2013 Annual Report
Important Notice:
The Board of Directors, the Supervisory Committee and the Directors, members of the Supervisory Committee and
senior management of the Company warrant that in respect of the information contained in this report, there are
no misrepresentations or misleading statements, or material omission, and individually and collectively accept full
responsibility for the authenticity, accuracy and completeness of the information contained in this report.
Chairman Wang Shi, Director Yu Liang, Director Xiao Li, Director Wei Bin, Director Chen Ying, Independent
Director Qi Daqing, Independent Director Zhang Liping,Independent Director Hua Sheng and Independent
DirectorElizabeth Law attended the board meeting in person. Deputy Chairman Qiao Shibo was not able to
attend the board meeting in person due to business engagements and had authorised Director Wei Bin to represent
him and vote on behalf of him at the board meeting.Director Sun Jianyi was not able to attend the board meeting
in person due to business engagements and had authorised Director Yu Liang to represent him and vote on behalf
of him at the board meeting.
The Company’s proposal on dividend distribution for the year 2013: Based on the number of shares on the record
date for dividend distribution, a cash dividend of RMB4.1 (including tax) will be distributed for every 10 existing
shares held.
Chairman Wang Shi, Director and President Yu Liang, and Executive Vice President and Supervisor of Finance
Wang Wenjin declare that the financial report contained in the annual report is warranted to be true and complete.
To Shareholders……………………………………………………….……………………….……………
Corporate Information …………………………………………………………………..…………………
Accounting and Financial Highlights…………………………………………………………..…………
Directors’ Report…………………………………………………………………………………………….. 4
Significant Events …………………………………………………………………………………………… 51
Change in Share Capital and Information on Shareholders…………………………………………… 61
Directors, Members of Supervisory Committee, Senior Management and Employees….…………. 65
Corporate Governance …………………………………………………………………………………….. 74
Report of Supervisory Committee ………………………………………………………………………… 78
Financial Report ……………………………………………………………………………………………. 80
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I. To Shareholders
2013 was the final year of Vanke’s third 10-year development plan, giving way to the start of the Company’s
fourth stage of 10-year development in 2014. Macro development of China’s property industry in the past decade
had enabled various property developers to make magnificent accomplishments. Vanke has grown from a minor
company with less than RMB10 billion annual sales to the world’s largest property developer. Enlisted as one of
the Top 500 private enterprises in China published by All-China Federation of Industry & Commerce in August
2013, Vanke ranked the ninth in terms of operating revenue, and second in terms of tax payment.
Looking back at the Company’s last 10 years, we still firmly believe that the fundamental of Vanke’s
achievements is its perseverance with integrity and down-to-earth approach. Shortcuts may lead to temporary
success, but a corporation can only sustain long-term prosperity by upholding its integrity and down-to-earth
approach.
Espousing integrity means honouring commitment and respecting the law, as well as abiding by basic
business principles. The existence of a corporation is to create value for society. This includes better addressing
customers’ needs, generating return for shareholders, providing employees with career development opportunities,
as well as embracing the nature and environment, and protecting the interests of stakeholders.
It is rather difficult to have an accurate future forecast. The market has yet to reach a consensus on its
prospects, and many have taken a more pessimistic view. Dreams nurtured in the mobile internet era are like
spectacular fireworks, bright and dazzling. In the face of a future that cannot be predicted with certainty, it is
obviously dangerous to remain arrogant and indifferent based on past success. However, overreaction without a
focus, or giving up one’s initiative may also put a corporation on a wrong track.
In the past year, we have devoted much of our resources to learn about the mobile internet. We can only
understand new ideas by embracing them with an open mind, and only with true understanding, can wedetermine
to what extent we should be involved.
We believe the Internet will change the world, and organisations that cannot adapt to this change will be
eliminated. But in our opinion, identifying the ―invariable‖ behind the change is more important than realising the
change itself.
We believe providing quality services to customers and creating value for customers are enduring business
principles, and the Internet brings us closer to our customers by delivering more effective tools which help us to
better understand the minute details of customers’ requirements and to swiftly adapt to the change in their needs.
We believe that good product price-performanceremains the core of competitiveness, and it will become
more obvious and significant in the future with improved transparency in the industry chain and
increasedaccessibility and availability of information.
We concur that perfection is a key characteristic of the Internet era, and it can be achieved only through
staying focus. Professionalism is what Vanke has been pursuing since its establishment.
We can still see that the process of urbanisation in China is far from completion. Although the arrival of the
Internet age is opening a new chapter in world’s history, China’s urbanisation and modernisation are having no
less significant impact on the world’s development. We should therefore attach equal significance to such progress.
As the saying goes, one should be settling down and be able to make some accomplishment at the age of 30.
Vanke, on its 30th anniversary, is still a young company, despite the fact that we have been labelled as a traditional
company in a traditional industry. We do not intend to argue against this as it is our firm belief that clothing, food,
housing and transportation are the basic necessities of mankind. These basic needs succeed from generation to
generation, and as time goes by they would only have to be better satisfied.
