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个股公告正文

万 科B:2009年年度报告(英文版)

日期:2010-03-02附件下载

    2009 Annual Report
    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 Shirley L. Xiao, Independent Director David Li Ka Fai,
    Independent Director Judy Tsui Lam Sin Lai, Independent Director Qi Daqing attended the board meeting in
    person. Deputy Chairman Song Lin, Director Wang Yin, Director Sun Jianyi and Director Jiang Wei were not
    able to attend the board meeting in person due to their business engagements and had authorised Director Yu
    Liang to represent them and vote on behalf of them at the board meeting. Independent Director Charles Li was
    not able to attend the board meeting in person due to his business engagements and had authorised Independent
    Director Qi Daqing to represent him and vote on behalf of him at the board meeting.
    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 the annual report is warranted to be true and
    complete.
    To Shareholders…………………………………………………………………………….………….…………2
    Basic Corporate Information ………………………………………………………………………………………5
    Accounts and Financial Highlights…………………………………………………………………………………5
    Change in Share Capital and Shareholders…………………………………………………………………….……6
    Directors, Members of Supervisory Committee, Senior Management and Employees……………………………11
    Corporate Governance Structure…………………………………………………………………………………17
    Summary of Shareholders’ Meetings……………………………………………………………….……………18
    Directors’ Report…………………………………………………………………………………………………19
    Report of Supervisory Committee……………………………………………………………………………….52
    Significant Events…………………………………………………………………………………….…………54
    Chronology of 2009…………………………………………………………………………………...…………64
    Financial Report…………………………………………………………………………………………………652
    To Shareholders
    2009 marked another eventful year for the property industry. From a fleeting boom in 2007 to a plunge into
    depression in 2008, and the emergence of a silver lining in 2009, the property industry has gone through
    several cycles of ups and downs within the three years.
    We are now sailing across the immense expanse of open water in the history of property industry. Perhaps
    because of this, we are steering through unprecedented choppy seas. Yet, no matter we pass through
    treacherous narrows or ride giant waves, we should not forget the mission and charted course of our journey.
    Below the swell, there lies the deep sea abyss, which is where the perennial philosophy is found.
    Logic of recovery
    The world economy is experiencing the most rigorous challenge since World War II. Under such a
    tremendous change, hopes for recovery have become a common goal across the world. Many business
    sectors might only saw the sprout of hope in 2009, but the property market in the PRC led the way in
    showing a V-shaped rebound.
    How do we interpret such a phenomenon? And what is the outlook for the PRC property market? However,
    what people concerned and speculated most in the past year were external factors such as revitalisation plan,
    stimulus policies, monetary policy, liquidity, etc.
    No doubt, these were important issues. Some of these factors could produce crucial results at a specific point
    of time, or even in the short run. As early as in the agricultural era, climate changes had significant impact on
    harvest. Thus, should weather observation be the most important task for a diligent farmer?
    Human rationality is limited. In this age of complexity, man apparently does not have the ability to predict
    future. As an enterprise, we are unlikely superior to an ancient farmer in predicting changes – we, in
    operation environment and he, the weather. Focusing on our business is mostly probably a pragmatic
    approach.
    In the 2006 annual report, we had discussed the following issue: the coastal area of China with three major
    economic circles as the centre witnessed the birth of the world’s largest city cluster in history. Hundreds of
    millions of individuals or tens of millions of households were moving to this city cluster. When they arrived,
    their bare hands and wisdom might be their only property, but some day, they would become the masters of
    the city. Provided that the residential property developers had respect for these newcomers and attached
    importance to them and had the skills to serve them, there would be almost unlimited opportunities for
    development for the residential property developers. This is the real secret of the continued prosperity of this
    industry.
    We can use this logic to make a simple interpretation of the high volatility experienced by the industry in the
    past three years. There was still rationality behind the market boom in the first half of 2007, but real
    purchasing power, to certain extent, fell amid the euphoria in the second of the year. As such, the macro
    economic adjustment in 2008 was inevitable even if there had not been any change in the external
    environment. Yet in 2008, the real purchasing power did not change. Customers held off on their purchases
    and built their savings when the market remained uncertain. The increased inventory of property developers
    could be interpreted as accumulation of saleable resources. When the pent-up demand released in 2009, it
    was met by the accumulated saleable inventory, leading to an upsurge in transaction volume.
    Part of the transaction volume in 2009 should have been recorded in 2008. As such, the historical high
    achieved in 2009 was not surprising. If we take the average of the figures of the two years, the transaction
    volume of new housing in the PRC achieved an annualized growth of approximately 10 per cent from 2007
    to 2009, which was close to the average annual growth rate of the economy.
    Along with this logic, we again see the development of the property market as a miniature of an economy.
    Based on this logic, we should not be excited about the record high transaction volume in 2009, nor should
    we worry too much about the potential market contraction in 2010.3
    Regardless of the amount of capital flowing in and out of the residential property market and the proportion
    of investment buyers in home purchase, the ultimate value and meaning of a property is that people live
    inside. As such, there are two eternal questions that residential property developers have to deal with. First,
    explore and satisfy any unfulfilled demand; second, try to use fewer resources to meet repeated demand.
    Despite the twists and turns in the past few years, China Vanke had been the world’s largest residential
    property developer for two consecutive years. The Company should not worry about the gains and losses
    from the market’s ups and downs, nor should it indulge itself in the temporary expansion in operation. Actual
    demand and real purchasing power are the fundamental drivers of recovery and continual development of an
    industry. The ability to maximise customers’ satisfaction with the minimal resources is the ultimate key to an
    enterprise’s competitiveness. There is no exception to the residential property industry nor to any other
    industry.
    Dancing pace of a city
    The PRC is going through the most rapid urbanisation in history as well as the largest scale of migration in
    the history of humankind, which provides the PRC residential property industry with a rarely seen
    opportunity. We have mentioned this point repeatedly in our previous reports and, needless to say, it has
    gained wide social recognition.
    As an enterprise, it is absolutely not enough to have an overall direction, source of confidence and room for
    creative thinking. What we need in addition are clearer and detailed analysis and judgment.
    People converge in a city to pursue a better life. Wealth and happiness are not only derived from the growth
    in basic material wealth, but also from diverse lifestyle and experiences. However, in view of the economies
    of scale achieved in production, logistics, channels as well as knowledge and information, the increasingly
    differentiated and diverse consumer demand, and the more complex and sophisticated division of labour can
    only be satisfied and achieved by the convergence effects of a densely populated area.
    On the other hand, when more people gather together, the city becomes more crowed, and the living space
    gets smaller. The paradox between economic efficiency and living space is eternal. Therefore, the location
    and pattern of a population convergence will change under different backgrounds and in different historical
    periods; meanwhile, the improvement and technical innovation of transportation, logistics and information
    communication also continue to contribute to the changing urbanisation patterns.
    Hong Kong offers a thought-provoking case. As the most developed city in the PRC, the middle-class
    income in Hong Kong is much higher than that of any other city in mainland China, but the average living
    space per capita of Hong Kong’s middle class may be less than that of any other city in mainland China. This
    could not be simply explained by population density alone, as the population density in Shenzhen has
    surpassed that of Hong Kong. Finance and other high-end services industry are the most important sectors of
    Hong Kong; working efficiency in Hong Kong may be one of the highest in the world – this implies that cost
    per unit of time in Hong Kong may be the highest in the PRC. Perhaps, this is a more reasonable explanation.
    The PRC will have more cities developed on a par with Hong Kong in the future, but not every city will
    become another Hong Kong. Changes in specialisation and differentiation of cities have gone almost
    unnoticed in recent years, but are still far from completion. In the coming years, these will determine the
    urbanisation pattern of the property industry. In those metropolitans with the most expensive cost per unit of
    time, railways and even lifts will become the most important transportation tools; the pure residential
    communities will cease to be the mainstream of architecture, as replaced by city complexes.
    In the past few years, the PRC economy leveraged global trade to achieve rapid growth. The interregional
    migration in the PRC, where people moved from the inland to the coastal regions, from low-density to highdensity
    cities, was a typical example of the “Matthew effect”. However, the global financial crisis has posed
    a challenge to this highly export-oriented economy. As a huge economy with a vast territory, the PRC needs
    to rely on domestic demand and supply to sustain its economic development. In inland China, there may
    emerge more industry centres, trade centres, logistic centres, and even information centres.
    The construction of high-speed railway and inter-city transportation network has shortened the distance
    between cities, which will accelerate the formation of city cluster, driving the development of regions
    adjacent to large metropolitans, and even leading to reverse migration from core cities to satellite cities.4
    The elderly population is now growing rapidly. For those people who withdraw from a busy work life and
    start to enjoy life after retirement, they can reconsider the option of whether to live in a crowded city or not.
    With basic material needs being satisfied, indulging in beautiful landscapes or even a temporary escape from
    the hustle and bustle of a city become a popular demand. Segmental markets such as those for housing for
    the elderly, holiday resorts, etc are emerging.
    The Company’s past success and current market position were attributable to its accurate capture of the
    direction of city development. The Company will not waver from its principle of “development in line with
    the city’s” but, facing a new situation, it will need to reconsider many issues.
    “Better city, better life” is the theme of Shanghai EXPO. Therefore, China Vanke will adopt the idea of
    “Better city, better life” as the theme of the Company for this year. It is not only an inspiring statement, but
    also a thought-provoking question, requiring us to work all-out to figure it out and answer.
    Dreams of being green
    In November 2009, just before the world-focused 2009 Copenhagen Climate Change Global Summit, the
    PRC government formally announced its emissions reduction target in the medium term. This becomes an
    important page of 2009 in the economic development history of the PRC.
    To Chinese enterprises, global warming and low carbon economy are not just an imported concept
    mentioned in the newspapers, but will have far-reaching impact on the development of almost all the
    industries, including the property sector. As China is undergoing highly rapid urbanisation, it has the most
    active construction industry in the world. It is therefore imperative to lift the energy saving and
    environmental friendly standards in construction.
    According to statistics, energy consumption per unit GFA in the PRC may be two to three times that of
    developed countries. Over 80% of new buildings and more than 95% of building stock are high-energy
    consumption buildings. Pursuant to “2008 research report on China’s annual development of energy saving
    in construction”, the energy consumption of operation of rural and urban buildings in the PRC accounted for
    approximately 25.5% of the country’s total amount of commodity energy, and the energy consumption ratio
    in the construction industry would surge higher if we take into account the energy consumed during the
    building process.
    Energy saving is an integral component of green construction, but does not represent it. Man spends most of
    his life in building. Among the man-made products produced and used by mankind, buildings are most likely
    the biggest in size and the heaviest. To certain extent, human’s impact on Mother Nature through his
    activities and his use of natural resources are, directly or indirectly, related to building. Once a building has
    been built, the activities of the people it serves and the ways the people utilise natural resources are then
    basically determined.
    The emergence of green concept reflects that man reconsiders his own development. When the carrying
    capacity of the Nature increasingly becomes an important factor for restraining human development, the
    impact of human activity on the Nature is increasingly similar to that on another person. When one’s
    freedom interferes with the other’s, it gives rise to rules, rights and obligations. Whether it is by law or the
    value of resources, the cost of the impact that human activity has on the Nature is being re-determined. This
    will gradually affect every person’s interest.
    As such, to residential property developers, to “go green” is not only a lofty idea, but is also closely tied with
    their customer’s interest in the future. Residential property developers’ ability to research and develop green
    buildings, as well as ability to develop and maintain green communities will play a key role in product
    competitiveness and may become important elements to compete in the market in the future as other
    products and services are becoming increasingly homogenous.
    However, the conversion of the green competitive advantage into revenue clearly shown on the financial
    statements will not occur in 2010, nor in the next two to three years. But as an ongoing business concern,
    China Vanke will strive to ensure that when this conversion takes place, customers of the Company will be5
    the first to enjoy products and services meeting the requirements of green standards and shareholders of
    China Vanke will obtain the maximum benefit from the green economy.
    Since its establishment, the Company has the good fortune to gain the continued support of a group of
    investors sharing the same vision. In this volatile era, shareholders’ understanding and trust are the greatest
    motivation for China Vanke to move ahead unswervingly from its vision and belief.
    II. Basic Corporate Information
    1. Company Name (Chinese): 万科企业股份有限公司
    Company Name (English): China Vanke Co., Ltd. (“Vanke”)
    2. Legal representative: Wang Shi
    3. Secretary of the Board: Tan Huajie
    E-mail address: IR@vanke.com
    Securities Affairs Representative: Liang Jie
    E-mail address: IR@vanke.com
    4. Contact Address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the
    People’s Republic of China
    5. Telephone number: 0755-25606666
    Fax number: 0755-25531696
    6. Registered address: Vanke East Coast Buildings C02, 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
    7. Website: www.vanke.com
    E-mail address: IR@vanke.com
    8. Media for disclosure of information: “China Securities Journal”, “Securities Times”, “Shanghai Securities
    News” and an English medium in Hong Kong.
    Website for publication of annual reports: www.cninfo.com.cn
    9. Place for annual report collection: The Office of the Company’s Board of Directors
    10. Stock exchange on which the Company’s shares are listed: Shenzhen Stock Exchange
    11. Company’s share abbreviation and stock codes on the stock exchange: Vanke A, 000002
    Vanke B, 200002
    12. First registration date of the Company: 30 May 1984; location: Shenzhen
    Date of change in registration: 19 September 2008; location: Shenzhen
    13. Corporate legal person business registration no.: 440301102900139
    14. Taxation registration code: Local taxation registration code: 440304192181490
    State taxation registration code: 440301192181490
    15. Organisation code: 19218149-0
    16. The name and address of the certified public accountants appointed by the Company:
    KPMG Huazhen Certified Public Accountants: 8/F, Office Tower E2, Oriental Plaza, 1 East Chang An
    Avenue, Beijing
    III. Accounts and Financial Highlights
    1. Three-year financial information summary (Unit: RMB)6
    2009 2008 2007
    Revenue 46,047,893,250 38,619,214,077 33,486,560,759
    Operating profit 9,095,535,238 8,844,809,759 9,848,471,908
    Share of profits less losses of associates and jointly controlled entities 541,860,863 209,735,863 128,643,367
    Profit before income tax 9,293,002,888 8,420,227,338 9,628,685,644
    Taxation -2,862,995,349 -3,780,358,185 -4,311,184,826
    Profit for the year 6,430,007,539 4,639,869,153 5,317,500,818
    Profit attributed to minority interests -1,100,269,812 -606,699,125 -473,265,324
    Profit attributed to Equity shareholders of the Company 5,329,737,727 4,033,170,028 4,844,235,494
    Basic earnings per share 0.48 0.37 0.45
    Diluted earnings per share 0.48 0.37 0.45
    Dividend per share 0.07 0.05 0.10
    2. Impact of IFRS Adjustments on Net Profit (Unit: RMB)
    Items Net profit for 2009
    As determined pursuant to PRC accounting standards 5,329,737,727
    As determined in conformity with IFRS 5,329,737,727
    IV. Change in Share Capital and Shareholders
    1. Change in Share Capital
    (1) Change in the shares of the Company (Unit: share, as at 31 December 2009)
    31 December 2008 Increase / decrease
    (+, -)
    31 December 2009
    Class of Share
    Quantity Percentage of
    shareholding
    Others
    (Note 1 & 2) Quantity
    Percentage
    of
    shareholdin
    g
    I. Restricted Shares
    1. State-owned and
    State-owned legal person
    shares
    264,000,000 2.40% -264,000,000 0 0%
    2. Shares held by domestic
    legal persons
    3. Shares held by domestic
    natural persons 26,037,098 0.24% -1,877,258 24,159,840 0.22%
    4. Shares held by foreign
    investors
    Total number of restricted
    shares 290,037,098 2.64% -265,877,258 24,159,840 0.22%
    II. Non-restricted Shares
    1. RMB-denominated
    ordinary shares (A shares) 9,390,217,652 85.40% 265,877,258 9,656,094,910 87.82%
    2. Domestic listed foreign
    shares (B shares) 1,314,955,468 11.96% 1,314,955,468 11.96%
    Total number of
    non-restricted shares 10,705,173,120 97.36% 265,877,258 10,971,050,378 99.78%
    III. Total Number of Shares 10,995,210,218 100.00% 0 10,995,210,218 100.00%
    Notes: Details on the change in the Company’s share capital are as follows:
    (1) During the reporting period, the Shenzhen office of China Securities Depository & Clearing Corporation Limited, according to
    regulations, lifted the selling restrictions on certain restricted shares held by senior management, leading to a decrease of 1,877,258
    shares in the number of restricted tradable shares held by the Company’s domestic natural persons and a corresponding increase in
    the Company’s non-restricted tradable shares.
    (2) During the reporting period, the selling restrictions on the 264,000,000 restricted shares from 2006 private placing held by
    China Resources Co., Limited (“CRC”) were lifted, leading to a corresponding decrease in the number of State-owned and Stateowned
    legal person restricted tradable shares of the Company and a corresponding increase in the Company’s non-restricted
    tradable shares.7
    Change in Restricted Shares
    Unit: share
    Name of
    shareholder
    Number of
    restricted shares
    held at the
    beginning of the
    year
    Number of
    lifted restricted
    shares during
    the year
    Number of
    restricted
    shares
    increased
    during the year
    Number of
    restricted
    shares held at
    the end of the
    year
    Reasons for selling
    restriction
    Date of release
    of lock-up
    period
    CRC 264,000,000 264,000,000 0 0 Private placing of
    restricted shares 2009-12-29
    Wang Shi 6,419,667 1,192,602 0 5,227,065 Chairman
    Yu Liang 3,995,399 332,539 0 3,662,860 Director, senior
    management staff
    Ding Fuyuan 1,901,035 352,117 0 1,548,918
    Member of
    Supervisory
    Committee
    Sun Jianyi 519,177 0 0 519,177 Director
    Zhang Li
    1,036,204
    0 0
    1,036,204 Member of
    Supervisory
    Committee
    Liu Aiming 1,650,978 0 0 1,650,978 Senior management
    staff
    Ding Changfeng 1,487,660 0 0 1,487,660 Senior management
    staff
    Xie Dong 1,487,660 0 0 1,487,660 Senior management
    staff
    Zhang Jiwen 1,548,950 0 0 1,548,950 Senior management
    staff
    Mo Jun 1,548,950 0 0 1,548,950 Senior management
    staff
    Xu Hongge 1,650,978 0 0 1,650,978 Senior management
    staff
    Shirley L. Xiao 1,446,849 0 0 1,446,849 Director, senior
    management staff
    Wang Wenjin 1,343,591 0 0 1,343,591 Senior management
    staff
    The Shenzhen
    office of China
    Securities
    Depository &
    Clearing
    Corporation
    Limited,
    according to
    regulations,
    lifted the
    selling
    restrictions on
    certain
    restricted
    shares held by
    senior
    management
    Total 290,037,098 265,877,258 0 24,159,840 - -
    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) Issue and listing of shares
    A. Issue of shares and derivative securities in the past three years
    Issue of corporate bonds
    Approved by Zhengjian Xu Ke [2008] No. 1056 documents of China Securities Regulatory Commission
    (“CSRC”), the Company issued an announcement on 2 September 2008 that it would make a public issue of
    corporate bonds with a par value not exceeding RMB5.9 billion. The corporate bonds in this issue were
    classified into secured bonds and unsecured bonds. Both of them bore a fixed interest rate with a 5-year
    maturity. The issuer of the unsecured bonds had the right to raise the coupon rate at the end of the third year
    of the maturity period, while investors had the right to resell their bonds. Pursuant to the feedback on the
    price, the coupon rate of the Company’s secured bonds was 5.50%, and that of the unsecured bonds was
    7.00%. The issue was completed on 9 September 2008 and the actual size of the issue of secured bonds was
    RMB3 billion, while the actual size of the issue of unsecured bonds was RMB2.9 billion. The Company’s
    corporate bonds started to trade on the Shenzhen Stock Exchange on 18 September 2008. The stock codes of
    the Company’s secured bonds and unsecured bonds are 112005 and 112006 respectively and their
    abbreviations are 08 VankeG1 and 08 VankeG2 respectively.
    During the year under review, there was no change in the number of issued corporate bonds.
    Public issue of A shares
    Approved by the CSRC Zhengjian Fa Xing Zi [2007] No. 240 documents, on 22 August 2007, the Company
    issued a prospectus for its public issue of new A shares and began to prepare for the public issue of the new
    A shares. The existing shareholders of A shares had pre-emptive right to purchase A shares of the new issue.
    The remaining balance of the new issue would be offered at a fixed price through on-line and off-line8
    subscription. The issue price was RMB31.53 per share. The number of new A shares of this issue was
    317,158,261 shares, raising a total amount of proceeds of RMB9,999,999,969.33. The net proceeds, after
    deducting issue expenses, were RMB9,936,601,701.22.
    On 5 September 2007, the newly issued A shares were listed on the Shenzhen Stock Exchange.
    B. During the year under review, there was no change in the Company’s total number of shares.
    C. As at the end of the year under review, the Company did not have any internal employee shares.
    2. Information on Shareholders (as at 31 December 2009)
    (1) Information on shareholders
    Unit: share
    Total number of shareholders 1,487,388 (A shares: 1,446,970, B shares: 40,418)
    Shareholdings of the top 10 shareholders
    Name of shareholder
    Classification
    of
    shareholder
    Percenta
    ge of
    sharehol
    dings
    Total
    number of
    shares held
    Number of
    restricted
    shares held
    Number of
    pledged or
    lock-up shares
    CRC State-owned
    legal person 14.73% 1,619,094,766 0 0
    China Life Insurance Company Limited– Dividend
    Distribution–Individual Dividend- 005L-FH002 Shen Others 1.67% 184,121,543 0 0
    Liu Yuansheng Others 1.22% 133,791,208 0 0
    Rongtong Shenzhen Stock Exchange 100 Index
    Securities Investment Fund Others 0.91% 99,575,114 0 0
    Toyo Securities Asia Limited-A/C client Foreign
    shareholder 0.80% 87,455,642 0 0
    E Fund Shenzhen Stock Exchange 100 Exchange-
    Traded Fund (E Fund Securities Funds (2009) 947)
    (易方达深证100交易型开放式指数证券投资基金
    (易方证基(2009)947))
    Others 0.79% 87,047,066 0 0
    HTHK/CMG FSGUFP-CMG First State China
    Growth FD
    Foreign
    shareholder 0.75% 82,406,712 0 0
    Bosera Tertiary Industry Growth Stock Securities
    Investment Fund Others 0.73% 80,000,000 0 0
    E Fund Shenzhen Stock Exchange 100 Exchange-
    Traded Fund (E Fund Securities Funds (2006) 20)
    (易方达深证100交易型开放式指数证券投资基金
    (易方证基(2006)20))
    Others 0.67% 74,032,782 0 0
    Bosera Emerging Growth Fund Others 0.64% 70,000,000 0 0
    Shareholdings of the top 10 shareholders of non-restricted shares
    Name of shareholder Number of non-restricted
    shares held
    Class of shares
    CRC 1,619,094,766 Ordinary RMB-denominated shares
    (A shares)
    China Life Insurance Company Limited– Dividend
    Distribution–Individual Dividend- 005L-FH002 Shen 184,121,543 Ordinary RMB-denominated shares
    (A shares)
    Liu Yuansheng 133,791,208 Ordinary RMB-denominated shares
    (A shares)
    Industrial and Commercial Bank of China -Rongtong
    Shenzhen Stock Exchange 100 Index Securities
    Investment Fund
    99,575,114 Ordinary RMB-denominated shares
    (A shares)
    Toyo Securities Asia Limited-A/C client 87,455,642 Domestic listed foreign shares
    (B shares)
    E Fund Shenzhen Stock Exchange 100 Exchang-
    Traded Fund (E Fund Securities Funds (2009) 947)
    (易方达深证100交易型开放式指数证券投资基金
    (易方证基(2009)947))
    87,047,066 Ordinary RMB-denominated shares
    (A shares)
    HTHK/CMG FSGUFP-CMG First State China
    Growth FD 82,406,712 Domestic listed foreign shares
    (B shares)
    Bosera Tertiary Industry Growth Stock Securities
    Investment Fund 80,000,000 Ordinary RMB-denominated shares
    (A shares)
    E Fund Shenzhen Stock Exchange 100 Exchange- 74,032,782 Ordinary RMB-denominated shares9
    Traded Fund (E Fund Securities Fund (2006) 20)
    (易方达深证100交易型开放式指数证券投资基金
    (易方证基(2006)20))
    (A shares)
    Bosera Emerging Growth Fund 70,000,000 Ordinary RMB-denominated shares
    (A shares)
    Remarks on the connected relationship or action in
    concert of the aforementioned shareholders
    E Fund Shenzhen Stock Exchange 100 Exchange-Traded Fund (E Fund
    Securities Funds (2009) 947) and E Fund Shenzhen Stock Exchange 100
    Exchange-Traded Fund (E Fund Securities Funds (2006) 20) are funds managed
    by E Fund Management Co., Ltd; Bosera Tertiary Industry Growth Stock
    Securities Investment Fund and Bosera Emerging Growth Fund are funds
    managed by Bosera Fund Management. 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 shareholders.
    (2) Number of shares held by the top 10 shareholders of restricted shares and the conditions of selling
    restrictions
    Unit: Share
    No.
    Name of
    shareholder of
    restricted shares
    Number of
    restricted
    shares held
    Date on which
    listing and
    trading may
    commence
    Number of new
    shares that may
    be listed and
    traded
    Conditions of selling restrictions
    1 Wang Shi 5,227,065
    2 Yu Liang 3,662,860
    3 Liu Aiming 1,650,978
    4 Xu Hongge 1,650,978
    5 Zhang Jiwen 1,548,950
    6 Mo Jun 1,548,950
    7 Ding Fuyuan 1,548,918
    8 Ding Changfeng 1,487,660
    9 Xie Dong 1,487,660
    10 Shirley L. Xiao 1,446,849
    —— ——
    The Shenzhen office of China Securities
    Depository & Clearing Corporation Limited,
    according to relevant regulations, put selling
    restrictions on the shares held by the senior
    management of the Company.
    (3) Controlling shareholders and beneficial controllers
    There were neither controlling shareholders nor beneficial controllers in the Company, and this situation
    remained the same during the year under review.
    (4) The single largest shareholder
    As at the end of the year under review, CRC was the single largest shareholder of the Company, holding an
    aggregate of 1,619,094,766 A shares of the Company, which represented 14.73 per cent of the total number
    of the Company’s shares.
    CRC was promoted and established by China Resources National Corporation (“CRNC”) in June 2003, with
    Mr Song Lin as its legal representative. CRC’s major assets include 100 per cent equity interests in China
    Resources (Holdings) Co., Ltd. (“CRH”) and other assets in the PRC. Its core businesses include
    manufacturing and distribution of consumer goods, property and related industries, infrastructure facilities
    and public utilities. The registered address of CRC is China Resources Building, No. 8 Jianguomen North
    Avenue, Dongcheng District, Beijing. CRC has a registered capital of approximately RMB16,467 million.
    CRNC holds 16,464,463,526 state-owned shares in CRC, representing 99.984212 per cent of CRC’s total
    share capital. The other four promoters, namely COFCO, China Minmetals Corporation, Sinochem
    Corporation and China Huaneng Group, each owns 650,000 state-owned legal person shares in CRC,
    representing 0.003947 per cent of CRC’s total share capital respectively.
    CRNC has a registered capital of approximately RMB9,662 million. Its major asset is the equity interests in
    CRC. It is under the direct supervision of the State-owned Assets Supervision and Administration
    Commission of the State Council. Mr Song Lin is the legal representative of CRNC.
    The following chart shows the equity relationship between the single largest shareholder and the Company:10
    3. Bond holdings of the Company’s bondholders (as at 31 December 2009)
    (1) Name of the top 10 bondholders of 08 Vanke G1 bonds and their bond holdings
    No. Bondholder
    No. of bonds
    held
    Percentage of
    bond holdings
    1 New China Life Insurance Company–Dividend Distribution–Individual Dividend-018LFH002
    Shen
    5,548,262 18.49%
    2 China Petroleum Finance Co., Ltd 4,157,662 13.86%
    3 China Pacific Insurance (Group) Co., Ltd. 3,433,312 11.44%
    4 China Life Insurance Company Limited 2,619,042 8.73%
    5 China Ping An Life Insurance Company Limited – Traditional – General Insurance
    Products
    2,218,727 7.40%
    6 China Life Property and Casualty Insurance Company Limited –Traditional – General
    Insurance Products
    1,820,000 6.07%
    7 China Life Pension Company Limited – Internal Resources 1,000,000 3.33%
    8 China Property & Casualty Reinsurance Company Ltd. 776,162 2.59%
    9 Ping An Property and Casualty Insurance Company of China –Investment-oriented
    Insurance Products
    751,630 2.51%
    10 Generali China Life Insurance Co., Ltd – Investment-linked Insurance Products – Stock
    Account
    713,500 2.38%
    Note: China Ping An Life Insurance Company Limited, which manages “China Ping An Life Insurance Company Limited–
    Traditional–General Insurance Products”, and Ping An Property and Casualty Insurance Company of China, which manages
    “Ping An Property and Casualty Insurance Company of China–Investment-oriented Insurance Products”, are subsidiaries of
    Ping An Insurance (Group) Company Of China Limited. China Life Pension Company Limited, which manages “China Life
    Pension Company Limited–Internal Resources”, is a majority-owned subsidiary of China Life Insurance Company Limited.
    China Life Property and Casualty Insurance Company Limited and China Life Insurance Company Limited, which manage
    “China Life Property and Casualty Insurance Company Limited–Traditional–General Insurance Products”, are majorityowned
    subsidiaries of China Life Insurance (Group) Company. 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
    99.984212%
    14.73%
    100%
    CRNC
    CRC
    The Company
    State-owned Assets
    Supervision and
    Administration Commission11
    No.
    Bondholder No. of bonds held Percentage of
    bond holdings
    1 ICBC Credit Suisse Credit Tianli Bond Securities Investment Fund 2,346,450 8.09%
    2 ICBC Credit Suisse Asset Management Co., Ltd – ICBC – Assets of Specific
    Clients(工银瑞信基金公司-工行-特定客户资产)
    2,271,824 7.83%
    3 China National Machinery Import & Export Corporation 1,946,689 6.71%
    4 206 Portfolio of National Social Security Fund, PRC 1,431,065 4.93%
    5 Fullgoal Tianfeng Surging Income Bond Securities Investment Fund 1,364,770 4.71%
    6 Bank of Communications Schroder Principal-Protected Mixed Securities
    Investment Fund
    1,238,331 4.27%
    7 801 Portfolio of National Social Security Fund, PRC 959,778 3.31%
    8 ChinaAMC Strategic Select Flexible Allocation Mixed Securities Investment Fund
    (华夏策略精选灵活配置混合型证券投资基金)
    790,609 2.73%
    9 Harvest Stable Growth Open-end Securities Investment Fund 709,798 2.45%
    10 CITIC Securities Ltd – CITIC – CITIC Securities Bond Selected Asset
    Management Scheme
    705,987 2.43%
    Note: “ICBC Credit Suisse Credit Tianli Bond Securities Investment Fund” and “ICBC Credit Suisse Asset Management Co.,
    Ltd– Assets of Specific Clients” are managed by ICBC Credit Suisse Asset Management Co., Ltd. Citic Securities Company
    Limited, which manages the “CITIC – CITIC Securities Bond Selected Asset Management Scheme”, is the controlling
    shareholder of China Asset Management Company Limited, which manages the “ChinaAMC Strategic Select Flexible
    Allocation Mixed Securities Investment Fund”. 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.
    V. Directors, Members of Supervisory Committee, Senior Management and Employees
    1. Directors, Supervisors and Senior Management
    (1) Basic information
    Brief introduction to directors
    Wang Shi, male, born in 1951. He joined the military force in 1968. Wang Shi changed his career in 1973
    and worked in the Water and Electrical supply department of Zhengzhou Railway. Wang Shi graduated from
    Lanzhou Railway College in 1978 majoring in water supply studies. After graduation, he had worked for
    Guangzhou Railway Bureau, Foreign Trade and Economic Cooperation Committee of Guangdong Province,
    and Shenzhen Special Region Development Company. In 1984, he established “Shenzhen Exhibition Centre
    of Modern Science and Education Equipment”, the predecessor of China Vanke, and acted as General
    Manager. He became Chairman and General Manager of China Vanke Co. Ltd. in 1988. Mr Wang no longer
    acted as the General Manager with effect from 1999. At present, he is the Chairman of the Company. Mr
    Wang is also a director of Sohu.com Inc, and an Independent Director of China Resources Land Limited
    (“CRL”), Shanghai Metersbonwe Fashion & Accessories Co., Ltd. and Central China Real Estate Limited,
    respectively.
    Song Lin, male, born in 1963. He graduated from Tongji University with a bachelor of science degree in
    engineering mechanics in 1985. Mr Song joined CRH in 1986 and became a Director of CRH in 1998. In
    2000, he became Executive Director and Deputy General Manager of CRH, and Managing Director of China
    Resources Enterprise Limited, as well as the Chairman of China Resources Logic Limited and China
    Resources Power Holdings Company Limited. He became a Director of CRC in 2003, and the Managing
    Director of CRC in 2005. He had been the Chairman of CRL since 2006. At present, Mr Song is the
    Chairman of CRH and CRC, as well as the Chairman of China Resources Power Holdings Company
    Limited, and China Resources Microelectronics Limited, and an Independent Non-executive Director of
    Geely Automobile Holdings Limited. He has been a Director of the Company since 2001. At present, he is
    the Deputy Chairman of the Company.
    Yu Liang, male, born in 1965. He graduated from the Faculty of International Economics Studies of Peking
    University with a bachelor’s degree in 1988. Mr Yu obtained a master’s degree in economics from Peking
    University in 1997. He had previously worked for Shenzhen Waimao Group. He joined the Company in
    1990. He became the General Manager of Shenzhen Vanke Financial Consultancy Company Limited in 199312
    and the Deputy General Manager of the Company in 1996, and the Executive Deputy General Manager and
    Supervisor of Finance of the Company in 1999. He has been the General Manager of the Company since
    2001 and a Director of the Company since 1994. At present, Mr Yu is the President of the Company.
    Sun Jianyi, male, born in 1953. He graduated from Zhongnan University of Finance and Economics,
    majoring in finance studies. He is a senior economist. He worked at Wuhan branch, the People’s Bank of
    China in 1971 and was appointed as deputy department head and director. He became Deputy General
    Manager of Wuhan Branch, the People's Insurance Company of China, Limited and the committee member
    of the Communist Party Committee in 1985. During 1990 to 2003, Mr Sun act as Assistant to General
    Manager, Deputy General Manager, Executive Deputy General Manager and Executive Director for Ping An
    Insurance Company of China. In 2003, he became the Executive Director, Executive Deputy General
    Manager and Deputy Chief Executive Officer of Ping An Insurance (Group) Company of China, Limited. At
    present, Mr Sun is the Chairman of Ping An Bank Limited and a Director of Ping An Life Insurance
    Company of China, Limited, Ping An Property & Casualty Insurance Company of China, Limited, China
    Ping An Trust & Investment Co., Limited and Ping An Annuity Insurance Company of China, Limited. He
    has been a Director of the Company since 1995. He became an Executive Director in 1997 and Deputy
    Chairman of the Company in 1998. He was an Independent Director of the Company from 2001 to 2008. He
    has become the convener of the remuneration and nomination committee of the Board of the Company, and a
    member of the audit committee since 2005. He has become a Director and a member of the remuneration and
    nomination committee of the Company since 2008.
    Wang Yin, male, born in 1956. He graduated from Shandong University with a bachelor’s degree in
    economics. He also obtained a master’s degree in Business Administration from the University of San
    Francisco. Mr Wang had worked in the Foreign Economic and Trade Cooperation Department. He became
    the Deputy Officer of the CRNC in 1984, Deputy General Manager of the Human Resources Department of
    CRH in 1988, and the General Manager of Max Share Limited, a subsidiary of CRH, in 1995. Mr Wang has
    been the Director and Assistant General Manager of CRH since 2000. He has become Managing Director of
    CRL since 2001. He is a Director and Deputy General Manager of CRH, and the Chairman of CRL. He has
    been a Director of the Company since 2002.
    Shirley L. Xiao, female, born in 1964. She graduated from Wuhan University, majoring in English
    Literature in 1984. She obtained a master’s degree in Business Administration from China Europe
    International Business School in 2000. She had worked in Central South University of Technology, China
    Technology Data Import & Export Co. and Mitsubishi Corporation Shenzhen Office. She joined China
    Vanke in 1994 as the Deputy Director of the General Manager’s Office. She became the Director of the
    General Manager’s Office in 1996 and the Director of the Office of the Company’s Board in 2004. She was
    the Secretary of the Board of Directors from 1995 to 2009. She has been a Director of the Company since
    2004, and a member of the investment and decision-making committee of the Board of the Company since
    2005. From 2007, she has been an Executive Vice President of China Vanke.
    Jiang Wei, male, born in 1963. He graduated from Foreign Economy and Trade University and obtained a
    master’s degree in international business and finance. He joined China Resources National Corporation in
    1988 and CRH in 1990. He became the General Manager of the Finance Department of CRH in 1999 and a
    Director of CRH in 2000. Mr Jiang became a Director and Financial Controller of CRH in 2002, the
    Financial Controller of CRC in 2003 and a Director of CRC in 2005. At present, Mr Jiang is a Director and
    the Financial Controller of CRH, a Director and Financial Controller of CRC, a Director of China Resources
    Enterprise, Limited, China Resources Power Holdings Company Limited, CRL, and a Non-executive
    Director of China Asset (Holdings) Limited, an Executive Director of Cosmos Machinery Enterprises
    Limited and an Independent Director of Greentown China Holdings Limited. He became a member of the
    Supervisory Committee of the Company in 2001 and has been a director of the Company since 2005. He has
    been a member of the audit committee and a member of the investment and decision-making committee of
    the Board of the Company since July 2005.
    Brief introduction to independent directors
    David Li Ka Fai, male, born in 1955. He graduated from London City University in the UK in 1978. He is a
    FCPA of Hong Kong Institute of Certified Public Accountants and a member of the Institute of Chartered
    Accountants in England & Wales, a fellow member of the Association of Chartered Certified Accountants
    and Institute of Chartered Secretaries and Administrators. At present, he is the Deputy Managing Partner of
    Li, Tang, Chen & Co. Certified Public Accountants and an Independent Non-executive Director and the
    Chairman of the audit committee of China-Hongkong Photo Products Holdings Ltd., an Independent Non13
    executive Director and Chairman of the audit committee of Cosmopolitan International Holdings Ltd., an
    Independent Non-executive Director and a member of the audit committee of China Merchant Holdings
    (International), and an Independent Non-executive Director and a member of the audit committee of CATIC
    International Holdings Limited. He has been an Independent Director and the convener of the audit
    committee of the Company since 2005.
    Judy Tsui Lam Sin Lai, female, born in 1955. She is the Associate Vice President, Dean of the Faculty of
    Business, Director of the Graduate School of Business and Chair Professor of Accounting at The Hong Kong
    Polytechnic University. Ms Tsui also holds positions as Honorary Professor and Visiting Professor at several
    top universities in Mainland China. She is the first professor in Accounting that was awarded the Cheung
    Kong Chair Professor by China’s Ministry of Education. She has been appointed as a Visiting Professor of
    the Research Centre for Social and Organizational Behaviour of the Chinese Academy of Sciences, and a
    Visiting Scholar of the Sloan School of Management of the Massachusetts Institute of Technology (MIT) in
    the USA. Ms Tsui was appointed by the Chief Executive of the Hong Kong SAR Government to serve as a
    member of the University Grants Committee and the statutory Financial Reporting Council. She is a Fellow
    of both the Hong Kong Institute of Certified Public Accountants and Hong Kong Institute of Directors, and
    an Honorary Fellow of CPA Australia. Ms Tsui is the first non-US citizen and the first Hong Kong scholar
    appointed as the Vice President-International of the American Accounting Association. She has been an
    Independent Director of the Company since 2005.
    Qi Daqing, male, born in 1964. Mr Qi graduated from College of Business, Michigan State University in the
    USA and obtained a PhD in accountancy. Mr Qi obtained a master’s degree in management from University
    of Hawaii in the USA and a dual bachelor’s degree in biophysics and international journalism from Fudan
    University. He had worked for The Chinese University of Hong Kong and Eli Broad Graduate School of
    Management of Michigan State University in the USA, Center for East-west studies in the USA and special
    correspondent foreign affairs department in Xinhua News Agency. He is currently a professor and Vice
    President of Cheung Kong Graduate School of Business, member of American Accounting Association,
    Independent Director of Sohu.com Inc. and Focus Media Inc. which are listed on the NASDAQ, and
    Independent Director of Honghua Group Ltd and CTV Golden Bridge International Media Co, Ltd. which
    are listed in HK. He has become an Independent Director, convener of the remuneration and nomination
    committee and a member of the audit committee of the Company since 2008.
    Charles Li, male, born in 1961. He graduated from the College of Foreign Languages and Cultures of
    Xiamen University in 1984 with a bachelor of arts degree. Mr Li obtained a master’s degree in journalism
    from the University of Alabama and a SJD from Columbia University School of Law. He had worked as a
    lawyer in Davis Polk & Wardwell, a well-known American law firm, and the New York Headquarters of
    Brown & Wood. He joined Merrill Lynch Securities in 1994, and has become the Managing Director and
    President of Merrill Lynch Securities (China) since 1999. Mr Li has become Chairman and Chief Executive
    Officer of JP Morgan (China) since 2003. He has been an Independent Director and convener of the
    investment and decision-making committee of the Company since 2008. Due to his forthcoming appointment
    at the Hong Kong Exchanges and Clearing Limited, Mr Li in December 2009 resigned as the Independent
    Director of the Company but will continue to hold office until his successor is appointed. He is currently a
    director and the Chief Executive of Hong Kong Exchanges and Clearing Limited.
    Brief introduction to members of the Supervisory Committee
    Ding Fuyuan, male, born in 1950. He holds a tertiary qualification. He had worked in Guangdong Provincial
    Tourism Department, South China Sea Oil Joint Service Corporation, South China Petroleum Shenzhen
    Development Service Corporation and Nanhai Huaxin Group. He joined China Vanke in 1990 and became
    the Deputy Director of the General Manager’s Office in February 1991. In October 1991, he became the
    Manager of the Human Resources Department of the Company. He has been the Secretary of the Communist
    Party Committee of the Company since 1995. He became a member of the first Supervisory Committee of
    the Company in 1993 and has been the Chairman of the Supervisory Committee of the Company since 1995.
    Zhang Li, male, born in 1959. He graduated from Jiangxi University majoring in political economics in
    1985. He had worked in Jiangxi No. 2 Chemical Fertilizer Factory, Jiangxi University and Jiangxi Labour
    Bureau. He joined the Company in November 1992. He became the General Manager of Shanghai Vanke
    Property Management Company Limited in 1995, Deputy General Manager of Shanghai Vanke Real Estate
    Company Limited in 1996, Manager of the Company’s Corporate Planning Department in November 1998,
    Chairman and General Manager of Shenzhen Vanke Gift Manufacturing Co., Ltd in 1999. He resigned from
    the Company in 2000 and became the General Manager of Yuanda Real Estate Co., Ltd. In 2001, he joined14
    the Company again as the General Manager of Beijing Vanke. He became the Director of the Property
    Management Department of the Company since 2002. He has become a member of the Supervisory
    Committee of the Company on behalf of the Staff Committee since 2004.
    Fang Ming, male, born in 1958, holds a bachelor’s degree in economics from Shandong University, an LLM
    degree from Nankai University and a degree of Doctor of social sciences from the Chinese Academy of
    Social Sciences. He had worked as a Deputy Researcher at the Chinese Academy of Social Sciences. Mr
    Fang joined CRH in 1993. He had been the Senior Manager of the Research Department of CRH, the
    General Manager of the Capital Operation Department of CRNC, the Assistant General Manager and the
    Deputy General Manager of the Corporate Development Department of CRH. He is currently the the Board
    Secretary of CRC, the Vice President of China Resources Medications Group Limited, Deputy Chairman of
    Wandong Medical Equipment Co., Ltd., and a Director of Sanjiu Medical & Pharmaceutical Co. Limited and
    Dong E E Jiao Co., Ltd., respectively. Since December 2005, he has been a member of the Supervisory
    Committee of China Vanke.
    Brief introduction to senior management
    Yu Liang: For biography of Yu Liang, please refer to the “Brief introduction to directors”.
    Xu Hongge, male, born in 1971. He graduated from Southeast University in 1994 with a bachelor’s degree
    in architecture. He joined China Vanke in 1994. He had been the Deputy Manager of Shenzhen Wanchuang
    Architecture and Design Consultancy Co. Ltd., the Executive Deputy General Manager of Shenzhen Vanke
    Real Estate Co., Ltd. and the General Manager of Shenzhen Vanke Real Estate Co., Ltd. He has been the
    Deputy General Manager of the Company since August 2005. He is currently an Executive Vice President of
    China Vanke.
    Liu Aiming, male, born in 1969. He graduated from the Department of Civil Engineering, Tsinghua
    University with a bachelor’s degree in building and structural engineering in 1991 and obtained a master’s
    degree in building materials from Tsinghua University in 1993. He had worked in China Overseas
    Construction (Shenzhen) Co., Ltd as Director, Assistant General Manager as well as the Manager of the
    Property Department. He became the Managing Director of China Overseas Construction (Shenzhen) Co.,
    Ltd in 2001 and the Deputy General Manager of Zhonghai Real Estate Co., Ltd. in 2002. He joined the
    Company in 2002 as the Deputy General Manager. He is currently an Executive Vice President of China
    Vanke.
