 3,227,000 sq m. In addition, the Company was
involved in an urban redevelopment project. According to the condition of the current planning, the
site area of the project attributable to the Company’s equity holding amounted to approximately
5
15,000 sq m (with a corresponding planned GFA of approximately 92,000 sq m). As at the end of
September, the GFA of projects under planning attributable to China Vanke’s equity holding amounted
to 35,810,000 sq m, which at a reasonable level to meet the Company’s development needs within the
next two to three years. Due to the possibility of continued adjustment in the land market, the
Company will persevere with its prudent investment approach. While ensuring that sound operations
are maintained, the Company will keep an eye on any reasonable investment opportunities for
achieving stable development.
§4 Significant Events
4.1 Significant changes and reasons for such changes in major items of the accounting
statements and financial indicators of the Company
√Applicable □Not applicable
30/9/2011 31/12/2010 Change
Items Reasons for change
(RMB'000) (RMB'000) (+/-)
Investment properties 188,317.00 129,176.20 45.78% Increase in investment properties
Interest in associates 1,917,281.50 1,035,875.90 85.09% Increase in investment for associates entities
Properties under development 129,642,406.45 78,982,068.16 64.14% Increase in newly added projects
Loans and borrowings(current) 23,744,160.65 16,783,690.79 41.47% Change in debt structure
Increase in investment for the development
Trade and other payables 165,013,883.48 106,138,344.68 55.47% of projects with associates and jointly
controlled entities
Jan-Sep 2011 Jan-Sep 2010 Change
Items Reasons for change
(RMB'000) (RMB'000) (+/-)
Increase in sales from property
Revenue 27,602,969.48 21,086,234.89 30.91%
development
Enlargement of sales scale and increase in
Distribution expenses 1,689,365.26 1,006,726.77 67.81% marketing for the opening of new projects
in the fourth quarter
Expansion of the Company and
Administrative expenses 1,286,862.41 887,754.44 44.96% amortization of Employee share-based
compensation reserve
Income tax expense 3,320,042.36 2,107,008.26 57.57% Increase in booked revenue
4.2 Progress of significant events and analysis of their impact and solutions
√Applicable □Not applicable
On 8 April 2011, matters in relation to the Company’s A-Share Stock Option Incentive Scheme (Revised Draft) were
approved at the Company’s first extraordinary general meeting in 2011. The Company had started to implement the scheme
in accordance with the stipulations. On 9 May 2011, the registration of the grant of stock options under the A-Share Stock
Option Incentive Scheme was completed. The abbreviation and code of the stock options are VankeJLC1 and 037015
respectively. The granted stock options are within vesting period during the Reporting Period.
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.
4.3 Implementation of the undertakings given by the Company, shareholders and beneficial
controllers
√ Applicable □Not applicable
6
Undertaking Details Implementation
China Resources National Corporation – 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
CRNC has fulfilled its
Other undertakings long as such support was beneficial to the Company’s development, and that it
undertakings.
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.
4.4 Warning of and explanation for the accumulated net profit from the beginning of the year
to the end of the next reporting period forecast to be a probable loss or to be significantly
differed from that of the corresponding period of the previous year
□Applicable √Not applicable
4.5 Other major events and their explanations
4.5.1 Securities investments
□Applicable √Not applicable
4.5.2 Equity interests held in other listed companies
√Applicable □Not applicable
(Unit: RMB)
Changes in equity
Book Gains/(losses
Initial Percentage attributable to
Stock Stock value as at ) during the
investment of equity shareholders
code abbreviation the end of reporting
amount shareholdings during the reporting
the period period
period
SST Tianjin
600751 Marine Shipping 143,600.00 0.04% 143,600.00 - -
Co., Ltd.
Total 143,600.00 - 143,600.00 - -
Note: 1. Equity interests of SST Tianjin Marine Shipping Co., Ltd held by the Company are legal person shares held
over the years. Up till now, the SST Tianjin Marine Shipping Co., Ltd has not undergone share reform.