When a new age begins, traditional corporations should try to improvetheir existing operations by
understanding the new rules, looking for new partners, and leveraging new instruments, rather than depart from
their familiar domain.
And this is exactly our approach.
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II. Corporate Information
1.Company name (Chinese): 万科企业股份有限公司
Company name (English): China Vanke Co., Ltd. (―Vanke‖)
2. Statutory representative: Wang Shi
3. Secretary of the Board: Tan Huajie
E-mail address: IR@vanke.com
Securities Affairs Representative: Liang Jie
E-mail address: IR@vanke.com
4.Contact address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the
People’sRepublic of China
5.Telephone number: 0755-25606666
Fax number: 0755-25531696
6.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
7.Website: www.vanke.com
E-mail address: IR@vanke.com
8. Media for disclosure of information: ―China Securities Journal‖, ―Securities Times‖, ―Shanghai Securities
News‖, ―Securities Daily‖ and an English publication in Hong Kong
Website for publication of annual reports:www.cninfo.com.cn
9.Place for annual report collection: The Office of the Company’s Board of Directors
10. Stock exchange on which the Company’s shares are listed: Shenzhen Stock Exchange
11. Company’s share abbreviation and stock codes on the stock exchange: Vanke A, 000002
Vanke B, 200002
12.First registration date of the Company: 30 May 1984; location: Shenzhen
Date of change in registration: 13 April 2010; location: Shenzhen
13. Corporate legal person business registration no.: 440301102900139
14. Taxation registration code: Local taxation registration code: 440300192181490
State taxation registration code: 440300192181490
15. Organisation code: 19218149-0
16. The name and address of the certified public accountants appointed by the Company:
KPMG Huazhen (Special General Partnership):
8/F, Office Tower E2, Oriental Plaza, 1 East Chang An Avenue, Beijing
Accountant-in-charge：Li Wanwei, Wen Huaxin
III. Accounting and Financial Highlights
1. Three-year financial information summary (Unit: RMB’000)
2013 2012 Change
Revenue 127,453,765 96,859,914 31.59% 67,709,396
Share of profits less losses of associates
999,398 889,787 12.32% 643,988
and joint ventures
Profit before income tax 27,847,233 25,697,537 8.37% 19,490,060
Income tax expense (9,549,684) (10,034,949) -4.84% (7,890,454)
Profit for the year 18,297,549 15,662,588 16.82% 11,599,606
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Profit attributed to non-controlling
(3,179,000) (3,111,406) 2.17% (1,974,731)
shareholders
Profit attributed to Equity shareholders
15,118,549 12,551,182 20.46% 9,624,875
of the Company
Basic earnings per share 1.37 1.14 20.17% 0.88
Diluted earnings per share 1.37 1.14 20.17% 0.88
Dividend per share 0.41 0.18 127.78% 0.13
2. Impact of IFRS Adjustments on Net Profit (Unit: RMB’000)
Items Net profit for 2013
As determined pursuant to PRC accounting standards
15,118,549
As restated in conformity with IFRS
15,118,549
IV. Directors’ Report
1. Management Discussion and Analysis
Changes in market environment, and the Company’s perspective
During the year under review, sales area and sales amount of commodity housing in the country amounted to
1,157,000,000 sq m and RMB6.77 trillion respectively, representing year-on-year increases of 17.5% and 26.6%
respectively. While the annual growth rates were higher than those of the previous year, growth rate of sales area
of commodity housing for the first, second, third, and fourth quarter of 2013 was 41.2%, 23.8%, 14.9% and 7.2%
respectively, indicating a decelerating quarterly growth rate, which was mainly due to the comparative figures of
2012.
During the year under review, the area of new residential properties sold in the 14 major cities (Beijing, Shanghai,
Shenzhen, Guangzhou, Tianjin, Shenyang, Hangzhou, Nanjing, Chengdu, Wuhan, Dongguan, Foshan, Wuxi, and
Suzhou) increased by 12.5% year-on-year. Approved pre-sales area of new housing was 20.4% higher than that of
2012. Since May 2013, the ratio of 3-month moving average sales area of commodity housing to approved pre-
sales area of new housing in the 14 cities had stayed below 1. Except for certain cities, sufficient new housing
supply had led to relatively rational supply-demand relationship in most of the major cities. As at the end of 2013,
new housing inventory in the abovementioned cities amounted to 128,000,000 sq m, up from 116,000,000 sq m as
at the end of 2012.The duration for the market to absorb housing inventory was 10.4 months. Relatively sufficient
inventory had facilitated smooth operation of the market.
During the year under review, investment in residential property development in China recovered from a slump in
2012. Completed residential development investment showed a year-on-year increase of 19.4%, representing an 8
percentage points increase from the growth rate of 2012. However, when compared with the average annual
growth rate of 23.9% in the past 10 years, the increase in residential development investment in 2013 was
relatively small.The floor area of new housing starts had stopped falling (which started in 2012) and posted a year-
on-year growth of 11.6%. However, in absolute terms, the floor area of new housing starts in 2013 was merely
close to that of 2011, indicating a rebound from the fall in 2012.
