China Vanke Co., Ltd.
2013 Interim Report
(For the six months ended 30 June 2013)
Important Notice:
The Board of Directors, the Supervisory Committee and the Directors, members of the Supervisory
Committee and senior management of the Company warrant that in respect of the information contained in
this report, there are no misrepresentations or misleading statements, or material omission, and
individually and collectively accept full responsibility for the authenticity, accuracy and completeness of
the information contained in this report.
Chairman Wang Shi, Director Yu Liang, Director Sun Jianyi, Director Xiao Li, Director Wei Bin, Director
Chen Yin, Independent Director Qi Daqing, Independent Director Zhang Liping, Independent Director
Hua Sheng and Independent Director Elizabeth Law attended the board meeting in person. Director Qiao
Shibo was not able to attend the board meeting in person due to his business engagemens and had
authorised Director Wei Bin to represent him and vote on behalf of him at the board meeting.
The Company will not carry out profit appropriation or transfer of capital surplus reserve to share capital
for the interim period of 2013.
The Company’s interim financial report has not been audited.
Chairman Wang Shi, Director and President Yu Liang, and Executive Vice President and Supervisor of
Finance Wang Wenjin declare that the financial report contained in the interim report is warranted to be
true and complete.
Basic Corporate Information ……………………………………………………………………….…2
Major Financial Data and Guidance…………………………………………………………………...3
Directors’ Report ………………………………………………………………… …….……………3
Significant Events…...……………………………………………………………………………..…..12
Change in Share Capital and Shareholdings of Major Shareholders ..…………………………………21
Directors, Members of Supervisory Committee, Senior Management ………………..…………….…23
Financial Report (Unaudited) …..………………………………………………………………………24
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
Location where this interim report is available for inspection: The Office of the Company’s Board of
Directors
6. Stock exchange on which the Company’s shares are listed: Shenzhen Stock Exchange
Stock short names and stock codes:
Vanke A, 000002
Vanke B, 200002
08 Vanke G1, 112005
08 Vanke G2, 112006
II. Major Financial Data and Guidance
(1) Major Financial Guidance
Unit: RMB’000
Financial Indicators Jan.-Jun. 2013 Jan.-Jun. 2012 Change（+/-）
Revenue 38,940,809 28,959,560 34.5%
Profit from operating activities 9,071,539 7,928,844 14.4%
Share of profits less losses of
associates and jointly controlled 387,629 422,520 -8.3%
entities
Profit before income taxation 8,780,564 7,562,983 16.1%
Income tax (3,444,673) (3,027,505) 13.8%
Profit for the period 5,335,891 4,535,478 17.6%
Profit attributed to minority (779,586) (810,393) -3.8%
Profit attributable to equity
4,556,305 3,725,085 22.3%
shareholders of the Company
Basic earnings per share 0.41 0.34 20.6%
Diluted earnings per share 0.41 0.34 20.6%
(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 4,556,305
As restated in conformity with IFRS 4,556,305
III. Directors’ Report
1. Management Discussion and Analysis
Changes in market environment and the Company’s perspective
During the reporting period, commodity housing transactions across China showed significant rebound
from that of the first quarter of last year, when the market was in a slump. However, monthly growth rate
declined slightly since April. The sales area of commodity housing in China increased by 41.2% and 23.8%
year-on-year in the first and second quarters respectively.
The area of commodity housing sold in the 14 cities (Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin,
Shenyang, Hangzhou, Nanjing, Chengdu, Wuhan, Dongguan, Foshan, Wuxi and Suzhou) surged
significantly by 65.5% year-on-year in the first quarter, but declined by 0.01% in the second quarter when
compared to that of the same period last year. The sharp contrast in performance between the first and
second quarters was due to: on the one hand, sales area in major cities started to increase tremendously
since March last year, resulting in a relatively large comparative figure for the second quarter; on the other
hand, market transactions in the second quarter of 2013 began to slow down, with feverish sales gradually
came to an end.
The approved pre-sales area of commodity housing in the 14 cities in the first half of the year increased by
16.2% year-on-year. When compared with the first quarter, the approved pre-sales area leaped by
approximately 69% in the second quarter. Accelerated launch of new housing units in the second quarter
had ended the shortage in supply at the beginning of the year. The sales area of commodity housing in the
14 cities was 1.43 times of the approved pre-sales area of new housing in the first quarter and 0.90 times of
the approved pre-sales area of new housing in the second quarter. On the whole, the ratio of sales area of
commodity housing to approved pre-sales area of new housing in the 14 cities in the first half of the year
was approximately 1.10, reflecting a relative balance in supply and demand. As at the end of June, the area
of new housing inventory in the aforementioned cities (the area of commodity housing that had been
granted sales permit but had not been sold) fell slightly from 116 million sq m at the end of 2012 to 112
million sq m. The duration for the market to absorb housing inventory (based on the moving average sales
area in the last three months) was approximately 10.4 months, which was basically the same as that at the
beginning of the year and continued to remain at a relatively reasonable level.
