China Vanke Co., Ltd.
2014 First 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 Wei Bin were not able to attend the board meeting in
person due to their business engagements and had authorised Director Chen Ying to represent them
and vote on behalf of them.
1.4 This quarterly financial report of China Vanke Co., Ltd. (the “Company”) and its subsidiaries (the
“Group”) was in accordance with the International Financial Reporting Standards (“IFRSs”) and
has not been audited. The significant accounting policies adopted in preparing the following financial
information are consistent in all material respects with those adopted by the Group for the year ended
31 December 2013.
1.5 The Company’s Chairman Wang Shi, Director and President Yu Liang, and Director, 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 guidance
（Unit: RMB’000）
As at 31 March 2014 As at 31 December 2013 Changes (%)
Total assets 495,386,717 479,474,818 3.32%
Equity attributable to equity
73,543,696 76,895,983 -4.36%
shareholders of the Company
Share capital (Unit: share) 11,014,968.919 11,014,968,919 -
Net assets per share attributable to
equity shareholders of the 6.68 6.98 -4.36%
Company(Unit: RMB)
1
January to March 2014 January to March 2013 Changes (%)
Revenue 9,007,858 13,195,692 -31.74%
Profit attributable to equity
1,529,479 1,613,904 -5.23%
shareholders of the Company
Net cash generated from operating
(5,579,131) (2,383,261) -134.10%
activities
Net cash generated from operating
(0.51) (0.22) -134.10%
activities per share (Unit: RMB)
Basic earnings per share(Unit: RMB) 0.139 0.147 -5.13%
Diluted earnings per share(Unit: RMB) 0.139 0.147 -5.13%
Decreased by 0.52
Return on equity 1.97% 2.49%
percentage point
Note: The net assets used to calculate the above net assets per share and return on equity refers to the equity
attributable to equity shareholders of the Company, while the net profit used to calculate the earnings per share refers to
the profit attributable to equity shareholders of the Company.
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 31 March 2014, the total number of shareholders of the Company was 736,625
(including 718,506 holders of A shares and 18,119 holders of B shares).
Total number of shareholders as at the end of the reporting period 736,625
Shareholdings of the top 10 shareholders
Classification Percentage of Total Number of Number of
Name of shareholder of shareholding number of restricted pledged or
shareholder s shares held shares held lock-up shares
State-owned
China Resources Co., Limited (“CRC”) 14.94% 1,645,494,720 0 0
legal person
Liu Yuansheng Others 1.21% 133,791,208 0 0
HTHK/CMG FSGUFP – CMG FIRST STATE CHINA Foreign
1.01% 111,756,974 0 0
GROWTH FD shareholder
103 Portfolio of National Social Security Fund, PRC Others 0.96% 105,992,742 0 0
China Minsheng Bank – Yinhua Shenzhen 100 Index
Others 0.87% 95,413,407 0 0
Classified Securities Investment Fund
China Construction Bank – Bosera Theme Industry
Others 0.82% 89,999,092 0 0
Stock Securities Investment Fund
China Life Insurance Company Limited – Dividend
Others 0.75% 83,091,653 0 0
Distribution – Individual Dividend-005L–FH002 Shen
China Pacific Life Insurance Co., Ltd. – Dividend
Others 0.75% 82,131,639 0 0
Distribution – Individual Dividend
CSOP Asset Management Limited－CSOP FTSE China
Others 0.73% 80,646,229 0 0
A50 ETF
ICBC – Rongtong Shenzhen Stock Exchange 100 Index
Others 0.68% 74,504,134 0 0
Securities Investment Fund
Remarks on strategic investor or ordinary legal person
becoming top 10 shareholders after placing of new Nil
shares
Shareholdings of the top 10 holders of non-restricted shares
Name of shareholder Number of non-restricted Class of shares
shares held
China Resources Co., Limited (“CRC”) 1,645,494,720 Ordinary RMB-denominated shares (A shares)
Liu Yuansheng 133,791,208 Ordinary RMB-denominated shares (A shares)
HTHK/CMG FSGUFP – CMG FIRST STATE CHINA
111,756,974 Domestic listed foreign shares (B shares)
GROWTH FD
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103 Portfolio of National Social Security Fund, PRC 105,992,742 Ordinary RMB-denominated shares (A shares)
