2010 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 Sun Jianyi,Director Shirley L. Xiao, Independent Director David Li Ka Fai, Independent Director Judy Tsui Lam Sin Lai, Independent Director Qi Daqing, Independent Director Zhang Liping attended the board meeting in person. Deputy Chairman Qiao Shibo, and Director Jiang Wei were not able to attend the board meeting in person due to their business engagements and had authorised Director Yu Liang to represent them and vote on behalf of them at the board meeting. Director Wang Yin was not able to attend the board meeting in person due to business engagements and had authorised Director Shirley L. Xiao to represent him and vote on his behalf at the board meeting. Chairman Wang Shi, Director and President Yu Liang, and Executive Vice President and Supervisor of Finance Wang Wenjin, declare that the financial report contained in the annual report is warranted to be true and complete.
To Shareholders .2 Basic Corporate Information 5 Accounts and Financial Highlights6 Change in Share Capital and Shareholders.6 Directors, Members of Supervisory Committee, Senior Management and Employees.11 Corporate Governance Structure17 Summary of Shareholders Meetings 19 Directors Report20 Report of Supervisory Committee .57 Significant Events . 58 Chronology of 201067 Financial Report .68

I. To Shareholders
We have repeatedly discussed about the past and the future, opportunities and dreams as well as doubt and controversy over the PRC residential property industry in our past annual reports. In 2010, such a dynamic industry in such extraordinary times continued to undergo an eventful year. Yet, we are not surprised, as all that happened were within our expectation. For those who are concerned about China Vanke, they may still remember the year 2010 because of a special number 100 billion. The sales of China Vanke exceeded RMB100 billion in 2010. This figure made up of the numbers 1 and 0 seems to have a mysterious characteristic. Nevertheless, it is only because we have chosen our system to be decimal. When the mystery is unveiled, the amount is only the base number being scaled, which is not worth further study . However, a different interpretation commands special attention to this number 100 billion. It represents the record-high annual sales of a world-class property company. The 100 billion level is also the peak that a nonstate-owned enterprise can reach. The extraordinary era has not come to an end, and remarkable changes and events are expected to continue to take place in the dynamic property industry. Faced with the unprecedented record high, perhaps China Vanke should divert more of its attention to self-assessment. That will bring it back to the starting point of enterprise logic. Reasons for existence World is a vanity fair. Racing and rioting, the the whole world goes after profit. The saying has described the situations and weakness of many people but not everyone. What exactly is the meaning of life? This question continues to preoccupy many thinkers throughout their lives. To an enterprise, there is a similar question: What are the reasons for an enterprise to exist? Everyone has a different starting point and fate. Some are rich because of inherited wealth; some succeed because of luck. As such, the significance of being is far beyond ones possession This is particularly true to an enterprise. Ownership of scarce natural resources or monopoly protection will certainly enable an enterprise to exist for a long period of time, while enjoying excessive returns. But from the societys point of view, it would not make a difference whether such an enterprise exists or not, or whether it is replaced by another enterprise. In view of the above, an enterprise needs to add value to social wealth to sustain its existence. Such addition of social wealth is reflected in satisfying more peoples needs. Therefore, a great enterprise is one that can satisfy peoples wants, which could not be satisfied in the past, through revolutionary innovation. Utilizing the same amount of social resources, a successful enterprise can satisfy more peoples needs through improvement in manufacturing and operation to raise productivity or reduce transaction costs. Shareholders decisions give birth to an enterprise. Out of their own pocket, they pay to establish the enterprise, hoping that the funds they put into the company will grow. When a shareholder invests in an enterprise, it implies that the shareholder has foregone the opportunity for investing through other channels to make profit. From this perspective, an enterprise is said to have a passing grade if it generates a shareholder return not less than the average return rate in the society. An outstanding enterprise is one that can deliver to the shareholders returns above society average level. A prominent enterprise not only creates a shareholder return above society average level, but is also able to maintain continuous growth in shareholder return. An enterprise is not a machine assembled from a pile of screws but comprised of individuals who have thoughts and feelings. Many in the team have spent a part of the most important period in their life at the enterprise. During this period, the time they spend with their colleagues at work may even be longer than the time they have with their families. They contribute not only time and skill, but also dedicate their youth and passion. What they look for is not merely a salary, but also work experience. Their dignity needs to be 2

protected. Their ideas need to be nourished. Their talent needs to be displayed. When combining the utility of each society member, the social utility is achieved. Since an enterprise is an individual component of a society, its contribution to increasing the utility of its employees naturally counts as a measure of reasons for its existence. We cannot deny that there are some enterprises that do not ponder on these issues and can still survive or even enjoy a golden age. However, we firmly believe that there is a better chance for those enterprises having found the reason for their existence to pave their way to the future without relying on external benefits. Quality for growth For those who run an enterprise, it seems they have an intuitive impulse to seek expansion in operation scale. The company size is closely related to the managers sense of accomplishment, amount of resources in hand and even social status. While an enterprise needs reasons for its existence, so does an enterprise seeking growth. If the growth of an enterprise results in an increase in social transaction costs and decrease in the efficiency of social resources, such growth is a waste in the society. If the growth of an enterprise leads to a decreased shareholders rate of return, such growth is actually a loss to the shareholders. If the growth is achieved at the expense of employees health and happiness, such growth has violated humanity. Based on the above logic, China Vanke has since 2004 made clear that quality growth and increase in operational efficiency are what the Company goes after. Simply growth numbers should not be the Companys target. It should be the natural result from increased operational efficiency. Shareholder return should be at the core of quality growth. Creating shareholder return is the duties of professional managers. Sheer bigger size without any attachment to returns means nothing to the shareholders. Without generating economic gain (returns exceeding society average level) is equivalent to not creating shareholders value. Return on assets is the key financial indicator to assess whether the operation is successful or not. It is also a crucial factor in measuring economic gain. Quality growth should reflect economies of scale and operational efficiency. When diseconomies of scale appears as a result of overgrowth, social resources are wasted. Quick turnover has been the fundamental

operating strategy of China Vanke. It is also the inevitable choice to ensure safe operation and social resources conservation.
Product quality is the bottom line for operation quality as well as the lifeline for enterprise survival. There should not be any ambiguity in the safety in production and housing and quality compliance. Lastly, growth needs to be sustainable. Financial indicators reflect the current operation quality, while sustainability determines future operation quality. A lasting company of 100 years old must have good internal control and risk management, provide a pleasant working experience to its staff, become a favourite business partner, respect society and Nature, and assume social responsibility. Growth in scale will create favourable conditions for economies of scale. Yet, it will also increase complexity in management. On the one hand, it will make it more difficult to control internal transaction costs. On the other hand, any minor errors will be magnified exponentially. As such, 100 billion is not the core indicator of China Vankes past success but a hallmark of the advent of new challenges. These new challenges are definitely not the numbers 200 billion, 300 billion or any figures but are how the Company can achieve perpetual quality growth over a sales amount unprecedented in the industry. Eternal faith Since its inception, China Vanke has gone through 26 years. Yet, the Company sees its business just start to take off. Of all the riches it accumulated in the past 26 years, China Vanke cherishes most is a few set of

beliefs that it has been upholding since the Company was founded, and not the RMB200 billion total assets. In the long journey ahead, these beliefs will be the source of courage and motivation for China Vanke. These beliefs include: Pursuit of excellence This means we will always strive to be the leader and first-mover in the market. We aspire to become a world-class outstanding company and a benchmark for the industry. These will be our perpetual goal that we will forever pursue. We are audacious and ready to face any new challenges. Together with the city we grow in tune with the changes in peoples way of living. We do not follow industry trend but prepare for its arrival through continuous innovation and exploration. By doing so, we will be the first to offer solutions. Indeed, our mission is to lead market advance. We respect Nature and environment, as much as we are concerned about the future of humankind. Our unswerving objective is to be an outstanding green enterprise. Customer orientation It all begins with understanding our customers way of living. Customers are the only qualified judge to determine the value of our products and services. As such, creating more value for our customers is almost like taking a step closer to enhancing market competitiveness, increasing shareholder return and achieving team objectives. Customers are the best teachers. Only by increasing our understanding of their needs, including discovering those needs that are not yet satisfied can we continue to innovate, optimize our products and services and identify the right direction for business opportunities. Rewarding shareholders We mean to create excellent shareholder return. We use shareholder return as an ultimate indicator of our operating performance. As a company run by professional managers, we double our discipline and effort to work towards being the most favourite and trusted enterprise among investors, and to achieve a win-win situation as far as shareholders interest, and the career and aspirations of managers are concerned. This implies respect for employees and partners. Staff dedication and employee Growing together involvement are keys to China Vankes success and development respectively. We believe humankind has a noble nature; we believe in the power of understanding and trust; we believe a much simpler interpersonal relationship and corporate culture that speaks of greater equality will facilitate teamwork and attract more people with common goals to join us. Respect for each other is our basic social principle. We believe an open mind can help us win over more allies. We especially treasure those partners whose visions and goals are close to ours. We seek to jointly develop and progress with our partners via collaborations, in order to enhance each of our own competitive edge, which will then be a win-win situation. Efficiency a priority By this, we mean to value resources, speed up turnover and rely on professionalism to obtain a fair return. We cherish all types of valuable social resources, including talents, capital, land, raw materials. As such, we hope to maximise their potential and reduce wastage. We persevere with a fundamental operating strategy of achieving quick turnover, and work all-out to raise investment accuracy, with aim to minimise the use of land and capital to create greater shareholder return. We insist on continuous reform, promote industry production method and advance in operation management, facilitate knowledge sharing and standardisation, realise economies of scale, and enhance efficiency of both organisation as a whole and individuals. We strive to rely on professionalism to lift the price/performance ratio of our products, with an attempt to use minimal resources to create a better customer experience. Sustainable development This encompasses the meaning of healthy operation and in harmony with society and the environment. Our top priority under any circumstances is to ensure the safe operation of the Company. We will not compromise on product quality, law observance, credibility and sound financial position. We are of the view that improvement in risk management and internal control of a company should be given priority over the growth of operation scale. We believe a balanced competitive edge and prudent operation style can help the enterprise deal with a more complicated business environment. We also believe the enterprise will gain social recognition and develop in harmony with society and the environment by making extra efforts and committing to more responsibilities. Based on these beliefs, China Vanke has set its theme for 2011 as follows: Beliefs define achievement; infinity starts with self-discipline ()

Beliefs define achievement: culture, values, beliefs define the height that an organisation can reach. High ambitions, respect for others, quality growth and sustainable development have always been China Vankes goals and beliefs, and will never be changed. All these have been fuelling the Companys achievement and will continue to provide the foundation on which the Company bases its development. Infinity starts with self-discipline: by recognising ones own limit, knowing when to accept and when to let go and by being self-disciplined, an individual or organisation can gain unlimited opportunities for development. The existence of an enterprise can be further explained by understanding the boundary of the enterprise. An enterprise exists for creating value for the society, while the boundary of an enterprise is defined by its respect for social needs. Only by making the choice between acceptance and letting go and adhering to self-discipline principles to achieve customer orientation, rewarding shareholders, respect for society can China Vanke obtain the opportunities for sustainable development and realise its goal to pursue excellence. A new year has begun. These are the commitments made by the Company to the future. And they are also words spoken to our shareholders from the bottom of our hearts. II. Basic Corporate Information
1. Company name (Chinese): Company name (English): China Vanke Co., Ltd. (Vanke) 2. Legal representative: Wang Shi 3. Secretary of the Board: Tan Huajie E-mail address: [email protected] Securities Affairs Representative: Liang Jie E-mail address: [email protected] 4. Contact address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the Peoples Republic 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 Peoples Republic of China Postal code: 518083 Office address: Vanke Center, No. 33 Huanmei Road, Dameisha, Yantian District, Shenzhen, the Peoples Republic of China Postal code: 518083 7. Website: www.vanke.com E-mail address: [email protected] 8. Media for disclosure of information: China Securities Journal, Securities Times, Shanghai Securities News 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 Companys Board of Directors 10. Stock exchange on which the Companys shares are listed: Shenzhen Stock Exchange 11. Companys 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: 440304192181490 State taxation registration code: 440301192181490 15. Organisation code: 19218149-0