    Ding Changfeng, male, born in 1970. He graduated from Peking University with bachelor’s degree in
    international politics in July 1991. He obtained a master’s degree in global economics from Peking
    University in 1998. He had worked for Jiangsu Yancheng Party School. He joined China Vanke in 1992 and
    became Deputy Director of the Research Centre of the General Manager’s Office of the Company in August
    1994. He was the Chief Editor of “Vanke Periodical” in 1995 and the Assistant to the General Manager of
    Northeast Operation and Management Department of the Company in January 1996. He was the Deputy
    General Manager of Northeast Department of the Company in 1997 and the Deputy General Manager of
    Shanghai Vanke Real Estate Co., Ltd. in 1998. He became the Manager of the Company’s Corporate
    Planning Department in 1999, and the General Manager of Shanghai Vanke Real Estate Company Limited in
    2000. He has been the Deputy General Manager of the Company since 2001. He is currently an Executive
    Vice President of China Vanke.
    Xie Dong, male, born in 1965. He graduated from Nanjing Engineering Institution in 1987 with a bachelor’s
    degree in wireless electricity. He received a master’s degree in business administration from Shanghai Jiao
    Tong University in 1997. He had worked in Shenzhen RGB Electronic Co., Ltd., the headquarters of China
    Shenzhen TV Company. He joined the Company in 1992. He became the manager of the Company’s
    Personnel Management Department in 1996, and the General Manager and Director of the Company’s
    Human Resources Department in 2000 and 2001 respectively. He became the Deputy General Manager of
    the Company in 2004. He is currently an Executive Vice President of China Vanke.
    Zhang Jiwen, male, born in 1967. He graduated from Tsinghua University with a bachelor’s degree in
    architecture in 1987 and obtained a master’s degree in engineering in 1994 from Tsinghua University. He
    had worked in Guizhou Architecture and Design Institute, Shenzhen Jin Xiu Zhong Hua Development Co.,
    Ltd., Shenzhen Window of the World Co., Ltd., Guangzhou Hua Heng Design Company and Ho & Partners
    Architects Engineers & Development Consultants Ltd. in Hong Kong. He joined Shanghai Vanke Real
    Estate Co., Ltd. in 2001 as the Deputy General Manager and became the Design Director of the Company in15
    2003. He became the Deputy General Manager of the Company in 2004. He is currently an Executive Vice
    President of China Vanke.
    Mo Jun, male, born in 1967. He graduated from Tsinghua University in 1991 with a bachelor’s degree in
    architecture. He obtained an MBA degree from the China Europe International Business School in 2004. He
    joined the Company in 1991. He was the Manager of Shenzhen Wanchuang Construction and Design
    Consultants Co., Ltd. in 1996, the General Manager of Shenzhen Vanke Real Estate Co., Ltd. in 1999, the
    General Manager of Beijing Vanke in 2000, the Deputy General Manager of the Company in March 2000,
    and the Executive Deputy General Manager of the Company in 2001. He resigned from the Company and
    became the Executive Deputy General Manager of Beijing Rongke Zhidi Real Estate Co., Ltd. in March
    2003. He joined the Company again as the Deputy General Manager in October 2004. He is currently an
    Executive Vice President of China Vanke.
    Shirley L. Xiao: for biography of Shirley L. Xiao, please refer to the “Brief introduction to directors”.
    Wang Wenjin, male, born in 1966. He graduated from Zhongnan University of Economics and Law in 1994
    with a master’s degree. He is a registered accountant in the PRC. He had worked for Hefei No. 10 Plastic
    Factory and Anhui Optical Sophisticated Mechanic Research Centre of China Academy of Sciences. He
    joined the Company in 1993 and became the Deputy Manager of the Company’s Finance Department in
    1998. He was the General Manager of China Vanke’s Finance Department in 1999, and has been Supervisor
    of Finance since 2002. Since 2004 he has been the Financial Controller of the Company. He is currently an
    Executive Vice President of China Vanke.
    Tan Huajie, male, born in 1973. He graduated from the First Faculty of Mechanical Engineering of
    Huazhong University of Science and Technology in 1993. He joined the Company in January 2001. He was
    appointed as the Manager of the Customer Relations Department in December 2003, and became the Chief
    Researcher and Deputy Director to the Office of the Board of Directors in October 2004. Since February
    2008, he has been the Director to the Office of the Board of Directors. He has been appointed as the
    Secretary to the Board of Directors since March 2009.
    (2) Remuneration and changes in shareholdings of Directors, Members of Supervisory Committee and
    Senior Management during the year under review
    The Company continued to follow the principle of its remuneration policy, which is “to offer competitive
    salaries according to market principles to retain and attract high-calibre professionals”. The remuneration of
    the Company’s senior management members was determined not only with reference to market level but also
    in accordance with the growth in the overall operating results of the Company. In 2009, there had been a
    rapid recovery in the property market, and the Company’s results regained growth momentum, achieving
    new records. This was reflected in the remuneration of the Company’s senior management, while the
    remuneration of those directors and members of Supervisory Committee who were not employed by the
    Company were determined at shareholders meeting.
    During the year under review, the aggregate amount of remunerations of the 13 directors, members of
    Supervisory Committee and senior management who were employees of the Company was RMB44.42
    million. Among the directors and members of Supervisory Committee who were not employed by the
    Company, three directors, namely Mr Song Lin, Mr Wang Yin, and Mr Jiang Wei and Mr Sun Jianyi, each
    received a remuneration amount of RMB180,000 (before tax). Independent DirectorsMr David Li Ka Fai,
    Ms Judy Tsui Lam Sin Lai, Mr Qi Daqing and Charles Li each received independent director’s remuneration
    of RMB300,000 (before tax); Mr Fang Ming, a member of the Supervisory Committee, received a
    remuneration of RMB180,000 (before tax). Mr Song Lin, Mr Wang Yin, Mr Jiang Wei and Mr Fang Ming
    also received salaries from CRH, a connected entity of CRC. Mr Wang Shi also received remuneration for
    his role as independent director from CRL, a connected entity of CRC.
    Remuneration of directors, members of the Supervisory Committee and senior management of the
    Company is as follows:16
    Name Position Sex Age Period of
    service
    Number of
    shares held
    at the
    beginning
    of 2009
    Number of
    shares held
    at the end
    of 2009
    Reasons
    for
    changes
    Total
    remunerations
    received from
    the Company
    during the
    year under
    review
    (RMB’000)
    Any
    remunerations
    received from
    shareholders
    or other
    connected
    entities
    Wang
    Shi Chairman M 59 2008.4~ 6,817,201 6,817,201 5,903
    Yes
    Yu Liang Director,
    President M 45 2008.4~ 4,106,245 4,106,245 5,200 No
    Ding
    Fuyuan
    Chairman of
    Supervisory
    Committee
    M
    60 2007.4~ 2,018,408 2,018,408
    3,302
    No
    Song Lin Deputy
    Chairman
    M 47 2008.4~ 0 0 180 Yes
    Sun Jianyi Director M 57 2008.4~ 692,236 692,236 180 No
    Wang Yin Director M 54 2008.4~ 0 0 180 Yes
    Jiang Wei Director M 47 2008.4~ 0 0 180 Yes
    David Li
    Ka Fai
    Independent
    Director
    M 55 2008.4~ 0 0 300 No
    Judy Tsui
    Lam Sin
    Lai
    Independent
    Director
    F
    55 2008.4~ 0 0 300
    No
    Qi Daqing Independent
    Director
    M 46 2008.4~ 0 0 300 No
    Charles Li Independent
    Director
    M 49 2008.4~ 0 0 300 No
    Fang Ming
    Member of
    Supervisory
    Committee
    M
    52 2007.4~ 0 0 180
    Yes
    Zhang Li
    Member of
    Supervisory
    Committee
    M
    51 2007.3~ 1,036,204 1,036,204 1,998
    No
    Liu
    Aiming
    Executive
    Vice
    President
    M
    41 2002.12~ 1,650,978 1,650,978 3,404
    No
    Ding
    Changfeng
    Executive
    Vice
    President
    M
    40 2001.2~ 1,487,660 1,487,660 3,403
    No
    Xie Dong
    Executive
    Vice
    President
    M
    45 2004.3~ 1,487,660 1,487,660 3,100
    No
    Zhang
    Jiwen
    Executive
    Vice
    President
    M
    43 2004.8~ 1,548,950 1,548,950 3,403
    No
    Mo Jun
    Executive
    Vice
    President
    M
    43 2004.10~ 1,548,950 1,548,950 3,099
    No
    Xu Hongge
    Executive
    Vice
    President
    M
    39 2005.7~ 1,650,978 1,650,978 3,402
    No
    Shirley L
    Xiao
    Director,
    Executive
    Vice
    President
    F
    46 2007.10~ 1,446,849 1,446,849 3,000
    No
    Wang
    Wenjin
    Executive
    Vice
    President
    M
    44 2007.10~ 1,343,591 1,343,591
    3,204
    No
    Tan Huajie Secretary to
    the Board
    M 37 2009.3~ 0 0 2,001 No
    Total - - - - 26,835,910 26,835,910 - 46,519 -
    (3) Change and reasons for the change in Directors, Members of the Supervisory Committee and
    Senior Management during the year under review17
    At the Fourth Meeting of the Fifteenth Board of Directors held on 6 March 2009, Mr Tan Huajie has been
    appointed as the Secretary of the Board.
    2. Number and Composition of Employees
    As at 31 December 2009, there were 17,616 employees on the Company’s payroll, representing an increase
    of 6.67 per cent from that of the previous year. The average age of the employees was 28.0.
    Among the entire workforce, there were 3,411 employees engaged in the property development division,
    representing an increase of 2.06 per cent from the previous year. The average age of the staff working for
    this division was 31.9 and the average years of service were 4.28; in terms of education level, 0.41 per cent
    held doctoral degree, 16.56 per cent with master’s degree, 67.22 per cent with university degree, 13.66 per
    cent with tertiary education and 2.14 per cent with education below tertiary level. Employees with university
    degree or above accounted for 84.20 per cent of the total staff in the property development division. The
    composition of employees in the property development division by job classification is as follows: 502
    marketing and sales staff, accounting for 14.72 per cent and up by 3.93 per cent from the previous year;
    1,686 professional technicians, accounting for 49.43 per cent and up by 2.99 per cent from the previous year;
    among the professional technicians, 973 were construction staff, accounting for 28.53 per cent, 369 were
    designers, accounting for 10.82 per cent and 204 were cost management staff, accounting for 5.98 per cent;
    there were 140 project development staff, accounting for 4.10 per cent. The number of management staff,
    including those working in the departments of finance, audit, IT, legal, human resources, customer relations
    and data analysis as well as senior management staff, was 1,223, accounting for 35.85 per cent and up by
    0.08 per cent from the previous year.
    There were 14,205 employees engaged in property management, up by 7.83 per cent from the previous year.
    The average age was 27.3 and the average years of service was 2.29. In terms of education level, 0.23 per
    cent held master’s degree, 7.46 per cent with university degree, 13.63 per cent with tertiary education and
    78.69 per cent with education below tertiary level. Employees with tertiary education or above accounted for
    21.31 per cent of the total staff in the property management division.
    VI. Corporate Governance Structure
    1. Elaboration on the Company’s Compliance with the Requirements Set Out in the Regulatory
    Documents on Corporate Governance of Listed Companies
    China Vanke strictly complies with the requirements of the laws, regulations and regulatory documents
    governing listed companies and continues to fine-tune its corporate legal person governance structure and
    regulate its operation.
    In 2009, the Company continued to intensify effort to improve its corporate governance. During the year
    under review, the Company, based on the existing system, established an independent system for the
    appointment of certified public accountant. In addition, the Company set up a system for managing inside
    information and insiders. While strengthening inspection of internal control and internal auditing, the
    Company continued with internal control development.
    Corporate governance is a long-term commitment. In the future, the Company will continue to adhere to the
    principle of “professionalism + regulation + transparency”, and to further enhance its corporate governance.
    2. The Company’s Independence from Its Single Largest Shareholder in Business Operation, Staff,
    Assets, Organisation and Finance
    The Company continued to persist in maintaining complete independence from its single largest shareholder
    CRC and its connected companies with respect to business operation, staff, assets, organisation and finance,
    to ensure independence in its business integrity and operation autonomy.
    The Company has not disclosed any unpublished information to CRC, its single largest shareholder, or taken
    any other action that might violate the code of corporate governance.
    3. Execution of the Duties of the Independent Directors
    In 2009, all independent directors continued to give independent opinions and constructive advice to the
    Company on its development strategies, important matters relating to operation and management, issues
    relating to project development, formulation of material rules, internal control development of the Company,
    remuneration scheme and accounting policies. With the active participation and promotion of the
    independent directors, the functions of the Board’s specialised committees became more regulated.18
    Independent directors had actively participated in the inspection of the Company’s projects. In the past year,
    they paid site visits to the projects in Fuzhou and Chongqing, etc, and conducted interviews during their
    visits; they acquired a deep understanding of the financial situation and progress of the implementation of
    business plans of various local companies, the differences between the planned and actual cost, procurement,
    construction schedule and sales of major projects. Through all of the above, the independent directors had a
    thorough knowledge of the operation and development of the Company.
    In 2009, the details of the attendance of independent directors at Board meetings, specialised committee
    meetings and their participation in voting by correspondence at Board meetings and specialised committee
    meetings are as follows:
    Name of
    Independent
    Directors
    Number of
    Board meetings
    during the year
    Attendance in
    person (times)
    Attendance by
    proxy (times)
    Absence
    (times)
    Number of
    resolutions voted by
    correspondence
    including
    resolutions
    considered by
    specialised
    committees
    Number of
    specialised
    committee
    meetings needed
    to be attended
    (times)
    Number of
    specialised
    committee
    meetings
    attended
    (times)
    David Li Ka Fai 4 4 0 0 22 3 3
    Judy Tsui
    Lam Sin Lai
    4
    2 2 0
    21 0
    0
    Qi Daqing 4 3 1 0 22 3 3
    Charles Li 4 2 2 0 21 0 0
    4. The Establishment and Implementation of Appraisal, Incentive and Reward Mechanisms for Senior
    Management
    The Company implemented a balanced scorecard as its major organisation performance management system.
    In accordance with the concept of a balanced scorecard, senior management’s performance is evaluated in
    accordance with the achievement of annual business objectives based on the Company’s medium to long
    term development strategic goals, and such business objectives include the operating results of the period
    under review and sustainability of the Company. The review covers different categories including the
    Company’s financial position, customers, internal procedure, staff training and development. The Company
    has established objective benchmarks to measure the performance in each of the categories. In order to
    obtain objective statistics on staff and customers’ satisfaction levels, the Company had appointed an
    independent third party to conduct survey.
    The remuneration and nomination committee under the Board is responsible to study and supervise the
    establishment and implementation of appraisal, incentive and reward systems for senior management.
    Operating results of the President were appraised by the Board.
    The remunerations of senior management staff are determined in accordance with the Company’s operating
    results of the year under review, their performance with reference to the accomplishment of overall
    management indicators, their appraisal report, and comparison with the industry salary level. In each
    management year, performance review of senior management is conducted through the Company’s work
    report meeting. The major factors to be considered in reviewing the senior management of the Company’s
    headquarters include the Company’s overall performance, the value of the management staff’s role in the
    Company and their performance with reference to the duties stipulated under their respective positions.
    With regard to those in charge of front-line companies, the review is based on the performance of those
    front-line companies to which they are held accountable, the value of their roles and their performance with
    reference to the duties stipulated under their respective positions.
    VII. Summary of Shareholders’ Meetings
    1. The 2008 (21st) Annual General Meeting19
    The notice of 2008 Annual General Meeting (“AGM”) was published in China Securities Journal, Securities
    Times, Shanghai Securities News and irasia.com, Hong Kong, on 10 March 2009. The last day for verifying
    the qualification of shareholders was 1 April 2009.
    The AGM was held at 9:30 am on 10 April 2009 at Vanke Architecture Research Centre, No 63 Meilin
    Road, Futian District, Shenzhen. A total of 298 shareholders (proxies) attended the meeting, holding
    3,821,726,516 shares, representing 34.76 per cent of the Company’s total number of shares with voting
    rights. There were 145 shareholders (proxies) of A shares, holding 3,454,170,617 shares, representing 35.68
    per cent of the Company’s total number of A shares with voting rights. There were 153 shareholders
    (proxies) of B shares, holding 367,555,899 shares, representing 27.95 per cent of the Company’s total
    number of B shares with voting rights.
    The AGM considered and approved (1) the Directors’ Report for the year 2008; (2) Report of the
    Supervisory Committee for 2008, (3) the Annual Report and audited financial report for the year 2008; (4)
    the resolution regarding the proposal on profit appropriation and dividend distribution for the year 2008; (5)
    the resolution regarding the appointment of auditors for the year 2009, (6) the resolution regarding the
    amendment of the Company’s Articles of Association. The execution of the duties of the independent
    directors and the Company’s involvement in the resettlement and reconstruction works in the affected area
    following the Sichuan earthquake were also reported at the AGM.
    The announcement of the resolutions of the AGM was published in China Securities Journal, Securities
    Times, Shanghai Securities News and irasia.com, Hong Kong, on 13 April 2009.
    2. The First Special General Meeting of 2009
    The notice of the First Special General Meeting of 2009 (“SGM”) was published in China Securities
    Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, on 27 August 2009. The
    last day for verifying the qualification of shareholders was 7 September 2009.
    The on-site meeting of the SGM was held at 14:00 am on 15 September 2009 at Vanke Architecture
    Research Centre, No 63 Meilin Road, Futian District, Shenzhen. The period for online voting through the
    trading system of Shenzhen Stock Exchange (“SSE”) was 9:30 to 11:30 and 13:00 to 15:00 on 15
    September 2009; the time for voting through the internet voting system of SSE started from 15:00 on 14
    September 2009 until 15:00 on 15 September 2009. A total of 777 shareholders (proxies) attended the
    meeting, holding 4,446,874,097 shares, representing 40.44 per cent of the Company’s total number of
    shares with voting rights. There were 580 shareholders (proxies) of A shares, holding 3,995,387,028 shares,
    representing 41.27 per cent of the Company’s total number of A shares with voting rights. There were 197
    shareholders (proxies) of B shares, holding 451,487,069 shares, representing 34.33 per cent of the
    Company’s total number of B shares with voting rights.
    The SGM considered and approved (1) The Resolution Regarding the Company’s Meeting the Conditions
    for Conducting a Public Offer of New A shares; (2) The Resolution Regarding the Proposal on the Public
    Offer of New A Shares, and passed as separate resolutions of each of the following items: type of shares to
    be issued and nominal value per share, issue size and the amount of proceeds to be raised, target subscribers,
    issue method and placing arrangement with existing shareholders, pricing method, use of proceeds from this
    offer, proposal on the entitlement to the Company’s accrued profits as at and upon the completion of the
    share offer, location for listing of the shares to be issued, and validity period of the resolution regarding the
    share issue; (3) “The Resolution Regarding Submitting to the Shareholders’ Meeting for Granting the Board
    the Mandate to Handle All the Matters Relating to the Public Offer of New A Shares”; (4) “The Resolution
    Regarding the Feasibility of the Planned Investment Projects Using the Proceeds Raised from the Public
    Offer of New A Shares”; (5) “The Resolution Regarding the Elaboration on the Use of Proceeds from the
    Previous Fund-raising Exercise in Specific Projects”, and (6) “The Resolution Regarding the Establishment
    of Procedures for Appointing Accounting Firm”.
    The announcement of the resolutions of the SGM was published in China Securities Journal, Securities
    Times, Shanghai Securities News and irasia.com, Hong Kong, on 16 September 2009.
    VIII. Directors’ Report
    1. Management Discussion and Analysis
    Changes in market environment and management’s opinion20
    Benefiting from favourable policies, resumed confidence, as well as pent-up demand, property transaction
    volume in 2009 increased significantly and hit record high. The sales area and sales amount of commodity
    housing for the full year reached 853 million sq m and RMB3,820 billion, representing increases of 43.9%
    and 80.0% when compared with those of 2008, respectively, and increases of 23.4% and 50.7% when
    compared with those of 2007, respectively.
    In the first half of 2009, the commodity housing markets across the country in general regained its growth
    momentum, with sales area rising month on month. After the interim period, market trend began to vary in
    different regions. In the second half of 2009, the sales area of commodity housing in the PRC increased by
    70.8% from that of the first half, while the sales area in the eastern, central and western parts of the PRC
    increased by 54.0%, 107.0% and 77.1%, respectively.
    Housing price in the PRC in general rose during the year, the rise in prices in most of the central and western
    cities as well as cities below the second-tier ranking was seen as a rebound from the decline of housing
    prices in 2008; but the sharp increase in the prices of housing in some first-tier cities and popular cities was
    triggered by a number of factors: long-term factor such as rapid urbanisation leading to imbalance in demand
    and supply of certain residential properties, as well as the impact of unusual economic conditions – given the
    lack of investment options, the capital withdrawn from the physical economy had been transformed into
    demand for asset-backed investment and such demand of this kind was basically concentrated in a few
    popular cities.
    In addition, the sharp volatility in the industry between 2007 and 2009 also aggravated periodical shortage in
    supply. Amid market depression in 2008, developers were forced to cut down new developments, causing
    the supply of new housing in the PRC to continue to fall short of transaction volume in 2009. According to
    the Company’s observation of 14 major cities, the sales area of commodity housing to approved pre-sales
    area of new housing ratio of the 14 cities in 2009 was 1.51, much higher than 1.04 in 2007 and 0.63 in 2008.
    The continued consumption of saleable inventory had sustained the decline in inventory level in the market
    kept declining during the year. The inventory level in most of the cities were currently at their lowest in
    recent years. The shortage of saleable inventory had added pressure on the surge of price in popular cities.
    With clear signs of a recovery trend in sales and increased market confidence during the year under review,
    there had been a resumption in corporate investment demand and gradual acceleration in progess of project
    development; this phenomenon became more obvious after the interim period. A majority of the projects
    under construction in 2009 will translate into market supply in 2010. As such, the overall balance in supply
    and demand of new housing in 2010 will be improved.
    In 2009, the improvement in the housing market also led to rapid recovery of the land market. There had
    been a sharp decline in the proportion of aborted land auctions and transactions completed at the reserve
    price after the first quarter. In the second half of the year, the starting price and hammer price in some major
    cities reached historical highs. The emergence of “superme land lots” sold at extraordinary high prices in
    certain cities had drawn extensive attention. As of now, “superme land lot” phenomenon only existed in a
    few popular cities. This is due to the ripple effect of the fast growing housing prices of popular cities on the
    land market, the land supply in these cities in general falling short of the sales volume of housing, and the
    need for replenishing land bank by developers who found their saleable resources quickly absorbed by the
    market. Moreover, since it was hardly feasible to develop new markets within a short time, much of the
    investment was concentrated in existing markets, which also led to intensified competition for land in these
    cities.
    To further regulate the land market and improve the efficiency of land use, the Ministry of Land and
    Resources enhanced supervision and management of idle land since the second half of 2009. In order to
    optimise the system of transfer of land use rights through competitive bidding, public auction and public
    trading, as well as to strengthen management of land supply and development, five ministries in December
    issued the “Notice on further strengthening land transfer revenue and expenditure management”, requiring
    all the instalments of a land transfer fee to be paid within one year of the sale, while the land transfer fee for
    special projects to be paid within two years of the sale as agreed, as well as a down payment of not less than
    50% of the total land transfer fee. After the implementation of the policy, enterprises should be more
    cautious when assessing their cost of capital at the time of project acquisition. This will prompt enterprises to
    be more rational when acquiring land and help cool the overheated land market of certain cities.21
    At the beginning of 2010, the State Council of the PRC issued the “Notice regarding the promotion of
    continuous healthy development of the property market” (“Notice”), which reaffirmed the positive
    implications of the previous rounds of measures while putting forward 11 opinions on the issues of soaring
    housing prices in certain cities. These opinions mainly focused on increasing the effective supply of lowincome
    housing and ordinary commodity housing; reasonable guidance on housing consumption to curb
    home purchase for speculation and investment; strengthening risk control and market regulation; accelerating
    the progress of low-income housing construction. The “Notice”, while affirming the importance of boosting
    housing supply, also paid great attention to guiding housing demand: guide residents to establish rational
    consumer behaviour by clamping down on home purchase for speculation and investment. The promulgation
    of the aforesaid policy has positive implications on easing the tight supply of housing, improving the
    industry standardisation, and promoting the healthy development of property market.
    China Vanke has always believed that excessive growth in housing price is harmful to the long-term
    development of the industry. Only stable development is conducive for the industry. The Company always
    adheres to the principle of “no hoarding of land; no stalling of home sale”, as well as a rapid development
    strategy. The Company remained rather cautious when acquiring land in 2009. China Vanke currently has a
    sound capital and financial positions, as well as healthy inventory structure. The Company believes the
    promulgation of the above-mentioned policies is comparatively favourable to enterprises with stable
    operations.
    Operating results and analysis
    The Company’s revenue and net profit for 2009 amounted to RMB46.05 billion and RMB5.33 billion,
    respectively, representing increases of 19.2% and 32.1% from those of the previous year, respectively.
    During the year under review, the Company’s sales exceeded RMB60 billion for the first time; sales area and
    sales amount in 2009 reached 6,636,000 sq m and RMB63.42 billion, respectively, representing increases of
    19.1% and 32.5% from those of 2008, respectively. The Company realised booked area and booked revenue
    of 6,052,000 sq m and RMB45.54 billion, respectively, in 2009, representing a year-on-year growth of
    34.1% and19.3%, respectively.
    In the Pearl River Delta region, the Company realised a sales area of 1,744,000 sq m and a sales revenue of
    RMB19.4 billion, accounting for 26.3% and 30.6% of the Company’s total sales area and sales revenue,
    respectively; booked area and booked revenue amounted to 1,904,000 sq m and RMB15.44 billion,
    respectively, accounting for 31.5% and 33.9% of the Company’s total booked area and booked revenue,
    respectively; net profit reached RMB1.92 billion, accounting for 32.5% of the Company’s total net profit. In
    the Yangtze River Delta region, the Company realised a sales area of 1,893,000 sq m and a sales revenue of
    RMB20.38 billion, accounting for 28.5% and 32.1% of the Company’s total sales area and sales revenue,
    respectively; booked area and booked revenue amounted to 1,770,000 sq m and RMB14.27 billion,
    respectively, accounting for 29.2% and 31.3% of the Company’s total booked area and booked revenue,
    respectively; net profit reached RMB2.02 billion, accounting for 34.2% of the Company’s total net profit. In
    the Bohai-Rim region, the Company realised a sales area of 2,015,000 sq m and a sales revenue of
    RMB16.61 billion, accounting for 30.4% and 26.2% of the Company’s total sales area and sales revenue,
    respectively; booked area and booked revenue amounted to 1,681,000 sq m and RMB11.36 billion,
    respectively, accounting for 27.8% and 24.9% of the Company’s total booked area and booked revenue,
    respectively; net profit reached RMB1.32 billion, accounting for 22.3% of the Company’s total net profit. In
    the Central and Western Region, the Company realised a sales area of 984,000 sq m and a sales revenue of
    RMB7.03 billion, accounting for 14.8% and 11.1% of the Company’s total sales area and sales revenue,
    respectively; booked area and booked revenue amounted to 697,000 sq m and RMB4.47 billion, respectively,
    accounting for 11.5% and 9.8% of the Company’s total booked area and booked revenue, respectively; net
    profit reached RMB651 million, accounting for 11.0% of the Company’s total net profit.
    As at the end of 2009, the Company had an area of 3,745,000 sq m of project resources sold but not yet
    completed nor booked, representing an aggregate contract amount of RMB38.23 billion. This included an
    area of 3,435,000 sq m sold but not yet booked with a contract amount of RMB35.65 billion under the
    consolidated statements. In view of an improved market situation during the year under review, it is expected
    that there will be a relatively large increase in profit for to-be-booked resources. The above-mentioned to-be22
    booked resources will be recognised in 2010, providing strong support to the Company’s achieving
    satisfactory profits in 2010.
    In 2008, the Company, in accordance with the prevailing market conditions, made provisions for diminution
    in value of RMB1.23 billion for 13 projects with potential risks. At the end of the year under review, all the
    projects had been tested for impairment according to the latest market and sales situation, and in particular
    the Company made an assessment of the projects for which provisions for diminution in value was made at the
    end of 2008. Based on the test results, the full amount of provisions for diminution in value of nine projects
    had been reversed (written off) according to the requirements of the Accounting Standards for Business
    Enterprises. As at the end of 2009, there were still four projects, due to their size and uncertainty over their
    operation in subsequent periods, subject to provisions for diminution in value. Details on the changes in the
    provisions for diminution in value of inventory during the year under review are as follows:
    (Unit: RMB’000)
    No. City Project
    Provision as at the
    start of the year
    Provision as at the
    end of the year
    1 Beijing
    Blue Mountain(former
    Aureate City) 121,120
    -
    2 Chengdu Jinrun Huafu 31,530 -
    3 Nanjing
    Golden Milestone (former
    Aureate City) 80,060
    -
    4 Nanjing Jinyu Tixiang 63,590 -
    5 Guangzhou Aureate City 87,390 -
    6 Shanghai Castle Tudor 65,780 -
    7 Tianjin Holiday Dew Garden 70,230 -
    8 Wuhan
    Element Integration (former
    Aureate City) 40,280
    -
    9 Wuxi
    Jinyu Tixiang(former Golden
    City) 53,910
    -
    10 Chengdu Haiyue Huicheng 81,500 81,500
    11 Chengdu Golden Lingyu 216,120 216,120
    12 Fuzhou Golden Rongjun 152,170 152,170
    13 Nanjing The Paradiso 166,880 166,880
    Total 1,230,560 616,670
    During the year, the gross margin of the Company’s property business was 26.03%, down by 6.01
    percentage points from that of 2008, while net margin reached 12.99%, up by 1.58 percentage points year on
    year.
    Owing to the delay in revenue recognition in the property industry, decline in booked gross margin reflected
    the fall in prices during the adjustment period in 2008. Much of the Company’s RMB27.34 billion resources
    sold but not yet booked at the end of 2008 were recognised in 2009, including four projects, namely Golden
    Rongjun, Fuzhou, Aureate City, Guangzhou, Jinyu Tixiang, Nanjing, Holiday Dew Garden, Tianjin, for
    which provisions for diminution in value was made at the end of 2008. Since the sales of these projects took
    place amid market depression, the gross margin was relatively low. Moreover, projects booked during the
    period under review also included low-income housing such as Huacao 213, Shanghai, Golden City,
    Shanghai, Everest Town, Guangzhou, which had relatively lower margins. In view of the fact that gross
    margin in 2009 was significantly higher than the booked gross margin, it is expected that there will be a relatively
    large increase in the booked gross margin in 2010.
    Rise in net margin reflected the effectiveness of the Company’s cost control measures, as well as the reversal of
    provisions of diminution in value of inventory and the impact of reduced gross margin on tax.
    At the beginning of 2009, the Company set its planned area for newly commenced construction and
    completed area at 4,030,000 sq m and 6,190,000 sq m for the full year. In 2009, the Company’s actual area
    for newly commenced construction amounted to 5,609,000 sq m, representing a 39.2% increase when
    compared with the planned area at the beginning of the year, and completed area amounted to 5,364,000 sq
    m, representing a 13.3% decrease from the planned area at the beginning of the year. The shortfall in actual
    completed area was mainly attributable to the extended construction schedule, which was caused by road23
    reconstruction, organisation of sporting events, product revamp to meet market needs and the adjustment of
    development schedule in order to meet the standard construciton schedule under strict quality control, etc.
    Having witnessed a series of market adjustments in the past few years, China Vanke was more cautious on
    project acquisition in 2009. In some cities where the housing prices and land premium rose sharply, the
    Company upheld the principle of “Would rather miss than make mistake”, and avoided as well as restrained
    from acquiring land lots for which competition was extremely fierce. In 2009, the Company had 44 newly
    added projects, most of which were located in second and third tier cities where owner-occupation
    constituted the mainstream demand, with only modest surge in housing prices. The accommodation value of
    the newly added projects was approximately RMB2,401 per sq m, representing a 29.5% decrease when
    compared to that of 2007. The land premium of the newly added projects attributable to China Vanke’s
    equity holding amounted to approximately RMB24.82 billion, accounting for 42.0% of the Company’s sales
    amount in the same period. Considering the growth to be achieved in the next three years, the aforesaid
    percentage was considered a stable and appropriate proportion. As at the end of 2009, the GFA of the
    projects under planning attributable to China Vanke’s equity holding amounted to 24.39 million sq m, which
    could basically meet its development needs in the coming two to three years.
    At the end of the year under review, the Company’s inventories included RMB5.31 billion of completed
    properties (properties ready for sale), accounting for 5.9%; RMB 41.87 billion of properties under
    development (including 3,435,000 sq m of properties sold but not yet booked and involved a contract value
    of RMB 35.65 billion), accounting for 46.4%; RMB43.26 billion of properties held for development
    (corresponding to the Company’s projects under planning, in which some projects will commence
    construction in the first quarter of 2010), accounting for 47.8%.
    The Company continued to maintain a healthy financial position. As at the end of the year under review, the
    cash and cash equivalents held by the Company amounted to RMB23.0 billion, representing an increase of
    15.1% when compared to that at the beginning of the year. The aggregate amount of the Company’s shortterm
    borrowings and long-term borrowings due within one year was RMB8.63 billion, representing a
    decrease of 51.7% when compared to that at the beginning of the year. The net gearing ratio was 19.7%,
    representing a decrease of 13.4 percentage points when compared to that at the end of 2008.
    The Company insisted on a stable and healthy operation strategy. Over the years, the Company has
    established excellent credibility and cooperative relationship in the financial community and such
    relationship stems from mutual understanding and trust. As such, the Company has a wide range of sources
    of funding. During the year under review, the Company entered into a “Strategic Collaboration Agreement”
    with China Construction Bank Corporation, further strengthening their long-established strategic
    collaborative relationship, and obtained a credit line of RMB50 billion from China Construction Bank
    Corporation. In the future, the Company will continue to forge extensive collaboration with various banks on
    property development loans, bank guarantees and acceptance bills.
    Review on the Company’s management in 2009
    In 2009, the Company persevered with its existing development strategy, which focused on the enhancement
    of operation quality, management efficiency and the Group’s professionalism. The Company actively pushed
    ahead with the change of its development focus from “scale and speed” to “quality and efficiency”.
    During the year under review, the Company intensely pursued cost optimisation. With the application of cost
    benchmarking, the Company established a cost and market price database, strictly controlling project costs
    and determining the most economical standards for the choice of building and decoration materials and
    process. At the beginning of 2009, the Company proposed to lower its administrative expenses and
    distribution costs as a percentage of revenue in 2009 by 20% when compared with that of 2008. Through
    streamlining management process, adopting stringent control and supervision of expense budget,
    strengthening market and customers research in marketing, and optimising its advertising costs, the absolute24
    value of the Company’s administrative expenses and distribution costs in 2009 dropped by 5.8% and 18.6%,
    respectively, year on year, despite growth in sales scale and booked scale. The aggregate amount of
    administrative expenses and distribution costs as a percentage of revenue decreased by 26.9% when
    compared to that of the previous year, which exceeded the target set at the beginning of the year under
    review.
    In 2009, the Company continued to apply furbished units strategy. Furbished units as a percentage of the area
    for newly commenced construction of the Company rose from 60% in 2008 to 79.5% in 2009. Compared to
    traditional roughcast housing units, the marketing of furbished units would not only help customers save
    considerable costs and time in furbishing their properties, but also reduce secondary pollution resulting from
    separate furbishing by customers, thereby lowering the consumption of construction waste and in line with
    the energy saving and environmental friendly concept. Certain regions and cities were currently introducing
    various measures to promote fully furbished housing units. In the future, as consumers become more
    experienced with the market, furbished units as a percentage of housing units will continue to rise. As the
    first enterprise in adopting furbished units strategy, the Company has gained extensive experience and
    recognition in the relevant sector, which will become an unique advantage in competing in the market in the
    future.
    The Company realized that even the market had turned positive, it should not treat product quality lightly.
    The increasing proportion of furbished units had propelled the Company to set higher standards for project
    management process, property construction quality and property maintenance. During the year under review,
    the Company strictly implemented the system of “standard schedule”, “construction according to the
    blueprint” and “actual survey, actual measurement” to ensure a reasonable construction schedule and to
    control defected delivery. The Company organised project quality benchmarking training for frontline
    companies, where extensive exchanges were made on the standards for project management, construction
    methods, techniques and solutions to management of furbished units. Based on the training, each frontline
    company set its quality targets according to its operation status. The frontline company put forth detailed
    measures to improve quality in various aspects, including identifying premium supply contractors,
    establishing a system to manage the entire procurement process, fully leveraging the active role of project
    supervisors and managers, tightening the control of shifts management and quality site work, and increasing
    internal awareness of quality and exquisiteness.
    As the number of projects and operation scale of the Company expanded, standardisation and centralisation
    became increasingly important for the Company to achieve streamlined and efficient management and to
    fully leverage economies of scale. During the year under review, the Company dedicated its efforts to
    achieve fast replication of mature standardised products and standardisation for building and decorative
    materials for furbished units. Through these efforts, the Company strengthened centralised procurement. The
    Company had set the standards for C-grade furbished units and promoted them within the company. In
    August, the Company ended its nation-wide tender offer for materials for C-grade furbished units, and
    achieved satisfactory results in the introduction of energy-saving materials, enhancing the quality for
    building and decorative materials and lowering purchasing cost. The categories of products bought through
    group purchase increased from 12 in 2008 to 24 . The Company had save approximately 12.3% of its
    purchasing cost.
    The Company gained recognition for its dedication to housing prefabrication. In 2009, #B3 and #B4 of
    Holiday Town Project developed by Vanke and COFCO were named as the “Pilot Project of Housing
    Prefabrication in Beijing”. #B3 and #B4, being the first prefabricated housing project by Vanke Beijing, had
    used new techniques and technologies such as prefabricated exterior wall panels and full furbishing.
    Compared with traditional construction method, there had been significant advantages in saving energy,
    material, water and land, as well as in the aspects of development cycle and being environmental friendly.
    Since the launch in mid 2009, the project had received positive market response. During the year under25
    review, Vanke Architecture Technology Research Center, Dongguan, was granted the certificate of high
    technology and new technology enterprise jointly issued by Guangdong Science and Technology
    Department, Guangdong Provincial Finance Bureau, Guangdong Municipal Office of the State
    Administration of Taxation and Guangdong Provincial Local Taxation Bureau, thereby becoming the first in
    the industry to be recognised as a high technology and new technology enterprise.
    During the year under review, the Company, heeding for the development trend of a low-carbon economy,
    actively involved in green construction research and promotion. “To be an outstanding green enterprise” has
    become an integral part of the Company’s mid-to-long term development strategy. In accordance with the
    PRC’s “Green Building Evaluation Standard”, the Company preliminarily formulated “China Vanke’s
    housing performance standard” and applied it in its projects. In June 2009, Phase 4 of the Dream Town,
    Shenzhen was the sole residential project in the PRC to be awarded the Three Star certification under the
    “Green Building Design Evaluation Criteria”. In 2009, China Vanke was elected by Fortune China as one of
    the “10 Green Companies” for its achievement in the research on prefabrication and urban low-income
    residential properties. In September, the Company moved its headquarters from Vanke Architecture
    Research Centre, No 63 Meilin Road, Futian District, Shenzhen to Vanke Center, No. 33 Huanmei Road,
    Dameisha, Yantian District, Shenzhen. The new headquarters was built to the US LEED Platinum Level and
    is currently in the process of applying for certification, with the possibility to become a green benchmark for
    global large-scale integrated complex.
    During the year under review, following the inauguration of the first batch of post-quake permanent public
    utilities funded by the Company, including Zundao School and hospital, Zundao Kindergarten, Government
    Administrative Centre, Xiang’e Government Administrative Centre and Zundao Lihua Square, for which
    construction was funded by the Company, was completed and ready for use. All these buildings meet the
    highest seismic performance level. In additional, the Company funded the construction of school, hospital
    and other public utilities in Pengzhou, Nanjiang, Mingshan, Yaan, etc. According to an independent audit
    report prepared by a third party, an aggregate amount of RMB124,622,000 was donated to Sichuan by the
    Company, the Vanke Charity Foundation, the Company’s employees and business partners, including
    RMB100,392,000 in accordance with the amount approved and authorised by the First Special General
    Meeting of 2008 and RMB2,200,000, which was allocated from the Company’s corporate citizenship special
    project fund. The expenses incurred in the relief work offered by the branch companies amounted to
    RMB2,195,000, staff donations amounted to RMB11,655,000, donations by China Vanke’s business partners
    amounted to RMB4,180,000 and donations from China Vanke’s Charity Foundation amounted to
    RMB4,000,000.
    In 2009, China Vanke was named as the World’s No. 1 Developer in the residential property category in the
    “Best Global Developer” selection by Euromoney. The Company was named for the seventh time “The Most
    Respected Enterprise in the PRC” jointly organised by The Economic Observer Newspaper and the
    Management Case Center of Peking University. According to the research report on “2009 Top 100 Property
    Development Enterprises in the PRC” jointly issued by three research institutions, namely Enterprise
    Research Institute of Development Research Centre of the State Council of the PRC, The Institute of Real
    Estate Studies of Tsinghua University and the Institute of China Index, China Vanke was named as the No. 1
    property developer in the overall strengths category. In 2009, China Vanke was named again by Forbes as
    one of the Asia’s Fabulous 50. China Vanke was named to Fortune China’s list of “2009 Most Praised PRC
    Enterprise”, and ranked first in the real estate industry category.
    According to the customers’ satisfaction survey conducted by Gallup Market Research Corporation, the
    satisfaction levels in 2009 rose. Four projects of the Company, namely Phase I, II and III of Wonderland in
    Beijing, Dream City in Guangzhou, Phase 1 of Glamorous City in Shenyang and The Peninsula, Wonderland
    in Wuhan received the “Golden Prize of Excellent Residential Community of Zhan Tianyou Award in 2009”,
    for their outstanding quality, energy-saving and environmental friendly attributes, as well as excellent26
    planning and technology. Phase 1 of New Elm Mansion in Shenyang won the title of Excellent Planning for
    Residential Community of Zhan Tianyou Award from China Civil Engineering Society. In the “2009 China
    Top 100 Property Management Companies” selection organised by “China Real Estate Top10 Research
    Group”, China Vanke was named as one of the “2009 China Top 100 Property Management Companies” and
    ranked first among “Top10’s Best Service Quality of Top 100 Companies”.
    The Company’s brand value was widely recognized. China Vanke won the title of “CCTV 60 Years 60
    Brands” in the “CCTV 60 Years 60 Brands” selection hosted by CCTV, organised by “Global Brand”
    Channel of CCTV.cn, and supported by the finance channel of CCTV, CCTV Mobile, and CCTV for mobile
    phone. Chairman Wang Shi was also awarded the “Outstanding Contribution to PRC Brands”. Hewitt
    Associates, a global human resources consulting firm, named China Vanke as one of the “Best PRC
    Employers in 2009”, which was the sole real estate enterprise among the 10 enterprises on the list.
    During the year under review, the Company persevered with improving investor relations. In the election for
    “The Golden Bull Awards for the Top 100 China Listed Companies” organised by China Securities Journal,
    the Company won the Golden Bull Award for its sustainable and stable development. In the election for
    Valuable China Listed Companies cum the First Edition of The Most Popular China Listed Company’s
    Website Among Investors organised by Securities Times, China Vanke received the titles of The Top 100
    China Listed Companies in terms of Value, Outstanding Management Team of China Listed Companies, The
    Best Corporate Social Responsibility Companies Listed in China, The Most Popular Listed Company’s
    Website Among Investors, and The Best Website for Information Disclosure.
    Future development prospects
    In 2010, the Company will focus on “Growth in Performance” and “Green Strategy”. While ensuring stable
    operation, the Company will endeavour to drive its performance and enhance its market position. The
    Company will also move towards becoming a green enterprise, and make progress in the development of
    investor and customer relations, staff, products, and services.
    In view of rapid increase in housing prices in certain cities, the government has introduced a series of
    regulatory measures since 2010, to direct the residential property market to reasonable development. The
    above-mentioned factors, to certain extent, have impact on home purchase sentiment, and may increase
    market uncertainty and transaction volatility in the short run. Yet, they have positive implications on the
    healthy development of the housing market. The Company will adhere to the operating strategy of “no
    hoarding of land; no stalling of home sale”, striving to boost sales and actively respond to market changes.
    The Company will remain cautious on project investment, and adopts a pruduent approach in land
    acquisition, fully leverage the edge of its geographical diversification strategy, and utilise various
    collaboration approaches. The Company will continue to optimise utilisation of its land bank in various
    markets, acquiring premium land lots at reasonable price, to ensure balanced development among different
    cities and regions and the existing land bank is sufficient to meet the Company’s stable development in the
    next three years. In 2010, the newly added projects of the Company will mainly be used for residential
    development to meet demand for owner-occupied housing.
