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个股公告正文

万 科B:2012年半年度报告(英文版)

日期:2012-08-07附件下载

                                   China Vanke Co., Ltd.
                                    2012 Interim Report
                          (For the six months ended 30 June 2012)Important Notice:The Board of Directors, the Supervisory Committee and the Directors, members of the SupervisoryCommittee and senior management of the Company warrant that in respect of the information contained inthis report, there are no misrepresentations or misleading statements, or material omission, andindividually and collectively accept full responsibility for the authenticity, accuracy and completeness ofthe information contained in this report.Chairman Wang Shi, Director Yu Liang, Director Xiao Li, Independent Director Qi Daqing, IndependentDirector Zhang Liping, Independent Director Hua Sheng attended the board meeting in person. DeputyChairman Qiao Shibo and Director Jiang Wei were not able to attend the board meeting in person due totheir business engagements and had authorised Director Yu Liang to represent them and vote on behalf ofthem at the board meeting. Director Wang Yin and Director Sun Jianyi were not able to attend the boardmeeting in person due to their business engagements and had authorised Director Xiao Li to representthem and vote on behalf of them at the board meeting. Independent Director Paul Chan Mo Po was notable to attend the board meeting in person due to his business engagements and had authorisedIndependent Director Qi Daqing to represent him and vote on his behalf at the board meeting.The Company’s interim financial statements have not been audited.Chairman Wang Shi, Director and President Yu Liang, and Executive Vice President and Supervisor ofFinance Wang Wenjin declare that the interim financial statements contained in the interim report arewarranted to be true and complete.Basic Corporate Information ……………………………………………………………………….…2Change in Share Capital and Shareholdings of Major Shareholders ..…………………………………3Directors, Members of Supervisory Committee, Senior Management ………………..…………….…5Directors’ Report ………………………………………………………………………….……………6Significant Events…...……………………………………………………………………………..…..13Financial Statements (Unaudited) …..…………………………………………………………………23This Report is edited in Chinese and English, should there be any differences in understanding between thetwo versions(except the differences due to the discrepancy between PRC accounting regulations and IFRS),please refer to the Chinese one.I. Basic Corporate Information
    1.     Company Name (Chinese): 万科企业股份有限公司 (“万科”)
       Company Name (English): CHINA VANKE CO., LTD. (“VANKE”)
    2.     Registered address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the
       People’s Republic of China
       Postal code: 518083
       Office address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the
       People’s Republic of China
       Postal code: 518083
       Website: www.vanke.com
       E-mail address: IR@vanke.com
    3.     Legal representative: Wang Shi
    4.     Secretary of the Board: Tan Huajie
       E-mail address: IR@vanke.com
       Securities Affairs Representative: Liang Jie
       E-mail address: IR@vanke.com
       Contact Address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the
       People’s Republic of China
       Telephone number: 0755-25606666
       Fax number: 0755-25531696
    5.     Media for disclosure of information: “China Securities Journal”, “Securities Times”, “Shanghai
       Securities News”, “Securities Daily” and an English media in Hong Kong.
       Website for publication of the interim report: www.cninfo.com.cn
       Place for interim report collection: The Office of the Company’s Board of Directors
    6.     Stock exchange on which the Company’s shares are listed: Shenzhen Stock Exchange
       Company’s share abbreviation and stock codes on the stock exchange:
       Vanke A, 000002
       Vanke B, 200002
       08 Vanke G1, 112005
       08 Vanke G2, 1120067. Major Financial Data and Indicators(1) Major Financial Indicators(Unit: RMB’000)
       Financial Indicators              Jan.-Jun. 2012            Jan.-Jun. 2011          Change(+/-)
    Revenue                                           28,959,560               18,886,966                53%
    Profit from operating activities                   7,928,844                6,376,643                 24%Share of profits less losses of
    associates and jointly controlled                    422,520                    7,773               5336%entities
    Profit before income tax                           7,562,983                5,866,824                 29%
    Income tax expense                                (3,027,505)              (2,614,306)                16%
    Profit for the period                              4,535,478                3,252,518                 39%
    Profit attributed to minority                        810,393                  274,663                195%Profit attributable to equity
                                                   3,725,085                2,977,855                25%shareholders of the Company
    Basic earnings per share                                  0.34                      0.27             26%
    Diluted earnings per share                                0.34                      0.27              26%
    (2) Impact of IFRS Adjustments on Net Profit (Unit: RMB’000)
                                                                           Net profit attributable to equity shareholders
                                  Items
                                                                                           of the Company
    As determined pursuant to PRC accounting standards                                                            3,725,085
    As restated in conformity with IFRS                                                                           3,725,085
    II. Change in Share Capital and Shareholdings of Major Shareholders
    1. Change in Share Capital (as at 30 June 2012)
                                                                                                           Unit: Share
                                       Before the Change                 Increase /              After the Change
    Class of Share                                     Percentage of          decrease                           Percentage of
                                    Quantity                               (+, -)           Quantity
                                                    shareholding                                             shareholdingI. Restricted Shares1. State-owned andState-owned legal personshares2. Shares held by domesticnon-State-owned legalpersons3. Shares held by domestic
                                          18,426,384           0.17%           -207,664            18,218,720          0.17%natural persons4. Shares held by foreigninvestorsTotal number of restricted
                                          18,426,384           0.17%           -207,664            18,218,720          0.17%sharesII. Non-restricted Shares1. RMB-denominated
                                      9,661,828,366           87.87%           +207,664        9,662,036,030          87.87%ordinary shares (A shares)2. Domestic listed foreign
                                      1,314,955,468           11.96%                   0       1,314,955,468          11.96%shares (B shares)Total number of
                                     10,976,783,834          99.83%            +207,664       10,976,991,498          99.83%non-restricted shares
    III. Total Number of Shares          10,995,210,218         100.00%                    0      10,995,210,218         100.00%
    Note: There were changes in the senior management staff of the Company in 2011. The trading restriction on the restricted
    shares held by these senior management staff would be lifted after 6 months of their departure. As a result, the number of
    restricted shares and non-restricted shares of the Company changed accordingly during the reporting period.
    2. The shareholdings of the Company’s top 10 shareholders and the shareholdings of the top 10
    holders of non-restricted shares (as at 30 June 2012)
                                                                                                            Unit: Share
    Total number of shareholders      842,855 (including 821,317 holders of A shares and 21,538 holders of B Shares)
    Shareholdings of the top 10 shareholders
                                      Classification    Percentage of      Total                Number of      Number of
                                     of shareholder shareholdings          number of            restricted     pledged or
       Name of shareholder
                                                                           shares held          shares held    lock-up
                                                                                                               shares
    China Resources Co., Limited           State-owned
                                                                14.73%         1,619,094,766               0                0
    (“CRC”)                              legal personBank of China - E Fund Shenzhen
    Stock Exchange 100 Exchange-              Others                 1.36%           149,102,263               0                0Traded Fund
    Liu Yuansheng                             Others                 1.22%           133,791,208               0                0China Construction Bank - Bosera
    Theme Industry Stock Securities           Others                 0.92%           100,731,921               0                0Investment FundIndustrial and Commercial Bank ofChina -Rongtong Shenzhen Stock
                                          Others                 0.90%            99,254,225               0                0Exchange 100 Index SecuritiesInvestment FundHTHK/CMG FSGUFP-CMG
                                         Foreign
    FIRST STATE CHINA GROWTH                                         0.78%            85,850,401               0                0
                                       shareholderFDBank of China - Harvest Thematic
                                             Others                 0.70%            76,999,387                0              0FundMORGAN STANLEY & CO.
                                             Others                 0.70%            76,864,430                0              0INTERNATIONAL PLC
    UBS AG                                       Others                 0.67%            74,183,257                0              0Staff Committee of China Vanke
                                             Others                 0.61%            67,168,517                0              0Co., Ltd.
                                  Shareholdings of the top 10 holders of non-restricted shares
    Name of shareholder                        Number of non-restricted                           Class of shares
                                                    shares held
    CRC                                                          1,619,094,766 Ordinary RMB-denominated shares (A shares)Bank of China - E Fund Shenzhen
    Stock Exchange 100 Exchange-                                   149,102,263 Ordinary RMB-denominated shares (A shares)Traded Fund
    Liu Yuansheng                                                  133,791,208 Ordinary RMB-denominated shares (A shares)China Construction Bank-Bosera
    Theme Industry Stock Securities                                100,731,921 Ordinary RMB-denominated shares (A shares)Investment FundIndustrial and Commercial Bank ofChina -Rongtong Shenzhen Stock
                                                                99,254,225 Ordinary RMB-denominated shares (A shares)Exchange 100 Index SecuritiesInvestment FundHTHK/CMG FSGUFP-CMG
    FIRST STATE CHINA GROWTH                                        85,850,401 Domestic listed foreign shares (B shares)FDBank of China - Harvest Thematic
                                                                76,999,387 Ordinary RMB-denominated shares (A shares)FundMORGAN STANLEY & CO.
                                                                76,864,430 Ordinary RMB-denominated shares (A shares)INTERNATIONAL PLC
    UBS AG                                                          74,183,257 Ordinary RMB-denominated shares (A shares)Staff Committee of China Vanke
                                                                67,168,517 Ordinary RMB-denominated shares (A shares)Co., Ltd.
    Remarks on the connected               It is not known as to whether there are connections or persons deemed to be acting in
    relationship or action in concert of   concert under “the Measures for the Administration of the Takeover of Listed Companies”
    the aforementioned shareholders        among the above-mentioned shareholders.
    3. Bondholdings of the Company’s top 10 bondholders (as at 30 June 2012)
    (1) Name of the top 10 bondholders of 08 Vanke G1 bonds and their bondholdings
    No.                                       Bondholder                                              No. of bonds held
         New China Life Insurance Company – Dividend Distribution – Individual Dividend –
    1                                                                                                              5,548,262
         018L-FH002 Shen
    2    China Petroleum Finance Co., Ltd.                                                                         4,157,662
    3    China Pacific Insurance (Group) Co. Ltd.                                                                  3,433,312
         China Ping An Property and Casualty Insurance Company Limited – Traditional –
    4                                                                                                              2,698,727
         General Insurance Products
    5    China Life Insurance Company Ltd.                                                                         2,619,042
    6    Taiping General Insurance Co., Ltd.                                                                       1,003,216
    7    China Life Pension Company Ltd. – Internal Resources                                                       924,010
    8    Haitong-BOC-Futong Bank                                                                                     897,256
         China Life Property and Casualty Insurance Company Ltd. – Traditional – General
    9                                                                                                                820,000
         Insurance Products
    10    China Property & Casualty Reinsurance Company Ltd.                                                          776,162
    Note: China Life Property and Casualty Insurance Company Limited, which manages “China Life Property and Casualty
    Insurance Company Limited – Traditional – General Insurance Products” and China Life Pension Company Limited, which
    manages “China Life Pension Company Limited – Internal Resources”, are subsidiaries of China Life Insurance Company
    Limited. Apart from the above-mentioned relationships, it is not known as to whether there are other connections or persons
    deemed to be acting in concert under “the Measures for the Administration of the Takeover of Listed Companies” among the
    above-mentioned bondholders.
    (2) Name of the top 10 bondholders of 08 Vanke G2 bonds and their bondholdings
    No.                                         Bondholder                                              No. of bonds held
    1     CMB-E Fund Pure Bond Fund                                                                               1,933,383
    2    Industrial Bank Co., Ltd.-Tianhong Yongli Bond Fund                                                      1,237,927
    3    ICBC – Harvest Stable Earning Bond Securities Investment Fund                                            1,016,978
    4    ICBC Credit Suisse Asset Management Co., Ltd – ICBC – Assets of Specific Clients                          889,101
    5    National Social Security Fund – Portfolio 801                                                              849,518
    6    CCB -Penghua Harvest Bond Fund                                                                             613,644
    7    CMB -China AMC Classic Allocation Hybrid Fund                                                              550,000
    8    ICBC-China Universal Capital Preservation Fund                                                             500,000
    9    ABC -ICBC Credit Suisse Four Seasons Income Bond Fund                                                      480,842
    10    CCB -Penghua Fengrun Bond Fund                                                                             480,000Note: “ICBC Credit Suisse Asset Management Co., Ltd – ICBC – Assets of Specific Clients” and “ABC -ICBC CreditSuisse Four Seasons Income Bond Fund” are managed by ICBC Credit Suisse Asset Management Co., Ltd.; “NationalSocial Security Fund – Portfolio 801” and “CMB -China AMC Classic Allocation Hybrid Fund” are managed by ChinaAsset Management Co., Ltd.; “CCB -Penghua Harvest Bond Fund” and “CCB -Penghua Fengrun Bond Fund” aremanaged by Penghua Fund Management Co., Ltd. Apart from the above-mentioned relationships, it is not known as towhether there are other connections or persons deemed to be acting in concert under “the Measures for the Administration ofthe Takeover of Listed Companies” among the above-mentioned bondholders.4. Change of controlling shareholders and beneficial controllersThere were neither controlling shareholders nor beneficial controllers in the Company, and this situationremained the same during the period under review.III. Directors, Members of Supervisory Committee and Senior Management1. Changes in the shareholdings of directors, members of Supervisory Committee and seniormanagement during the period under review
                                                                                                                 Unit: Share
                                                                                           Number        of   Number        of
                                       Number of                                           share options      share options
                                                          Number of         Number of
    Name              Capacity        shares held at                                       exerciseable as    exercised as at
                                                       shares held as at   share options
                                      the beginning                                        at the date of     the date of
                                                         30 June 2012        granted
                                         of 2012                                           announcement       announcement
                                                                                           of the report      of the report
    Wang Shi        Chairman             6,817,201          6,817,201         6,600,000         2,640,000              0
    Yu Liang    Director, President      4,106,245          4,106,245         5,500,000         2,200,000              0
                  Chairman of                                                    -                 -                  -
    Ding Fuyuan      Supervisory           2,018,408          2,018,408
                  Committee
    Sun Jianyi        Director             692,236            692,236              -                 -                 -
                Executive Vice                                               2,200,000          880,000              0
    Ding Changfeng                          1,487,660          1,487,660
                   President
                Executive Vice                                               2,200,000          880,000              0
    Xie Dong                             1,487,660          1,487,660
                   President
                Executive Vice                                               2,200,000          880,000              0
    Zhang Jiwen                            1,548,950          1,548,950
                   President
                Executive Vice                                               2,200,000          880,000              0
    Mo Jun                              1,548,950          1,548,950
                   President
                   Director,                                                 2,200,000          880,000              0
    Xiao Li     Executive Vice          1,446,849          1,446,849
                   President
                Executive Vice                                               2,200,000          880,000              0
    Wang Wenjin                            1,343,591          1,343,591
                   President
                Executive Vice                                               2,100,000          840,000              0
    Du Jing                              735,812            735,812
                   President
                Executive Vice                                               2,000,000          800,000              0
    Zhou Weijun                            1,038,065          1,038,065
                   President
                Executive Vice                                               2,000,000          800,000              0
    Mao Daqing                                  0                   0
                   President
                Secretary to the                                             1,600,000          640,000              0
    Tan Huajie                                 0                   0
                     Board
                  Member of                                                       -                -                 -
    Zhou Qingping     Supervisory             20,000            20,000
                  CommitteeNote: Save for the above-mentioned persons, other Directors, members of the Supervisory Committee and seniormanagement of the Company did not hold any of the Company’s shares.2. Change of Directors, members of the Supervisory Committee and senior management of theCompany during the reporting periodThere was no change in Directors, members of the Supervisory Committee and senior management of theCompany during the reporting period.After the reporting period, Mr Du Jing resigned from the Company as executive vice president; Mr. PaulChan Mo Po resiged from the Company as independent director. In accordance with the relevant laws,regulations, and Articles of Association, Mr Chan will continue to perform his duties until a succeedingindependent director is appointed.IV. Directors’ Report1. Management Discussion and AnalysisChanges in market environment and the Company’s judgementSales area of commodity housing in China saw negative growth during the reporting period whencompared with the corresponding period last year. It decreased by 15.5% year on year in the first quarter of2012, and reduced by 11.2% year on year during the first half of the year. Volatile trading was seen inmajor cities. From January to February 2012, transaction volume in 14 cities including Beijing, Shanghai,Shenzhen, Guangzhou, Tianjin, Shenyang, Hangzhou, Nanjing, Chengdu, Wuhan, Dongguan, Foshan,Wuxi and Suzhou fell to its lowest level since 2007. The area of commodity housing sold in these 14 citiesdropped by 55.1% as compared with the same period last year. Since March, improvement in the creditconditions for first-time home buyers, demand driven by price adjustment, coupled with the release of thepent-up demand from end users had caused the transaction volume of residential properties in the aforesaidcities to rebound. As the comparative figure of last year was relatively small, the sales area of commodityhousing in these cities rose by 57.6% between March and June as compared with the same period last year.At the beginning of the year, the approved pre-sales area of the 14 abovementioned cities shranksignificantly. Between January and February 2012, the approved pre-sales area was only 58.7% of that ofthe same period last year. The approved pre-sales area rose during the March-June period to the same levelas the corresponding period in 2011. In the first half of the year, the approved pre-sales area of these 14cities dropped by 6.7% year on year. As supply dropped, these cities were close to balancing their newhousing supply and sales area. The three-month moving average of the sales area to pre-sales area ratio(sales area of commodity housing to approved pre-sales area of new housing) rose from 0.61 at thebeginning of the year to approximately 1 in the second quarter. This, to a certain extent, has eased therising inventory pressure since the beginning of 2011. As at the end of June 2012, the housing inventory(commodity housing that had been granted sales approval but had not been sold) in these 14 cities had anaggregate area of approximately 114 million sq m, representing a slight increase of 1.8% as compared tothe beginning of the year, and the time to clear housing inventory (based on the calculation of the movingaverage of sales area in the last 3 months) dropped from the highest months-to-clear of 21.7 months as atthe end of February to 10.5 months.According to the statistics from the People’s Bank of China, China’s property loan for the first half of theyear increased by RMB565.3 billion, which was RMB227.1 billion less than the increased amount for thesame period last year. The increase in property loan accounted for 12.3% of the total increments of variousloans during the period. When compared with 17.5% in 2011, it showed a substantial decrease. Thefinancing situation of the property market remained gloomy.Although sales proceeds improved in the second quarter, they only helped strengthen enterprises’ debtrepayment ability. Moreover, as substantial improvement in the tight credit conditions in the market hadyet to to be seen, the problems of construction and weakened investment ability remained unsolved. Thefloor area commencing construction of residential housing across China continued to shrink. Following a5.2% year-on-year decrease in the first quarter, it further dropped by 14.5% in the second quarter ascompared to the same period last year. Although investment in residential property development continuedto rise, affected by the delay in the availability of real-time statistics, the growth rate had significantlydropped from 19.0% in the first quarter to 8.5% in the second quarter. Up till now, measures that wouldencourage and support the development of ordinary commodity housing, and increase the supply ofordinary commodity housing are yet to explore. The risk of insufficient new housing supply for the comingyear continues to rise.With the changes in the international and domestic economic environments, the government graduallyshifted the focus of its macroeconomic policies to stable growth during the reporting period. However,tight austerity measures on property market were still in place. With the government’s unwaveringdetermination in implementing its austerity measures, investment-driven property demand continued to besuppressed. Residential property is gradually returning to its original function as dwelling. Enterprises canbe in a better position to cope with market changes only by following policy direction and industrychanges, maintaining reasonable product positioning and enhancing operation efficiency and managementskills.During the first half of the year, in the 16 major cities where statistics are accessible by the public(Shenzhen, Guangzhou, Dongguan, Foshan, Shanghai, Hangzhou, Nanjing, Suzhou, Ningbo, Beijing,Tianjin, Shenyang, Dalian, Wuhan, Chengdu, and Chongqing), the area of land sold dropped byapproximately 17% when compared with the same period last year. Entering the second quarter, affectedby the rise in the number of transactions in certain cities, auctions of some favourite property sites haddrawn heated bidding. The situation where land sold at premium price had increased. Nevertheless, theoverall sentiment of the land market was still sluggish. Although the number of failed auctions haddropped, it still remained high. The area of land sold continued to shrink, reducing by 22% year on year inthe second quarter. The land market in general had not shown any significant improvement It is expectedthat land supply will increase in the second half of the year, and enterprises with greater capital strengthwill be able to seize more opportunities.The Company’s operation and managementDuring the reporting period, the Company continued its focus on mainstream market and activelypromoted sales. As the majority of the Company’s new projects will be launched in the second half of theyear, especially in the fourth quarter, new projects launched in the first half of the year were significantlylower than that of the same period last year. Nevertheless, through a reasonable sales strategy, theCompany was able to achieve growth in sales area, while recording a sales amount higher than the value ofnewly launched projects. From January to June, the Company realised an accumulative sales area of6,025,000 sq m, a 6.5% increase year on year, with a sales amount of RMB62.54 billion, representing adecrease of 4.7% year on year. Should there be no material adverse changes in the market and with morenew projects put on sale after September, it is expected that the Company will achieve greater sales in thesecond half of the year than the first half of the year and sales for the full year may exceed that of 2011.By geographical segment, the Company realised a sales area of 1,878,000 sq m and a sales amount ofRMB20.32 billion in Pearl River Delta focused Guangshen Region; a sales area of 1,093,000 sq m and asales amount of RMB13.33 billion in Yangtze River Delta focused Shanghai Region; a sales area of1,711,000 sq m and a sales amount of RMB17.39 billion in Bohai-rim focused Beijing Region; a sales areaof 1,343,000 sq m and a sales amount of RMB11.50 billion in Chengdu Region, which comprises corecities of Central and Western Region,during the first half of 2012.Small and mid-sized ordinary commodity housing continued to make up a majority of the Company’sproduct mix. Residential units with an area under 144 sq m accounted for 89% of all the residential unitssold during the first half of the year.In the first half of the year, the Company realized a booked area of 2,638,000 sq m and booked revenue ofRMB28.48 billion, representing increases of 90.7% and 55.1% year-on-year respectively; the Companyrealized revenue of RMB28.96 billion and a net profit of RMB3.73 billion, representing increases of53.3% and 25.1% respectively as compared with those of the same period last year.In the first half of the year, the average booked price of the Company’s property business was RMB10,796,representing a year-on-year decrease of 17.5%. The gross margin of the property business stood at 28.1%,down by 5.9 percentage points year on year. The booked net profit margin was 15.0%, down by 2.6percentage points when compared with the same period last year. Although both the average booked priceand profit margins decreased year on year, the Company’s return on assets rose slightly. The Company’sdiluted return on equity for the first haf of the year was 6.8%, which was 0.4 percentage point higher than6.4% of the same period last year.As at the end of the reporting period, the Company had an area of 13,920,000 sq m sold but not yet bookedstated in the consolidated statements as construction had yet to be completed. The area of 13,920,000 sq mhad a contract amount of approximately RMB146.4 billion, representing increases of 28% and 20% ascompared with those at the end of 2011 respectively. This would provide a solid foundation for realizingfuture operating results.The Company continued to maintain a sound and stable financial structure and a solid cash position.Owing to the increase in advance receipts, the Company’s gearing ratio rose by 1.8 percentage points fromthe beginning of the year to 78.9%. However, as advance receipts will be recognized as revenue upon therecognition of projects, they do not give rise to any real pressure for debt repayment. The Company’s netgearing ratio was only22.8%, showing a further decrease from 23.8% at the beginning of the year. As at theend of the reporting period, the cash and cash equivalents held by the Company amounted to RMB45.72billion, which was much higher than the sum of short-term borrowings and long-term borrowings duewithin one year of RMB20.31 billion. The capital strength of the Company further increased whencompared with the beginning of the year. Given that opportunities for residential development often ariseduring the adjustment period of the property market and in view of the weakened investment ability withinthe industry, the Company can leverage its solid cash position to acquire projects on more favourable terms.As at the end of the reporting period, the Company’s inventories included RMB8.49 billion of completedproperties (properties ready for sale), accounting for 3.75% of the total.The Company’s planned floor area commencing construction and completed area at the beginning of theyear were 13,280,000 sq m and 8,900,000 sq m respectively. As at the end of June, the actual floor areacommencing construction and completed floor area were 4,680,000 sq m and 2,440,000 sq m respectively,representing a completion of 35% and 28% of those planned at the beginning of the year. It is expected thatthe actual floor area commencing construction and completion for the full year will meet the plan set at thebeginning of the year respectively. It is expected that the actual floor area commencing construction andcompleted floor area for the full year will be in line with the targets planned at the beginning of the year.During the reporting period, despite the drop in the number of land transactions, there was not muchchange in the land premium. The Company adhered to its stringent investment policies. For the first half ofthe year, the Company acquired 13 new development projects, with a site area attributable to ChinaVanke’s equity holding of approximately 690,000 sq m (a corresponding planned GFA of approximately1,740,000 sq m). The average land premium per floor area was approximately RMB2,230 per sq m. Inaddition, the Company was also involved in one city redevelopment project; according to the currentplanning, the site area of the part to be developed by China Vanke and the plot ratio GFA thereof wasapproximately 129,000 sq m and approximately 394,000 sq m respectively. The average compositeredevelopment cost and land premium per floor area is estimated to be approximately RMB3,800 per sq m.As at the end of the reporting period, the aggregate GFA of the Company’s projects under planningattributable to China Vanke’s equity holding amounted to 34,350,000 sq m, which can basically meet itsdevelopment needs in the coming 2 to 3 years.In view of the opportunities driven by the increase in land supply in the second half of the year, theCompany will strengthen its position in the existing markets and pay close attention to any possible marketopportunities with a target at end users. In respect of the decision-making process for project development,the Company’s concern remains over the reasonableness of land premium relative to property prices in thesurrounding areas and the risk manageability of the project. The Company will not set its profit targetbased on any overoptimistic expectations.During the reporting period, the Company adhered to its product and service philosophy of “Buildingquality housing for ordinary people” and “Building home as a place to live”. On the aspect of improvingproduct functionality, the Company will continue to explore and improve ancillary services, with an aim to
    improve the quality of its customers’ properties. In order to better serve customers’ daily needs, the
    Company will push ahead with product innovation and service upgrade. The Company has introduced
    ancillary services like “Fortune Depot”, community food court, self storage facilities and fully furnished
    units, etc., to offer a safer, more comfortable and convenient community environment.