16. The name and address of the certified public accountants appointed by the Company: KPMG Huazhen Certified Public Accountants: 8/F, Office Tower E2, Oriental Plaza, 1 East Chang An Avenue, Beijing

III. Accounts and Financial Highlights 1. Three-year financial information summary (Unit: RMB)
2010 47,763,550,428 14,566,666,634 291,703,046 14,542,867,027 (5,703,256,522) 8,839,610,505 (1,556,483,466) 7,283,127,039 0.66 0.66 0.10 2009 46,047,893,250 9,095,535,238 541,860,863 9,293,002,888 (2,862,995,349) 6,430,007,539 (1,100,269,812) 5,329,737,727 0.48 0.48 0.07 2008 38,619,214,077 8,844,809,759 209,735,863 8,420,227,338 (3,780,358,185) 4,639,869,153 (606,699,125) 4,033,170,028 0.37 0.37 0.05

Revenue Results from operating activities Share of profits less losses of associates and jointly controlled entities Profit before income tax Income tax expense Profit for the year Profit attributed to minority Profit attributed to Equity shareholders of the Company Basic earnings per share Diluted earnings per share Dividend per share

2. Impact of IFRS Adjustments on Net Profit (Unit: RMB)

Items As determined pursuant to PRC accounting standards As restated in conformity with IFRS Net profit for 2010 7,283,127,039 7,283,127,039

IV. Change in Share Capital and Shareholders 1. Change in Share Capital (1) Change in the shares of the Company (Unit: share, as at 31 December 2010)
31 December 2009 Class of Shares Quantity I. Restricted Shares 1. State-owned and State-owned legal person shares 2. Shares held by domestic legal persons 3. Shares held by domestic 24,159,840 0.22% -4,795,062 19,364,778 0.18% natural persons 4. Shares held by foreign investors Total number of restricted 24,159,840 0.22% -4,795,062 19,364,778 0.18% shares II. Non-restricted Shares 1.RMB-denominated ordinary 9,656,094,910 87.82% 4,795,062 9,660,889,972 87.86% 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 10,971,050,378 99.78% 4,795,062 10,975,845,440 99.82% non-restricted shares III. Total Number of Shares 10,995,210,218 100.00% 0 10,995,210,218 100.00% Notes: Details on the change in the Companys share capital are as follows: (1) During the reporting period, the Shenzhen office of China Securities Depository & Clearing Corporation Limited, according to regulations, imposed or lifted the selling restrictions on certain restricted shares held by directors, members of the Supervisory Percentage of shareholding Increase / decrease (+, -) Others (Note 1) 31 December 2010 Quantity Percentage of shareholding

Committee and senior management staff, leading to a decrease of 4,795,062 shares in the number of restricted tradable shares held by the Companys domestic natural persons and a corresponding increase in the Companys non-restricted tradable shares.

Change in Restricted Shares Unit: share

Name of shareholder Number of Number of Number of Number of Reasons for selling Date of release restricted shares lifted restricted restricted restricted restriction of lock-up held at the shares during shares shares held at period beginning of the the year increased the end of the year during the year year 5,227,065 114,164 0 5,112,901 Director Director, senior 3,662,860 583,176 0 3,079,684 management staff Member of The Shenzhen 1,548,918 35,112 0 1,513,806 Supervisory office of China Committee Securities 519,177 0 0 519,177 Director Depository & Member of Clearing 1,036,204 0 Supervisory 1,036,204 0 Corporation Committee Limited, Member of according to Supervisory 0 0 15,000 15,000 regulations, Committee imposed or lifted the Senior management 1,650,978 412,745 0 1,238,233 selling staff 1,487,660 1,115,745 Senior management restrictions on 371,915 0 certain staff restricted 1,487,660 1,115,745 Senior management 371,915 0 shares held by staff directors, 1,548,950 1,161,712 Senior management 387,238 0 members of the staff Supervisory 1,548,950 1,161,712 Senior management 387,238 0 Committee and staff senior 1,650,978 1,238,233 Senior management 412,745 0 management staff staff 1,446,849 1,085,137 Director, senior 361,712 0 management staff 1,343,591 1,007,693 Senior management 335,898 0 staff 24,159,840 4,810,062 15,000 19,364,778

Wang Shi Yu Liang Ding Fuyuan Sun Jianyi Zhang Li

Zhou Qingping Liu Aiming Ding Changfeng Xie Dong Zhang Jiwen Mo Jun Xu Hongge Shirley L. Xiao Wang Wenjin Total

(2) Issue and listing of shares A. Issue of shares and derivative securities in the past three years Issue of corporate bonds Approved by Zhengjian Xu Ke [2008] No. 1056 documents of China Securities Regulatory Commission (CSRC), the Company issued an announcement on 2 September 2008 that it would make a public issue of corporate bonds with a par value not exceeding RMB5.9 billion. The corporate bonds in this issue were classified into secured bonds and unsecured bonds. Both of them bore a fixed interest rate with a 5-year maturity. The issuer of the unsecured bonds had the right to raise the coupon rate at the end of the third year of the maturity period, while investors had the right to resell their bonds. Pursuant to the feedback on the price, the coupon rate of the Companys secured bonds was 5.50%, and that of the unsecured bonds was 7.00%. The issue was completed on 9 September 2008 and the actual size of the issue of secured bonds was RMB3 billion, while the actual size of the issue of unsecured bonds was RMB2.9 billion. The Companys corporate bonds started to trade on the Shenzhen Stock Exchange on 18 September 2008. The stock codes of the Companys secured bonds and unsecured bonds are 112005 and 112006 respectively and their abbreviations are 08VankeG1 and 08VankeG2 respectively. During the year under review, there was no change in the number of issued corporate bonds.

B. During the year under review, there was no change in the Companys total number of shares. C. As at the end of the year under review, the Company did not have any internal employee shares. 2. Information on Shareholders (as at 31 December 2010) (1) Information on shareholders Unit: share
Total number of shareholders Shareholdings of the top 10 shareholders Name of shareholder Classification of shareholder State-owned legal person Others Others Others Others Others 1,144,654 (A shares: 1,117,665, B shares: 26,989) Percentage of shareholdings Total number of shares held 1,619,094,766 133,791,208 112,282,473 107,000,000 100,000,000 93,309,734 Number of restricted shares held 0 0 0 0 0 0 Number of pledged or lock-up shares 0 0 0 0 0 0

CRC Liu Yuansheng Bank of ChinaE Fund Shenzhen Stock Exchange 100 Exchange-Traded Fund (E Fund Securities Fund) China Construction BankBosera Thematic Stock Securities Investment Fund Bosera Value Growth Securities Investment Fund Industrial and Commercial Bank of China Rongtong Shenzhen Stock Exchange 100 Index Securities Investment Fund China Life Insurance Company Limited Dividend DistributionIndividual Dividend005L-FH002 Shen HTHK/CMG FSGUFP-CMG First State China Growth FD China Life Insurance Company Limited Traditional General Insurance Products 005L-CT001 Shen Toyo Securities Asia Limited-A/C client

14.73% 1.22% 1.02% 0.97% 0.91% 0.85%

Others Foreign shareholder Others

0.83% 0.81% 0.72%

91,741,448 89,427,768 79,567,826 77,566,240 Class of shares

0 0 0 0

0 0 0 0

Foreign 0.71% shareholder Shareholdings of the top 10 shareholders of non-restricted shares Name of shareholder Number of non-restricted shares held 1,619,094,766 133,791,208 112,282,473 107,000,000 100,000,000 93,309,734

CRC Liu Yuansheng Bank of ChinaE Fund Shenzhen Stock Exchange 100 Exchange-Traded Fund (E Fund Securities Fund) China Construction BankBosera Thematic Stock Securities Investment Fund Bosera Value Growth Securities Investment Fund Industrial and Commercial Bank of China Rongtong Shenzhen Stock Exchange 100 Index Securities Investment Fund China Life Insurance Company Limited Dividend DistributionIndividual Dividend005L-FH002 Shen HTHK/CMG FSGUFP-CMG First State China Growth FD China Life Insurance Company Limited Traditional General Insurance Products-005LCT001 Shen Toyo Securities Asia Limited-A/C client

Ordinary RMB-denominated shares (A shares) Ordinary RMB-denominated shares (A shares) Ordinary RMB-denominated shares (A shares) Ordinary RMB-denominated shares (A shares) Ordinary RMB-denominated shares (A shares) Ordinary RMB-denominated shares (A shares) Ordinary RMB-denominated shares (A shares) Domestic listed foreign shares (B shares) Ordinary RMB-denominated shares (A shares) Domestic listed foreign shares (B shares)

91,741,448 89,427,768 79,567,826 77,566,240

Remarks on the connected relationship or action in concert of the aforementioned shareholders

China Construction BankBosera Thematic Stock Securities Investment Fund and Bosera Value Growth Securities Investment Fund are funds managed by Bosera Fund Management. China Life Insurance Company Limited Dividend DistributionIndividual Dividend-005L-FH002 Shen and China Life Insurance Company Limited Traditional General Insurance Products-005L-CT001 Shen are funds managed by China Life Insurance Company Limited. Apart from the abovementioned relationships, it is not known as to whether there are other connections or persons deemed to be acting in concert under the Measures for the Administration of the Takeover of Listed Companies among the above-mentioned shareholders.

(2) Number of shares held by the top 10 shareholders of restricted shares and the conditions of selling restrictions
Unit: Share Name of shareholder of restricted shares Wang Shi Yu Liang Ding Fuyuan Liu Aiming Xu Hongge Zhang Jiwen Mo Jun Ding Changfeng Xie Dong Shirley L. Xiao Number of restricted shares held 5,112,901 3,079,684 1,513,806 1,238,233 1,238,233 1,161,712 1,161,712 1,115,745 1,115,745 1,085,137 Date on which listing and trading may commence Number of new shares that may be listed and traded

No.

Conditions of selling restrictions

1 2 3 4 5 6 7 8 9 10

The Shenzhen office of China Securities Depository & Clearing Corporation Limited, according to relevant regulations, put selling restrictions on the Companys shares held by Director,, Member of Supervisory Committee and the senior management.

(3) Controlling shareholders and beneficial controllers There were neither controlling shareholders nor beneficial controllers in the Company, and this situation remained the same during the year under review. (4) The single largest shareholder As at the end of the year under review, CRC was the single largest shareholder of the Company, holding an aggregate of 1,619,094,766 A shares of the Company, which represented 14.73 per cent of the total number of the Companys shares. CRC was promoted and established by China Resources National Corporation (CRNC) in June 2003, with Mr Song Lin as its legal representative. CRCs major assets include 100 per cent equity interests in China Resources (Holdings) Co., Ltd. (CRH) and other assets in the PRC. Its core businesses include manufacturing and distribution of consumer goods, property and related industries, infrastructure facilities and public utilities. The registered address of CRC is China Resources Building, No. 8 Jianguomen North Avenue, Dongcheng District, Beijing. CRC has a registered capital of approximately RMB16,467 million. CRNC holds 16,464,463,526 State-owned shares in CRC, representing 99.984212 per cent of CRCs total share capital. The other four promoters, namely COFCO, China Minmetals Corporation, Sinochem Corporation and China Huaneng Group, each owns 650,000 State-owned legal person shares in CRC, representing 0.003947 per cent of CRCs total share capital respectively. CRNC has a registered capital of approximately RMB9,662 million. Its major assets are the equity interests in CRC. It is under the direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council. Mr Song Lin is the legal representative of CRNC. The following chart shows the equity relationship between the single largest shareholder and the Company:

State-owned Assets Supervision and Administration

100%

CRNC

99.984212%

CRC

14.73%

The

3. Bondholdings of the Companys bondholders (as at 31 December 2010) (1) Name of the top 10 bondholders of 08 Vanke G1 bonds and their bondholdings
No. 1 Bondholder No. of bonds held Bondholding percentage New China Life Insurance CompanyDividend DistributionIndividual 5,548,262 18.49% Dividend -018L-FH002 Shen 2 China Petroleum Finance Co., Ltd. 4,157,662 13.86% 3 China Pacific Insurance (Group) Co. Ltd. 3,433,312 11.44% China Ping An Life Insurance Company LimitedTraditionalGeneral 4 2,760,727 9.20% Insurance Products 5 China Life Insurance Company Ltd. 2,619,042 8.73% China Life Property and Casualty Insurance Company LimitedTraditional 6 1,820,000 6.07% General Insurance Products 7 CNPC Pension Scheme - ICBC 1,018,194 3.39% 8 China Life Pension Company LimitedInternal Resources 1,000,000 3.33% 9 China Property & Casualty Reinsurance Company Ltd. 776,162 2.59% 10 Generali China Life InsuranceInvestment Related ProductsStock Account 706,500 2.36% Note: China Life Pension Company Limited, which manages China Life Pension Company LimitedInternal Resources, is a majority-owned subsidiary of China Life Insurance Company Limited. China Life Property and Casualty Insurance Company Limited and China Life Insurance Company Limited, which manage China Life Property and Casualty Insurance Company LimitedTraditionalGeneral Insurance Products, are majority-owned subsidiaries of China Life Insurance (Group) Company. China Petroleum Finance Co., Ltd, which is entrusted to manage CNPC Pension Scheme ICBC, is a subsidiary of the trustor, CNPC. 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. 1 2 3 4 Bondholder ICBC Credit Suisse Asset Management Co., LtdICBCAssets of Specific Clients CCBICBC Credit Suisse Credit Tianli Bond Securities Investment Fund ICBC- Harvest Stable Earning Bond Securities Investment Fund China National Machinery Import & Export Corporation No. of bonds held 2,728,528 2,196,450 2,012,707 1,500,759 Bondholding percentage 9.41% 7.57% 6.94% 5.18%

10

206 Portfolio of National Social Security Fund, PRC 1,430,218 4.93% CCBFullgoal Tianfeng Surging Income Bond Securities Investment 6 1,364,700 4.71% Fund 7 Bank of CommunicationsChina AMC Bond Investment Fund 1,196,931 4.13% 8 CNPC Pension SchemeICBC 972,256 3.35% 9 801 Portfolio of National Social Security Fund, PRC 959,778 3.31% 10 China Ping An Trust & Investment Co. LtdCMB Furui Life Individual 922,343 3.18% Note: ICBC Credit Suisse Asset Management Co., LtdICBCAssets of Specific Clients and ICBC Credit Suisse Credit Tianli Bond Securities Investment Fund are managed by ICBC Credit Suisse Asset Management Co., Ltd. Apart from the above-mentioned relationships, it is not known as to whether there are other connections or persons deemed to be acting in concert under the Measures for the Administration of the Takeover of Listed Companies among the above-mentioned bondholders.

V. Directors, Members of Supervisory Committee, Senior Management and Employees 1. Directors, Supervisors and Senior Management (1) Basic information Brief introduction to directors Wang Shi, male, born in 1951. He joined the military force in 1968. Wang Shi changed his career in 1973 and worked in the Water and Electrical supply department of Zhengzhou Railway. Wang Shi graduated from Lanzhou Railway College in 1978 majoring in water supply studies. After graduation, he had worked for Guangzhou Railway Bureau, Foreign Trade and Economic Cooperation Committee of Guangdong Province, and Shenzhen Special Region Development Company. In 1984, he established Shenzhen Exhibition Centre for Modern Science and Education Equipment, the predecessor of China Vanke, and acted as general manager. He became chairman and general manager of China Vanke Co. Ltd. in 1988. Mr Wang no longer acted as the general manager with effect from 1999. At present, he is the chairman of the Company. Mr Wang is also a director of Sohu.com Inc, and an independent director of China Resources Land Limited (CRL), Shanghai Metersbonwe Fashion & Accessories Co., Ltd., Central China Real Estate Limited, and Modern Media Holdings Limited respectively.
Qiao Shibo, male, born in 1954, graduated from the Jilin University in 1983 with a bachelors degree in Chinese Language and Literature. He had served as a department head at the Ministry of Foreign Trade and Economic Cooperation of the Peoples Republic of China (now Ministry of Commerce), the deputy general manager and general manager of the Human Resources Department of CRH, the general manager and chairman of China Resources Petrochems (Group) Co., Ltd. In 2000, Mr Qiao served as the director and assistant general manager of CRH. During this period, he also served as the deputy managing director of China Resources Enterprise Ltd. and the chairman of China Resources Machinery & Minmetals (Holdings) Co., Ltd. In 2003, Mr Qiao was a director and deputy general manager of CRH, during which he also served as the chairman of China Resources (Jilin) Bio-Chemical Co., Ltd., the chairman of the board of China Resources Cement Holdings Ltd., the chief executive officer of China Huayuan Group Ltd., and the general manager of Sanjiu Medical & Pharmaceutical Co., Limited. In 2008, he was a director and general manager of CRH, as well as the vice chairman and president of China Resources Medications Group Limited, the chairman of China Resources Enterprise Limited, the chairman of China Resources Sanjiu Medical & Pharmaceutical Co., Ltd., and the chairman of Shandong Dong E E Jiao Co., Ltd. He is a director and general manager of CRH, and the chairman of China Resources Enterprise, Limited. He has been a director and the deputy chairman of the Company since 2010.

Yu Liang, male, born in 1965. He graduated from the Faculty of International Economics Studies of Peking University with a bachelors degree in 1988. Mr Yu obtained a masters degree in economics from Peking University in 1997. He had previously worked for Shenzhen Waimao Group. He joined the Company in 1990. He became the general manager of Shenzhen Vanke Financial Consultancy Company Limited in 1993 and the deputy general manager of the Company in 1996, and the executive deputy general manager and Supervisor of Finance of the Company in 1999. He has been the general manager of the Company since 2001 and a director of the Company since 1994. At present, Mr Yu is the president of the Company. Sun Jianyi, male, born in 1953. He graduated from Zhongnan University of Finance and Economics, majoring in finance studies. He is a senior economist. He worked at Wuhan branch, the Peoples Bank of China in 1971 and was appointed as deputy department head and director. He became deputy general 11

manager of Wuhan Branch, the People's Insurance Company of China, Limited and the committee member of the Communist Party Committee in 1985. Between 1990 and 2003, Mr Sun acted as assistant to general manager, deputy general manager, executive deputy general manager and executive director for Ping An Insurance Company of China. In 2003, he became the executive director, executive deputy general manager and deputy chief executive officer of Ping An Insurance (Group) Company of China, Limited. Since 2008, he has been the vice chairman and deputy chief executive officer of Ping An Insurance (Group) Company of China, Limited. At present, Mr Sun is the chairman of Ping An Bank Limited and a director of Ping An Life Insurance Company of China, Limited, Ping An Property & Casualty Insurance Company of China, Limited, China Ping An Trust & Investment Co., Limited and Ping An Annuity Insurance Company of China, Limited. He has been a director of the Company since 1995. He became an executive director in 1997 and deputy chairman of the Company in 1998. He was an independent director of the Company from 2001 to 2008. He became the convener of the remuneration and nomination committee and a member of the audit committee in 2005. He has become a director and a member of the remuneration and nomination committee of the Company since 2008. Wang Yin, male, born in 1956. He graduated from Shandong University with a bachelors degree in economics. He also obtained a masters degree in Business Administration from the University of San Francisco. Mr Wang had worked in the Foreign Economic and Trade Cooperation Department. He became the deputy officer of CRNC in 1984, deputy general manager of the Human Resources Department of CRH in 1988, and the general manager of China Resources Construction (Holdings) Ltd., a subsidiary of CRH, in 1996. He is the deputy managing director of CRH and the chairman of CRL. He has been a director of the Company since 2002. Shirley L. Xiao, female, born in 1964. She graduated from Wuhan University, majoring in English Literature in 1984. She obtained a masters degree in Business Administration from China Europe International Business School in 2000. She had worked in Central South University of Technology, China Technology Data Import & Export Co. and Mitsubishi Corporation Shenzhen Office. She joined China Vanke in 1994, and had since become the deputy director and director of the General Managers Office, as well as the director of the Office of the Companys Board. From 1995 to 2009, she was the secretary of the Board of Directors. She has been a director of the Company since 2004, and a member of the investment and decision-making committee of the Board of the Company since 2005. Since 2007, she has been an executive vice president of China Vanke. Jiang Wei, male, born in 1963. He graduated from Foreign Economy and Trade University and obtained a masters degree in international business and finance. He joined CRNC in 1988 and CRH in 1990. He became the general manager of the Finance Department of CRH in 1999 and a director of CRH in 2000. Mr Jiang became a director and financial controller of CRH in 2002, financial controller of CRC in 2003 and a director of CRC in 2005. At present, Mr Jiang is a director and deputy general manager of CRH, a director of CRC, a director of China Resources Enterprise, Limited, China Resources Power Holdings Company Limited, CRL, and a non-executive director of China Asset (Holdings) Limited, an executive director of Cosmos Machinery Enterprises Limited and an independent director of Greentown China Holdings Limited. He became a member of the Supervisory Committee of the Company in 2001 and has been a director of the Company since 2005. He has been a member of the audit committee and a member of the investment and decision-making committee of the Board of the Company since July 2005. Brief introduction to independent directors David Li Ka Fai, male, born in 1955. He graduated from London City University in the UK in 1978. He is a FCPA of Hong Kong Institute of Certified Public Accountants and a member of the Institute of Chartered Accountants in England & Wales, a fellow member of the Association of Chartered Certified Accountants and Institute of Chartered Secretaries and Administrators. At present, he is the deputy managing partner of Li, Tang, Chen & Co. Certified Public Accountants and an independent non-executive director and a member of the audit committee and the remuneration committee respective of China Merchant Holdings (International), an independent non-executive director and a member of the audit committee and the remuneration committee respectively of AVIC International Holding (HK) Limited (formerly known as CATIC International Holdings Limited), an independent non-executive director and the chairman of the audit committee of China-Hongkong Photo Products Holdings Ltd., an independent non-executive director, chairman of the audit committee, and a member of the remuneration committee of Cosmopolitan International Holdings Ltd., an independent non-executive director, chairman of the audit committee,

12

member of the remuneration committee, member of the nomination committee of Goldlion Holdings Limited, and an independent non-executive director, and chairman of the audit committee of Shanghai Industrial Urban Development Group Limited. He has been an independent director and the convener of the audit committee of the Company since 2005. Judy Tsui Lam Sin Lai, female, born in 1955. She is the Associate Vice President, Director of the Graduate School of Business and Chair Professor of Accounting at The Hong Kong Polytechnic University. Ms Tsui also holds positions as honorary professor and visiting professor at several top universities in Mainland China. She is the first professor in accounting that was awarded the Cheung Kong Chair Professor by Chinas Ministry of Education. She has been appointed as a visiting professor of the Research Centre for Social and Organizational Behaviour of the Chinese Academy of Sciences, and a visiting scholar of the Sloan School of Management of the Massachusetts Institute of Technology (MIT) in the USA. Ms Tsui was appointed by the Chief Executive of the Hong Kong SAR Government to serve as a member of the University Grants Committee and the statutory Financial Reporting Council. She is a fellow of both the Hong Kong Institute of Certified Public Accountants and Hong Kong Institute of Directors, and an honorary fellow of CPA Australia. Ms Tsui is the first non-US citizen and the first Hong Kong scholar appointed as the vice president (international) of the American Accounting Association. She has been an independent director of the Company since 2005. Qi Daqing, male, born in 1964. Mr Qi graduated from College of Business, Michigan State University in the USA and obtained a PhD in accountancy. Mr Qi obtained a masters degree in management from University of Hawaii in the USA and a dual bachelors degree in biophysics and international journalism from Fudan University. He had worked for The Chinese University of Hong Kong and Eli Broad Graduate School of Management of Michigan State University in the USA, Center for East-west Studies in the USA and special correspondent foreign affairs department in Xinhua News Agency. He is currently a professor and vice president of Cheung Kong Graduate School of Business, a member of American Accounting Association, independent director of listed companies of NYSE, NASDAQ and Hong Kong. He has become an independent director, convener of the remuneration and nomination committee and a member of the audit committee of the Company since 2008. Zhang Liping, male, born in 1958, graduated from Beijing Institute of Foreign Trade in 1980. He obtained his masters degree in international affairs and international law from St. Johns University, the USA, in 1987. Mr Zhang had worked for the Ministry of Foreign Trade and Economic Cooperation (now Ministry of Commerce) and had served as director of the Investment Banking Division of Merrill Lynch, the USA, managing director and head of Greater China Region of Dresdner Bank, Germany, managing director of Pacific Concord Holdings Limited, Hong Kong, and chief executive officer of Imagi International Holdings Ltd, Hong Kong. In 2004, Mr Zhang joined Credit Suisse First Boston and is currently a member of the Global Investment Banking Department Operating Committee and vice chairman of Global Investment Banking Department and CEO (China) of Credit Suisse Group. Mr Zhang is also an independent nonexecutive director of the board of Zhejiang Expressway Co., Ltd. He has become an independent director, convener of the investment and decision-making committee and a member of the remuneration and nomination committee of the Company since 2010. Brief introduction to members of the Supervisory Committee Ding Fuyuan, male, born in 1950. He holds a tertiary qualification. He had worked in Guangdong Provincial Tourism Department, South China Sea Oil Joint Service Corporation, South China Petroleum Shenzhen Development Service Corporation and Nanhai Huaxin Group. He joined China Vanke in 1990 and became the deputy director of the General Managers Office in February 1991. In October 1991, he became the manager of the Human Resources Department of the Company. He has been the secretary of the Communist Party Committee of the Company since 1995. He became a member of the first Supervisory Committee of the Company in 1993 and has been the Chairman of the Supervisory Committee of the Company since 1995.