4.5.3 Investor relations activities such as meetings, communications and visits during the
reporting period
Issues
Type of discussed and
Time Location Approach Classification of visitors
activities information
provided
CITIC (I) Major
Face to face Investors including securities companies, funds,
Securities 2011.7 Chengdu issues
meeting etc
meeting discussed:
Hongyuan 2011.7 (1) The
Face to face Investors including securities companies, funds,
Securities Shenzhen Company’s
meeting etc
meeting
daily
Qilu Securities 2011.7 Face to face Investors including securities companies, funds,
Qingdao operations;
meeting meeting etc
Huatai United 2011.7 Face to face Investors including securities companies, funds, (2) The
Shenzhen Company’s
meeting meeting etc
d l
7
CITIC
Face to face Investors including securities companies, funds,
Securities 2011.7 Shenzhen
meeting etc
meeting
Hong Kong,
Interim results Shenzhen Face to face Investors including securities companies, funds,
2011.8
presentation (Shanghai, meeting individual investors, etc
Beijing)
Credit Suisse 2011.8 Face to face Investors including securities companies, funds,
Hong Kong
meeting meeting etc
2011.8 Face to face Investors including securities companies, funds,
BNP meeting Hong Kong
meeting etc
Guotai Junan 2011.8 Face to face Investors including securities companies, funds,
Shenzhen
meeting meeting etc
2011.9 Face to face Investors including securities companies, funds,
CLSA meeting Hong Kong
meeting etc
Face to face Investors including securities companies, funds,
UBS meeting 2011.9 Hong Kong
meeting 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, KGI Securities, Goldman Sachs, CICC, Orient
Dongguan, Securities, Guotai Junan, Gaohua, Citi, Morgan
Huizhou, Stanley, UBS, RBS, Merrill Lynch, CLSA, Ping
Guangzhou, An Securities, Guangfa Securities, HuaChuang
Foshan, Securities, Macquarie Securities, Shenjin Wanguo
Zhongshan, Securities, Haitong Securities, Credit Suisse, CCB
Zhuhai, International, JP Morgan, Minsheng Securities,
Xiamen, China Jianyin Investment Securities, CITIC
Sanya, Securities, Guosen Securities, BOC International
Changsha, Securities, Mitsubishi UFJ, SMBC Nikko Inc.,
Shanghai, Research-Works, Religare Capital Markets,
During Hangzhou, Jefferies, Samsung Securities, Keefe, Bruyette &
Small group
Securities the Nanchang, Woods, and DBS Vickers (HK) Ltd., etc.
or
companies reporting Ningbo, Hefei,
one-on-one
period Beijing,
Tianjin,
Shenyang,
Anshan,
Qingdao,
Yantai,
Taiyuan,
Wuhan,
Chengdu,
Chongqing,
Guiyang,
Xi’an
Shenzhen, Bosera Fund, Harvest Fund, Asset Management
Dongguan, Department of CICC, China Universal Asset
Huizhou, Management, Yinhua Fund, Power Pacific
Guangzhou, Corporation, Ltd (鲍尔太平洋), Bank of
Foshan, Communications Schroders, Penghua Fund,
Zhongshan, Dacheng Fund, China Life, E Fund, China AMC,
Zhuhai, Hillhouse Capital, Chongyang Investment, Fortis
Xiamen, Haitong Fund, Fullgoal Fund, Shanghai Goldluxe
Sanya, Investment Ltd. (上海金历投资有限公司),
Changsha, Guangfa Fund, Southern Fund, Guotai AMC,
Fund and other
During Shanghai, Sinolink General Asset Management (国金通用基
investment Small group
the Hangzhou, 金), Hua An Fund, China Merchants Fund,
companies and or
reporting Nanchang, Taikang Life, Rongtong Fund, TIAA-CREF Asset
individual one-on-one
period Ningbo, Hefei, Management, Autonomy Capital, Fortress
investors
Beijing, Investment, Fidelity, BOCOM International, Broad
Tianjin, Peak Investment Advisers Pte Ltd, Chow Tai
Shenyang, Fook, GLG, Korea Investment Management,
Anshan, Resolution Capital, Rioni Capital, RCM, Deka
Qingdao, Investment, Value Partners Ltd., JF Asset
Yantai, Management Limited, TT International, BMP
Taiyuan, Paribas Investment, Kingdon Capital Management,
Wuhan, TPG AXON, Gartmore, Mount Kellet, Mount
Chengdu, Kellet, Manulife, NEUBERGER BERMAN
Chongqing, INVESTMENT MANAGEMENT, Lion Global
8
Guiyang, Investors, Christensen, Duquesne Family Office,
Xi’an Telligent Capital Management, Sylebra Capital
Management, Wellington, GIC,SAC Capital, UBS