    2. Principal operations of the Company during the reporting period
    (1) The scope and operations of the Company’s core businesses
    The Company specialises in property development with commodity housing as its major products. During
    the reporting period, the Company realized a sales area of 6,030,000 sq m representing an increase of
    6.5% year-on-year while sales amount was RMB62.5 billion, a decrease of 4.7% as compared with the
    same period last year. The booked area of the Company for the first half of the year was 2,640,000 sq m,
    representing an increase of 90.7% when compared with that of the same period last year. The booked
    revenue amounted to RMB28.48 billion, representing an increase of 55.1% from that of the same period
    last year.
    Due to variation in the completion schedule of different projects,, the completed area from January to June
    was 2,440,000 sq m, representing 28% of the planned completed area of 8,900,000 sq m for 2012. It is
    expected that more projects will be completed and booked in the fourth quarter of 2012.
                                                                                                                 Unit RMB ‘000
                                     Revenue                           Cost of sales                        Gross margin
        Sector
                             Amount               Change            Amount             Change         Value             Change
    Property                                                                                                         -5.9 percentage
                                28,483,487           55.04%           18,955,934        76.91%          28.05%
    sales                                                                                                                  point
    Property
                                                                                                                   -16.6 percentage
    management                      476,073           -7.60%               341,451       20.24%          28.28%
                                                                                                                         point
    and others
                                                                                                                   -6.2 percentage
        Total               28,959,560            53.33%         19,297,385            75.45%        28.06%
                                                                                                                         point
    Note: Land appreciation tax had been deducted f in calculating gross profit margin
    (2)Comparison of major assets & liabilities and key operating indicators
                                                                                             Unit: RMB ‘000
                                                                               Change
    Item                          30-Jun-2012             31-Dec-2011                                Reasons for change
                                                                                (+/-)
    Cash     and    cash                                                                       Active sales and prudent
                                           45,719,728           33,614,112          36.01%
    equivalents                                                                                investment
    Loans and borrowings
                                           42,605,550           26,822,359          58.84%      Change in debt structure
    (Non current)
                                                                               Change
              Item                 Jan-Jun 2012            Jan-Jun 2011                               Reasons for change
                                                                                (+/-)
    Revenue                               28,959,560           18,886,966       53.33%         Increase in booked sales
    Cost of sales                         19,297,385           10,998,932       75.45%         Increase in booked area
                                                                                                To maintain reasonable growth
    Distribution cost                       1,238,382              956,748         29.44%      following the trend of austerity
                                                                                                measures
    (3)The Company’s core business by region
                         Revenue from                        Net profit                          BookedArea
    Region              core businesses     Percentage                       Percentage                            Percentage
                                                           (RMB'000)                            (sq m)
                           (RMB'000)
    Guangshen Region               8,097,855         28.42%         1,658,682           38.73%              714,339            27.09%
    Shanghai Region               7,736,115          27.16%           745,193           17.40%              599,105            22.71%
    Beijing Region                6,739,193          23.66%         1,085,250           25.34%              585,796            22.21%
    Chengdu Region                5,910,324          20.75%           793,491           18.53%              738,367            27.99%
    Total                 28,483,487           100%           4,282,617      100%            2,637,607            100%
    Note. During the reporting period, the cities in which the Company had booked projects included Shenzhen, Guangzhou,
    Dongguan, Foshan, Zhuhai, Zhongshan, Changsha, Xiamen, Fuzhou, Sanya, Huizhou, Qingyuan in Guangshen region;
    Shanghai, Hangzhou, Suzhou, Wuxi, Nanjing, Zhenjiang, Ningbo, Nanchang in Shanghai region; Beijing, Tianjin, Shenyang,Anshan, Dalian, Changchun, Qingdao in Beijing region, and Chengdu, Chongqing, Wuhan, Xi’an, Guiyang in Chengduregion.3. Investment of the Company(1) Use of proceeds from the capital marketPublic issue of A Shares in 2007Having obtained the approval from the relevant authorities, the Company issued a prospectus regarding thepublic issue of A shares on 22 August 2007. The Company issued 317,158,261 shares (par value: RMB1per share) at an issue price of RMB31.53 per share, raising proceeds of RMB9,999,999,969.33. Afterdeducting issuing expenses of RMB63,398,268.11, the net proceeds amounted to RMB9,936,601,701.22and 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, investmentgain, development progress of the projects as of 30 June 2012 are as follows:
                                                                                                                 Unit: RMB ’000
                                                                  Funds used for investment during the
    Total amount of proceeds                           9,936,600                                                           13,120
                                                                           reporting periodAmount of proceeds with
                                                              0changed usage
                                                                        Accumulated funds used                          9,829,930Percentage of proceeds with
                                                            0%changed usage
                                  Is there              Funds
                                                                 Accumulated
                                                       used for                                          Does it
                                    any                           funds used            Accumulated                Significant
                                             Planned investment              Investment                  achieve
      Investment projects         change                          during the              realized                 change in
                                           investment during the              progress                   estimated
                                     in                            reporting              income                   feasibility
                                                      reporting                                          income
                                  project                           period
                                                        periodEverest Town (former Science
                                    No      600,000                   600,000   100%          144,520      Yes           NoCity H3 Project), GuangzhouThe Paradiso (former Jinshazhou
                                    No      800,000                   800,000   100%          458,130      Yes           NoProject), GuangzhouThe Dream Town (former
                                    No      900,000                   900,000   100%          517,580      Yes           NoNanzhuang Project), FoshanZhuhai Hotel Project, Xiangzhou
                                    No      650,000                   650,000   100%          734,370      Yes           NoDistrict, ZhuhaiWest Spring Butterfly Garden
    (former Jiangcun Project),          No      700,000                   700,000   100%        1,136,580      Yes           NoHangzhouLiangzhu Project, Yuhang
                                    No    1,700,000                 1,700,000   100%          401,660      Yes           NoDistrict, HangzhouGolden Town Project, Yinzhou
                                    No    1,636,600                 1,636,600   100%          904,580      Yes           NoDistrict, NingboWujiefang Project, Pudong,
                                    No    1,200,000                 1,200,000   100%                 -     Yes           NoShanghaiJinse Yazhu (former Zhonglin
                                    No      700,000                   700,000   100%          263,970      Yes           NoProject), ShanghaiAnpin Street Project, Baixia
                                    No      650,000      13,120       543,330    84%                 -     Yes           NoDistrict, NanjingStratford (former Huangjiayu
                                    No      400,000                   400,000   100%           45,070       No           NoProject), Nanjing
               Total               No     9,936,600      13,120 9,829,930 99%                4,606,460      -          No
                                (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 commenced in the
                                second half of 2010, and sales began in May 2012. The overall development plan of the
                                project had been adjusted accordingly. Nanjing Anpin Street Project was affected by theRemarks on delay and failure to
                                government’s policy to preserve the city’s heritage. Adjustment had been made to theachieve estimated income (by
                                planning of the project, and the original commencement schedule had been affected. Theproject)
                                relevant planning has now been approved. The overall development plan of the project has
                                been adjusted accordingly.
                                (2) Stratford Project in Nanjing was almost sold out and delivered in 2010. Accumulative net
                                profit margin amounted to 7.49%. The project had achieved good brand effect but the income
                                 generated from this project did not reach the estimated level stated in the prospectus, while
                                 the income of other projects financed by the raised proceeds exceeded or expected to exceed
                                 the estimated level. It is expected that the overall return from the projects financed by the
                                 raised proceeds will be higher that the estimated level stated in the prospectus.Remarks on reasons and
    procedures for changes (by       No changesproject)
                                  As of 30 June 2012, the Company had applied RMB9,829.93 million of the proceeds inApplication of the balance of the accordance with the prospectus. The amount represented 98.9% of the net proceeds of
    proceeds                          RMB9,936.6 million. The balance of proceeds of RMB106.67 million will be applied in
                                  accordance with the progress of project development.(2) Use of capital not from the capital marketA. Major equity investment1) During the reporting period, the Company promoted and established 7 new subsidiaries, each with
    registered capital of over RMB10 million. The details are as follows:
                                                                                                              Unit: ’000
                                                                                               Actual
                                                                         Registered                                 Scope of
    No.                       Company                     Currency                          investment by
                                                                          capital                                   business
                                                                                            China Vanke
          Qingdao Vanke Commercial Property Co.,                                                                 Property
    1                                                      RMB                100,000               100,000
          Ltd. (青岛万科商业地产有限公司)                                                                        development
          Beijing Xingfuhui Investment Co., Ltd.(北                                                              Property
    2                                                      RMB                  75,000               45,000      development
          京幸福汇投资有限公司)
          Tianjin Wanwei Property Investment Co.,                                                                Property
    3                                                      RMB                  25,500               25,500
          Ltd.(天津万为置业投资有限公司)                                                                         development
          Wuhan Vanke Golden Plaza Property                                                                      Property
    4     Development Co., Ltd.                            RMB                  10,000               10,000      development
          (武汉万科金色广场物业发展有限公司)
          East of Nanjing Station Property Co., Ltd.                                                             Property
    5                                                      RMB                  10,000               10,000
          (南京站东置业有限公司)                                                                                 development
          Yantai Wanhong Real Estate Co., Ltd. (烟                                                               Property
    6                                                      RMB                  10,000                7,000      development
          台万宏房地产开发有限公司)
          Nanchong Vanke Property Co., Ltd. (南充                                                                Property
    7                                                      RMB                  10,000                6,000      development
            万科置业有限公司)
                        Total                                                 240,500               203,500In addition, the Company had established another 3 new subsidiaries, with a total amount of investment ofRMB11.4 million.2) The major companies that the Company acquired during the reporting period are as follows:A. On 5 January 2012, the Company acquired 65% equity interests of Airwell Aircon (China) Co.,Ltd. (欧威尔空调(中国)有限公司) for a total cash consideration of RMB214.5 million.B. On 23 April 2012, the Company acquired 100% equity interests of Wise Grow Group Limited for a totalcash consideration of USD34.78 million. Wise Grow Group Limited holds 45% equity interests of DalianVanke City Property Company Limited, a majority-owned subsidiary of the Company.C. On 23 April 2012, the Company acquired 100% equity interests of Tian Cheng (Holdings) InvestmentsLimited for a total cash consideration of USD20.63 million. Tian Cheng (Holdings) Investments Limitedholds 45% equity interests of Wuhan Vanke Tiancheng Real Estate Company Limited, a majority-ownedsubsidiary of the Company.D. On 23 April 2012, the Company acquired 83.67% equity interests of Bonus Plus Holdings Limited for atotal cash consideration of USD23.58 million. Bonus Plus Holdings Limited holds 49% equity interests ofSuzhou Huihua Investment and Property Company Limited, a majority-owned subsidiary of the Company.E. On 15 June 2012, the Company acquired 90% equity interests of Changchun Vanke Jingcheng RealEstate Development Co., Ltd. for a total cash consideration of RMB207 million.
          During the reporting period, the Company acquired another 5 companies for a total consideration of
          RMB139.55 million.
          Subsequent events:
          According to the announcement dated 15 May 2012, Vanke Property (Hong Kong) Company Limited
          (“Vanke Property”), a wholly-owned subsidiary of China Vanke Co.,Ltd. (the “Company”), and Wing Tai
          Properties Limited (“Wing Tai Properties”, StockCode: 0369.HK) had entered into an agreement. Pursuant
          to the agreement, Vanke Property, through its wholly-owned subsidiary Wkland Investments Company
          Limited, will acquire the shares in Winsor Properties Holdings Limited (“Winsor Properties” Stock Code:
          1036.HK) held by Wing Tai Properties upon completion of the agreed reorganisation of Winsor Properties.
          On 16 July 2012, Winsor Properties completed its reorganisation. The aforesaid share acquisition has now
          been completed. Wkland Investments Company Limited now holds 205,835,845 shares in Winsor
          Properties, with the offer price of HK$5.6197 per share, representing approximately 79.26% of the total
          issued shares of Winsor Properties after reorganisation. According to the relevant requirements, Wkland
          Investments Company Limited shall fulfil the obligation of making a general offer to acquire all the issued
          shares in the restructured Winsor Properties. Since the consideration and the size of target company are
          relatively small, the acquisition will not have material impact on the total assets, net assets, net profits,
          gearing ratio and other key financial indicators of the Company.
          3) During the year under review, in order to support the business development of the majority-owned
          subsidiaries, the Company increased the capital of 6 subsidiaries by RMB969 million. Of the total amount,
          RMB482 million was for Shanghai Wanshi Property Co., Ltd.(上海万狮置业有限公司), RMB280 million
          for Dongguan Vanke Real Estate Co., Ltd.(东莞市万科房地产有限公司), and RMB200 million for
          Putian Vanke Property Co., Ltd.(莆田市万科置业有限公司).
         Other investments
         During the reporting period, the Company acquired 13 new projects, with a site area attributable to China
         Vanke’s equity holding of approximately 690,000 sq m (planned GFA of approximately 1,740,000 sq m).
         Details of the projects are as follows:
                                                                                                GFA
                                                                                                attributable to
                                                       Percentage
                                                                     Site Area   Planned GFA    China
    City                 Project            Location         of                                                        Progress
                                                                      (sq m)        (sq m)      Vanke’s
                                                      shareholding
                                                                                                equity holding
                                                                                                     (sq m)
               Phase II, Northern Vanke   Qingcheng
    Qingyuan                                                 100%           37,048         74,096           74,096    Preconstruction
               City                        District
               Guangzhou Tianhe            Tianhe
    Guangzhou                                                100%           27,654         82,962           82,962    Preconstruction
               Software Park Project       District
                                            Yuelu
    Changsha       Yang Hu Yuan Project                      100%          100,350        298,331          298,331    Preconstruction
                                           District
               Nanjing South High-
                                           Yuhua
    Nanjing       speed Railway Station                     100%           76,424        182,400          182,400    Preconstruction
                                           District
               Project
                                          Binhu New
    Hefei        Ziyun Road Project                         55%          165,584        462,648          254,456    Preconstruction
                                           District
                                            Lunan
    Tangshan       Southern Stratford                        100%           47,007         48,101           48,101    Preconstruction
                                           District
               Xianghe Jiangxintun         Xianghe
    Langfang                                                  50%          130,045        221,077          110,538    Preconstruction
               West Project                 County
                                            Lubei
    Tangshan       The Paradiso                               40%           26,329         65,341           26,136    Preconstruction
                                           District
                                             Tiexi
    Shenyang       Spring Dew Mansion                        100%           19,321         48,302           48,302    Preconstruction
                                           District
                                            Sifang
    Qingdao       Vanke Plaza                               100%           38,775        124,080          124,080    Preconstruction
                                           District
                                           Fushan
    Yantai        Dew Garden                                 70%           65,733        151,008          105,706    Preconstruction
                                           District
                                              Gaoping
    Nanchong      Jinrun Huafu                                   60%            182,012           518,004           310,803    Preconstruction
                                              District
                                              Yunyan
    Guiyang      Jincheng                                       51%              42,311          148,089            75,525    Preconstruction
                                              District
                                   Total                                    958,592         2,424,438         1,741,436          —
         In addition, the Company was involved in 1 urban redevelopment project during the reporting period.