Wu Ding, male, born in 1965. He holds a bachelors degree in economics from Shanxi University of
Finance and Economics and a masters degree in Business Administration from China Europe International Business School. He joined CRH in 1993 and had served as project manager for the Enterprise Development Divison of CRH, chairman/general manager of China Resources Shanghai Co., Ltd. and deputy general manager of CRL. He is now the chairman/general manager of China Resources Investment and Asset

13

Management Company Limited, chairman of China Resouces Parking Holdings Limited and a director of China Resources SZITIC Trust Co.,Ltd. He has been a member of the Supervisory Committee of the Company since 2010.

Zhou Qingping, male, born in 1969. He graduated from Hunan University (former Hunan Institute of Finance and Economics) in 1993, with a bachelors degree in accouting. He is a registered accountant in the PRC. He had worked in Xiangcai Securities Co., Ltd. He joined China Vanke in 1995 and served as finance manager of Vanke Financial Consultancy Company Limited. He became financial controller of Chengdu Vanke Real Estate Co., Ltd. in 2000 and deputy general manager of the Companys Risk Management Department in 2003. He has been the general manager of the Companys Risk Management Department and a member of the Supervisory Committee of the Company since 2010.
Brief introduction to senior management Yu Liang: For biography of Yu Liang, please refer to the Brief introduction to directors. Liu Aiming, male, born in 1969. He graduated from the Department of Civil Engineering, Tsinghua University, with a bachelors degree in building and structural engineering in 1991 and obtained a masters degree in building materials from Tsinghua University in 1993. He had worked in China Overseas Construction (Shenzhen) Co., Ltd as director, assistant general manager as well as the manager of the Property Department. He became the managing director of China Overseas Construction (Shenzhen) Co., Ltd in 2001 and the deputy general manager of Zhonghai Real Estate Co., Ltd. in 2002. He joined the Company in 2002 as deputy general manager. He is currently an executive vice president of China Vanke. Ding Changfeng, male, born in 1970. He graduated from Peking University with a bachelors degree in international politics in July 1991. He obtained a masters degree in global economics from Peking University in 1998. He had worked for Jiangsu Yancheng Party School. He joined China Vanke in 1992 and became deputy director of the Research Centre of the General Managers Office of the Company in August 1994. He was the chief editor of Vanke Periodical in 1995 and the assistant to general manager of Northeast Operation and Management Department of the Company in January 1996. He was the deputy general manager of Northeast Department of the Company in 1997 and the deputy general manager of Shanghai Vanke Real Estate Co., Ltd. in 1998. He became the manager of the Companys Corporate Planning Department in 1999, and the general manager of Shanghai Vanke Real Estate Company Limited in 2000. He had been deputy general manager of the Company since 2001. He is currently an executive vice president of China Vanke. Xie Dong, male, born in 1965. He graduated from Nanjing Engineering Institution in 1987 with a bachelors degree in wireless electricity. He received a masters degree in business administration from Shanghai Jiao Tong University in 1997. He had worked in Shenzhen RGB Electronic Co., Ltd., the headquarters of China Shenzhen TV Company. He joined the Company in 1992. He became the manager of the Companys Personnel Management Department in 1996, and the general manager and director of the Companys Human Resources Department in 2000 and 2001 respectively. He became deputy general manager of the Company in 2004. He is currently an executive vice president of China Vanke. Zhang Jiwen, male, born in 1967. He graduated from Tsinghua University with a bachelors degree in architecture in 1987 and obtained a masters degree in engineering in 1994 from Tsinghua University. He had worked in Guizhou Architecture and Design Institute, Shenzhen Jin Xiu Zhong Hua Development Co., Ltd., Shenzhen Window of the World Co., Ltd., Guangzhou Hua Heng Design Company, and Ho & Partners Architects Engineers & Development Consultants Ltd. in Hong Kong. He joined Shanghai Vanke Real Estate Co., Ltd. in 2001 as deputy general manager and became the Companys design director in 2003. He became deputy general manager of the Company in 2004. He is currently an executive vice president of China Vanke. Mo Jun, male, born in 1967. He graduated from Tsinghua University in 1991 with a bachelors degree in architecture. He obtained an MBA degree from the China Europe International Business School in 2004. He joined the Company in 1991. He was the manager of Shenzhen Wanchuang Construction and Design Consultants Co., Ltd. in 1996, the general manager of Shenzhen Vanke Real Estate Co., Ltd. in 1999, the general manager of Beijing Vanke in 2000, deputy general manager of the Company in March 2000, and executive deputy general manager of the Company in 2001. He resigned from the Company and became 14

executive deputy general manager of Beijing Rongke Zhidi Real Estate Co., Ltd. in March 2003. He joined the Company again as deputy general manager in October 2004. He is currently an executive vice president of China Vanke. Shirley L. Xiao: for biography of Shirley L. Xiao, please refer to the Brief introduction to directors. Wang Wenjin, male, born in 1966. He graduated from Zhongnan University of Economics and Law in 1994 with a masters degree. He is a registered accountant in the PRC. He had worked for Hefei No. 10 Plastic Factory and Anhui Optical Sophisticated Mechanic Research Centre of China Academy of Sciences. He joined the Company in 1993 and became the deputy manager of the Companys Finance Department in 1998. He was the general manager of China Vankes Finance Department in 1999, and has been the Supervisor of Finance since 2002. Since 2004, he has been the financial controller of the Company. He is currently an executive vice president of China Vanke. Du Jing, male, born in 1971, graduated from the Southeast University in 1992 with a bachelors

degree in architecture. He obtained a masters degree in business administration from Cheung Kong Graduate School of Business in 2009. He had previously worked for China Overseas Construction (Shenzhen) Company Limited, China Overseas Development Company Limited and China Overseas Property Limited. Mr. Du Jing joined the Company in 2002, and was appointed as the general manager of Guangzhou Vanke in 2003. He became the vice president of the Company and general manager of Shenzhen Vanke Real Estate Co., Ltd. in 2007. He has been an executive vice
president of China Vanke since January 2011. Tan Huajie, male, born in 1973. He graduated from the First Faculty of Mechanical Engineering of Huazhong University of Science and Technology in 1993. He joined the Company in January 2001. He was appointed as the manager of the Customer Relations Department in December 2003, and became the chief researcher and deputy director of the Office of the Board in October 2004. Since February 2008, he has been the director of the Office of the Board. He has been appointed as the secretary to the Board of Directors since March 2009. (2) Remuneration and changes in shareholdings of directors, members of Supervisory Committee and senior management during the year under review The Company continued to follow the principle of its remuneration policy, which is to offer competitive salaries according to market principles to retain and attract high-calibre professionals. The remuneration of the Companys senior management members was determined not only with reference to market level but also in accordance with the growth in the overall operating results of the Company. In 2010, the Company achieved rapid growth in its operating results. This was reflected in the remuneration of the senior management members employed by the Company, while the remuneration of those directors and members of Supervisory Committee who were not employed by the Company was determined at shareholders meeting. During the year under review, the aggregate amount of remunerations of the 13 directors, members of Supervisory Committee and senior management who were employees of the Company was RMB52.40 million. Among the directors and members of Supervisory Committee who were not employed by the Company, three directors, namely Mr Wang Yin, Mr Jiang Wei and Mr Sun Jianyi, each received a remuneration amount of RMB150,000. Director Mr Qiao Shibo received a directors remuneration of RMB60,000. Independent Directors Mr David Li Ka Fai, Ms Judy Tsui Lam Sin Lai and Mr Qi Daqing each received independent directors remuneration of RMB250,000; Independent Director Zhang Liping received independent directors remuneration of RMB100,000; Mr Wu Ding, a member of the Supervisory Committee, received a remuneration of RMB120,000. Mr Qiao Shibo, Mr Wang Yin, Mr Jiang Wei and Mr Wu Ding also received salaries from a connected entity of CRC. Mr Wang Shi also received remuneration for his role as independent director from CRL, a connected entity of CRC. Remuneration of directors, members of the Supervisory Committee and senior management of the Company is as follows:

15

Name

Position

Sex

Age

Period of service

Number of shares held at the beginning of 2010

Number of shares held at the end of 2010

Reasons for changes

Total remunerations received from the Company during the year under review (RMB000) 7,600 6,800

Any remunerations received from shareholders or other connected entities

Wang Shi
Yu Liang Ding Fuyuan Qiao Shibo Sun Jianyi Wang Yin Jiang Wei David Li Ka Fai Judy Tsui Lam Sin Lai Qi Daqing Zhang Liping Wu Ding Zhou Qingping Liu Aiming Ding Changfeng Xie Dong Zhang Jiwen Mo Jun Xu Hongge Shirley L Xiao Wang Wenjin Tan Huajie Total

Chairman Director, President Chairman of Supervisory Committee Deputy Chairman Director Director Director Independent Director Independent Director Independent Director Independent Director Member of Supervisory Committee Member of Supervisory Committee Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Director, Executive Vice President Executive Vice President Secretary to the Board -

M M M

60 46

2008.4~ 2008.4~

6,817,201 4,106,245

6,817,201 4,106,245

Yes
No

61 M M M M M F 56 M M 47 53 46

2007.4~

2,018,408 0 692,236 0 0 0 0 0 0 0

2,018,408 0 692,236 0 0 0 0 0 0 0

4,200

No

57 58 55 48 56

2010.8~ 2008.4~ 2008.4~ 2008.4~ 2008.4~ 2008.4~ 2008.4~ 2010.8~ 2010.3

60 150 150 150 250 250 250 100 120

Yes No Yes Yes No No No No Yes

M M

42 M 42 M 41 M 46 M 44 M 44 M 40 F 47 M 45 M 38 -

2010.3~

20,000

20,000

1,400

No

2002.12~

1,650,978

1,650,978

3,700

No

2001.2~

1,487,660

1,487,660

4,200

No

2004.3~

1,487,660

1,487,660

3,300

No

2004.8~

1,548,950

1,548,950

4,200

No

2004.10~

1,548,950

1,548,950

3,700

No

2005.7~

1,650,978

1,650,978

4,200

No

2007.10~

1,446,849

1,446,849

3,300

No

2007.10~ 2009.3~ -

1,343,591 0 25,819,706

1,343,591 0 25,819,706 -

3,300 2,500 53,880

No No -

16

(3) Change and reasons for the change in directors, members of the Supervisory Committee and senior management during the year under review During the year under review, by democratic election, the Companys Staff Committee elected Mr Zhou Qingping as Staff Representative Supervisor. The 2009 Annual General Meeting approved the election of Mr Ding Fuyuan and Mr Wu Ding as members of the Supervisory Committee. During the year under review, Mr Song Lin resigned as director and deputy chairman of the Board. At the Companys First Extraordinary General Meeting in 2010, Mr Qiao Shibo was elected as director and Mr