Global Asset Management ,Amundi HK, Baring
Asset Mgmt ,Deutsche Asset Mgmt, HSBC
Global, Harvest Global, PineBridge Inv, George
Weiss, Och-Ziff Capital Management, Schroder
Investment Management, Tenax Capital, MRV,
Bluebay Asset Management, Soros, Taurus,
Keywise, Prudential, Blackrock International Ltd,
Capital Group Intl Inc (Guardian), China Asset
Mgmt Co Ltd, China Intl Fund Mgmt Co Ltd,
China Universal Asset Mgmt Co,
CITIC-Prudential Fund Mgmt Co Ltd, Coatue
Mgmt, Fortune SGAM Fund Mgmt Co Ltd,
INVESCO Asia Ltd, Ashmore EMM,RREEF Real
Estate Securities, RREEF Real Estate Securities,
Waddell Capital, Moore Capital, Colonial First
State A M, Thai Focus Equity Fund, Thames River
Capital LLP, and Franklin, etc.
4.5.4 Other major events and their explanations
√ Applicable □Not applicable
(1) The Company did not provide any funds for use by its controlling shareholder and its related parties, nor did the Company
provide any guarantee to third parties in violation of regulations and procedures;
(2) Corporate bonds of the Company
During the reporting period, the Company paid the third-year interest of its bonds, namely “08 Vanke G1” and “08 Vanke G2”.
(3) On 8 April 2011, at the Company’s first extraordinary general meeting in 2011, the Board was granted the authority to forge
cooperation with China Resources (Holdings) Co., Limited and its connected companies (collectively “China Resources”), 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, the amount of 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 granted
authority is valid for one year from the date of passing of the relevant resolution at the shareholders meeting.
During the reporting period, the details of cooperation were yet to work out.
(4) Progress of establishment of internal control
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
implemented the implementation proposal according to the Basic Criteria of Enterprise Internal Control, rectified the
risks of internal control activities, evaluated the defects of the internal control system, and formulated a plan to rectify
the defects of the internal control system. In future, the Company will push ahead with the implementation of the Basic
Criteria of Enterprise Internal Control according to the implementation proposal. Such will enhance internal control and
assessment ability, thereby further improving the Company’s corporate governance.
4.6 Investment in derivatives
√ Applicable □Not applicable
In order to limit the risk associated with the fluctuations of
interest rate, the Company entered into an interest rate swap
(“IRS”) agreement to hedge floating rate foreign currency loan.
The Company would charge the counterparty an interest
Remarks on risk analysis and management of derivative positions
according to a floating rate, in order to pay the floating-rate
during the reporting period (including but not limited to market
interest to the original lender, while paying a fixed rate to the
risk, liquidity risk, credit risk, operational risk and legal risk, etc.)
counterparty.
In terms of the time limit and amount of the foreign currency
loan, IRS limited 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
during the reporting period, as well as the method, related profit or loss during the reporting period amounted to
assumptions and parameters used to analyse the fair value of RMB(10,446,016.47). The value of the IRS was determined
derivatives should be disclosed based on the fair value assessed on 30 September 2011.
9
Remarks on whether there has been a material change in the
accounting policy and accounting measurement principles for the
Nil
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 could ward off the possible
Special advice on derivative investment and risk control by
loss associated with foreign currency loan in the event of
independent directors, sponsors and financial advisors
fluctuations in interest rate. The relevant arrangement of the
Company has been prudent and reasonable.