    On the front of project development, based on the existing project development schedule, the Company
    expects that area of newly commenced construction in 2010 will be 8.55 million sq m, representing 52.5%
    increase from that of 2009. Affected by the actual progress of the related procedures and preparation work
    prior to the commencement of construction, part of the projects which were scheduled to commence
    construction at the end of 2009 was postponed to the first quarter of 2010. The Company’s actual area for
    newly commenced construction was therefore slightly lower than the planned area adjusted during the
    interim period, which in turn led to an increase in the planned area for newly commenced constrution in27
    2010. Since the proportion of furbished units in newly commenced projects continues to increase in recent
    years, and before the proportion of fully furbished units and furbished units is stabilised, the period between
    the overall completion date and the date of commenced construction and date of product launch will be
    extended. It is expected that the completed construction area will be 5.04 million sq m in 2010, representing
    a drop from that of 2009. In view of the significant increase in profitability in the resources sold but yet to be
    booked at the end of 2009, the increase in the Company’s net profit in 2010 will not be greatly affected by
    the aforesaid. The Company will rationally fine-tune the construction commencement schedule according to
    its sales progress, in order to maintain a healthy inventory level.
    With the adjustment to urban development and urban planning, there is an increase in the proportion of
    commercial auxiliary facilities in the new projects disposed in recent years. The Company’s ability to
    compete in this area will, to a certain extent, affect project acquisition in the future. Moreover, along with the
    expansion in the scale of the Company’s project development and property management, the Company faces
    the challenge of effective management of commercial auxiliary facilities in residential projects to improve
    project value and customers’ quality of living. Based on these demands, the Company will not only continue
    to pursue a business model of mainstream residential property development, but also try to develop other
    types of properties that are complimentary to residential properties, and gradually develop the skills in nonresidential
    business. Meanwhile, the Company will study the change in urban population structure and the
    trend for diversified housing requirements, and pay attention to new emerging residential markets such as
    homes for elderly and vacation properties.
    Improving product quality is an on-going task. The Company will formulate a quality satisfaction
    improvement plan and an implementation follow-up plan. To ensure smooth implementation of the furbished
    units strategy, the Company will take action in four areas, namely blueprint standardisation, prefabrication,
    visualization of management and orderly arrangement of construction sites, so as to enhance the guidance
    function of the blueprint of furbished units, strengthen standardisation of the management process, and
    reduce mistakes during construction.
    In order to further augment the overall operational quality and brand recognition of projects, the Company
    will leverage its expertise and resources as well as fully utilise successful and outstanding projects in the
    industry as reference, to develop an array of benchmark products and premium projects with influential
    power in the industry for each product category. By reproducing the development process of these projects
    across the country, the Company can consolidate its competitive edge in product development.
    Price performance ratio is the standard of measurement of product quality. In other words, quality and
    performance provided to customers should excel the market average. The Company will continue to strictly
    adhere to its “quality first” philosophy, as well as enhance communication with its customers, while
    improving customers’ recognition of product quality. On the front of product performance, the Company will
    emphasise convenience, comfort, energy saving and environmental friendly aspects of the products when
    being used.
    The Company will continue to expand the range of standardized product categories as a systematic means to
    improve China Vanke’s product quality and operation efficiency. The Company will fine-tune its
    standardised product categories in all aspects, including product inventory, style, furbished units, landscape
    and performance, and provide products with high price performance ratio that fit for the Company’s scale of
    development. In 2010, the proportion of standardised products used in new high rise products is planned to
    reach 30 per cent.
    In 2010, the Company will persevere with its “Ease and Safety” service objective, by developing an
    integrated service system comprising property development and property management. This is to maintain its
    leadership in the basic service sector and improve its property operations. In addition, the Company will try
    to introduce value added services according to customers’ actual requirements, so as to increase their loyalty.28
    The ideas of low-carbon economy, energy saving and environmental friendly are increasingly popular. The
    property industry will play an important role in energy saving and emission reduction. Whether the Company
    will be the first to complete transformation into a green enterprise is crucial to compete in a market with the
    backdrop of a green economy. 2010 will be a critical year for China Vanke to translate theory of green
    architecture into practice. The Company will complete formulating a 10-year green development plan. With
    this plan and utilisation of the Company’s advantages in prefabrication and furbished units, the Company
    will push forward with energy saving construction. The Company plans to have all of its newly commenced
    apartment projects in 2010 to be fully furbished, with an area of 1 million sq m for prefabricated structures.
    All the new projects are to meet China Vanke’s housing performance standard, and an area of 1 million sq m
    will be designed and built according to the green standard requirements of Three Star certification. In
    addition, the Company will also actively support the running of China Vanke Pavilion in the World Expo,
    Shanghai, and use it as a major marketing platform for the Company’s green idea and as the highlight of the
    Company’s green strategy implementation.
    On the front of organisational management, the Company will in 2010 streamline and strengthen its
    management, starting from the headquarters, to meet its business development needs. It includes redefining
    the functions of the departments in the headquarters, streamlining the management, reducing items for
    approval, and improving organizational efficiency. The Company’s headquarters will also provide additional
    support to the front-line companies and encourage them to fine-tune their organizational structure and
    approval process according to their business development needs.
    Along with a gradual recovery in the macro economy of the PRC, there is a possibility of minor adjustments
    in the relaxed monetary policy adopted in 2009 to stimulate the economy. As such, enterprises will face
    uncertainty in credit and financing markets. In 2010, the Company will set maintaining safe operations as the
    top priority. It will establish a closer partnership with financial institutions, including banks, trustees, and
    insurance companies, develop new financing methods and expand the source of funding. The Company’s
    proposal on issuing new A shares in 2009 has been submitted for approval from related regulatory
    authorities. Should the issue be successfully implemented, it is expected to reinforce the Company’s capital
    strength and operational flexibility. The Company will continue to actively push forward the progress of the
    proposal.
    2. Operation of the Company
    (1) The scope and operations of the Company’s core businesses
    A. By sector
    The Company specialises in property development with commodity housing as its major products. In 2009,
    the Company’s sales area and sales revenue were 6,636,000 sq m, and RMB63.42 billion respectively,
    representing increases of 19.1% and 32.5% respectively when compared with those of 2008.
    In 2009, the total sales of commodity housing in the PRC amounted to RMB3,815.72 billion. Based on the
    aforesaid amount, the Company accounted for 1.66% of the domestic market share in terms of sales revenue,
    down by 0.68 percentage point from 2008.
    During the year under review, the booked area, booked revenue and booked cost of the Company’s property
    projects were 6,052,000 sq m, RMB45.54 billion and RMB33.69 billion respectively, representing increases
    of 34.1%, 19.3% and 29.8% respectively when compared with those of the previous year. The operating
    profit margin of the property business for the year was approximately 26.0%, decreased by 6.01 percentage
    points from that of the previous year.
    Unit RMB’000
    Revenue Cost of Sales Operating Profit Margin
    Sector Amount Change Amount Change Amount Change29
    Property 45,543,248.97 19.28% 33,690,186.11 29.84% 26.03%
    Down by 6.01
    percentage points
    Property
    Management
    and Others 504,644.28 15.34% 365,901.45 4.01% 27.49%
    Up by 7.90 percentage
    points
    Total 46,047,893.25 19.24% 34,056,087.55 29.49% 26.04%
    Down by 5.86
    percentage points
    Note 1: Core business tax and surcharges had been deducted from the operating profit margin
    B. By investment region
    In recent years, the Company adhered to its urban-economy-oriented strategy with Pearl River Delta,
    Yangtze River Delta and Bohai-Rim region being its core development areas. In 2009, core cities such as
    Shenzhen, Guangzhou, Shanghai, Beijing and Tianjin accounted for 44.1% and 44.5% of revenue and net
    profit respectively.
    Revenue
    (RMB’000)
    Percentage
    Net Profit
    (RMB’000)
    Percentage
    Booked
    Area
    (’000 sqm)
    Percentage
    Pearl River Delta Region
    Shenzhen 4,870,068.33 10.69% 555,884.46 9.40% 405.9 6.71%
    Guangzhou 4,099,856.30 9.00% 494,491.55 8.36% 497.6 8.22%
    Dongguan 988,831.37 2.17% 119,114.54 2.01% 185.1 3.06%
    Zhuhai 142,569.70 0.31% 20,141.93 0.34% 12.6 0.21%
    Zhongshan 210,762.67 0.46% 29,854.66 0.50% 56.0 0.93%
    Foshan 2,764,533.55 6.07% 425,541.27 7.19% 465.3 7.69%
    Changsha 865,853.31 1.92% 81,945.65 1.39% 168.1 2.78%
    Xiamen 1,496,686.25 3.29% 193,460.13 3.27% 113.5 1.88%
    Sub-total 15,439,161.48 33.91% 1,920,434.19 32.46% 1,904.0 31.46%
    Yangtze River Delta Region
    Shanghai 4,252,557.37 9.34% 778,660.86 13.16% 629.3 10.40%
    Suzhou 1,946,514.70 4.27% 207,992.71 3.52% 205.9 3.40%
    Hangzhou 4,311,880.02 9.47% 620,952.67 10.50% 424.8 7.02%
    Nanjing 1,693,730.66 3.72% 205,784.86 3.48% 165.6 2.74%
    Nanchang 113,148.85 0.25% 9,045.82 0.15% 32.5 0.54%
    Ningbo 686,613.83 1.51% 129,422.84 2.19% 64.3 1.06%
    Zhengjiang 277,808.09 0.61% (196.57) 0.00% 55.3 0.91%
    Wuxi 985,249.49 2.16% 74,777.79 1.26% 192.0 3.17%
    Hefei - 0.00% (3,847.14) -0.07% - -
    Sub-total 14,267,503.01 31.33% 2,022,593.84 34.19% 1,769.8 29.24%
    Bohai-rim Region
    Beijing 2,260,500.67 4.96% 372,509.68 6.29% 218.3 3.61%
    Tianjin 4,587,167.27 10.07% 432,447.17 7.31% 640.4 10.58%
    Shenyang 2,418,185.53 5.31% 377,624.14 6.38% 477.1 7.88%
    Dalian 775,890.16 1.70% 62,691.32 1.06% 98.8 1.63%
    Qingdao 750,529.36 1.65% 34,331.93 0.58% 144.6 2.39%
    Changchun 571,753.07 1.25% 42,886.19 0.72% 101.7 1.68%
    Sub-total 11,364,026.06 24.94% 1,322,490.43 22.34% 1,680.9 27.78%
    Central and Western Region
    Chengdu 3,372,140.85 7.40% 529,490.09 8.95% 517.9 8.56%
    Wuhan 982,039.40 2.16% 140,400.14 2.37% 165.0 2.73%
    Chongqing 118,378.17 0.26% (15,051.91) -0.25% 13.9 -30
    Xian - - (3,489.57) -0.06% - -
    Sub-total 4,472,558.42 9.82% 651,348.75 11.01% 696.9 11.29%
    Total 45,543,248.97 100.00% 5,916,867.21 100.00% 6,051.6 100.00%
    (2) Operating results of the major wholly-owned subsidiaries and non wholly-owned subsidiaries of the Company
    (Unit: RMB)
    Name of company Equity
    interest
    Sales revenue
    in 2009
    Net profit
    in
    2009
    Total assets at
    the end of 2009
    Major projects developed
    in 2009
    Shenzhen Vanke Real
    Estate Company Limited 100% 4,561,755,565 664,074,800 16,724,434,061 King Metropolis, Water
    Cities
    Guangzhou Vanke Real
    Estate Company Limited 100% 3,790,267,716 522,457,100 10,772,167,600 Le Bonheur, The Paradiso
    Dongguan Vanke Real
    Estate Company Limited 100% 879,454,435 101,684,100 4,501,831,700 Hongxinuoya ,The Dream
    Town
    Foshan Vanke Property
    Company Limited 100% 2,764,533,574 427,982,100 5,114,461,600 The Dream Town, The
    Paradiso
    Shanghai Vanke Real
    Estate Company Limited 100% 4,285,448,953 856,710,800 19,746,668,461 Gloden City, New City
    Garden
    Zhejiang Vanke Nandu
    Real Estate Company
    Limited
    100% 4,289,362,558 786,434,000 6,916,517,600
    West Spring Butterfly
    Garden, Liangzhu New
    Town
    Beijing Vanke Company
    Limited 100% 2,210,530,127 525,157,800 9,229,690,600 No. 5 Park Front Boutique
    Apartment, Holiday Town
    Tianjin Vanke Real Estate
    Company Limited 100% 4,587,167,307 559,453,200 6,657,275,900 Waterfront, The Paradiso
    Shenyang Vanke Real
    Estate Development
    Company Limited
    100% 2,006,855,090 219,109,200 4,175,489,900 The Paradiso, A
    Glamorous City
    Chengdu Vanke Real
    Estate Company Limited 100% 3,372,140,838 590,833,200 5,580,256,200 Jinyu Xiling, A Glamorous
    City
    Note: Subsidiries of the above companies are included. Profit and loss of minority interests are included in the net profit.
    (3) Implementation of the business plan
    In 2009, the rapid recovery of the property market, together with the release of the pent-up demand from
    2008 resulted in record sales. The sales area and sales amount of housing in the PRC for the full year
    increased by 43.9% and 80%, respectively, to 558,865,000 sq m and RMB3,815.72 billion, respectively,
    when compared with those of the previous year. The Company actively promoted sales. In 2009, the
    Company’s sales area and sales revenue amounted to 6,636,000 sq m and RMB63.42 billion, respectively.
    The Company’s planned area for newly commenced construction and completed area at the beginning of the
    year was 4,030,000 sq m and 6,190,000 sq m respectively. To cope with the rapid recovery of the property
    market, the Company announced in its 2009 interim report that it had adjusted its plan for newly commenced
    construction for the full year. The area for newly commenced construction was increased to 5,850,000 sq m.
    In 2009, the Company’s actual area for newly commenced construction and completed area amounted to
    5,554,000 sq m and 5,364,000 sq m respectively.
    Development of the Company’s major projects in 2009
    Unit: sq m
    Project Location Equity
    interest Site area Planned
    GFA
    Area for
    construction
    work
    commenced
    in 2009
    Area for
    construction
    work done in
    2009
    Accumulated
    area for
    construction
    work done as
    at the end of
    2009
    Pearl River Delta Region31
    The Village, Shenzhen Longgang 100% 472,011 646,930 - 98,890 336,375
    East Coast, Shenzhen Yantian 100% 342,984 265,864 - 20,308 255,166
    Vanke Centre, Shenzhen Yantian 100% 61,730 80,201 - - -
    Ravine Village,
    Shenzhen Baoan 60% 158,639 47,270 - - -
    Dajia Island, Shenzhen Huizhou 100% 364,450 234,975 - - -
    Eastern Metropolis,
    Shenzhen Longgang 100% 104,801 315,808 - 39,235 80,267
    Golden Hill, Shenzhen
    (深圳金色半山) Longgang 60% 62,474 96,969 54,969 - -
    Jiuzhou Project,
    Shenzhen Longgang 90% 236,330 513,012 - - -
    Qianlin Shanju,
    Shenzhen Longgang 100% 198,597 361,753 53,242 89,042 109,645
    Golden Mansion,(金域华
    府) , Shenzhen Baoan 100% 68,310 196,182 81,753 11,853 11,853
    Jinyu Huating ( 金域华
    庭), Huizhou Huicheng 100% 151,298 327,550 - 31,574 31,574
    Tianqin Bay, Shenzhen Yantian 90% 253,990 24,785 - 1,558 2,663
    Water Cities Shenzhen Tangxia 51% 596,786 412,504 - 60,875 60,875
    Airport Project,
    Shenzhen Baoan 100% 72,410 161,856 - - -
    Shuangyuewan, Huizhou Huidong 67% 360,000 360,000 - - -
    Dongfang Qinyuan
    Project, Shenzhen Longgang 90% 37,740 69,608 17,163 - -
    The Dream Town,
    Guangzhou Luogang 100% 222,000 156,742 - - 156,742
    Tian Jing Garden,
    Guangzhou Huadu 100% 61,324 143,979 - 68,557 143,979
    The Paradiso, Guangzhou Baiyun 50% 144,657 433,584 - 74,971 141,185
    Hillside Garden,
    Guangzhou Baiyun 50% 94,745 133,746 - 36,490 101,058
    Golden Kangyuan,
    Guangzhou Liwan 100% 6,576 58,027 - 58,027 58,027
    Golden Liyuan,
    Guangzhou Liwan 100% 5,734 40,558 - 40,558 40,558
    Everest Town,
    Guangzhou Luogang 100% 88,105 175,971 - 175,971 175,971
    Aureate City, Guangzhou Panyu 100% 58,093 72,549 - 21,866 21,866
    Golden Mansion (金域华
    府), Guangzhou Liwan 100% 6,623 46,147 - - -
    Tongfu West Project,
    Guangzhou Haizhu 100% 9,929 85,279 - - -
    Le Bonheur, Guangzhou Liwan 100% 38,111 135,689 135,689 - -
    Jinshazhou B04 Project,
    Guangzhou Baiyun 100% 17,207 30,973 - - -
    Nansha Project,
    Guangzhou Nansha 95% 134,760 269,520 - - -
    Yinhuwan, Guangzhou Huadu 100% 210,288 98,835 61,508 - -
    The East Canal No.1,
    Dongguang Guancheng 100% 83,156 239,752 - 23,663 239,752
    Dream Town, Dongguan Changping 100% 635,971 442,460 35,194 30,945 132,988
    Vanke Luhu, Dongguan
    (东莞万科麓湖) Dalingshan 100% 146,674 116,934 - - -
    Feilishan, Dongguan (东
    莞翡丽山) Nancheng 50% 249,534 366,543 - - -
    The Paradiso, Dongguan, Dalang 51% 91,780 183,560 64,987 66,004 66,004
    Golden Mansion,
    Dongguan (金域华府) Nancheng 51% 189,934 493,811 157,736 - -
    Hongxinuoya, Dongguan
    Songshan
    Lake 90% 416,618 291,585 158,571 - -
    Xincheng Wanpan,
    Foshan (新城湾畔) Shunde 100% 69,877 139,754 - 39,455 94,360
    Rancho Santa Fe, Foshan Shunde 100% 127,598 228,002 51,209 49,061 143,60132
    Palace, Foshan Nanhai 100% 110,001 240,170 - 123,554 215,518
    The Dream Town,
    Foshan Chancheng 100% 337,544 776,350 - 93,755 190,942
    Jinyu Huating ( 金域华
    庭), Foshan Nanhai 55% 75,916 184,607 17,922 8,789 44,425
    The Paradiso, Foshan Nanhai 55% 221,035 574,690 - - -
    Chencun Jinglong
    Project, Foshan Shunde 100% 38,986 134,891 - - -
    Dengzhou Project,
    Foshan Shunde 49% 284,036 710,092 - - -
    City Views, Zhongshan
    Southern
    District 100% 338,516 507,145 85,839 43,045 375,647
    Zhuhai Hotel, Zhuhai Xiangzhou 100% 109,917 143,792 11,177 - -
    Rancho Santa Fe,
    Zhongshan
    Eastern
    District 100% 76,387 150,764 - - -
    The Paradiso, Xiamen Siming 100% 55,657 166,746 - 52,105 166,746
    Huxin Island Project,
    Xiamen Huli 100% 95,098 199,710 - - -
    Xiang’an Project,
    Xiamen Xiang’an 100% 54,441 109,000 - - -
    Jimie Xinbin Project,
    Xiamen Jimei 100% 102,427 443,000 - - -
    The Paradiso, Changsha Furong 80% 120,150 363,369 - 103,762 103,762
    The Golden Home,
    Changsha Yuhua 100% 12,526 40,085 - 40,085 40,085
    Golden Mansion,(金域华
    府) Changsha Yuhua 60% 232,440 545,000 - - -
    Four Seas Project,
    Changsha Yuelu 80% 46,914 137,646 48,055 - -
    The Dream town,
    Changsha Kaifu 70% 195,421 465,542 - - -
    Jinyu Rongjun (金域榕
    郡), Fuzhou Jin’an 100% 166,736 403,446 - 20,310 20,310
    Paper Box Plant Project,
    Fuzhou Cangshan 100% 16,168 32,100 - - -
    Sea House, Haikou Xiuying 100% 115,503 56,941 - 56,941 56,941
    Senlinlu Project, Sanya Sanya 65% 1,330,552 877,004 - - -
    Sub-total 10,788,213 15,761,357 1,035,014 1,581,249 3,618,883
    Yangtze River Delta Region
    Firenze, Shanghai Minhang 49% 296,295 285,793 37,530 29,897 29,897
    Floral City, Shanghai Minhang 100% 140,678 207,773 22,793 58,109 172,697
    New City Garden,
    Shanghai Minhang 51% 287,741 365,764 95,364 - -
    Wuzhong Road 187
    Project, Shanghai Minhang 100% 61,724 145,065 145,065 - -
    No. 53, Qibao, Shanghai Minhang 100% 49,294 212,947 - - -
    Charming Garden,
    Shanghai Songjiang 49% 366,465 312,931 19,189 107,743 305,742
    Everest Town, Shanghai
    Pudong New
    District 90% 238,920 321,275 - 19,594 309,413
    Wujiefang Project,
    Shanghai
    Pudong New
    District 99.8% 121,463 129,242 - - -
    Qijiefang Project,
    Shanghai
    Pudong New
    District 99.8% 83,854 142,612 142,612 - -
    Jiyang Road Project,
    Shanghai
    Pudong New
    District 99.8% 19,392 16,500 16,500 - -
    Huacao 213, Shanghai Minhang 100% 172,668 295,700 - 17,365 295,700
    Wonderland, Shanghai Baoshan 100% 383,576 471,700 - 44,530 438,186
    Castle Tudor, Shanghai Baoshan 100% 231,753 254,356 88,589 - -
    Blue Mountain Town,
    Shanghai
    Pudong New
    District 100% 433,180 209,171 59,583 - 163,807
    Golden City, Shanghai
    Pudong New
    District 60% 405,627 809,929 125,694 123,470 123,470
    Tongshan Street Project, Pudong New 75% 90,645 277,031 - - -33
    Shanghai District
    Bingjiang Project,
    Shanghai
    Pudong New
    District 25% 38,753 103,132 - - -
    Crystal Garden, Shanghai Qingpu 55% 77,804 79,523 30,670 - -
    North of Land Lot No.
    35, Qibao, Shanghai Minhang 51% 39,366 69,913 - - -
    Liangzhu New Town,
    Hangzhou Yuhang 100% 3,354,214 2,309,282 - 131,985 576,025
    Aureate City, Hangzhou Shangcheng 100% 3,584 13,176 - 13,176 13,176
    A Glamorous City,
    Hangzhou Jianggan 100% 84,438 190,876 - 90,163 190,876
    West Spring Butterfly
    Garden, Hangzhou Xihu 51% 155,838 354,038 131,706 112,060 112,060
    Golden Home, Hangzhou Fuyang 55% 55,576 110,834 - - -
    Spring Bay, Hangzhou Fuyang 100% 499,483 208,981 15,048 - -
    Caozhuang Project,
    Hangzhou Jianggan 100% 37,181 86,945 - - -
    Nimble Bay, Suzhou
    Industrial
    District 70% 384,042 821,664 20,504 16,224 494,041
    Ben’an Project, Suzhou
    Industrial
    District 51% 155,673 133,506 - - 45,714
    Golden Home, Suzhou Canglang 55% 134,771 242,588 - 145,199 189,159
    Changfeng School
    Project, Suzhou Canglang 49% 48,714 48,153 20,939 - -
    Jinyu Tixiang, Suzhou
    Industrial
    Zone 51% 47,177 118,099 - - -
    Golf, Kunshan Bacheng 100% 433,916 328,678 2,345 - -
    Eastern Impression,
    Wuxi
    Changjiang
    Road North,
    New District 70% 81,664 214,817 - 62,365 214,817
    Glamorous City, Wuxi Binhu 60% 960,000 1,336,620 121,625 112,717 640,813
    Aureate City,( 金域缇
    香),Wuxi New District 100% 224,376 600,087 81,743 - -
    The Paradiso, Wuxi Binhu 55% 154,468 386,250 50.950 - -
    Jinyu Tixiang, Nanjing Jianye 100% 48,938 98,405 - 98,405 98,405
    Anpin Street, Nanjing Baixia 100% 27,325 26,790 - - -
    Stratford, Nanjing Xiaguan 100% 27,116 43,474 - 31,894 43,474
    The Paradiso, Nanjing Jiangning 100% 272,298 544,540 - - -
    Golden Milestone (金色
    里程), Nanjing Yuehua 100% 42,318 82,404 70,118 - -
    Glamorous City,
    Zhenjiang Tanshan Road 100% 834,900 918,571 152,186 56,080 161,080
    North part of
    Wonderland, Nanchang Gaoxin 50% 374,335 459,013 29,120 - 429,893
    Qingshan Lake,
    Nanchang Qingshanhu 50% 97,061 136,007 4,941 - -
    Policy Academy Project,
    Nanchang Qingyunpu 50% 97,109 145,206 - - -
    Golden Town, Ningbo Yinzhou 100% 190,369 313,602 61,223 56,460 199,399
    Golden Mansion,(金域华
    府) , Ningbo Yinzhou 10% 18,500 49,948 - - -
    Cicheng Project, Ningbo Yinzhou 100% 314,200 393,740 - - -
    Golden Mingjun, Hefei Shushan 50% 107,326 387,447 106,186 - -
    Jianghuai Project, Hefei Shushan 50% 115,628 412,098 - - -
    Sub-total 12,921,738 16,226,195 1,652,221 1,275,671 5,196,079
    Bohai-Rim region
    Holiday Town, Beijing Fengtai 50% 224,289 413,304 80,570 114,103 265,981
    Wonderland, Beijing Shunyi 100% 195,817 304,817 18,803 66,504 285,317
    Blue Mountain, Beijing Chaoyang 100% 55,885 147,249 114,600 - -
    Hongshi Jiayuan (红狮家
    园), Beijing Fengtai 100% 59,800 184,502 - - -
    Jinyu Vanke City,
    Beijing Changping 49% 178,908 543,461 97,275 169,353 169,35334
    No. 5 Park Front
    Boutique Apartment,
    Beijing Chaoyang 60% 37,917 97,044 - - -
    Changyang Project,
    Beijing Fangshan 50% 437,179 853,165 - - -
    Waterfront, Tianjin Dongli 100% 2,708,886 1,910,211 52,730 156,043 547,788
    Holiday Town, Tianjin Xiqing 55% 228,541 296,382 - 58,832 296,382
    The Paradiso, Tianjin
    Development
    District 96% 60,200 283,684 - 283,684 283,684
    Holiday Dew Garden,
    Tianjin Xiqing 100% 229,300 343,101 122,899 59,907 59,907
    A Glamorous City,
    Tianjin Dongli 100% 176,773 258,579 64,861 75,427 75,427
    Jin’ao International,
    Tianjin Xiqing 100% 58,577 162,566 78,889 - -
    Binhai Modern, Tianjin
    Development
    District 100% 6,538 40,312 - - -
    Binhai East, Tianjin
    Development
    District 100% 32,270 48,731 - - -
    New Milestone, Tianjin Dongli 51% 136,524 204,786 93,977 - -
    Sino-Singapore Eco-city
    (中新生态城), Tianjin
    Binhai New
    District 95% 90,604 126,600 - - -
    Golden Home, Anshan Tiedong 100% 48,874 97,969 - 40,515 83,368
    Dream Town, Anshan Gaoxin 100% 167,664 405,257 43,897 75,502 75,502
    Huisile Project(惠斯勒项
    目), Anshan Tiedong 100% 303,700 530,560 - - -
    New Milestone,
    Shenyang
    Hunnan New
    District 100% 52,659 119,260 41,000 48,799 119,260
    Rancho Santa Fe,
    Shenyang Dongling 100% 344,366 111,539 12,330 27,458 89,659
    New Elm Mansion,
    Shenyang
    Hunnan New
    District 100% 182,139 289,647 41,277 58,854 232,183
    A Glamorous City,
    Shenyang Yuhong 100% 156,817 297,026 34,307 142,049 206,703
    Dream Town, Shenyang Heping 49% 361,320 895,175 137,312 173,491 428,146
    The Paradiso, Shenyang
    Hunnan New
    District 100% 226,356 615,688 125,930 87,920 87,920
    Jiyu International(金域国
    际), Shenyang Tiexi 100% 27,249 108,581 108,581 - -
    Wulihe Project,
    Shenyang Shenhe 55% 83,227 291,295 - - -
    Rancho Phase II (兰乔大
    二期), Shenyang Dongling 100% 43,334 21,245 - - -
    Toudao Project,
    Shenyang Dongling 70% 315,362 378,434 - - -
    Ravine Village, Dalian Ganjingzi 55% 363,716 380,922 - 65,868 174,855
    A Glamorous City,
    Dalian Ganjingzi 30% 195,526 404,240 148,100 - -
    City Garden, Dalian Shahekou 100% 28,580 33,942 - - -
    Subsequent Projects of
    Glamorous City, Dalian Ganjingzi 55% 20,474 44,272 - - -
    Yangpu Garden,
    Changchun
    Economic
    Development
    Zone 100% 89,678 178,229 62,235 88,743 88,743
    Tanxi Villa, Changchun
    Jingyue
    Development
    Zone 100% 75,000 48,956 16,759 12,572 12,572
    Diesel Engine Factory
    Project, Changchun Erdao 49% 251,356 503,040 - - -
    Xiaodonggou Project,
    Changchun Jingyue 50% 399,715 477,840 - - -
    228 Factory Project,
    Changchun Chaoyang 100% 276,769 493,330 - - -
    Wonderland, Qingdao Jimo 55% 150,753 241,165 71,504 36,315 36,315
    A Glamorous City, Chengyang 80% 200,289 340,491 50,897 31,382 171,78435
    Qingdao
    Aureate City, Qingdao Sifang 60% 61,873 179,756 36,808 39,163 39,163
    Lanshan (蓝山), Qingdao
    Shibei
    District 100% 68,153 204,459 - - -
    Dream Town, Qingdao Sifang 55% 154,607 395,794 - - -
    City Garden, Qingdao Chengyang 80% 130,873 231,647 - - -
    Datuan Project,Yantai Zhifu 100% 311,614 444,065 - - -
    Sub-total 10,010,050 14,982,318 1,655,541 1,912,484 3,830,011
    Central and western region
    A Glamorous City,
    Chengdu Chenghua 60% 308,501 761,258 45,401 100,046 433,105
    The Paradiso, Chengdu Chenghua 100% 56,293 293,504 - 237,100 237,100
    Twin Riverside, Chengdu Xindu 100% 267,347 338,203 50,109 38,218 318,886
    Jinyu Xiling(金域西岭),
    Chengdu Jinniu 60% 79,331 359,031 - 73,199 73,199
    Golden Lingyu, Chengdu Qingyang 100% 49,628 297,980 - - -
    Jinrun Huafu, Chengdu Jingjiang 100% 52,895 264,473 65,179 - -
    Golden Hairong,
    Chengdu Wuhou 49% 54,970 234,464 53,843 - -
    Haiyue Huicheng,
    Chengdu Shuangliu 90% 104,307 521,698 62,649 - -
    A Glamorous City,
    Wuhan
    East Lake
    High-Tech
    Development
    Zone 100% 225,258 405,457 195,319 103,698 188,859
    Golden Home, Wuhan Jianghan 100% 23,851 149,618 - - 31,070
    The Peninsula,
    Wonderland, Wuhan Dongxi Lake 100% 201,800 253,361 - 9,188 253,361
    Element Integration]( 万
    科圆方), Wuhan Jianghan 55% 12,022 42,869 42,869 - -
    Golf City Garden, Wuhan Dongxihu 49% 237,660 393,858 129,770 20,275 152,996
    Golden Mansion (金域华
    府), Wuhan Wuchang 55% 59,790 191,300 117,102 - -
    Dream Town, Wuhan Jianghan 90% 65,901 299,337 113,977 - -
    Final phase of City
    Garden , Wuhan
    East Lake
    High-Tech
    Development
    Zone 100% 230,970 349,607 - - -
    Wanwei,Wuhan 武汉万
    威
    Wuhan
    Economic and
    Technological
    Development
    Zone 100% 213,440 533,600 - - -
    New City, Xi’an Yanta 51% 41,765 260,735 - - -
    Yuyuan, Chongqing, (渝
    園) Yubei 51% 229,581 344,372 244,960 13,120 13,120
    Gaoxinyuan Zone H
    Project, Chongqing Yubei 100% 41,448 145,067 145,067 - -
    Gaoxinyuan Zone I
    Project, Chongqing Yubei 100% 138,071 376,737 - - -
    Chongqing Jiaotong
    University Project,
    Chongqing Yuzhong 100% 105,463 533,486 - - -
    Sub-total 2,800,290 7,350,014 1,266,244 594,844 1,701,697
    Total 36,520,292 54,319,883 5,609,021 5,364,247 14,346,670
    3. Major Suppliers and Customers
    (1) The aggregate purchase amount from the Company’s five largest suppliers as a percentage of its
    total purchase during the year
    In 2009, the Company continued to expand the scope of sourcing, deepen the relationship with its partners,
    further centralise procurement and increase strategic collaborations, in order to achieve economies of scale.36
    In 2009, purchase made through centralised procurement and strategic collaborations accounted for 43.67 per
    cent of the total purchase. The categories of products bought through group purchase increased from 12 in
    2008 to 24. Products for C Grade standardised furbishing procured through group purchase by means of a
    tender offered nationwide helped the Company save over RMB100 million in purchasing cost during the
    year. During the year under review, the aggregate purchase amount from the five largest material and
    equipment suppliers was RMB649 million, accounting for 3.23 per cent of the total purchase for the year.
    (2) The aggregate sales amount to the Company’s five largest customers as a percentage of its total
    sales during the year
    The Company’s major project is commodity housing. Most of its customers are individual homebuyers from
    various cities where the Company has launched its projects. Only for certain projects are there signs of a
    small number of institutional buyers or bulk purchasers. As a result, sales to major customers only account
    for a small proportion of the annual turnover. Sales to the five largest customers amounted to approximately
    RMB421 million, accounting for 0.66% of the Company’s total sales revenue of 2009.
    4. Financial status of the Company
    During the year under review, the Company’s operation remained stable and financial position was sound.
    Unit: RMB ’000
    Item 2009-12-31 2008-12-31 Change (+/-) Reasons for change
    Construction in progress 593,208.23 188,587.02 214.55% Construction of Vanke Center making
    progress
    Interest in jointly
    controlled entities 2,763,877.40 1,888,809.16 46.33% Increase in joint venture projects
    Trade and other
    receivables 17,235,320.84 8,416,531.56 104.78%
    Increase in advance payment for land
    premium of new projects, and increase in
    investment for the development of
    projects with associates and jointly
    controlled entities
    Current interest-bearing
    borrowings 8,628,670.48 17,866,342.91 -51.70% Repayment of loans; change in debt
    structure
    Item Jan-Dec
    2009
    Jan-Dec
    2008 Change (+/-) Reasons for change
    Other income 263,313.11 77,012.47 241.91% Income from disposal of investment
    Net finance costs -344,393.21 -634,318.28 -45.71% Increase in cash dividends from
    investment of cost method
    Share of profits less
    losses of associates 392,250.94 219,115.50 79.02% More profits recognised from associates
    Minority interests 1,100,269.81 606,699.13 81.35% More profits recognised from joint
    venture projects
    Other financial
    indicators
    Jan-Dec
    2009
    Jan-Dec
    2008 Change (+/-) Reasons for change
    Gearing ratio 67.10% 67.81% Down by 0.71 percentage
    points Increase in receipts in advance, etc
    Current ratio 1.92 1.76 Up by 0.16 Relatively greater increase in payments in
    advance
    Quick ratio 0.59 0.43 Up by 0.16 Relatively greater increase in payments in
    advance
    Equity ratio 32.90% 32.19% Up by 0.71 percentage points Increase in receipts in advance, etc
    Accounts receivable
    turnover (Day)
    6 8 Decrease by 2 days Decrease in total accounts receivable,
    increase in turnover
    Inventory turnover (Day) 918 1,050 Decrease by 132 days Acceleration in construction progress
    5. Investment of the Company
    (1) Use of proceeds from the capital market37
    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).
    The aforesaid proceeds were used to invest in 11 projects. Details on the investment amount, investment
    gain, development progress of the projects as of 31 December 2009 are as follows:
    Unit: RMB’000
    Total amount of proceeds, net 9,936,600 Funds used for investment during the year 824,400
    Amount of proceeds with changed usage 0
    Percentage of proceeds with changed
    usage 0% Accumulated funds used 9,514,880
    Investment projects
    Is
    there
    any
    change
    in
    project
    Planned
    investment
    Funds
    used for
    investment
    during the
    year
    Accumulated
    funds used
    Development
    progress
    Estimated
    net
    margin
    Net margin
    on
    accumulated
    booked
    sales during
    the year
    Change
    in
    feasibility
    Everest Town, (former Science City H3
    Project), Guangzhou
    No 600,000 600,000 100% 9.20% 10.84% No
    The Paradiso (former Jinshazhou
    Project), Guangzhou
    No 800,000 800,000 46% 13.70% 10.14% No
    The Dream Town (former Nanzhuang
    Project), Foshan
    No 900,000 900,000 32% 17.08% 22.20% No
    Zhuhai Hotel Project, Xiangzhou District,
    Zhuhai
    No 650,000 44,580 587,380 4% 11.73% - No
    West Spring Butterfly Garden (former
    Jiangcun Project), Hangzhou
    No 700,000 700,000 39% 10.12% 18.03% No
    Liangzhu Project, Yuhang District,
    Hangzhou
    No 1,700,000 1,700,000 35% 10.29% 9.64% No
    Golden Town Project, Yinzhou District,
    Ningbo
    No 1,636,600 219,030 1,636,600 86% 11.42% 15.80% No
    Wujiefang Project, Pudong, Shanghai No 1,200,000 501,920 1,044,600
    Construction
    not
    commenced
    10.34% - No
    Jinse Yazhu (former Zhonglin Project),
    Shanghai
    No 700,000 38,750 700,000 100% 14.94% 19.44% No
    Anpin Street Project, Baixia District,
    Nanjing
    No 650,000 160 446,300
    Construction
    not
    commenced
    12.09% - No
    Stratford (former Huangjiayu Project),
    Nanjing
    No 400,000 19,960 400,000 100% 20.54% 11.20% No
    Total No 9,936,600 824,400 9,514,880 - - - No
    Remarks on delay and estimated earnings
    (by project)
    (1) The preconstruction of Shanghai Wujiefang Project was affected by the government’s
    redirection of roads due to its location within the Expo area; construction of the project
    therefore could not commence according to schedule. The Company is in the progress of
    submitting planning reports for approval. It is expected that construction will commence in
    the second half of 2010, and the overall development plan of the project will be adjusted
    according to progress.38
    Nanjing Anpin Street Project was not able to commence construction according to
    schedule, as the government was making adjustment to its planning to preserve the city’s
    heritage. The Company is in the progress of submitting planning reports for approval. It is
    expected that construction will commence in the second half of 2010, and the overall
    development plan of the project will be adjusted according to progress.
    (2) In view of the current sales progress of projects and market forecast, the earnings to be
    generated from Stratford Project, Nanjing, will not reach the estimated level stated in the
    prospectus; it is expected that other projects financed by the raised proceeds will have a
    return rate above the estimated return rate, and 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 project) No changes
    Application of the balance of the
    proceeds
    As of 31 December 2009, the Company had applied RMB9,514.88 million of the proceeds
    in accordance with the prospectus. The amount represented 95.8% of the net proceeds of
    RMB9,936.6 million. The balance of proceeds of RMB421.72 million will be applied in
    accordance with the progress of project development.
    (2)Use of capital not from the capital market
    A. Equity investment
    During the year under review, the Group’s net investment amount increased by RMB 5,383,180,000.
    1)During the year under review, the Company promoted and established 15 new subsidiaries, each with
    registered capital of over RMB30 million. The details are as follows:
    No. Newly-established company Currency Registered
    capital
    Actual
    investment by
    China Vanke
    (RMB)
    Scope of business
    1 Ningbo Jiangbei Vanke Property Co., Ltd (宁波
    江北万科置业有限公司)
    RMB 675,000,000.00 675,000,000.00 Property development
    2
    Foshan Nanhai Paradiso Real Estate Co., Ltd
    (佛山市南海区万科金域蓝湾房地产有限公
    司)
    USD 95,000,000.00 356,697,652.08 Property development
    3
    Shenyang Tianqin Bay Vanke Property
    Company Limited (沈阳万科天琴湾置业有限
    公司)
    USD 99,980,000.00 334,492,683.00 Property development
    4 Qingdao Dream Town Real Estate Co., Ltd (青
    岛万科城地产有限公司)
    RMB 300,635,000.00 300,635,000.00 Property development
    5 Hangzhou Youhe Enterprise Management
    Co.,Ltd (杭州佑和企业管理有限公司) RMB 300,000,000.00 300,000,000.00 Investment and
    consultancy
    6 Hangzhou Vanke Junyuan Property Co., Ltd
    (杭州万科郡园置业有限公司*) USD 29,990,000.00 204,769,470.75 Property development
    7 Xiamen Singlu Oriental Trading Co., Ltd (厦门
    新鹭东方商贸有限公司)
    RMB 114,264,857.00 114,264,857.00 Wholesale and retail of
    construction materials
    8 Jiangxi Vanke Qingyun Property Co., Ltd (江
    西万科青云置业有限公司)
    RMB 100,000,000.00 100,000,000.00 Property development
    9
    Wuhan Vanke City Garden Real Estate
    Development Co., Ltd (武汉万科城市花园房
    地产开发有限公司)
    RMB 100,000,000.00 100,000,000.00 Property development
    10 Shenyang Vanke Jinyu Xijun Real Estate
    Development Co., Ltd. RMB 68,000,000.00 68,000,000.00 Property development
    11 Shanghai Qiaobei Property Co., Ltd (上海桥北
    置业有限公司)
    RMB 100,000,000.00 60,000,000.00 Property development
    12 Qingdao Vanke Company Limited RMB 50,000,000.00 50,000,000.00 Property development
    13 Qingdao Vanke Property Co., Ltd (青岛万科置
    业有限公司)
    RMB 50,000,000.00 50,000,000.00 Property development39
    14 Shanghai Yudi Investment Co., Ltd (上海御地
    投资咨询有限公司)
    RMB 50,000,000.00 30,000,000.00 Investment and
    consultancy
    15 Tianjin Vanke Airport Property Co., Ltd (天津
    万科空港置业有限公司)
    RMB 40,000,000.00 20,400,000.00 Property development
    Total 2,764,259,662.83
    In addition to the aforesaid companies, the Group had promoted and established another 25 companies, with a
    total amount of investment of RMB238 million.
    2). The major companies the Group acquired during the year under review are as follows:
    a) On 31 May 2009, the Company acquired 90% equity interest of Wuhan Wangjiadun Xiandaicheng Real
    Estate Development Co., Ltd. for a total cash consideration of RMB368.43 million.
    b) On 24 August 2009, the Compan acquired 100% equity interest of Trendell Co., Ltd. for a total cash
    consideration of RMB140.39 million.
    c) , On 11 September 2009, the Company acquired 100% equity interest of Ample Avenue Investment Co.,
    Ltd. for a total cash consideration of RMB103.39 million.
    d) On 15 December 2009, the Company acquired 95% equity interest of Qingyuan Hongmei Investment
    Co., Ltd, for a total cash consideration of RMB266 million.
    e) On 31 December 2009, the Company obtained 65% equity interest of Shanghai Pangzhi Investment
    Management Co., Ltd, for a total cash consideration of RMB567.75 million.
    The total amount of investment in another 23 companies acquired by the Company during the year under
    review was RMB250 million.
    3)During the year under review, the Company increased the capital of seven wholly-owned subsidaries by
    RMB685 million. Of the total amount, RMB340 million was for Wuxi Dongcheng Real Estate Co., Ltd and
    RMB137 million for Fuyang Spring Bay Property Company Limited. Capital injection to other wholly-owned
    companies amounted to RMB208 million.
    (2) Other investments
    During the year under review, the Company had acquired 44 new projects, with a total site area of
    approximately 7,630,000 sq m and a planned GFA of approximately 13,320,000 sq m, of which
    approximately 10,360,000 sq m of planned GFA was attributable to China Vanke’s equity holding.