China Minsheng Bank – Yinhua Shenzhen 100 Index
95,413,407 Ordinary RMB-denominated shares (A shares)
Classified Securities Investment Fund
China Construction Bank – Bosera Theme Industry
89,999,092 Ordinary RMB-denominated shares (A shares)
Stock Securities Investment Fund
China Life Insurance Company Limited – Dividend
83,091,653 Ordinary RMB-denominated shares (A shares)
Distribution – Individual Dividend-005L–FH002 Shen
China Pacific Life Insurance Co., Ltd. – Dividend
82,131,639 Ordinary RMB-denominated shares (A shares)
Distribution – Individual Dividend
CSOP Asset Management Limited－CSOP FTSE China
80,646,229 Ordinary RMB-denominated shares (A shares)
A50 ETF
ICBC – Rongtong Shenzhen Stock Exchange 100 Index
74,504,134 Ordinary RMB-denominated shares (A shares)
Securities Investment Fund
It is not known as to whether there are connections or persons deemed to be acting in
Remarks on the connected relationship or action in
concert under “the Measures for the Administration of the Takeover of Listed
concert of the aforementioned shareholders
Companies” among the above-mentioned shareholders.
Remarks on shareholders involved in securities margin Nil
trading
As at the end of 31 March 2014, the total number of shares of the Company was 11,014,968,919,
including 9,700,013,451 A shares and 1,314,955,468 B shares.
§3 Management Discussion and Analysis
During the reporting period, the sales area of commodity housing in China decreased by 5.7%
year-on-year. One of the main reasons was that commodity housing sales rebounded significantly in
2013, leading to a relatively higher comparative figure for 2014. When compared with the same
period of 2012, the sales area of commodity housing in China in the first quarter of 2014 increased by
33.2%.
In early 2013, the growth rate of housing sales in 14 major cities, namely Beijing, Shanghai,
Shenzhen, Guangzhou, Tianjin, Shenyang, Hangzhou, Nanjing, Chengdu, Wuhan, Dongguan, Foshan,
Wuxi and Suzhou, was higher than the national growth rate. During the reporting period, housing
sales in these cities declined considerably when compared with the same period of 2013. The sales
area of residential properties in the 14 cities in the first quarter of 2014 saw a year-on-year drop of
27.5%, while the sales area of commodity housing to approved pre-sales area of new housing ratio
was 1.0. The new supply and sales were basically balanced. As at the end of March, inventory of
saleable new homes (those that have obtained sales permit but have not yet been sold) in the
above-mentioned 14 cities was 122 million sq m, which was basically the same as that at the end of
2013.
During the reporting period ,the site area supplied and sold in 16 major cities (Shenzhen, Guangzhou,
Dongguan, Foshan, Shanghai, Hangzhou, Nanjing, Suzhou, Ningbo, Beijing, Tianjin, Shenyang,
Dalian, Chengdu, Wuhan and Chongqing) where statistics are accessible by the public decreased by
1.5% and 5.9% respectively, on a year-on-year basis. The land sales in major cities have slowed down
after entering March. Although the average land transaction price remained at a high level, the
proportion of land lots changed hands at a premium decreased when compared to the peak in the third
quarter of last year.
During the reporting period, the Company continued to implement its mainstream positioning and
proactive sales strategy. In the first quarter, the Company achieved an accumulated sales area of
4,150,000 sq m, with a sales amount of RMB54.23 billion, representing year-on-year increases of
11.7% and 24.2% respectively. Among the commodity housing units sold, homes smaller than 144 sq
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m took up 93.8%.
In Guangshen region, the Company realized a sales area of 1,077,000 sq m and sales amount of
RMB14.98 billion. In Shanghai region, the Company realized a sales area of 1,329,000 sq m and sales
amount of RMB19.29 billion. In Beijing region, the Company realized a sales area of 925,000 sq m
and a sales amount of RMB12.49 billion. In Chengdu region, the Company realized a sales area of
819,000 sq m and sales amount of RMB7.46 billion.