         According to the current planning, the site area attributable to China Vanke’s equity holding amounted to
         approximately 130,000 sq m (planned GFA attributable to China Vanke’s equity holding was
         approximately 390,000 sq m).
                                                                                                         GFA
                                                                                                         attributable to
                                                         Percentage
                                                                         Site area      Planned GFA      China
    City              Project                 Location     of                                                                   Progress
                                                                           (sq m)           (sq m)       Vanke’s
                                                         shareholding
                                                                                                         equity holding
                                                                                                         (sq m)
                                            Huangpu
    Guangzhou     Wenchong Project              District         100%           129,417           394,432           394,432    Preconstruction
                                   Total                                    129,417           394,432           394,432          —
         From the end of the reporting period to the date of announcement of this report, the Company acquired 6
         new projects, with site area attributable to China Vanke’s equity holding of 380,000 sq m (the planned
         GFA attributable to China Vanke’s equity holding was 8,400,000 sq m) . Details are as follows:
                                                                                                        GFA
                                                                                                        attributable to
                                                         Percentage
                                                                         Site area     Planned GFA      China
    City                Project             Location    of                                                                 Progress
                                                                          (sq m)           (sq m)       Vanke’s
                                                         shareholding
                                                                                                        equity holding
                                                                                                        (sq m)
                Yinzhou Venture              Yinzhou                                                                       Pre-
    Ningbo                                                    55%           41,080            73,944              40,669
                Investment Project           District                                                                      construction
                No. 25, Hubei                                                                                              Pre-
                                            Qingshanhu                                                                     construction
    Nanchang      Road Project (湖北                           50%           16,888            50,664              25,332
                                              District
                大道 25 亩项目)
                Jimo Dongjin                                                                                               Pre-
    Jimo       Project (即墨东郡           Jimo City        55%          112,400           287,200             157,960    construction
                项目)
                Bulk Cargo                                                                                                 Pre-
                Logistics Project           Binhai New                                                                     construction
    Tianjin                                                  51%          108,400           190,000              96,900
                                              District
                 (散货物项目)
                Zaoyuan Project(枣           Lianhu                                                                        Pre-
    Xi’an      园项目)                      District       100%           65,706           249,186             249,186    construction
                Land Lot No. 11 in
                Hongqiao Business            Minhang                                                                       Pre-
    Shanghai     District (虹桥商务                          100%          112,850           177,870             177,870
                                             District                                                                      construction
                区11号地块项目)
                                    Total                                 457,324          1,028,864            841,017        —
         Among the abovementioned projects, certain projects may be developed jointly with external partners in
         future. As such, the respective equity interests held by China Vanke in the relevant projects may alter. The
         percentage of shareholdings disclosed above is only for periodical reference for investors.
         4. Comparison between the actual operating results during the reporting period and the planned
         targets at the beginning of the period
         The Company’s actual operating results during the reporting period did not deviate much from the planned
         targets at the beginning of the period.
         V. Significant events
         1. Corporate governance
         As one of the first batch of companies listed in the PRC, the Company has always abided by its corporate
         values: to pursue simplicity, to be transparent, to be regulated and to be responsible. It continues to exploreways to raise its corporate governance standard. With a foundation built on sound corporate governance,China Vanke has established long-standing trust and win-win relationships with its investors.During the reporting period, the Company continued to persist in maintaining complete independence fromits single largest shareholder, CRC, and its connected companies in respect of business operation, staff,assets, organisation and finance, to ensure independence in its business integrity and operation autonomy.The Company had not taken any actions that violated the code on corporate governance practices such asreporting to CRC on any undisclosed information.The Company had strengthened the management of inside information. During the period under review, noinsider who had access to inside information had violated the laws to engage in insider trading. There hadbeen no discrepancy between the Company’s governance and the relevant requirements of China SecuritiesRegulatory Commission.As a key pilot company to implement the Basic Internal Control Norms for Enterprises and itsimplementation guidelines, the Company continued to adopt a pragmatic internal control approach toestablish the internal control process in a systematic manner. All the departments at the headquarters andfrontline companies raised their internal control standards by strengthening their internal controlsaccording to their actual business operations, assessing inherent and control risks and taking effectivecontrol measures. All the departments at the Company’s headquarters formulated their annual internalcontrol system establishment scheme, while frontline subsidiaries established their risk management plan.To enhance the effectiveness of control and management, the Company had developed an IT applicationsystem in respect of the key aspects of control and management. Based on the assessment of the actualweakness of the existing internal control system, the Company formulated a solution that addresses issuesrelated to the system and process to minimize actual risks and enhance the effectiveness of its internalcontrols.The Company has been upholding its dividend distribution policy every year since its listing on theShenzhen Stock Exchange in 1991. Among all A-share companies, the Company has the longest history ofdistributing cash dividends. The total cash dividends distributed since 1992 accounted for 18% of the totalnet profit of the Company generated since 1992. The total cash dividends distributed in the last three yearsaccounted for 44.5% of the average net profit of the Company in the last three years. The proposal ondividend distribution was considered at the 2011 Annual General Meeting, for which the Companyestablished an Internet voting platform for shareholders to exercise their voting rights. The formulation andimplementation of the Company’s cash dividend distribution policy was in compliance with therequirements of the Articles of Association of the Company and shareholders’ approval. During the votingprocess, the independent directors of the Company had diligently performed their duties of supervision,while small-medium shareholders also had a chance to express their views. In future, the Company willcontinue to uphold a stable cash dividend distribution policy. The amount of cash dividends to bedistributed per annum from 2012 to 2014 is expected to be not less than 15% of the distributable net profitof that year.2. Implementation of the Company’s proposal on dividend distribution for the previous year andprofit appropriation for the interim period of 2012Proposal on dividend distribution for the year 2011 was approved at the 2011 Annual General Meeting heldon 11 May 2012. The proposal on the dividend distribution was: based on the total share capital as at theclose of the market on the record date of the Company, a cash dividend of RMB1.3 (including tax; afterdeducting tax, a cash dividend of RMB1.17 would be paid for every 10 existing shares beneficially held byindividual shareholders, investment funds and non-resident enterprises holding A shares; for individualshareholders and non-resident enterprise shareholders holding B shares, a cash dividend of RMB1.17would be paid for every 10 existing shares held) would be paid to all the shareholders on the basis of every10 existing shares held.The aforesaid proposal was implemented after the reporting period: the record date for A shares was 4 July2012, and ex-dividend date was 5 July 2012, while the last trading day of B shares was 4 July 2012, ex-dividend date was 5 July 2012, and the record date was 9 July 2012. For details on the implementation ofthe proposal, please refer to the announcement published in China Securities Journal, Securities Times,Shanghai Securities News, Securities Daily, www.cninfo.com.cn and irasia.com on 27 June 2012.The Company will not carry out profit appropriation nor the transfer of capital surplus reserve to sharecapital for the interim period of 2012.3. Implementation of the A-Share Stock Option Incentive Scheme“A-Share Stock Option Incentive Scheme (Revised Draft) of China Vanke Co., Ltd.” (Stock OptionIncentive Scheme) had been approved at the first extraordinary general meeting of the Company in 2011.On 25 April 2011, being the grant date of stock options under the A-Share Stock Option Incentive Scheme,the beneficiaries obtained their stock options.During the reporting period, some of the beneficiaries resigned and therefore failed to qualify for being abeneficiary of the Stock Option Incentive Scheme. Accordingly, 5,128,500 stock options became invalidduring the reporting period. As at the end of the reporting period, the number of beneficiaries of the StockOption Incentive Scheme was 715, holding 96,239,500 stock options that had been granted but yet to beexercised.The Company implemented the proposal on dividend distribution on 5 July 2012, and distributed a cashdividend of RMB1.3 (including tax) to all shareholders for every 10 existing shares held. Pursuant to theapproval of the resolution regarding granting the Board the authority to handle matters relating to theCompany’s Stock Option Incentive Scheme at the first extraordinary general meeting in 2011, the Boardresolved to make corresponding adjustment of the exercise price of the A-share stock options. Theadjusted exercise price was RMB8.66.According to the authority granted to the Board at the shareholders meeting, the Board considered andagreed to determine that the vesting conditions of the stock options had been fulfilled.The beneficiaries ofthe Scheme had met the conditions for exercising the stock options under the Scheme. Upon thecompletion of the relevant procedures for approval, the Stock Option Incentive Scheme entered the firstexercise period on 12 July 2012, and the beneficiaries of the Scheme can, between 12 July 2012 and 24April 2014, exercise 40% of the options they are holding..The introduction of the Stock Option Incentive Scheme will complement the Company’s incentiveinstruments with a long-term plan, while establishing a check-and-balance mechanism betweenshareholders and professional management team through linking up their interests. The Scheme willfurther improve the Company’s corporate governance structure and strengthen the Company’scompetitiveness.Accounting treatments for the A-Share Stock Option Incentive Scheme as equity-settled share-basedpayment are carried out in accordance with the “Accounting Standard for Business Enterprises No. 11 –Share-based payment”. On each balance sheet date within the vesting period, the Company shall included,based on the best estimate of the number of vested stock options, the services obtained from thebeneficiaries during the period in the costs and expenses as well as in the capital surplus reserves at the fairvalue of the stock options on the grant date. During the exercise period of the stock options, the Companyshall make no adjustment to the relevant costs, expenses or the capital surplus reserves which have beenrecognised. On each balance sheet date, based on the actual number of options exercised, the capitalsurplus reserves recognised shall be settled.Stock Option Incentive Scheme adopts Binomial tree option pricing model to estimate the fair value of thestock options on the grant date. According to the straight-line method, the cost of stock options ofRMB57.8139 million amortised by the Company for the first, second and third exercise periods shall beincluded in the costs and expenses, while the Company’s capital surplus reserves increased byRMB57.8139 million. Please refer to the notes to the financial statements for details on the accountingtreatments.For details, please refer to the announcements published on China Securities Journal, Securities Times,Shanghai Securities News , Securities Daily, and www.cninfo.com.cn on 12 July 2012.
    4. Material Litigation and Arbitration
    During the reporting period, the Company did not involve in any material litigation or arbitration.
    5. Major Acquisition and Disposal of Assets
    During the reporting period, the Company did not have any major acquisition or disposal of assets.
    6. Other investments
    6.1 Investment of securities
    □Applicable √Not applicable
    6.2 Equity interests held in other listed companies
                                                                                                               Unit:RMB
                                                                        Booked                              Changes in equity
                                                                                         Gains/(losses)
                                   Initial                            value as at                            attributable to
    Stock         Stock                             Percentage of                             during the
                                investment                             the end of                            equity holders
    code       abbreviation                         shareholdings                             reporting
                                  amount                             the reporting                             during the
                                                                                            period
                                                                         period                             reporting period
    600751    SST Tianjin                143,600.00          0.04%             143,600.00                     -                  -
          Marine Shipping
          Co., Ltd.
           Total                     143,600.00          0.04%              143,600.00                    -                  -
    Note: Equity interests held in SST Tianjin Marine Shipping Co., Ltd are legal person shares held by the Company over the
    years. Up till now, it has not undergone share reform.
    6.3 Shareholding in non-listed financial corporations and companies planning for listing
    Nil.
    7. Major connected transactions
    In February 2012, pursuant to the authority granted at the first extraordinary general meeting of 2011, the
    Board agreed that the Company applied for a trust loan of RMB1 billion, with a 2-year term and a fixed
    annual interest rate of 10.6 per cent from China Resources SZITIC Trust Co., Ltd. to satisfy the
    development needs of the Company’s Dongguan Zitai Project, Dongguan King Metropolis Project and
    Anshan Whistler Project. To satisfy the development needs of the Wenzhou Longwan Garden Phase I
    Project, Nanjing The Paradiso Phase III Project, Hangzhou Liangzhu Heron Hill West Phase I Project and
    Qinhuangdao Holiday Town Phase III Project, the Company had applied for a trust loan of RMB2 billion
    from China Resources SZITIC Trust Co., Ltd. The term of the loan is two years and a fixed annual interest
    rate of 10.5 per cent. The cost of the loan had been determined with reference to the prevailing market
    price level and the characteristics of the project, and was not higher than the cost of trust loan taken out by
    the Company from an independent third party during the period. Upon the expiry in April 2012 of the
    authority granted at the first extraordinary general meeting of 2011, the aggregate amount of trust loans
    applied by the Company from China Resources SZITIC Trust Co., Ltd. amounted to RMB4 billion.
    In May 2012, the Company’s annual general meeting of 2011 authorised the Board to determine, within the
    scope set out below, the continuous cooperation with China Resources (Holdings) Co., Ltd and its
    connected companies (collectively “CRH”), including entering into a loan agreement with Zhuhai City
    Commercial Bank Co., Ltd., using the funds under China Resources SZITIC Trust Co., Ltd. and Harvest
    Capital Partners Limited, and joint investment with China Resources SZITIC Trust Co., Ltd. and Harvest
    Capital Partners Limited. The total sum of the loan amount, funds to be utilised and the joint investment
    amount shall not be more than RMB10.59 billion (i.e. not more than 20% of the Company’s audited net
    assets value as at the end of 2011). The authorisation is valid for a period of one year commencing from
    the date of passing of the relevant resolution in the annual general meeting.
    The cooperation will fully leverage CRH’s financial strengths and platform, which will be beneficial to the
    Company to broaden its financing channels, strengthen its ability to avert risk, accelerate its development,
    enhance return on assets, and create synergies to achieve a win-win situation. During the reporting period,
    the details of cooperation were yet to work out.
              8. Major contracts and their implementation
              (1) During the reporting period, the Company was not subject to any major material entrustment, sub-
              contracting or leasing arrangements involving assets of other companies, nor were any other companies
              entitled to any entrustment, sub-contracting or leasing arrangements involving assets of the Company.
              (2) During the reporting period, the Company did not have any financial entrustment.
              (3) Details on the new guarantees made by the Company during the reporting period are as follows:
          Guarantor           Company for which
         (% of equity       guarantee was granted
    No.                                                       Guarantee Amount           Details            Guarantee Period    Remarks
       interest held by   (% of equity interest held by
        China Vanke )            China Vanke )
      Vanke Properties                                                        Provided a guarantee      From 4 January
    1     (Hong Kong) Co.,    Tairong Co., Ltd. (100%)        RMB193.39 million   for a bank loan of        2012 to 4 January
      Ltd. (100%)                                                             RMB206.78 million         2014
                                                                              Provided a guarantee
                          Shanghai Jingyuan Property
      Shanghai Vanke                                                          in proportion to the      From 5 January
                          Development Company
    2     Real Estate Co.,                                    RMB17.1 million     Company’s equity         2012 to 30
                          Limited (45%)
      Ltd. (100%)                                                             holding for a bank loan   September 2013
                                                                              of RMB38 million
                                                                              Provided a guarantee
      Shanghai Vanke      Shanghai Wanzhicheng                                in proportion to the      From 16 January
    3     Real Estate Co.,    Property Development Co.,       RMB15 million       Company’s equity         2012 to 31 May      Withdrawn
      Ltd. (100%)         Ltd. (50%)                                          holding for a bank loan   2012
                                                                              of RMB30 million
                                                                              Provided a guarantee
      Shanghai Vanke      Shanghai Wanzhicheng                                in proportion to the      From 16 January
    4     Real Estate Co.,    Property Development Co.,       RMB20.31 million    Company’s equity         2012 to 12
      Ltd. (100%)         Ltd. (50%)                                          holding for a bank loan   December 2014
                                                                              of RMB40.63 million
                                                                              Provided a guarantee
                          Shanghai Jingyuan Property
      Shanghai Vanke                                                          in proportion to the      From 10 February
                          Development Company
    5     Real Estate Co.,                                    RMB1.35 million     Company’s equity         2012 to 30
                          Limited (45%)
      Ltd. (100%)                                                             holding for a bank loan   September 2013
                                                                              of RMB3 million
                                                                              Provided a guarantee
      Shanghai Vanke      Shanghai Wanzhicheng                                in proportion to the      From 21 February
    6     Real Estate Co.,    Property Development Co.,       RMB1.1 million      Company’s equity         2012 to 12
      Ltd. (100%)         Ltd. (50%)                                          holding for a bank loan   December 2014
                                                                              of RMB2.2 million
                          Beijing Jindi                                       Provided a guarantee
      Beijing Vanke       Vanke Property Development                          in proportion to the      From 21 February
    7     Company Limited     Co., Ltd. (50%)                 RMB350 million      Company’s equity         2012 to 21
      (100%)                                                                  holding for a loan of     February 2014
                                                                              RMB700 million
                                                                              Provided a guarantee
      Shanghai Vanke      Shanghai Wanzhicheng                                in proportion to the      From 23 February
    8     Real Estate Co.,    Property Development Co.,       RMB6.33 million     Company’s equity         2012 to 12
      Ltd. (100%)         Ltd. (50%)                                          holding for a bank loan   December 2014
                                                                              of RMB12.66 million
      Shenzhen Vanke      Shenzhen Vanke City Views                           Provided a guarantee      From 24 February
    9     Real Estate Co.,    Property Development Co.,       RMB420 million      for a loan of RMB420      2012 to 23 August
      Ltd. (100%)         Ltd. (100%)                                         million                   2013
                                                                              Provided a guarantee
      Shanghai Vanke      Shanghai Jingyuan Property                          in proportion to the      From 19 March
    10    Real Estate Co.,    Development Company             RMB1.8 million      Company’s equity         2012 to 30
      Ltd. (100%)         Limited (45%)                                       holding for a bank loan   September 2013
                                                                              of RMB4 million
                                                                          Provided a guarantee
    Changchun Wanrun   Changchun Vanke Xizhigu                           in proportion to the      From 29 March
    Real Estate
    11                      Real Estate Development Co.,   RMB3.04 million    Company’s equity         2012 to 19 May
    Development Co.,   Ltd. (50%)                                        holding for a bank loan   2014
    Ltd. (100%)                                                          of RMB6.08 million
                                                                          Provided a guarantee
    Shenzhen Vanke     Dongguan Xinwan Real                              in proportion to the      From 6 April 2012
    12   Real Estate Co.,   Estate Development Co., Ltd.   RMB102 million     Company’s equity         to 6 April 2014
    Ltd. (100%)        (51%)                                             holding for a bank loan
                                                                          of RMB200 million
                                                                          Provided a guarantee
    Shanghai Vanke     Shanghai Jingyuan Property                        in proportion to the      From 10 April
    13   Real Estate Co.,   Development Company            RMB2.25 million    Company’s equity         2012 to 30
    Ltd. (100%)        Limited (45%)                                     holding for a bank loan   September 2013
                                                                          of RMB5 million
                                                                          Provided a guarantee
    Changchun Wanrun   Changchun Vanke Xizhigu                           in proportion to the      From 19 April
    Real Estate
    14                      Real Estate Development Co.,   RMB4.51 million    Company’s equity         2012 to 19 May
    Development Co.,   Ltd. (50%)                                        holding for a bank loan   2014
    Ltd. (100%)                                                          of RMB9.01 million
                                                                          Provided a guarantee
    Vanke Properties                                                     in proportion to the      From 20 April
    15   (Hong Kong) Co.,   Fengyi Co., Ltd. (100%)        RMB632 million     Company’s equity         2012 to 20 April
    Ltd. (100%)                                                          holding for a bank loan   2015
                                                                          of RMB632 million
                                                                          Provided a guarantee
    Shanghai Vanke     Shanghai Jingyuan Property                        in proportion to the      From 9 May 2012
    16   Real Estate Co.,   Development Company            RMB3.6 million     Company’s equity         to 30 September
    Ltd. (100%)        Limited (45%)                                     holding for a bank loan   2013
                                                                          of RMB8 million
                                                                          Provided a guarantee
                                                                          in proportion to the      From 10 May
    China Vanke Co.,   Shenzhen Vanke Property Co.,
    17                                                     RMB130 million     Company’s equity         2012 to 9 May
    Ltd.(100%)         Ltd. (100%)                                       holding for a bank loan   2014
                                                                          of RMB130 million
                                                                          Provided a guarantee
    Changchun Wanrun   Changchun Vanke Xizhigu                           in proportion to the
    Real Estate                                                                                    From 11 May 2012
    18                      Real Estate Development Co.,   RMB12.5 million    Company’s equity
    Development Co.,                                                                               to 19 May 2014
                        Ltd. (50%)                                        holding for a bank loan
    Ltd. (100%)                                                          of RMB25 million
                                                                          Provided 51% of the
    Shenyang Vanke     Shenyang Zhongtie Vanke                                                     From 24 May
                                                                          guarantee for a bank
    19   Real Estate Co.,   Langyu Property Company        RMB14.79 million                             2012 to 7 August
                                                                          loan of RMB29
    Ltd. (100%)        Limited (49%)                                     million                   2014
                                                                          Provided a guarantee
    Changchun Wanrun   Changchun Vanke Xizhigu                           in proportion to the      From 25 May
    Real Estate
    20                      Real Estate Development Co.,   RMB24 million      Company’s equity         2012 to 19 May
    Development Co.,   Ltd. (50%)                                        holding for a bank loan   2014
    Ltd. (100%)                                                          of RMB48 million
                                                                          Provided a guarantee
    Shanghai Vanke     Shanghai Jingyuan Property                        in proportion to the      From 30 May
    21   Real Estate Co.,   Development Company            RMB1.89 million    Company’s equity         2012 to 30
    Ltd. (100%)        Limited (45%)                                     holding for a bank loan   September 2013
                                                                          of RMB4.2 million
                                                                          Provided a guarantee
    Changchun Wanrun   Changchun Vanke Xizhigu                           in proportion to the      From 31 May
    Real Estate
    22                      Real Estate Development Co.,   RMB15.99 million   Company’s equity         2012 to 19 May
    Development Co.,   Ltd. (50%)                                        holding for a bank loan   2014
    Ltd. (100%)                                                          of RMB31.98 million
                                                                          Provided a guarantee
    Shanghai Vanke     Shanghai Jingyuan Property                        in proportion to the      From 7 June 2012
    23   Real Estate Co.,   Development Company            RMB3.15 million    Company’s equity         to 30 September
    Ltd. (100%)        Limited (45%)                                     holding for a bank loan   2013
                                                                          of RMB7 million
                        Ningbo Zhongwan Property                          Provided a guarantee
    Ningbo Vanke       Co., Ltd (49% held by China                       in proportion to the      From 26 June
    Property
    24                      Vanke, 15% of which were       RMB0.98 million    Company’s equity         2012 to 5
    Development Ltd.