    (Unit: sq m)
    City Project Location Equity
    interest Site Area Planned
    GFA
    GFA
    attributable
    to China
    Vanke’s
    equity
    holding
    Progress
    Shenzhen Dongfang Qinyuan
    Project Longgang 90% 37,740 69,608 62,647 Under
    construction
    Le Bonheur Liwan 100% 38,111 135,689 135,689 On sale
    Jinshazhou B04 Project Baiyun 100% 17,207 30,973 30,973 Pre-construction
    Guangzhou Nansha Project Nansha 95% 134,760 269,520 256,044 Pre-construction
    Yinhuwan Huadu 100% 210,288 98,835 98,835 Under
    construction
    Dongguan Hongxinuoya Songshan Lake 90% 127,694 89,385 80,447 Pre-construction
    Foshan The Paradiso Nanhai 55% 221,035 574,690 316,080 Pre-construction
    Chencun Jinglong Shunde 100% 38,986 134,891 134,891 Under
    construction40
    Dengzhou Project Shunde 49% 284,036 710,092 347,945 Pre-construction
    Huxin Island Project Huli 100% 95,098 199,710 199,710 Pre-construction
    Xiamen Xiang’an project Xiang’an 100% 54,441 109,000 109,000 Pre-construction
    Jimei Xingbin Jimei 100% 102,427 443,000 443,000 Pre-construction
    Golden Mansion Yuhua 60% 232,440 545,000 327,000 Pre-construction
    Four
    Seas Project Yuelu 80% 46,914 137,646 110,117 Under
    Changsha construction
    Dream town Kaifu 70% 195,421 465,542 325,879 Pre-construction
    Zhongshan Rancho Santa Fe Eastern District 100% 76,387 150,764 150,764 Pre-construction
    Fuzhou Paper Box Plant Project Cangshan 100% 16,168 32,100 32,100 Pre-construction
    Sanya Senlinhu Project Sanya 65% 1,330,552 877,004 570,053 Pre-construction
    Shanghai North of Land Lot No. 35,
    Qibao Minhang 51% 39,366 69,913 35,656 Pre-construction
    Hangzhou Caozhuang Project Jianggan 100% 37,181 86,945 86,945 Pre-construction
    Wuxi South of Golden Home
    Land Lot New District 100% 102,170 306,510 306,510 Pre-construction
    Nanchang Policy Academy Project Qingyunpu 50% 97,109 145,206 72,603 Pre-construction
    Ningbo Cicheng Project Yinzhou 100% 314,200 393,740 393,740 Pre-construction
    Beijing Changyang Project Fangshan 50% 437,179 853,165 426,583 Pre-construction
    New Milestone Dongli 51% 136,524 204,786 104,441 Under
    Tianjin construction
    Sino-Singapore Eco-city Binhai New District 95% 90,604 126,600 120,270 Pre-construction
    Anshan Huisile Project Tiedong 100% 303,700 530,560 530,560 Pre-construction
    Jiyu International,
    Shenyang沈阳金域国际 Tiexi 100% 27,249 108,581 108,581 Under
    construction
    Wulihe project Shenhe 55% 83,227 291,295 160,212 Pre-construction
    Rancho Phase II
    Shenyang沈阳兰乔大二
    期
    Dongling 100% 43,334 21,245 21,245 Pre-construction
    Shenyang
    Toudao Project Dongling 70% 315,362 378,434 264,904 Pre-construction
    Dalian Subsequent projects of
    Glamorous Cit Ganjingzi 55% 20,474 44,272 24,350 Pre-construction
    Diesel Engine Factory
    Project Erdao 49% 251,356 503,040 246,490 Pre-construction
    Changchun Xiaodonggou Project Jingyue 50% 399,715 477,840 238,920 Pre-construction
    228 Factory Project Chaoyang 100% 276,769 493,330 493,330 Pre-construction
    Blue Mountain Northern District 100% 68,153 204,459 204,459 Pre-construction
    Qingdao Dream Town Sifang 55% 154,607 395,794 217,687 Pre-construction
    City Garden Chengyang 80% 130,873 231,647 185,318 Pre-construction
    Yantai Datuan Project Zhifu 100% 311,614 444,065 444,065 Pre-construction
    Gaoxinyuan Zone H
    Project Yubei 100% 41,448 145,067 145,067 Under
    construction
    Gaoxinyuan Zone I
    Chonqqing Project Yubei 100% 138,071 376,737 376,737 Pre-construction
    Chongqing Jiaotong
    University Project Yuzhong 100% 105,463 533,486 533,486 Pre-construction
    Final phase of City
    Garden
    East Lake High-
    Tech Development
    Zone
    100% 230,970 349,607 349,607 Pre-construction
    Wuhan
    Wanwei,
    武汉万威
    Wuhan Economic
    and Technological
    Development Zone
    100% 213,440 533,600 533,600 Pre-construction
    Total 7,629,862 13,323,373 10,356,536
    The total land premium of the above-mentioned new projects attributable to China Vanke’s equity holding
    was RMB24.82 billion. As at the end of 2009, the Company had paid a total premium of RMB14.85 billion
    for the above-mentioned new projects.41
    Subsequent event:
    From the end of the year under review to the date of publication of this report, the Company acquired 18 new
    projects, with a GFA of 4,380,000 sq m attributable to China Vanke’s equity holding. Details are as follows:
    (Unit: sq m)
    6. Project development plan for the new year
    As at the end of 2009, the Company had 125 projects under planning with an aggregate GFA of
    approximately 30,630,000 sq m, approximately 24,360,000 sq m of which was GFA attributable to China
    Vanke’s equity holding.
    In view of the existing land bank and future market conditions, the Company sets its 2010 plan for area for
    newly commenced construction and completed area at approximately 8,550,000 sq m and 5,040,000 sq m,
    respectively. The planned area for newly commenced construction is approximately 52.5% more than the
    actual area for newly commenced construction achieved in 2009. The completed area during the year under
    review was relatively smaller, mainly due to the continued rise in the proportion of the Company’s furbished
    units among newly commenced projects in recent years. Before the proportion of fully furbished units and
    furbished units is stabilised, the period between the overall completion date and the date of commenced
    construction and date of product launch will be extended.
    The Group’s major projects in 2010:
    City Project Location Equity
    interest Site area Planned GFA
    GFA
    attributable to
    China Vanke’s
    equity holding
    Progress
    Shenzhen Buji Shuijing(布吉水
    径) Longgang 60% 165,003 455,200 273,120
    Pre-construction
    Phase 2, Chencun (陈
    村)
    Shunde 100% 117,865 294,900 294,900
    Pre-construction
    Lunjiao (伦教) Shunde 100% 80,570 241,712 241,712 Pre-construction
    Foshan
    F04 Shunde 50% 30,381 75,600 37,800 Pre-construction
    Guangzhou Tianhe Yupin (天河
    御品)
    Baiyun 100% 22,297 120,850 120,850 Under
    construction
    North of Songshan
    Lake
    Songshan
    Lake 51% 136,151 381,223 194,424 Pre-construction
    Dongguan Liansheng Road (连
    升路), Humen
    Humen 100% 60,570 151,425 151,425
    Pre-construction
    Changsha Machine Tool
    Factory Tianxin 100% 9,970 232,762 232,762 Pre-construction
    Redevelopment of
    Shanghai New
    Village
    Taijiang 100% 93,359 448,123 448,123 Pre-construction
    Fuzhou
    Yongtai Red Cliff Yongtai 51% 392,000 392,000 199,920 Pre-construction
    Pudong Airport C4 Pudong 100% 119,628 148,814 148,814 Pre-construction
    Shanghai
    Zhaochong Road East Qingpu 100% 119,860 145,266 145,266 Pre-construction
    Wuxi
    Xincheng Road
    East(信成道东) Binhu 100% 154,119 380,279 380,279 Pre-construction
    Ningbo Dongjiacun (董家村) Yinzhou 100% 95,242 171,436 171,436 Pre-construction
    Zhenjiang Bailongshan (白龙
    山)
    Runzhou 100% 285,683 416,400 416,400
    Pre-construction
    Shenyang Haiman(海漫) Dadong 100% 74,500 223,600 223,600 Pre-construction
    Wuhan Redevelopment of
    Changjiang Village Hongshan 100% 135,600 470,400 470,400 Pre-construction
    Xi’an Phase I Qujiang
    Project 60% 152,700 386,000 231,600 Pre-construction
    Total 2,245,499 5,137,502 4,384,34342
    (Unit: sq m)
    Project Name Location Equity
    interest Site area Planned
    GFA
    Planned area
    for newly
    commenced
    construction
    in 2010
    Planned
    completed
    area in 2010
    GFA
    construction
    of which not
    commenced
    as at the end
    of 2009
    Pearl River Delta Region
    The Village, Shenzhen Longgang 100% 472,011 646,930 42,932 104,496 143,170
    East Coast, Shenzhen Yantian 100% 342,984 265,864 - 10,698 -
    Vanke Center Yantian 100% 61,730 80,201 - 80,201 -
    Ravine Village,
    Shenzhen Baoan 60% 158,639 47,270 - - 47,270
    Dajia Island, Shenzhen Huizhou 100% 364,450 234,975 - - 234,975
    Eastern Metropolis,
    Shenzhen Longgang 100% 104,801 315,808 62,956 - 238,001
    Golden Hill, (金色半
    山)Shenzhen
    Longgang 60% 62,474 96,969 - 49,003 42,000
    Jiuzhou Project,
    Shenzhen Longgang 90% 236,330 513,012 - - 513,012
    Qianlin Shanju,
    Shenzhen Longgang 100% 198,597 361,753 131,354 38,590 199,581
    Golden Mansion,(金域
    华府) Shenzhen
    Baoan 100% 68,310 196,182 - 100,454 -
    Jinyu Huating (金域华
    庭), Huizhou
    Huicheng 100% 151,298 327,550 84,082 35,655 295,977
    Tianqin Bay, Shenzhen Yantian 90% 253,990 24,785 - 3,649 12,793
    Water Cities Shenzhen Tangxia 51% 596,786 412,504 81,446 54,046 308,837
    Airport Project,
    Shenzhen Baoan 100% 72,410 161,856 161,856 - 161,856
    Shuangyuewan,
    Huizhou Huidong 67% 360,000 360,000 - - 360,000
    Dongfang Qinyuan
    Project, Shenzhen Longgang 90% 37,740 69,608 52,445 - 52,445
    The Paradiso,
    Guangzhou Baiyun 50% 144,657 433,584 40,000 96,517 157,233
    Hillside Garden,
    Guangzhou Baiyun 50% 94,745 133,746 - 32,529 -
    Aureate City,
    Guangzhou Panyu 100% 58,093 72,549 - 5,850 -
    Golden Mansion,
    Guangzhou Liwan 100% 6,623 46,147 - 42,008 -
    Tongfu West Project,
    Guangzhou Haizhu 100% 9,929 85,279 46,078 - 46,078
    Le Bonheur,
    Guangzhou Liwan 100% 38,111 135,689 - 76,897 -
    Jinshazhou B04
    Project, Guangzhou Baiyun 100% 17,207 30,973 30,973 - 30,973
    Nansha Project,
    Guangzhou Nansha 95% 134,760 269,520 45,000 - 269,520
    Yinhuwan, Guangzhou Huadu 100% 210,288 98,835 37,327 69,908 37,327
    Tianhe Yupin,
    Guangzhou Baiyun 100% 22,297 122,363 - 122,363 -
    Dream Town,
    Dongguan Changping 100% 635,971 442,460 91,724 35,194 194,324
    Vanke Luhu,( 万科麓
    湖)Dongguan
    Dalingshan 100% 146,674 116,934 87,945 - 116,934
    Feilishan ( 东莞翡丽
    山), Dongguan
    Nancheng 50% 249,534 366,543 20,000 - 366,543
    The Paradiso
    Dongguan Dalang 51% 91,780 183,560 - 52,568 -0
    Golden Mansion, ( 金
    域华府)Dongguan
    Nancheng 51% 189,934 493,811 100,000 44,007 336,075
    Hongxinuoya,
    Dongguan Songshan Lake 90% 416,618 291,585 70,063 86,432 84,05843
    Xincheng Wanpan (新
    城湾畔) Foshan
    Shunde 100% 69,877 139,754 - 59,321 -
    Rancho Santa Fe,
    Foshan Shunde 100% 127,598 228,002 - 32,321 -0
    Golden Mansion,
    Foshan Nanhai 100% 110,001 240,170 - - -
    The Dream Town,
    Foshan Chancheng 100% 337,544 776,350 - 28,609 495,483
    Jinyu Huating,, Foshan Nanhai 55% 75,916 184,607 41,678 34,383 41,678
    The Paradiso, Foshan Nanhai 55% 221,035 574,690 160,127 - 574,690
    Chencun Jinglong
    Project, Foshan Shunde 100% 38,986 134,891 134,891 - 134,891
    Dengzhou Project,
    Foshan Shunde 49% 284,036 710,092 106,800 - 710,092
    City Views, Zhongshan Southern
    District 100% 338,516 507,145 43,831 89,356 43,831
    Zhuhai Hotel, Zhuhai Xiangzhou 100% 109,917 143,792 82,204 11,176 132,615
    Rancho Santa Fe,
    Zhongshan Eastern District 100% 76,387 150,764 120,764 45,221 150,764
    Huxin Island Project,
    Xiamen Huli 100% 95,098 199,710 95,240 - 199,710
    Xiang’an Project,
    Xiamen Xiang’an 100% 54,441 109,000 109,000 - 109,000
    Jimei Xingbin Project,
    Xiamen Jimei 100% 102,427 443,000 110,000 - 443,000
    The Paradiso,
    Changsha Furong 80% 120,150 363,369 130,622 - 259,552
    Golden Mansion,
    Changsha Yuhua 60% 232,440 545,000 194,310 63,000 545,000
    Four Seas Project,
    Changsha Yuelu 80% 46,914 137,646 - - 89,591
    Dream town, Changsha Kaifu 70% 195,421 465,542 162,938 21,444 465,542
    Jinyu Rongjun, (金域
    榕郡) Fuzhou
    Jin’an 100% 166,736 403,446 167,748 73,222 304,646
    Paper Box Plant
    Project, Fuzhou Cangshan 100% 16,168 32,100 32,100 - 32,100
    Senlinhu Project,
    Sanya Sanya 65% 1,330,552 877,004 213,312 - 877,004
    Sub-total 10,159,929 14,804,919 3,091,747 1,599,512 9,858,173
    Yangtze River Delta Region
    Firenze, Shanghai Minhang 49% 296,295 285,793 80,169 22,014 218,366
    Floral City, Shanghai Minhang 100% 140,678 207,773 14,559 7,581 14,559
    New City Garden,
    Shanghai Minhang 51% 287,741 365,764 128,418 31,861 270,400
    Baima Garden,
    Shanghai Songjiang 49% 366,465 312,931 - 7,189 -
    Wonderland, Shanghai Baoshan 100% 383,576 471,700 - 33,514 -
    Wuzhong Road 187
    Project, Shanghai Minhang 100% 61,724 145,065 - 101,334 -
    No. 53, Qibao ,
    Shanghai Minhang 100% 49,294 212,947 50,000 - 212,947
    Everest Town,
    Shanghai Pudong 90% 238,920 321,275 - 11,862 -
    Wujiefang Project,
    Shanghai Pudong 99.8% 121,463 129,242 - - 129,242
    Qijiefang Project,
    Shanghai Pudong 99.8% 83,854 142,612 - 142,612 -
    Jiyang Road Project,
    Shanghai Pudong 99.8% 19,392 16,500 - 16,500 -
    Castle Tudor, Shanghai Baoshan 100% 231,753 254,356 79,495 53,464 79,495
    Blue Mountain Town,
    Shanghai Pudong 100% 433,180 209,171 - 40,000 -
    Golden City, Shanghai Pudong 60% 405,627 809,929 125,150 125,694 513,188
    Tongshan Street
    Project, Shanghai Pudong 75% 90,645 277,031 - - 277,03144
    Bingjiang Project,
    Shanghai Pudong 25% 38,753 103,132 - - 103,132
    Crystal Garden,
    Shanghai Qingpu 55% 77,804 79,523 48,853 30,670 48,853
    North of Land Lot
    No.35 Minhang 51% 39,366 69,913 69,913 - 69,913
    Liangzhu New Town,
    Hangzhou Yuhang 100% 3,354,214 2,309,282 150,000 106,282 1,478,451
    West Spring Butterfly
    Garden, Hangzhou Xihu 51% 155,838 354,038 110,281 51,765 110,281
    Golden Home,
    Hangzhou Fuyang 55% 55,576 110,834 - - -
    Spring Bay, Hangzhou Fuyang 100% 499,483 208,981 21,717 51,317 142,655
    Caozhuang Project,
    Hangzhou Jianggan 100% 37,181 86,945 86,945 - 86,945
    Nimble Bay, Suzhou Industrial
    District 70% 384,042 821,664 108,054 70,808 233,312
    Ben’an Project, Suzhou Industrial
    District 51% 155,673 133,506 23,019 55,086 23,019
    Golden Home, Suzhou Canglang 55% 134,771 242,588 - 38,851 -
    Changfeng School
    Project, Suzhou Canglang 49% 48,714 48,153 27,214 20,939 27,214
    Jinyu Dixiang, Suzhou Industrial Zone 51% 47,177 118,099 107,655 - 107,655
    Golf, Kunshan Bacheng 100% 433,916 328,678 20,000 - 326,333
    Glamorous City, Wuxi Binghu 60% 960,000 1,336,620 133,000 79,883 561,506
    Aureate City, Wuxi New District 100% 224,376 600,087 155,315 41,221 518,344
    The Paradiso, Wuxi Binghu 55% 154,468 386,250 73,968 79,669 255,061
    Anpin Street, Nanjing Baixia 100% 27,325 26,790 - - 26,790
    The Paradiso, Nanjing Jiangning 100% 272,298 544,540 97,029 80,366 424,027
    Golden Milestone,
    Nanjing Yuehua 100% 42,318 82,404 - 29,987 -
    Glamorous City,
    Zhenjiang Tanshan Road 100% 834,900 918,571 44,833 104,826 577,207
    North part of
    Wonderland, Nanchang Gaoxin 50% 374,335 459,013 - 28,904 -
    Qingshan Lake,
    Nanchang Qingshanhu 50% 97,061 136,007 119,291 22,761 119,291
    Policy Academy
    Project, Nanchang Qingyunpu 50% 97,109 145,206 85,700 - 145,206
    Golden Town, Ningbo Yinzhou 100% 190,369 313,602 - 51,781 -
    Golden Mansion,
    Ningbo Yinzhou 10% 18,500 49,948 - 49,948 -
    Cicheng Project,
    Ningbo Yinzhou 100% 314,200 393,740 118,085 - 393,740
    Golden Mingjun, Hefei Shushan 50% 107,326 387,447 78,307 57,036 224,225
    Jianghuai Project,
    Hefei Shushan 50% 115,628 412,098 85,594 - 412,098
    Sub-total 12,503,330 15,369,746 2,242,564 1,645,724 8,130,485
    Bohai-Rim region
    Holiday Town, Beijing Fengtai 50% 224,289 413,304 16,030 50,217 16,030
    Wonderland, Beijing Shunyi 100% 195,817 304,817 - 19,500 -
    Blue Mountain, Beijing Chaoyang 100% 55,885 147,249 - - 32,649
    Hongshi Jiayuan,
    Beijing Fengtai 100% 59,800 184,502 - 146,009 34,443
    Dream Town, Beijing Changping 49% 178,908 543,461 81,832 - 279,069
    No. 5 Park Front
    Boutique Apartment,
    Beijing
    Chaoyang 60% 37,917 97,044 - 40,241 -
    Changyang Project,
    Beijing Fangshan 50% 437,179 853,165 158,000 - 853,165
    Waterfront, Tianjin Dongli 100% 2,708,886 1,910,211 108,140 88,723 1,465,736
    Holiday Dew Garden,
    Tianjin Xiqing 100% 229,300 343,101 30,152 48,004 160,295
    A Glamorous City, Dongli 100% 176,773 258,579 40,000 18,715 99,57745
    Tianjin
    Jin’ao International,
    Tianjin Xiqing 100% 58,577 162,566 66,110 - 83,678
    Binhai Modern, Tianjin Development
    District 100% 6,538 40,312 40,312 - 40,312
    Binhai East, Tianjin Development
    District 100% 32,270 48,731 48,731 - 48,731
    New Milestone,
    Tianjin Dongli 51% 136,524 204,786 110,809 31,093 110,809
    Sino-Singapore Ecocity
    Binhai new
    district 95% 90,604 126,600 21,037 - 126,600
    Golden Home, Anshan Tiedong 100% 48,874 97,969 - 14,601 -
    Dream Town, Anshan Gaoxin 100% 167,664 405,257 101,342 43,935 285,821
    Huisile Project,
    Anshan Tiedong 100% 303,700 530,560 106,600 - 530,560
    Rancho Santa Fe,
    Shenyang Dongling 100% 344,366 111,539 - 21,880 -
    New Elm Mansion,
    Shenyang
    Hunnan New
    District 100% 182,139 289,647 16,187 - 16,187
    A Glamorous City,
    Shenyang Yuhong 100% 156,817 297,026 46,567 23,837 46,567
    Dream Town,
    Shenyang Heping 49% 361,320 895,175 58,080 44,203 282,859
    The Paradiso,
    Shenyang
    Hunnan New
    District 100% 226,356 615,688 69,806 101,523 364,675
    Jiyu International,
    Shenyang Tiexi 100% 27,249 108,581 - - -
    Tianqin Bay, Shenyang Shenhe 55% 83,227 291,295 79,889 - 291,295
    Rancho Phase II(兰乔
    大二期), Shenyang
    Dongling 100% 43,334 21,245 21,245 - 21,245
    Toudao Project,
    Shenyang Dongling 70% 315,362 378,434 41,995 - 378,434
    Ravine Village, Dalian Ganjingzi 55% 363,716 380,922 104,423 51,079 151,921
    A Glamorous City,
    Dalian Ganjingzi 30% 195,526 404,240 174,403 104,520 222,293
    City Garden, Dalian Shahekou 100% 28,580 33,942 - - 33,942
    Subsequent Projects of
    Glamorous City,
    Dalian
    Ganjingzi 55% 20,474 44,272 - - 44,272
    Yangpu Garden,
    Changchun
    Economic
    development
    District
    100% 89,678 178,229 27,251 61,916 27,251
    Tanxi Villa,
    Changchun
    Jingyue
    Development
    District
    100% 75,000 48,956 12,602 35,083 12,602
    Diesel Engine Factory
    Project, Changchun Erdao 49% 251,356 503,040 102,710 - 503,040
    Xiaodonggou Project,
    Changchun Jingyue 50% 399,715 477,840 80,600 - 477,840
    228 Factory Project,
    Changchun Chaoyang 100% 276,769 493,330 65,450 - 493,330
    Wonderland, Qingdao Jimo 55% 150,753 241,165 68,168 43,643 134,407
    A Glamorous City,
    Qingdao Chengyang 80% 200,289 340,491 77,623 66,586 77,623
    Aureate City, Qingdao Sifang 60% 61,873 179,756 53,529 46,260 53,529
    Lanshan, Qingdao Shibei 100% 68,153 204,459 78,387 - 204,459
    Dream Town, Qingdao Sifang 55% 154,607 395,794 95,740 - 395,794
    City Garden, Qingdao Chengyang 80% 130,873 231,647 70,854 - 231,647
    Datuan Project, Yantai Zhifu 100% 311,614 444,065 84,500 - 444,065
    Sub-total 9,668,650 14,282,991 2,302,821 1,101,567 9,076,750
    Central and western region
    A Glamorous City,
    Chengdu Chenghua 60% 308,501 761,258 114,343 40,773 137,470
    The Paradiso, Chengdu Chenghua 100% 56,293 293,504 - 56,404 -
    Twin Riverside, Xindu 100% 267,347 338,203 - 19,317 -46
    Chengdu
    Jinyu Xiling (金域西
    岭), Chengdu
    Jinniu 60% 79,331 359,031 - 71,316 -
    Golden Lingyu,
    Chengdu Qingyang 100% 49,628 297,980 30,000 - 297,980
    Jinrun Huafu, Chengdu Jingjiang 100% 52,895 264,473 95,522 - 199,294
    Golden Hairong,
    Chengdu Wuhou 49% 54,970 234,464 79,749 51,110 139,749
    Haiyue Huicheng,
    Chengdu Shuangliu 90% 104,307 521,698 45,000 - 459,050
    A Glamorous City,
    Wuhan
    East Lake
    High-Tech
    Development
    Zone
    100% 225,258 405,457 21,037 119,198 21,037
    Golden Home, Wuhan Jianghan 100% 23,851 149,618 - 118,548 -
    Element Integration
    (武汉圆方), Wuhan Jianghan 55% 12,022 42,869 - - -
    Golf City Garden,
    Wuhan Dongxi Lake 49% 237,660 393,858 65,496 90,041 90,151
    Golden Mansion ,( 金
    域华府) , Wuhan
    Wuchang 55% 59,790 191,300 36,145 - 74,198
    Dream Town, Wuhan Jianghan 90% 65,901 299,337 46,150 - 185,360
    Final phase of City
    Garden
    East Lake
    High-Tech
    Development
    Zone
    100% 230,970 349,607 85,012 21,422- 349,607
    Wanwe, Wuhan(万威)
    Wuhan
    Economic and
    Technological
    Development
    Zone
    100% 213,440 533,600 55,000 - 533,600
    New City, Xi’an Yanta 51% 41,765 260,735 - 41,728 71,280
    Yuyuan,
    Chongqing (渝园) Yubei 51% 229,581 344,372 99,412 66,306 99,412
    Gaoxinyuan Zone H
    Project, Chongqing Yubei 100% 41,448 145,067 - - -
    Guoxinyuan Zone I
    Project, Chongqing Yubei 100% 138,071 376,737 51,817 - 376,737
    重庆交通大学)项目
    Chongqing Jiaotong
    University Project,
    Chongqing
    Yuzhong 100% 105,463 533,486 93,554 - 533,486
    Sub-total 2,598,490 7,096,653 918,237 696,163 3,568,411
    Total 34,930.400 51,554,309 8,555,368 5,042,966 30,633,819
    Special Remarks on Risk Factors:
    The schedule for the commencement and completion of the above-mentioned projects may be adjusted due
    to the following factors:
    a) There may be changes in the macro economy and the property market or changes in the sale of an
    individual project;
    b) Approval requirements may be tightened by new rules and regulations such that the progress of
    application for permits will be slowed down, thereby affecting the schedule of project development;
    c) Unfavourable weather conditions may delay the progress of project development and affect the schedule
    for completion;
    d) Impact of other unpredictable significant events on the construction progress of projects.
    7. Fair value measurement and the holding of financial assets and financial liabilities in foreign
    currency
    Fair value measurement:47
    Unit: RMB’000
    Item Balance at
    the
    beginning
    of the year
    Gain/loss
    from changes
    in fair value
    during the
    year under
    review
    Accumulated
    changes of fair
    value recognised
    in equity
    Provision
    for
    diminution
    in value
    during the
    year under
    review
    Disposal
    during the
    year under
    review
    Balance at
    the end of
    the year
    under
    review
    Financial assets
    Including:
    1. Financial assets measured at
    fair value, and changes of which
    are recorded in profit and loss
    during the period2 - 740.5 - - - 740.5
    Including: Derivative
    financial assets - 740.5 - - - 740.5
    2. Available-for-sale financial
    assets 167,417.9 80,714.8 (84,503.2) 163,629.5
    Sub-total of financial assets 167,417.9 740.5 80,714.8 0.00 (84,503.2) 164,370.0
    Financial liabilities 1,694.9 (1,694.9) - - - -
    Investment properties - - - - - -
    Productive biological assets - - - - - -
    Others3 - - - - - -
    Total - 2,435.4 80,714.8 - (84,503.2) -
    Holding of financial assets and financial liabilities in foreign currency
    Unit: RMB’000
    Item Balance at
    the
    beginning of
    the year
    Gain/loss from
    changes in fair
    value during the
    year under
    review
    Accumulated changes
    of fair value
    recognised in equity
    Provision
    for
    diminution
    in value
    during the
    year under
    review
    Balance at
    the end of
    the year
    under
    review
    Financial assets
    Including:
    1. Financial assets measured at fair
    value, and changes of which are
    recorded in profit and loss during the
    period2
    - 740.5 - - 740.5
    Including: Derivative financial assets - 740.5 - - 740.5
    2. Loans and accounts receivables 3 - - - - -
    3. Available-for-sale financial assets - - - - -
    4. Held-to-maturity investment 3 - - - - -
    Sub-total of financial assets - 740.5 - - 740.5
    Financial liabilities 1,694.9 (1,694.9) - - -
    Most of the above-mentioned items measured at fair value are legal person shares that have been held by the
    Company for a long time and with a low value and are being gradually disposed of. With respect to certain
    items, the Company refer to the control procedures for major investment projects: the Company’s
    management reviewed and approved, within the scope of authority as conferred by the Board, the relevant
    items after they have been reviewed by the specialised departments with due diligence.
    VIII. Work Report of the Board of Directors48
    (1) The Board held a total of four board meetings during 2009
    A. On 6 March 2009, the Fourth Meeting of the Fifteenth Board was held to consider and approve the
    following resolutions: the resolution regarding the appropriation and write-off of the provision for
    diminution in asset value for the year 2008; the audited financial report for the year 2008; the special
    remarks on the deposit and use of proceeds raised from previous fund-raising exercises during 2008; the
    internal control self-assessment report for the year 2008; the proposal on profit appropriation and dividend
    distribution for the year 2008; the resolution regarding the Company’s 2008 annual report and its summary;
    the resolution regarding the appointment of auditors for the year 2009; the resolution regarding Ms. Shirley
    L. Xiao’s resignation as the Secretary of the Board of Directors and the appointment of Mr. Varjak H. Tan as
    the Secretary of the Board of Directors; the resolution regarding the amendment of the Company’s Articles
    of Association; resolution regarding the Company’s 2008 corporate responsibility report; the resolution
    regarding the convention of the 2008 Annual General Meeting. The related announcement was published in
    China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong,
    respectively, on 10 March 2009.
    B. On 25 April 2009, the Fifth Meeting of the Fifteenth Board of Directors was held to consider and approve
    the Company’s first quarterly report and financial statements for the year 2009. The related announcement
    was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong
    Kong, respectively, on 27 April 2009.
    C. On 31 July 2009, the Sixth Meeting of the Fifteenth Board of Directors was held to consider and approve
    the following resolutions: the interim report, financial statements and the summary of the interim report for
    the year 2009; and the resolution regarding the proposals on no profit appropriation or transfer of surplus
    reserve to share capital for the 2009 interim period. The related announcement was published in China
    Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, respectively, on
    4 August 2009.
    D. On 23 October 2009, the Seventh Meeting of the Fifteenth Board was held to consider and approve the
    third quarterly report and financial statements for the year 2009. The related announcement was published in
    China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong,
    respectively, on 26 October 2009.
    (2) In 2009, the Board had conducted 12 votings by correspondence
    A. On 12 January 2009, the resolution regarding the disposal of 90% equity interest in Nanjing Hengbang
    Real Estate Development Co., Ltd. was submitted for the Board’s approval through voting by
    correspondence.
    B. On 16 March 2009, the resolution regarding the provision of guarantee for a bank loan of Shaanxi Hualian
    Property Development Co., Ltd. was submitted for the Board’s approval through voting by correspondence.
    C. On 14 April 2009, the resolutions regarding the confirmation of the tenure of the president and the
    provision of guarantee for the principal and interest of a RMB120 million loan of Shenzhen Vanke Real
    Estate Co., Ltd.(Shenzhen Vanke) were submitted for the Board’s approval through voting by
    correspondence.
    D. On 5 May 2009, the resolution regarding the progress of withdrawing from the development of Shenzhen
    Vanke City East project by disposing of 90% equity interest in the said project company was submitted for
    the Board’s approval through voting by correspondence.
    E. On 27 July 2009, the resolution regarding Shenzhen Vanke’s provision of guarantee for a bank loan of
    Tangyue Project was submitted for the Board’s approval through voting by correspondence.49
    F. On 13 August 2009, the resolutions regarding the establishment of Shenyang Wulihe Project Company,
    the establishment of Qingdao Vanke City Real Estate Co., Ltd., and China Construction Bank’s provision of
    a credit line were submitted for the Board’s approval through voting by correspondence.
    G. On 14 August 2009, the resolutions regarding setting up a system of appointing auditors, the Company’s
    meeting the conditions for conducting a public offer of new A shares, the proposal on the public offer of new
    A shares, submitting to the shareholders’ meeting for granting the board the mandate to handle all the
    matters relating to the public offer of new A shares, the feasibility of the planned investment projects using
    the proceeds raised from the public offer of new A shares, elaboration on the use of proceeds from the
    previous fund-raising exercise in specific projects, and the convention of 2009 first special general meeting
    were submitted for the Board’s approval through voting by correspondence.
    H. On 23 September 2009, the resolution regarding the adjustment to the Board’s authorisation in relation to
    project development was submitted for the Board’s approval through voting by correspondence.
    I. On 12 October 2009, the resolution regarding Shanghai Vanke’s provision of guarantee for a bank loan for
    Shanghai Golden City Project was submitted for the Board’s approval through voting by correspondence.
    J. On 26 October 2009, the resolution regarding the acquisition of Guicheng Qiandeng Hubei Project in
    Nanhai, Foshan, was submitted for the Board’s approval through voting by correspondence.
    K. On 30 October 2009, the resolution regarding establishing a system for managing inside information and
    insiders was submitted for the Board’s approval through voting by correspondence.
    L. On 25 November 2009, the resolution regarding acquisition of Guangzhou Asia Games City was
    submitted for the Board’s approval through voting by correspondence.
    The progress and important facts of the relevant issues were disclosed pursuant to requirements in China
    Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong.
    (3) The Board’s implementation of the resolutions approved at shareholders’ meetings
    A. The implementation of the proposal on dividend distribution for the year 2008
    Following the resolutions passed at the 2008 (20th) Annual General Meeting, the Board had proceeded with
    the implementation of the proposal on dividend distribution for 2008. The dividend distribution proposal for
    2008 is as follows: for every 10 existing shares held, a cash dividend of RMB0.5 (including tax; after
    deducting tax, a cash dividend of RMB0.45 would be paid for every 10 existing shares beneficially held by
    individual shareholders, investment funds, and qualified foreign institutional investors of A shares; for other
    non-resident enterprises, the Company would not withhold nor pay the income tax on their behalf – the
    taxpayer should pay the tax in the place where the income would be received; B shares are not subject to
    taxation for the time being) was paid. The record date for A shareholders for entitlement of dividend was 5
    June 2009. The ex-right and ex-dividend date was 8 June 2009. The last trading date and ex-right and exdividend
    date for B share was 5 June 2009 and 8 June 2009, respectively. The record date for B shareholders
    was 10 June 2009. The exchange rate for B share’s cash dividend was HK$1 = RMB0.8816, being the
    median price of the exchange rate of Hong Kong dollars for Renminbi published by the People’s Bank of
    China on the first working day (13 April 2009) after the approval of the dividend distribution proposal at the
    Company’s 2008 Annual General Meeting.
    B. Resettlement, repair and reconstruction works in the affected area following the Sichuan
    earthquake
    Pursuant to the resolutions passed at the First Special General Meeting of 2008, the Company in 2009
    continued to participate in the resettlement and reconstruction works in the earthquake-stricken area of
    Sichuan. The building of Zundao Kindergarten, Zundao People’s Centre, Xiang’e People’s Centre and
    Zundao Lihua Square, for which construction was funded by the Company, was completed and ready for use.
    Since 2008, the Company alone funded the construction of six public buildings, with a total investment
    amount of RMB86,204,000, covering an aggregate GFA of 27,900 sq m, and helping 35,000 people. The
    Company also made donations to six public projects in Shifang, Pengzhou, Bazhong and Ya’an, with a total
    investment amount of RMB23,200,000. As at December 2009, all the projects funded by the Company had
    been completed and in use. According to an independent audit report prepared by a third party, the total costs50
    of the resettlement and reconstruction works in the disaster area amounted to RMB124,622,000, including
    RMB100,392,000 in accordance with the amount authorised by the First Special General Meeting of 2008,
    and RMB2,200,00, which was allocated from the Company’s corporate citizenship special project fund. The
    expenses incurred in the relief work offered by the branch companies amounted to RMB2,195,000, staff
    donations amounted to RMB11,655,000, donations by China Vanke’s business partners amounted to
    RMB4,180,000 and donations from China Vanke’s Charity Foundation amounted to RMB4,000,000.
    (4) Specialised Committees’ Performance of Duties
    The audit committee, the remuneration and nomination committee, as well as the investment and decisionmaking
    committee, had dutifully performed their duties, in accordance with the “Code of corporate
    governance for listed companies”, “Articles of Association”, and “Rules Governing the Procedures of Board
    Meetings” and the responsibilities and obligations as stipulated in the implementation details of the different
    specialised committees.
    A. Audit committee’s performance of duties
    During the period under review, the audit committee held four audit committee meetings and communication
    meetings and conducted one voting by correspondence. The audit committee considered the following
    issues: the arrangement of audit duties, the periodical financial reports, proposal on profit appropriation, the
    appointment of audit firm, opinions on the management of audit firm, appropriation for and write-off of
    diminution in value, guarantee issues, establishment of an internal control system, etc. The audit committee
    also communicated with the auditors on a regular basis.
    The audit committee actively performed its audit duties in 2009. Since the end of the year under review, the
    audit committee held two more meetings and communication meetings, and conducted one voting by
    correspondence, supervised the auditors to follow the audit schedule in order to ensure the audit could be
    completed on time, reviewed the financial statements and provided feedback,. It also considered and
    approved the appointment of auditors, internal control self-assessment report and the change in the person in
    charge of the internal audit department.
    The audit committee concluded the audit performed by KPMG Huazhen Certified Public Accountants in 2009 as
    follows:
    According to the requirements of the Document No. 34 (2009) issued by China Securities Regulatory
    Commission, the following conclusions have been made regarding the audit performed by KPMG Huazhen
    Certified Public Accountants (“KPMG”):
    1. Preparation before auditing
    i. Determinination of audit schedule
    It took four months from pre-auditing, which commenced at the beginning of November 2009, up till the
    completion of preliminary auditing for the 2009 audit. Details of the work schedule are as follows:
    1) November to December 2009: Pre-audit – to perform pre-audit of new acquisitions and new markets in 2009
    and selected regions based on their importance;
    2) 14 January 2010: Started performing their audit in China Vanke’s office. On 24 February, the first draft of the
    2009 Auditor’s Report was presented to the audit committee for review; and final draft of the published version of
    the Auditor’s Report was presented on 26 February.
    ii. Review of not-yet audited financial statements
    Before the auditors came in, the audit committee had reviewed, with due diligence, the financial statements
    prepared by the Company and provided their opinions in writing.
    2. Audit process
    Starting from 14 January 2010, KPMG sent five different teams (for Shenzhen, Shanghai, Beijing, other areas and
    the Company as a whole) to perform audit for the Company and its subsidiaries.51
    During the auditing process, the audit committee supervised and made written requests to requested KPMG to
    arrange its audit work according to the audit work schedule, in order to ensure that the audit completed on time.
    On 24 February 2010, KPMG submitted to the audit committee the 2009 Auditors’ Report and special remarks on
    “The Company’s Internal Control Self-Assessment Report (2009)”. On 26 February 2010, the Board meeting
    approved this item and the on-site audit performed by KPMG for the Company’s 2009 audit completed.
    3. Audit results
    KPMG has issued its unqualified opinion for the 2009 Auditors’ Report and special remarks on “The Company’s
    Internal Control Self-Assessment Report (2009)”.
    The audit committee is of the opinion that the audit performance of KPMG on the Company’s 2009 financial
    statements is satisfactory.
    The audit committee resolved to propose to the Board for approval the re-appointment of KPMG Huazhen
    Certified Public Accountants to audit the Company’s 2010 financial statements according to the PRC and
    international accounting standards, and to present the internal control audit report according to the requirements of
    the regulatory bodies.
    B. Remuneration and nomination committee’s performance of duties
    During the year under review, the remuneration and nomination committee maintained regular contact with
    the management, held several debriefing sessions where the management reported their work, and convened
    several communication meetings to discuss the adjustment to the remuneration incentive proposal and the
    reform of staff benefits policy.
    C. Investment and decision-making committee’s performance of duties
    During the year under review, the investment and decision-making committee maintained regular contact
    with the management, fully understanding the Board’s acquisition of projects within the scope of authority
    and convened several communication meetings to discuss the development of new projects and related
    matters on financing..
    9. Profit Appropriation and Dividend Distribution Proposal
    The Company’s profit appropriation and dividend distribution was based on the Company’s profit available
    for appropriation. Details on the profit available for appropriation of the Group and the Company in 2009
    according to PRC Accounting Standards are as follows:
    Unit: RMB
    The Group The Company
    Profit available for appropriation after
    taxation* 10,964,255,202.76 2,941,228,262.80
    Include: Net profit for 2009 5,329,737,727.00 2,874,475,278.28
    Profit available for appropriation at the
    beginning of the year 6,184,277,986.66 616,513,495.42
    Allocation of dividend for 2008 (549,760,510.90) (549,760,510.90)
    *The significant difference between the profit of the Company and consolidated profit of the Group is attributable to the cost method
    used for recording investment in subsidiaries after the adoption of “Accounting Standards for Business Enterprises 2006”. According
    to the Company Law, the subsidiaries’ surplus reserve is retained in the subsidiaries and subsidiaries’ profit for the year has yet to be
    appropriated to the Company.
    According to the relevant rules and requirements of the Company’s Articles of Association, and considering
    shareholders’ interests and the Company’s development needs in the long run, the Board of Directors
    submitted to the shareholders meeting the following profit appropriation proposal for the year 2009:
    1. to appropriate 10 per cent of the net profit of the Company to statutory surplus reserve;
    2. to appropriate 65 per cent of the net profit of the Company to discretionary surplus reserve;
    3. to appropriate 25 per cent of the net profit of the Company and the unappropriated profit of last year for
    dividend distribution fund;52
    The appropriation of the profit available for appropriation for the year 2009 is as follows:
    Unit: RMB
    The Company
    As a percentage of
    the Company’s net
    profit for the year
    As a percentage of
    the Company’s
    consolidated net
    profit for the year
    Net profit of 2009 2,874,475,278.28 100% 53.93%
    Transfer to statutory surplus
    reserve 287,447,527.83 10% 5.39%
    Transfer to discretionary surplus
    reserve 1,868,408,930.88 65% 35.06%
    Transfer to 2009 dividend
    distribution fund 718,618,819.57 25% 13.48%
    Profit available for appropriation at
    the beginning of the year 66,752,984.52 - -
    Distribution of cash dividend for
    2009 769,664,715.26 26.78% 14.44%
    Retained profit for appropriation for
    the following financial year 15,707,088.83 - -
    The Company’s distribution of cash dividends for the past three years:
    Unit: RMB
    Year Cash dividend
    (before tax)
    Net profit
    attributable to the
    Company
    Consolidated net
    profit attributable to
    the Company
    As a percentage
    of the net profit
    attributable to
    the Company
    As a percentage of
    the consolidated net
    profit attributable to
    the Company
    Profit available for
    appropriation for
    the year
    2008 549,760,510.90 1,582,019,762.35 4,033,170,027.89 34.75% 13.63% 7,370,792,808.42
    2007 687,200,638.70 1,727,621,268.51 4,844,235,494.21 39.78% 14.19% 5,026,288,447.07
    2006 649,427,190.90 2,297,883,766.18 2,297,883,766.18 28.26% 28.26% 2,339,727,664.40
    Accumulated cash dividend in the past 3 years as a percentage to the
    average net profit of past three years 50.64%
    Remark: Net profit attributable to the Company for 2006 is retrospectively adjusted in accordance with the new accounting
    principals.
    Dividend distribution proposal: A cash dividend of RMB0.7 (before tax) will be distributed for every 10
    existing shares held.
    Based on the total share capital of 10,995,210,218 shares as at 31 December 2009, the total amount of cash
    dividends for distribution for 2009 will be RMB769,664,715.26.
    10. Media for Disclosure of Information
    The Company has chosen China Securities Journal, Securities Times, Shanghai Securities News and one
    English media in Hong Kong as media for disclosure of information.
    IX. Report of Supervisory Committee
    2009 was certainly a year to remember. After making tremendous effort, the Company succeeded in
    regaining its growth momentum.
    During the year under review, the Supervisory Committee had performed their duties with due diligence,
    safeguarded the interests of the Company, shareholders and staff, in accordance with the requirements of the
    Company Law and the Articles of Association of the Company. The major duties of the Supervisory
    Committee are as follows:
    1. Supervisory Committee Meetings and Resolutions of Such Meetings
    In 2009, a total of four meetings were held by the Supervisory Committee. The details of the meetings and
    resolutions are as follows:
    (1) The 9th Meeting of the 6th Supervisory Committee was held on 6 March 2009. The meeting considered
    and approved the resolution regarding the appropriation and write-off of the provision for diminution in asset
    value for the year 2008; the audited financial report for the year 2008; the proposal on profit appropriation
    and dividend distribution for the year 2008; the internal control self-assessment report for the year 2008; the53
    special remarks on the deposit and use of the proceeds raised in 2008; the Report of the Supervisory
    Committee for the year 2008; the Company’s 2008 annual report and its summary; the resolution regarding
    the appointment of certified public accountants for the year 2009.
    (2) The 10th Meeting of the 6th Supervisory Committee was held on 24 April 2009. The meeting considered
    and approved the Company’s 2009 first quarterly report and financial statements.
    (3) The 11th Meeting of the 6th Supervisory Committee was held on 31 July 2009. The meeting considered
    and approved the resolution regarding the Company’s 2009 interim report, its summary and financial
    statements; the resolution regarding the proposals of no dividend distribution and transfer of capital surplus
    reserve to share capital for the 2009 interim period.
    (4) The 12th Meeting of the 6th Supervisory Committee was held on 22 October 2009. The meeting
    considered and approved the Company’s 2009 Third Quarterly Report.
    2. Inspection Tours by the Supervisory Committee
    To strengthen control over internal risks, the Supervisory Committee, in line with the Company’s internal
    control development, paid more site-visits to and intensified inspection of all levels of subsidiaries. During
    the year under review, the Supervisory Committee conducted inspection tours to 8 front-line companies.
    Through on-site investigation, individual interviews, group meetings, the Supervisory Committee had
    inspected and supervised various aspects including the implementation of the Company’s development
    strategy, self-regulation of management staff of front-line companies, protection of employees’ interests,
    implementation of “Labour Contract Law”, progress of internal control development, and the reform on
    property.