There is a certain seasonal trend for project completion and recognition in the property industry. A
majority of the projects are completed and recognised in the second half of the year, especially in the
fourth quarter. Since the amount of project completion and booked area in the first quarter accounted
for a relatively small proportion of the full year’s total, which led to a relatively large year-on-year
change, the booked items for the first quarter were insignificant reference for the outlook for the
full-year operating results. In the first quarter of 2014, the Company's completed area amounted to
984,000, accounting for only 6.6% of the planned area to be completed for the full year, which was
lower than that of previous years. Affected by this, the Company realized a booked area and booked
revenue of 727,000 sq m and RMB8.58 billion respectively for the first quarter, representing
year-on-year decreases of 41.1% and 31.6% respectively. Meanwhile, the Company realized revenue
and net profit of RMB9.01 billion and RMB1.53 billion respectively, representing year-on-year
decreases of 31.7% and 5.2% respectively. The Company expected that the area to be completed for
the full year of 2014 will basically meet the target set at the beginning of the year, while the operating
results are expected to continue to grow steadily in 2014.
During the reporting period, the Company’s net profit margin increased significantly, mainly
attributable to the following reasons: 1) Booked gross profit margin of the Company’s property
business rose by 3.59 percentage points from that of the corresponding period of last year to 31.99%
of the reporting period due to a higher percentage of booked revenue contribution from cities with
high profit margin such as Shanghai and Shenzhen in the first quarter. 2) The Company realized other
net income of RMB537 million in the reporting period, increased by RMB518 million when
compared with the corresponding period last year, which was mainly contributable from income from
collaborative projects through equity transfer and income from disposal of commercial properties
through equity transfer; 3) The share of profit from the Company’s associates and joint ventures
amounted to be RMB236 million, increased by approximately RMB201 million from that in the
corresponding period last year. The Company is actively exploring and promoting light asset
operational model. The scope of cooperation will be broadened in future, and associates and joint
ventures will account for a greater percentage in the Company’s overall operation. The Company will
also be involved in more activities of introducing partners by disposing certain equity interests in a
project, and engaging in the operation of investment properties disposed of through equity transfer.
With light asset operational model, the Company, under normal conditions, still engages in the
management and operation of development projects or investment properties, despite certain equity
interests in these projects or investment properties being disposed of by the Company or the fact that
Company has only a relatively small percentage of shareholding in certain joint-venture projects or
investment properties. As such, the Company can receive a certain amount of management fee, or
request a share of profit higher than its shareholding percentage. Such arrangement is beneficial for
the Company to increase its return on equity.
As at the end of the reporting period, the Company had an area of 17,105,000 sq m sold but not yet
booked stated in the consolidated statements as construction had yet to be completed. This area and its
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corresponding contract amount of approximately RMB195.57 billion represented increases of 19.0%
and 20.5% respectively when compared with those at the beginning of the year.
During the reporting period, the Company acquired 8 new development projects, with a site area
attributable to Vanke's equity holding of approximately 462,000 sq m, representing a planned GFA of
approximately 1,348,000 sq m, and an average land premium basing on floor area of approximately
RMB4,535 per sq m. The Company will continue to pursue prudent land acquisition strategy. While
persevering with strict control of investment risks, the Company will make proper land bank
replenishment according to actual development needs.
In the first quarter, the Company achieved a floor area of housing starts of 4,200,000 sq m, accounting
for 18.8% of the full year plan for housing starts. As the floor area of housing starts will gradually
increase, the Company expects that its floor area of housing starts for the full year will be higher than
that set at the beginning of the year.
As at the end of the reporting period, the Company’s net gearing ratio was 40.9%, while the cash and
cash equivalents including the pledged deposit held by the Company amounted to RMB37.53 billion,
which was more than the sum of short-term borrowings and long-term borrowings due within one
year of RMB27.91 billion. The Company had a sound and solid financial position.