Zhang Liping as independent director. The Twelfth meeting of the Fifteenth Board approved the election of Mr Qiao Shibo as deputy chairman of the Board.
Subsequent event: In January 2011, Mr Xu Hongge resigned as executive vice president. The Board appointed Mr Du Jing as executive vice president. 2. Number and Composition of Employees As at 31 December 2010, there were 22,850 employees on the Companys payroll, representing an increase of 29.7 per cent from that of the previous year. The average age of the employees was 28.3. Among the entire workforce, there were 4,464 employees engaged in the property development division, representing an increase of 30.9 per cent from the previous year. The average age of the staff working for this division was 29.1 and the average years of service were 3.8; in terms of education level, 0.36 per cent held doctoral degree, 15.17 per cent with masters degree, 67.74 per cent with university degree, 14.27 per cent with tertiary education and 2.46 per cent with education below tertiary level. Employees with university degree or above accounted for 83.27 per cent of the total staff in the property development division. The composition of employees in the property development division by job classification is as follows: 642 marketing and sales staff, accounting for 14.38 per cent and up by 27.9 per cent from the previous year; 2,525 professional technicians, accounting for 56.57 per cent and up by 49.8 per cent from the previous year; among the professional technicians, 1,401 were construction staff, accounting for 31.38 per cent, 506 were designers, accounting for 11.34 per cent and 261 were cost management staff, accounting for 5.85 per cent; there were 357 project development staff, accounting for 8.00 per cent. The number of management staff, including those working in the departments of finance, audit, IT, legal, human resources, customer relations and data analysis as well as senior management staff, was 1,297, accounting for 29.05 per cent and up by 6.05 per cent from the previous year. There were 18,386 employees engaged in property management, up by 29.4 per cent from the previous year. The average age was 27.5 and the average years of service was 2.1. In terms of education level, 0.24 per cent held masters degree, 8.01 per cent with university degree, 15.68 per cent with tertiary education and 76.07 per cent with education below tertiary level. Employees with tertiary education or above accounted for 23.93 per cent of the total staff in the property management division. VI.Corporate Governance Structure 1. Elaboration on the Companys Compliance with the Requirements Set Out in the Regulatory Documents on Corporate Governance of Listed Companies China Vanke had strictly complied with the requirements of the laws, regulations and regulatory documents governing listed companies and continued to fine-tune its corporate legal person governance structure and regulate its operation. There had been no discrepancy between the Companys governance structure and the requirements of the regulations on corporate governance of listed companies. Moreover, the Company had not faced with any problems with horizontal competition and connected transactions caused by partial restructuring. In 2010, the Company continued to step up efforts to improve its corporate governance. During the year under review, the Company established a system to make claims against those liable for material errors in annual report information disclosure. Pursuant to the centralised deployment of CSRC, Shenzhen Bureau, the Company pushed ahead with the standardisation of financial and accounting basic tasks, improvement of internal audit of financial reports, self-inspection of the establishment and implementation of an effective mechanism for the prevention of capital being used, and strengthened the promotion and execution of inside

17

information management, so as to further enhance internal control. So far no insider who has access to inside information has violated the laws to engage in insider trading. In 2010, the Company received The Best Board of Directors Award at the Sixth Session of the Gold Roundtable Awards organised by the Directors & Boards publication and co-organised by The Listed Companies Association. The Company was awarded the Best Corporate Governance at the Third Session of the Best Board of Directors of Listed Companies in China organised by Moneyweek, received 2010 Best Corporate Governance Practices of Listed Companies in China Award and 2010 Best Board of Directors of Listed Companies Award from the Research Center of Corporate Governance at Nankai University. Corporate governance is a long-term commitment. In the future, the Company will continue to adhere to the principle of professionalism + regulation + transparency, and to further enhance its corporate governance. 2. The Companys Independence from Its Single Largest Shareholder in Business Operation, Staff, Assets, Organisation and Finance The Company continued to persist in maintaining complete independence from its single largest shareholder CRC and its connected companies with respect to business operation, staff, assets, organisation and finance, to ensure independence in its business integrity and operation autonomy. The Company has not disclosed any unpublished information to CRC, its single largest shareholder, or taken any other action that might violate the code of corporate governance. 3. Execution of the Duties of the Independent Directors In 2010, all independent directors continued to give independent opinions and constructive advice to the Company on its development strategies, remuneration scheme, stock option incentive plan, internal control development, external guarantee issues, derivatives investment and accounting treatment. With the active participation of the independent directors, the corporate governance was further enhanced. Independent directors had actively participated in the inspection of the Companys projects. In the past year, they paid site visits to the projects in Chengdu and Xian, and conducted interviews during their visits; they focused on the financial situation, progress of implementation of business plans and internal control development of companies in different areas. Through all of the above, the independent directors had a thorough understanding of the operation and development of these companies. In 2010, the details of the attendance of independent directors at Board meetings, specialised committee meetings and their participation in voting by correspondence at Board meetings and specialised committee meetings are as follows:
Number of resolutions voted by Number of correspondence Name of Board Attendance inAttendance by Absence including independent meetings heldperson (times) proxy (times) (times) resolutions directors during the year considered by specialised committees 5 5 0 0 15 David Li Ka Fai Judy Tsui Lam Sin Lai Qi Daqing Zhang Liping 5 2 4 2 1 0 0 0 15 4 8 1 8 1 0 1 5 2 3 0 8 Number of specialised committee meetings needed to be attended (times) Number of specialised committee meetings attended (times) Number of general meetings attended (times)

5 0

5 0

2 1

4. The Establishment and Implementation of Appraisal, Incentive and Reward Mechanisms for Senior Management The Company implemented a balanced scorecard as its major organisation performance management system. In accordance with the concept of a balanced scorecard, senior managements performance is evaluated in accordance with the achievement of annual business objectives based on the Companys medium to long term development strategic goals, and such business objectives include the operating results of the period 18

under review and sustainability of the Company. The review covers different categories including the Companys financial position, customers, internal procedure, staff training and development. The Company has established objective benchmarks to measure the performance in each of the categories. The statistics on staff and customers satisfaction levels were obtained from survey conducted by an independent third party. The remuneration and nomination committee under the Board is responsible for studying and supervising the establishment and implementation of the appraisal, incentive and reward systems for senior management. Performance of the president was appraised by the Board. The remunerations of senior management staff are determined in accordance with the Companys operating results of the year under review, the accomplishment of overall management indicators, their appraisal report, and comparison with the industry salary level. In each management year, performance review of senior management is conducted through the Companys work report meeting. The major factors to be considered in reviewing the senior management of the Companys headquarters include the Companys overall performance, the value of the management staffs role in the Company and their performance with reference to the duties stipulated under their respective positions. With regard to those in charge of front-line companies, the review is based on the performance of those front-line companies to which they are held accountable, the value of their roles and their performance with reference to the duties stipulated under their respective positions. In 2010, in order to realize shareholder orientation, enhance the consistency between business decisions and shareholders interests and continue to achieve outstanding operating results, the Company made adjustment to the performance appraisal system, by raising the performance benchmarks such as the rate of return on net assets and net profit growth rate. In addition, Economic Profit was adopted as a performance indicator for granting bonus for outstanding performance. The Company also adjusted the overall remuneration scheme to reduce short-term incentives and adopt long-term incentives plan, building up a balanced remuneration scheme structure comprised of fixed salaries, short-term and long-term incentives. VII. Summary of Shareholders Meetings 1. The 2009 (22nd) Annual General Meeting The notice of 2009 Annual General Meeting (AGM) was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, on 2 March 2010. The last day for verifying the qualification of shareholders was 12 March 2010. The AGM was held at 9:30 am on 23 March 2010 at Vanke Centre, No 33 Huanmei Road, Dameisha, Yantian District, Shenzhen. A total of 260 shareholders (proxies) attended the meeting, holding 2,527,231,755 shares, representing 22.98 per cent of the Companys total number of shares with voting rights. There were 79 shareholders (proxies) of A shares, holding 2,083,519,803 shares, representing 21.52 per cent of the Companys total number of A shares with voting rights. There were 181 shareholders (proxies) of B shares, holding 443,711,952 shares, representing 33.74 per cent of the Companys total number of B shares with voting rights. The AGM considered and approved (1) the Directors Report for the year 2009; (2) Report of the Supervisory Committee for 2009, (3) the Annual Report and audited financial report for the year 2009; (4) the resolution regarding the proposal on profit appropriation and dividend distribution for the year 2009; (5) the resolution regarding the appointment of auditors for the year 2010; (6) the resolution regarding the special remarks on the use of proceeds from previous fund-raising exercises; (7) the resolution regarding the amendment of the Companys Articles of Association and the election of Mr Ding Fuyuan and Mr Wu Ding as members of the Supervisory Committee. The execution of the duties of the independent directors and the Companys involvement in the resettlement and reconstruction works in the affected area following the Sichuan earthquake were also reported at the AGM. The announcement of the resolutions of the AGM was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, on 24 March 2010. 2. The First Extraordinary General Meeting of 2010 The notice of the First Extraordinary General Meeting of 2010 (EGM) was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, on 23 July 2010. The last day for verifying the qualification of shareholders was 2 August 2010. 19

The on-site meeting of the EGM was held at 10:00 am on 10 August 2010 at Vanke Centre, No 33 Huanmei Road, Dameisha, Yantian District, Shenzhen. A total of 260 shareholders (proxies) attended the meeting, holding 3,199,124,497 shares, representing 29.10 per cent of the Companys total number of shares with voting rights. There were 55 shareholders (proxies) of A shares, holding 2,593,388,948 shares, representing 26.79 per cent of the Companys total number of A shares with voting rights. There were 205 shareholders (proxies) of B shares, holding 605,735,549 shares, representing 46.07 per cent of the Companys total number of B shares with voting rights. The EGM elected Mr Qiao Shibo as director and Mr Zhang Liping as independent director for a term that ends upon the expiry of the term of the 15th session of the Board. The announcement of the resolutions of the EGM was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, on 11 August 2010. VIII. Directors Report 1. Management Discussion and Analysis Changes in market environment and managements opinion During the year under review, the sales area and sales amount of national commodity housing increased by 10.1% and 18.3% respectively. Compared with 2009, the growth rates had slowed down significantly. Affected by changes in policy and market situation, trading of commodity housing had been relatively volatile for the full year. At the beginning of 2010, the housing markets in various areas continued the robust momentum in 2009; since the second quarter, the government had successively promulgated a series of measures to regulate the housing market, leading to a sharp slowdown in transaction volume; but with the launch of properties concentrating in August and September, the transaction volume in various markets began to recover. Nevertheless, the growth rate was still lower than the growth rate in supply during the same period. Owing to the above-mentioned factors, the four quarterly sales area of commodity housing of 2010 rose year-on-year by 35.8%, 5.2%, -1.9% and 16.6% respectively. Geographically speaking, the eastern region was particularly susceptible to the market fluctuations, with a 4.1% growth rate in sales area for the full year which was lower than the average level in the PRC. While the impact on the central and western regions of the PRC was smaller, the sales area of central and western regions recorded a growth rate of 19.9% and 13.5% respectively. The sales area realized in major cities for the full year in general had shrunk. In particular, the transaction volume in those cities with relatively large increase in price had a greater rate of decline. Compared with 2009, the major cities saw a drop in their share of the domestic market. During the year under review, with the combined effect of new housing supply and slowdown in sales, the decline in home inventory that had started since 2009 gradually came to an end. After June, the transaction volume of housing to approved pre-sales area ratio in the cities where the Company had major operations remained at less than 1. This showed a cyclical phenomenon of oversupply had appeared in these cities. It is expected that the saleable inventory of commodity housing will continue to increase for some time in the future and market competition will be further intensified. During the year under review, the investment amount of property development and new construction area across the country maintained a relatively fast growth. The national investment amount of property development for the full year increased by 33.2%, and new construction area increased by 40.7%, which was the fastest growth rate over the past decade. With this new construction area gradually translating into market sales in 2011, there will be sufficient new housing supply in the future. This in turn will result in a supplydemand balance that is favourable to property buyers. However, it should be noted that although the accumulated growth rate was relatively high, there were signs of a slowdown in new construction of housing in the PRC at the end of the year due to a slowdown in transaction. As the market becomes more volatile, corporate investment capability may reduce, while the pace of new construction will slow down. All these will affect housing supply in the year after. For the land market, land sales area in major cities in 2010 increased when compared with that of the previous year. In general, developers displayed more prudent land purchase behavior than in the second half 20