                        held through Ningbo Vanke                         holding for a bank loan   December 2014
    (100%)
                        Property Development Ltd)                         of RMB6.55 million
           During the reporting period, the amount of new guarantees provided by the Company and its majority-
           owned subsidiaries was RMB1,977 million, and the amount of guarantees withdrawn was RMB1,245
           million. There was a slight change in the outstanding amount of guarantees at the beginning of the
           reporting period due to changes in exchange rates. As at the end of the reporting period, the outstanding
           amount of guarantees provided by the Company was RMB14,427 million, accounting for 27.24% of the
           audited equity attributable to shareholders of the Company as at the end of the 2011. The outstanding
           amount of guarantees provided by the Company and its majority-owned subsidiaries for other majority-
           owned subsidiaries was RMB13,935 million; the outstanding amount of guarantees provided by the
           Company and its majority-owned subsidiaries for associates and joint venture companies was RMB492
           million. The Company and its majority-owned subsidiaries did not have any external guarantees.
           The Company did not provide guarantee for shareholders, beneficial controller and its connected parties,
           nor did it have any overdue guarantees or guarantees involving litigation.
           9. Specific elaboration and independent opinions of the independent directors on the use of capital
           and external guarantees by connected parties
           There had been no non-operational use of capital by the controlling shareholder or other connected parties
           of the Company.
           During the reporting period, the Company, in strict compliance with the related rules, regulated its external
           guarantee activities in order to control risks. There was no violation against the “Notice regarding the
           regulation of external guarantees by listed companies”. The Company’s guarantees had been made to meet
           its production and operational needs and the requirements for reasonable use of capital. The procedures for
           determining the provision of guarantees are legal and reasonable, without prejudice to the interests of the
           Company and its shareholders.
           10. Undertakings
           China Resources National Corporation (“CRNC”), the parent company of CRC, being the Company’s
           original single largest shareholder and the present single largest shareholder, gave a significant undertaking
           to the Company in 2001: CRNC would provide as much support to the Company as it did in the past, as
           long as such support was beneficial to the Company’s development, and that it would remain impartial in
           the event of any horizontal competition between the investment projects of the Company and that of
           CRNC and its subsidiaries, and in the event of any disagreements or disputes arising from horizontal
           competition. CRNC had fulfilled its undertaking.
           11. Details on the Company’s investor meetings
                                                                                                                      Issues
                                                                                                                      discussed
    Type of meeting     Date           Location          Approach                         Types of investors              and
                                                                                                                      information
                                                                                                                      provided
    BNP                                            Face to face    Investors including securities companies,         (I) Major issues
                   2012.1         Hong Kong                                                                           discussed:
    meeting                                         meeting         funds, etc
    Credit Suisse                                                                                                       (1) The
                                                    Face to face    Investors including securities companies,         Company’s
    Securities      2012.1         Hong Kong
                                                    meeting         funds, etc                                        daily
    Meeting                                                                                                           operations;
    UBS Securities                                      Face to face    Investors including securities companies,         (2)The
                   2012.1          Shanghai
    Meeting                                         meeting         funds, etc                                        Company’s
    Deutsche Bank                                      Face to face    Investors including securities companies,         development
                   2012.1           Beijing         meeting                                                           strategies;
    meeting                                                         funds, etc
                                                                                                                      (3)The
    Religare                                        Face to face    Investors including securities companies,         Company’s
                   2012.2         Hong Kong         meeting
    meeting                                                         funds, etc                                        opinion on the
    CITIC Securities                                    Face to face    Investors including securities companies,         changes in the
                   2012.2          Shenzhen         meeting                                                           industry.
    meeting                                                         funds, etc
    Goldman Sachs                                      Face to face    Investors including securities companies,   (II) Major
                    2012.2        Shenzhen         meeting                                                     information
    meeting                                                         funds, etc
                                                   Face to face                                                provided:
                                Hong Kong,
    Annual results                                    meeting         Investors including securities companies,   Published
                    2012.3   Shenzhen (Shanghai,                                                               information
    presentation                                                     funds, individual investors, etc
                                  Beijing)                                                                     including the
    CLSA Securities                                    Face to face    Investors including securities companies,   Company’s
                    2012.3       Hong Kong         meeting                                                     regular reports.
    meeting                                                         funds, etc
    Credit Suisse                                     Face to face
                                                   meeting         Investors including securities companies,
    Securities        2012.3       Hong Kong
                                                                   funds, etc
    meeting
    Goldman Sachs                                      Face to face    Investors including securities companies,
                    2012.3       Hong Kong         meeting
    meeting                                                         funds, etc
                                                   Face to face    Investors including securities companies,
    BNP meeting        2012.3       Hong Kong         meeting         funds, etc
    Credit Suisse                                    Face to face
                                                   meeting         Investors including securities companies,
    Securities       2012.3       Hong Kong
                                                                   funds, etc
    meeting
    UBS Securities                                    Face to face    Investors including securities companies,
                    2012.3        Shanghai         meeting
    meeting                                                        funds, etc
    Mirae Asset                                      Face to face    Investors including securities companies,
                    2012.4       Hong Kong         meeting
    meeting                                                        funds, etc
    China Merchants                                    Face to face
                                                   meeting         Investors including securities companies,
    Securities       2012.4       Hangzhou
                                                                   funds, etc
    meeting
    CLSA Securities                                    Face to face    Investors including securities companies,
                    2012.4       Hong Kong
    meeting                                        meeting         funds, etc
    Credit Suisse                                    Face to face    Investors including securities companies,
                    2012.4       Hong Kong
    meeting                                        meeting         funds, etc
                                                   Face to face    Investors including securities companies,
    HSBC meeting       2012.4       Hong Kong
                                                   meeting         funds, etc
    CLSA Securities                                    Face to face    Investors including securities companies,
                    2012.5         Beijing
    meeting                                         meeting         funds, etc
                                                   Face to face    Investors including securities companies,
    Barclays meeting    2012.5       Hong Kong
                                                   meeting         funds, etc
    Morgan Stanley                                     Face to face    Investors including securities companies,
                    2012.5       Hong Kong
    meeting                                        meeting         funds, etc
    Guotai Junan                                      Face to face    Investors including securities companies,
                    2012.6         Xi’an
    meeting                                        meeting         funds, etc
    Credit Suisse                                     Face to face    Investors including securities companies,
                    2012.6       Hangzhou
    meeting                                        meeting         funds, etc
    Essence
                                                   Face to face    Investors including securities companies,
    Securities       2012.6         Beijing
                                                   meeting         funds, etc
    meeting
    Guosen
                                                   Face to face    Investors including securities companies,
    Securities       2012.6        Shenzhen
                                                   meeting         funds, etc
    meeting
    Morgan Stanley                                     Face to face    Investors including securities companies,
                    2012.6         Beijing
    meeting                                        meeting         funds, etc
    Huatai Securities                                  Face to face    Investors including securities companies,
                    2012.6        Shanghai
    meeting                                        meeting         funds, etcChina Merchants
                                                   Face to face    Investors including securities companies,
    Securities       2012.6        Shenzhen
                                                   meeting         funds, etc
    meeting
    Merrill Lynch                                     Face to face    Investors including securities companies,
                    2012.6        Shenzhen
    meeting                                        meeting         funds, etc
    Credit Suisse                                          Face to face    Investors including securities companies,
                     2012.6           Hong Kong
    meeting                                             meeting         funds, etc
    Okasan
                                                        Face to face    Investors including securities companies,
    Securities        2012.6           Hong Kong
                                                        meeting         funds, etc
    meeting
    CITIC Securities                                        Face to face    Investors including securities companies,
                     2012.6             Ningbo
    meeting                                             meeting         funds, etcNote: The above-mentioned meetings included one-on-one meetings, small group meetings and large group presentation. TheCompany received or met with investors from over 50 companies.
                                 Shenzhen, Huizhou,                     Shenjin Wanguo, Guotai Junan, Daiwa Securities,
                                 Guangzhou, Foshan,                     Minsheng Securities, CLSA Securities, CITIC
                                 Dongguan, Zhuhai,                      Securities, Deusche Bank, Credit Suisse Securities,
                                 Zhongshan, Haikou,                     Goldman Sachs, UBS, JP Morgan, CICC, Huatai
                                 Fuzhou, Xiamen,                        United Securities, Standard Chartered Bank, CITIC
                                 Changsha, Shanghai,                    Construction Securities, Goldman Sachs Gaohua,
                                 Jiaxing, Wuxi,                         Guangfa Securities, Haitong Securites, Merrill Lynch
                   During        Nanjing, Hangzhou,                     Securities, Yuanta Securities, Changjiang Securities,
                                                        Small group     Citibank, Morgan Stanley, Orient Securities, Dongxing
    Securities         the           Ningbo, Wenzhou,
                                                        or one-on-      Securities, Galaxy Securities, Sinolink Securities,
    companies          reporting     Nanchang, Hefei,
                                                        one             BOCI, Essence Securities, China Investment
                   period        Beijing, Tianjin,
                                 Tangshan, Shenyang,                    Securities, Guosen Securities, China Merchants
                                 Dalian, Taiyuan,                       Securities, Samsung Securities, Macqurie, HSBC,
                                                                        Nomura Securities, Barclays, Korea Investment &
                                 Qingdao, Yantai,
                                                                        Securities, Hengtai Securities, Mizuho Securities,
                                 Wuhan, Chengdu,
                                                                        Mitsubishi UFJ Securities, BNP, Jefferies, Religare,
                                 Chongqing, Xi’an,
                                                                        UOB KayHian, Keefe, Bruyette & Woods Asia, Oliver
                                 Kunming, Guiyang                       Wyman, DBS Vickers (HK) Ltd etc.
                                 etc.
                                                                   GF Fund Management, Orient Asset Management,
                                                                   Rongtong Fund Management, Goldman Sachs (Asia)
                                                                   Co., Ltd, Shenzhen Jinchaoyang Enterprise
                                                                   Management Ltd, CICC Asset Management, China
                                                                   Universal Asset Management, Manulife Teda Fund,
                                                                   Daiwa Asset Management, New China Life,
                                                                   Changsheng Fund, China Life, Bosera Fund, Harvest
                                                                   Fund, China AMC, Fortis Haitong Fund, Yinhua Fund,
                                                                   Dacheng Fund, Southern Fund, E Fund, Fullgoal Fund,
                                                                   Cephei Investment, First State Investment Fund, China
                                                                   International Fund Management, PICC, Ping An
                                                                   Insurance, Fortune SGAM Fund, New China Life, Hua
                                                                   An Fund, CITIC Asset Management, Taikang Life,
                                                                   UBS SDIC Fund, Bank of Communications Schroders
                                                                   Fund, Kondor Asset Management, Korea Investment &
                                                                   Trust, Korea KTB Asset Management, Ethan Capital,
                                                                   Wells Capital Management, PNC Capital, Moon
                                                                   Capital, Dialectic Capital, Heitman LLC, Libra Capital
                                                                   Managment, Kowloon Development Company
                                                                   Limited, HwangDBS Investment Management,
                                                                   Discovery Capital Management LLC, Prince Street
                                                                   Capital Management, Matthews International Capital
                                                                   Management, GSI Fund (HK), JF Asset Management,
                                                                   FMR Capital Group, Cheuvreux Creidt Agricole,
                                                                   Boodell & Company, Marsico Capital, TT
                              Shenzhen, Huizhou,                   International, Trusted Sources, Barclays Capital, UBS
                              Guangzhou, Foshan,                   GAM, F & C, Keywise, Lazard Asset Management,
                              Dongguan, Zhuhai,                    Baillie Gifford, Och-Ziff, Wellington Management,
                              Zhongshan, Haikou,                   SAC Capital, CSPB, Havenport, Trivest, East Capital,
                              Fuzhou, Xiamen,                      Merchants Gate Capital, Capital, Norges Bank
                              Changsha, Shanghai,                  Investment Management, Broad Peak Investment
                              Jiaxing, Wuxi,                       Advicers, Putnam, EFMI Limited (HK), HoloweskoFunds and other
                  During      Nanjing, Hangzhou,                   Partners, Waddell & Reed, Algebris, Ashmore EMM,
    investment                                          Small group    Deutsche Asset Management, Zeal Asset Management,
                  the         Ningbo, Wenzhou,
    companies and                                       or one-on-     Allianze, Open Door, Pictet Asset Management,
                  reporting   Nanchang, Hefei,
    individual                                          one            Fortress Investment Group, Maverick Capital Ltd,
                  period      Beijing, Tianjin,
    investors                                                          Hokan Zurich Insurance Company Ltd, Bank of
                              Tangshan, Shenyang,
                              Dalian, Taiyuan,                     Singapore Ltd, TIAA-CREF Investment Management
                              Qingdao, Yantai,                     Inc, Sparx, CQS (Hong Kong) Ltd, Samena Capital
                              Wuhan, Chengdu,                      Hong Kong Limited, SCHRODERS, FIL Investment
                              Chongqing, Xi’an,                   Management (Singapore), Cascabel Management,
                              Kunming, Guiyang                     Soros, Seatown Holdings, Tiger Asia, Elliott, Parter
                              etc.                                 Funds, Generation Investment, Mount Kellet,
                                                                   Emerging Markets Investment Trust, Baring, Harris
                                                                   Associates LP, Cephei Investment, APG Asset
                                                                   Management, Templeton, Salus Resources Advisory,
                                                                   Teng Yue Partners, Hugh Currie, Cambiar, Alliance
                                                                   Berstein, Trilogy Global Advisors, Caisse De Depot Et
                                                                   Placement, PT Trimegah Asset Management, Artisan
                                                                   Partners LP, Heitman Real Estate Securities LLC,
                                                                   Glenrock Inc, Batterymarch Financial Management,
                                                                   Kynikos Associates, Standard Life Investment, Kylin
                                                                   Management, CBRE, Tmasek, Fidel Manulife Asset
                                                                   Management ity, GIC, DnB Asset Management,
                                                                   Manulife Asset Management, RCM (UK), Genesis,
                                                                   T.Rowe Price etc
    12. Corporate bonds and related matters
    During the reporting period, the Company’s issued bonds, including “08 Vanke G1” (Bond code: 112005)
    and “08 Vanke G2” (Bond code: 112006), was tracked and rated by China Chengxin Securities Rating Co.,
    Ltd. (中诚信证券评估有限公司) (“China Chengxin”). The rating company continued to assign AAA
    credit ratings to the Company’s secured corporate bonds “08 Vanke G1” and non-secured corporate bonds
    “08 Vanke G2” as well as the Company’s overall corporate credit. China Chengxin gave a stable outlook
    rating to the Company. During the reporting period, the Company maintained a good credit standing.
    Citic Securities Co., Ltd., the trustee of the Company’s corporate bonds, was of the opinion that China
    Vanke has a healthy operation and good credit standing, with strong capacity to meet its financial
    obligation. The principal and interest payments for this bond issue are safe.
    During the reporting period, the Shenzhen branch of China Construction Bank Corporation, being the
    guarantor of the secured corporate bonds “08 Vanke G1” issued by the Company, had safe assets and stable
    operating results, with no material change in credit standing.
    13. Investment in derivatives
                                                                  In order to limit the risk associated with the fluctuations of interest
                                                                  rate, the Company entered into an interest rate swap (“IRS”)
    Remarks on risk analysis and management of derivative             agreement to hedge floating rate foreign currency loan. The Companypositions during the reporting period (including but not limited would charge the counterparty an interest according to a floating rate,to market risk, liquidity risk, credit risk, operational risk and in order to pay the floating-rate interest to the original lender, while
    legal risk, etc.)                                                 paying a fixed rate to the counterparty. In terms of the term and
                                                                  amount of the foreign currency loan, IRS limits the risk of fluctuations
                                                                  of interest rate through fixed forward rate.Change in market price or fair value of the derivatives invested The effect of the change in the IRS value on the Company’s profit and
    during the reporting period, as well as the method, related       loss during the reporting period amounted to RMB(16,527,282.76).
    assumptions and parameters used to analyse the fair value of      The value of the IRS was determined based on the fair value assessed
    derivatives should be disclosed                                   on 30 June 2012Remarks on whether there has been a material change in theaccounting policy and accounting measurement principles for
                                                                  Nilthe Company’s derivatives during the reporting period ascompared with those of the previous reporting period
                                                                  The Company’s independent directors are of the view that financial
                                                                  instruments such as IRS prevent the possible loss associated withSpecial advice on derivative investment and risk control by
                                                                  foreign currency loan in the event of significant fluctuations in interestindependent directors, sponsors or financial advisors
                                                                  rate. The relevant arrangement of the Company had been prudent and
                                                                  reasonable.
    Derivative positions as at the end of the reporting period
                                                                                                                   Unit: RMB’000
                                                                                                Contract amount
                                                                                                as a percentage of the
                                Contract amount as at Contract amount as                        Company’s equity
                                                                         Profit/loss during the
    Type of contracts            the beginning of the  at the end of the                         attributable to
                                                                         reporting period
                                period                period                                    shareholders as at the
                                                                                                end of the reporting
                                                                                                period
    Interest rate swap
                                              3,079,879.9              2,569,806.9               (16,527.3)                     4.66%
    (IRS) agreement
               Total                          3,079,879.9              2,569,806.9               (16,527.3)                    4.66%
    XI. Financial Report (Unaudited)China Vanke Co., Ltd.万科企业股份有限公司
      30 June 2012
                                                                                      China Vanke Co., Ltd.
                                                 Financial statements for the six months ended 30 June 2012Consolidated income statementfor the six months ended 30 June 2012(Expressed in Renminbi Thousand Yuan)
                                                                        2012                     2011
                                         Note                    Jan. – Jun.             Jan. – Jun.
    Revenue                                  4(a)                     28,959,560               18,886,966
    Cost of sales                                                   (19,297,385)             (10,998,932)
    Gross profit                                                        9,662,175               7,888,034
    Other revenue                              5                          395,098                  364,682
    Other net income                           6                           74,687                   61,741
    Distribution cost                                                 (1,238,382)                (956,748)
    Administrative expenses                                             (851,688)                (904,669)
    Other operating expenses                   7                        (113,046)                 (76,397)
    Profit from operations                                              7,928,844               6,376,643
    Finance costs                            8(a)                       (788,381)                (517,592)Share of profits less losses of
                                          14                          256,481                   30,061associates
    Share of profits less losses of                                       166,039                 (22,288)
                                          15jointly controlled entities
    Profit before taxation                                              7,562,983               5,866,824
    Income tax                               9(a)                     (3,027,505)             (2,614,306)
    Profit for the period                                               4,535,478               3,252,518Attributable to:Equity shareholders of the
                                                                    3,725,085               2,977,855Company
    Non-controlling interests                                             810,393                 274,663
    Profit for the period                                               4,535,478               3,252,518
    Basic earnings per share                  11                              0.34                     0.27The accompanying notes form part of these financial statements.
                                                                                          China Vanke Co., Ltd.