§4 Significant Events
4.1 Significant changes and reasons for such changes in major items of the accounting
statements and financial guidance of the Company
√Applicable □Not applicable
31 December
31 March 2014 Change
Items 2013 Reasons for change
(RMB'000) (+/-)
(RMB'000)
Trade and other receivables 81,681,629 68,218,739 19.73% Expansion of operating scale
Interest in joint ventures 8,107,327 6,897,969 17.53% Increase of joint-venture projects.
Non-current loans and
43,772,083 36,683,128 19.32% Fluctuation of financing structure
borrowings
January-March January-March
Change
Items 2014 2013 Reasons for change
(+/-)
(RMB'000) (RMB'000)
Revenue 9,007,858 13,195,692 -31.74% Decrease in booked sales
Cost of sales 5,704,523 8,807,186 -35.23% Decrease in booked sales
Income tax 818,520 1,122,964 -27.11% Decrease in taxable profits
Share of profits less losses of
246,802 (4,564) 5507.58% Increase in booked sales of associates
associates
Profit attributable to equity
1,529,479 1,613,904 -5.23% Decrease in booked sales
shareholders of the Company
4.2 Progress of significant events and analysis of their impact and solutions
√Applicable □Not applicable
1. A-Share Stock Option Incentive Scheme
On 8 April 2011, the first extraordinary general meeting of the Company passed the Company’s A-Share Stock Option Incentive
Scheme (Revised Draft) and related matters. Implementation of the Company’s A-Share Stock Option Incentive Scheme (“Scheme”)
thus commenced. On 9 May 2011, the registration of the grant of stock options was completed. The Company granted 108,435,000
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stock options to 810 beneficiaries. The abbreviation of the stock options is Vanke JLC1, while the stock option code is 037015.
The initial exercise price of the stock options was RMB8.89. The Company implemented the proposal on dividend distribution for
the year 2010 on 27 May 2011, and distributed a cash dividend of RMB1.0 (including tax) to all shareholders for every 10 existing
shares held. In accordance with the relevant regulations and the resolutions passed at the shareholders meeting, the Board made an
adjustment to the exercise price of the stock options to RMB8.79. The Company implemented the proposal on dividend distribution
for the year 2011 on 5 July 2012, and distributed a cash dividend of RMB1.3 (including tax) to all shareholders for every 10 existing
shares held. The Company made an adjustment to the exercise price according to the provisions. The adjusted exercise price was
RMB8.66. The Company implemented the proposal on dividend distribution for the year 2012 on 16 May 2013, and distributed a
cash dividend of RMB1.8 (including tax) to all shareholders for every 10 existing shares held. The Company made a further
adjustment to the exercise price according to the provisions. The adjusted exercise price was RMB8.48.
On 12 July 2012, the first exercise period of the Scheme commenced. The beneficiaries of the Scheme could exercise 40% of their
options during the exercisable period between 12 July 2012 and 24 April 2014. On 29 May 2013, the second exercise period of the
Scheme commenced. The beneficiaries of the Scheme could exercise 30% of their options between 29 May 2013 and 24 April 2015.
During the reporting period, no options were exercised. Since certain beneficiaries became members of the Supervisory
Committee or left the Company, the total number of stock options granted but not yet exercised decreased to 68,426,799 at the end
of the reporting period.
The introduction of the Scheme complements 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.
2. Change of Listing Location of Domestically Listed Foreign Shares (“B shares”) of the Company and Listing & Trading on
the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”) by Way of Introduction
On 19 January 2013, the Company announced the Proposal (“Proposal”) for Change of Listing Location of Domestically Listed
Foreign Shares of China Vanke Co., Ltd. and Listing & Trading on the Main Board of The Stock Exchange of Hong Kong Limited
by Way of Introduction. On 4 February, the Proposal was passed at the first extraordinary general meeting in 2013. On 7 February,
the Company received a confirmation letter regarding the processing of the application for administrative licence from China
Securities Regulatory Commission. The Company also received a confirmation letter from the SEHK on 15 February. The Company
received the “Reply regarding approval of China Vanke Co., Ltd’s listing on the main board of The Stock Exchange of Hong Kong
Limited” issued by China Securities Regulatory Commission on 3 March 2014 (Zhengjian Xu Ke [2014] No. 239). China Securities
Regulatory Commission approved the Company’s conversion of its B shares to overseas listed foreign shares for listing on the main
board of The Stock Exchange of Hong Kong Limited. The application is currently in progress.