As sales improved over that of the same period last year, the amount of housing commencing construction
works ceased to decline. The floor area of residential properties commenced construction across China in
2012 dropped by 11.2% year-on-year; the amount rose by 2.9% year-on-year in the first half of 2013.
However, the growth in floor area commencing construction was relatively small. It remains to be seen
whether the amount could return to the 2011 level in the second half of the year.
Increase in land supply and enterprises’ need to replenish their land bank in the second half of 2012 led to a
gradual recovery in land sales. Entering 2013, robust sales in the residential property market further
boosted enterprises’ confidence in investment. In the first half of 2013, site area supplied and sold in 16
cities including Shenzhen, Guangzhou, Dongguan, Foshan, Shanghai, Hangzhou, Nanjing, Suzhou,
Ningbo, Beijing, Tianjin, Shenyang, Dalian, Wuhan, Chengdu, Chongqing increased by 30.4% and 29.5%
year-on-year respectively. As enterprises intensified their investment in first- and second-tier cities, which
saw relatively satisfactory residential property sales, competition for land in these cities became ferocious.
Average price premium continued to rise, and the land markets in certain cities showed signs of overheat.
Judging from the current supply-demand condition of the residential property market, and the relatively
reasonable duration for the market to absorb housing inventory, the market is poised for steady
development with no solid ground for over-optimistic expectations of land price. Moreover, basing on
previous experience, the amount of land supply in the second half of the year will generally be more than
that of the first half. With the increase in land supply in the second half of the year, in particular in the
fourth quarter, the market is expected to become more rational.
With the resumption of new housing construction and increase in land supply, investment in residential
property development in China completed between January and June increased by 20.8% year-on-year,
representing an increase of 8.8 percentage points when compared with that of the same period last year.
Operation and management of the Company
During the reporting period, the Company actively boosted its sales by committing to target at end users
and adhering to its product positioning with a focus on small and mid-sized ordinary commodity housing.
In the first half of the year, the Company realised an accumulative sales area of 7,164,000 sq m and a sales
amount of RMB83.67 billion, representing increases of 18.9% and 33.8% year-on-year respectively.
Residential units with an area under 144 sq m accounted for 90% of all the residential properties sold.
By geographical segment, the Company realised a sales area of 2,121,000 sq m and a sales amount of
RMB26.54 billion in the Guangshen Region surrounding the Pearl River Delta; a sales area of 1,629,000
sq m and a sales amount of RMB22.57 billion in the Shanghai Region surrounding the Yangtze River Delta;
a sales area of 2,052,000 sq m and a sales amount of RMB22.77 billion in the Beijing Region surrounding
the Bohai Rim; a sales area of 1,363,000 sq m and a sales amount of RMB11.80 billion in Chengdu Region,
which comprises core cities of Central and Western Region.
From January to June, the Company realised a booked area of 3,884,000 sq m and booked revenue of
RMB38.22 billion, representing increases of 47.2% and 34.2% year-on-year respectively; the Company
realised revenue of RMB38.94 billion and a net profit of RMB4.56 billion, representing increases of 34.5%
and 22.3% respectively as compared with those of the same period last year.
During the first half of the year, the average booked price of the Company’s property business was
RMB9,842 per sq m, representing a year-on-year decrease of 8.8%. The gross profit margin of the property
business was 25.1%, down by 3.0 percentage points from that of the same period last year. The booked net
profit margin dropped by 0.04 percentage points year-on-year to 15.00%. In the first half of the year, the
Company’s diluted return on equity rose by 0.08 percentage point year-on-year to 6.84%.
In recent years, the Company has been pursuing qualitative growth, and constantly improving its operating
efficiency to mitigate the effect of declining profit margin and achieve year-on-year growth in return on
equity. The Company’s diluted return on equity in 2012 was a record high since 1993. Although there may
be a year-on-year decrease in the booked profit margin in 2013, the Company expects the return on equity
will be maintained at a high level.
As at the end of the reporting period, the Company had an area of 16,030,000 sq m sold but not yet booked,
which was stated in the consolidated statements as construction had yet to be completed. These unbooked
resources had a contract amount of approximately RMB176.6 billion. The area and contract amount were
18.3% and 22.9% higher than those at the end of 2012 respectively. This would provide a solid foundation
for realizing future operating results.