of 2009, while the premium rate of land transactions also dropped significantly. But it should also be noted that the land reserve price in some cities still remained high, while the land transaction price and premium rate rose in the second half of 2010 from that in the first half. As such, enterprises became more active in acquiring land. However, in view of the market recession and tightening of credit, it is expected that the land market overheat will not sustain. Enterprises will be more rational with land purchase. During the year under review, a series of measures to regulate the property market were promulgated. In mid April, the State Council promulgated the Notice regarding determination to curb rapidly rising housing price in certain cities, which proposed a series of measures including differential housing credit policy, increase of effective housing supply and stepping up the construction of affordable housing. At the end of September, the State further introduced a number of measures including: all commercial banks temporarily suspended loans to families purchasing their third house; raise the down payment for first-time buyers of commodity housing to 30% or above, and adjust deed tax and preferential tax policies for personal income tax, etc. Subsequently, major cities promulgated measures to limit the total number of properties bought by a single family. The introduction of the policy had significant impact on the market. During the year under review, the leverage ratio property buyers who made use of bank credit to leverage their mortgage, significantly decreased. From the Companys point of view, bank loans accounted for 54% of the amount paid to purchase home between January and April; it dropped to 46% from May to September, and further decreased to 41% from October to December, which was a record low in recent years. In view of the sales composition, the proportion of small to medium sized ordinary commodity housing had increased, reflecting a gradual decline in investment-driven demand. In January, 2011, in order to strengthen and expand the impact of the previous rounds of measures, the State Council introduced another eight new measures, including further tightening the existing differential housing credit policy by raising the down payment of buyers of second homes to not less than 60%; expanding the scope for imposing limits on the number of homes bought by a single family, and establishing an accountability mechanism to ensure the affordability of housing and to stabilize housing prices. Already Shanghai and Chongqing have started to experiment with a property tax. The promulgation of the aforementioned measures once again reflects that the States determination to regulate and control the property market and prevent housing prices from growing excessively. The main focus of the measures is to curb speculative investment in housing, whereas those ordinary commodity housing targeted at first-time home buyers and end-users are in line with the government policy. Close to 90% of the Companys product portfolio is made up of ordinary residential properties targeted at end-users. As such, the impact of change in market environment on the Company will be relatively small. During the year under review, the government intensifies effort to ensure affordability of housing. According to statistics, construction of 5.9 million units of affordable housing and housing redeveloped from shanties in the PRC commenced in 2010; construction of about 3.7 million units was completed, which was a record high for construction of affordable housing. Pursuant to the relevant planning policy, construction of affordable housing in the PRC will be stepped up in the next few years, and affordable housing will account for a bigger share in the total housing supply. In the long run, the implementation of affordable housing construction will have a positive effect on the increase in housing supply, improvement in the living conditions of low to middle income families, and stability of housing prices and the property market. Realizing the goal of affordable housing construction will facilitate a more stable operating environment in the commodity housing market and prevent volatility in the market, thereby providing conditions conducive to steady and sustainable growth for the industry. During the year under review, in response to the changes in macro-economic environment, the States priority shifted from ensuring economic growth to control anticipated inflation, and the monetary policy was adjusted from moderately relax to prudent. In the fourth quarter of 2010, the Peoples Bank of China (central bank) raised interest rate twice, and again raised the benchmark rates of RMB deposits and loans of financial institutions in February 2011. During the year under review, the regulatory body required banks to strengthen risk management of home mortgage, and imposed a stricter control over real estate trust and finance business. According to statistics, among the source of funds of real estate developers, domestic loans 21

accounted for 17.3% in 2010, a drop from 19.8% in 2009. In addition, a number of cities introduced policies to regulate the proceeds from the pre-sale of commodity housing, restricting the use of proceeds from presales. Capital crunch will prevail in the industry for some time in the future, which implies that enterprises should strengthen their capital management and attach more importance to financial safety. Enterprises should also enhance the utilization efficiency of existing resources and strengthen organic growth ability. China Vanke has always insisted on a prudent development strategy and a healthy financial position, which enable the Company to ensure safe operation under different market situations. Moreover, with mature attitude of cooperation, professional background as well as regulated and transparent corporate governance, China Vanke has accumulated extensive experience in seeking collaborative resources. These have created advantages for the Company as well as enable it to make use of all various possible social resources to speed up its development through flexible cooperation arrangements, despite capital crunch looming over the property market. Operating results and analysis Faced with a complicated and volatile business environment, the Company persevered with its mainstream market orientation, quick turnover and geographical diversification strategy during the year under review. As a result of its proactive response to market changes, the Company achieved satisfactory results. The Company had for the first time exceeded RMB100 billion in sales. Sales area and sales revenue for the full year amounted to 8,977,000 sq m and RMB108.16 billion, representing increases of 35.3% and 70.5% respectively from those of 2009. The Company accounted for 2.1% of the domestic commodity housing market in terms of sales revenue. In Shenzhen, Dongguan, Foshan, Tianjin, Shenyang, Qingdao, Wuhan, etc, the Company ranked first in terms of market share, and ranked second in Zhuhai, Fuzhou, Shanghai, Suzhou, Changchun, etc. The Company thus further solidified its dominance in the industry. During the year under review, the Company saw its sales in Beijing and Shenzhen exceed RMB10 billion for the first time, while the number of cities with sales surpassing RMB5 billion jumped from 3 in 2009 to 8 (Beijing, Shenzhen, Shanghai, Shenyang, Tianjin, Sunan, Guangzhou, Hangzhou). The Companys revenue and net profit for 2010 amounted to RMB47.76 billion and RMB7.28 billion respectively, representing year-on-year increases of 3.7% and 36.7% respectively. The Company realised booked area of 4,520,506 sq m and booked revenue of RMB47.11 billion, representing a decrease of 25.3% and an increase of 3.5% from those of 2009 respectively. Owing to the time lag in revenue recognition in the property industry, and rise in the proportion of furbished units in recent years as well as the prolonged period from completion of sales to satisfying the conditions for recognition, the growth in booked revenue was smaller than that of sales revenue. As at the end of 2010, the Company had an area of 7,610,000 sq m sold but incomplete and not yet booked, with an aggregate contract amount of approximately RMB91.9 billion. Included in the consolidated statements was an area of 6,800,000 sq m sold but not yet booked, with a contract amount of RMB82.0 billion. As most of the aforementioned projects will be booked in 2011, they will provide a strong support for the Group to achieve satisfactory profitability in 2011. During the year under review, the Company continued to focus on the mainstream market as reflected by its product mix. The Companys main products were small to medium sized ordinary commodity housing units targeted at end-users. The proportion of units smaller than 144 sq m further increased from 86% in 2009 to 88%. According to the latest market and sales situation, the Company made an assessment during the year under review of the projects for which provisions for diminution in value had been made. Based on the assessment results, the Company reversed the provisions for diminution in value of RMB616,667,200 for Golden Rongjun in Fuzhou, Paradiso Project in Nanjing, Haiyue Huicheng Project in Chengdu and King Metropolis in Chengdu. Such reversal affected the net profit attributable to the Company by RMB462,500,400. During the year, the booked gross margin and booked net margin of the Companys property business were 32.6% and 16.5% respectively, representing increases of 6.56percentage points and 3.49 percentage points from those of 2009 respectively. Considering the time lag in revenue recognition in the property industry,

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increase in net margin reflected the rebound in profit margin of projects driven by market recovery since 2009, the results of the Companys effort in strengthening its cost management and expenses control as well as the impact of the reversal of provision of diminution in value of inventory. Against the backdrop of rapid expansion in sales, the Company, during the year under review, exercised strict control over expenses. Administrative expenses as a percentage of sales revenue declined from 2.3% in 2009 to 1.7%, while distribution costs as a percentage of sales revenue dropped from 2.4% in 2009 to 1.9%. During the year under review, the Company continued to adhere to the operating strategy of rapid development and quick turnover. Through a series of measures including the promotion of product standardization, optimization of development process and commending those projects with quick development, the Company further lifted its operational efficiency and shortened the average time between project acquisition and commencement of construction. Since the pace of project development significantly quickened, a large proportion of projects newly acquired by the Company in 2010 commenced construction in the same year. As a result, the actual new construction area for the full year surpassed the area planned at the beginning of the year. The actual new construction area was 12,480,000 sq m, representing an increase of 46% from the area of 8,550,000 sq m planned at the beginning of the year. Affected by the Asian Games and World Expo, progress in construction of certain projects slowed down. Actual completed construction area amounted to 4,420,000 sq m, which was 12% lower than the 5,040,000 sq m planned at the beginning of the year. The Companys quick turnover was met with timely replenishment of land bank for future development. During the year under review, the Company newly acquired 87 projects, with a site area attributable to China Vankes equity holding of approximately 9,410,000 sq m (planned GFA attributable to China Vankes equity holding of approximately 22,150,000 sq m). Although there were a relatively large number of newly acquired projects, the Company had not changed its principle of prudent land acquisition. The acquisition prices were within a reasonable range. As at the end of 2010, the GFA of the projects under planning attributable to China Vankes equity holding amounted to 36,400,000 sq m , which could basically meet its development needs in the coming two to three years. In 2010, the Company tapped 12 new markets, namely Kunming, Guiyang, Qingyuan, Wenzhou, Yangzhou, Nantong, Jiaxing, Tangshan, Langfan, Jilin, Fushun and Urumqi. As at the end of 2010, the Company had entered markets in 46 cities, showing an extensive market reach. Its sophisticated geographical diversification strategy had not only provided the Company with enormous room for development, but had also helped the Company to avert the risk of certain overheated markets. As at the end of the year under review, the Companys inventories included RMB5.29 billion of completed properties (properties ready for sale), accounting for3.96%; RMB78.98 billion of properties under development (including properties sold but not yet booked), accounting for 59.08%; RMB49.31 billion of properties held for development (corresponding to the Companys projects under planning), accounting for 36.89% The Company continued to maintain a healthy financial position. Owing to satisfactory sales, the cash and cash equivalents held by the Company as at the end of the year under review surged significantly from that at the beginning of the year to RMB37.82 billion, much higher than the sum of short-term borrowings and long-term borrowings due within one year of RMB16.78 billion. The Companys capital strength was therefore further enhanced. Affected by substantial increase in advance receipts, the Companys assets/liabilities ratio rose slightly from that of the start of the year to 74.73%. However, advance receipts do not actually constitute pressure on debt repayment ability. Instead, they will be recognized as the Companys revenue upon booking of projects. Excluding this factor, the Companys other total liabilities as a percentage of total assets was merely 40.3%; among these other liabilities, interest-bearing borrowings as a percentage of total assets was merely 21.9%. Moreover, the proportion of short-term borrowings among interest-bearing borrowings was relatively low, accounting for only 35.4%. As at the end of the year under review, the Companys net gearing ratio was 17.5%, down 2.2 percentage points from 19.7% at the end of 2009.