The change of listing location of the Company’s B shares to SEHK is conducive to enhancing the Company’s global visibility, and
enables the Company to leverage global resources and markets to reinforce the Company’s core competitiveness.
4.2.1 Qualified opinion
□Applicable √Not applicable
4.2.2 The signing and implementation of major contracts for daily operation
□Applicable √Not applicable
4.2.3 Others
□Applicable √Not applicable
4.3 Implementation of the undertakings given by the Company, shareholders and beneficial
controllers
√ Applicable □Not applicable
Party who makes the
Undertaking Description Implementation
undertaking
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
China Resources National Company as it did in the past, as long as such CRNC has
Other
Corporation support was beneficial to the Company’s fulfilled its
undertakings
(“CRNC”) development, and that it would remain impartial, undertakings
including but not limited to, in the event of
reviewing investment projects that may lead to
competition between CRNC’s subsidiaries and the
Company, and in the event of any disagreements or
disputes arising from horizontal competition.
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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
Gains/(loss
Initial Percentage Book value as attributable to
Stock Stock es) during
investment of at the end of the equity shareholders
code abbreviation the reporting
amount shareholdings period during the
period
reporting period
600751 Tianjin 143,600.00 0.02% 1,281,000.00 - (15,750.00)
Marine
Shipping
3698.HK Huishang
2,499,147,576.48 8.00% 2,425,768,966.24 - (34,494,901.69)
Bank
Total - 2,499,291,176.48 2,427,049,966.24 - (34,510,651.69)
4.5.3 Investor relations activities such as meetings, communications and visits during the
reporting period
Issues discussed
Type of activities Time Location Approach Parties met and information
provided
Face to Investors including securities companies, (I) Major issues
Barclays meeting 2014.1 Hong Kong
Face funds, etc
Credit Suisse Face to Investors including securities companies, discussed:
2014.1 Hong Kong
meeting Face funds, etc (1) The
Face to Investors including securities companies,
BNP meeting 2014.1 Hong Kong Company’s
Face funds, etc
Nomura Securities Face to Investors including securities companies, daily
2014.1 Hong Kong
meeting Face funds, etc
Face to Investors including securities companies, operations;
UBS meeting 2014.1 Shanghai
Face funds, etc (2)The
Deutsche Bank Face to Investors including securities companies,
2014.1 Beijing
meeting Face funds, etc Company’s
Hong Kong, Face to
development
Annual results Shenzhen Face Investors including securities companies,
2014.3
presentation （Shanghai, funds, individual investors, etc strategies;
Beijing）
(3)The
2014.3 Face to Investors including securities companies,
CLSA meeting Hong Kong Face Company’s
funds, etc
Credit Suisse 2014.3 Face to Investors including securities companies, opinion on the
Hong Kong
meeting Face funds, etc
Standard 2014.3 Face to Investors including securities companies, changes in the
Hong Kong
Chartered meeting Face funds, etc industry.
GF Securities 2014.3 Face to Investors including securities companies,
Guangzhou (II) Major
meeting Face funds, etc
Guotai Junan 2014.3 Face to Investors including securities companies, information
Shanghai
meeting Face funds, etc
2014.3 Face to Investors including securities companies, provided:
Citi meeting Hong Kong
Face funds, etc Published
Credit Suisse 2014.3 Face to Investors including securities companies,
Hong Kong information
meeting Face funds, etc
Note: The above-mentioned meetings included one-on-one meetings, small group meetings and large group including the
presentation. The Company received or met with investors from over 50 companies.