                                                     Financial statements for the six months ended 30 June 2012Consolidated statement of comprehensive incomefor the six months ended 30 June 2012(Expressed in Renminbi Thousand Yuan)
                                                                                 2012                 2011
                                                       Note               Jan. – Jun.         Jan. – Jun.
    Profit for the period                                                       4,535,478            3,252,518Other comprehensive income (after tax
                                                         10and reclassification adjustments)Exchange differences on translation of
                                                                              (73,372)              88,446financial statements of overseas subsidiariesAvailable-for-sale securities: net movement
    in the fair value reserve                                                    (27,374)                    -
                                                                            (100,746)               88,446
    Total comprehensive income for the year                                     4,434,732            3,340,964Attributable to:
    Equity shareholders of the Company                                          3,624,339            3,066,301
    Non-controlling interests                                                     810,393              274,663
    Total comprehensive income for the                                          4,434,732            3,340,964periodThe accompanying notes form part of these financial statements.
                                                                                       China Vanke Co., Ltd.
                                                  Financial statements for the six months ended 30 June 2012Consolidated statement of financial positionas at 30 June 2012(Expressed in Renminbi Thousand Yuan)
                                          Note                30 June 2012        31 December 2011Non-current assets
    Property, plant and equipment              12                     3,000,840                  2,777,889
    Investment properties                      13                     1,225,338                  1,126,105
    Interest in associates                     14                     2,349,667                  2,160,824
    Interest in jointly controlled entities    15                     4,451,749                  4,183,142
    Other financial assets                     16                        87,387                    523,790
    Other non-current asset                    17                       276,700                    463,793
    Deferred tax assets                       25(b)                   2,767,396                  2,326,242
                                                                 14,159,077                 13,561,785Current assets
    Inventories                                18                   226,663,780               208,661,350
    Trade and other receivables                19                    42,869,054                40,071,647
    Pledged deposits                           20                     1,292,461                   625,403
    Cash and cash equivalents                  21                    45,719,728                33,614,112
                                                                316,545,023               282,972,512Current liabilities
    Loans and borrowings                       22                    20,305,843                23,570,276
    Financial derivative                       23                        19,313                    17,042
    Trade and other payables                   24                   189,556,904               168,893,596
    Current taxation                          25(a)                   7,219,061                 8,243,247
                                                                217,101,121               200,724,161
    Net current assets                                               99,443,902                 82,248,351
    Total assets less current liabilities                           113,602,979                 95,810,136
                                                                                         China Vanke Co., Ltd.
                                                    Financial statements for the six months ended 30 June 2012Consolidated statement of financial positionAs at 30 June 2012(Expressed in Renminbi Thousand Yuan)
                                         Note                   30 June 2012        31 December 2011Non-current liabilities
    Loans and borrowings                     22                        42,605,550                 26,822,359
    Deferred tax liabilities                25(c)                       1,090,883                  1,104,762
    Provisions                               26                            57,904                     38,678
    Other non-current liabilities            27                            14,669                     11,798
                                                                   43,769,006                 27,977,597
    NET ASSETS                                                         69,833,973                 67,832,539CAPITAL AND RESERVES
    Share capital                             29                       10,995,210                 10,995,210
    Reserves                                                           44,104,605                 41,972,585Total equity attributable to equity
                                                                   55,099,815                 52,967,795shareholders of the Company
    Non-controlling interests                                          14,734,158                 14,864,744
    TOTAL EQUITY                                                       69,833,973                 67,832,539Approved and authorised for issue by the board of directors on 3 August2012.
                                                )
                                                )
                                                )          Directors
                                                )
                                                )The accompanying notes form part of these financial statements.
                                                                                                                                                                              China Vanke Co., Ltd.
                                                                                                                                         Financial statements for the six months ended 30 June 2012Consolidated statement of changes in equityYear ended 31 December 2011(Expressed in Renminbi Thousand Yuan)
                                                                                     Attributable to equity shareholders of the Company
                                                                                    Share-based                                                                                Non-
                                                             Share         Share   compensation       Statutory     Exchange        Other      Retained                  controlling
                                                  Note      capital     premium          reserve       reserves       reserve     reserves       profits       Total       interests   Total equity
                                                          RMB’000     RMB’000       RMB’000       RMB’000      RMB’000 RMB’000          RMB’000      RMB’000      RMB’000      RMB’000
    Balance at 1 January 2011                                 10,995,210   8,789,676               -    10,587,706      390,132         (332)    13,470,285    44,232,677    10,353,523     54,586,200
    Changes in equity for 2011:                                        -           -               -             -            -             -              -             -            -              -
    Profit for the year                                                -           -               -             -            -             -     9,624,875     9,624,875     1,974,731     11,599,606
    Other comprehensive income                          10             -           -               -             -      155,644        27,373             -       183,017             -        183,017
    Total comprehensive income                                         -           -               -             -      155,644        27,373     9,624,875     9,807,892     1,974,731     11,782,623Dividends approved in respect of
    the previous year                                 29(c)            -           -               -              -             -            -   (1,099,521)   (1,099,521)             -    (1,099,521)
    Appropriation to statutory reserves               29(b)                                              3,061,021                           -   (3,061,021)             -             -              -
    Equity settled share-based transactions             28                                  106,236                                          -             -      106,236              -       106,236
    Capital contribution from                                                                                                   -            -             -             -                            -
    non-controlling interests                                          -           -               -              -             -            -             -             -    3,904,944      3,904,944
    Acquisitions of subsidiaries                                       -           -               -              -             -            -             -             -       68,806         68,806
    Acquisitions of additional interest                                                                                                                                  -                            -
    in subsidiaries                                                                                                                  (79,489)                    (79,489)     (405,068)      (484,557)
    Disposals of subsidiaries                                                                                                                                            -    (102,688)      (102,688)
    Dividends declared to non-controlling interests       -                                                                                                              -    (898,844)      (898,844)
    Others                                                                                                                                                               -      (30,660)       (30,660)
    Balance at 31 December 2011                               10,995,210   8,789,676        106,236     13,648,727      545,776      (52,448)    18,934,618    52,967,795    14,864,744     67,832,539The accompanying notes form part of these financial statements.
                                                                                                                                                                         China Vanke Co., Ltd.
                                                                                                                                    Financial statements for the six months ended 30 June 2012Consolidated statement of changes in equity (continued)Period ended 30 June 2012(Expressed in Renminbi Thousand Yuan)
                                                                            Attributable to equity shareholders of the Company
                                                                               Share-
                                                                                                                                                                        Non-
                                                                                based
                                                                           compensat
                                                      Share       Share                      Statutory   Exchange          Other      Retained                    controlling
                                                                                  ion
                                          Note      capital     premium       reserve         reserves      reserve      reserves      profits        Total         interests     Total equity
                                                  RMB’000     RMB’000     RMB’000        RMB’000 RMB’000 RMB’000               RMB’000      RMB’000        RMB’000        RMB’000
    Balance at 1 January 2012                         10,995,210   8,789,676     106,236      13,648,727       545,776      (52,448)    18,934,618    52,967,795     14,864,744       67,832,539Changes in equity for 2012 Jan. to
                                                                                                                                                            -                                -June:
    Profit for the six months period                           -           -            -               -            -             -     3,725,085     3,725,085         810,393        4,535,478
    Other comprehensive income                  10             -           -            -               -     (73,372)      (27,374)             -     (100,746)                        (100,746)
    Total comprehensive income                                 -           -            -               -     (73,372)      (27,374)     3,725,085     3,624,339         810,393        4,434,732Dividends approved in respect of
    the previous year                         29(c)            -           -            -               -             -             -   (1,429,377)   (1,429,377)                     (1,429,377)
    Appropriation to statutory reserves       29(b)            -           -            -               -             -             -             -             -                                -
    Equity settled share-based transactions     28             -           -      57,814                -             -             -             -       57,814                           57,814
    Capital contribution from                                                                                                                                                                    -
    non-controlling interests                                  -                        -               -             -    (120,756)              -     (120,756)         84,813         (35,943)
    Acquisitions of subsidiaries                               -           -            -               -             -            -              -             -         23,455           23,455Acquisitions of additional interest
    in subsidiaries                                            -           -            -               -             -             -             -             -      (784,327)        (784,327)
    Disposals of subsidiaries                                  -           -                            -             -             -             -             -          1,091            1,091Dividends declared to non-controlling
                                              -            -           -            -               -             -             -             -             -      (266,011)        (266,011)interests
    Others                                                     -                        -               -             -             -             -             -                                -
    Balance at 30 June 2012                           10,995,210   8,789,676     164,050      13,648,727       472,404     (200,578)    21,230,326    55,099,815     14,734,158       69,833,973
                                                                                              China Vanke Co., Ltd.
                                                         Financial statements for the six months ended 30 June 2012Consolidated cash flow statementfor the six months ended 30 June 2012(Expressed in Renminbi Thousand Yuan)
                                                                                      2012                 2011
                                                                                Jan.–Jun.           Jan.–Jun.
    Cash received from sales of products                                            48,164,285            50,406,825
    Other cash received from business operating activities                           3,406,592             7,004,980
    Cash generated from operating activities                                        51,570,877            57,411,805
    Cash paid for purchasing of merchandise and services                            31,537,772            38,777,093
    Cash paid to employees or paid for employees                                     1,821,229             1,461,654
    Tax paid for tax                                                                 9,818,780             9,510,509
    Other cash paid for business operating activities                                5,573,901             3,836,700
    Cash used in operating activities                                               48,751,682            53,585,956
    Net cash used in operating activities                                            2,819,195             3,825,849
    Proceeds from sales of investments                                                    4,000               76,700
    Dividends received                                                                   47,684               15,216
    Proceeds from disposal of property, plant and equipment                                 679                  329
    Proceeds from disposal of subsidiaries                                                    -                    -
    Proceeds from other investment activities                                           189,256              407,324
    Cash generated from investing activities                                            241,619              289,453Acquisitions of property, plant and equipment and
                                                                                     79,462              124,040construction in progressAcquisitions of interest in associates, jointly controlled
                                                                                    131,450              398,261entities and other investments
    Acquisitions of subsidiaries,net of cash acquired                                  835,148             3,042,726
    Other cash paid relating to investing activities                                    60,000                42,569
    Cash used in investing activities                                                1,106,060             3,397,479
    Net cash used in investing activities                                            (864,441)           (3,108,026)
                                                                                           China Vanke Co., Ltd.
                                                      Financial statements for the six months ended 30 June 2012Consolidated cash flow statement (continued)for the six months ended 30 June 2012(Expressed in Renminbi Thousand Yuan)
                                                                                 2012                   2011
                                                                           Jan.–Jun.             Jan.–Jun.
    Net proceeds from issue of shares upon placing                                132,213               1,804,653
    Proceeds from loans and borrowings                                         26,317,972              14,003,078
    Cash generated from financing activities                                   26,450,185              15,807,731
    Repayment of loans and borrowings                                          13,798,424               8,497,000Dividend paid to equity shareholders of the Company
                                                                            2,481,267               3,068,132and Interest paid
    Cash used in financing activities                                          16,279,691              11,565,132
    Net cash generated from financing activities                               10,170,494               4,242,599
    Effect of foreign exchange rates                                              (19,632)                (10,587)
    Net increase in cash and cash equivalents                                  12,105,616               4,949,835
    Cash and cash equivalents at 1 January                                     33,614,112              35,096,935
    Cash and cash equivalents at 30 June                                       45,719,728              40,046,770The accompanying notes form part of these consolidated financial statements.
                                                                                               China Vanke Co., Ltd.
                                                          Financial statements for the six months ended 30 June 2012
      Notes to the consolidated financial statements
      (Expressed in Renminbi Thousand Yuan unless otherwise indicated)
    1     Reporting entity
      China Vanke Co., Ltd (the “Company”) is a company domiciled in the People’s Republic of
      China (the “PRC”). The consolidated financial statements of the Company for the six
      months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to
      as the “Group” and individually as “Group entities”) and the Group’s interests in associates
      and jointly controlled entities. The Group’s principal activities are development and sale of
      properties in the PRC.
    2     Significant accounting policies
    (a)   Statement of compliance
      These financial statements have been prepared in accordance with the International Financial
      Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board
      (“IASB”). A summary of the significant accounting policies adopted by the Group is set out
      below.
    (b)   Basis of measurement
      The measurement basis used in the preparation of the financial statements is the historical
      cost basis except that the following assets and liabilities are stated at their fair value as
      explained in the accounting policies set out below:
             financial instruments classified as available-for-sale (see note 2(f));
             derivative financial instruments are measured at fair value (see note 2(g)).
      The preparation of financial statements in conformity with IFRSs requires management to
      make judgements, estimates and assumptions that affect the application of policies and
      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.
      Judgements made by management in the application of IFRSs that have significant effect on
      the financial statements and major sources of estimation uncertainty are discussed in note 3.
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (c)   Changes in accounting policies
      The IASB has issued a number of amendments to IFRSs and one new Interpretation that are
      first effective for the current accounting period of the Group.
      Of these, the following developments are relevant to the Group’s financial statements:
              IAS 24 (revised 2009), Related party disclosures
              Improvements to IFRSs (2010)
      The Group has not applied any new standard or interpretation that is not yet effective for the
      current accounting period.
      The impacts of the developments are discussed below:
              IAS 24 (revised 2009) revises the definition of a related party. As a result, the Group
              has re-assessed the identification of related parties and concluded that the revised
              definition does not have any material impact on the Group’s related party disclosures
              in the current and previous period. IAS 24 (revised 2009) also introduces modified
              disclosure requirements for government-related entities. This does not impact the
              Group because the Group is not a government-related entity.
              Improvements to IFRSs (2010) omnibus standard introduce a number of amendments
              to the disclosure requirements in IFRS 7, Financial instruments: Disclosures. The
              disclosures about the Group’s financial instruments in note 30 have been conformed
              to the amended disclosure requirements. These amendments do not have any material
              impact on the classification, recognition and measurements of the amounts recognised
              in the financial statements in the current and previous periods.
    (d)   Subsidiaries and non-controlling 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.
      Non-controlling interests represent the equity in a subsidiary not attributable directly or
      indirectly to the Company, and in respect of which the Group has not agreed any additional
      terms with the 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. For each business combination, the Group can elect to measure any non-controlling
      interests either at fair value or at their proportionate share of the subsidiary’s net identifiable
      assets.
                                                                                               China Vanke Co., Ltd.
                                                          Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (d)   Subsidiaries and non-controlling interests (continued)
      Non-controlling interests are presented in the consolidated statement of financial position
      within equity, separately from equity attributable to the equity shareholders of the Company.
      Non-controlling interests in the results of the Group are presented on the face of the
      consolidated income statement and the consolidated statement of comprehensive income as
      an allocation of the total profit or loss and total comprehensive income for the six months
      period between non-controlling interests and the equity shareholders of the Company. Loans
      from holders of non-controlling interests and other contractual obligations towards these
      holders are presented as financial liabilities in the consolidated statement of financial
      position.
      Changes in the Group’s interests in a subsidiary that do not result in a loss of control are
      accounted for as equity transactions, whereby adjustments are made to the amounts of
      controlling and non-controlling interests within consolidated equity to reflect the change in
      relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.
      When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire
      interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss.
      Any interest retained in that former subsidiary at the date when control is lost is recognised at
      fair value and this amount is regarded as the fair value on initial recognition of a financial
      asset (see note 2(f)) or, when appropriate, the cost on initial recognition of an investment in
      an associate or jointly controlled entity (see note 2(e)).
    (e)   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 that is classified as held for sale). Under the equity
      method, the investment is initially recorded at cost, adjusted for any excess of the Group’s
      share of the acquisition-date fair values of the investee’s identifiable net assets over the cost
      of the investment (if any). Thereafter, the investment is adjusted for the post acquisition
      change in the Group’s share of the investee’s net assets and any impairment loss relating to
      the investment (see note 2(k)). Any acquisition-date excess over cost, the Group’s share of
      the post-acquisition, post-tax results of the investees and any impairment losses for the six
      months period 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 six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (e)   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 investee. 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.
      When the Group ceases to have significant influence over an associate or joint control over a
      jointly controlled entity, it is accounted for as a disposal of the entire interest in that investee,
      with a resulting gain or loss being recognised in profit or loss. Any interest retained in that
      former investee at the date when significant influence or joint control is lost is recognised at
      fair value and this amount is regarded as the fair value on initial recognition of a financial
      asset (see note 2(f)) or, when appropriate, the cost on initial recognition of an investment in
      an associate (see note 2(e)).
    (f)   Other investments in equity securities
      The Group’s policies for investments in equity securities, other than investments in
      subsidiaries, associates and jointly controlled entities, are as follows:
      Investments in equity securities are initially stated at fair value, which is their transaction
      price unless fair value can be more reliably estimated using valuation techniques whose
      variables include only data from observable markets. Cost includes attributable transaction
      costs.
      Investments in equity securities that do not have a quoted market price in an active market
      and whose fair value cannot be reliably measured are recognised in the statement of financial
      position at cost less impairment losses (see note 2(k)).
      Investments in equity securities which are not held for trading are classified as available-for-
      sale securities. At the end of each reporting period the fair value is remeasured, with any
      resultant gain or loss being recognised in other comprehensive income and accumulated
      separately in equity. Dividend income from these investments is recognised in profit or loss
      in accordance with the policy set out in note 2(u)(v). When these investments are
      derecognised or impaired (see note 2(k)), the cumulative gain or loss is reclassified from
      equity to profit or loss.
      Investments are recognised/derecognised on the date the Group commits to purchase/sell the
      investments.
                                                                                               China Vanke Co., Ltd.
                                                          Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (g)   Derivative financial instruments
      Derivative financial instruments are recognised initially at fair value. At the end of each
      reporting period the fair value is remeasured. The gain or loss on remeasurement to fair
      value is recognised immediately in profit or loss.
    (h)   Investment property
      Investment properties are land and/or buildings which are owned or held under a leasehold
      interest (see note 2(j)) 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 at cost less accumulated depreciation and accumulated
      impairment loss. Rental income from investment properties is accounted for as described in
      note 2(u)(iv).
      Depreciation is calculate to write off the costs of investment properties, less its residual value
      of 0% to 4%, if any, using the straight-line method over their estimated useful lives of 12.5 to
      40 years. Both the useful life and residual value, if any, are reviewed annually.
      When the Group holds a property interest under an operating lease to earn rental income
      and/or for capital appreciation, the interest is classified and accounted for as an investment
      property on a property-by-property basis. Any such property interest which has been
      classified as an investment property is accounted for as if it were held under a finance lease
      (see note 2(j)), and the same accounting policies are applied to that interest as are applied to
      other investment properties leased under finance leases. Lease payments are accounted for as
      described in note 2(j).
    (i)   Property, plant and equipment
      The following items of property, plant and equipment are measured at cost less accumulated
      depreciation and accumulated impairment loss (see note 2(k)) :
      - buildings held for own use which are situated on leasehold land classified as held under
        operating lease (see note 2(j)); and
      - other items of plant and equipment.
      The cost of self-constructed items of property, plant and equipment 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 2(w)).
      Gains or losses arising from the retirement or disposal of an item of property, plant and
      equipment are determined as the difference between the net disposal proceeds and the
      carrying amount of the item and are recognised in profit or loss on the date of retirement or
      disposal.
                                                                                              China Vanke Co., Ltd.
                                                         Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (i)   Property, plant and equipment (continued)
      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:
                                                    Residual value                          Useful life
      Leasehold land                                           0%             unexpired term of lease
      Hotel and other buildings                                4%         the shorter of the unexpired
                                                                      term of lease and 12.5-40 years
      Improvements to premises                                     0%                       5-10 years
      Machinery and motor vehicles                                 4%                       5-10 years
      Other equipment                                              4%                          5 years
      Where parts of an item of property, plant and equipment have different useful lives, the cost
      of the item is allocated on a reasonable basis between the parts and each part is depreciated
      separately. Both the useful life of an asset and its residual value, if any, are reviewed
      annually.
    (j)   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.
      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 classified as an investment
      property (see note 2(h)) or is held for development (see note 2(l)).
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (k)   Impairment of assets
    (i)   Impairment of investments in equity securities and other receivables
      Investments in 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 the
      end of each reporting period 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;
        -   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, the impairment loss is
            measured by comparing the recoverable amount of the investment with its carrying
            amount in accordance with note 2(k)(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 2(k)(ii).
        -   For unquoted equity securities 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 equity securities
            carried at cost 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 these financial assets 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.
                                                                                                   China Vanke Co., Ltd.
                                                              Financial statements for the six months ended 30 June 2012
    2      Significant accounting policies (continued)
    (k)    Impairment of assets (continued)
    (i)    Impairment of investments in equity securities and other receivables (continued)
                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 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.