The Company actively pushed ahead with its inventory clearance, maintaining a reasonable mix of product
inventory. As at the end of the reporting period, the Company’s inventories included RMB17.63 billion of
completed properties (properties ready for sale), accounting for 5.7% of the total and representing a
decrease of 0.6 percentage point from that at the end of 2012.
During the first half of the year, the actual floor area commenced construction was 9,190,000 sq m ,
representing an increase of 96.3% from those of same period last year, and the actual floor area
commenced construction achieved in the first half of the year represented 55.6% of the full year plan set at
the beginning of the year. The actual floor area completed area was 4,320,000 sq m, representing an
increase of 76.9% from those of same period last year, and the actual completed area achieved in the first
half of the year represented 33.5% of the full year plan set at the beginning of the year respectively. It is
expected that the actual floor area to be completed for the full year will meet the respective targets set at
the beginning of the year.
During the reporting period, the Company continued its emphasis on securing residential land lots meeting
end-user demand in the cities where it had a presence. The Company capitalized on its flexibility in
capturing market opportunities to rationally replenish its land bank. In the first half of the year, the
Company acquired 42 development projects, with a site area attributable to Vanke’s equity holding of
approximately 3,420,000 sq m, corresponding to a planned GFA of approximately 9,250,000 sq m. The
Company adhered to a prudent investment strategy, and maintained the cost of newly acquired projects in
the first half of the year at reasonable levels with an average land premium of approximately RMB2,735
per sq m of floor area. As at the end of the reporting period, the aggregate GFA of the Company’s projects
under planning attributable to Vanke’s equity holding amounted to 41,230,000 sq m, which could basically
meet its development needs within the next two to three years. In addition, the Company was also involved
in some other city redevelopment projects at the end of the reporting period. According to the current
planning, the projects’ GFA attributable to Vanke’s equity holding was approximately 3,030,000 sq m.
Owing to increase in receipts in advance, the Company’s gearing ratio rose by 1.3 percentage points to
79.6% at the end of the reporting period when compared to that at the end of 2012. However, as receipts in
advance did not constitute any actual debt repayment pressure, the Company’s other liabilities (excluding
receipts in advance) as a percentage of total assets was 42.8%, which slightly declined from 43.8% as at
the end of 2012. As a result of proper land bank replenishment and relatively significant increase in floor
area commenced construction, the cash and cash equivalents held by the Company declined from that at
the beginning of the year to RMB36.25 billion at the end of the reporting period.
During the reporting period, three international renowned rating agencies, namely Standard & Poor’s,
Moody’s Investors Service and Fitch Ratings assigned the Company long-term corporate credit ratings of
BBB+, Baa2 and BBB+ respectively. The Company’s prudent operation practice and its corporate
credibility established over the years have gained wide recognition among international investors, which
earned the Company more opportunities and better terms for fund raising in the capital market. In March
2013, the Company’s overseas subsidiary successfully issued US$800 million bonds, with a 5-year term,
which became listed on The Stock Exchange of Hong Kong Limited. During the reporting period, the
Company’s overseas subsidiary also established a medium-term notes programme. The Company’s
international financing ability has, thus, been further enhanced.
During the reporting period, the Company landed on the Hong Kong, US and Singapore markets through
collaboration with local renowned property developers. The international business ventures are conducive
for widening the Company’s global perspective, strengthening its understanding of overseas mature
markets, learning from the experience of top-notch overseas counterparts, thereby enhancing the
Company’s expertise and scientific management, as well as consolidating its leading position in China.
During the reporting period, the proposal for the change of listing location of the Company’s domestically
listed foreign shares for listing and trading on the main board of The Stock Exchange of Hong Kong
Limited by way of introduction was approved at the Company’s 2013 first extraordinary general meeting.
Application of the proposal is being processed by China Securities Regulatory Commission and The Stock
Exchange of Hong Kong Limited respectively. The Company will continue to actively push forward the
proposal.
2. Operation of the Company
(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’s sales area and sales amount were 7,164,000 sq m and RMB83.67
billion respectively, representing increases of 18.9% and 33.8% respectively when compared with those of
the same period last year. The Company realized booked area and booked revenue of property projects of
3,884,000 sq m and RMB38.22 billion respectively, representing year-on-year increases of 47.2% and 34.2%
respectively.
Due to variation in the completion schedule of different projects, the completed area from January to June
was 4,320,000 sq m, representing 33.5% of the planned area of 12,900,000 sq m to be completed for 2013.
It is expected that more projects will be completed and booked in the fourth quarter of 2013.
Unit RMB ’000
Revenue Cost of sales Operating profit margin
Sector
Amount Change Amount Change