    The Supervisory Committee further arranged inspection tours for certain directors to companies in Fuzhou
    and Chongqing, etc. During the tours, they focused on understanding these companies’ financial situation,
    progress of implementation of business plans, the differences between the planned and actual cost,
    procurement, construction schedule and sales of major projects, changes and reasons for the changes in
    employees, measures used to protect employees’ interests and results thereof. Through all of the above, the
    Supervisory Committee had a thorough understanding of the operation and development of the Company in
    different cities.
    3. Independent Opinions of the Supervisory Committee on Certain Issues Relating to the Company
    (1) Statutory compliance: During the year, the members of the Supervisory Committee attended every Board
    Meeting, supervised through reviewing reports and on-site inspection as well as participated in the evaluation
    of the development of part of the internal control system. The Supervisory Committee is of the opinion that
    through the intensification of internal control, the Company’s decision-making process will be further
    regulated and corporate governance structure will be further optimized. In 2009, the directors and
    management team of the Company diligently carried out their duties, and none of their acts had violated the
    law, regulations, the Company’s Articles of Association, nor had they prejudiced the Company’s,
    shareholders’ and employees’ interests.
    (2) Financial monitoring: During the year under review, the Supervisory Committee diligently performed its
    duty of monitoring the Company’s financial situation and provided audited opinions to each regular report.
    The Supervisory Committee is of the opinion that the financial report reflects a true and accurate view on the
    Company’s financial position and operating results. The auditor’s report issued on the Company’s annual
    financial report by KPMG Huazhen Certified Public Accountants is objective and non-biased.
    (3) Use of proceeds from fund raising exercises: Through reviewing financial statements, inspecting
    investment projects, etc, the Supervisory Committee traced and inspected the use of proceeds raised from the
    subsequent offer of A shares in 2007 and the issue of corporate bonds in 2008. The Supervisory Committee
    is of the opinion that the proceeds have been used appropriately and the actual investments in various
    projects were in line with the amount earmarked for use in the designated investment projects.
    (4) Major asset acquisitions and disposals as well as connected transactions: In 2009, the Company did not
    have any major asset acquisitions and disposals, nor any connected transactions.
    In 2010, the Supervisory Committee will increase its support for the Company’s internal control
    development, and intensify its supervision in achieving the target of prefabricated housing and green
    building. It will fully leverage its values by remaining proactive and vigilant on changes in both internal and
    external factors that affect the operation and management of the Company.54
    X. Significant Events
    1. Material Litigation and Arbitration
    During the year under review, the Company did not involve in any material litigation or arbitration.
    2. Major Acquisition and Disposal of Assets
    During the year under review, the Company did not have any major acquisition and disposal of assets.
    3. Major Connected Transactions
    During the year under review, the Company did not have any major connected transactions.
    4. Implementation of the Restricted Stock Incentive Plan
    (1) The relevant procedures and overview of the implementation of the Restricted Stock Incentive Plan
    Phase One (2006-2008) of the Company’s Restricted Stock Incentive Plan (“Phase One Incentive Plan”) was
    approved by the Company’s 14th Board in 2006 and was filed on record by CSRC without objection, and
    was approved at the Company’s 2005 Annual General Meeting. The basic operating mechanism of the
    incentive plan is as follows: the Company adopts the method of advanced appropriation plus supplementary
    appropriation for the incentive fund as the incentive for the beneficiaries of the incentive plan. The
    beneficiaries authorise the Company to appoint a trustee, who will operate on an independent basis, to use
    the aforesaid incentive fund to purchase the Company’s listed A shares within a specified period and to
    transfer all the restricted shares to the accounts of the beneficiaries of the incentive plan upon fulfilment of
    conditions.
    Phase One Incentive Plan consists of three individual plans for the years of 2006, 2007 and 2008,
    respectively. Pursuant to the authorisation of the beneficiaries, the Company appointed an independent third
    party as the Company’s trustee, who set up three independent trusts for the management of the three
    relatively independent incentive plans, respectively. Implementation of the incentive plan for the year 2006
    was completed on 11 September 2008 after the prescribed business performance target and share price
    condition had been met. With regard to the incentive plan for the year 2008, implementation of this plan was
    terminated during the year under review because the prescribed business performance target had not been
    met.
    The incentive plan for the year 2007 met the prescribed business performance target. However, the share
    price condition could not be met during the year under review, which was also the supplementary vesting
    period. At the end of the year under review, it was confirmed that the share price condition could not be met,
    and implementation of the incentive plan for that year was therefore terminated. As at the publication date of
    this announcement, the execution of the Company’s Phase One Incentive Plan has completed according to
    procedure.
    (2) Appropriation for incentive fund for Phase One Incentive Plan during the year under review
    There was no appropriation for incentive fund for Phase One Incentive Plan during the year under review.
    (3) Changes in the incentive stock under Phase One Incentive Plan during the year under review
    Since the prescribed business performance target could not be met, all the 60,925,820 Vanke A shares held
    by the 2008 incentive plan during the year under review were sold after the publication of the
    “Announcement regarding termination of the implementation of the restricted stock incentive plan for year
    2008” on 14 April 2009 in accordance with the provisions.
    On 8 June 2009, the Company implemented the proposal on dividend distribution for the year 2008. The
    shares held by the 2007 incentive plan were entitled to a dividend amount of RMB2,317,088.05. According
    to the provisions of the incentive plan, the aforementioned amount of dividends was used to purchase
    210,000 Vanke A shares. The Vanke A shares held by the 2007 incentive plan increased from 46,341,761
    shares as at the end of 2008 to 46,551,761 shares.
    After the end of year 2009, the Company published the “Announcement regarding termination of the
    implementation of the restricted stock incentive plan for year 2007” on 5 January 2010 because the share
    price condition for the 2007 incentive plan could not be met. As at the publication date of this
    announcement, all the 46,551,761 Vanke A shares held by the 2007 incentive plan had been sold.55
    (4) Appraisal of beneficiaries and adjustment to the qualification of a beneficiary
    According to the requirements of the Phase One Incentive Plan, the allotment policy of Phase One Incentive
    Plan is determined based on the combination of responsibilities, rights and obligations, including the duties
    and performance of the beneficiaries. There had not been any change in the scope of qualified beneficiaries
    during the year under review.
    (5) Termination of the implementation of the Phase One Incentive Plan during the year under review
    During the year under review, the Company’s net profit after deducting extraordinary gains/(losses) for 2008
    declined by 15.61 per cent from that of 2007. The incentive plan for year 2008 was confirmed being
    terminated because the business performance target “to achieve a growth rate of over 15 per cent in net profit
    after extraordinary gains or losses”, which was stipulated in Provision No 12 of Phase One Incentive Plan,
    could not be met. The 60,925,820 Vanke A shares held by the 2008 incentive plan were all sold on the
    secondary market within the tradable window period after the Company published the announcement
    regarding the termination of implementation. The proceeds from the sale of shares amounted to
    RMB620,003,685.63. All the funds and accrued interest of the 2008 incentive plan in the aggregate amount
    of RMB620,656,308.20 had been transferred to a designated account of the Company. Termination of
    implementation of the 2008 incentive plan had been completed.
    During the year under review, the incentive plan for year 2007 met the business performance target.
    However, taking 1 January 2007 as the base day, the average closing price of Vanke A shares in 2008 after
    ex-right price backward adjustment was RMB25.79, which was lower than RMB33.66, being the average
    closing price of Vanke A shares in 2007 after ex-right price backward adjustment. As such, the share price
    condition for 2007 incentive plan could not be met. According to the requirements of Phase One Incentive
    Plan, the 2007 incentive plan entered the supplementary vesting period during the year under review.
    At the end of 2009, taking 1 January 2007 as the base day, the average closing price of Vanke A shares in
    2009 after ex-right price backward adjustment was RMB25.50, which was lower than RMB33.66, being the
    average closing price of Vanke A shares in 2007 after ex-right price backward adjustment. The vesting
    conditions for the restricted shares held by the 2007 incentive plan were confirmed not being met. The
    trustee sold all the 46,551,761 Vanke A shares held by the 2007 incentive plan within the tradable window
    period from the date of publication of the announcement regarding the termination of implementation of the
    2007 incentive plan. The proceeds from the sale of shares amounted to RMB468,575,915.48. All the funds
    and accrued interest of the 2007 incentive plan in the aggregate amount of RMB468,728,083.89 had been
    transferred to a designated account of the Company. Termination of implementation of the 2007 incentive
    plan had been completed.
    (6) Accounting treatment of Phase One Incentive Plan and its impact on the financial situation and
    operating results
    Pursuant to the requirements of Provision No. 15 (3) of the Phase One Incentive Plan, the incentive plan will
    appropriate for an incentive fund in accordance with the relevant requirements of “Issue No. 2 Q&A
    regarding the regulation of information disclosure of public listed companies – Appropriation of incentive
    fund for mid-level and senior management” (Zhengjian Kuaiji Zi [2001] No. 15), and recognise it as cost.
    During the implementation of the incentive plan, the Ministry of Finance issued the “Notice regarding the
    publication of the details of the 38 standards including the ‘Accounting Standards for Business Enterprises
    No. 1 – Inventory’” (Caikuai [2006] Document No. 3). Pursuant to the requirements of the notice,
    accounting treatment had been made to the Company’s Phase One Incentive Plan in accordance with the
    “Accounting Standards for Business Enterprises No. 11 – Share-based payment” since 2006. In accordance
    with the relevant accounting standards, the Phase One Incentive Plan is an arrangement of share-based
    payment through equity settlement, and beneficiary’s services are recognised as cost basing on the fair value
    of the equity instrument, while increasing the capital reserve at the same time. At the time of incentive fund
    appropriation, deduct “Bank deposit” and recognise in the “capital reserve —stock incentive trust fund”, as
    the deduction of capital reserve; at the time of incentive fund amortisation, increase “Administration fee” and
    recognise in the “capital reserve —stock incentive reserve”, as the increase of capital reserve; if termination
    of the incentive plan is confirmed, the proceeds from the sale of shares will be returned to the Company, and
    increase “Bank deposit”, while increasing capital reserve.
    The Phase One Incentive Plan uses the Monte Carlo Simulation method to assess the fair value of incentive
    plan of each year. The incentive fund for every year is amortised using the straight line method during the56
    waiting period of each incentive plan. Amortisation of the 2006 incentive fund and 2007 incentive fund had
    been completed. For details please refer to 2008 annual report of the Company.
    Since the business performance target of the 2008 incentive plan had not been reached, no actual
    administrative fee had been incurred from the pre-appropriation of the 2008 incentive fund. During the year
    under review, implementation of the 2008 incentive plan was terminated. The proceeds from the sale of
    Vanke A shares held by the 2008 incentive plan, together with the accrued interest in the aggregate amount
    of RMB620,656,308.20 had been transferred to a designated account of the Company. The Company’s
    capital reserve increased accordingly.
    For details of the above-mentioned accounting treatment for the Phase One Incentive Plan, please refer to
    Note 10 – Share-based payment and Note 15 – Capital reserve.
    5. Major Contracts and Their Implementation
    (1) During the year under review, the Company did not have any material assets under custodial
    management, sub-contract or lease any assets from other companies, nor were any material assets of the
    Company put under the custodial management of, subcontracted or leased by other companies.
    (2) Details on the new guarantees made by the Company during the year under review are as follows:
    No.
    Guarantor
    (% of equity interest
    held by China Vanke )
    Company for which
    guarantee was granted
    (% of equity interest held
    by China Vanke )
    Guarantee amount Remarks Guarantee Period
    1 China Vanke Co., Ltd. Tianjin Xinghai Real Estate
    Co., Ltd. (55%) RMB16.5 million
    Provided a guarantee in
    proportion to the Company’s
    equity holding (55%) for a
    bank loan of RMB30 million
    from 27 March 2009,
    withdrawn by now
    2 China Vanke Co., Ltd. Shenzhen Vanke Real
    Estate Co. Ltd.(100%) RMB120 million
    Provided a guarantee in
    proportion to the Company’s
    equity holding (100%) for a
    bank loan of RMB120 million
    29 April 2009 to 29
    April 2012
    3 Shenzhen Vanke Real
    Estate Co., Ltd.
    Dongguan Xinwan Real
    Estate Development Co.,
    Ltd.(51%)
    RMB204 million
    Provided a guarantee in
    proportion to the Company’s
    equity holding (51%) for a
    bank loan of RMB400 million
    30 July 2009 to 30
    July 2011
    4 Shenzhen Vanke Real
    Estate Co., Ltd.
    Dongguan Xinwan Real
    Estate Development Co.,
    Ltd.(51%)
    RMB102 million
    Provided a guarantee in
    proportion to the Company’s
    equity holding (51%) for a
    bank loan of RMB200 million
    25 September 2009 to
    30 July 2011
    5 Shanghai Vanke Real
    Estate Co., Ltd.
    Shanghai Dijie Property
    Co., Ltd.(50%) RMB110 million Provided a guarantee for a
    bank loan of RMB110 million
    23 October 2009 to
    30 April 2011
    6 Chengdu Vanke Real
    Estate Co., Ltd.
    Chengdu Yihang Vanke
    Binjiang Real Estate
    Development Co., Ltd.
    (49%)
    RMB15 million
    Provided a guarantee in
    proportion to the Company’s
    equity holding (15%) for a
    bank loan of RMB100 million
    22 December 2009 to
    21 December 2012
    Remark: The Company hold 49% equity interest of Chengdu Yihang Vanke Binjiang Real Estate Development Co., Ltd via direct
    and indirect investment, among which the direct equity interest accounts for 15%.
    During the year under review, the new amount of guarantees (including counter guarantees) made by the
    Company and its subsidiaries was RMB568 million, and the amount of guarantees withdrawn was
    RMB1,548 million. As at the end of the year under review, the outstanding amount of guarantees made by
    the Company was RMB1,241 million (due to changes in exchange rate, there was a slight adjustment in the
    outstanding amount of guarantees as at the beginning of the year), accounting for 3.3 per cent of the
    Company’s net assets. The outstanding amount of guarantees made by the Company and its majority-owned
    subsidiaries for other majority-owned subsidiaries was RMB1,226 million, the outstanding amount of
    guarantees made by the Company and its majority-owned subsidiaries for associated and joint venture
    companies was RMB15 million. As at the end of the year under review, the Company and its majorityowned
    subsidiaries did not have any external guarantees.
    During the year under review, the Company did not provide guarantee for shareholders, beneficial controller
    and its connected parties, nor did it, directly or indirectly, provide guarantee for companies with an
    assets/liabilities ratio exceeding 70 per cent.57
    (3) During the year under review, the Company did not have any entrustment of financial management.
    (4) For details on the projects acquired by the Company during the year under review, please refer to
    “Project investment” of the “Use of capital not from the capital market”.
    6. Specific elaboration and independent opinions of the independent directors on the use of capital by
    connected parties and external guarantees
    There had been no non-operational use of capital by the controlling shareholder or other connected parties of the
    Company.
    During the year under review, the Company, in strict compliance with the related rules, regulated its external
    guarantee activities in order to control risks. There was no violation against the “Notice regarding the regulation
    of external guarantees by listed companies”. The Company’s guarantees had been made to meet its production and
    operational needs and the requirements for reasonable use of capital. The procedures for the determination of
    guarantees are legal and reasonable without prejudice to the interests of the Company and its shareholders.
    7. Implementation of the Undertakings Given by the Company or Shareholders Holding 5% or More
    of the Equity Interests in the Company
    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.
    For the private placing of A shares in 2006, CRC undertook to be subject to a lock-up period of 36 months
    for the subscribed shares of its own accord. The related undertakings had been strictly fulfilled. The selling
    restrictions on the 264,000,000 restricted tradable shares from 2006 private placing currently held by CRC
    were lifted on 29 December 2009.
    8. Interaction with investors
    In 2009, the Company has further strengthened its interaction with investors. During the year, the Company
    received over 600 investor visits, participated in over 70 large-scale investor meetings of both domestic and
    international corporations. The Company also organised 4 investor meetings, 2 visits to institutional
    investors, and 2 online presentations. In addition, via telephone and e-mail, the Company communicated
    with and gathered opinions from investors, as well as disseminated its information. The Company has also
    built an online system to make timely response to different investor requests. It also strove to enhance
    transparency, to increase trust with investors.
    During 2009, the Company received the “Listed Company with Best Investor Relations in 2009” award
    jointly granted by Hexun.com and SEEC, as well as that jointly given by cnfol.com, caifucn.com,
    chinafund.cn, gold.org.cn and chinaforex.com.cn. The Company was also given the awards of The Most
    Popular Listed Company’s Website Among Investors, Best Website for Information Disclosure, and 100
    Best Board Secretary by Securities Times. In the 5th “New Fortune Golden Board Secretary” selection, the
    Company’s Board Secretary was named again as the Golden Board Secretary and the Most Popular Board
    Secretary among Investors.
    Details on the Company’s investor meetings in 2009:
    Type of meeting Date Location Approach Classification of visitors
    Issues discussed
    and information
    provided
    Goldman Sachs
    meeting 2009.1 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    UBS meeting 2009.1 Shanghai Face to Face Meeting Investors including securities companies,
    funds, etc
    Deutsche Bank
    meeting 2009.1 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    (I) Major issues
    discussed:
    (1) The
    Company’s
    daily
    operations;58
    Pingan Securities
    meeting 2009.1 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    United Securities
    meeting 2009.1 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Merrill Lynch
    meeting 2009.1 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Daiwa Securities
    meeting 2009.2 Tokyo Face to Face Meeting Investors including securities companies,
    funds, etc
    CLSA Securities
    meeting 2009.2 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    CITIC Securities
    meeting 2009.2 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    China Merchants
    Securities meeting 2009.2 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Annual results
    presentation 2009.3
    Hong Kong,
    Shenzhen
    (Shanghai and
    Beijing)
    Face to Face Meeting
    Investors including securities companies,
    funds, individual investors, etc
    CLSA meeting 2009.3 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Credit Suisse
    meeting 2009.3 Hokng Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    UBS meeting 2009.3 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Shenyin Wanguo
    Meeting 2009.4 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    Deutsche Bank
    meeting 2009.5 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Macquarie
    meeting 2009.5 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    BOCI meeting 2009.5 Chengdu Face to Face Meeting Investors including securities companies,
    funds, etc
    CICC meeting 2009.5 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    CLSA meeting 2009.5 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Pingan Securities
    meeting 2009.5 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    JP Morgan
    meeting 2009.6 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    Essence securities
    meeting 2009.6 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    CITIC securities
    meeting 2009.6 Chengdu Face to Face Meeting Investors including securities companies,
    funds, etc
    Guotai Junan
    meeting 2009.6 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    China Merchants
    Securities meeting 2009.6 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Industrial
    securities meeting 2009.6 Shanghai Face to Face Meeting Investors including securities companies,
    funds, etc
    Great Wall
    Securities meeting 2009.6 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    UBS meeting 2009.6 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    Morgan Stanley
    meeting 2009.7 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Deutsche Bank
    meeting 2009.7 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Guosen Securities
    meeting 2009.7 Chongqing Face to Face Meeting Investors including securities companies,
    funds, etc
    Nomura Securities
    meeting 2009.7 Singapore Face to Face Meeting Investors including securities companies,
    funds, etc
    Macquarie
    meeting 2009.7 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Sinolink Securities
    meeting 2009.7 Guilin Face to Face Meeting Investors including securities companies,
    funds, etc
    Goldman Sachs
    meeting 2009.7 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Interim results
    presentation 2009.8
    Hong Kong ,
    Shenzhen
    (Shanghai Beijing)
    Face to Face Meeting Investors including securities companies,
    funds, individual investors, etc
    United Securities
    meeting 2009.8 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    China Jianyin
    Investment
    Securities meeting
    2009.8
    Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    (2)The Company’s
    development
    strategies;
    (3)The Company’s
    opinion on the
    changes in the
    industry.
    (II) Major
    information
    provided:
    Published
    information
    including the
    Company’s
    regular reports.59
    Changjiang
    Securities meeting 2009.8 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    Shenyin Wanguo
    meeting 2009.8 Hangzhou Face to Face Meeting Investors including securities companies,
    funds, etc
    Guotai Junan
    meeting 2009.8 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    JP Morgan
    meeting 2009.9 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Nomura Securities
    meeting 2009.9 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    Everbright
    Securities meeting 2009.9 Shanghai Face to Face Meeting Investors including securities companies,
    funds, etc
    CICC meeting 2009.9 Shanghai Face to Face Meeting Investors including securities companies,
    funds, etc
    CLSA meeting 2009.9 Shanghai Face to Face Meeting Investors including securities companies,
    funds, etc
    Sinolink Securities
    meeting 2009.9 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    UBS meeting 2009.9 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    CLSA meeting 2009.9 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    BNP meeting 2009.10 Changsha Face to Face Meeting Investors including securities companies,
    funds, etc
    Goldman Sachs
    Gao Hua meeting 2009.11 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    Merrill Lynch
    meeting 2009.11 Beijing Face to Face Meeting Investors including securities companies,
    funds, etc
    Credit Suisse
    meeting 2009.11 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Sinolink Securities
    meeting 2009.11 Zhuhai Face to Face Meeting Investors including securities companies,
    funds, etc
    Morgan Stanley
    meeting 2009.11 Singapore Face to Face Meeting Investors including securities companies,
    funds, etc
    Daiwa Securities
    meeting 2009.11 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Industrial
    Securities meeting 2009.11 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Everbright
    Securities meeting 2009.11 Shanghai Face to Face Meeting Investors including securities companies,
    funds, etc
    CLSA Securities
    meeting 2009.12 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Pingan Securities
    meeting 2009.12 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Merrill Lynch
    meeting 2009.12 Hong Kong Face to Face Meeting Investors including securities companies,
    funds, etc
    Shenyin Wanguo
    meeting 2009.12 Shanghai Face to Face Meeting Investors including securities companies,
    funds, etc
    Great Wall
    Securities meeting 2009.12 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Southwest
    Securities meeting 2009.12 Sanya Face to Face Meeting Investors including securities companies,
    funds, etc
    Citic Securities
    meeting 2009.12 Kunming Face to Face Meeting Investors including securities companies,
    funds, etc
    Guosen Securities
    meeting 2009.12 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Essence Securities
    meeting 2009.12 Shenzhen Face to Face Meeting Investors including securities companies,
    funds, etc
    Note: The above-mentioned meetings included one-on-one meetings, small group meetings and large group presentation. The
    Company received or met with investors from over 50 companies.60
    Securities
    companies
    During
    the year
    under
    review
    Shenzhen,
    Dongguan,
    Guangzhou,
    Foshan, Xiamen,
    Fuzhou, Shanghai,
    Hangzhou, Suzhou,
    Nanjing, Wuxi,
    Ningbo, Beijing,
    Tianjin, Shenyang,
    Dalian, Qingdao,
    Wuhan, Chengdu,
    Chongqing,
    Changsha, etc.
    Small group or oneon-
    one
    Goldman Sachs, Shenyin Wanguo, CLSA,
    UBS, Macquarie, First Shanghai, JP
    Morgan, Morgan Stanley, Everbright
    Securities, Citi, Goldman Sachs Gao Hua,
    CITIC Securities, Deutsche Bank, Credit
    Suisse, Nomura Securities, Changjiang
    Securities, CICC, BOCI, Hongta Securities,
    Donghai Securities, Guodu Securities, China
    Merchants Securities, ABN Amro,
    Mitsubishi UFJ, Essence Securities, United
    Securities, Pingan Securities, Taishin
    Securities, HSBC, Yuanta Securities, Daiwa
    Securities, Southchina Securities, CSC
    International, Merrill Lynch, CCB
    International Securities, Great Wall
    Securities, Guosen Securities, Guangzhou
    Securities, Jih Sun Securities, Toyo
    Securities, KGI Securities, Haitong
    Securities, Great Wall Securities, China
    Jianyin Investment Securities, Guotai Junan,
    Taifook Securities, Guangfa Securities,
    Royal Bank of Scotland, BNP, DBS
    Vickers, Research-works, TY Advisor,
    CIBC, etc.61
    Funds and other
    investment
    companies and
    individual
    investors
    During
    the year
    under
    review
    Shenzhen,
    Dongguan,
    Guangzhou,
    Foshan, Xiamen,
    Fuzhou, Shanghai,
    Hangzhou, Suzhou,
    Nanjing, Wuxi,
    Ningbo, Beijing,
    Tianjin, Shenyang,
    Dalian, Wuhan,
    Chengdu,
    Chongqing,
    Changsha, etc.
    Small group or oneon-
    one
    China Galaxy Investment Management
    Company Limited (中国银河投资管理有限
    公司), Dalian Chenxi Investment Company
    (大连晨曦投资公司), China Life, E Fund,
    China AMC, Greenwoods Asset
    Management, Harvest Fund, Fortis Haitong
    Fund, Bosera Fund, Fullgoal Fund, Southern
    Fund, China Universal Fund, China Life
    Franklin Asset Management Co., Limited,
    Mirae Fund, Zhonghai Fund, Taikang Life,
    Cephei Investments, Bank of
    Communications Schroder Fund, Dacheng
    Fund, Lion Fund, Invesco Great Wall Fund,
    Guangfa Fund, Hua An Fund, Rongtong
    Fund, Fuh Hwa Securities Investment Trust,
    Sinowise, CCB Principal Asset
    Management, Yinhua Fund, Beijing Ding
    Tian Investment Management Company
    Limited, Franklin Templeton Sealand Fund,
    Waddell & Reed Investment Management
    Co., ICBC Credit Suisse Asset Management,
    Capital Investment Trust, Cathay Life
    Insurance, CICC Asset Management, New
    China Life, Changsheng Fund, Shanghai
    Congrong Investment, ABN AMRO Teda
    Fund, BOCI Fund, Everbright Pramerica
    Fund, Great Wall Fund, Aegon-Industrial
    Fund, Guotai AMC, China International
    Fund Management, Tianhong Fund, Tiansun
    Investment Management (天隼投资管理咨
    询有限公司), China Investment
    Corporation, Ignis Investment Services
    Limited, Emerging Markets Mgmt LLC,
    Fortress Investment Group, ING Real Estate,
    Cohen & Steers, Galleon Asia, JPMorgan
    Asset Management, Fidelity, Bain Capital,
    Portman Holdings,UBS AG, UBS Global
    Asset Management, Rexiter, American
    Century Investment, CM Asia Pacific,
    Hamon Asset Management Limited,
    Blackstone Group Asia Limited, Fox-Pitt,
    Sansar, Oppenheimer Fund, Acru Asset
    Management, HT Capital, MFC Global
    Investment Management, Broad Peak
    Investment, Sloane Robinson, Alliance
    Bernstein, Lansdowne, Templeton, Marshall
    Wace, T Rowe Price, Robeco, Kingdon
    Capital, TPG - Axon, Tiger Asia,
    Montpelier Asset Management, Joho
    Partner, Newton Investment Management,
    BEA Union Investment, JF Asset
    Management, Farallon, Hellman&
    Friedman, Capital, PMA, Soros Capital
    Management, Partner Fund, Keywise
    Capital, Blue Ridge, Norges Bank, APG
    Investments, Janus Capital, MICH
    Investments, Highbridge, Sumitomo Trust &
    Banking, Piper Jaffray & Co., Triskele
    Capital Management Limited, Marverick
    Capital, Bennelong, Dragon Back, Union
    Investment Privatfords GMBH, AMP
    Capital, Henderson Global, Marvin &
    Palmer, Harding Loevner LLC, UOB Kay
    Hian, GLG Partners LP, DIAM Asset
    Management, TIAA CREF, GMO, Owl
    Creek Asset Management, Buena Vista
    Fund, Dodge and Cox US, Tiedemann,
    Aberdeen, Tiburon Partners, Clairvoyance,
    Mirae Asset Inv Mgmt, SAC Capital, ABCCA
    Fund Mgmt, Daiwa Asset Management,
    Fair Asset Management, NPJ AM, Boyer
    Allan Investment Management, GE Asset
    Management, Jupiter Asset Management
    Ltd,62
    Kelusa Capital, Alpine Woods Capital, GIC,
    Kylin Fund, Orange Capital Partners,
    Wellington, Black Rock, Allegiant Asset
    Management Company, Lazard Asset
    Management, Putnam Investments, William
    Blair, Kingdom, Emperor Investments,
    Mitsubishi UFJ, Moon Capital, Hamblin
    Watsa Investment, Wide Gain Investment
    Limited, Och-Ziff, Hansberger Global
    Investors Inc, China Rock, Comgest Far East
    Ltd, Credit Agricole (Suisse) SA Singapore,
    Cypress Lane Capital Limited, D.E. Shaw &
    Co LP, Deutsche Asset Management (Asia)
    Ltd, DnB NOR Asset Management (Asia)
    Limited, Duquesne Capital Management,
    L.L.C., Frontier Asia Fund, GF Asset
    Management (Hong Kong)Ltd, Hill House
    Capital Management Ltd, ING Clarion Real
    Estate Securities, Invesco Hong Kong
    Limited, Lapp Capital Private Ltd, Legg
    Mason International Equities, Passport
    Capital LLC, Pictet & Cie, Geneva,
    Redwood Investment Management (Asia)
    Ltd, SUN Partners Investment Management
    Limited, Sloane Robinson LLP, Star Master
    Fund, The Children's Inv Fd Mgt (UK) LLP,
    Amoeba Capital Asia Fund, Prudential Asset
    Management, Kesula Capital LLC, Battery
    March, Shumway Capital, Jetstream Capital,
    Sumitomo Mitsui Asset Mgmt , Wide Gain
    International Investment Co. Limited,
    Chilton Investment Company, Avenue
    Capital Group, American Century, Brooke
    Capital, Thornburg Investment Management,
    ZBI Europe, Gartmore Investment Ltd,
    Martin Currie Investment Management,
    Absolute Partners Management Ltd, Level
    Global, Viking Global, Habrok Captial Mgt,
    HQ Fonder, Geosphere Capital, Ward Ferry,
    Discovery Capital, Serengeti, AXA IM, FIM
    Asset Mgmt, Grand River Investment, PNC
    Captial Advisor, Dongbu Asset Management,
    F&C Asset Management, Carmignac
    Gestion, Temasek Holding, First State,
    Emirates Tarian, Fullerton Fund
    Management, Firth Investment, Primero,
    Clough Capital, Perennial Real Estate,
    Polaris International Securities Investment
    Trust Corp, Prudential Financial Investment
    Trust Corp, Fubon Asset Management Trust
    Corp, Fox Point Capital, Cascabel
    Management, Touradji Capital Management,
    Ziff Brothers Investments, Lasalle, etc
    9.Corporate bonds and related matters
    The Shenzhen Branch of China Construction Bank Corporation (authorised by the headquarters) provides an
    unconditional and irrevocable joint liability guarantee for the full payment of the principal and interest of the
    secured corporate bonds, 08 Vanke G1, issued by the Company. During the year under review, the guarantor
    continued to be profitable, with sound assets structure, and there was no significant change in its credit
    status.
    During the year under review, the Company paid the first-year interest on 08 Vanke G1 and 08 Vanke G2.
    Pursuant to the tracked ratings of the Company’s bonds by China Chengxin Securities Rating Co., Ltd (中诚
    信证券评估有限公司), 08 Vanke G1 and 08 Vanke G2 were rated AAA and AA+ respectively. The
    Company’s overall corporate credit rating was AA+. During the year under review, the Company had
    maintained a good credit standing.63
    Citic Securities Co., Ltd., the trustee of the Company’s corporate bonds, is of the opinion that: China Vanke
    has a stable operation and good credit standing and past performances, with strong capacity to meet its
    financial obligation. The principal and interest payments for this bond issue are safe.
    10.Other investments
    10.1 Investment of securities
    No.
    10.2 Equity interests held in other listed companies
    Stock
    code
    Stock
    abbreviation
    Initial
    investment
    amount
    Percentage of
    shareholdings
    Booked
    value as at
    the end of
    the year
    under review
    Gains/(losse
    s)during the
    year under
    review
    Changes in
    equity
    attributable to
    equity holders
    during the year
    under review
    000001 Shenzhen
    Development
    Bank Co., Ltd – A
    11,582,347.80 0.10% 73,449,230.40 - 44,937,547.20
    600697 Changchun
    Eurasia Group
    Co., Ltd
    5,070,000.00 1.18% 45,977,808.62 563,683.80 18,827,038.92
    600680 Shanghai Potevio
    Co., Ltd.
    7,076,961.71 0.90% 39,438,833.64 6,939,556.67 16,950,190.40
    600751 SST Tianjin Marine
    Shipping Co., Ltd.
    143,600.00 0.04% 143,600.00 - -
    Total 23,872,909.51 - 159,009,472.66 7,503,240.47 80,714,776.52
    Note:1. The above-mentioned equity interests are legal person shares of the Company over the years. Up till now, the SST Tianjin
    Marine Shipping Co., Ltd has not undergone share reform;
    2. During the year under review, the equity interests held in Shanghai Potevio Co., Ltd. by the Company had been disposed. Gains
    from the disposal of the equity interests have been recognised as “investment income”. The change in fair value of other equity
    interests at the end of the year under review increased the “tradable financial assets”, and correspondingly increased “capital
    reserve”.
    10.3 Shareholding of non-listed financial corporations and companies planning for listing
    No.
    10.4 Investment in derivatives
    Remarks on risk analysis and management of derivative
    positions during the year under review (including but not
    limited to market risk, liquidity risk, credit risk, operational risk
    and legal risk, etc.)
    In order to limit the capital risk associated with the fluctuations of
    exchange rate for foreign currency loans, the Company entered into a
    non-deliverable forward (“NDF”) contract to hedge a US$15.84
    million and US$19.8 million foreign currency loan in 2007. NDF is
    used to hedge against the risk arising from the change in exchange
    rate by fixing a forward exchange rate on the notional amount during
    the term of the contract. During the year under review, the NDF
    reached maturity and was settled.
    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 a US$67.75 million floating rate foreign currency
    loan during the year under review. The Company would charge the
    counterparty an interest according to a floating rate, in order to pay
    the floating-rate interest to the original lender, while a fixed rate to the
    counterparty.
    Change in market price or fair value of the derivatives invested
    during the year under review, as well as the method, related
    assumptions and parameters used to analyse the fair value of
    derivatives should be disclosed
    The effect of the change in the aforementioned NDF value on the
    Company’s profit or loss during the year under review amounted to
    RMB1,694,880.00. The fair value of the NDF was determined with
    reference to the market rate of NDF which matured on the same day;
    the effect of the change in the aforementioned IRS value on the
    Company’s profit or loss during the year under review amounted to
    RMB740,470.77. The value of the IRS was determined based on the
    the price quoted in the agreement dated 31 December 200964
    Remarks on whether there has been a material change in the
    accounting policy and accounting measurement principles for
    the Company’s derivatives during the year under review as
    compared with those of the previous reporting year
    Nil
    Special advice on derivative investment and risk control by
    independent directors, sponsors and financial advisors
    The Company’s independent directors are of the view that financial
    instruments such as NDF and IRS reduced the loss associated with
    foreign currency loan in the event of significant fluctuations in
    exchange rate and interest rate. The relevant arrangement of the
    Company has been prudent and reasonable.
    Derivative positions as at the end of the year under review
    Unit: RMB’000
    Type of contracts
    Contract amount
    as at the
    beginning of the
    year
    Contract amount as
    at the end of the
    year
    Profit/loss during the
    year under review
    Contract amount as at the end of the
    year as a percentage of the Company’s
    net assets as at the end of 2009 (%)
    Interest rate swap
    (IRS) agreement 0 462,610.6 740.5 1.24
    Total 462,610.6 740.5 1.24
    11. Was there any use of the Company’s funds by the controlling shareholder and other related parties
    for non-operation purpose?
    There had not been any use of the Company’s funds by the controlling shareholder and other related parties
    for non-operation purpose.
    12. Appointment and termination of certified public accountants
    The 2008 Annual General Meeting resolved to confirm the appointment of KPMG Huazhen Certified Public
    Accountants as the Company’s auditors for the year 2009. The following table shows the details on the
    appointment of the certified public accountants of the Company:
    2009 2008
    Audited item Auditor Audit fee
    Year of
    service Auditor Audit fee
    The Group’s consolidated
    financial statements
    prepared in accordance
    with the PRC Accounting
    Standards for Business
    Enterprises
    9 years
    The Group’s consolidated
    financial statements
    prepared in accordance
    with the IFRS
    KPMG
    Huazhen
    Certified
    Public
    Accountants
    RMB6,800,000.00
    17 years
    KPMG Huazhen
    Certified Public
    Accountants
    RMB7,500,000.00
    The above-mentioned audit fee included the travelling expenses incurred during the auditing period.
    13. Was there any disciplinary action was taken against the Company and the Company’s Directors,
    members of Supervisory Committee and senior management during the year under review.
    Nil.
    XI. Chronology of 2009
    On 11 May 2009, Blocks B3 and B4 of Holiday Town Project developed by China Vanke and COFCO were
    named as the pilot project of housing prefabrication in Beijing.65
    On 1 June 2009, Zundao Zhongxin Kindergarten funded by the Company was ready for use.
    On 30 June 2009, the handover ceremony of Xiang’e Government Administrative Centre, construction aid
    for which was provided by the Company, was successfully held.
    On 29 July 2009, the foundation laying ceremony of “2049” – China Vanke Pavilion in Puxi Area, the
    Shanghai World Expo was held.
    On 17 August 2009, China Construction Bank Corporation entered into a “Strategic Collaboration
    Agreement” with the Company, providing the Company with a credit line of RMB50 billion.
    On 17 August 2009, the signing of the agreement on the Company’s strategic partnership for standardisation
    of fully furbished units with a theme on “Green Home, Healthy Family”.
    On 15 September 2009, the Company’s resolution regarding the proposal on the public offer of new A shares
    was approved at a shareholders’ meeting.
    On 29 September 2009, the Company’s headquarters officially moved to Vanke Center in Dameisha,
    Shenzhen.
    On 6 October 2009, “Bless the Children with Love”, a special funded project of China Vanke in Sichuan was
    launched in Chengdu.
    On 9 December 2009, the Company’s four projects, namely Phases I, II and III of Wonderland in Beijing,
    Dream Town in Guangzhou, Phase I of Glamorous City in Shenyang, and The Peninsula, Wonderland in
    Wuhan received the “Golden Prize of Excellent Residential Community of Zhan Tianyou Award in 2009”
    from China Civil Engineering Society. Phase I of New Elm Mansion in Shenyang won the title of Excellent
    Planning for Residential Community of Zhan Tianyou Award from China Civil Engineering Society.
    XII. Financial Report66
    China Vanke Co., Ltd.
    萬科企業股份有限公司
    31 December 200967
    Independent auditor’s report to the shareholders of
    China Vanke Co., Ltd.
    (Established as a joint stock company in the People’s Republic of China
    with limited liability)
    We have audited the accompanying consolidated financial statements of China Vanke Co.,
    Ltd. (the “Company”) and its subsidiaries (together with the Company referred to as the
    “Group”), which comprise the consolidated balance sheet as at 31 December 2009, and the
    consolidated income statement, the consolidated statement of comprehensive income, the
    consolidated statement of changes in equity and the consolidated cash flow statement for the
    year then ended, and a summary of significant accounting policies and other explanatory
    notes.
    Directors’ responsibility for the financial statements
    The directors of the Company are responsible for the preparation and fair presentation of
    these consolidated financial statements in accordance with International Financial Reporting
    Standards. This responsibility includes designing, implementing and maintaining internal
    control relevant to the preparation and fair presentation of financial statements that are free
    from material misstatements, whether due to fraud or error; selecting and applying
    appropriate accounting policies; and making accounting estimates that are reasonable in the
    circumstances.
    Auditor’s responsibility
    Our responsibility is to express an opinion on these consolidated financial statements based
    on our audit and to report our opinion solely to you, as a body, and for no other purpose. We
    do not assume responsibility towards or accept liability to any other person for the contents
    of this report.
    We conducted our audit in accordance with International Standards on Auditing. Those
    standards require that we comply with relevant ethical requirements and plan and perform the
    audit to obtain reasonable assurance as to whether the financial statements are free of
    material misstatement.
    An audit involves performing procedures to obtain audit evidence about the amounts and
    disclosures in the financial statements. The procedures selected depend on our judgement,
    including the assessment of the risks of material misstatement of the financial statements,
    whether due to fraud or error. In making those risk assessments, we consider internal control
    relevant to the entity’s preparation and fair presentation of the financial statements in order to
    design audit procedures that are appropriate in the circumstances, but not for the purpose of
    expressing an opinion on the effectiveness of the entity’s internal control. An audit also
    includes evaluating the appropriateness of accounting principles used and the reasonableness
    of accounting estimates made by the directors, as well as evaluating the overall presentation
    of the financial statements.
    We believe that the audit evidence we have obtained is sufficient and appropriate to provide
    a basis for our opinion.68
    Independent auditor’s report to the shareholders of
    China Vanke Co., Ltd. (continued)
    (Established as a joint stock company in the People’s Republic of China
    with limited liability)
    Opinion
    In our opinion, the consolidated financial statements give a true and fair view of the
    consolidated financial position of the Group as at 31 December 2009, and of its consolidated
    financial performance and its consolidated cash flows for the year then ended in accordance
    with International Financial Reporting Standards.
    Certified Public Accountants
    8th Floor, Tower E2, Oriental Plaza
    1 East Chang An Avenue
    Beijing, People’s Republic of China
    26 February 2010China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    69
    Consolidated income statement
    for the year ended 31 December 2009
    (Expressed in Renminbi Yuan)
    Note 2009 2008
    Revenue 8 46,047,893,250 38,619,214,077
    Cost of sales (34,056,087,552) (26,299,201,645)
    Gross profit 11,991,805,698 12,320,012,432
    Other income 9 263,313,108 77,012,468
    Distribution costs (1,513,716,870) (1,860,350,084)
    Administrative expenses (1,472,764,647) (1,549,020,923)
    Other operating expenses 10 (173,102,051) (142,844,134)
    Profit from operations 9,095,535,238 8,844,809,759
    -------------------- --------------------
    Finance income 503,223,726 347,798,642
    Finance costs (847,616,939) (982,116,926)
    Net finance costs 12 (344,393,213) (634,318,284)
    -------------------- --------------------
    Share of profits less losses of associates 22 392,250,939 219,115,497
    Share of profits less losses
    of jointly controlled entities 23 149,609,924 (9,379,634)
    Profit before income tax 9,293,002,888 8,420,227,338
    Income tax 13(a) (2,862,995,349) (3,780,358,185)
    Profit for the year 6,430,007,539 4,639,869,153
    Attributable to:
    Equity shareholders of the Company 5,329,737,727 4,033,170,028
    Minority interests 1,100,269,812 606,699,125
    Profit for the year 6,430,007,539 4,639,869,153
    Basic and diluted earnings per share 15 0.48 0.37
    The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    70
    Consolidated statement of comprehensive income
    for the year ended 31 December 2009
    (Expressed in Renminbi Yuan)
    Note 2009 2008
    Profit for the year 6,430,007,539 4,639,869,153
    -------------------- --------------------
    Other comprehensive income
    for the year (after tax and
    reclassification adjustments) 14
    Exchange differences on translation
    of financial statements of
    foreign subsidiaries (586,681) 129,508,819
    Available-for-sale securities: net
    movement in the fair value reserve 62,957,529 (90,154,429)
    62,370,848 39,354,390
    -------------------- --------------------
    Total comprehensive income for the year 6,492,378,387 4,679,223,543
    Attributable to:
    Equity shareholders of the Company 5,392,108,575 4,072,524,418
    Minority interests 1,100,269,812 606,699,125
    Total comprehensive income for the year 6,492,378,387 4,679,223,543
    The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    71
    Consolidated balance sheet at 31 December 2009
    (Expressed in Renminbi Yuan)
    Note 2009 2008
    ASSETS
    Non-current assets
    Property, plant and equipment 17 1,387,295,710 1,290,600,931
    Lease prepayments 18 81,966,326 -
    Investment properties 19 228,143,158 198,394,767
    Construction in progress 20 593,208,234 188,587,023
    Interest in associates 22 709,512,280 508,175,188
    Interest in jointly controlled entities 23 2,763,877,398 1,888,809,160
    Other financial assets 24 255,622,796 256,158,816
    Deferred tax assets 25(a) 1,265,649,479 1,449,480,633
    Total non-current assets 7,285,275,381 5,780,206,518
    -------------------- --------------------
    Current assets
    Inventories 26 59,998,046 48,111,356
    Properties held for development 27 43,259,163,354 34,131,859,032
    Properties under development 27 41,872,964,957 44,340,453,697
    Completed properties for sale 27 5,311,972,269 7,890,962,140
    Trade and other receivables 28 17,235,320,841 8,416,531,561
    Financial derivatives 740,471 -
    Cash and cash equivalents
    and pledged deposits 29 23,001,923,831 19,978,285,930
    Total current assets 130,742,083,769 114,806,203,716
    -------------------- --------------------
    TOTAL ASSETS 138,027,359,150 120,586,410,234
    EQUITY
    Share capital 30 10,995,210,218 10,995,210,218
    Reserves 31 26,866,813,259 22,146,755,978
    Awarded Shares purchased for the
    Employees’ Share Award Scheme 36 (486,135,416) (1,250,040,934)
    Total equity attributable to equity
    shareholders of the Company 37,375,888,061 31,891,925,262
    Minority interests 8,032,624,393 6,926,624,219
    TOTAL EQUITY 45,408,512,454 38,818,549,481
    -------------------- --------------------
    The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    72
    Consolidated balance sheet at 31 December 2009 (continued)
    (Expressed in Renminbi Yuan)
    Note 2009 2008
    LIABILITIES
    Non-current liabilities
    Interest-bearing borrowings and bonds 32 23,296,534,102 14,942,136,092
    Deferred tax liabilities 25(b) 1,221,268,786 1,380,487,627
    Other long term liabilities 33 8,408,145 12,644,850
    Provisions 35 34,355,815 41,729,468
    Total non-current liabilities 24,560,566,848 16,376,998,037
    -------------------- --------------------
    Current liabilities
    Interest-bearing borrowings 32 8,628,670,478 17,866,342,910
    Financial derivatives - 1,694,880
    Trade and other payables 34 55,244,411,867 43,979,207,733
    Current taxation 13(c) 4,185,197,503 3,543,617,193
    Total current liabilities 68,058,279,848 65,390,862,716
    -------------------- --------------------
    TOTAL LIABILITIES 92,618,846,696 81,767,860,753
    -------------------- --------------------
    TOTAL EQUITY AND LIABILITIES 138,027,359,150 120,586,410,234
    Approved and authorised for issue by the board of directors on 26 February 2010.