4.6.1 Derivative positions as at the end of the reporting period
√ Applicable □Not applicable
Unit: RMB000’
Contract amount as at the
Contract amount Contract Profit/loss end of the period as a
Type of contracts as at the beginning amount as at the during the percentage of the Company’s
of the period end of the period reporting period net assets as at the end of the
reporting period
Interest rate swap (IRS)
1,249,109.39 3,106,275.12 (10,446.02) 5.22%
agreement
Total 1,249,109.39 3,106,275.12 (10,446.02) 5.22%
10
Consolidated income statement for the three months ended 30 September 2011
(Expressed in Renminbi Yuan)
Jul-Sep 2011 Jul-Sep 2010
Revenue 8,716,003,957 5,269,980,667
Cost of sales (6,056,107,666) (3,462,667,296)
Gross profit 2,659,896,291 1,807,313,371
Other income 58,956,044 46,946,815
Distribution expenses (732,617,079) (400,325,189)
Administrative expenses (382,193,240) (312,306,496)
Other expenses (46,616,599) (27,242,972)
Results from operating activities 1,557,425,417 1,114,385,529
Finance income 32,631,686 74,176,302
Finance costs (51,620,925) (87,634,546)
Net finance costs (18,989,239) (13,458,244)
Share of profits less losses of associates (7,358,012) (2,819,019)
Share of profits less losses of jointly controlled entities 28,489,380 (6,339,067)
Profit before taxation 1,559,567,546 1,091,769,199
Income tax expenses (705,736,077) (426,944,430)
Profit for the period 853,831,469 664,824,769
Attributable to:
Owners of the Company 606,055,521 459,505,335
Non-controlling interests 247,775,948 205,319,434
Profit for the period 853,831,469 664,824,769
Earnings per share
Basic 0.055 0.042
Diluted 0.055 0.042
Other comprehensive income for the period 45,833,229 22,762,535
Total comprehensive income for the period 899,664,698 687,587,304
Attributable to:
Owners of the Company 651,888,750 482,267,870
Non-controlling interests 247,775,948 205,319,434
11
Consolidated income statement for the nine months ended 30 September 2011
(Expressed in Renminbi Yuan)
Jan-Sep 2011 Jan-Sep 2010
Revenue 27,602,969,484 21,086,234,891
Cost of sales (17,055,039,889) (13,509,556,744)
Gross profit 10,547,929,595 7,576,678,147
Other income 106,617,226 253,601,462
Distribution expenses (1,689,365,264) (1,006,726,766)
Administrative expenses (1,286,862,409) (887,754,439)
Other expenses (119,861,061) (62,397,259)
Results from operating activities 7,558,458,087 5,873,401,145
Finance income 408,241,069 447,777,180
Finance costs (569,212,569) (473,806,265)
Net finance costs (160,971,500) (26,029,085)
Share of profits less losses of associates 22,703,439 14,848,848
Share of profits less losses of jointly controlled entities 6,201,338 70,433,006
Profit before taxation 7,426,391,364 5,932,653,914
Income tax expenses (3,320,042,361) (2,107,008,256)
Profit for the period 4,106,349,003 3,825,645,658
Attributable to:
Owners of the Company 3,583,910,174 3,272,003,908
Non-controlling interests 522,438,829 553,641,750
Profit for the period 4,106,349,003 3,825,645,658
Earnings per share
Basic 0.326 0.298
Diluted 0.326 0.298
Other comprehensive income for the period 134,279,390 (23,439,217)
Total comprehensive income for the period 4,240,628,393 3,802,206,441
Attributable to:
Owners of the Company 3,718,189,564 3,248,564,691
Non-controlling interests 522,438,829 553,641,750
12
Consolidated balance sheet as at 30 September 2011
(Expressed in Renminbi Yuan)
30 Sep 2011 31 Dec 2010
Non-current assets
Property, plant and equipment 1,617,795,475 1,625,695,230
Investment properties 188,316,999 129,176,195
Construction in progress 927,879,068 764,282,141
Interest in associates 1,917,281,496 1,035,875,902
Interest in jointly controlled entities 3,089,275,359 3,374,074,020
Other financial assets 489,207,300 488,565,309
Deferred tax assets 2,093,922,477 1,643,158,028
Other non-current assets 1,055,992,715 1,055,992,715
Total non-current assets 11,379,670,889 10,116,819,540
Current assets
Inventories 59,306,613 93,090,534
Properties held for development 58,041,386,113 49,314,694,209