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Shenzhen, Guotai Junan, SWS, First Capital Securities, Company’s
Dongguan, China Securities, Citi, China Galaxy
Guangzhou, Securities, Credit Suisse, Goldman Sachs regular reports.
Foshan, Gaohua, UBS Securities, Orient Securities,
Xiamen, Deutsche Bank, Haitong Securities, GF
Changsha, Securities, BNP, Kim Eng Securities,
During Sanya, Small Changjiang Securities, Macquarie, China
Shanghai, International Capital Corporation Limited,
Securities the Hangzhou, group Minsheng Securities, Standard Chartered
companies reporting Nanjing, Wuxi, or one- Bank, CLSA, Ping An Securities, BOCI,
Xuzhou, etc.
period Nanchang, on-one
Hefei, Wuhu,
Beijing,
Tangshan, Jinan,
Wuhan,
Chengdu,
Chongqing, etc.
China International Fund Management Co.,
Ltd., Morgan Stanley Huaxin Funds, Bosera
Funds, Penghua Fund, Greenwoods Asset
Management, China AMC, Taikang AMC,
China Life, Zhonghai Fund, HSBC Jintrust,
Fortune SG Fund, China Merchants Fund,
HuaAn Funds, Rongtong Fund,
Shenzhen, Dacheng Fund, China Southern Asset
Dongguan, Management, E Fund, China Pacific
Guangzhou, Insurance, Harvest Fund, China Universal
Foshan, Asset Management, Huatai-PineBridge
Fund, Fullgoal Fund, Chongyang, UBS
Xiamen, SDIC Asset Management, New China Asset
Funds and other Changsha, Management, Yinhua Fund , CCB Principal
During Sanya, Small Asset Management, Shinhan Investment
investment Shanghai, Corp., Wanjia Asset, First State
the Hangzhou, group Investments , Och Ziff, William Blair, Bank
companies and of Singapore, BOC Asset Management,
reporting Nanjing, Wuxi, or one-
individual Xuzhou, Lion Global Investors Limited, Muzinich &
period Nanchang, on-one Co, Pinebridge Investments, Wellington,
investors Hefei, Wuhu, BEA Union, UOB AM, Fidelity, UBS AG,
GMO, Balyasny, Alliance Bernstein, T
Beijing, Rowe Pric, GIC Private Limited, ING,
Tangshan, Jinan, Kingdon Capital Mgmt Corp, APG Asset
Wuhan, Management, Discovery Fund, Macquarie
Chengdu, Capital, Capital World, Goldman Sachs
Chongqing, etc. Asset Management, Lynas Capital Ltd,
Blackrock Inv, Vontobel, Cohen and Steers,
Equitas, Constellation, BNY Mellon ARX,
Jupiter Asset Management, Kriya Capital,
Perpetual Funds Management, Alphinity
Investment Management, Argo Investments
Sydney, Arnhem Investment Management,
GE Asset Management, 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) Authority granted by the annual general meeting in respect of continued cooperation with China Resources
The resolutions approved at the 2012 annual general meeting on 20 March 2013 authorized the Board to decide on the continuous
cooperation with China Resources. The validity of the granted authority was adjusted to two years, while the aggregate authorized
amount was adjusted to not more than RMB12.7 billion per year (i.e. not more than 20% of the audited net assets value of the
Company as at the end of 2012). During the reporting period, no new cooperation had been implemented.
After the reporting period, in order to satisfy the development needs of Dongguan Changan Vanke Centre Project, the Company
had applied for a trust loan of RMB750 million with China Resources SZITIC Trust Co., Ltd. for a term of two years, with a fixed rate
of 7.482% per annum. The cost of the trust loan was determined with reference to the prevailing market price level and the
characteristics of the project, and the annual interest rate of the loan shall not be higher than the cost of trust loans obtained by the
Company from an independent third party during the same period. The trust loan can help support the development of Dongguan
Changan Vanke Centre Project and improve the operation efficiency of the project. All the independent directors unanimously
8
approved of the loan. They were of the opinion that the loan and relevant decision-making procedures were in compliance with the
relevant requirements of the Company Law, Securities Law, the Rules Governing Listing of Stocks on the Shenzhen Stock Exchange,
and the Articles of Association of the Company, and were in the interests of the Company and its shareholders as a whole, and did not
prejudice the interests of the Company and other shareholders.