    )
    )
    ) Directors
    )
    )
    The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    73
    Consolidated statement of changes in equity
    For the year ended 31 December 2009
    (Expressed in Renminbi Yuan)
    Attributable to equity shareholders of the Company
    Awarded shares
    Employee purchased for
    Foreign share-based Employees’
    Share Share exchange Statutory compensation Revaluation Retained Share Award Minority
    Note capital premium reserve reserves reserve reserve Other reserves profits Scheme Total interests Total equity
    Balance at 1 January 2009 10,995,210,218 8,826,644,405 277,307,760 6,581,984,978 473,226,067 44,647,125 (241,332,344) 6,184,277,987 (1,250,040,934) 31,891,925,262 6,926,624,219 38,818,549,481
    Changes in equity for 2009:
    Transfer of retained profits 31(b) - - - 2,155,856,459 - - - (2,155,856,459) - - - -
    Dividend declared-2009 16 - - - - - - - (549,760,511) - (549,760,511) - (549,760,511)
    Dividends distributed to
    minority interests - - - - - - - - - - (135,528,732) (135,528,732)
    Capital injections from
    minority interests of subsidiaries - - - - - - - - - - 829,084,667 829,084,667
    Minority interests arising from
    acquisitions of non-wholly
    owned subsidiaries - - - - - - - - - - 65,659,742 65,659,742
    Equity settled share-based
    transactions 36 - - - - - - (143,249,210) - 763,905,518 620,656,308 - 620,656,308
    Other movement in minority interests - - - - - - - - - - (20,751,055) (20,751,055)
    Acquisitions of minority interests - - - - - - 20,958,427 - - 20,958,427 (732,734,260) (711,775,833)
    Total comprehensive income
    for the year - - (586,681) - - 62,957,529 - 5,329,737,727 - 5,392,108,575 1,100,269,812 6,492,378,387
    Balance at 31 Decem ber 2009 1 0,995,210,218 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) 3 7,375,888,061 8,032,624,393 4 5,408,512,454China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    74
    Consolidated statement of changes in equity (continued)
    For the year ended 31 December 2008
    (Expressed in Renminbi Yuan)
    Attributable to equity shareholders of the Company
    Employee Awarded shares
    Foreign share-based purchased for the
    Share Share exchange Statutory compensation Revaluation Employees’ Share Minority
    Note capital premium reserve reserves reserve reserve Other reserves Retained profits Award Scheme Total interests Total equity
    Balance at 1 January 2008 6,872,006,387 12,949,848,236 147,798,941 5,395,470,156 453,690,000 134,801,554 (241,332,344) 4,032,906,217 (466,541,546) 29,278,647,601 4,640,875,428 33,919,523,029
    Changes in equity for 2008:
    Equity settled share-based transactions 31(c) - - - - 494,987,500 - - - - 494,987,500 - 494,987,500
    Adjustment for equity settled
    share-based transactions 31(c) - - - - (259,987,500) - - - - (259,987,500) - (259,987,500)
    Distributions of the Awarded Shares 36 - - - - (215,463,933) - - (8,082,797) 223,546,730 - - -
    Purchased through the trust 36 - - - - - - - - (1,007,046,118) (1,007,046,118) - (1,007,046,118)
    Transfer of retained profits 31(b) - - - 1,186,514,822 - - - (1,186,514,822) - - - -
    Capitalisation of share premium 31(a) 4,123,203,831 (4,123,203,831) - - - - - - - - - -
    Capital injections from
    minority interests of subsidiaries - - - - - - - - - - 695,603,280 695,603,280
    Dividend declared-2008 16 - - - - - - - (687,200,639) - (687,200,639) - (687,200,639)
    Dividends paid to minority interests - - - - - - - - - - (204,651,502) (204,651,502)
    Minority interests arising from
    acquisitions of non-wholly
    owned subsidiaries - - - - - - - - - - 560,417,984 560,417,984
    Acquisitions of minority interests - - - - - - - - - - (122,028,497) (122,028,497)
    Increase in minority interests
    resulting from disposal of partial
    interest in a subsidiary - - - - - - - - - - 839,030,034 839,030,034
    Decrease in minority interests resulting
    from liquidation of subsidiaries - - - - - - - - - - (65,009,125) (65,009,125)
    Other movement in minority interests - - - - - - - - - - (24,312,508) (24,312,508)
    Total comprehensive income
    for the year - - 129,508,819 - - (90,154,429) - 4,033,170,028 - 4,072,524,418 606,699,125 4,679,223,543
    Balance at 31 Decem ber 2008 1 0,995,210,218 8,826,644,405 277,307,760 6,581,984,978 473,226,067 44,647,125 (241,332,344 ) 6,184,277,987 (1,250,040,934) 3 1,891,925,262 6,926,624,219 3 8,818,549,481
    The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    75
    Consolidated cash flow statement
    for the year ended 31 December 2009
    (Expressed in Renminbi Yuan)
    Note 2009 2008
    Cash flows from operating activities
    Cash receipts from customers 57,595,333,546 42,783,256,973
    Cash paid to suppliers (34,560,212,562) (30,218,067,735)
    Cash paid to and for employees (1,197,521,165) (2,319,451,076)
    Cash paid for other taxes (3,466,498,213) (3,233,320,498)
    Cash generated from other operating activities 1,889,792,191 1,478,587,996
    Cash used in other operating activities (7,936,728,231) (3,895,351,267)
    Cash generated from operations 12,324,165,566 4,595,654,393
    PRC Corporate Income Tax paid (2,088,636,153) (3,888,124,245)
    Land Appreciation Tax paid (982,178,093) (741,681,978)
    Net cash generated from / (used in)
    operating activities 9,253,351,320 (34,151,830)
    -------------------- --------------------
    Cash flows from investing activities
    Acquisitions of subsidiaries,
    net of cash acquired 6 (825,289,152) (2,396,176,023)
    Acquisitions of interest in associates, jointly
    controlled entities and other investments (942,738,623) (1,350,265,711)
    Acquisitions of minority interests (457,952,838) (73,842,575)
    Acquisitions of property, plant and
    equipment and construction in progress (806,062,158) (215,283,734)
    Payment for acquisitions of subsidiaries in
    previous year (2,150,653,776) (217,036,600)
    Prepayment for investments (176,776,030) (15,947,889)
    Proceeds from disposals of subsidiaries 7 119,164,800 3,547,677
    Proceeds from disposal of partial interest
    in a subsidiary - 838,743,750
    Proceeds from disposal of property,
    plant and equipment 142,450,545 5,687,794
    Proceeds from sales of investments 210,421,894 201,580,207
    Interest received 304,714,390 298,441,058
    Dividends received 392,060,351 76,414,614
    Net cash used in investing activities (4,190,660,597) (2,844,137,432)
    -------------------- --------------------
    The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    76
    Consolidated cash flow statement (continued)
    for the year ended 31 December 2009
    (Expressed in Renminbi Yuan)
    2009 2008
    Cash flows from financing activities
    Proceeds from issue of corporate bonds - 5,759,981,650
    Capital injections from minority interests
    of subsidiaries 829,084,667 472,936,459
    Proceeds from loans and borrowings 20,731,516,741 14,325,980,946
    Repayment of loans and borrowings (21,640,510,970) (11,690,595,100)
    Dividend paid to equity shareholders (549,760,511) (687,200,639)
    Dividend paid to minority shareholders
    of subsidiaries (127,633,677) (170,052,296)
    Interest paid (2,271,351,470) (2,144,710,398)
    Net cash (used in) / generated from
    financing activities (3,028,655,220) 5,866,340,622
    -------------------- --------------------
    Net increase in cash and cash equivalents 2,034,035,503 2,988,051,360
    Cash and cash equivalents at 1 January 19,978,285,930 17,046,504,584
    Effect of foreign exchange rate changes (9,546,495) (56,270,014)
    Cash and cash equivalents at 31 December 22,002,774,938 19,978,285,930
    The accompanying notes form part of these financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    77
    Notes to the consolidated financial statements
    (Expressed in Renminbi Yuan)
    1 Reporting entity
    China Vanke Co., Ltd (the “Company”) is a company domiciled in the People’s Republic of
    China (the “PRC”). The consolidated financial statements of the Company for the year
    ended 31 December 2009 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
    8).
    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 IASB has issued certain new and revised IFRSs that are first effective or available for
    early adoption for the current accounting period of the Group. Note 4 provides information
    on any changes in accounting policies resulting from initial application of these
    developments to the extent that they are relevant to the Group for the current and prior
    accounting periods reflected in these financial statements.
    The consolidated financial statements were approved and authorised for issue by the
    Company’s board of directors on 26 February 2010.
    (b) Basis of measurement
    The consolidated financial statements have been prepared on the historical cost basis except
    for the following:
    ?financial instruments at fair value through profit or loss are measured at fair value
    ?available-for-sale financial assets are measured at fair value
    (c) Functional and presentation currency
    The consolidated financial statements are presented in Renminbi Yuan, which is the Group’s
    functional currency.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    78
    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 17, 18, 19 and 20 – depreciation and impairment of property, plant and
    equipment , lease prepayments , investment properties and construction in progress.
    ?Note 27 – write down of properties
    ?Note 28 – impairment of trade debtors and other receivables
    ?Note 43 – accounting estimates and judgements
    3 Significant accounting policies
    The accounting policies set out below have been applied consistently to all periods presented
    in these consolidated financial statements, and have been applied consistently by Group
    entities.
    (a) Basis of consolidation
    (i) Subsidiaries and minority interests
    Subsidiaries are entities controlled by the Group. Control exists when the Group has the
    power to govern the financial and operating policies of an entity so as to obtain benefits from
    its activities. In assessing control, potential voting rights that presently are exercisable are
    taken into account.
    An investment in a subsidiary is consolidated into the consolidated financial statements from
    the date that control commences until the date that control ceases. Intra-group balances and
    transactions and any unrealised profits arising from intra-group transactions are eliminated in
    full in preparing the consolidated financial statements. Unrealised losses resulting from
    intra-group transactions are eliminated in the same way as unrealised gains but only to the
    extent that there is no evidence of impairment.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    79
    3 Significant accounting policies (continued)
    (a) Basis of consolidation (continued)
    (i) Subsidiaries and minority interests (continued)
    Minority interests represent the portion of the net assets of subsidiaries attributable to
    interests that are not owned by the Company, whether directly or indirectly through
    subsidiaries, and in respect of which the Group has not agreed any additional terms with
    holders of those interests which would result in the Group as a whole having a contractual
    obligation in respect of those interests that meets the definition of a financial liability.
    Minority interests are presented in the consolidated balance sheet within equity, separately
    from equity attributable to the equity shareholders of the Company. Minority interests in the
    results of the Group are presented on the face of the consolidated income statement as an
    allocation of the total profit or loss for the year between minority interests and the equity
    shareholders of the Company.
    Where losses applicable to the minority exceed the minority’s interest in the equity of a
    subsidiary, the excess, and any further losses applicable to the minority, are charged against
    the Group’s interest except to the extent that the minority has a binding obligation to, and is
    able to, make additional investment to cover the losses. If the subsidiary subsequently
    reports profits, the Group’s interest is allocated all such profits until the minority’s share of
    losses previously absorbed by the Group has been recovered.
    Loans from holders of minority interests and other contractual obligations towards these
    holders are presented as financial liabilities in the consolidated balance sheet in accordance
    with notes 3(r) and 3(t) depending on the nature of the liability.
    (ii) Associates and jointly controlled entities
    An associate is an entity in which the Group has significant influence, but not control or joint
    control, over its management, including participation in the financial and operating policy
    decisions.
    A jointly controlled entity is an entity which operates under a contractual arrangement
    between the Group and other parties, where the contractual arrangement establishes that the
    Group and one or more of the other parties share joint control over the economic activity of
    the entity.
    An investment in an associate or a jointly controlled entity is accounted for in the
    consolidated financial statements under the equity method, unless it is classified as held for
    sale (or included in a disposal group of that is classified as held for sale). Under the equity
    method, the investment is initially recorded at cost and adjusted thereafter for the post
    acquisition change in the Group’s share of investees’ net assets and any impairment loss
    relating to the investment (see note 3(h)(i)). The Group’s share of the post-acquisition, posttax
    results of the investees and any impairment losses for the year are recognised in the
    consolidated income statement, whereas the Group’s share of the post-acquisition post-tax
    items of the investees’ other comprehensive income is recognised in the consolidated
    statement of comprehensive income.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    80
    3 Significant accounting policies (continued)
    (a) Basis of consolidation (continued)
    (ii) Associates and jointly controlled entities (continued)
    When the Group’s share of losses exceeds its interest in the associate or the jointly controlled
    entity, the Group’s interest is reduced to nil and recognition of further losses is discontinued
    except to the extent that the Group has incurred legal or constructive obligations or made
    payments on behalf of the associate or the jointly controlled entity. For this purpose, the
    Group’s interest is the carrying amount of the investment under the equity method together
    with the Group’s long-term interests that in substance form part of the Group’s net
    investment in the associate or the jointly controlled entity.
    Unrealised profits and losses resulting from transactions between the Group and its associates
    and jointly controlled entities are eliminated to the extent of the Group’s interest in the
    investee, except where unrealised losses provide evidence of an impairment of the asset
    transferred, in which case they are recognised immediately in profit or loss.
    (iii) Business combinations
    When an acquisition is completed by a series of successive transactions, each significant
    transaction is considered individually for the purpose of the determination of the fair value of
    the identifiable assets, liabilities and contingent liabilities acquired and hence for the
    goodwill associated with the acquisition.
    The fair values of the identifiable assets and liabilities acquired can vary at the date of each
    transaction. When a transaction results in taking over the control of the entity, the interests
    of the entity previously recorded in the Group’s financial statements are revalued on the basis
    of the fair values of the identifiable assets and liabilities at the transaction date. Any
    revaluation surplus/deficits are recorded in equity.
    When control already exists at the date of addition in interest in an entity, no fair value
    adjustment is made to the identifiable assets, liabilities and contingent liabilities of the entity.
    Any difference between the considerations and the carrying amount of interests previously
    recorded in the Group’s financial statements is dealt with in equity.
    Where the Group decreases its interest in a subsidiary without losing control, any gain or loss
    on the partial disposal is recognised in equity.
    (iv) Goodwill
    Goodwill represents the excess of the cost of a business combination or an investment in an
    associate or a jointly controlled entity over the Group’s interest in the net fair value of the
    acquiree’s identifiable assets, liabilities and contingent liabilities.
    Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a
    business combination is allocated to cash-generating units and is tested annually for
    impairment (see note 3(h)). In respect of associates or jointly controlled entities, the carrying
    amount of goodwill is included in the carrying amount of the interest in the associate or
    jointly controlled entity and the investment as a whole is tested for impairment whenever
    there is objective evidence of impairment (see note 3(h)).China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    81
    3 Significant accounting policies (continued)
    (a) Basis of consolidation (continued)
    (iv) Goodwill (continued)
    Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets,
    liabilities and contingent liabilities over the cost of a business combination or an investment
    in an associate or a jointly entity is recognised immediately in profit or loss.
    On disposal of a cash generating unit, an associate or a jointly controlled entity during the
    year, and attributable amount of purchased goodwill is included in the calculation of the
    profit or loss on disposal.
    (b) Foreign currency
    (i) Foreign currency transactions
    Transactions in foreign currencies are translated to the respective functional currencies of
    Group entities at exchange rates at the dates of the transactions. Monetary assets and
    liabilities denominated in foreign currencies at the reporting date are retranslated to the
    functional currency at the exchange rate at that date. The foreign currency gain or loss on
    monetary items is the difference between amortised cost in the functional currency at the
    beginning of the period, adjusted for effective interest and payments during the period, and
    the amortised cost in foreign currency translated at the exchange rate at the end of the period.
    Non-monetary assets and liabilities denominated in foreign currencies that are measured at
    fair value are retranslated to the functional currency at the exchange rate at the date that the
    fair value was determined. Foreign currency differences arising on retranslation are
    recognised in profit or loss.
    (ii) Foreign operations
    The assets and liabilities of foreign operations, including goodwill and fair value adjustments
    arising on acquisition, are translated to Renminbi at exchange rate at the reporting date. The
    income and expenses of foreign operations are translated to Renminbi at exchange rates at
    the dates of the transactions.
    Foreign currency differences are recognised in other comprehensive income and accumulated
    separately in equity in the foreign exchange reserve. When a foreign operation is disposed of,
    in part of in full, the relevant amount in the foreign exchange reserve is transferred to profit
    or loss as part of the profit or loss on disposal.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    82
    3 Significant accounting policies (continued)
    (c) Financial instruments
    (i) Non-derivative financial assets
    The Group initially recognises loans and receivables and deposits on the date that they are
    originated. All other financial assets (including assets designated at fair value through profit
    or loss) are recognised initially on the trade date at which the Group becomes a party to the
    contractual provisions of the instrument.
    The Group derecognises a financial asset when the contractual rights to the cash flows from
    the asset expire, or it transfers the rights to receive the contractual cash flows on the financial
    asset in a transaction in which substantially all the risks and rewards of ownership of the
    financial asset are transferred. Any interest in transferred financial assets that is created or
    retained by the Group is recognised as a separate asset or liability.
    Financial assets and liabilities are offset and the net amount presented in the balance sheet
    when, and only when, the Group has a legal right to offset the amounts and intends either to
    settle on a net basis or to realise the asset and settle the liability simultaneously.
    The Group has the following non-derivative financial assets: loans and receivables and
    available-for-sale financial assets.
    Loans and receivables
    Loans and receivables are financial assets with fixed or determinable payments that are not
    quoted in an active market. Such assets are recongnised initially at fair value plus any
    directly attributable transaction costs. Subsequent to initial recognition loans and receivables
    are measured at amortised cost using the effective interest method, less any impairment
    losses.
    Available-for-sale financial assets
    Available-for-sale financial assets are non-derivative financial assets that are designated as
    available-for-sale. The Group’s investments in equity securities and certain debt securities
    are classified as available-for-sale financial assets. Subsequent to initial recognition, they are
    measured at fair value and changes therein, other than impairment losses (see note 3(h)) and
    foreign currency differences on available-for-sale equity instruments, are recognised in other
    comprehensive income and presented within equity in the fair value reserve. When an
    investment is derecognised, the cumulative gain or loss in equity is transferred to profit or
    loss.
    (ii) Non-derivative financial liabilities
    The Group initially recognises debt securities issued on the date that they are originated. All
    other financial liabilities (including liabilities designated at fair value through profit or loss)
    are recognised initially on the trade date at which the Group becomes a party to the
    contractual provisions of the instrument.
    The Group derecognises a financial liability when its contractual obligations are discharged
    or cancelled or expire.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    83
    3 Significant accounting policies (continued)
    (c) Financial instruments (continued)
    (ii) Non-derivative financial liabilities (continued)
    Financial assets and liabilities are offset and the net amount presented in the balance sheet
    when, and only when, the Group has a legal right to offset the amounts and intends either to
    settle on a net basis or to realise the asset and settle the liability simultaneously.
    The Group has the following non-derivative financial liabilities: loans and borrowings, and
    trade and other payables.
    Such financial liabilities are recognised initially at fair value plus any directly attributable
    transaction costs. Subsequent to initial recognition these financial liabilities are measured at
    amortised cost using the effective interest method.
    (iii) Derivative financial instruments
    Derivative financial instruments are recognised initially at fair value; attributable transaction
    costs are recognised in the profit or loss when incurred. Subsequent to initial reorganisation,
    derivatives are measured at fair values, and all changes in its fair value are recognised
    immediately in profit or loss.
    Embedded derivatives are separated from the host contract and accounted for separately if
    the economic characteristics and risks of the host contract and the embedded derivative are
    not closely related, a separate instrument with the same terms as the embedded derivative
    would meet the definition of a derivative, and the combined instrument is not measured at
    fair value through profit or loss.
    (iv) Share capital
    Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
    ordinary shares are recognised as a deduction from equity, net of any tax effects.
    (d) Property, plant and equipment
    (i) Recognition and measurement
    Hotel and other properties held for own use, plant and equipment are measured at cost less
    accumulated depreciation and accumulated impairment losses. Cost includes expenditure
    that is directly attributable to the acquisition of the asset. The cost of self-constructed assets
    includes the cost of materials and direct labour, any other costs directly attributable to
    bringing the assets to a working condition for their intended use, and the costs of dismantling
    and removing the items and restoring the site on which they are located, and an appropriate
    proportion of production overheads and borrowing costs (see note 3(n)). Purchased software
    that is integral to the functionality of the related equipment is capitalised as part of that
    equipment.
    When parts of an item of property, plant and equipment have different useful lives, they are
    accounted for as separate items (major components) of property, plant and equipment.
    Gains and losses on disposal of an item of property, plant and equipment are determined by
    comparing the proceeds from disposal with the carrying amount of property, plant and
    equipment, and are recognised net within “other income” in profit or loss.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    84
    3 Significant accounting policies (continued)
    (d) Property, plant and equipment (continued)
    (ii) Subsequent costs
    The cost of replacing part of an item of property, plant and equipment is recognised in the
    carrying amount of the item if it is probable that the future economic benefits embodied
    within the part will flow to the Group and its cost can be measured reliably. The carrying
    amount of the replaced part is derecognised. The costs of the day-to-day servicing of
    property, plant and equipment are recognised in profit or loss as incurred.
    (iii) Depreciation
    Depreciation is calculated to write-off the cost of items of property, plant and equipment, less
    their estimated residual value, if any, using the straight line method over their estimated
    useful lives as follows:
    Estimated
    residual value
    as a percentage
    Year of costs
    Hotel buildings 34 4%
    Other buildings 12.5 - 25 4%
    Improvements to premises 5 years or over terms of leases -
    Plant and machinery 5 - 10 4%
    Furniture, fixtures and equipment 5 - 10 4%
    Motor vehicles 5 4%
    Both the useful life of an asset and its residual value, if any, are reviewed annually.
    (e) Investment properties
    Investment properties are land and buildings which are owned or held under a leasehold
    interest (see note 3(g)) to earn rental income and/or for capital appreciation. These include
    land held for a currently undetermined future use and property that is being constructed or
    developed for future use as investment property.
    Investment properties are stated in the consolidated balance sheet at cost less accumulated
    depreciation and impairment losses (see note 3(h)). The cost of self-constructed assets
    includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs
    of dismantling and removing the items and restoring the site on which they are located, and
    an appropriate proportion of production overheads and borrowing costs (see note 3(n)).
    Any gain or loss arising from the retirement or disposal of an investment property is
    recognised in profit or loss. Rental income from investment property is accounted for as
    described in note 3(l)(iii).
    Depreciation is calculated to write off the cost of items of investment properties, less their
    estimated residual value of 4% of costs, using straight line method over their estimated
    useful lives of 12.5 to 34 years.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    85
    3 Significant accounting policies (continued)
    (f) Construction in progress
    Construction in progress represents items of property, plant and equipment or investment
    properties under construction and pending installation, and is stated at cost less impairment
    losses (see note 3(h)). Cost comprises cost of materials, direct labour, borrowing costs
    capitalised (see note 3(n)), and an appropriate proportion of production overheads incurred
    during the periods of construction and installation. Capitalisation of those costs ceases and
    the construction in progress is transferred to property, plant and equipment or investment
    properties, as appropriate, when the asset is substantially ready for its intended use. No
    depreciation is provided in respect of construction in progress.
    (g) Leased assets
    An arrangement, comprising a transaction or a series of transactions, is or contains a lease if
    the Group determines that the arrangement conveys a right to use a specific asset or assets
    for an agreed period of time in return for a payment or a series of payments. Such a
    determination is made based on an evaluation of the substance of the arrangement and is
    regardless of whether the arrangement takes the legal form of a lease. Leases which do not
    transfer substantially all the risks and rewards of ownership to the Group are classified as
    operating leases.
    Where the Group has the use of assets held under operating leases, payments made under the
    leases are charged to profit or loss in equal instalments over the accounting periods covered
    by the lease term, except where an alternative basis is more representative of the pattern of
    benefits to be derived from the leased asset. Lease incentives received are recognised in
    profit or loss as an integral part of the aggregate net lease payments made.
    Contingent rentals are charged to profit or loss in the accounting period in which they are
    incurred.
    The cost of acquiring land held under an operating lease is amortised on a straight-line basis
    over the period of the lease term except where the property is held for development, under
    development or completed and held for sale (see notes 3(j) and 3(k)).
    (h) Impairment of assets
    (i) Impairment of investments in debt and equity securities and other receivables
    Investments in debt and equity securities and other current and non-current receivables that
    are stated at cost or amortised cost or are classified as available-for-sale securities are
    reviewed at each balance sheet date to determine whether there is objective evidence of
    impairment. Objective evidence of impairment includes observable data that comes to the
    attention of the Group about one or more of the following loss events:
    - significant financial difficulty of the debtor;
    - a breach of contract, such as a default or delinquency in interest or principal
    payments;
    - it becoming probable that the debtor will enter bankruptcy or other financial
    reorganisation;China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    86
    3 Significant accounting policies (continued)
    (h) Impairment of assets (continued)
    (i) Impairment of investments in debt and equity securities and other receivables (continued)
    - significant changes in the technological, market, economic or legal environment that
    have an adverse effect on the debtor; and
    - a significant or prolonged decline in the fair value of an investment in an equity
    instrument below its cost.
    If any such evidence exists, any impairment loss is determined and recognised as follows:
    - For investments in associates and jointly controlled entities recognised using the
    equity method, the impairment loss is measured by comparing the recoverable
    amount of the investment as a whole with its carrying amount in accordance with note
    3(h)(ii). The impairment loss is reversed if there has been a favourable change in the
    estimates used to determine the recoverable amount in accordance with note 3(h)(ii).
    - For unquoted securities that are carried at cost, the impairment loss is measured as the
    difference between the carrying amount of the financial asset and the estimated future
    cash flows, discounted at the current market rate of return for a similar financial asset
    where the effect of discounting is material. Impairment losses for securities are not
    reversed.
    - For trade and other current receivables and other financial assets carried at amortised
    cost, the impairment loss is measured as the difference between the asset’s carrying
    amount and the present value of estimated future cash flows, discounted at the
    financial asset’s original effective interest rate (i.e. the effective interest rate
    computed at initial recognition of these assets), where the effect of discounting is
    material. This assessment is made collectively where financial assets carried at
    amortised cost share similar risk characteristics, such as similar past due status, and
    have not been individually assessed as impaired. Future cash flows for financial
    assets which are assessed for impairment collectively are based on historical loss
    experience for assets with credit risk characteristics similar to the collective group.
    If in a subsequent period the amount of an impairment loss decreases and the decrease
    can be linked objectively to an event occurring after the impairment loss was
    recognised, the impairment loss is reversed through profit or loss. A reversal of an
    impairment loss shall not result in the asset’s carrying amount exceeding that which
    would have been determined had no impairment loss been recognised in prior years.
    - For available-for-sale securities, the cumulative loss that has been recognised directly
    in equity is reclassified to profit or loss. The amount of the cumulative loss that is
    recognised in profit or loss is the difference between the acquisition cost (net of any
    principal repayment and amortisation) and current fair value, less any impairment loss
    on that asset previously recognised in profit or loss.
    Impairment losses recognised in profit or loss in respect of available-for-sale equity
    securities are not reversed through profit or loss. Any subsequent increase in the fair
    value of such assets is recognised in other comprehensive income.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    87
    3 Significant accounting policies (continued)
    (h) Impairment of assets (continued)
    (i) Impairment of investments in debt and equity securities and other receivables (continued)
    Impairment losses in respect of available-for-sale debt securities are reversed if the
    subsequent increase in fair value can be objectively related to an event occurring after the
    impairment loss was recognised. Reversals of impairment losses in such circumstances are
    recognised in profit or loss.
    Impairment losses are written off against the corresponding assets directly, except for
    impairment losses recognised in respect of trade debtors and bills receivable included within
    trade and other receivables, whose recovery is considered doubtful but not remote. In this
    case, the impairment losses for doubtful debts are recorded using an allowance account.
    When the Group is satisfied that recovery is remote, the amount considered irrecoverable is
    written off against trade debtors and bills receivable directly and any amounts held in the
    allowance account relating to that debt are reversed. Subsequent recoveries of amounts
    previously charged to the allowance account are reversed against the allowance account.
    Other changes in the allowance account and subsequent recoveries of amounts previously
    written off directly are recognised in profit or loss.
    (ii) Impairment of other assets
    Internal and external sources of information are reviewed at each balance sheet date to
    identify indications that the following assets may be impaired or an impairment loss
    previously recognised no longer exists or may have decreased:
    - investment properties;
    - property, plant and equipment;
    - construction in progress; and
    - lease prepayments.
    If any such indication exists, the asset’s recoverable amount is estimated. In addition, for
    goodwill, intangible assets that are not yet available for use and intangible assets that have
    indefinite useful lives, the recoverable amount is estimated annually whether or not there is
    any indication of impairment.
    - Calculation of recoverable amount
    The recoverable amount of an asset is the greater of its fair value less costs to sell and
    value in use. In assessing value in use, the estimated future cash flows are discounted
    to their present value using a pre-tax discount rate that reflects current market
    assessments of time value of money and the risks specific to the asset. Where an
    asset does not generate cash inflows largely independent of those from other assets,
    the recoverable amount is determined for the smallest group of assets that generates
    cash inflows independently (i.e. a cash-generating unit).China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    88
    3 Significant accounting policies (continued)
    (h) Impairment of assets (continued)
    (ii) Impairment of other assets (continued)
    - Recognition of impairment losses
    An impairment loss is recognised in profit or loss whenever the carrying amount of
    an asset, or the cash-generating unit to which it belongs, exceeds its recoverable
    amount. Impairment losses recognised in respect of cash-generating units are
    allocated first to reduce the carrying amount of any goodwill allocated to the cashgenerating
    unit (or group of units) and then, to reduce the carrying amount of the
    other assets in the unit (or group of units) on a pro rata basis, except that the carrying
    value of an asset will not be reduced below its individual fair value less costs to sell,
    or value in use, if determinable.
    - Reversals of impairment losses
    In respect of assets other than goodwill, an impairment loss is reversed if there has
    been a favourable change in the estimates used to determine the recoverable amount.
    An impairment loss in respect of goodwill is not reversed.
    A reversal of an impairment loss is limited to the asset’s carrying amount that would
    have been determined had no impairment loss been recognised in prior years.
    Reversals of impairment losses are credited to profit or loss in the year in which the
    reversals are recognised.
    (i) Inventories
    Inventories are stated at the lower of cost and net realisable value. Cost is calculated using
    the weighted average cost formula and comprises all costs of purchase, costs of conversion
    and other costs incurred in bringing the inventories to their present location and condition.
    Net realisable value is the estimated selling price in the ordinary course of business, less the
    estimated costs of completion and the estimated costs necessary to make the sale.
    When inventories are sold, the carrying amount of those inventories is recognised as an
    expense in the period in which the related revenue is recognised. The amount of any writedown
    of inventories to net realisable value and all losses of inventories are recognised as an
    expense in the period the write-down or loss occurs. The amount of any reversal of any
    write-down of inventories is recognised as a reduction in the amount of inventories
    recognised as an expense in the period in which the reversal occurs.
    (j) Properties under development and properties held for development
    Properties under development are stated at the lower of cost and net realisable value. The
    cost of properties under development and properties held for development comprise
    specifically identified cost, including the acquisition cost of land, aggregate cost of
    development, materials and supplies, wages and other direct expenses, an appropriate
    proportion of overheads and borrowing costs capitalised (see note 3(n)). Net realisable value
    represents the estimated selling price less the estimated costs of completion and the estimated
    costs to be incurred in selling the properties.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    89
    3 Significant accounting policies (continued)
    (k) Completed properties for sale
    Completed properties for sale are stated at the lower of cost and net realisable value. Cost is
    determined by apportionment of the total development costs for that development project
    attributable to the unsold properties. Net realisable value represents the estimated selling
    price less the estimated costs to be incurred in selling the properties.
    The cost of completed properties for sale comprises all costs of purchase, costs of conversion
    and other costs incurred in bringing completed properties for sale to their present location
    and condition.
    When properties are sold, the carrying amount of those properties is recognised as an
    expense in the period in which the related revenue is recognised. The amount of any writedown
    of properties to net realisable value and all losses of properties are recognised as an
    expense in the period the write-down or loss occurs. The amount of any reversal of any
    write-down of properties is recognised as a reduction in the amount of properties recognised
    as an expense in the period in which the reversal occurs.
    (l) Revenue recognition
    Provided it is probable that the economic benefits will flow to the Group and the revenue and
    costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as
    follows:
    (i) Sale of properties
    Revenue from the sale of completed properties for sale is recognised upon the signing
    of the sale and purchase agreement and the receipt of the deposits pursuant to the sale
    and purchase agreement or the achievement of status ready for hand-over to
    customers as stipulated in the sales and purchase agreements, whichever is the later.
    Deposits and instalments received on properties sold prior to the date of revenue
    recognition are included in the consolidated balance sheet under sales deposits
    received in advance.
    (ii) Provision of services
    Revenue from services is recognised when services are rendered.
    (iii) Rental income from operating leases
    Rental income receivable under operating leases is recognised in profit or loss in
    equal instalments over the periods covered by the lease term, except where an
    alternative basis is more representative of the pattern of benefits to be derived from
    the use of the leased asset. Lease incentives granted are recognised in profit or loss as
    an integral part of the aggregate net lease payments receivable. Contingent rentals are
    recognised as income in the accounting period in which they are earned.
    (iv) Interest income
    Interest income is recognised as it accrues using the effective interest method.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    90
    3 Significant accounting policies (continued)
    (l) Revenue recognition (continued)
    (v) Dividend income
    - Dividend income from unlisted investments is recognised when the
    shareholder’s right to receive payment is established.
    - Dividend income from listed investments is recognised when the share price of
    the investment goes ex-dividend.
    (vi) Government grants
    Government grants are recognised initially as deferred income when there is
    reasonable assurance that they will be received and that the Group will comply with
    the conditions attaching to them. Grants that compensate the Group for expenses
    incurred are recognised as other sundry income in profit or loss on a systematic basis
    in the same periods in which the expenses are incurred. Grants that compensate the
    Group for the cost of an asset are deducted in arriving at the carrying amount of the
    asset and consequently are effectively recognised in profit or loss over the useful life
    of the asset by way of reduced depreciation expense.
    The above revenue is net of the relevant taxes and is after the deduction of any trade
    discounts. No revenue is recognised if there are significant uncertainties regarding recovery
    of the consideration due, associated costs or the possible return of goods.
    (m) Lease prepayments
    Payments made under operating leases are recognised in profit or loss on a straight-line basis
    over the term of the lease. Lease incentives received are recognised as an integral part of the
    total lease expense, over the term of the lease.
    (n) Borrowing costs
    Borrowing costs are expensed in profit or loss in the period in which they are incurred,
    except to the extent that they are capitalised as being directly attributable to the acquisition,
    construction or production of an asset which necessarily takes a substantial period of time to
    get ready for its intended use or sale.
    The capitalisation of borrowing costs as part of the cost of a qualifying asset commences
    when expenditure for the asset is being incurred, borrowing costs are being incurred and
    activities that are necessary to prepare the asset for its intended use or sale are in progress.
    Capitalisation of borrowing costs is suspended or ceases when substantially all the activities
    necessary to prepare the qualifying asset for its intended use or sale are interrupted or
    complete.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    91
    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 Group has adopted an equity-settled Employees’ share award scheme (the “Scheme”) for
    its employees (see note 36) and the Group’s policy for the Scheme is set out below.
    The fair value of the shares granted to the employees (the “Awarded Shares”) is recognised
    as an employee cost with a corresponding increase in employee share based compensation
    reserve within equity. The fair value is measured at grant date using the Monte-Carlo option
    pricing model, taking into account the terms and conditions upon which the Awarded Shares
    were granted. As the employees have to meet vesting conditions before becoming
    unconditionally entitle to the Awarded Shares, the total estimated fair value of the Awarded
    Shares is spread over the vesting period, taking into account the probability that the Awarded
    Shares will vest. As the duration of the vesting period depends on the market price of the
    Company’s A shares, the estimation on the vesting period is reviewed at each balance sheet
    date. Any adjustment to the employee cost recognised in prior years is charged / credited to
    the profit or loss for the year of review with a corresponding adjustment to the compensation
    reserve.
    The Group’s contribution to the Scheme is stated at cost and is presented as a contra account,
    namely, Awarded Shares purchased for the Employees’ share award scheme, within equity.
    When the Awarded Shares are transferred to the awardees upon vesting, the related costs of
    the Awarded Shares vested are credited to Awarded shares purchased for the Employee’s
    share award scheme with a corresponding adjustment to the employee share based
    compensation reserve.
    When the Scheme expires, the related costs of the Awarded Shares disposed are credited to
    Awarded shares purchased for the Employee’s share award scheme, and the disposal gains or
    losses are credited to Capital reserve arising from disposal of awarded shares.
    (p) Income tax
    Income tax for the year comprises current tax and movements in deferred assets and
    liabilities. Current tax and movement in deferred tax assets and liabilities are recognised in
    profit or loss except to the extent that they relate to items recognised in other comprehensive
    income or directly in equity, in which case the relevant amounts of tax are recognised in
    other comprehensive income or directly in equity, respectively.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    92
    3 Significant accounting policies (continued)
    (p) Income tax (continued)
    Current tax is the expected tax payable on the taxable income for the year, using tax rates
    enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable
    in respect of previous years.
    Deferred tax assets and liabilities arise from deductible and taxable temporary differences
    respectively, being the differences between the carrying amounts of assets and liabilities for
    financial reporting purposes and their tax bases. Deferred tax assets also arise from unused
    tax losses and unused tax credits.
    Apart from certain limited exceptions, all deferred tax liabilities and all deferred tax assets to
    the extent that it is probable that future taxable profits will be available against which the
    asset can be utilised, are recognised. Future taxable profits that may support the recognition
    of deferred tax assets arising from deductible temporary differences include those that will
    arise from the reversal of existing taxable temporary differences, provided those differences
    relate to the same taxation authority and the same taxable entity, and are expected to reverse
    either in the same period as the expected reversal of the deductible temporary difference or in
    periods into which a tax loss arising from the deferred tax asset can be carried back or
    forward. The same criteria is adopted when determining whether existing taxable temporary
    differences support the recognition of deferred tax assets arising from unused tax losses and
    credits, that is, those differences are taken into account if they relate to the same taxation
    authority and the same taxable entity, and are expected to reverse in a period, or periods, in
    which the tax loss or credit can be utilised.
    The limited exceptions to recognition of deferred tax assets and liabilities are those
    temporary difference arising from goodwill not deductible for tax purposes, the initial
    recognition of assets or liabilities that affect neither accounting nor taxable profit (provided
    they are not part of a business combination), and temporary differences relating to
    investments in subsidiaries to the extent, in the case of taxable differences, the Group
    controls the timing of the reversal and it is probable that the differences will not reverse in
    the foreseeable future, or in the case of deductible differences, unless it is probable that they
    will reverse in the future.
    The amount of deferred tax recognised is measured based on the expected manner of
    realisation or settlement of the carrying amount of the assets and liabilities, using tax rates
    enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities
    are not discounted.
    The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is
    reduced to the extent that it is no longer probable that sufficient taxable profits will be
    available to allow the related tax benefit to be utilised. Any such reduction is reversed to the
    extent that it becomes probable that sufficient taxable profits will be available.
    Additional income taxes that arise from the distribution of dividends are recognised when the
    liability to pay the related dividends is recognised.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    93
    3 Significant accounting policies (continued)
    (p) Income tax (continued)
    Current tax balances and deferred tax balances, and movements therein, are presented
    separately from each other and are not offset. Current tax assets are offset against current tax
    liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the
    Group has the legally enforceable right to set off current tax assets against current liabilities
    and the following additional conditions are met:
    - in the case of current tax assets and liabilities, the Company or the Group intends
    either to settle on a net basis, or to realise the asset and settle the liability
    simultaneously; or
    - in the case of deferred tax assets and liabilities, if they relate to income taxes levied
    by the same taxation authority on either:
    - the same taxable entity; or
    - different taxable entities, which, in each future period in which significant
    amounts of deferred tax liabilities or assets are expected to be settled or
    recovered, intend to realise the current tax assets and settle the current tax
    liabilities on a net basis or realise and settle simultaneously.
    (q) Trade and other receivables
    Trade and other receivables are initially recognised at fair value and thereafter at amortised
    cost less impairment losses for bad and doubtful debts (see note 3(h)), except where the
    receivables are interest-free loans made to related parties without any fixed repayment terms
    or the effect of discounting would be immaterial. In such cases, the receivables are stated at
    cost less impairment losses for bad and doubtful debts (see note 3(h)).
    (r) Trade and other payables
    Trade and other payables are initially recognised at fair value. Except for financial guarantee
    liabilities measured in accordance with note 3(u), trade and other payables are subsequently
    stated at amortised cost unless the effect of discounting would be immaterial, in which case
    they are stated at cost.
    (s) Cash and cash equivalents
    Cash and cash equivalents comprise cash at bank and on hand, and demand deposits with
    banks. Bank overdrafts that are repayable on demand and form an integral part of the
    Group’s cash management are included as a component of cash and cash equivalents for the
    purpose of the consolidated statement of cash flows.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    94
    3 Significant accounting policies (continued)
    (t) Interest-bearing borrowings and bonds
    Interest-bearing borrowings and bonds are recognised initially at fair value, less attributable
    transaction costs. Subsequent to initial recognition, interest-bearing borrowings/bonds are
    stated at amortised cost with any difference between cost and redemption value being
    recognised in the profit or loss over the period of the borrowings/bonds, together with any
    interest and fees payable, using the effective interest method.
    (u) Financial guarantees issued, provisions and contingent liabilities
    (i) Financial guarantees issued
    Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified
    payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder
    incurs because a specified debtor fails to make payment when due in accordance with the
    terms of a debt instrument.
    Where the Group issues a financial guarantee, the fair value of the guarantee (being the
    transaction price, unless the fair value can otherwise be reliably estimated) is initially
    recognised as deferred income within trade and other payables. Where consideration is
    received or receivable for the issuance of the guarantee, the consideration is recognised in
    accordance with the Group’s policies applicable to that category of asset. Where no such
    consideration is received or receivable, an immediate expense is recognised in profit or loss
    on initial recognition of any deferred income.
    The amount of the guarantee initially recognised as deferred income is amortised in profit or
    loss over the term of the guarantee as income from financial guarantees issued. In addition,
    provisions are recognised in accordance with note 3(u)(iii) if and when (i) it becomes
    probable that the holder of the guarantee will call upon the group under the guarantee, and
    (ii) the amount of that claim on the Group is expected to exceed the amount currently carried
    in trade and other payables in respect of that guarantee i.e. the amount initially recognised,
    less accumulated amortisation.
    (ii) Contingent liabilities acquired in business combinations
    Contingent liabilities acquired as part of a business combination are initially recognised at
    fair value, provided the fair value can be reliably measured. After their initial recognition at
    fair value, such contingent liabilities are recognised at the higher of the amount initially
    recognised, less accumulated amortisation where appropriate, and the amount that would be
    determined in accordance with note 3(u)(iii). Contingent liabilities acquired in a business
    combination that cannot be reliably fair valued are disclosed in accordance with note
    3(u)(iii).
    (iii) Other provisions and contingent liabilities
    Provisions are recognised for other liabilities of uncertain timing or amount when the Group
    has a legal or constructive obligation arising as a result of a past event, it is probable that an
    outflow of economic benefits will be required to settle the obligation and a reliable estimate
    can be made. Where the time value of money is material, provisions are stated at the present
    value of the expenditure expected to settle the obligation.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    95
    3 Significant accounting policies (continued)
    (u) Financial guarantees issued, provisions and contingent liabilities (continued)
    (iii) Other provisions and contingent liabilities (continued)
    Where it is not probable that an outflow of economic benefits will be required, or the amount
    cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the
    probability of outflow of economic benefits is remote. Possible obligations, whose existence
    will only be confirmed by the occurrence or non-occurrence of one or more future events are
    also disclosed as contingent liabilities unless the probability of outflow of economic benefits
    is remote.
    (v) Related parties
    For the purposes of these financial statements, a party is considered to be related to the
    Group if:
    (i) the party has the ability, directly or indirectly through one or more intermediaries, to
    control the Group or exercise significant influence over the Group in making financial
    and operating policy decisions, or has joint control over the Group.