       Impairment losses are written off against the corresponding assets directly, except for
       impairment losses recognised in respect of trade debtors 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
       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 the end of each reporting period
       to identify indications that the following assets may be impaired or an impairment loss
       previously recognised no longer exists or may have decreased:
       -       property, plant and equipment; and
       -       pre-paid interests in leasehold land classified as being held under an operating lease.
       If any such indication exists, the asset’s recoverable amount is estimated.
       -       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 the 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 six months ended 30 June 2012
    2      Significant accounting policies (continued)
    (k)    Impairment of assets (continued)
    (ii)   Impairment of other assets (continued)
       -   Recognition of impairment losses
           An impairment loss is recognised in profit or loss if 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 to reduce
           the carrying amount of the 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
           An impairment loss is reversed if there has been a favourable change in the estimates
           used to determine the recoverable amount.
           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.
    (l)    Inventories
    (i)    Construction materials
       Constrcution materials are carried 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 construction materials
       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.
    (ii)   Property development
       Inventories in respect of property development activities are carried at the lower of cost and
       net realisable value. Cost and net realisable values are determined as follows:
       -   Property held for development and property under development
           The cost of properties held for development and properties under development
           comprises 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 2(w)).
           Net realisable value represents the estimated selling price less estimated costs of
           completion and costs to be incurred in selling the property.
                                                                                               China Vanke Co., Ltd.
                                                          Financial statements for the six months ended 30 June 2012
    2      Significant accounting policies (continued)
    (l)    Inventories (continued)
    (ii)   Property development (continued)
       -   Completed property for sale
           In the case of completed properties developed by the Group, 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
           costs to be incurred in selling the property.
           The cost of completed properties held for sale comprises all costs of purchase, costs of
           conversion and other costs incurred in bringing the inventories to their present location
           and condition.
    (m)    Construction contracts
       Construction contracts are contracts specifically negotiated with a customer for the
       construction of an asset or a group of assets, where the customer is able to specify the major
       structural elements of the design. The accounting policy for contract revenue is set out in
       note 2(x)(iii). When the outcome of a construction contract can be estimated reliably,
       contract costs are recognised as an expense by reference to the stage of completion of the
       contract at the end of the reporting period. When it is probable that total contract costs will
       exceed total contract revenue, the expected loss is recognised as an expense immediately.
       When the outcome of a construction contract cannot be estimated reliably, contract costs are
       recognised as an expense in the period in which they are incurred.
       Construction contracts in progress at the end of the reporting period are recorded at the net
       amount of costs incurred plus recognised profit less recognised losses and progress billings,
       and are presented in the statement of financial position as the “Gross amount due from
       customers for contract work” (as an asset) or the “Gross amount due to customers for
       contract work” (as a liability), as applicable. Progress billings not yet paid by the customer
       are included under “Trade debtors”. Amounts received before the related work is performed
       are presented as “Receipts in advance” under “Trade and other payables”.
    (n)    Trade and other receivables
       Trade and other receivables are initially recognised at fair value and thereafter stated at
       amortised cost using the effective interest method, less allowance for impairment of doubtful
       debts (see note 2(k)), 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 allowance for impairment of doubtful
       debts.
    (o)    Interest-bearing borrowings
       Interest-bearing borrowings are recognised initially at fair value less attributable transaction
       costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised
       cost with any difference between the amount initially recognised and redemption value being
       recognised in profit or loss over the period of the borrowings, together with any interest and
       fees payable, using the effective interest method.
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    2       Significant accounting policies (continued)
    (p)     Trade and other payables
        Trade and other payables are initially recognised at fair value. Except for financial guarantee
        liabilities measured in accordance with note 2(t)(i), 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.
    (q)     Cash and cash equivalents
        Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks
        and other financial institutions, and short-term, highly liquid investments that are readily
        convertible into known amounts of cash and which are subject to an insignificant risk of
        changes in value, having been within three months of maturity at acquisition.
    (r)     Employee benefits
    (i)     Short term employee benefits and contributions to defined contribution retirement plans
        Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement
        plans 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.
    (ii)    Share-based payments
        The fair value of share options granted to employees is recognised as an employee cost with
        a corresponding increase in the share-based compensation reserve within equity. The fair
        value is measured at grant date using the Binomial model, taking into account the terms and
        conditions upon which the options were granted. Where the employees have to meet vesting
        conditions before becoming unconditionally entitled to the options, the total estimated fair
        value of the options is spread over the vesting period, taking into account the probability that
        the options will vest.
        During the vesting period, the number of share options that is expected to vest is reviewed.
        Any resulting adjustment to the cumulative fair value recognised in prior years is
        charged/credited to the profit or loss for the six months period of the review, unless the
        original employee expenses qualify for recognition as an asset, with a corresponding
        adjustment to the share-based compensation reserve. On vesting date, the amount recognised
        as an expense is adjusted to reflect the actual number of options that vest (with a
        corresponding adjustment to the share-based compensation reserve). The equity amount is
        recognised in the share-based compensation reserve until either the option is exercised (when
        it is transferred to the share premium account) or the option expires (when it is released
        directly to retained profits).
    (iii)   Termination benefits
        Termination benefits are recognised when, and only when, the Group demonstrably commits
        itself to terminate employment or to provide benefits as a result of voluntary redundancy by
        having a detailed formal plan which is without realistic possibility of withdrawal.
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (s)   Income tax
      Income tax for the six months period comprises current tax and movements in deferred tax
      assets and liabilities. Current tax and movements 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.
      Current tax is the expected tax payable on the taxable income for the six months period,
      using tax rates enacted or substantively enacted at the end of the reporting period, 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 are 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 differences 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 that, 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 end of the reporting period. Deferred tax assets and
      liabilities are not discounted.
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (s)   Income tax (continued)
      The carrying amount of a deferred tax asset is reviewed at the end of each reporting period
      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.
      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 Group has the legally
      enforceable right to set off current tax assets against current tax liabilities and the following
      additional conditions are met:
      -   in the case of current tax assets and liabilities, 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.
    (t)   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.
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    2      Significant accounting policies (continued)
    (t)    Financial guarantees issued, provisions and contingent liabilities (continued)
    (i)    Financial guarantees issued (continued)
       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 2(t)(ii) 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)   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.
       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.
    (u)    Revenue recognition
       Revenue is measured at the fair value of the consideration received or receivable. 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 arising from the sale of properties 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
       sale and purchase agreement, whichever is the later. Deposits and instalments received on
       properties sold prior to the date of revenue recognition are presented as “Receipts in
       advance” under “Trade and other payables”.
    (ii)   Provision of services
       Revenue from services is recognised when services are rendered.
                                                                                                 China Vanke Co., Ltd.
                                                            Financial statements for the six months ended 30 June 2012
    2       Significant accounting policies (continued)
    (u)     Revenue recognition (continued)
    (iii)   Contract revenue
        When the outcome of a construction contract can be estimated reliably:
          -   revenue from a fixed price contract is recognised using the percentage of completion
              method, measured by reference to the percentage of contract costs incurred to date to
              estimated total contract costs for the contract; and
          -   revenue from a cost plus contract is recognised by reference to the recoverable costs
              incurred during the period plus an appropriate proportion of the total fee, measured by
              reference to the proportion that costs incurred to date bear to the estimated total costs
              of the contract.
        When the outcome of a construction contract cannot be estimated reliably, revenue is
        recognised only to the extent of contract costs incurred that it is probable will be recoverable.
    (iv)    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.
    (v)     Dividends
          -   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)    Interest income
        Interest income is recognised as it accrues using the effective interest method.
    (vii)   Government grants
        Government grants are recognised in the statement of financial position initially 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 revenue 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 from 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.
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (v)   Translation of foreign currencies
      Foreign currency transactions during the year are translated at the foreign exchange rates
      ruling at the transaction dates. Monetary assets and liabilities denominated in foreign
      currencies are translated at the foreign exchange rates ruling at the end of the reporting
      period. Exchange gains and losses are recognised in profit or loss.
      Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
      currency are translated using the foreign exchange rates ruling at the transaction dates. Non-
      monetary assets and liabilities denominated in foreign currencies that are stated at fair value
      are translated using the foreign exchange rates ruling at the dates the fair value was
      determined.
      The results of foreign operations are translated into Renminbi at the exchange rates
      approximating the foreign exchange rates ruling at the dates of the transactions. Statement of
      financial position items are translated into Renminbi at the closing foreign exchange rates at
      the end of the reporting period. The resulting exchange differences are recognised in other
      comprehensive income and accumulated separately in equity in the exchange reserve.
      On disposal of a foreign operation, the cumulative amount of the exchange differences
      relating to that foreign operation is reclassified from equity to profit or loss when the profit or
      loss on disposal is recognised.
    (w)   Borrowing costs
      Borrowing costs that are 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 are capitalised as part of the cost of that asset. Other borrowing costs are expensed in
      the period in which they are incurred.
      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 six months ended 30 June 2012
    2     Significant accounting policies (continued)
    (x)   Related parties
    (a)   A person, or a close member of that person’s family, is related to the Group if that person:
      (i) has control or joint control over the Group;
      (ii) has significant influence over the Group; or
      (iii) is a member of the key management personnel of the Group.
    (b)   An entity is related to the Group if any of the following conditions applies:
      (i) The entity and the Group are members of the same group (which means that each parent,
          subsidiary and fellow subsidiary is related to the others).
      (ii) One entity is an associate or joint venture of the other entity (or an associate or joint
           venture of a member of a group of which the other entity is a member).
      (iii) Both entities are joint ventures of the same third party.
      (iv) One entity is a joint venture of a third entity and the other entity is an associate of the
           third entity.
      (v) The entity is a post-employment benefit plan for the benefit of employees of either the
          Group or an entity related to the Group.
      (vi) The entity is controlled or jointly controlled by a person identified in (a).
      (vii) A person identified in (a)(i) has significant influence over the entity or is a member of
            the key management personnel of the entity (or of a parent of the entity).
      Close members of the family of a person are those family members who may be expected to
      influence, or be influenced by, that person in their dealings with the entity.
    (y)   Segments reporting
      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 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.
                                                                                            China Vanke Co., Ltd.
                                                       Financial statements for the six months ended 30 June 2012
    3   Critical accounting judgements in applying the Group’s accounting policies
    Estimates and judgements used in preparing the financial statements are evaluated and based
    on historical experience and other factors, including expectations of future events that are
    believed to be reasonable under the circumstances. The Group makes estimates and
    assumptions concerning the future. The resulting accounting estimates will, by definition,
    seldom equal the related actual results. The estimates and assumptions that may have a
    significant effect on the carrying amounts of assets and liabilities mainly include those
    related to property development activities.
    (i)     Properties for sale
            As explained in note 2(l), the Group’s properties for sale are stated at the lower of
            cost and net realisable value. Based on the Group’s recent experience and the nature
            of the subject properties, the Group makes estimates of the selling prices, the costs of
            completion in cases for properties held for development and properties under
            development, and the costs to be incurred in selling the properties based on prevailing
            market conditions.
            If there is an increase in costs to completion or a decrease in net sales value, the net
            realisable value will decrease and this may result in provision for properties for sale.
            Such provision requires the use of judgement and estimates. Where the expectation is
            different from the original estimate, the carrying value and provision for properties in
            the periods in which such estimate is changed will be adjusted accordingly.
            In addition, 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 end of the reporting period. Any increase or
            decrease in the provision would affect profit or loss in future years.
    (ii)    Impairment for trade and other receivables
            The Group estimates impairment losses for trade and other receivables resulting from
            the inability of the customers to make the required payments. The Group bases the
            estimates on the aging of the trade and other receivable balance, customer
            creditworthiness, and historical write-off experience. If the financial condition of the
            customers were to deteriorate, actual provisions would be higher than estimated.
    (iii)   Recognition of deferred tax assets
            Deferred tax assets in respect of tax losses and other deductible temporary differences
            carried forward are recognised and measured based on the expected manner of
            realisation or settlement of the carrying amount of the assets, using tax rates enacted
            or substantively enacted at the end of the reporting period. In determining the
            carrying amounts of deferred tax assets, expected taxable profits are estimated which
            involves a number of assumptions relating to the operating environment of the Group
            and require a significant level of judgement exercised by the directors. Any change
            in such assumptions and judgement would affect the carrying amounts of deferred tax
            assets to be recognised and hence the net profit in future years.
                                                                                           China Vanke Co., Ltd.
                                                      Financial statements for the six months ended 30 June 2012
    3   Critical accounting judgements in applying the Group’s accounting policies
    (continued)
    (iv)   Classification between investment properties and owner-occupied properties
           The Group determines whether a property qualifies as an investment property, and
           has developed criteria in making that judgement. Investment property is a property
           held to earn rentals or for capital appreciation or both. Therefore, the Group
           considers whether a property generates cash flows largely independently of the other
           assets held by the Group. Some properties comprise a portion that is held to earn
           rentals or for capital appreciation and another portion that is held for use in the
           production or supply of goods or services or for administrative purposes. If these
           portions could be sold separately or leased out separately under finance lease, the
           Group accounts for the portions separately. If the portions could not be sold
           separately, the property is an investment property only if an insignificant portion is
           held for use in the production or supply of goods or services or for administrative
           purposes. Judgement is made on an individual property basis to determine whether
           ancillary services are so significant that a property does not qualify as an investment
           property.
    (v)    Classification between investment properties and properties held for sale
           The Group develops properties held for sale and properties held to earn rentals and/or
           for capital appreciation. Judgement is made by management on determining whether
           a property is designated as an investment property or a property held for sale. The
           Group considers its intention for holding the properties at the early development stage
           of the related properties. During the course of construction, the related properties
           under construction are accounted for as properties under development included in
           current assets if the properties are intended for sale after their completion, whereas,
           the properties are accounted for as investment properties under construction if the
           properties are intended to be held to earn rentals and/or for capital appreciation.
           Upon completion of the properties, the properties held for sale are transferred to
           completed properties held for sale, while the properties held to earn rentals and/or for
           capital appreciation are transferred to investment properties.
    (vi)   LAT
           As explained in note 9(a), LAT 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 end of the reporting period. Any increase or decrease in estimates would affect
           profit or loss in future years.
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    4     Revenue and segment reporting
    (a)   Revenue
      The principal activities of the Group are development and sale of properties in the PRC.
      Revenue mainly represents income from sale of properties, construction contract and
      property management and related services earned during the year, net of business tax and
      other sales related taxes and discounts allowed, and is analysed as follows:
                                                                          2012                              2011
                                                                   Jan. – Jun.                      Jan. – Jun.
                                                                 RMB’000                           RMB’000
      Sale of properties                                        27,847,524                         18,174,048
      Construction contract                                        635,963                            197,151
      Property management and related services                     330,713                            224,997
      Others                                                       145,360                            290,770
                                                                28,959,560                         18,886,966
      The Group’s customer base is diversified and does not have customer with whom
      transactions have exceeded 10% of the Group’s revenue.
    (b)   Segment reporting
      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/Guangshen 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 the four segments mainly 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 carried out in the PRC.
             Details about the specific cities covered by each region are set out in note 4(b)(i).
             Property management: this segment provides property management and related
             services to purchasers and tenants of the Group’s own developed residential
             properties and shopping arcades, as well as those developed by the external property
             developers. Currently the Group’s activities in this regard are also carried out in the
             PRC.
      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 consolidated financial
      statements.
                                                                                              China Vanke Co., Ltd.
                                                         Financial statements for the six months ended 30 June 2012
    4     Turnover and segment reporting (continued)
    (b)   Segment reporting (continued)
    (i)   Segment results, assets and liabilities
      For the purpose of assessing segment performance and allocating resources among segments,
      the Group’s most senior executive management monitors the results, assets and liabilities
      attributable to each reportable segment on the following bases:
      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, loans and borrowings, and the provision for the estimated
      losses to be borne by the Group in relation to the property management projects, but
      excluding deferred tax liabilities.
      Revenue and expenses are allocated to the reportable segments with reference to sales before
      sales tax 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.
      The measure used for reporting segment profit is the profit before CIT, excluding share of
      profit or loss of associates or jointly controlled entities, dividend income, other income and
      other operating expenses, but including the provision for doubtful debts and the profit arising
      from the inter-segment transactions. LAT which is considered directly attributable to the sale
      of properties is deducted from the segment profit for the review by the Group’s most senior
      executive management.
      Inter-segment sales are priced with reference to prices charged to external parties for similar
      transactions.
                                                                                                                                                     China Vanke Co., Ltd.
                                                                                                                Financial statements for the six months ended 30 June 2012
    4     Turnover and segment reporting (continued)
    (b)   Segment reporting (continued)
    (i)   Segment results, assets and liabilities (continued)
                                                                            Real Estate Development((note 1))
                                                                Beijing          Shenzhen          Shanghai         Chengdu              Property
                                                                                                                                                                    Total
                                                                 Region            Region             Region         Region           Management
                                                               RMB’000          RMB’000         RMB’000         RMB’000             RMB’000               RMB’000
      For the period ended 30 June 2012
      Revenue from external customers, before sales taxes       7,169,322       8,608,262          8,271,885       6,274,232               389,598            30,713,299
      Inter-segment revenue                                        55,744         192,493                  -               -               290,926               539,163
      Reportable segment revenue, before sales taxes            7,225,066       8,800,755          8,271,885       6,274,232               680,524            31,252,462
      Reportable segment profit                                 1,348,769       2,146,954          1,305,043       1,119,931               (19,459)            5,901,238
      Interest income                                            267,987           78,197             91,223           38,160                 2,110              477,677
      Interest expense                                           211,277          288,386            250,863           26,182                    38              776,746
      Share of profits less losses of associates and jointly
                                                                 303,681              82,346        (47,564)           31,459                      -             369,922
      controlled entities((note 2))
      Reportable segment assets                                94,626,710     108,695,974         85,640,978      54,718,202             1,842,118          345,523,982
      Reportable segment liabilities                           79,713,170      94,455,810         74,739,427      49,540,815             1,628,694          300,077,916
                                                                                                                                                      China Vanke Co., Ltd.
                                                                                                                 Financial statements for the six months ended 30 June 2012
    4     Turnover and segment reporting (continued)
    (b)   Segment reporting (continued)
    (i)   Segment results, assets and liabilities (continued)
                                                                             Real Estate Development((note 1))
                                                                 Beijing          Shenzhen          Shanghai         Chengdu              Property
                                                                                                                                                                     Total
                                                                  Region            Region             Region         Region           Management
                                                                RMB’000         RMB’000          RMB’000         RMB’000             RMB’000               RMB’000
      For the period ended 30 June 2011
      Revenue from external customers, before sales taxes       3,133,634        7,568,064          6,723,807       2,264,285               298,005            19,987,795
      Inter-segment revenue                                             -                -                237               -               261,054               261,291
      Reportable segment revenue, before sales taxes            3,133,634        7,568,064          6,724,044       2,264,285               559,059            20,249,086
      Reportable segment profit                                   274,492        2,076,160          2,076,362           76,224               (8,070)            4,495,168
      Interest income                                          22,191,821        5,580,555         17,303,678      25,397,724             1,574,445           72,048,223
      Interest expense                                         25,802,708       30,195,421        165,196,292      56,795,991                 2,049          277,992,461
      Share of profits less losses of associates and jointly
                                                               (8,732,211)       2,477,863       (11,934,677)      34,131,657                       -          15,942,632
      controlled entities((note 2))
      Reportable segment assets                                77,245,186       84,126,721         74,716,284      41,610,385             1,387,563          279,086,139
      Reportable segment liabilities                           65,248,116       72,864,900         64,618,795      38,241,490             1,290,561          242,263,862
                                                                                                                                                China Vanke Co., Ltd.
                                                                                                           Financial statements for the six months ended 30 June 2012
    4     Turnover and segment reporting (continued)
    (b)   Segment reporting (continued)
    (i)   Segment results, assets and liabilities (continued)
      Note (1):
      Beijing region represents Beijing, Tianjin, Shenyang, Anshan, Dalian, Qingdao, Changchun, Yantai, Jilin, Taiyuan, Tangshan, Langfang, Fushun,
      Qinhuangdao and Jinzhong.
      Guangshen region represents Shenzhen, Guangzhou, Qingyuan, Dongguan, Foshan, Zhuhai, Zhongshan, Changsha, Xiamen, Fuzhou, Huizhou,
      Hainan and Putian.
      Shanghai region represents Shanghai, Hangzhou, Su’nan, Ningbo, Nanjing, Zhenjiang, Nanchang, Hefei, Yangzhou, Jiaxing, Wuhu and Wenzhou.
      Chengdu region represents Chengdu, Wuhan, Xi’an, Chongqing, Kunming, Guiyang and Urumqi.
      Note (2):
      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 RMB53 million (2011: RMB 171 million).
                                                                                                           China Vanke Co., Ltd.