During the year under review, the land market in the third and fourth-tier cities of China was stagnant, while some
popular cities had seen relatively competitive land auctions. In the 16 cities, namely Shenzhen, Guangzhou,
Dongguan, Foshan, Shanghai, Hangzhou, Nanjing, Suzhou, Ningbo, Beijing, Tianjin, Shenyang, Dalian, Wuhan,
Chengdu, and Chongqing, the site area supplied and sold grew by 9.1% and 15.8% respectively from those of the
previous year.Land transactions continued to be active in major cities where property developers enlarged their
market coverage, leading to approximately 40.6% of land lots changed hands with a price premium, up by 14.5
percentage points from that of 2012. There is the need for the land market of certain popular cities to return to
rationality.
2013 operating results and analysis
During the yearunder review, the Company achieved stable growth in operating results by adhering to its end-user
oriented product positioning and proactive sales promotion.
In 2013, the Company realized a sales area of 14,899,000 sq m and a sales amount of RMB170.94 billion,
representing year-on-year increases of 15.0% and 21.0% respectively. The sales amount remained an industry
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record high.
By geographical segment, the Company realised a sales area of 4,299,000 sq m and a sales amount of RMB52.39
billion in the Guangshen Region surrounding the Pearl River Delta; a sales area of 3,397,000 sq m and a sales
amount of RMB46.05 billion in the Shanghai Regionsurrounding the Yangtze River Delta; a sales area of
4,054,000 sq m and a sales amount of RMB45.40 billion in the Beijing Region surrounding the Bohai Rim; a sales
area of 3,149,000 sq m and a sales amount of RMB27.10 billion in Chengdu Region, which comprises core cities
of Central and Western Region.
A majority of the Company’s products were small and medium sized ordinary commodity housing units, with
91.5% of units below 144 sq m.Satisfactory sales momentum wasmaintained during the year under review, and the
subscription rate of projects in their launching month remained at approximately 60%.
In 2013, the Company realised a booked area of 12.31 million sq m and booked revenue of RMB124.97billion,
representing increases of 36.9% and 31.0% year-on-year respectively. In 2013, the Company’s revenue amounted
to RMB127.45billion and net profit was RMB15.12 billion, representing increases of 31.59% and 20.5%year-on-
year respectively.
The average booked price of the Company’s property business was RMB10,152 per sq m, representing a 4.3%
drop from that of 2012. The booked gross profit margin of the property business was 23.69%, down by 3.72
percentage points year-on-year. The booked net profit margin was 12.76%, down by 1.16 percentage points from
that of 2012. Apart from the overall market trend, certain factors also contributed to the decline in profit margins,
including increase in the proportion of booked furbished units among overall total. This change resulted in lower
profit margins but a higher rate of return, which was a manifestation of increased efficiency. The units sold in the
second half of 2011 during market adjustment began to be recognised during the year under review also
contributed to the profit margin adjustment. The Company had mitigated the impact of decreasing profit margins
by increasing operating efficiency, and maintained its return on equity at a record high. In 2013, the Company’s
fully diluted return on equity was 19.66%, which remained the same as that of 2012.
As at the end of 2013, the Company had a total area of 14,374,000 sq m sold but not yet booked stated in the
consolidated statements, as construction had yet to be completed. These unbooked resources had a contract
amount of approximately RMB162.33 billion. The area and contract amount were6.1% and 13.0% higher than
those at the beginning of 2013 respectively. Sufficient area sold but not yet booked provides a solid foundation for
realizing the Company’s future performance.
Up to the end of 2013, the Company’s inventories included RMB17.71 billion of completed properties (properties
ready for sale), accounting for 5.37%;RMB187.28 billion of properties under development (including properties
sold but not yet booked), accounting for 56.80%; RMB124.37 billion of properties held for development
(corresponding to the Company’s projects under planning), accounting for 37.72%. The inventory structure
remained healthy.
The Company’s actual floor area of new starts and completed area in 2013 reached 21,310,000 sq m and
13,030,000 sq m respectively, representing year-on-year increases of48.7% and 33.1% and representing128.9%
and 101.0% of the plan set at the beginning of the year respectively. The actual floor area of new starts and
completed area during the second half of the year accounted for 56.9% and 66.9% of the full year plan
respectively.
In recent years, variation in housing market across cities widened. The Company used the PIE (ie, population,
infrastructure, and employment) model to conduct thorough assessment of investment risk in order to make
rational choices on which region to invest. During the year under review, the Company continued to focus on the
mainstream market, intensified penetration of its existing markets, and appropriately replenished quality project
resourcesin cities with promising development prospects.Due to severe struggle for landin popular cities, the
Company continued to uphold its principle of ―rather forgoing an opportunity than making a wrong
acquisition‖for land acquisition, and insisted ona prudent investmentapproach to avoid acquiring overvalued sites.
In 2013, the Company acquired 104 new development projects, with a site area attributable to Vanke’s equity
holding of approximately 7,570,000sq m, representing a planned GFA of approximately 21,480,000 sq m.
Approximately66% of the aforesaid projects were acquired via collaboration or alliance. The average land
premium basing on floor area of the newly acquired projects was approximately RMB3,516 per sq m.. As at the
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