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Review on the Companys management in 2010 In 2010, the Company adopted the development strategy of promoting balanced improvement, enhancing quality growth and focused on enhancement of operational efficiency and value creation ability. Through reforming and optimising its major business processes, the Company pushed ahead with the shift of its growth model towards quality and efficiency. During the year, the Company consolidated and improved its professionalism, enriched and enhanced management tools and platforms, thereby laying a solid foundation for sustainable growth in future. During the year under review, in an attempt to exploit economies of scale and facilitate the shift to refined and intensive management approach, the Company stepped up product standardisation. Based on the threeyear standardisation plan formulated in 2009, the Company improved its product standardisation system in all aspects, including product inventory, style, furbished units, landscape and functions, and established architecture standardisation system relying on modularisation. In addition, the Company also attempted to consolidate its product lines to provide high price/performance ratio products that are in line with its development. Capitalising on product standardisation, the Company issued standard construction schedule of 2010, which further enhanced construction efficiency. As a result, the average period from land acquisition to sale had been significantly reduced. The Company made remarkable achievement in furbished units standardisation, being an integral part of the standardisation system. During the year under review, the Company announced four-grade, namely A, B, C and D, furbished unit system, with 14 product types. The Company also established the corresponding processes for research, implementation, and upgrade, laying a foundation for extensive implementation of furbished units and centralised procurement. In 2010, furbished units accounted for 93% of new construction, indicating wide recognition of furbished units by customers. Of the above-mentioned furbished units, 60% adopted standardised product technology. The scope and scale of centralised procurement were further expanded. In 2010, the Company increased the proportion of centralised purchase to 47%, representing an 8% increase from 2009. The number of categories of products bought through group purchase increased to 30. Following the nation-wide tender offer for materials for C-grade furbished units, the Company conducted the first centralised procurement for standardised A-grade and B-grade furbished units, further expanding the implementation scope of standardised products. Through the nation-wide tender offer, the Company simplified purchase process and reduced purchase costs; promoted resources integration in the supply chain and improved the quality of materials purchased. As a result, the competitiveness of the Companys furbished units enhanced. During the year under review, the Company intensified the improvement of the surveying system, enhanced the look and quality of products, implemented visual management of production safety, and organised a special event the Month of Production Safety Promotion. The Company achieved satisfactory results in the exploration of using the new approach of refined management to enhance construction efficiency. As a result, the number of quality problems identified by property owners after the handover of units was significantly reduced. According to the customer satisfaction survey conducted by an independent third party, the Company saw remarkable improvement in satisfaction level for building quality and the quality satisfaction of prospective owners compared with those of 2009. During the year, the Company focused on maintenance and property handover to enhance customer satisfaction, and actively commenced a series of customer caring campaigns. As a result of the Companys dedicated efforts, customer loyalty reached record high in 2010. In 2010, the Company received seven state-level awards and 58 provincial-level awards in recognition of its product quality. Three projects of the Company, namely The Dream Town in Shenzhen (Phase IV), A 24

Glamorous City in Qingdao (Phase I and Zone I of Phase II), and Holiday Town in Beijing (Phases I, II, III) received the Golden Prize of Excellent Residential Community of Zhan Tianyou Award. Hillside Garden in Guangzhou won the title of Excellent Environment for Residential Community of Zhan Tianyou Award. Dream Town in Shenyang (Phase II) won the title of Excellent Technology for Residential Community of Zhan Tianyou Award. The Dream Town in Shenzhen (Phase IV) and Everest Town in Guangzhou (Phases I and II) received Guangsha Award. The Companys achievement of RMB100 billion sales called for reforms in the construction management model to meet future development demand. During the year under review, the Company has initiated a construction system reform, establishing communication platform with large-scale construction companies, and began to experiment extensive strategic cooperation with contractors and comprehensive contracting management in certain cities. In 2010, the Company pushed ahead with the improvement of the cost benchmarking system, by setting up seven compulsory economic benchmarks, initiating a cost alignment mechanism for furbished units, and conducted studies and research of cost control by outstanding peers. During the year under review, the Company issued Measures for Controlling Design Fees of the Group. Through experience sharing, awareness of cost control had been promoted across the Company. During the year, the Company optimised organization structure of its headquarters, fine-tuned the promotion scheme of managers, strengthened internal control, and improved the remuneration scheme, with an aim to enhance shareholders value. To cope with the needs for business development, the Company launched Talent Recruitment Schemeto attract and recruit excellent talents. To promote cultural inheritance of outstanding enterprises and reduce risks of work ethics, the Company stepped up professional development and extended the scope of staff training. In 2010, staff dedication increased drastically, higher than the average level of the Best Employers in China by 9 percentage points, which enabled the Company to remain as the High Performance/Best Employer. In an attempt to attract and retain talents, the Company, during the year under review, proposed A-share Stock Options Incentive Scheme for Year 2010. The proposed scheme, with a more demanding performance targets than the 2006-2008 Restricted Stock Incentive Plan, adopts return on equity and net profit growth rate as essential performance targets and focuses on the organic growth of the Company. Should the proposed scheme be implemented, it will improve the accountability and commitment of the management and key personnel in helping the Company to achieve sustainable and sound development. Such will ensure the Companys realisation of its development objectives, and help strengthen investors confidence in the growth prospects of the Company. Upon the publication of the announcement, the proposed scheme gained wide market recognition. China Vanke steadily pushed ahead with prefabrication. For the year under review, the Company achieved prefabricated construction area of 1,060,000 sq m, which far surpassed the pre-established target. The favourable policies on prefabrication promulgated in certain cities during the year helped facilitate the Companys research progress on prefabrication. Prefabrication can be applied to affordable housing construction, given the extensive construction scale, tight construction schedule, standardised building structure and high requirement for energy saving. The Company has also begun to actively experiment the application of prefabrication technology in affordable housing construction. So far, prefabrication technology has been applied to two affordable housing projects in Shenzhen and Nanjing. The Companys research capability in construction had gained recognition. During the year, in order to conduct research in the relevant fields, the Company set up a post-doctoral workstation and applied for qualification of a national engineering center for its residential facilities experiment tower, and established the research institute of water environment and earthquake-resistant technology. 25

In response to customer demand, the Company transformed the intangible green concept into tangible green products. During the year, the Company completed 750,000 sq m of residential housing qualified for the Three Star certification, which represented 54% of the total area with this qualification in the PRC. This marked the Companys first mover advantage in green building. In 2010, China Vanke Center received the certificate of the Leadership in Energy and Environmental Design (LEED-NC) from the U.S. Green Building Council in recognition of its green construction, excellent performance in energy saving and waste reduction. It is the first office building in China to obtain LEED-NC Platinum certificate. China Vanke was named Best Low-carbon Corporations of China in the selection of 2010 Best Low-carbon Corporations of China, jointly organized by The Economic Observer Newspaper and The Economic Observer Academy, for its optimised allocation of energy resources, development and application of green technology and application of environmental friendly materials. In 2010, as the sole real estate corporation with an independent pavilion in the Shanghai Expo 2010, China Vanke had significantly enhanced its brand image. During the exhibition, Vanke Pavilion received more than 1,210,000 visitors. Under the backdrop of low-carbon economy, the green concept delivered by Vanke Pavilion drew enormous attention and won great recognition and accolade from the society. Such had considerably enhanced the reputation of the Company. Vank Pavilion has become the Companys foothold in improving brand identity and green corporation image. During the year under review, the brand image of the Company gained wide recognition. In the 2010 Report of Brand Value Appraisal in Real Estate Industry of China, China Vanke was named Leading Brand in Real Estate Industry of China for 2010 with its RMB15.577 billion brand value. In the list of 2010 Most Praised PRC Enterprises announced by Fortune China, China Vanke was named on the Most Praised PRC Enterprises All-star List, and ranked first in the real estate industry category. In the Best Public Image Corporation selection organized by Enterprise Research Institute of the Development Research Center of the State Council and other organisations, China Vanke was named the Best Social Responsibility Corporation. According to a customer survey conducted by an independent third party, the China Vanke brand is the No. 1 reason for them to purchase the Companys products. In 2010, at the presentation of the results of the brand value study of property companies in China organised by Top 10 China Real Estate Research Group, the brand value of China Vanke ranks first among 2010 China Top Brands of Property Services Companies. According to a customer survey conducted by an independent third party, property management is the No. 1 reason for about 75% customers to recommend China Vankes products. China Vanke was named again in 2010, after 2009, as the Worlds No. 1 Residential Property Developer among the Property Developer, Agency, Financial Services sectors by Euromoney. The Company ranked 45th in Fortune Chinas list of Top 500 PRC Listed Companies and ranked first in the real estate industry category. During the year, the Company continued to enhance investor relations, which earned it greater recognition. The Company was named again among the Top 10 Companies in Investor Relations by Nanjing University and The Research Center of Investor Relations Management of China Listed Companies. In the selection of The Golden Bull Awards for the Top 100 China Listed Companies organised by China Securities Journal, the Company ranked fourth, and first in the real estate industry category. Also, the Company ranked first among My Personal Top 10 Golden Bull Listed Companies. In the selection of Top 100 Most Valuable Listed Companies on the Main Board in China organised by Securities Times, China Vanke was named among the Top 100 Most Valuable Listed Companies in China, the Top 10 Management Team of Listed Companies on the Main Board in China, and The Best Corporate Social Responsibility Companies Listed in China. In addition, the Company was named the Most Sustainable Listed Company in Chinas Securities 26

Market in the Past 20 Years, Investors Most Favourite Listed Company, while the Companys secretary to the Board was awarded Chinas Best Value Creation IR Award in a selection organised by the Centre for Research on the Market Value Management in Chinese Listed Companies, China Securities Journal, Shanghai Securities News and Securities Times. In 2010, the Company also received many accolades for its corporate governance. In 2010, the Company received The Best Board of Directors Award at the Sixth Session of the Gold Roundtable Awards organised by the Directors & Boards publication. The Company was awarded the Best Corporate Governance at the Third Session of the Best Board of Directors of Listed Companies in China organised by Moneyweek, received 2010 Best Corporate Governance Practices of Listed Companies in China Award and 2010 Best Board of Directors of Listed Companies Award from the Research Center of Corporate Governance at Nankai University. Future development prospects in 2011 2011 is the first year after China Vanke has achieved an annual sales revenue of over RMB100 billion. At this level, the Company will definitely be faced with new challenges. Accordingly, the Company is committed to build a management and organisational platform meeting future development needs, and explore the way to transformation into a green enterprise, research and development enterprise and servicing company. All these will sharpen the Companys competitive edges to cope with the future. In response to possible changes in the operating environment, the Company will adhere to customer and market orientation, and insist on the quick turnover strategy of no hoarding of land; no stalling of home sale. As a sales guideline, the subscription rate of a project in its launch month has been set to over 60%. By means of various sales promotions, the Company is able to speed up cash inflow. Such can ensure the Companys safe operation and achieving operating results above industry average. On the front of product positioning, the Company will focus on mainstream products, including housing units that target end-users and ordinary residential properties with reasonable prices. By following the sales trend in the market and adjusting its product design, the Company strives to ensure what it supplies is what the market really needs. The project management area of the Company will reach 30 million sq m in 2011. The rapid expansion in the scale of construction will bring new challenges to the Company with respect to product quality and construction safety. For product quality, the Company will continuously adopt the principle of Quality Goes First, and strictly implement quality and safety management scheme. On top of significant improvement in quality of substance, the Company will further enhance the look and feel of its products. In respect of project management, the Company will have no tolerance for avoidable accidents and develop a production safety accountability scheme. The Company will step up extensive strategic cooperation with contractors. It will forge strategic cooperation with large-scale construction companies and push ahead with comprehensive contracting management to increase project quality. In order to break through the development bottleneck, the Company will improve the standardisation system for furbished units and upgrade modular inventory. It will also promote application of standardisation across the board to achieve economies of scale. The Company will continue to push ahead with prefabrication and fine-tune the classification of prefabricated products. In 2011, the planned prefabricated project construction area is expected to be 2,000,000 sq m, while the construction of the second construction technology research base will begin in Beijing. The Company will actively promote the development and application of energy-saving technology