    (ii) the Group and the party are subject to common control;
    (iii) the party is an associate of the Group or a joint venture in which the Group is a
    venturer;
    (iv) the party is a member of key management personnel of the Group, or a close family
    member of such an individual, or is an entity under the control, joint control or
    significant influence of such individuals;
    (v) the party is close family member of a party referred to in (i) or is an entity under the
    control, joint control or significant influence of such individuals; or
    (vi) the party is a post-employment benefit plan which is for the benefit of employees of
    the Group or of any entity that is a related party of the Group.
    Close family members of an individual are those family members who may be expected to
    influence, or be influenced by, that individual in their dealings with the entity.
    (w) Earnings per share
    The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is
    calculated by dividing the profit or loss attributable to ordinary shareholders of the Company
    by the weighted average number of ordinary shares outstanding during the period.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    96
    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 Changes in accounting policies
    (i) Overview
    Starting as of 1 January 2009, the Group has changed its accounting policies in the following
    areas:
    ?Determination and presentation of operating segments
    ?Presentation of financial statements
    (ii) Determination and presentation of operating segments
    As of 1 January 2009 the Group determines and presents operating segments based on the
    information that internally is provided to the President, who is the Group's chief operating
    decision maker. This change in accounting policy is due to the adoption of IFRS 8 Operating
    Segments. Previously operating segments were determined and presented in accordance with
    IAS 14 Segment Reporting. The new accounting policy in respect of segment operating
    disclosures is presented as follows.
    Comparative segment information has been re-presented in conformity with the transitional
    requirements of such standard. Since the change in accounting policy only impacts
    presentation and disclosure aspects, there is no impact on earnings per share.
    An operating segment is a component of the Group that engages in business activities from
    which it may earn revenues and incur expenses, including revenues and expenses that relate
    to transactions with any of the Group's other components. An operating segment's operating
    results are reviewed regularly by the President to make decisions about resources to be
    allocated to the segment and assess its performance, and for which discrete financial
    information is available.
    Segment results that are reported to the President include items directly attributable to a
    segment as well as those that can be allocated on a reasonable basis. Unallocated items
    comprise mainly corporate assets (primarily the Company's headquarters), head office
    expenses, and income tax assets and liabilities.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    97
    4 Changes in accounting policies (continued)
    (iii) Presentation of financial statements
    The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became
    effective as of 1 January 2009. As a result, the Group presents in the consolidated statement
    of changes in equity all owner changes in equity, whereas all non-owner changes in equity
    are presented in the consolidated statement of comprehensive income.
    Comparative information has been re-presented so that it also is in conformity with the
    revised standard. Since the change in accounting policy only impacts presentation aspects,
    there is no impact on earnings per share.
    5 Determination of fair values
    A number of the Group’s accounting policies and disclosures require the determination of fair
    value, for both financial and non-financial assets and liabilities. Fair values have been
    determined for measurement and or disclosure purposes based on the following methods.
    When applicable, further information about the assumptions made in determining fair values
    is disclosed in the notes specific to that asset or liability.
    (i) Trade and other receivables
    The fair value of trade and other receivables is estimated as the present value of
    future cash flows, discounted at the market rate of interest at the reporting date.
    (ii) Property, plant and equipment, lease prepayment, investment properties, construction
    in progress, properties held for development, properties under development and
    completed properties for sale
    The fair value of property, plant and equipment, properties held for development,
    properties under development and completed properties for sale is based on market
    values. The market value of these properties is the estimated amount for which an
    item could be exchanged on the date of valuation between a willing buyer and a
    willing seller in an arm’s length transaction after proper marketing wherein the parties
    had each acted knowledgeably and willingly. The fair value of items of property,
    plant and equipment, lease prepayment, investment properties, construction in
    progress, properties held for development, properties under development and
    completed properties for sale is based on the quoted market prices for similar items
    when available and replacement cost when appropriate.
    (iii) Investments in debt and equity securities
    The fair value of listed available-for-sale financial assets is determined by reference
    to their quoted closing bid price at the reporting date without any deduction for
    transaction costs. There is no quoted market price in an active market for the unlisted
    equity and debt securities and thus their fair value cannot be reliably estimated.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    98
    6 Acquisitions of subsidiaries
    (i) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009:
    (a) Pursuant to an equity transfer agreement dated 1 April 2009, the Group acquired a
    100% equity interest in Charm Crystal Limited (“Charm Crystal”) at a consideration
    of HKD 1,000. Charm Crystal is principally engaged in investment holding. The
    acquisition was completed on 1 April 2009.
    (b) Pursuant to an equity transfer agreement dated 6 January 2008, the Group acquired a
    90% equity interest in Wu Han Wangjiadun Morden City Real Estate Development
    Co., Ltd. (“Wangjiadun”) at a consideration of RMB 368 million. Wangjiadun is
    principally engaged in holding properties held for development and properties under
    development. The acquisition was completed on 31 May 2009 (note).
    (c) Pursuant to an equity transfer agreement dated 28 July 2009, the Company acquired a
    100% equity interest in Leadway Capital Limited Limited (“Leadway”) at a
    consideration of HKD 1,000. Leadway holds a 45% equity interest in Wuhan Wanwei
    Consultancy Company Limited. The acquisition was completed on 28 July 2009.
    (d) Pursuant to an equity transfer agreement dated 24 August 2009, the Group acquired a
    100% equity interest in Trendell Limited (“Trendell”) at a consideration of RMB 140
    million. Trendell is principally engaged in investment holding. The acquisition was
    completed on 24 August 2009. After the acquisition, the Company holds a 80%
    equity interest in Dongguan Vanke Property Management Company Limited.
    (e) Pursuant to an equity transfer agreement dated 3 September 2009, the Group acquired
    a 80% equity interest in Chengdu Tongtai Property Development Company Limited
    (“Tongtai”) at a consideration of RMB 1.52 million. Tongtai is principally engaged in
    holding properties held for development and properties under development. The
    acquisition was completed on 3 September 2009 (note).
    (f) Pursuant to an equity transfer agreement dated 4 September 2009, the Group acquired
    a 100% equity interest in Hangzhou Yuanhao Investment Management Company
    Limited (“Yuanhao”) at a consideration of RMB 1.2 million. Yuanhao is principally
    engaged in investment holding. The acquisition was completed on 4 September 2009.
    (g) Pursuant to an equity transfer agreement dated 4 September 2009, the Group acquired
    a 100% equity interest in Hangzhou Hangchen Investment Management Company
    Limited (“Hangchen”) at a consideration of RMB 1.2 million. Hangchen is
    principally engaged in investment holding. The acquisition was completed on 4
    September 2009.
    (h) Pursuant to an equity transfer agreement dated 11 September 2009, the Group
    acquired a 100% equity interest in Ample Avenue Investments Limited (“Ample”) at
    a consideration of RMB 103 million. Ample holds a 45% equity interest in Tianjin
    Vanke Xinlicheng Company Limited. The acquisition was completed on 11
    September 2009.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    99
    6 Acquisitions of subsidiaries (continued)
    (i) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009:
    (Continued)
    (i) Pursuant to an equity transfer agreement dated 25 September 2009, the Group
    acquired a 100% equity interest in Pro Ocean Limited (“Pro Ocean”) at a
    consideration of RMB 881.1. Pro Ocean is principally engaged in investment holding.
    The acquisition was completed on 25 September 2009.
    (j) Pursuant to an equity transfer agreement dated 25 September 2009, the Company
    acquired a 100% equity interest in Double Falcon Limited (“Double Falcon”) at a
    consideration of HKD 1,000. Double Falcon is principally engaged in investment
    holding. The acquisition was completed on 25 September 2009.
    (k) Pursuant to an equity transfer agreement dated 25 September 2009, the Company
    acquired a 100% equity interest in Glorious Pacific Limited (“Glorious Pacific”) at a
    consideration of HKD 1,000. Glorious Pacific is principally engaged in investment
    holding. The acquisition was completed on 25 September 2009.
    (l) Pursuant to an equity transfer agreement dated 25 September 2009, the Company
    acquired a 100% equity interest in Likeford Limited (“Likeford”) at a consideration
    of HKD 1,000. Likeford is principally engaged in investment holding. The
    acquisition was completed on 25 September 2009.
    (m) Pursuant to an equity transfer agreement dated 29 September 2009, the Group
    acquired a 70% equity interest in Hunan Vanke Heshun Property Company Limited
    (“Heshun”) at a consideration of RMB 36 million. Heshun is principally engaged in
    holding properties held for development and properties under development. The
    acquisition was completed on 14 October 2009 (note).
    (n) Pursuant to an equity transfer agreement dated 30 September 2009, the Group
    acquired a 90% equity interest in Shenzhen Construction Holding of Longgang
    Property Co., Ltd. (“Longgang”) at a consideration of RMB 99 million. Longgang is
    principally engaged in holding properties held for development and properties under
    development. The acquisition was completed on 30 October 2009 (note).
    (o) Pursuant to an equity transfer agreement dated 2 November 2009, the Group acquired
    a 100% equity interest in Guangzhou Yinye Junrui Real Estate Co., Ltd (“Yinye
    Junrui”) at a consideration of RMB 55 million. Yinye Junrui is principally engaged in
    holding properties held for development and properties under development. The
    acquisition was completed on 2 November 2009 (note).
    (p) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
    acquired a 100% equity interest in Star Top Development Limited (“Star Top”) at a
    consideration of RMB 0.88. Star Top is principally engaged in investment holding.
    The acquisition was completed on 10 November 2009.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    100
    6 Acquisitions of subsidiaries (continued)
    (i) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009:
    (Continued)
    (q) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
    acquired a 100% equity interest in Well Keen Limited (“Well Keen”) at a
    consideration of RMB 0.88. Well Keen is principally engaged in investment holding.
    The acquisition was completed on 10 November 2009.
    (r) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
    acquired a 100% equity interest in Bloom Gain Limited (“Bloom”) at a consideration
    of RMB 0.88. Bloom is principally engaged in investment holding. The acquisition
    was completed on 10 November 2009.
    (s) Pursuant to an equity transfer agreement dated 10 November 2009, the Group
    acquired a 100% equity interest in Hopewin Investments Limited (“Hopewin”) at a
    consideration of RMB 0.88. Hopewin is principally engaged in investment holding.
    The acquisition was completed on 10 November 2009.
    (t) Pursuant to an equity transfer agreement dated 10 November 2009, the Company
    acquired a 100% equity interest in Best Cheer Investments Limited (“Best Cheer”) at
    a consideration of RMB 0.88 . Best cheer is principally engaged in investment
    holding. The acquisition was completed on 10 November 2009.
    (u) Pursuant to an equity transfer agreement dated 19 November 2009, the Group
    acquired a 95% equity interest in Guangzhou Linhai Real Estate Co.,Ltd. (“Linhai”)
    at a consideration of RMB 45 million. Linhai is principally engaged in holding
    certain properties held for development and properties under development. The
    acquisition was completed on 19 November 2009 (note).
    (v) Pursuant to an equity transfer agreement dated 25 November 2009, the Group
    acquired a 12.39% equity interest in Dongguan Xintong Industry and Investment
    Company Limited (“Xintong”) at a consideration of RMB 1.2 million. Xintong is
    principally engaged in holding properties held for development and properties under
    development. The acquisition was completed on 25 November 2009. After the
    acquisition, the Company holds a 51% equity interest in Xintong (note).
    (w) Pursuant to an equity transfer agreement dated 15 December 2009, the Group
    acquired a 95% equity interest in Qingyuan Hongmei Investment Company Limited
    (“Hongmei”) at a consideration of RMB 266 million. Hongmei is principally engaged
    in holding properties held for development and properties under development. The
    acquisition was completed on 15 December 2009 (note).
    (x) Pursuant to an equity transfer agreement dated 17 December 2009, the Group
    acquired a 95% equity interest in Chengdu Jinlan Property Company Limited
    (“Jinlan”) at a consideration of RMB 9.5 million. Jinlan is principally engaged in
    holding properties held for development and properties under development. The
    acquisition was completed on 17 December 2009 (note).China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    101
    6 Acquisitions of subsidiaries (continued)
    (i) Acquisitions of subsidiaries by the Group during the year ended 31 December 2009:
    (Continued)
    (y) Pursuant to an equity transfer agreement dated 31 December 2009, the Group
    acquired a 65% equity interest in Shanghai Pangzhi Investment Management
    Company Limited (“Pangzhi”) at a consideration of RMB 568 million. Pangzhi is
    principally engaged in holding properties held for development and properties under
    development. The acquisition was completed on 31 December 2009 (note).
    Note: In the circumstances, the acquired subsidiaries’ major assets are properties held for
    development, properties under development and / or completed properties for sale.
    The directors consider that the purpose of acquiring those subsidiaries is solely to
    acquire the underlying properties.
    The acquisitions had the following effect on the Group’s cashflow on acquisition dates:
    Considerations, satisfied in cash 1,696,235,078
    Cash acquired (380,511,555)
    Considerations prepaid in prior years (388,436,843)
    Considerations to be paid subsequent to 2009 (101,997,528)
    Net cash outflow in 2009 825,289,152
    All subsidiaries set out above were acquired from third parties.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    102
    6 Acquisitions of subsidiaries (continued)
    (ii) Acquisitions of subsidiaries by the Group during the year ended 31 December 2008:
    (a) Pursuant to an agreement dated 26 September 2007, the Group acquired certain
    properties held for development by acquiring Shanghai Dijie Property Co. Ltd, which
    was located in Shanghai. The acquisition was completed on 26 February 2008 (note).
    (b) Pursuant to an equity transfer agreement dated 17 April 2007, the Group acquired a
    60% equity interest in Qingdao Dashan Real Estate Development Company Limited
    ("Qingdao Dashan"). Qingdao Dashan is principally engaged in holding properties
    held for development. The acquisition was completed on 30 April 2008 (note).
    (c) Pursuant to an equity transfer agreement dated 21 November 2007, the Group
    acquired the entire equity interest in Shanghai Xiangda Real Estate Development
    Company Limited ("Shanghai Xiangda"). Shanghai Xiangda is principally engaged
    in holding properties held for development and properties under development. The
    acquisition was completed on 5 January 2008 (note). Subsequently, the Group
    transferred 25% equity interests of Shanghai Xiangda to an external investor.
    (d) Pursuant to an equity transfer agreement dated 4 January 2008, the Group acquired
    the entire equity interest in Guangdong Shangcheng Construction Company Limited
    ("Guangdong Shangcheng"). Guangdong Shangcheng is principally engaged in
    engineering design and construction in Guangdong. The acquisition was completed
    on 11 February 2008.
    (e) Pursuant to an equity transfer agreement dated 18 January 2008, the Group acquired
    the entire equity interest in Wuhan Guohao Property Company Limited ("Wuhan
    Guohao"). Wuhan Guohao is principally engaged in holding properties held for
    development. The acquisition was completed on 27 February 2008. (note).
    (f) Pursuant to an equity transfer agreement dated 20 January 2008, the Group acquired a
    55% equity interest in Qingdao Hao Ren Property Company Limited ("Qingdao Hao
    Ren"). Qingdao Hao Ren is principally engaged in holding properties held for
    development. The acquisition was completed on 2 April 2008 (note).
    (g) Pursuant to an equity transfer agreement dated 1 February 2008, the Group acquired a
    75% equity interest in Ningbo Jinsheng Property Company Limited ("Ningbo
    Jinsheng"). Ningbo Jinsheng is principally engaged in holding properties held for
    development. The acquisition was completed on 1 February 2008 (note).
    (h) Pursuant to an equity transfer agreement dated 2 March 2008, the Group acquired the
    entire equity interest in Tianjin Binhai Fashion Property Company Limited ("Tianjin
    Binhai"). Tianjin Binhai is principally engaged in holding properties held for
    development. The acquisition was completed on 21 March 2008 (note).
    (i) Pursuant to an equity transfer agreement dated 31 March 2008, the Group acquired a
    51% equity interest in Suzhou Huihua Investment and Property Company Limited
    ("Suzhou Huihua"). Suzhou Huihua is principally engaged in holding properties held
    for development and properties under development. The acquisition was completed
    on 30 June 2008 (note).China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    103
    6 Acquisitions of subsidiaries (continued)
    (ii) Acquisitions of subsidiaries by the Group during the year ended 31 December 2008
    (continued):
    (j) Pursuant to an equity transfer agreement dated 6 May 2008, the Group acquired a
    78.4% equity interest in Shenzhen Yili Real Estate Development Company Limited
    ("Shenzhen Yili"). Shenzhen Yili is principally engaged in holding certain completed
    properties for sale. The acquisition was completed on 26 May 2008 (note).
    (k) Pursuant to an equity transfer agreement dated 28 May 2008, the Group acquired a
    55% equity interest in Shanghai Jingyuan Property Company Limited ("Shanghai
    Jingyuan"). Shanghai Jingyuan is principally engaged in holding certain properties
    held for development and properties under development. The acquisition was
    completed on 31 July 2008 (note).
    (l) Pursuant to an equity transfer agreement dated 30 June 2008, the Group acquired a
    70% equity interest in Shenyang Vanke Jinyu Blue Property Development Company
    Limited ("Jinyu Blue"). Jinyu Blue is principally engaged in holding certain
    properties held for development. The acquisition was completed on 1 July 2008
    (note). After the acquisition, the Company holds the entire equity interest of Jinyu
    Blue.
    (m) Pursuant to an equity transfer agreement dated 30 June 2008 and 2 July 2008, the
    Group acquired 45.5% and a further 24.5% equity interests in Shenyang Vanke
    Hunnan Jinyu Propoerty Development Company Limited ("Hunnan Jinyu")
    respectively. Hunnan Jinyu is principally engaged in holding certain properties held
    for development (note). After the acquisition, the Company holds the entire equity
    interest of Hunhan Jinyu.
    (n) Pursuant to an equity transfer agreement dated 8 July 2008, the Group acquired a
    90% equity interest in Chengdu Vanke Huadong Real Estate Company Limited
    ("Huadong Real Estate"). Huadong Real Estate is principally engaged holding certain
    properties held for development and properties under development. The acquisition
    was completed on 8 July 2008 (note).
    (o) Pursuant to an equity transfer agreement dated 21 July 2008, the Group acquired a
    51% equity interest in Shanxi Hualian Property Development Compnay Limited
    ("Shanxi Hualian"). Shanxi Hualian is principally engaged in holding certain
    properties held for development. The acquisition was completed on 22 December
    2008 (note).
    (p) Pursuant to an equity transfer agreement dated 24 August 2008, the Group purchased
    a 80% equity interest in Changsha Sihai Property Company Limited ("Changsha
    Sihai"). Changsha Sihai is principally engaged in holding certain properties held for
    development. The acquisition was completed on 8 September 2008 (note).
    (q) Pursuant to an equity transfer agreement dated 10 September 2008, the Group
    acquired the entire equity interest in Changsha Nandu Property Management
    Co.,Ltd.( "Changsha Nandu"). Changsha Nandu is principally engaged in property
    management in Changsha. The acquisition was completed on 17 Octorber 2008.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    104
    6 Acquisitions of subsidiaries (continued)
    (ii) Acquisitions of subsidiaries by the Group during the year ended 31 December 2008
    (continued):
    (r) Pursuant to an equity transfer agreement dated 11 September 2008, the Group
    acquired a 51% equity interest in Chongqing Yu Development Coral Property
    Company Limited ("Coral Property"). Coral Property is principally engaged in
    holding certain properties held for development. The acquisition was completed on 28
    September 2008.
    Note: In the circumstances, the acquired subsidiaries’ major assets are properties held for
    development, properties under development and / or completed properties for sale.
    The directors consider that the purpose of acquiring those subsidiaries is solely to
    acquire the underlying properties.
    The acquisitions had the following effect on the Group’s cashflow on acquisition date:
    Considerations, satisfied in cash 4,782,729,812
    Cash acquired (235,900,013)
    Considerations to be paid subsequent to 2008 (2,150,653,776)
    Net cash outflow 2,396,176,023
    All subsidiaries set out above were acquired from third parties.
    7 Disposal of subsidiaries
    (i) Disposal of subsidiaries by the Group during the year ended 31 December 2009:
    (a) On 31 July 2009, the Group disposed of 90% equity interest in Nanjing Hengbang
    Property Co., Ltd., which was previously 90% owned by the Group, to an
    independent party, at a consideration of RMB10 million.
    (b) On 23 July 2009, the Group disposed of equity interest in Shenzhen Hengfeng
    Property Co., Ltd. to an independent party, at a consideration of RMB27 million.
    (c) On 20 August 2009, the Group disposed of 65% equity interest in Ningbo Jinsheng
    Property Co., Ltd., which was previously 75% owned by the Group, to an
    independent party, at a consideration of RMB13 million. The Group is subject to
    receive an additional consideration depending on the future performance of Ningbo
    Jinsheng Property Co., Ltd..
    (d) On 31 October 2009, the Group disposed of 90% equity interest in Hangzhou
    Qianjiangwan Garden Property Co., Ltd., which was previously 90% owned by the
    Group, to an independent party, at a consideration of RMB27 million.
    (e) On 30 November 2009, the Group disposed 100% equity interest in Shanghai Caohua
    Property Co., Ltd., which was previously wholly owned by the Group, to an
    independent party, at a consideration of RMB102 million.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    105
    7 Disposal of subsidiaries (continued)
    (i) Disposal of subsidiaries by the Group during the year ended 31 December 2009: (continued)
    Effect of the disposal on individual assets and liabilities of the Group for the year ended 31
    December 2009
    Cash and cash equivalents 11,196,676
    Trade and other receivables 1,196,325,721
    Properties held for development,
    properties under development and
    completed properties for sales 438,222,856
    Property, plant and equipment 23,205,206
    Trade and other payables (1,611,353,762)
    Minority interests (29,024,437)
    Net assets and liabilities disposed of by the Group 28,572,260
    Gain on disposal of a subsidiary 150,738,396
    Considerations to be paid subsequent to 2009 (48,949,180)
    Considerations received, satisfied in cash 130,361,476
    Cash disposed of (11,196,676)
    Net cash inflow 119,164,800
    (ii) Disposals of a subsidiary by the Group during the year ended 31 December 2008:
    On 30 May 2008, the Group disposed of 50% equity interest in Dongguan Vanke Property
    Co., Ltd. (“Dongguan Vanke”), which was previously wholly owned by the Group, to an
    independent party, at a consideration of RMB5 million. Subsequent to the transfer,
    Dongguan Vanke became a jointly controlled entity of the Group.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    106
    8 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 8(b).
    ?Property management services: this segment provides house keeping services to the
    property development segment, as well as the external property developers. Currently
    the Group’s activities in this regard are also carried out in mainland China.
    Although the operating segment of property management services does not meet any of the
    quantitative thresholds specified in IFRS 8, Operating Segments, management believes that
    information about the segment would be useful to users of the financial statements.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    107
    8 Operating segments (continued)
    (a) Segment results, assets and liabilities
    For the purpose of assessing segment performance and allocating resources between
    segments, the Group’s senior executive management monitors the results, assets and
    liabilities attributable to each reportable segment on the following bases:
    (i) Segment assets and liabilities
    Segment assets include all tangible, intangible assets, other investments and current
    assets with the exception of deferred tax assets and other corporate assets. Segment
    liabilities include trade creditors, accruals, interest-bearing borrowings and bonds,
    and the provision for the estimated losses to be borne by the Group in relation to the
    property management projects.
    (ii) Segment revenue and expenses
    Revenue and expenses are allocated to the reportable segments with reference to sales
    generated by those segments and the expenses incurred by those segments or which
    otherwise arise from the depreciation or amortisation of assets attributable to those
    segments.
    (iii) Segment profit
    The measure used for reporting segment profit is the profit before PRC corporate
    income tax expense, excluding share of profit or loss of associates or jointly
    controlled entities and other non-operating income and expense, but including the
    profit arising from the inter-segment transactions. Land appreciation tax is deducted
    from segment profit for the review by the Group’s senior executive management for it
    is considered directly attributable to the sale of properties.
    (iv) Inter-segment transactions
    Inter-segment sales are priced with reference to prices charged to external parties for
    similar services.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    108
    8 Operating segments (continued)
    (a) Segment results, assets and liabilities (continued)
    Real Estate Development
    Beijing Region Shenzhen Region Shanghai Region Chengdu Region Property
    (note(1)) (note(2)) (note(3)) (note(4)) Management Total
    For the year ended 31 December 2009
    Revenue from external revenue,
    before sales taxes 12,061,318,325 16,456,704,832 15,168,178,905 4,736,657,399 446,870,162 48,869,729,623
    Inter-segment revenue - - - - 450,762,770 450,762,770
    Reportable segment revenue,
    before sales taxes 12,061,318,325 16,456,704,832 15,168,178,905 4,736,657,399 897,632,932 49,320,492,393
    Reportable segment profit 1,808,198,638 2,408,254,876 3,197,239,875 936,581,046 142,240,124 8,492,514,559
    Interest income 422,666,543 411,732,177 448,479,219 140,186,471 2,082,041 1,425,146,451
    Interest expense 430,123,175 498,250,687 578,270,216 199,496,482 1,134,448 1,707,275,008
    Share of profits less losses of associates
    and jointly controlled entities (note (5)) 123,247,053 6,454,819 351,762,901 799,140 - 482,263,913
    Reportable segment assets
    (including investment in joint ventures) 24,359,649,868 33,198,931,234 37,134,037,436 12,138,735,205 936,713,213 107,768,066,956
    Reportable segment liabilities 17,289,333,777 24,557,753,557 30,312,262,600 10,281,755,747 691,455,231 83,132,560,912China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    109
    8 Operating segments (continued)
    (a) Segment results, assets and liabilities (continued)
    Real Estate Development
    Beijing Region Shenzhen Region Shanghai Region Chengdu Region Property
    (note(1)) (note(2)) (note(3)) (note(4)) Management Total
    For the year ended 31 December 2008
    Revenue from external revenue,
    before sales taxes 9,692,502,325 15,231,625,842 12,901,092,410 2,784,759,005 374,225,480 40,984,205,062
    Inter-segment revenue - - - - 547,288,273 547,288,273
    Reportable segment revenue,
    before sales taxes 9,692,502,325 15,231,625,842 12,901,092,410 2,784,759,005 921,513,753 41,531,493,335
    Reportable segment profit 1,881,149,030 3,205,441,778 1,864,675,663 54,198,942 95,882,616 7,101,348,029
    Interest income 379,347,628 922,035,719 695,171,564 101,029,355 1,996,827 2,099,581,093
    Interest expense 447,575,079 922,964,821 929,584,674 161,810,038 762,147 2,462,696,759
    Share of profits less losses of associates
    and jointly controlled entities (note (5)) 29,754,431 48,104,944 82,360,652 8,015,220 - 168,235,247
    Reportable segment assets
    (including investment in joint ventures) 23,659,539,807 41,262,343,315 43,706,481,056 10,891,797,778 692,201,002 120,212,362,958
    Reportable segment liabilities 18,330,736,267 32,407,940,277 38,349,911,408 9,050,098,654 499,216,809 98,637,903,415China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    110
    8 Operating segments (continued)
    (b) Reconciliation of reportable segment revenues, profit or loss, assets and liabilities
    2009 2008
    Revenue
    Reportable segment revenue 49,320,492,393 41,531,493,335
    Unallocated head office and corporate revenue 11,283,521 7,574,152
    Sales taxes (2,833,119,894) (2,372,565,137)
    Elimination of inter-segment revenue (450,762,770) (547,288,273)
    Consolidated turnover 46,047,893,250 38,619,214,077
    Profit
    Reportable segment profit 8,492,514,559 7,101,348,029
    Elimination of inter-segment profit (390,445,091) (614,661,367)
    Share of profits less losses of
    associates and jointly controlled entities 541,860,863 209,735,863
    Other income 263,313,108 77,012,468
    Other operating expenses,
    excluding provision for doubtful debts (144,826,118) (105,291,939)
    Dividend income 198,509,336 4,713,306
    Unallocated head office and corporate expenses (343,498,849) (350,570,734)
    Land appreciation tax 675,575,080 2,097,941,712
    Consolidated profit before taxation 9,293,002,888 8,420,227,338
    Assets
    Reportable segment assets 107,768,066,956 120,212,362,958
    Elimination of inter-segment receivables (44,631,419,049) (71,823,332,882)
    Deferred tax assets 1,265,649,479 1,449,480,633
    Unallocated head office and corporate assets 73,625,061,764 70,747,899,525
    Consolidated total assets 138,027,359,150 120,586,410,234
    Liabilities
    Reportable segment liabilities 83,132,560,912 98,637,903,415
    Elimination of inter-segment payables (39,100,106,359) (65,531,552,831)
    Deferred tax liabilities 1,221,268,786 1,380,487,627
    Unallocated head office and corporate liabilities 47,365,123,357 47,281,022,542
    Consolidated total liabilities 92,618,846,696 81,767,860,753China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    111
    8 Operating segments (continued)
    Notes:
    (1) Beijing region represents Beijing, Tianjin, Shenyang, Anshan, Dalian, Qingdao, and
    Changchun.
    (2) Shenzhen region represents Shenzhen, Guangzhou, Dongguan, Foshan, Zhuhai,
    Zhongshan, Changsha, Xiamen, Fuzhou, Huizhou, and Hainan.
    (3) Shanghai region represents Shanghai, Hangzhou, Suzhou, Wuxi, Ningbo, Nanjing,
    Zhenjiang, Nanchang and Hefei.
    (4) Chengdu Region represents Chengdu, Wuhan, Xi’an, and Chongqing.
    (5) Share of profits less losses of associates and jointly controlled entities that is
    attributable to head office and not allocated to the respective segments is RMB
    59,596,950 (2008: RMB 41,500,616).
    9 Other income
    2009 2008
    Forfeited deposits and compensation from customers 19,150,446 19,639,564
    Gain on disposals of subsidiaries 150,738,396 295,087
    Gain on disposals of interest in associates 19,176,868 -
    Gain on disposals of other investment 20,283,706 601,533
    Gain on disposals of property, plant and equipment 7,883,854 8,936,739
    Unrealised gain on financial derivatives 2,435,351 19,262,232
    Compensation income from insurance - 2,797,899
    Other sundry income 43,644,487 25,479,414
    263,313,108 77,012,468
    10 Other operating expenses
    2009 2008
    Provision for doubtful debts 28,275,933 37,552,195
    Compensation to customers 30,544,937 19,670,383
    Donations 47,819,939 53,597,709
    Loss on disposals of property, plant and equipment 1,577,638 2,336,423
    Realised and unrealised loss on financial derivatives 6,492,341 5,332,863
    Penalties 10,635,324 7,452,967
    Other sundry expenses 47,755,939 16,901,594
    173,102,051 142,844,134China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    112
    11 Personnel expenses
    2009 2008
    Wages, salaries and other staff costs 1,366,033,170 790,513,017
    Contributions to defined contribution plans 120,229,614 110,499,460
    Equity-settled share-based compensation - 235,000,000
    1,486,262,784 1,136,012,477
    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% (2008: 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.
    12 Finance income and finance costs
    2009 2008
    Interest income 304,714,390 300,476,020
    Dividend income 198,509,336 4,713,306
    Net foreign exchange gain - 42,609,316
    Finance income 503,223,726 347,798,642
    -------------------- --------------------
    Interest expense and other borrowing costs 2,174,111,158 2,459,226,301
    Less: Interest capitalised (1,329,102,436) (1,477,109,375)
    Finance costs 845,008,722 982,116,926
    Foreign exchange loss 2,608,217 -
    -------------------- --------------------
    Net finance costs (344,393,213) (634,318,284)
    Interest expense and other borrowing costs have been capitalised at an average rate of 6.7%
    (2008: 7.0%) per annum.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    113
    13 Taxation
    (a) Taxation in the consolidated income statement represents:
    2009 2008
    Current tax
    PRC Corporate Income Tax
    - Provision for the year 2,086,679,824 2,631,939,752
    Land Appreciation Tax 769,460,459 2,161,307,853
    2,856,140,283 4,793,247,605
    -------------------- --------------------
    Deferred tax
    Fair value adjustments arising from
    business combinations
    - PRC Corporate Income Tax (83,090,710) (104,100,065)
    - Land Appreciation Tax (93,885,379) (63,366,141)
    Accrual for Land Appreciation Tax 209,408,887 (336,686,228)
    Tax losses (147,899,296) (57,960,111)
    Provision for diminution in value of properties 153,322,143 (305,849,580)
    Accruals for construction costs 30,038,912 (134,365,188)
    Other temporary differences (61,039,491) (10,562,107)
    6,855,066 (1,012,889,420)
    -------------------- --------------------
    2,862,995,349 3,780,358,185
    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 20% and 25% (2008:
    between 18% 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 31 December 2009 and 2008,
    deferred tax assets and liabilities are calculated based on the applicable income tax rates
    enacted by the NPC from 1 January 2008.
    Land Appreciation Tax is levied on properties developed by the Group for sale, at
    progressive rates ranging from 30% to 60% on the appreciation of land value, which under
    the applicable regulations is calculated based on the proceeds of sales of properties less
    deductible expenditures including lease charges of land use rights, borrowing costs and
    relevant property development expenditures.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    114
    13 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:
    2009 2008
    Profit before income tax 9,293,002,888 8,420,227,338
    Less: Land Appreciation Tax (675,575,080) (2,097,941,712)
    8,617,427,808 6,322,285,626
    Notional tax on profit before taxation
    calculated at effective income tax rate
    of the relevant group subsidiaries concerned 2,091,230,130 1,518,200,485
    Non-taxable income (141,411,577) (33,570,053)
    Non-deductible expenses 180,626,272 90,026,225
    Effect of tax losses not recognised 80,843,778 112,880,745
    Recognition of previously unrecognised tax losses (16,101,473) (2,269,994)
    Effect of temporary difference not recognised - 947,005
    Effect of change in tax rates on deferred
    tax in respect of current year
    temporary differences (7,766,861) (3,797,940)
    PRC Corporate Income Tax 2,187,420,269 1,682,416,473
    Land Appreciation Tax 675,575,080 2,097,941,712
    Actual total tax expense 2,862,995,349 3,780,358,185
    (b) Taxation recognised directly in equity
    2009 2008
    Arising from fair value adjustments on
    available-for-sale securities (note 25(c)) 17,757,247 (19,106,620)
    Others - (53,006)
    17,757,247 (19,159,626)China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    115
    13 Taxation (continued)
    (c) Current taxation in the consolidated balance sheet represents:
    2009 2008
    Corporate Income Tax 720,023,458 103,616,161
    Land Appreciation Tax 3,465,174,045 3,440,001,032
    4,185,197,503 3,543,617,193
    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 31 December 2009 and 2008.
    14 Other comprehensive income
    (a) Tax effects relating to each component of other comprehensive income
    2009 2008
    Before- Tax Net-of- Before- Tax Net-oftax
    expense tax tax benefit tax
    amount amount amount amount
    Exchange differences
    on translation of
    financial statements of
    overseas subsidiaries (586,681) - (586,681 ) 129,508,819 - 1 29,508,819
    Available-for-sale
    securities: net
    movement in fair
    value reserve 80,714,776 (17,757,247) 62,957,529 (109,102,025) 19,106,620 (89,995,405)
    Others - - - (212,030 ) 53,006 (159,024 )
    Other comprehensive
    Income 80,128,095 (17,757,247) 62,370,848 20,194,764 19,159,626 39,354,390China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    116
    14 Other comprehensive income (continued)
    (b) Reclassification adjustments relating to components of other comprehensive income
    2009 2008
    RMB’000 RMB’000
    Available-for sale securities:
    Changes in fair value recognised during the year 69,897,086 (88,848,992)
    Reclassification adjustments for amounts
    transferred to profit or loss:
    - gains on disposal (6,939,557) (1,305,437)
    Net movement in the fair value reserve during the
    year recognised in other comprehensive income 62,957,529 (90,154,429)
    15 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 5,329,737,727 (2008: 4,033,170,028)
    and on the weighted average number of ordinary shares outstanding during the year of
    10,995,210,218 (2008 restated: 10,995,210,218) shares.
    There were no dilutive potential shares during the years presented above.
    16 Dividends
    A cash dividend of RMB0.05 per share, resulting in a dividend payment of RMB549,760,511
    in respect of the year ended 31 December 2008 was declared and paid during the year ended
    31 December 2009.
    A cash dividend of RMB0.1 per share, resulting in a dividend payment of RMB687,200,639
    in respect of the year ended 31 December 2007 was declared and paid during the year ended
    31 December 2008.
    A cash dividend of RMB0.07 per share, resulting in a dividend payment of RMB769,664,715
    in respect of the year ended 31 December 2009 are to be proposed at the Company’s
    forthcoming annual general meeting. The dividend has not been recognised as a liability at
    the balance sheet date.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    117
    17 Property, plant and equipment
    Hotel and Furniture,
    other buildings Improvements Plant and fixtures and Motor
    held for own use to premises machinery equipment vehicles Total
    Cost:
    At 1 January 2008 571,015,951 52,060,424 25,250,395 146,038,119 96,310,218 890,675,107
    Additions:
    - via acquisitions of
    subsidiaries 2,854,256 - - 3,606,227 1,066,429 7,526,912
    - transfer from
    completed
    properties for sale 483,677,655 - - - - 483,677,655
    - others 237,404,662 37,196,242 1,686,605 40,932,376 13,341,598 330,561,483
    Disposals (20,683,753) (13,115,878) (710,164) (10,096,065) (20,568,167) (65,174,027)
    At 31 December 2008 1,274,268,771 76,140,788 26,226,836 180,480,657 90,150,078 1,647,267,130
    -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
    At 1 January 2009 1,274,268,771 76,140,788 26,226,836 180,480,657 90,150,078 1,647,267,130
    Additions:
    - via acquisitions of
    subsidiaries - - - 1,829,457 - 1,829,457
    - others 286,578,946 8,874,508 262,924 15,328,150 7,879,982 318,924,510
    Disposals (157,500,457) (14,958,775) (284,494) (9,929,704) (9,908,872) (192,582,302)
    At 31 December 2009 1,403,347,260 70,056,521 26,205,266 187,708,560 88,121,188 1,775,438,795
    -------------------- -------------------- -------------------- -------------------- -------------------- --------------------China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    118
    17 Property, plant and equipment (continued)
    Hotel and Furniture,
    other buildings Improvements Plant and fixtures and Motor
    held for own use to premises machinery equipment vehicles Total
    Accumulated depreciation
    and impairment loss:
    At 1 January 2008 123,530,957 33,414,027 8,672,051 79,512,155 63,468,711 308,597,901
    Additions:
    - via acquisitions of
    subsidiaries 896,542 - - 1,505,882 304,265 2,706,689
    Charge for the year 33,241,383 6,048,379 1,260,969 25,235,806 11,135,083 76,921,620
    Written back on
    disposals (7,039,351) (811,464) (234,146) (6,795,685) (16,679,365) (31,560,011)
    At 31 December 2008 150,629,531 38,650,942 9,698,874 99,458,158 58,228,694 356,666,199
    -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
    At 1 January 2009 150,629,531 38,650,942 9,698,874 99,458,158 58,228,694 356,666,199
    Additions:
    - via acquisitions of
    subsidiaries - - - 630,938 - 630,938
    Charge for the year 43,582,084 5,720,427 1,368,366 26,715,773 9,897,271 87,283,921
    Written back
    on disposals (28,034,425) (13,159,161) (218,800) (7,231,490) (7,794,097) (56,437,973)
    At 31 December 2009 166,177,190 31,212,208 10,848,440 119,573,379 60,331,868 388,143,085
    -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
    Net book value:
    At 31 December 2009 1,237,170,070 38,844,313 15,356,826 68,135,181 27,789,320 1,387,295,710
    At 31 December 2008 1,123,639,240 37,489,846 16,527,962 81,022,499 31,921,384 1,290,600,931China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    119
    18 Lease prepayments
    2009
    Additions 82,516,436
    A mortisation for the year (550,110 )
    81,966,326
    Leasehold land of the Group is held in the PRC. At 31 December 2009, the remaining lease
    term of the land is 50 years.
    19 Investment properties
    2009 2008
    Cost:
    At 1 January 225,849,490 290,242,224
    Transfer from completed properties for sale 117,043,338 74,164,374
    Disposals (86,251,508) (138,557,108)
    At 31 December 256,641,320 225,849,490
    -------------------- --------------------
    Accumulated depreciation
    and impairment loss:
    At 1 January 27,454,723 13,151,649
    Charge for the year 7,738,355 14,540,704
    Written back on disposals (6,694,916) (237,630)
    At 31 December 28,498,162 27,454,723
    -------------------- --------------------
    Net book value:
    At 31 December 228,143,158 198,394,767
    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 RMB258,970,079 (2008: RMB316,581,608).
    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:
    2009 2008
    Within 1 year 11,881,321 10,317,612
    After 1 year but within 5 years 45,034,409 32,692,959
    After 5 years 97,352,090 75,950,458
    154,267,820 118,961,029China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    120
    20 Construction in progress
    2009 2008
    At 1 January 188,587,023 271,270,240
    Additions 622,987,458 89,427,277
    Transferred out to property, plant and equipment (218,366,247) (109,211,201)
    T ransferred out to properties under developm ent - (62,899,293 )
    593,208,234 188,587,023
    Construction in progress represents self-constructed office premises and owner managed
    hotel under construction.