(3) Establishment of internal control
In 2013, the Company continued to adopt a pragmatic internal control approach to establish internal control process.
4.6 Investment in derivatives
√Applicable □Not applicable
In order to limit the risk associated with the fluctuations of interest
Remarks on risk analysis and management of derivative rate, the Company entered into an interest rate swap (“IRS”)
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
paying a fixed rate to the counterparty. In terms of the time limit and
legal risk, etc) 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 and
during the reporting period, as well as the method, related loss during the reporting period amounted to RMB (572,697.83). The
assumptions and parameters used to analyze the fair value of value of the IRS was determined based on the fair value assessed on
derivatives should be disclosed 31 March 2014.
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
Special advice on derivative investment and risk control by instruments such as IRS prevent the possible loss associated with
foreign currency loan in the event of significant fluctuations in interest
independent directors, sponsors and financial advisors 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: RMB)
Contract amount as at
the end of the period as
Contract amount as at Contract amount as Profit/(loss) during
a percentage of the
Type of contracts the beginning of the at the end of the the
Company’s net assets
period period reporting period
as at the end of the
reporting period
Interest rate swap (IRS)
1,828,155,465.00 1,844,707,185.00 (572,697.83) 1.81%
agreement
Total 1,828,155,465.00 1,844,707,185.00 (572,697.83) 1.81%
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Consolidated statement of profit or loss
for the three months ended 31 March 2014
(Expressed in Renminbi Yuan)
2014 2013
Jan.–Mar. Jan.–Mar.
RMB’000 RMB’000
Revenue 9,007,858 13,195,692
Cost of sales (5,704,523) (8,807,186)
Gross profit 3,303,335 4,388,506
Other revenue 77,153 157,093
Other net income 536,924 18,804
Distribution costs (710,555) (623,399)
Administrative expenses (681,143) (589,614)
Other operating expenses (52,555) (29,625)
Profit from operations 2,473,159 3,321,765
Finance costs (252,494) (444,480)
Share of profits less losses of associates 246,802 (4,564)
Share of profits less losses
of joint ventures (10,617) 39,612
Profit before taxation 2,456,850 2,912,333
Income tax (818,520) (1,122,964)
Profit for the period 1,638,330 1,789,369
Attributable to:
Equity shareholders of the Company 1,529,479 1,613,904
Non-controlling interests 108,851 175,465
Profit for the period 1,638,330 1,789,369
Basic earnings per share (RMB) 0.14 0.15
10
Consolidated statement of profit or loss and other
comprehensive income for the three months ended
31 March 2014
(Expressed in Renminbi Yuan)
2014 2013
Jan.–Mar. Jan.–Mar.