Properties under development 129,642,406,453 78,982,068,164
Completed properties for sale 5,529,863,819 5,290,716,117
Trade and other receivables 44,990,257,654 34,370,341,244
Cash and cash equivalents 33,899,446,886 37,816,932,912
Total current assets 272,162,667,538 205,867,843,180
TOTAL ASSETS 283,542,338,427 215,984,662,720
CAPITAL AND RESERVES
Share capital 10,995,210,218 10,995,210,218
Reserves 35,900,498,267 33,237,466,573
Total equity attributable to equity
shareholders of the Company 46,895,708,485 44,232,676,791
Non-controlling interests 12,658,043,687 10,353,522,851
TOTAL EQUITY 59,553,752,172 54,586,199,642
13
Consolidated balance sheet as at 30 September 2011 （continued）
(Expressed in Renminbi Yuan)
30 Sep 2011 31 Dec 2010
Non-current liabilities
Loans and borrowings 28,165,708,514 30,611,643,798
Deferred tax liabilities 1,083,278,606 1,086,104,338
Other non-current liabilities 44,832,729 8,816,121
Provisions 40,608,213 41,107,323
Total non-current liabilities 29,334,428,062 31,747,671,580
Current liabilities
Loans and borrowings 23,744,160,653 16,783,690,787
Guaranteed notes payable 31,250,000 -
Financial derivatives 24,619,235 15,054,493
Trade and other payables 164,982,633,475 106,138,344,681
Current taxation 5,871,494,830 6,713,701,537
Total current liabilities 194,654,158,193 129,650,791,498
TOTAL LIABILITIES 223,988,586,255 161,398,463,078
TOTAL EQUITY AND LIABILITIES 283,542,338,427 215,984,662,720
14
Consolidated cash flow statement for the nine months ended 30 September 2011
(Expressed in Renminbi Yuan)
Jan-Sep 2011 Jan-Sep2010
Cash flows from operating activities
Cash receipts from customers 75,167,847,931 54,283,454,889
Cash paid to suppliers (60,877,669,097) (42,941,813,416)
Cash paid to and for employees (2,102,813,719) (1,131,132,831)
Cash paid for other taxes (12,378,906,582) (6,603,238,943)
Cash generated from other operating activities 8,787,555,246 5,511,421,036
Cash used in other operating activities (10,091,392,567) (10,326,054,325)
Net cash used in operating activities (1,495,378,788) (1,207,363,590)
Cash flows from investing activities
Acquisitions of subsidiaries,
net of cash acquired (2,216,619,142) (450,226,495)
Acquisitions of interest in associates, jointly
controlled entities and other investments (786,935,149) (1,155,471,630)
Acquisitions of non-controlling interests (19,477,855) (368,305,267)
Acquisitions of property, plant and
equipment and construction in progress (166,354,600) (56,160,940)
Payment for acquisitions of subsidiaries in previous year (564,892,500) (26,164,230)
Cash used in other investment activities - (993,726,314)
Proceeds from disposals of subsidiaries (42,569,163) 6,519,582
Proceeds from disposal of property,
plant and equipment 636,007 458,787
Proceeds from disposal of interest in
other long term investments 104,150,000 158,403,841
Proceeds from other investment activities 334,048,225 826,706,405
Proceeds from investment income 18,351,601 439,300,965
Net cash used in investing activities (3,339,662,576) (1,618,665,296)
15
Consolidated cash flow statement for the nine months ended 30 September 2011
(Expressed in Renminbi Yuan)
Jan-Sep 2011 Jan-Sep2010
Cash flows from financing activities
Capital injections from non-controlling interests
of subsidiaries 2,802,867,963 1,594,241,499
Proceeds from loans and borrowings 18,851,185,694 21,874,453,038
Repayment of loans and borrowings (14,217,946,400) (8,882,790,882)
Dividends paid to equity shareholder (1,018,124,006) (771,376,582)
Dividends paid to non-controlling shareholder (291,536,325) (332,449,919)
Interests paid (3,226,463,958) (1,949,316,947)
Net cash generated from financing activities 2,899,982,968 11,532,760,207
Net increase in cash and cash equivalents (1,935,058,396) 8,706,731,321
Cash and cash equivalents at 1 January 35,096,935,416 22,002,774,937
Effect of foreign exchange rate changes (12,165,936) 4,181,269
Cash and cash equivalents at balance sheet date 33,149,711,084 30,713,687,527
16