    21 Principal subsidiaries
    Percentage of interest
    Name of company
    Place of
    establishment
    and operation Paid in capital held by the
    Group
    held by the
    Company
    held by a
    subsidiary
    Principal
    activities
    Anshan Vanke Property
    Development Co., Ltd. Anshan USD5,172,700 100% - 100%
    Property
    development
    Beijing Chaoyang Vanke
    Property Development
    Company Limited Beijing RMB200,000,000 60% 60% -
    Property
    development
    Beijing Vanke Enterprises
    Shareholding Company
    Limited Beijing RMB1,000,000,000 100% 90% 10%
    Property
    development
    Beijing Vanke Property
    Management Company
    Limited Beijing RMB22,000,000 100% - 100%
    Property
    management
    Beijing Vanke Zhongliang
    Jiarifengjing Real Estate
    Development Company
    Limited (note) Beijing RMB830,000,000 50% - 50%
    Property
    development
    Changchun Vanke Real Estate
    Company Limited Changchun RMB50,000,000 100% 95% 5%
    Property
    development
    Changchun Vanke Jingcheng
    Property Development
    Company Limited Changchun RMB10,000,000 100% - 100%
    Property
    development
    Changsha Vanke Property
    Management Company
    Limited Changsha RMB5,000,000 100% - 100%
    Property
    management
    Chengdu Vanke Chenghua
    Property Company Limited Chengdu RMB554,479,142 100% - 100%
    Property
    development
    Chengdu Vanke Guanghua
    Property Company Limited Chengdu USD131,428,571 100% - 100%
    Property
    development
    Chengdu Vanke Guobin
    Property Company Limited Chengdu USD140,000,000 60% - 60%
    Property
    development
    Chengdu Vanke Jinjiang
    Property Company Limited Chengdu RMB10,000,000 100% - 100%
    Property
    development
    Chengdu Vanke Property
    Management Company
    Limited Chengdu RMB5,000,000 100% - 100%
    Property
    management
    Chengdu Vanke Real Estate
    Company Limited Chengdu RMB80,000,000 100% 90% 10%
    Property
    development
    Chengdu Vanke Huadong Real
    Estate Company Limited Chengdu RMB77,680,000 90% - 90%
    Property
    development
    Chongqing Yu Development
    Coral Property Company
    Limited Chongqing RMB100,000,000 51% - 51%
    Property
    developmentChina Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    121
    21 Principal subsidiaries (continued)
    Percentage of interest
    Name of company
    Place of
    establishment
    and operation Paid in capital
    held by the
    Group
    held by the
    Company
    held by a
    subsidiary
    Principal
    activities
    Vanke (Chongqing) Real Estate
    Company Limited Chongqing RMB80,000,000 100% 100% -
    Property
    development
    Dalian Vanke City Real
    Property Company Limited Dalian USD42,000,000 55% - 55%
    Property
    development
    Dalian Vanke Real Estate
    Development Company
    Limited Dalian RMB32,000,000 100% - 100%
    Property
    development
    Dongguan Vanke Construction
    Research Company Limited Dongguan RMB20,000,000 100% 100% -
    Construction
    research
    Dongguan Vanke Real Estate
    Company Limited Dongguan RMB20,000,000 100% - 100%
    Property
    development
    Dongguan Xinwan Property
    Development Company
    Limited Dongguan RMB10,000,000 51% - 51%
    Property
    development
    Dongguan Songhuju Property
    Company Limited Dongguan RMB10,000,000 100% - 100%
    Property
    development
    Dongguan Vanke Property
    Management Company
    Limited Dongguan RMB5,000,000 100% - 100%
    Property
    management
    Dongguan Xintong Industry
    Investment Company Limited Dongguan RMB10,000,000 51% - 51%
    Property
    development
    Foshan Vanke Property
    Management Company
    Limited Foshan RMB3,000,000 100% - 100%
    Property
    management
    Foshan Vanke Real Estate
    Company Limited Foshan RMB80,000,000 100% - 100%
    Property
    development
    Foshan Nanhai District
    Jinyuhuating Propoerty
    Company Limited Foshan USD44,000,000 55% - 55%
    Property
    development
    Foshan Nanhai District
    Jinyulanwan Propoerty
    Company Limited Foshan USD95,000,000 55% - 55%
    Property
    development
    Vanke Property (Hong Kong)
    Company Limited Hong Kong USD9,500,000 100% - 100% Investment
    Fuzhou Vanke Real Estate
    Company Limited Fuzhou RMB20,000,000 100% 40% 60%
    Property
    development
    Guangzhou Pengwan Property
    Company Limited (note) Guangzhou RMB200,000,000 50% - 50%
    Property
    development
    Guangzhou Vanke Real Estate
    Company Limited Guangzhou RMB50,000,000 100% - 100%
    Property
    development
    Guangzhou Wanxin Property
    Company Limited Guangzhou HKD760,000,000 100% - 100%
    Property
    development
    Guangzhou Yinyejunrui
    Property Development
    Company Limited Guangzhou RMB10,000,000 100% - 100%
    Property
    development
    Hainan Vanke Property
    Development Company
    Limited Haikou RMB10,000,000 100% 100% -
    Property
    development
    Tander China Investment
    Company Limited Hong Kong HKD10,000 100% - 100% Investment
    Vanke Real Estate (Hong
    Kong) Company Limited Hong Kong HKD15,600,000 100% - 100% Investment
    Zhenjiang Rundu Property
    Company Limited Zhenjiang RMB10,000,000 100% - 100%
    Property
    development
    Zhenjiang Runnan Property
    Company Limited Zhenjiang RMB50,000,000 100% - 100%
    Property
    development
    Zhenjiang Runqiao Property
    Company Limited Zhenjiang RMB10,000,000 100% - 100%
    Property
    development
    Zhenjiang Runzhong Property
    Company Limited Zhenjiang RMB10,000,000 100% - 100%
    Property
    developmentChina Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    122
    21 Principal subsidiaries (continued)
    Percentage of interest
    Name of company
    Place of
    establishment
    and operation Paid in capital
    held by the
    Group
    held by the
    Company
    held by a
    subsidiary
    Principal
    activities
    Nanjing Hengyue Property
    Company Limited Nanjing RMB10,000,000 100% - 100%
    Property
    development
    Nanjing Jinyu Blue Property
    Company Limited Nanjing RMB90,000,000 100% - 100%
    Property
    development
    Nanjing Vanke Property
    Company Limited Nanjing RMB150,000,000 100% - 100%
    Property
    development
    Ningbo Vanke Real Estate
    Company Limited Ningbo RMB150,000,000 100% - 100%
    Property
    development
    Ningbo Jiangbei Vanke
    Property Company Limited Ningbo RMB675,000,000 100% - 100%
    Property
    development
    Qingdao Da Shan Real Estate
    Development Company
    Limited Qingdao RMB100,000,000 60% - 60%
    Property
    development
    Qingdao Vanke Real Estate
    Company Limited Qingdao RMB20,000,000 100% 100% -
    Property
    development
    Qingdao Vanke Yinshengtai
    Real Estate Development Co.,
    Ltd Qingdao RMB100,000,000 80% 80% -
    Property
    development
    Hainan Fuchun East Real Estate
    Development Company
    Limited Hainan RMB20,000,000 100% - 100%
    Property
    development
    Qingyuan Hongmei Investment
    Company Limited Qingyuan RMB280,000,000 95% - 95%
    Property
    development
    Shanghai Luolian Property
    Company Limited. Shanghai RMB470,000,000 100% - 100%
    Property
    development
    Shanghai Meilanhuafu Property
    Company Limited Shanghai RMB700,000,000 100% - 100%
    Property
    development
    Shanghai Vanke Investment
    Management Company
    Limited Shanghai RMB204,090,000 100% 100% -
    Property
    development
    Shanghai Tianyi Property
    Development Company
    Limited Shanghai RMB50,000,000 90% - 90%
    Property
    development
    Shanghai Vanke Baobei
    Property Company Limited Shanghai RMB10,000,000 100% - 100%
    Property
    development
    Shanghai Hengda Property
    Shareholding Company
    Limited Shanghai RMB141,348,200 100% - 100%
    Property
    development
    Shanghai Vanke Property
    Management Company
    Limited Shanghai RMB10,000,000 100% - 100%
    Property
    management
    Shanghai Vanke Pudong
    Property Company Limited Shanghai RMB160,000,000 100% - 100%
    Property
    development
    Shanghai Vanke Real Estate
    Company Limited Shanghai RMB800,000,000 100% - 100%
    Property
    development
    Shanghai Xiangda Real Estate
    Development Company
    Limited Shanghai RMB1,783,000,000 75% - 75%
    Property
    development
    Shanghai Dijie Property
    Company Limited (note) Shanghai RMB20,000,000 50% - 50%
    Property
    development
    Shenyang Vanke Property
    Management Company
    Limited Shenyang RMB10,000,000 100% - 100%
    Property
    management
    Shenyang Vanke Real Estate
    Development Company
    Limited Shenyang RMB100,000,000 100% 95% 5%
    Property
    developmentChina Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    123
    21 Principal subsidiaries (continued)
    Percentage of interest
    Name of company
    Place of
    establishment
    and operation Paid in capital held by the
    Group
    held by the
    Company
    held by a
    subsidiary
    Principal
    activities
    Shenyang Vanke Jinyu Blue
    Bay Property Development
    Company Limited Shenyang RMB578,150,000 100% - 100%
    Property
    development
    Shenyang Vanke Hunnan Jinyu
    Property Development
    Company Limited Shenyang RMB1,022,520,258 100% - 100%
    Property
    development
    Shenyang Vanke Tianqinwan
    Property Company Limited Shenyang USD99,980,000 55% - 55%
    Property
    development
    Shenzhen Vanke Daolin
    Investment Development
    Company Limited Shenzhen RMB20,000,000 100% - 100%
    Property
    development
    Shenzhen Fuchun East (Group)
    Company Limited Shenzhen USD14,600,000 90% - 90%
    Property
    development
    Shenzhen Fuchun East Real
    Estate Company Limited Shenzhen RMB158,000,000 100% - 100%
    Property
    development
    Shenzhen Longcheer Yacht
    Club Company Limited Shenzhen RMB57,100,000 100% - 100% Club Service
    Shenzhen Vanke City Scenery
    Property Company Limited Shenzhen RMB120,000,000 100% - 100%
    Property
    development
    Shenzhen Vanke Real Estate
    Company Limited Shenzhen RMB600,000,000 100% 95% 5%
    Property
    development
    Shenzhen Vanke Financial
    Consultancy Company
    Limited Shenzhen RMB15,000,000 100% 95% 5%
    Investment
    trading and
    Consultancy
    services
    Shenzhen Vanke Nancheng
    Real Estate Company Limited Shenzhen RMB10,000,000 90% - 90%
    Property
    development
    Shenzhen Vanke Property
    Management Company
    Limited Shenzhen RMB10,000,000 100% 95% 5%
    Property
    management
    Shenzhen Vanke Xingye
    Property Company Limited Shenzhen RMB62,413,230 100% - 100%
    Property
    development
    Shenzhen Vanke Xizhigu Real
    Estate Company Limited Shenzhen RMB10,000,000 60% - 60%
    Property
    development
    Suzhou Huihua Investment and
    Property Company Limited Suzhou RMB355,000,000 51% - 51%
    Property
    development
    Suzhou Nandu Jianwu
    Company Limited Suzhou RMB300,000,000 70% 70% -
    Property
    development
    Jiangsu Sunan Vanke Real
    Estate Company Limited Suzhou RMB30,000,000 100% - 100%
    Property
    development
    Suzhou Vanke Zhongliang
    Property Company Limited Suzhou RMB230,000,000 51% - 51%
    Property
    development
    Tianjin Vanke Property
    Management Company
    Limited Tianjin RMB10,000,000 100% - 100%
    Property
    management
    Tianjin Vanke Real Estate
    Company Limited Tianjin RMB390,000,000 100% - 100%
    Property
    development
    Tianjin Vanke Xinlicheng
    Company Limited Tianjin RMB230,000,000 100% - 100%
    Property
    development
    Tianjin Wanbin Real Estate
    Development Company
    Limited Tianjin RMB140,000,000 100% - 100%
    Property
    development
    Tianjin Wanfu Investment
    Company Limited Tianjin RMB10,000,000 100% - 100%
    Property
    development
    Tianjin Wanzhu Investment
    Company Limited Tianjin RMB20,000,000 100% - 100%
    Property
    development
    Tianjin Zhongtian Wanfang
    Investment Company Limited Tianjin RMB20,000,000 100% - 100%
    Property
    developmentChina Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    124
    21 Principal subsidiaries (continued)
    Percentage of interest
    Name of company
    Place of
    establishment
    and operation Paid in capital held by the
    Group
    held by the
    Company
    held by a
    subsidiary
    Principal
    activities
    Wuhan Guohao Property
    Company Limited Wuhan RMB10,000,000 55% - 55%
    Property
    development
    Wuhan Vanke Property
    Management Company
    Limited Wuhan RMB12,000,000 100% - 100%
    Property
    management
    Wuhan Vanke Real Estate
    Company Limited Wuhan RMB150,000,000 100% 95% 5%
    Property
    development
    Wuhan Vanke Tianrun Real
    Estate Company Limited Wuhan USD57,600,000 100% - 100%
    Property
    development
    Wuhan Wangjiadun Morden
    City Property Company
    Limited Wuhan RMB200,000,000 90% - 90%
    Property
    development
    Wuxi Dongcheng Real Estate
    Company Limited Wuxi USD99,600,000 100% - 100%
    Property
    development
    Wuxi Vanke Property
    management Company
    Limited Wuxi RMB3,000,000 100% - 100%
    Property
    management
    Wuxi Vanke Real Estate
    Company Limited Wuxi RMB300,000,000 60% 60% -
    Property
    development
    Wuxi Wansheng Real Estate
    Development Company
    Limited Wuxi USD49,200,000 55% - 55%
    Property
    development
    Xiamen Vanke Real Estate
    Company Limited Xiamen RMB50,000,000 100% - 100%
    Property
    development
    Xi'an Vanke Real Estate
    Company Limited Xi'an RMB20,000,000 100% - 100%
    Property
    development
    Zhuhai Vanke Real Estate
    Company Limited Zhuhai RMB10,000,000 100% - 100%
    Property
    development
    Zhuhai Zhubin Property
    Development Company
    Limited Zhuhai RMB109,000,000 100% - 100%
    Property
    development
    Huizhou Vanke Property
    Company Limited Huizhou RMB10,000,000 100% - 100%
    Property
    development
    Hefei Vanke Property Company
    Limited Hefei RMB20,000,000 100% 100% -
    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.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    125
    22 Interest in associates
    Details of the Group’s principal associates at 31 December 2009 are as follows:
    Percentage of interest
    Name of company
    Place of
    establishment
    and operation Paid in capital
    held by the
    Group
    held by the
    Company
    held by a
    subsidiary
    Principal
    activities
    Beijing Vanke Consultancy
    Company Limited Beijing RMB100,000 20.00% - 20.00%
    Consultancy
    services
    Shanghai Zhongfang Binjiang
    Real Estate Company
    Limited Shanghai RMB200,000,000 25.00% - 25.00%
    Property
    development
    Wuhan Golf City Garden Real
    Estate Company Limited
    (note) Wuhan RMB219,000,000 49.00% - 49.00%
    Property
    development
    Shanghai Nandu White Horse
    Real Estate Company
    Limited (note) Shanghai RMB27,000,000 49.00% - 49.00%
    Property
    development
    Chengdu Yihang Vanke
    Binjiang Real Estate
    Company Limited (note) Chengdu RMB140,000,000 49.00% - 49.00%
    Property
    development
    Hefei Yihang Vanke Real
    Estate Company Limited Hefei RMB101,500,000 50.00% - 50.00%
    Property
    development
    Suzhou Zhonghang Vanke
    Changfeng Real Estate
    Company Limited Suzhou RMB200,000,000 49.00% - 49.00%
    Property
    development
    Hangzhou Star Real Estate
    Company Limited Hangzhou RMB50,000,000 20.00% - 20.00%
    Property
    development
    Changsha Oriental City Real
    Estate Company Limited Changsha RMB20,000,000 20.00% - 20.00%
    Property
    development
    Shanghai Zunyi Property
    Management Company
    Limited Shanghai RMB3,000,000 30.00% - 30.00%
    Property
    management
    Beijing Jinyu Vanke Real
    Estate Development
    Company Limited Beijing RMB190,000,000 49.00% - 49.00%
    Property
    development
    Foshan Shunde Zhonghang
    Vanke Real Estate Company
    Limited Foshan RMB10,000,000 49.00% - 49.00%
    Property
    development
    Shenzhen Mingjue investment
    Company Limited Shenzhen RMB15,000,000 40.00% - 40.00%
    Investment
    consultation
    Note: Except for the 15% equity interest held directly, the Group also hold 34% effective
    equity interest in these associates through a jointly controlled entity.
    Summary financial information on associates:
    Equity
    attributable
    Assets Liabilities to parent Revenue Profit
    2009
    100 per cent 10,271,806,802 8,013,212,222 2,258,594,580 7,412,023,684 1,562,276,704
    Group’s effective interest 4,220,037,527 3,510,525,247 709,512,280 2,276,229,781 392,250,939
    2008
    100 per cent 7,312,096,864 5,435,615,027 1,876,481,837 2,283,305,003 601,706,907
    Group’s effective inter est 2,963,597,886 2,455,422,698 508,175,188 818,977,888 219,115,497China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    126
    23 Interest in jointly controlled entities
    Details of the Group’s principal jointly controlled entities at 31 December 2009 are as
    follows:
    Percentage of interest
    Name of company
    Place of
    establishm
    ent and
    operation Paid in capital
    held by the
    Group
    held by the
    Company
    held by a
    subsidiary
    Principal
    activities
    Shenyang Yong Da Property
    Company Limited (note 1) Shenyang RMB197,235,443 49.00% - 49.00%
    Property
    development
    Hangzhou Song City Property
    Company Limited Hangzhou RMB130,000,000 50.00% - 50.00%
    Property
    development
    Shanghai Jialai Real Estate
    Development Company
    Limited (note 1) Shanghai RMB180,000,000 49.00% - 49.00%
    Property
    development
    Zhonghang Vanke Company
    Limited (note 1) Beijing RMB1,000,000,000 40.00% 40.00% -
    Property
    development
    Dongguan Vanke Property
    Company limited Dongguan RMB10,000,000 50.00% - 50.00%
    Property
    development
    Dalian Vanke Charming City
    Property Development
    Company Limited (note 1) Dalian RMB 340,000,000 30.00% - 30.00%
    Property
    development
    Wuhan Vanke Qinganju
    Property Development
    Limited (note 1) Wuhan RMB100,000,000 30.00% - 30.00%
    Property
    development
    Yunnan Vanke City Property
    Company Limited (note 2) Kunming RMB10,000,000 51.00% 51.00% -
    Property
    development
    Changsha Lingyu Real Estate
    Development Company
    Limited (note 1) Changsha RMB100,000,000 60.00% 60.00% -
    Property
    development
    Changsha Lingyu Investment
    Company Limited (note 1) Changsha RMB100,000,000 60.00% 60.00% -
    Property
    development
    Beijing Zhongliang Vanke Real
    Estate Development
    Company Limited (note 1) Beijing RMB800,000,000 50.00% - 50.00%
    Property
    development
    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.
    Summary of financial information on jointly controlled entities – Group’s effective interest
    2009 2008
    Non-current assets 413,738,553 374,540,476
    Current assets 6,212,322,249 3,360,015,120
    Non-current liabilities (82,050,000) (19,600,000)
    Current liabilities (3,780,133,404) (1,826,146,436)
    Net assets 2,763,877,398 1,888,809,160
    Income 969,474,034 466,170,606
    Expenses (819,864,110) (475,550,240)
    Profit / (Loss) for the year 149,609,924 (9,379,634)China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    127
    24 Other financial assets
    2009 2008
    Available-for-sale securities in the PRC
    Equity securities
    - Unlisted 91,993,324 88,740,921
    - Listed in the PRC 163,629,472 84,559,813
    Debt securities
    - Unlisted - 82,858,082
    255,622,796 256,158,816
    25 Deferred tax assets / (liabilities)
    (a) Deferred tax assets
    Deferred tax assets are attributable to the items detailed as follows:
    2009 2008
    Tax losses 289,824,752 141,925,456
    Impairment loss of trade and other receivables 17,811,958 8,323,552
    Provision for diminution in value of properties 156,170,130 309,492,273
    Accruals for construction costs 145,121,089 175,160,001
    Accrual for Land Appreciation Tax 575,409,722 784,818,610
    Other temporary differences 81,311,828 29,760,741
    1,265,649,479 1,449,480,633
    Deferred tax assets have not been recognised in respect of the following temporary
    differences:
    2009 2008
    Tax losses 1,006,670,048 917,582,959
    Other temporary differences 158,420,591 148,199,000
    1,165,090,639 1,065,781,959
    The tax losses expire between 2010 and 2014. The deductible temporary differences will not
    expire the under current tax legislation. The above deferred tax assets have not been
    recognised because it is not probable that future taxable profit will be available against which
    the Group can utilise the benefits therefrom.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    128
    25 Deferred tax assets / (liabilities) (continued)
    (b) Deferred tax liabilities
    Deferred tax liabilities are attributable to the items detailed as follows:
    2009 2008
    Fair value adjustments on
    available-for-sale securities (28,303,017) (10,545,770)
    Fair value adjustments arising from
    business combinations (1,192,965,769) (1,369,941,857)
    (1,221,268,786) (1,380,487,627)
    (c) Movements in deferred taxation, net:
    2009 2008
    At 1 January 68,993,006 (963,003,034)
    Transferred to consolidated income statement (note 13(a)) (6,855,066) 1,012,889,420
    Recognised in other comprehensive income (note 14(a)) (17,757,247) 19,106,620
    At 31 December 44,380,693 68,993,006
    26 Inventories
    2009 2008
    Raw materials 59,998,046 48,111,356
    Inventories recognised as cost of sales for the year 11,432,652 16,309,805
    27 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:
    2009 2008
    With lease term of 50 years or more 56,788,947,082 54,737,002,663
    With lease term of less than 50 years 3,624,287,723 3,906,402,115
    60,413,234,805 58,643,404,778China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    129
    27 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:
    2009 2008
    Carrying amount of properties sold 34,219,897,859 24,653,484,452
    Write down of properties 150,693 1,230,561,038
    Reversal of write-down of properties (616,565,282) (1,436,701)
    33,603,483,270 25,882,608,789
    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.
    (c) Included in properties held for development, property under development and completed
    properties for sale an amount of RMB52,736 million (2008: RMB34,131 million) is not
    expected to be recovered within one year.
    28 Trade and other receivables
    2009 2008
    Debtors and other receivables 4,381,802,497 2,943,528,935
    Less: allowance for doubtful debts (163,638,185) (141,023,757)
    4,218,164,312 2,802,505,178
    -------------------- --------------------
    Amount due from associates and jointly
    controlled entities 4,281,498,407 1,617,804,867
    Less: allowance for doubtful debts (661,378) (1,438,296)
    4,280,837,029 1,616,366,571
    -------------------- --------------------
    Prepaid taxes 1,979,482,542 837,140,813
    -------------------- --------------------
    Deposits and prepayments 6,756,836,958 3,160,518,999
    -------------------- --------------------
    17,235,320,841 8,416,531,561
    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 40(b).
    All of the trade and other receivables, apart from deposits of RMB374 million (2008:
    RMB658 million), and the acquisition prepayment of RMB432 million (2008: RMB575
    million) are expected to be recovered within one year.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    130
    28 Trade and other receivables (continued)
    Apart from the amounts due from associates and jointly controlled entities of RMB2,206
    million (2008: RMB314million) which are interest bearing at market interest rate, amounts
    due from associates and jointly controlled entities are interest free, unsecured and have no
    fixed terms of repayment. The interest income received from associates during the year
    amounted to RMB9 million (2008: RMB27 million).
    Deposits and prepayments mainly represented tendering deposits for acquisitions of land and
    prepayment for land and development costs of projects undertaken by the Group.
    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:
    2009 2008
    At 1 January 142,462,053 105,704,325
    Impairment loss recognised 28,275,933 37,552,195
    Uncollectible amounts written off (6,438,423) (794,467)
    At 31 December 164,299,563 142,462,053
    At 31 December 2009, the Group’s trade debtors and other receivables of RMB164 million,
    (2008: RMB142 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 RMB164 million (2008: RMB142 million) were
    recognised. The Group does not hold any collateral over these balances.
    Trade debtors and other receivable 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:
    2009 2008
    Neither past due nor impaired 4,841,756,331 4,294,160,423
    Less than 1 year past due 520,080,632 124,711,326
    5,361,836,963 4,418,871,749
    Receivables that were neither past due nor impaired relate to a wide range of customers for
    whom there was no recent history of default.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    131
    28 Trade and other receivables (continued)
    Trade debtors and other receivable that are not impaired (continued)
    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.
    29 Cash and cash equivalents and pledged deposits
    Cash and cash equivalents and pledged deposits consist of cash on hand and balances with
    banks. The balance includes deposits with banks of RMB1,003 million and RMB403 million
    unused proceeds raised in prior year share allotment with restriction for designated purposes.
    30 Share capital
    2009 2008
    Number of Nominal Number of Nominal
    shares value shares value
    Registered, issued and fully paid:
    A shares of RMB1 each 9,680,254,750 9,680,254,750 9,680,254,750 9,680,254,750
    B share s of RMB1 each 1,314,955,468 1,314,955,468 1,314,955,468 1,314,955,468
    10,995,210,218 10,995,210,218 10,995,210,218 10,995,210,218
    The holders of A and B share are entitled to receive dividends as declared from time to time
    and are entitled to one vote per share at general meetings of the Company.
    A summary of the movements in the Company’s share capital during 2008 is as follows:
    Issued share capital
    A shares B shares Total
    At 1 January 2008 6,050,159,219 821,847,168 6,872,006,387
    Capitalisation of share
    prem ium (note 31(a)) 3,630,095,531 493,108,300 4,123,203,831
    At 31 December 2008 9,680,254,750 1,314,955,468 10,995,210,218
    There were no movement in share capital during 2009.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    132
    31 Reserves
    (a) Share premium
    During the year ended 31 December 2008, the Company issued 4,123,203,831 shares with a
    par value of RMB1 each to all shareholders in the ratio of 6 shares for every 10 shares held
    as recorded in the register of shareholders on 13 June 2008 upon capitalisation of share
    premium. There were no such issues in 2009.
    (b) Statutory reserves
    Statutory reserves include the following items:
    (i) Statutory surplus reserve
    According to the PRC Company Law, the Company is required to transfer 10% of its
    profit after taxation, as determined under PRC Accounting Regulations, to statutory
    surplus reserve until the reserve balance reaches 50% of the registered capital. The
    transfer to this reserve must be made before distribution of a dividend to shareholders.
    Statutory surplus reserve can be used to make good previous years’ losses, if any, and
    may be converted into share capital by the issue of new shares to equity shareholders
    in proportion to their existing shareholdings or by increasing the par value of the
    shares currently held by them, provided that the balance after such issue is not less
    than 25% of the registered capital.
    For the year ended 31 December 2009, the Company transferred RMB287,447,528
    (2008: RMB158,201,976), 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 year ended 31 December 2009, the directors proposed to transfer
    RMB1,868,408,931 (2008: RMB1,028,312,846), being 65% (2008: 65%) of the
    Company’s current year’s net profit as determined in accordance with the PRC
    Accounting Rules and Regulations, to this reserve.
    (c) 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 36) 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).
    On 25 May 2009, the Company received the proceeds of RMB 620,656,308 in respect of the
    sale of Awarded Shares held under the 2008 Scheme, which were forfeited due to that the
    non-market performance conditions were not met.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    133
    31 Reserves (continued)
    (c) Employee share-based compensation reserve (continued)
    During the year ended 31 December 2008, equity-based employee benefits of RMB
    494,987,500 were charged to the consolidated income statement and with the corresponding
    amount credited to the reserve, RMB235,000,000 of which was related to the 2007 Scheme
    and the remaining RMB259,987,500 was related to the 2008 Scheme.
    On 30 September 2008, equity-based employee benefits of RMB259,987,500 in respect of
    the 2008 Scheme was reversed as the directors subsequently considered that the 2008
    Scheme’s non-market performance condition of over 15% year-to-year profit growth was
    unlikely to be met.
    (d) 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).
    (e) Other reserves
    Other reserves are resulted from transactions with owners in their capacity as owners. The
    balance as at 31 December 2009 comprise capital reserve deficit arising from difference
    between fair value and book value of the acquiree’s net assets at the date of stepped
    acquisition of RMB 241,332,344 (2008: RMB 241,332,344), and surplus for acquisitions of
    minority interests of RMB 20,958,427 (2008: nil), and deficit arising from disposal of
    Awarded Shares held under the 2008 scheme of RMB 143,249,210 (2008: nil) (see note 36).
    (f) Retained profits
    At 31 December 2009, included in the retained profits attributable to equity shareholders of
    the Group is an amount of RMB2,581,661,025 (2008: RMB1,618,315,317) which represents
    the Group’s subsidiaries’ statutory reserves, being attributable to the equity shareholders of
    the Company.
    (g) 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, cashflow and profit forecasts. In order to maintain a sound
    capital position, the Group may adjust the amount of dividends payable to shareholders, issue
    new shares, issue bonds or raise new debt financing.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    134
    32 Interest-bearing borrowings and bonds
    This note provides information about the contractual terms of the Group’s interest-bearing
    borrowings and bonds. For more information about the Group’s exposure to interest rate and
    foreign exchange risks, please refer to note 40.
    2009 2008
    Non-current
    Secured or guaranteed
    - bank loans (note (a)) 2,300,254,991 1,553,110,000
    - corporate bonds (note (b)) 2,915,228,176 2,894,365,250
    - other borrowings (note (c)) 1,200,000,000 -
    -------------------- --------------------
    6,415,483,167 4,447,475,250
    -------------------- --------------------
    Unsecured
    - bank loans 5,218,451,222 7,621,010,095
    - corporate bonds (note (b)) 2,878,507,630 2,873,650,747
    - other borrowings (note (c)) 8,784,092,083 -
    16,881,050,935 10,494,660,842
    -------------------- --------------------
    23,296,534,102 14,942,136,092
    At 31 December, non-current interest-bearing borrowings and bonds were repayable as
    follows:
    2009 2008
    After 1 year but within 2 years 15,934,138,520 7,876,887,677
    After 2 years but within 5 years 7,362,395,582 7,065,248,415
    23,296,534,102 14,942,136,092China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    135
    32 Interest-bearing borrowings and bonds (continued)
    2009 2008
    Current
    Secured or guaranteed
    - bank loans (note (a)) 150,000,000 60,000,000
    - current portion of long term bank loans (note (a)) 1,258,730,915 363,995,220
    - other borrowings (note (c)) - 120,000,000
    1,408,730,915 543,995,220
    -------------------- --------------------
    Unsecured
    - bank loans 1,038,256,111 190,000,000
    - current portion of long term bank loans 6,181,683,452 5,792,489,356
    - other borrowings (note (c)) - 4,351,968,334
    - current portion of long term other borrowings - 6,987,890,000
    7,219,939,563 17,322,347,690
    -------------------- --------------------
    8,628,670,478 17,866,342,910
    Notes:
    (a) Bank loans
    The secured or guaranteed bank loans of 3,709 million as at 31 December 2009
    (2008: RMB1,977 million) are secured over certain properties held for development
    and properties under development with aggregate carrying value of RMB3,496
    million (2008: RMB2,968 million), the Group’s interests in certain subsidiaries.
    The interest rate of bank loans ranges from 4.86% to 8.33% in 2009 (2008: from
    4.86% to 10.00%).
    (b) Corporate bonds
    2008
    Corporate bonds Corporate bonds
    No.101688 No.101699
    Proceeds from issue of corporate
    bonds of RMB100 each 2,900,000,000 3,000,000,000
    Transaction costs (28,271,731) (111,746,619)
    Net proceeds 2,871,728,269 2,888,253,381
    Transaction costs amortised 1,922,478 6,111,869
    Carrying value at 31 December 2,873,650,747 2,894,365,250China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    136
    32 Interest-bearing borrowings and bonds (continued)
    Notes (continued):
    (b) Corporate bonds (continued)
    2009
    Corporate bonds Corporate bonds
    No.101688 No.101699
    Brought forward value at 1 January 2,873,650,747 2,894,365,250
    Transaction costs amortised 4,856,883 20,862,926
    Carrying value at 31 December 2,878,507,630 2,915,228,176
    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
    2009 2008
    Non-current
    Proceeds 10,200,000,000 -
    Transaction costs (215,907,918) -
    9,984,092,082 -
    -------------------- ---------------------
    Current
    Proceeds - 4,520,000,000
    Transaction costs - (48,031,666)
    - 4,471,968,334
    -------------------- ---------------------
    Current portion of long term other borrowings
    Proceeds - 6,987,890,000China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    137
    32 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 from 4.90% to 5.40% in 2009 (2008: 4.86% to 10.00%).
    Other borrowings of RMB 1,200 million as at 31 December 2009 were guaranteed by
    the Company for its subsidiaries.
    Other borrowings of RMB 120 million as at 31 December 2008 were secured over
    certain properties held for development and properties under development with
    aggregate carrying value of RMB 370 million.
    33 Other long term liabilities
    Other long term liabilities at 31 December 2009 and 2008 mainly represented consideration
    payable in connection with acquisitions of subsidiaries and was due for settlement by
    instalments in 2011 and 2012.
    34 Trade and other payables
    2009 2008
    Trade payable 16,300,047,906 12,895,962,837
    Amounts due to associates 24,046,337 21,277,927
    Amounts due to jointly controlled entities 900,009,782 841,977,518
    Deposits received in advance 31,734,801,164 23,945,755,140
    Other payables and accrued expenses 6,101,542,047 6,225,573,623
    Other taxes 183,964,631 48,660,688
    Total 55,244,411,867 43,979,207,733
    All of the trade and other payables, except for retention moneys of RMB417 million (2008:
    RMB213 million), are expected to be settled within one year.
    35 Provisions
    2009 2008
    Balance at 1 January 41,729,468 37,962,953
    Provisions made during the year 2,667,737 8,300,215
    Provisions used during the year (10,041,390) (4,533,700)
    Balance at 31 December 34,355,815 41,729,468
    The balance represents the estimated losses to be borne by the Group in relation to the
    property management projects.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    138
    36 Employees’ share award scheme
    Pursuant to a shareholders’ resolution passed on 30 May 2006, the Company adopted an
    Employees’ Share Award Scheme (the “Scheme”) for each of the years ended 31 December
    2006, 2007 and 2008 under which certain employees of the Group, including certain
    directors of the Company, will be entitled to certain A shares of the Company if the vesting
    conditions as set out in the Scheme are met.
    Background of the Scheme
    Under the Scheme, the Company made an initial contribution to an independentlyadministrated
    Trust (the “Trust”) for each of the years ended 31 December 2006, 2007 and
    2008 based on certain historical performance indicators of the Group in the respective year
    (“Year 0”). The Trust then purchased the Awarded Shares from the Shenzhen Stock
    Exchange and held the Awarded Shares under trust. The final amount to be contributed to
    the Trust for each year’s scheme depends on the financial performance of the Group for Year
    0 as compared with that of the year before the Year 0 (as determined under the PRC
    Accounting Regulations) and is determined as follows:
    - if the growth rate of the audited net profit is less than or equal to 15%, no contribution
    is required.
    - if the growth rate of the audited net profit for the respective year is more than 15%
    but less than or equal to 30%, the total contribution equals to the net profit
    incremental multiplied by the growth rate.
    - if the growth rate of the audited net profit is more than 30%, the total contribution
    equals to the net profit incremental multiplied by 30%.
    Pursuant to the Scheme, the total contribution to the Trust for each year’s scheme will not
    exceed 10% of the net profit for Year 0.
    Duration of the vesting period depends on the market price of the Company’s A shares in
    Year 0 through two years after Year 0 (“Year 2”). When the average closing price of
    Company’s A shares in the year after Year 0 (expressed as “Year 1” below) is higher than
    that in Year 0, the Scheme is vested and the Trust is required to distribute the Awarded
    Shares to the designated employees in Year 2. When the average closing price of the
    Company’s A shares in Year 1 is lower than that in Year 0, the vesting period is extended to
    31 December of Year 2 whereby the Scheme is vested when the average closing price of the
    Company’s A shares in Year 2 is higher than that in both Year 0 and Year 1. In the
    circumstances, the Trust is required to distribute the Awarded Shares to the designated
    employees in the year after Year 2. Otherwise, the Trust is terminated and the Awarded
    Shares will be resold in the Shenzhen Stock Exchange and the proceeds be refunded to the
    Company.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    139
    36 Employees’ share award scheme (continued)
    Details of the Awarded Shares purchased by the Trust under the Scheme are as follows:
    Scheme for the year ended Scheme for the year ended Scheme for the year ended
    31 December 2008 31 December 2007 31 December 2006
    (The 2008 Scheme) (The 2007 Scheme) (The 2006 Scheme) Total
    Number of Aggregate Number of Aggregate Number of Aggregate Number of Aggregate
    shares amount shares amount shares amount shares amount
    purchased paid purchased paid purchased paid purchased paid
    At 1 January 2008 - - 17,229,468 242,994,816 43,740,250 223,546,730 60,969,718 466,541,546
    Purchased through
    the Trust (Note i) 37,804,258 763,905,518 11,533,195 243,140,600 - - 49,337,453 1,007,046,118
    New shares
    through
    bonus issue (Note ii) 22,682,555 - 17,257,598 - 17,282,420 - 57,222,573 -
    Dividend
    reinvested
    through the Trust 439,007 - 321,500 - 424,700 - 1,185,207 -
    Distribution of
    Awarded Shares(No te iii) - - - - (61,447,370) ( 223,546,730) (61,447,370 ) ( 223,546,730)
    At 31 December
    2008 60,925,820 763,905,518 46,341,761 486,135,416 - - 107,267,581 1, 250,040,934
    At 1 January 2009 60,925,820 763,905,518 46,341,761 486,135,416 - - 107,267,581 1,250,040,934
    Sale of forfeited
    Awarded shares (60,925,820) (620,656,308) - - - - (60,925,820) (620,656,308)
    Deficit arising
    from sales of
    Awarded Shares - (143,249,210) - - - - - (143,249,210)
    Dividend reinvested
    throug h the trust - - 210,000 - - - 210,000 -
    At 31 December
    2009 - - 46,551,761 486,135,416 - - 46,551,761 486,135,416
    Note:
    (i) On 2 June 2008, the Company made an additional contribution of RMB243,140,600
    to the 2007 Scheme and the Trust acquired 11,533,195 A shares of the Company. On
    the same day, the Company made a contribution of RMB763,905,518 to the 2008
    Scheme and the Trust acquired 37,804,258 A shares of the Company.
    (ii) On 16 June 2008, the Company issued new A shares out of the share premium in the
    ratio 10:6 to all equity shareholders. Accordingly, additional 22,682,555, 17,257,598
    and 17,282,420 A shares were issued to the 2008, 2007 and 2006 Schemes
    respectively.
    (iii) Pursuant to the 2006 Scheme, on 13 September 2008, the Trust distributed
    61,447,370 A shares under the 2006 Scheme to the eligible employees upon vesting
    of the 2006 Scheme.
    (iv) On 25 May 2009, the Company received the proceeds of RMB 620,656,308 in respect
    of the sales of Awarded Shares held under the 2008 Scheme, which were forfeited
    due to that non-market performance conditions were not met in 2008 (see note 31(c)).
    The deficit of the sale proceeds less the purchased value of the Awarded Shares under
    2008 Scheme is transferred out to other reserves within equity.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    140
    36 Employees’ share award scheme (continued)
    Details of the Awarded Shares purchased by the Trust under the Scheme are as follows
    (continued):
    The average closing price of the Company’s A shares in 2009 is lower than that in 2007 and
    2008. Therefore, the Awarded Shares held under the 2007 Scheme were forfeited as the
    market performance condition was not met. Such shares were disposed of and the Company
    received the proceeds in the amount of RMB468,728,084 on 25 January 2010.
    37 Material related party transactions
    (a) Reference should be made to the following notes regarding related parties:
    Associates (note 22, 28 & 34)
    Jointly controlled entities (note 23, 28 & 34)
    Key management personnel (see note (b) below)
    Post-employment benefit plans (note 11)
    (b) Key management personnel compensations
    The key management personnel compensations are as follows:
    2009 2008
    Short-term employee benefits 77,001,000 27,252,500
    The above compensations are included in “personnel expenses” (see note 11). In addition, all
    the key management personnel are participants of the Employees’ share award scheme of the
    Group (see note 36).
    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:
    2009 2008
    Sales of properties to the key management personnel 17,766,449 1,217,125
    Related cost of sales (9,844,936) (1,001,353)
    Gross profit 7,921,513 215,772
    Estimated fair value of the properties
    sold to the key management personnel 18,579,645 1,857,125
    All the above were approved by the Board of Directors as a kind of employment benefits to
    the key management personnel.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    141
    38 Commitments
    (a) Commitments outstanding at 31 December not provided for in the financial statements
    were as follows:
    2009 2008
    Contracted for 25,845,776,320 23,202,031,151
    Commitments mainly related to land and development costs for the Group’s properties under
    development.
    (b) At 31 December 2008, the total future minimum lease payments under non-cancellable
    operating leases are payable as follows:
    2009 2008
    Within 1 year 25,616,859 32,497,446
    After 1 year but within 2 years 9,172,514 20,784,514
    After 2 year but within 5 years 4,619,928 30,333,962
    After 5 years - 4,735,353
    39,409,301 88,351,275
    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 year, the operating lease expense of the Group amounted to
    RMB36 million (2008: RMB41 million).
    39 Contingent liabilities
    As at the balance sheet date, the Group has issued guarantees to banks to secure the mortgage
    arrangement of property buyers. The outstanding guarantees to the banks amounted to
    RMB22,083 million (2008: RMB17,969 million), including guarantees of RMB21,272
    million (2008: RMB17,452 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 RMB811 million (2008: RMB517 million) which will be terminated upon full
    repayment of mortgage loans by buyers to the banks.
    The directors do not consider it probable that the Group will sustain a loss under these
    guarantees as the bank has the rights to sell the property and recovers the outstanding loan
    balance from the sale proceeds if the property buyers default payment. The Group has not
    recognised any deferred income in respect of these guarantees as its fair value is considered
    to be minimal by the directors.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    142
    40 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 32 to the
    financial statements.
    At 31 December 2009, 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
    RMB12 million (2008: RMB49 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 2008.
    (b) Credit risk
    The Group’s credit risk is primarily attributable to trade and other receivables and other
    financial assets. Management has a credit policy in place and the exposures to these credit
    risks are monitored on an ongoing basis.
    In respect of trade receivables, credit risk is minimised as the Group normally receives full
    payment from buyers before the transfer of property ownership.
    In respect of other receivables and other financial assets, the Group reviews the exposures
    and closely monitors the recoverability of the balances on an ongoing basis. Normally, the
    Group does not obtain collateral from debtors. The impairment losses on bad and doubtful
    accounts are within management’s expectation.
    (c) Liquidity risk
    The Group’s policy is to regularly monitor current and expected liquidity requirements and
    its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash
    and adequate committed lines of funding from major financial institutions to meet its
    liquidity requirements in the short and longer terms.China Vanke Co., Ltd.
    Financial statements for the year ended 31 December 2009
    143
    40 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:
    2009
    Total contractual More than 1 More than 2
    Carrying undiscounted Within 1 year year but less years but less
    amount cash flow or on demand than 2 year than 5 years
    Interest-bearing borrowings 26,131,468,775 28,828,225,766 10,235,713,529 16,974,290,816 1,618,221,420
    Corporate bonds 5,793,735,806 7,249,333,333 368,000,000 368,000,000 6,513,333,333
    Creditors and accrued charges 22,401,589,953 22,401,589,953 22,401,589,953 - -
    Amounts due to jointly controlled
    entities and associates 924,056,119 924,056,119 924,056,119 - -
    Other long term liabilities 8,408,145 8,408,145 - - 8,408,145
    2008
    Total contractual More than 1 More than 2
    Carrying undiscounted Within 1 year year but less years but less
    amount cash flow or on demand than 2 year than 5 years
    Interest-bearing borrowings 27,040,463,005 28,614,049,859 18,958,810,394 8,343,262,843 1,311,976,622
    Corporate bonds 5,768,015,997 7,614,880,000 368,000,000 368,000,000 6,878,880,000
    Creditors and accrued charges 19,121,536,460 19,121,536,460 19,121,536,460 - -
    Amounts due to jointly controlled
    entities and associates 863,255,445 863,255,445 863,255,445 - -
    Other long term liabilities 12,644,850 12,644,850 - 2,946,875 9,697,975
    (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:
    2009 2008
    United States Dollars 806,368,281 420,141,957
    Hong Kong Dollars 8,147,723 7,049,434
    Interest-bearing borrowings denominated in a currency other than the functional currency of
    the entity to which they relate are as follows:
    2009 2008
    United States Dollars 2,602,202,906 2,388,563,971
    Hong Kong Dollars - 134,930,700China Vanke Co., Ltd.
    Year ended 31 December 2009
    144
    40 Financial risk management (continued)
    (d) Foreign exchange risk (continued)
    Financial assets at fair value through profit or loss denominated in a currency other than the
    functional currency of the entity to which they relate are as follows:
    2009 2008
    United States Dollars - 1,694,880
    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.
    2009 2008
    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% (134,687,597) (134,492,028) (112,192,264) (113,246,603)
    United States Dollars (10%) 134,687,597 134,492,028 112,192,264 113,246,603
    Hong Kong Dollars 10% (611,079) (213,039,426) (9,718,976) (220,462,035)
    Hong Kong Dollars (10%) 611,079 213,039,426 9,718,976 220,462,035
    The sensitivity analysis has been determined assuming that the change in foreign exchange
    rates had occurred at the balance sheet date and had been applied to each of the group
    entities’ exposure to currency risk for non-derivative financial instruments in existence at that
    date, and that all other variables, in particular interest rates, remain constant.
    (e) Equity price risk
    The Group is exposed to equity price changes arising from equity investments classified as
    available-for-sale equity securities (see note 24). The Group monitors the performance of the
    available-for-sale equity securities regularly.
    41 Non-adjusting post balance sheet events
    After the balance sheet date the directors proposed a final dividend, further details of which
    are disclosed in note 16.
    42 Comparative figures
    As a result of the application of IAS 1 (revised 2007), Presentation of financial statements,
    and IFRS 8, Operating segments, certain comparative figures have been adjusted to conform
    to current year’s presentation and to provide comparative amounts in respect of items
    disclosed for the first time in 2009. Further details of these developments are disclosed in
    note 4.China Vanke Co., Ltd.
    Year ended 31 December 2009
    145
    43 Accounting estimates and judgments
    Key sources of estimation uncertainty
    (i) Impairment provision for properties held for development
    As explained in note 3(h), the Group makes impairment provision for properties held
    for development taking into account the Group’s estimates of the recoverable amount
    from such properties. Given the volatility of the PRC property market, the actual
    recoverable amount may be higher or lower than that estimated at the balance sheet
    date. Any increase or decrease in the provision would affect profit or loss in future
    years.
    (ii) Impairment provision for completed properties for sale and properties under
    development
    As explained in notes 3(j) and 3(k), the Group’s completed properties for sale and
    properties under development are stated at the lower of cost and net realisable value.
    Based on the Group’s recent experience and the nature of the subject properties, the
    Group makes estimates of the selling prices, the costs of completion in case for
    properties under development, and the costs to be incurred in selling the properties.
    Given the volatility of the PRC property market and the unique nature of individual
    properties, the actual outcomes in terms of costs and revenue may be higher or lower
    than that estimated at the balance sheet date. Any increase or decrease in the
    provision would affect profit or loss in future years.
    (iii) Land appreciation tax
    As explained in note 13(a), land appreciation tax is levied on properties developed by
    the Group for sale, at progressive rates ranging from 30% to 60% on the appreciation
    of land value, which under the applicable regulations is calculated based on the
    proceeds of sales of properties less deductible expenditures including lease charges of
    land use rights, borrowing cost and relevant property development expenditures.
    Given the uncertainties of the calculation basis of land appreciation tax to be
    interpreted by the local tax bureau, the actual outcomes may be higher or lower than
    that estimated at the balance sheet date. Any increase or decrease in estimates would
    affect profit or loss in future years.China Vanke Co., Ltd.
    Year ended 31 December 2009
    146
    44 Possible impact of amendments, new standards and interpretations issued but
    not yet effective for the year ended 31 December 2009
    Up to date of issue of these financial statements, the IASB has issued a number of
    amendments, new standards and interpretations which are not yet effective for the year ended
    31 December 2009 and which have not been adopted in these financial statements.
    The Group is in the process of making an assessment of what the impact of these
    amendments, new standards and new interpretations is expected to be in the period of initial
    application.
    So far it has concluded that the adoption of them is unlikely to result in a restatement of the
    Group’s results of operations and financial position.
    In addition, the following developments are expected to result in amended disclosures in the
    financial statements, including restatement of comparative amounts in the first period of
    adoption:
    Effective for
    accounting periods
    beginning on or after
    IFRS 3 (Revised), Business Combination 1 July 2009
    Amendments to IAS 27, Consolidated and Separate Financial Statements 1 July 2009
    IFRS 9, Financial Instruments 1 January 2013
    Amendments to IAS 24, Related Party Disclosures 1 January 2011

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