                                                                      Financial statements for the six months ended 30 June 2012
    4      Turnover and segment reporting (continued)
    (b)    Segment reporting (continued)
    (ii)   Reconciliation of reportable segment revenues, profit or loss, assets and liabilities
                                                                                                   2012                   2011
                                                                                               Jan.-Jun.              Jan.-Jun.
       Revenue
       Reportable segment revenue                                                            31,252,462             20,249,086
       Elimination of inter-segment revenue                                                   (539,163)              (333,019)
       Unallocated head office and corporate revenue                                              9,693                 72,771
       Sales taxes                                                                          (1,763,432)            (1,101,873)
       Consolidated turnover                                                                 28,959,560             18,886,965
       Profit
       Reportable segment profit                                                              5,901,238              4,495,168
       Elimination of inter-segment profit                                                     (19,060)               (36,291)
       Share of profits less losses of associates and jointly controlled entities               422,520                   7,773
       Dividend income                                                                           27,324                 15,266
       Other net income, excluding net exchange gain                                             69,907                 47,661
       Other operating expenses, exlucding bad debt provision                                  (12,729)                 (4,806)
       Unallocated head office and corporate expenses                                         (340,526)               (72,962)
       Land appreciation tax                                                                  1,514,309              1,415,015
       Consolidated profit before taxation                                                    7,562,983              5,866,824
       Assets
       Reportable segment assets                                                            345,523,982            279,086,139
       Elimination of inter-segment receivables                                           (152,170,457)          (134,365,539)
       Unallocated head office and corporate assets                                         137,350,575            116,580,588
       Consolidated total assets                                                           330,704,100            261,301,188
       Liabilities
       Reportable segment liabilities                                                       300,077,916            242,263,862
       Elimination of inter-segment payables                                              (136,675,662)          (120,925,596)
       Unallocated head office and corporate liabilities                                     97,467,873             82,155,439
       Consolidated total liabilities                                                      260,870,127            203,493,705
                                                                                            China Vanke Co., Ltd.
                                                       Financial statements for the six months ended 30 June 2012
    5   Other revenue
                                                                                2012                     2011
                                                                           Jan. – Jun.           Jan. – Jun.
                                                                           RMB’000                RMB’000
    Interest income                                                           367,774                 349,416
    Dividend income                                                            27,324                  15,266
                                                                              395,098                 364,682
    6   Other net income
                                                                                2012                    2011
                                                                           Jan. – Jun.            Jan. – Jun.
                                                                           RMB’000                RMB’000
    Forfeited deposits and compensation from customers                         23,640                    9,863
    Gain on disposals of subsidiaries                                          36,928                   (1,240)
    Gain on acquisitions of subsidiaries                                          380                      450
    Gain on disposals of minority interests of subsidiary                            -                   5,200
    Gain on disposals of other investments                                    (14,256)                     881
    Net gain/(loss) on disposals of property,
      plant and equipment                                                          33                     (195)
    Net realised and unrealised loss on financial derivatives                  (2,271)                   3,628
    Net exchange gain                                                           4,780                   10,927
    Other sundry income                                                        25,453                   32,227
                                                                               74,687                   61,741
    7   Other operating expenses
                                                                                2012                      2011
                                                                         Jan. – Jun.              Jan. – Jun.
                                                                          RMB’000                  RMB’000
    Provision for doubtful debts                                           100,317                     68,439
    Compensation to customers                                                 9,417                        503
    Donations                                                                    904                    1,444
    Penalties                                                                    738                    1,749
    Other sundry expenses                                                     1,670                     4,262
                                                                           113,046                     76,397
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    8     Profit before taxation
      Profit before taxation is arrived at after charging/(crediting):
    (a)   Finance costs
                                                                                    2012                    2011
                                                                               Jan. – Jun.            Jan. – Jun.
                                                                               RMB’000                RMB’000
      Interest on interest-bearing borrowings                                  2,606,843                1,857,312
      Less: Interest expense capitalised into inventories (note)              (1,818,462)              (1,339,721)
                                                                                  788,381                 517,591
      Note: The borrowing costs have been capitalised at a rate of 9.2% per annum (2011: 8.9%).
    (b)   Staff costs
                                                                                    2012                    2011
                                                                               Jan. – Jun.            Jan. – Jun.
                                                                               RMB’000                RMB’000
      Salaries, wages and other benefits                                       1,013,852                  647,624
      Contributions to defined contribution
        retirement plan                                                           128,862                   91,989
      Equity-settled share-based payment expenses                                  57,814                   26,082
                                                                               1,200,528                  765,695
    (c)   Other items
                                                                                    2012                    2011
                                                                               Jan. – Jun.             Jan. – Jun.
                                                                               RMB’000                RMB’000
      Depreciation and amortisation                                              76,439                     58,747
      Impairment loss on trade and other receivables                            100,317                     68,439
      Cost of inventories                                                    18,383,496                 10,708,755
      Operating lease charges in respect of properties                           34,381                     43,212
      Rental income                                                             125,192                    208,653
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    9     Income tax in the consolidated income statement
    (a)   Taxation in the consolidated income statement represents:
                                                                             2012                        2011
                                                                      Jan. – Jun.                Jan. – Jun.
                                                                      RMB’000                    RMB’000
      Current tax
      PRC Enterprise Income Tax
      -Provision for CIT                                              1,910,218                   1,495,963
      -Provision for LAT                                              1,537,251                   1,421,217
      -Provision for withholding tax                                     25,945                       5,181
                                                                      3,473,414                   2,922,361
      Deferred tax
      Fair value adjustments arising
      from business combinations
      - CIT                                                             (8,927)                     (14,569)
      - LAT                                                            (22,940)                      (6,202)
      Accrual for LAT                                                  (53,672)                     (52,708)
      Tax losses                                                      (294,789)                    (208,018)
      Bad debt provision and write-
                                                                        (21,665)                              -
      down of inventories
      Accruals for construction costs                                   (6,919)                     (19,188)
      Withholding tax                                                    27,112                        4,665
      Other temporary differences                                      (64,109)                     (12,035)
                                                                      (445,909)                    (308,055)
                                                                      3,027,505                   2,614,306
    (i)   CIT
      The provision for CIT 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 is 25% (2011: from 24% to 25%).
      According to the CIT Law that was passed by the Standing Committee of the Tenth National
      People’s Congress (“NPC”) on 16 March 2007 and the Notice of the State Council on the
      Transitional Preferential Policy regarding implementation of the CIT Law (Guo Fa [2007]
      No.39) issued on 26 December 2007, income tax rate is revised to 25% with effect from 1
      January 2008. For certain enterprises that are entitled to preferential income tax rate of 15%
      before the implementation of the CIT Law, the income tax rate applicable will be 18%, 20%,
      22%, 24% and 25% in 2008, 2009, 2010, 2011, and 2012 and thereafter respectively. As at
      30 June 2012 and 2011, deferred tax assets and liabilities were calculated based on the
      applicable income tax rates enacted by the NPC from 1 January 2008.
                                                                                                   China Vanke Co., Ltd.
                                                              Financial statements for the six months ended 30 June 2012
    9       Income tax in the consolidated income statement (continued)
    (a)     Taxation in the consolidated income statement represents: (continued)
    (ii)    LAT
        LAT 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.
    (iii)   Withholding tax
        Withholding tax is levied on the overseas subsidiaries in respect of dividend distributions
        arising from profit of PRC subsidiaries earned after 1 January 2008 ranged from 5% to 10%.
    (b)     Reconciliation between tax expense and accounting profit at applicable tax rates:
                                                                                  2012                         2011
                                                                            Jan. – Jun.                Jan. – Jun.
                                                                            RMB’000                    RMB’000
        Profit before income tax                                            7,562,983                   5,866,824
        Less: Land Appreciation Tax                                       (1,514,311)                 (1,415,015)
                                                                            6,048,672                   4,451,809
        Notional tax on profit before taxation
        calculated at effective income tax rate of the                      1,495,776                   1,086,513
        relevant group subsidiaries concerned
        Non-taxable income                                                  (105,630)                       (2,068)
        Non-deductible expenses                                                88,950                       81,422
        Effect of temporary difference not recognised                           55,989                      34,582
        Recognition of previously unrecognised tax
                                                                              (21,891)                      (1,045)
        losses
        Effect of change in tax rates on deferred tax in
                                                                                       -                      (113)
        respect of current year temporary differences
        PRC Corporate Income Tax                                            1,513,194                   1,199,291
        Land Appreciation Tax                                               1,514,311                   1,415,015
        Actual total tax expense                                            3,027,505                   2,614,306
                                                                                                          China Vanke Co., Ltd.
                                                                     Financial statements for the six months ended 30 June 2012
    10    Other comprehensive income
    (a)   Tax effects relating to each component of other comprehensive income
                                                2012 Jan.-Jun.                                   2011 Jan.-Jun.
                                    Before-             Tax            Net-of-       Before-              Tax         Net-of-
                                         tax        expense                tax            tax          benefit            tax
                                    amount                            amount         amount                          amount
                                   RMB’000        RMB’000          RMB’000       RMB’000        RMB’000        RMB’000
                                                 (note 25(d))                                     (note 25(d))
      Exchange differences on
        translation of financial
        statements of overseas
        subsidiaries                 (73,372)                          (73,372)         88,446                         88,446
      Available-for-sale
        securities: net
        movement in fair value
        reserve                      (36,498)          9,124           (27,374)
      Other comprehensive
        income                      (109,870)         (9,124)         (100,746)         88,446                         88,446
    (b)   Components of other comprehensive income, including reclassification adjustments
                                                                                              2012                     2011
                                                                                         Jan. – Jun              Jan. – Jun
                                                                                         RMB’000                 RMB’000
      Available-for sale securities:
        Changes in fair value recognised during the year                                    (27,374)
        Reclassification adjustments for amounts
           transferred to profit or loss:                                                            -
         Net movement in the fair value reserve during the
           year recognised in other comprehensive income                                    (27,374)
    11    Basic earnings per share
      The calculation of basic earnings per share is based on the profit attributable to equity
      shareholders of the Company of RMB 3,725,085,079 (2011: RMB 2,977,854,653) and the
      weighted average of 10,995,210,218 (2011: 10,995,210,218) shares in issue during the year.
      The Group has a share option scheme which was adopted on 25 April 2011 (see note 28).
      The scheme gives rise to potential A shares of the Company. The potential A shares have no
      diluted effect for the six months ended 30 June 2012, but may have diluted effect in future
      years.
                                                                                                                   China Vanke Co., Ltd.
                                                                              Financial statements for the six months ended 30 June 2012
    12   Property, plant and equipment
                                  Hotel and
                            other buildings   Improvements     Leasehold   Machinery and            Electronic and         Construction
                           held for own use     to premises   prepayment   motor vehicles         other equipment           in progress        Total
                                  RMB’000       RMB’000      RMB’000        RMB’000                 RMB’000             RMB’000       RMB’000
    Cost:
    At 1 January 2011           1,302,156           84,973      383,379         127,988                   203,393               764,282    2,866,171
    Additions                      15,929          39,935        71,691           62,265                    46,251              289,177      525,248
    Transfer                      347,907                -            -                -                         -            (347,907)            -
    Disposals                    (11,873)          (5,663)            -         (12,856)                  (12,565)                    -     (42,957)
    At 31 December 2011         1,654,119         119,245       455,070         177,397                   237,079               705,552    3,348,462
    At 1 January 2012           1,654,119         119,245       455,070         177,397                   237,079               705,552    3,348,462
    Additions                       1,229          14,072        32,746            5,051                    16,612              226,721      296,431
    Transfer                        3,340            2,594            -              805                       207               (6,946)            -
    Disposals                           -          (1,273)            -          (3,615)                   (3,406)                     -      (8,294)
    At 30 June 2012             1,658,688         134,638       487,816         179,638                   250,492               925,327    3,636,599
                                                                                                                       China Vanke Co., Ltd.
                                                                                  Financial statements for the six months ended 30 June 2012
    12   Property, plant and equipment (continued)
                                        Hotel and
                                  other buildings   Improvements     Leasehold   Machinery and           Electronic and         Construction
                                 held for own use     to premises   prepayment   motor vehicles        other equipment           in progress          Total
                                        RMB’000       RMB’000      RMB’000        RMB’000                RMB’000             RMB’000         RMB’000
    Accumulated amortisation
    and depreciation:
    At 1 January 2011                   215,074           45,921        9,427           77,701                  128,071                       -     476,194
    Charge for the year                   51,204          20,505       10,169           18,055                   28,779                       -     128,712
    Written back on disposals            (8,904)         (3,489)            -         (11,160)                 (10,780)                       -    (34,333)
    At 31 December 2011                 257,374           62,937       19,596           84,596                  146,070                       -     570,573
    At 1 January 2012                   257,374          62,937        19,596          84,596                  146,070                        -    570,573
    Charge for the year                  29,452          12,010         5,046            9,278                  15,451                        -     71,237
    Written back on disposals                 -          (1,093)            -          (2,214)                  (2,744)                       -     (6,051)
    At 30 June 2012                     286,826          73,854        24,642          91,660                  158,777                        -    635,759
    Net book value:                           -               -             -                -                        -                    -              -
    At 30 June 2012                   1,371,862          60,784       463,174           87,978                   91,715              925,327      3,000,840
    At 31 December 2011               1,396,745          56,308       435,474           92,801                   91,009              705,552      2,777,889
                                                                                              China Vanke Co., Ltd.
                                                         Financial statements for the six months ended 30 June 2012
    13    Investment properties
                                                                           30 Jun. 2012            31 Dec. 2011
                                                                             RMB’000                RMB’000
      Cost:
      At 1 January                                                           1,155,945                  150,401
      Addition                                                                 104,435                1,005,544
      Disposals                                                                      -                        -
      At 30 June                                                             1,260,380            1,155,945
                                                                     -------------------- --------------------
      Accumulated depreciation:
      At 1 January                                                               29,840                   21,225
      Charge for the six months period                                            5,202                    8,615
      Written back on disposals                                                       -                        -
      At 30 June                                                                 35,042               29,840
                                                                     -------------------- --------------------
      Net book value:
      At 30 June                                                             1,225,338                1,126,105
      Investment properties include those under development at the end of the reporting period
      with carrying amount of RMB1,416 million (2011: 920million).
      Investment properties comprise certain commercial properties that are leased to third 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 RMB1,735 million (2011: RMB 1,519 million).
    (a)   The analysis of net book value of investment properties is set out as follows:
                                                                          30 Jun. 2012             31 Dec. 2011
                                                                            RMB’000                 RMB’000
      In the PRC, held on leases of
           -                                                                            Between 10 and 50 years
                                                                                957,422           856,635
           -                                                                            Over 50 years267,916
                                                                                269,470
                                                                             1,225,338                1,126,105
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    13    Investment properties (continued)
    (b)   The Group leases out investment properties under operating leases. The leases typically run
      for an initial period of two to twenty years. None of the leases includes contingent rentals.
      The Group’s total future minimum lease payments under non-cancellable operating leases are
      receivable as follows:
                                                                 30 Jun. 2012       31 Dec. 2011
                                                                   RMB’000           RMB’000
      Within 1 year                                                             13,661                  17,815
      After 1 year but within 5 years                                          205,872                 131,176
      After 5 years                                                            191,573                 271,408
                                                                               411,106                 420,399
    14    Interest in associates
                                                                        30 Jun. 2012            31 Dec. 2011
                                                                           RMB’000                RMB’000
      Share of net assets                                                   2,349,667                2,160,824
      The following list contains only the particulars of associates, all of which are unlisted
      corporate entities, which principally affected the results or assets of the Group.
                                                                                      Proportion of
                                                                                   ownership interest
                                                         Place of              Group’s
                                                    incorporation              effective          Principal
      Name of company                               and operation               interest            activity
      Beijing Jinyu Vanke Property                              PRC                 49%               Property
        Development Company Limited                                                               development
      Wuhan Golf City Gardern Real Estate                       PRC                 49%               Property
        Company Limited (note 1)                                                                  development
      Chengdu Yihang Vanke Binjiang Real                        PRC                 49%               Property
        Estate Company Limited (note 1)                                                           development
      Hefei Yihang Vanke Real Estate                            PRC                 50%               Property
        Company Limited (note1, 2)                                                                development
      Suzhou Zhonghang Vanke Changfeng                          PRC                 49%               Property
        Real Estate Company Limited (note 1)                                                      development
      Changsha Oriental City Real Esteate                        PRC                20%               Property
        Company Limited                                                                           development
      Foshan Shunde District Zhonghang                          PRC                 49%               Property
        Vanke Property Company Limited                                                            development
      Xiamen Wantefu Property Development                       PRC                 30%               Property
        Company Limited                                                                           development
                                                                                            China Vanke Co., Ltd.
                                                       Financial statements for the six months ended 30 June 2012
    14   Interest in associates (continued)
                                                                                     Proportion of
                                                                                  ownership interest
                                                        Place of              Group’s
                                                   incorporation              effective          Principal
    Name of company                               and operation               interest            activity
    Guangzhou Yinyejunrui Property                            PRC                 49%               Property
       Development Company Limited (note 1)                                                      development
    Shanghai Jingyuan Property Development                    PRC                 45%               Property
       Company Limited                                                                           development
    Langfang Kuangshijiye Property                            PRC                 50%               Property
       Development Company Limited (note 2)                                                      development
    Shanghai Vanke Changning Property                         PRC                 49%               Property
       Development Company Limited (note 1)                                                      development
    Shanghai Chongwan Property Development                    PRC                 49%               Property
       Company Limited (note 1)                                                                  development
    Shenyang Zhongtie Vanke Langyu Property                   PRC                 49%               Property
       Development Company Limited (note 2)                                                      development
    Chongqing Wanbin Property Development                     PRC                 45%               Property
       Company Limited (note 1)                                                                  development
    Suzhou Kejian Property Development                        PRC                 49%               Property
       Company Limited (note 1)                                                                  development
    Beijing Wuyuankesheng Property                            PRC                 49%               Property
       Development Company Limited                                                               development
    Beijing Jingtouyintai Property Development                PRC                 50%               Property
       Company Limited (note 2)                                                                  development
    Guangzhou Wanshang Property                               PRC                 33%               Property
       Development Company Limited                                                               development
    Chongqing Zhonghang Vanke Yunling                         PRC                 45%               Property
       Property Development Company Limited (note 1)                                             development
    Chongqing Zhonghang Vanke Junjing Property                PRC                 45%               Property
       Development Company Limited (note 1)                                                      development
    Changchun Vanke Xizhigu Property                          PRC                 50%               Property
       Development Company Limited (note 2)                                                      development
    Shanghai NanduBaima Property                              PRC                 49%               Property
       Development Company Limited                                                               development
    Shanghai Zunyi Wuye Service                               PRC                 30%                Service
       Company Limited                                                                           management
    Ningbo Zhongwan Property                                  PRC                 49%               Property
       Development Company Limited                                                               development
    Notes:
    (1)      Except for the equity interest held directly, the Group also hold equity interest in
              these associates through a jointly controlled entity.
    (2)      Pursuant to the voting rights in the board of directors, the Group has significant
              influence in these entities.
                                                                                              China Vanke Co., Ltd.
                                                         Financial statements for the six months ended 30 June 2012
    14   Interest in associates (continued)
    Summary financial information on associates:
                                       Assets     Liabilities         Equity          Revenue          Profit
                                     RMB’000     RMB’000          RMB’000         RMB’000        RMB’000
    30 June 2012
    100 per cent                   39,913,114 32,966,029           6,947,085 3,301,176                 499,680
    Group’s effective interest    18,337,971 15,988,304           2,349,667 15,182,637                256,481
    31 December 2011
    100 per cent                   39,057,055 32,217,827           6,839,228        4,857,011          798,304
    Group’s effective interest    18,011,971 15,851,147           2,160,824        2,374,551          397,783
    15   Interest in jointly controlled entities
                                                                         30 Jun. 2012          31 Dec. 2011
                                                                            RMB’000              RMB’000
    Share of net assets                                                     4,451,749              4,183,142
    The following list contains only the particulars of jointly controlled entities, all of which are
    unlisted corporate entities, which principally affected the results or assets of the Group.
                                                                                       Proportion of
                                                                                    ownership interest
                                                          Place of              Group’s
                                                     incorporation              effective          Principal
    Name of company                                 and operation               interest            activity
    Shanghai Jialai Real Estate Development                     PRC                 49%               Property
       Company Limited (note)                                                                      development
    Zhonghang Vanke Company                                     PRC                 40%               Property
       Limited (note)                                                                              development
    Dongguan Vanke Property                                     PRC                 50%               Property
       Company Limited                                                                             development
    Changsha Lingyu Real Estate Development                     PRC                 60%               Property
       Company Limited (note)                                                                      development
    Changsha Lingyu Investment Company                          PRC                 60%               Property
       Limited (note)                                                                              development
    Beijing Zhongliang Vanke Real Estate                        PRC                 50%               Property
       Development Company Limited                                                                 development
    Wuhan Vanke Qinganju Real Estate                            PRC                 30%               Property
       Company Limited                                                                             development
    Yunnan Vanke Chengtou Real Estate Investment                PRC                 51%               Property
       Company Limited                                                                             development
    Hangzhou Xiangge Investment Management                      PRC                 50%             Consulting
       Company Limited                                                                                  service
                                                                                              China Vanke Co., Ltd.