RMB’000 RMB’000
Profit for the period 1,638,330 1,789,369
Other comprehensive income (after tax and
reclassification adjustments)
Exchange differences on translation of financial
statements of overseas subsidiaries (76,228) (4,709)
Available-for-sale securities: net movement in
the fair value reserve (56,259) -
(132,487) (4,709)
Total comprehensive income for the period 1,505,843 1,784,660
Attributable to:
Equity shareholders of the Company 1,396,992 1,609,195
Non-controlling interests 108,851 175,465
Total comprehensive income for the period 1,505,843 1,784,660
11
Consolidated statement of financial position
at 31 March 2014
(Expressed in Renminbi Yuan)
31 Mar. 2014 31 Dec. 2013
RMB’000 RMB’000
Non-current assets
Property, plant and equipment 3,495,400 3,475,223
Investment properties 5,673,694 6,366,655
Intangible assets 321,695 263,487
Interest in associates 3,950,757 3,633,457
Interest in joint ventures 8,107,327 6,897,969
Other financial assets 2,560,230 2,572,246
Other non-current assets 9,648,797 10,424,440
Deferred tax assets 3,596,650 3,525,262
37,354,550 37,158,739
Current assets
Inventories 338,824,720 329,731,930
Trade and other receivables 81,681,629 68,218,739
Pledged deposits 1,134,686 1,361,261
Cash and cash equivalents 36,391,132 43,004,149
458,032,167 442,316,079
Current liabilities
Loans and borrowings 27,907,709 32,624,307
Financial derivatives 10,336 11,687
Trade and other payables 305,541,768 287,930,076
Current taxation 7,892,087 8,355,764
341,351,900 328,921,834
Net current assets 116,680,267 113,394,245
Total assets less current liabilities 154,034,817 150,552,984
12
Consolidated statement of financial position
at 31 March 2014 (continued)
(Expressed in Renminbi Yuan)
31 Mar. 2014 31 Dec. 2013
RMB’000 RMB’000
Non-current liabilities
Loans and borrowings 43,772,083 36,683,128
Bonds payable 7,469,032 7,398,392
Deferred tax liabilities 931,567 942,209
Provisions 63,005 46,877
Other non-current liabilities 48,158 42,955
52,283,845 45,113,561
NET ASSETS 101,750,972 105,439,423
CAPITAL AND RESERVES
Share capital 11,014,969 11,014,969
Reserves 62,528,727 65,881,014
Total equity attributable to equity shareholders
of the Company 73,543,696 76,895,983
Non-controlling interests 28,207,276 28,543,440
TOTAL EQUITY 101,750,972 105,439,423
13
Consolidated cash flow statement
for the three months ended 31 March 2014
(Expressed in Renminbi Yuan)
2014 2013
Jan.–Mar. Jan.–Mar.
RMB’000 RMB’000
Cash received from sales of products 29,064,102 32,818,691
Other cash received from business operating
activities 4,224,908 7,224,739
Cash generated from operating activities 33,289,010 40,043,430
Cash paid for purchasing of merchandise and
services (24,901,832) (32,088,269)
Cash paid to employees or paid for employees (1,666,216) (1,628,003)
Cash paid for tax (6,160,984) (6,140,089)
Other cash paid for business operating activities (6,139,108) (2,570,330)
Cash used in operating activities (38,868,140) (42,426,691)
Net cash used in operating activities (5,579,130) (2,383,261)
Proceeds from sales of investments 4,570 31,983
Dividends received 11 78,400
Proceeds from disposal of property, plant and
equipment 51 656
Proceeds from disposal of interest in subsidiaries 752,408 -
Proceeds from other investment activities 471,727 157,507
Cash generated from investing activities 1,228,767 268,546
Acquisitions of property, plant and equipment and
construction in progress (52,253) (24,459)
Acquisitions of interest in associates, joint ventures
and other investments (1,029,217) (121,260)
Acquisitions of subsidiaries, net of cash acquired (483,676) (825,065)
Other cash paid for investing activities (865,218) -
Cash used in investing activities (2,430,364) (970,784)
Net cash used in investing activities (1,201,597) (702,238)
14
Consolidated cash flow statement
for the three months ended 31 March 2014 (continued)
(Expressed in Renminbi Yuan)
2014 2013
Jan.–Mar. Jan.–Mar.
RMB’000 RMB’000
Capital injections from non-controlling interests of
subsidiaries 437,772 347,700
Proceeds from loans and borrowings 16,585,767 11,116,574
Proceeds from issue of corporate bonds - 4,944,738
Cash received from other financing activities - 85,053
Cash generated from financing activities 17,023,539 16,494,065
Repayment of loans and borrowings (14,321,855) (11,872,320)
Dividend paid to equity shareholders of the
Company and Interest paid (2,559,400) (1,687,259)
Cash used in financing activities (16,881,255) (13,559,579)
Net cash generated from financing activities 142,284 2,934,486
Effect of foreign exchange rates 25,426 (8,339)
Net decrease in cash and cash equivalents (6,613,017) (159,352)
Cash and cash equivalents at 1 January 43,004,149 51,120,224
Cash and cash equivalents at 31 March 36,391,132 50,960,872
15