                                                         Financial statements for the six months ended 30 June 2012
    Pingdu Vanke Real Estate Investment                         PRC                 51%               Property
       Company Limited                                                                             development
    15   Interest in jointly controlled entities (continued)
                                                                                       Proportion of
                                                                                    ownership interest
                                                          Place of            Group’s
                                                     incorporation            effective            Principal
    Name of company                                 and operation             interest              activity
    FuYang Donghe Real Estate Investment                        PRC                 20%               Property
       Company Limited                                                                             development
    Shanghai Wanshuang Construction Technology                  PRC                 60%             Consulting
       Company Limited                                                                                  service
    Shanghai Vanke YiDa Investment Management                   PRC                 50%             Consulting
       Company Limited                                                                                  service
    Chongqing Liangjiang Vanke Investment                       PRC                 50%               Property
       Company Limited                                                                             development
    Tangshan Wanrun Real Estate Investment                      PRC                 40%               Property
       Company Limited                                                                             development
    Wuhan Yayuan Vanke Real Estate Investment                   PRC                 50%               Property
       Company Limited                                                                             development
    Beijing Dongfang Vanke Investment Management                PRC                 50%            Investment
       Company Limited
    Tianjin Diwan Investment Company                            PRC                 40%               Property
       Limited (note)                                                                              development
    Hangzhou Dongshang Property                                 PRC                 50%               Property
       Development Company Limited                                                                 development
    Beijing Wanxin Investment Development                       PRC                 50%             Investment
       Company
    Zhuhai Haiyu Property Development                           PRC                 50%               Property
       Company Limited                                                                             development
    Tianjin Songke Real Estate Company                          PRC                 49%               Property
       Limited (note)                                                                              development
    Beijing Jingtou Vanke Property Development                  PRC                 50%               Property
       Company Limited                                                                             development
    Fuyang Yongtong Property Development                        PRC                 20%               Property
       Company Limited (note)                                                                      development
    Shanghai Wanzhicheng Property                               PRC                 50%               Property
       Development Company Limited                                                                 development
    Shanghai Ledu Property Development                          PRC                 33.3%             Property
       Company Limited (note)                                                                      development
    Wuhan Liantou Vanke Property                                PRC                 50%               Property
       Development Company Limited                                                                 development
    Shandong Xiaozhushan Construction                           PRC                 34%               Property
       Development Company Limited                                                                 development
    Notes: A contractual arrangement between the Group and the counterparty of these entities
            establishes joint control over the financial and operating policies of these entities.
    Summary financial information on jointly controlled entities – Group’s effective interest
                                                                                            China Vanke Co., Ltd.
                                                       Financial statements for the six months ended 30 June 2012
    15   Interest in jointly controlled entities (continued)
                                                                        30 Jun. 2012           31 Dec. 2011
                                                                           RMB’000               RMB’000
    Non-current assets                                                     1,177,376              1,058,502
    Current assets                                                       37,721,165              16,108,803
    Non-current liabilities                                               (1,364,543)            (1,769,198)
    Current liabilities                                                 (33,082,249)            (11,214,965)
    Net assets                                                            4,451,749                4,183,142
    Income                                                                1,040,475                1,801,032
    Expenses                                                               (874,436)              (1,554,827)
    Profit for the period                                                    166,039                 246,205
    16   Other financial assets
                                                                       30 Jun. 2012          31 Dec. 2011
    Available-for-sale securities in the PRC                             RMB’000              RMB’000
    Equity securities
    -unlisted                                                                87,243                519,026
    -listed in PRC                                                              144                  4,764
                                                                              87,387                523,790
    17   Other non-current assets
    The other non-current assets mainly represent entrusted loans and prepayments for
    acquisitions of investees. The entrusted loans are interest bearing at market rate, unsecured
    and repayable after one year but within two years.
                                                                                               China Vanke Co., Ltd.
                                                          Financial statements for the six months ended 30 June 2012
    18       Inventories
                                                                       30 Jun. 2012                31 Dec. 2011
                                                                          RMB’000                    RMB’000
         Properties held for development                                61,817,761                   62,985,176
         Properties under development                                  156,208,127                  138,330,541
         Completed properties for sale                                    8,494,713                   7,239,386
         Others                                                             143,179                     106,247
                                                                       226,663,780                  208,661,350
    (a)       The analysis of carrying value of leasehold land held for property development for sale is
      as follows:
         In the PRC, held on lease of                                 30 Jun. 2012                 31 Dec. 2011
                                                                         RMB’000                     RMB’000
         Between 10 and 50 years                                       13,492,075                    13,979,928
         Over 50 years                                                105,024,751                   120,888,196
                                                                      118,516,826                   134,868,124
    (b)      The analysis of the amount of inventories recognised as an expense and included in profit
         or loss is as follows:
                                                                      30 Jun. 2012                 31 Dec. 2011
                                                                         RMB’000                     RMB’000
         Carrying amount of inventories sold                            18,383,496                   41,236,819
         The amount of properties held for development and properties under development expected
         to be recovered after more than one year is 93,651RMB million (2011: RMB109,070
         million). All of the other inventories are expected to be recovered within one year.
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    19   Trade and other receivables
                                                                     30 Jun. 2012               31 Dec. 2011
                                                                        RMB’000                   RMB’000
    Trade debtors                                                      1,099,206                  1,497,916
    Less: allowance for doubtful debts                                  (21,515)                   (27,849)
                                                                        1,077,691                  1,470,067
    Other debtors                                                    11,203,100                   8,286,197
    Amount due from associates                                         4,719,103                  6,176,274
    Amount due from jointly controlled entities                        3,180,033                  3,978,143
    Prepayments                                                      22,626,341                  20,116,219
    Gross amount due from customers
    for contract work                                                     62,786                     44,747
                                                                       42,869,054                 40,071,647
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    19    Trade and other receivables (continued)
    (a)   Trade debtors mainly arose from sales of properties. Proceeds in respect of sales of properties
      are to be received in accordance with the terms of the related sales and purchase agreements.
      The ageing analysis of trade debtors is as follows:
                                                                            30 Jun. 2012           31 Dec. 2011
                                                                               RMB’000               RMB’000
      Current                                                                    981,036             1,448,709
                                                                       --------------------- ---------------------
      Less than 1 year past due                                                    96,281                      772
      More than 1 year past due                                                       374                   20,586
                                                                                   96,655                21,358
                                                                       --------------------- ---------------------
                                                                               1,077,691                1,470,067
      The Group’s credit policy is set out in note 30(a).
      As at 30 June 2012, Trade debtors of approximately RMB21.52 million (2011:
      approximately RMB27.85 million) were impaired. The Group makes a reasonable provision
      based on its past experience.
    (b)   The amounts due from associates and jointly controlled entities as at 30 June 2012 include an
      amount of RMB2,531 million which are interest bearing at market rate, unsecured and
      repayable on demand. The interest income from these associates and jointly controlled
      entities amounted to RMB95 million in 2012. The remaining amounts due from associates
      and jointly controlled entities are unsecured, interest free and repayable on demand.
    (c)   The balance includes prepayments for leasehold land of RMB8,935 million (2011:
      RMB10,366 million).
    (d)   The aggregate amount of costs incurred plus recognised profits less recognised losses to date,
      included in the gross amount due from/to customers for contract work at 30 June 2012, is
      RMB2,196 million (2011: RMB1,518 million).
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    20   Pledged deposits
    The balance mainly represents the guarantee deposits in respect of the proceeds received
    from pre-sale of properties..
    21   Cash and cash equivalents
                                                                        30 Jun. 2012             31 Dec. 2011
                                                                           RMB’000                 RMB’000
    Cash at bank and in hand                                            45,708,065                33,605,320
    Other cash equivalents                                                   11,663                    8,792
                                                                         45,719,728                33,614,112
    22   Loans and borrowings
    This note provides information about the contractual terms of the Group’s loans and
    borrowings. For more information about the Group’s exposure to interest rate risk, please
    refer to note 30(c).
                                                                          30 Jun. 2012           31 Dec. 2011
                                                                             RMB’000               RMB’000
    Current
    Secured
    - Bank loans (note (a))                                                  3,319,330              1,636,415
    - Other borrowings                                                       1,890,400              1,600,000
                                                                              5,209,730              3,236,415
    Unsecured
    - bank loans                                                            7,983,793             11,946,031
    - entrusted bank loan from jointly controlled entity(note a)                    -                      -
    - current portion of long term other borrowings                         7,112,320              8,387,830
                                                                            15,096,113             20,333,861
                                                                            20,305,843             23,570,276
                                                                                            China Vanke Co., Ltd.
                                                       Financial statements for the six months ended 30 June 2012
    22    Loans and borrowings (continued)
                                                                     30 Jun. 2012               31 Dec. 2011
                                                                        RMB’000                   RMB’000
      Non-current
      Secured
      - bank loans (note (a))                                           5,469,561                  4,635,821
      - other borrowings (note (b))                                     2,244,680                  3,062,067
      - corporate bonds (note (c))                                      2,972,681                  2,960,450
                                                                       10,686,922                 10,658,338
      Guaranteed
      - bank loans (note (a))                                              290,000                          -
      - other borrowings (note (b))                                        320,000                    320,000
                                                                           610,000                    320,000
      Unsecured
      - bank loans (note (a))                                          13,882,962                  8,324,630
      - other borrowings (note (b))                                    14,532,594                  4,629,444
      - corporate bonds (note (c))                                      2,893,072                  2,889,947
                                                                       31,308,628                 15,844,021
                                                                       42,605,550                 26,822,359
      At 31 December, non-current interest-bearing borrowings and corporate bonds were
      repayable as follows:
                                                            30 Jun. 2012   31 Dec. 2011
                                                               RMB’000       RMB’000
      After 1 year but within 2 years                                      35,083,948             19,865,824
      After 2 years but within 5 years                                      7,521,602              6,956,535
                                                                           42,605,550             26,822,359
      Notes:
    (a)   Bank loans
      The secured bank loans are secured over certain properties held for development and
      properties under development with aggregate carrying value of RMB8,375 million (2011:
      RMB3,469 million) or pledged by the shares of interest in certain subsidiaries of the Group.
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    22    Loans and borrowings (continued)
    (b)   Other borrowings
                                                                  30 Jun. 2012                   31 Dec. 2011
                                                                     RMB’000                       RMB’000
      Current
      Proceeds                                                        9,002,720                      9,987,830
      Non-current
      Proceeds                                                      16,837,649                       8,071,886
      Transactions costs                                              (60,375)                        (60,375)
                                                                    16,777,274                       8,011,511
      The secured other borrowings are pledged by the shares of interest in certain subsidiaries of
      the Group.
    (c)   Corporate bonds
                                                                   30 Jun. 2012
                                                                    RMB’000
                                                         Corporatebonds         Corporate bonds
                                                             No.101688               No.101699
      Brought forward value at 1 January                      2,889,947               2,960,450
      Transaction costs amortised                                 3,125                  12,231
      Carrying value at 30 June                               2,893,072               2,972,681
                                                                   31 Dec. 2011
                                                                    RMB’000
                                                         Corporatebonds         Corporate bonds
                                                             No.101688               No.101699
      Brought forward value at 1 January                      2,884,022               2,937,122
      Transaction costs amortised                                 5,925                  23,328
      Carrying value at 30 June                               2,889,947               2,960,450
                                                                                            China Vanke Co., Ltd.
                                                       Financial statements for the six months ended 30 June 2012
    22    Loans and borrowings (continued)
    (c)   Corporate bonds (continued)
      In September 2008, the Company issued two series of corporate bonds, namely the “No.
      101688 Bonds” and the “No. 101699 Bonds”, amounting to RMB 5,900 million. Both
      Bonds are listed on the Shenzhen Stock Exchange.
      The No. 101688 Bonds are with no guarantee and interest bearing at 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 maximum of 100 basis 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 arrears on 6 September
      2012 and 2013. None of the No. 101688 Bonds were early redeemed by the bondholders on
      6 September 2011.
      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 5.5% per annum
      payable in arrears on 6 September 2009, 2010, 2011, 2012 and 2013.
    23    Financial derivatives
                                                                        30 Jun. 2012           31 Dec. 2011
                                                                           RMB’000               RMB’000
      Interest rate swaps                                                      19,313                   17,042
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    24    Trade and other payables
                                                                    30 Jun. 2012            31 Dec. 2011
                                                                       RMB’000                RMB’000
      Trade creditors and bills payable                              28,956,926               29,777,063
      Other payables and accruals                                    25,617,424               24,464,680
      Dividends payable                                               1,429,377                        -
      Amounts due to associates                                         903,917                1,873,455
      Amounts due to jointly controlled entities                      1,784,466                1,676,680
      Receipts in advance                                           130,802,008              111,075,180
      Gross amount due to customers for contract work                    62,786                   26,538
                                                                    189,556,904              168,893,596
      Included in trade and other payables is retention payable of RMB486 million (2011:
      RMB300 million) which are expected to be settled after one year.
      The amounts due to associates and jointly controlled entities include an amount of RMB1,349
      million which are interest bearing at market rate, unsecured and repayable on demand. The
      interest expenses to these associates and jointly controlled entities amounted to RMB31
      million in 2012. The remaining amounts due to associates and jointly controlled entities are
      unsecured, interest free and repayable on demand.
    25    Income tax in the statement of financial position
    (a)   Current taxation in the statement of financial position represents:
                                                                    30 Jun. 2012              31 Dec. 2011
                                                                       RMB’000                  RMB’000
      CIT                                                              1,509,817                 2,423,046
      LAT                                                              5,709,244                 5,820,201
                                                                       7,219,061                 8,243,247
      LAT 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 Group 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 LAT, the provisions have been recorded as current liabilities as at 30 June 2012
      and 31 December 2011.
                                                                                                China Vanke Co., Ltd.
                                                           Financial statements for the six months ended 30 June 2012
    25    Income tax in the statement of financial position (continued)
    (b)   Deferred tax assets
      Deferred tax assets are attributable to the items set out below:
                                                                       30 Jun. 2012                31 Dec. 2011
                                                                          RMB’000                     RMB’000
      Tax losses                                                          1,109,835                     815,046
      Bad debt provision and write-down of
                                                                               49,930                      28,265
      inventories
      Accruals for construction costs                                        203,989                     197,070
      Accrual for LAT                                                      1,129,706                   1,076,034
      Other temporary differences                                            273,936                     209,827
                                                                           2,767,396                   2,326,242
      Deferred tax assets have not been recognised in respect of the following items:
                                                                       30 Jun. 2012                31 Dec. 2011
                                                                          RMB’000                    RMB’000
      Tax losses                                                            951,349                    778,467
      Other temporary differences                                            86,430                     80,653
                                                                          1,037,779                    859,120
      The tax losses expire between 2012 and 2017. The deductible temporary differences will not
      expire the under current tax legislation. Deferred tax assets have not been recognised in
      respect of these items because it is not probable that future taxable profit will be available
      against which the Group can utilise the benefits therefrom.
    (c)   Deferred tax liabilities
      Deferred tax liabilities are attributable to the items set out below:
                                                                       30 Jun. 2012                31 Dec. 2011
                                                                        RMB’000                    RMB’000
      Fair value adjustments on available-for-sale securities                           -                    9,124
      Fair value adjustments arising from business
                                                                               978,438                 1,010,306
      combinations
      Other temporary differences                                             112,445                     85,332
                                                                            1,090,883                  1,104,762
                                                                                            China Vanke Co., Ltd.
                                                       Financial statements for the six months ended 30 June 2012
    25    Income tax in the statement of financial position (continued)
    (d)   Movements in deferred taxation, net:
                                                                       30 Jun. 2012            31 Dec. 2011
                                                                          RMB’000                  RMB’000
      At 1 January                                                        1,221,480                   557,054
      Transferred to consolidated income statement (9(a))                   445,909                   673,550
      Recognised in other comprehensive income (10(a))                        9,124                    (9,124)
      At 30 June                                                          1,676,513                 1,221,480
    26    Provisions
                                                                       30 Jun. 2012             31 Dec. 2011
                                                                          RMB’000                 RMB’000
      Balance at 1 January                                                   38,678                   41,107
      Provisions made during the year                                        22,200                   10,524
      Provisions used during the year                                       (2,974)                 (12,953)
      Balance at 30 June                                                      57,904                    38,678
      The balance represents the estimated losses to be borne by the Group in relation to the
      property management projects.
    27    Other non-current liabilities
      The balance mainly represents the amounts that hold on behalf of the owners committees in
      the property management sector.
                                                                                             China Vanke Co., Ltd.
                                                        Financial statements for the six months ended 30 June 2012
    28    Equity settled share-based transactions
      The Group has a share option scheme which was adopted on 25 April 2011 whereby the
      senior management and key staff of the Group are granted certain options at nil consideration
      to subscribe for an aggregate of 110,000,000 A shares of the Company. The key management
      are granted with 33,000,000 A shares. 40% of the options vest after one year (30% after two
      years and the remaining 30% after three years) from the date of grant and are then
      exercisable within a period of two years. Each option gives the holder the right to subscribe
      for one A share of the Company.
    (a)   The number and weighted average exercise prices of share options are as follows:
                                                                                                        2012
                                                                                                Jan.-Jun.
                                                                                                     Number
                                                                                                        ’000
      Outstanding at the beginning of the year                                                         101,368
      Granted during the year
      Forfeited during the year                                                                          (5,129)
      Outstanding at the end of the year                                                                 96,239
      Exercisable at the end of the year                                                                        -
      No share options were exercised during the year.
    (b)   Terms of unexpired and unexercised share options at the end of the reporting period:
                                                                                                  30 Jun.2012
                                                                     Exercise price*                  Number
                                                                               RMB                       ’000
      25 April 2012 to 24 April 2014                                                8.66                 39,419
      25 April 2013 to 24 April 2015                                                8.66                 28,410
      25 April 2014 to 22 April 2016                                                8.66                 28,410
                                                                                                         96,239
      * The original exercise price is RMB8.89. The exercise price was adjusted to RMB8.66 after
        declaration of dividend of RMB0.13 per share during the year in accordance with the terms
        and          conditions         of       the         share         option        scheme.
                                                                                               China Vanke Co., Ltd.
                                                          Financial statements for the six months ended 30 June 2012
    28    Equity settled share-based transactions (continued)
    (c)   Fair value of share options and assumptions
      The fair value of services received in return for share options granted is measured by
      reference to the fair value of share options granted. The estimate of the fair value of the share
      options granted is measured based on the Binomial model.
      Fair value of share options and assumptions                                                            2011
      Fair value at measurement date (RMB’000)                                                         294,050
      Share price                                                                                      RMB8.52
      Exercise price                                                                                   RMB8.89
      Expected volatility                                                                              45%-50%
      Option life                                                                                        5 years
      Risk-free interest rate                                                                        3.20-3.43%
      The expected volatility is based on the historic volatility of the Company’s A share. Changes
      in the subjective input assumptions could materially affect the fair value estimate.
      Share options were granted under a performance condition. This condition has not been
      taken into account in the grant date fair value measurement of the services provided. There
      was no market condition associated with the share options.
    29    Capital, reserves and dividends
    (a)   Share capital:
                                                                           30 Jun.2012             31 Dec.2011
                                                                             RMB’000                RMB’000
      Authorised, issued and fully paid:
      A shares of RMB1 each                                                   9,680,255                9,680,255
      B shares of RMB1 each                                                   1,314,955                1,314,955
                                                                             10,995,210              10,995,210
      Included in the A shares are 18,218,720 shares (2011: 18,426,384 shares) with restriction to
      transfer.
      The holders of A and B shares 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. All A and B
      shares rank equally with regard to the Company’s residual assets.
      There was no movement in share capital during 2011 and 2012.
                                                                                               China Vanke Co., Ltd.
                                                          Financial statements for the six months ended 30 June 2012
    29    Capital, reserves and dividends (continued)
    (b)   Nature and purpose of reserves
      (i)     Share-based compensation reserve
              The share-based compensation reserve comprises the portion of the grant date fair
              value of unexercised share options that has been recognised in accordance with the
              accounting policy adopted for share-based payments in note 2(r)(ii).
      (ii)    Statutory reserves
              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.
              According to the PRC Company Law, the Company is required to transfer 10% of its
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