27

so as to enhance its transformation towards a green corporation. Among the newly commenced projects in 2011, 1,800,000 sq m will be built according to green construction standards . For project development, the Company will continue to adopt prudent investment strategy, and choose the right timing to acquire projects for future development. The Company will intensify cooperation and expand the scope of possible partners, and select appropriate approaches for collaborating with various resource owners. With respect to geographic coverage, the Company will step up its geographical diversification efforts, by seeking the right moment to penetrate new cities, while leveraging its presence at existing markets. Against the backdrop of tightening credit, the Company will strengthen its existing cooperation with banks as well as further expand financing channels. It will pay attention to various new financial products and, through extensive cooperation, implement resource integration and complement each others strengths. The Company will also enhance the alignment between financing and project operation, optimise capital management and leverage the progress of investment to increase capital utilisation. Aiming to enhance organisation efficiency, the Company will timely optimise its organisational structure and foster a more receptive corporate culture, by creating a work environment that speaks of simplicity, resultorientation, openness and cooperation. The Company will also adopt performance, ability and behaviours as well as capability for meeting future growth as the criteria for selecting cadre members. It will continue to recruit talent and improve the overall quality of existing workforce through new training scheme. In response to urban development and market demand, the Company will step up business innovation to increase social and commercial value. It will constantly enhance understanding of business other than residential property and explore new profit growth drivers. To achieve these, the Company has to acquire experience in investment invitation and design for integrated project to prepare for future operation needs. As to the emerging market segment for elderly apartments, the Company will conduct in-depth study on users demand to develop products with competitiveness. On the front of property services, the Company will step up improvement in the quality of property management services and fully leverage its long-held competitive edge in property services, with the aim to complement and enhance its property operation business. Simultaneously, the Company will strengthen its property management business through further expanding and diversifying the scope of property services. By doing so, the Company aims at being able to prepare itself for venturing the new businesses of commercial complex management and offering community support services for the elderly. 2. Operation of the Company (1) The scope and operations of the Companys core businesses A. By sector The Company specialises in property development with commodity housing as its major products. In 2010, the Companys sales area and sales revenue were 8,977,000 sq m and RMB108.16 billion respectively, representing increases of 35.3% and 70.5% respectively when compared with those of 2009. In 2010, the total sales of commodity housing in the PRC amounted to RMB5,250 billion. Based on the aforesaid amount, the Company accounted for 2.1% of the domestic market in terms of sales revenue, up by 0.62 percentage point from 2009. During the year under review, the booked area, booked revenue and booked cost of the Companys property projects were 4,520,506 sq m, RMB47.11 billion and RMB29.08 billion respectively, representing a decrease of 25.3% , an increase 3.5% and a decrese of 13.7% respectively when compared with those of the previous

28

year. The operating profit margin of the property business for the year was approximately 32.59%, up by 6.56 percentage points from that of the previous year.
Unit RMB000 Revenue Sector Property sales Property management and others Total Amount 47,115,182.00 648,368.43 47,763,550.43 Change 3.45% 28.48% 3.73% Cost of sales Amount 29,084,588.76 443,932.61 29,528,521.37 Change -13.67% 21.33% -13.29% Operating profit margin Value 32.59% 31.53% 32.58% Change Up by 6.56 percentage point Up by 4.04 percentage point Up by 6.54 percentage point

Note 1: Core business tax and surcharges had been deducted from the operating profit margin

B. By investment region The Company adhered to its urban-oriented strategy and actively leveraged the edge of its geographical diversification strategy. In 2010, core cities such as Shenzhen, Guangzhou, Shanghai, Beijing and Tianjin accounted for 49.7% and 47.9% of the Companys total revenue and net profit respectively.
Revenue from core businesses (RMB000) Pearl River Delta focused Shenzhen Region Yangtze River Delta focused Shanghai Region Bohai-rim focused Beijing Region Chengdu Region comprised of core cities of Central and Western Region Total 15,402,941.28 18,123,976.18 9,702,374.15 3,885,890.39 47,115,182.00 Net profit (RMB000) 2,915,947.18 2,870,380.13 1,322,837.88 656,576.12 7,765,741.31 Booked area (sq m) 1,243,769.68 1,658,649.64 1,045,186.19 572,900.37 4,520,505.88

Percentage

Percentage

Percentage

32.69% 38.47% 20.59% 8.25% 100.00%

37.55% 36.96% 17.03% 8.46% 100.00%

27.52% 36.69% 23.12% 12.67% 100.00%

(2) Operating results of the major wholly-owned subsidiaries and non wholly-owned subsidiaries of the Company
(Unit: 000 RMB) Name of company Shenzhen Vanke Real Estate Company Limited Guangzhou Vanke Real Estate Company Limited Dongguan Vanke Real Estate Company Limited Foshan Vanke Company Limited Property Equity interest Revenue in 2010 4,667,817.24 4,243,084.53 2,701,717.64 1,202,608.76 6,981,566.80 2,158,456.39 2,025,671.18 2,258,789.13 1,176,196.14 Net profit in 2010 951,656.08 699,630.67 599,382.27 295,420.56 1,251,443.75 474,971.92 310,013.00 488,319.01 97,103.15 Total assets at the end of 2010 24,633,256.31 10,580,621.23 8,072,085.31 8,056,892.75 22,660,209.24 11,938,209.59 18,245,907.44 9,603,984.80 10,894,212.55 Major projects developed in 2010 King Metropolis, Village The

100% 100% 100% 100% 100% 100% 100% 100% 100%

Glorious Life, The Paradiso The Paradiso, Hongxinuoya Jinyu Huating (), Xincheng Wanpan ( ) Golden City, Qijiefang Liangzhu New Town, Spring Bay No. 5 Park Front Boutique Apartment, Hongshi Jiayuan Waterfront, Holiday Dew Garden The Paradiso, Rancho Santa Fe

Shanghai Vanke Investment Management Company Limited Zhejiang Vanke Nandu Real Estate Company Limited Beijing Vanke Company Limited Tianjin Vanke Real Estate Company Limited Shenyang Vanke Real Estate Development Company

29

Limited Chengdu Vanke Real Estate A Glamorous City, Haiyue 100% 1,281,829.67 378,757.36 8,978,115.29 Company Limited Huicheng Note: Subsidiries of the above companies are included. Profit and loss of minority interests are included in the net profit.

(3) Implementation of the business plan The Company focused on mainstream customers end-users, and actively promoted sales to achieve outstanding performance. In 2010, the Companys sales area and sales revenue amounted to 8,977,000 sq m and RMB108.16 billion respectively, representing increases of 35.3% and 70.5%. The Companys planned area of newly commenced construction and completed area at the beginning of the year were 8,550,000 sq m and 5,040,000 sq m respectively. In light of cooling of the land market in the first half of the year, the Company grasped the opportunity and acquired a relatively large number of newly added projects. The Company insisted on rapid development and quick turnover, and most of the newly added projects commenced construction in the same year of acquisition. As such, the actual area of newly commenced construction in 2010 was 12,480,000 sq m, representing an increase of nearly 46% from the planned area at the beginning of the year. Affected by the Asian Games and World Expo, progress in construction of certain projects slowed down. Actual completed area amounted to 4,420,000 sq m, which was slightly below the planned area at the beginning of the year.

Development of the Companys major projects in 2010

Unit: sq m
Project Location Equity interest Site area Planned GFA Area of construction work commenced in 2010 Area of construction work done in 2010 Accumulated area of construction work done as at the end of 2010

Shenzhen Region Yuyi Village Project, Shenzhen Nanyuan New Village Project, Shenzhen East Coast, Shenzhen Vanke Centre, Shenzhen Tianqin Bay, Shenzhen Yantian Central Line Project King Metropolis, Shenzhen Golden Domain ( ) Project, Shenzhen Ravine Village, Shenzhen The Village, Shenzhen Golden Hill ( ), Shenzhen Jiuzhou Project, Shenzhen Qianlin Shanju, Shenzhen Vanke Hong (), Shenzhen Jinse Qinyuan ( ) Project, Shenzhen Shuijing ( ) Project, Buji, Shenzhen Sandy Bay Project, Buji, Shenzhen Eastern Metropolis, Shenzhen

Nanshan Nanshan Yantian Yantian Yantian Yantian Baoan

80% 80% 100% 100% 100% 100% 100%

19,500 82,600 342,984 61,730 253,990 89,177 68,310

142,000 581,700 265,864 80,201 24,785 344,670 196,182

0 0 0 0 7,551 0 0

0 0 10,698 26,000 3,227 0 103,748

0 0 265,864 26,000 5,890 0 115,601

Baoan Baoan Longgang Longgang Longgang Longgang Longgang Longgang Longgang Longgang Pingshan New District

100% 60% 100% 100% 100% 100% 100% 90% 60% 65% 100%

72,410 158,639 472,011 62,474 236,330 198,597 31,337 37,740 165,003 104,870 104,801

161,856 47,270 646,930 96,969 513,012 361,753 150,370 69,608 449,360 481,215 315,808

68,518 0 70,868 42,000 0 162,840 0 52,445 0 47,430 0

0 0 72,070 0 0 26,750 0 0 0 0 0

0 0 408,445 0 0 136,395 0 0 0 0 80,267

30

Water Cities, Shenzhen Dajia Island, Shenzhen Shuangyuewan, Huizhou Jinyu Huating, Huizhou Glorious Life, Guangzhou Science City, Guangzhou The Paradiso, Guangzhou Hillside Garden, Guangzhou Aureate City, Guangzhou King Metropolis, Guangzhou Tongfu West, Guangzhou Le Bonheur, Guangzhou Jinshazhou B04 Project, Guangzhou Nansha Project, Guangzhou Racho Santa Fe, Guangzhou Dream Town, Qingyuan 29# Qingcheng, Qingyuan Jinyu Songhu ( ), Dongguan Humen Zitai ( ), Dongguan Changan Project, Dongguan Nancheng Headquarters, Dongguan Houjie Project, Dongguan Dream Town, Changping, Dongguan Vanke Luhu, ( ) Dongguan Hongxinuoya, Dongguan King Metropolis, Dongguan Feilishan (), Dongguan The Paradiso, Dongguan, The Paradiso, Foshan Binfen Siji () Project, Foshan Dengzhou Project, Foshan Lunjiao Qinyuan ( ) Project, Foshan Nancun Project, Foshan Two projects in Chencun, Foshan F04 Project, Foshan Jinse Xigu Huayuan ( ), Foshan Xincheng Wanpan, Foshan Rancho Santa Fe,

Tangxia, Dongguan Huizhou Huidong Huicheng Baiyun Luogang Baiyun Baiyun Panyu Liwan Haizhu Liwan Baiyun Nansha Huadu Qingyuan Qingyuan Songshan Lake Humen Town Changan Town

51% 100% 67% 100% 100% 100% 50% 50% 100% 100% 100% 100% 100% 95% 49% 100% 100% 51% 100% 100%

596,786 364,450 687,000 151,298 22,297 177,588 144,657 94,745 58,093 6,623 9,929 38,111 17,207 134,760 210,288 689,326 79,164 136,151 60,570 75,653

412,504 234,975 850,500 327,550 120,850 454,175 433,584 133,746 72,549 46,147 85,279 135,689 30,973 269,520 124,338 1,356,279 312,820 381,000 151,426 249,654

55,305 0 0 72,066 120,850 0 157,233 0 0 0 0 0 30,973 269,520 62,830 345,330 0 144,166 32,760 0

39,047 0 0 24,120 120,850 0 133,034 32,688 6,271 46,147 0 81,938 0 0 61,508 0 0 0 0 0

99,922 0 0 55,694 120,850 0 274,219 133,746 28,137 46,147 0 81,938 0 0 61,508 0 0 0 0 0

Nancheng Houjie Town Changping Dalingshan Songshan Lake Nancheng Nancheng Dalang Nanhai Shunde Shunde Shunde Chancheng Shunde Shunde

100% 100% 100% 100% 100% 51% 50% 51% 55% 100% 49% 100% 57% 100% 50%

4,771 88,788 635,971 146,674 416,618 189,934 249,534 91,780 221,035 38,986 284,036 80,571 114,429 117,854 30,382

42,937 257,486 442,460 117,341 291,633 493,827 374,302 183,560 574,690 134,891 710,092 241,712 564,667 294,636 75,954

0 0 87,900 83,336 49,591 101,588 106,648 0 341,057 134,891 142,738 173,707 0 161,464 0

0 0 43,925 0 86,090 44,203 0 63,876 0 0 0 0 0 0 0

0 0 176,913 0 86,090 44,203 0 129,880 0 0 0 0 0 0 0

Nanhai Shunde Shunde

100% 100% 100%

66,533 69,877 127,598

79,839 139,754 228,002

0 0 0

0 32,715 32,699

0 127,075 176,300

31

Foshan King Metropolis, Foshan The Dream Town, Foshan Jinyu Huating, Foshan City Views, Zhongshan Spring Dew Mansion, Zhongshan Tanzhou Project, Zhongshan Central District, Dongfeng Town, Zhongshan Zhuhai Hotel, Zhuhai Haiyu Project, Zhuhai Baijiao, Doumen, Zhuhai Huxin Island, Xiamen Jinse Yuecheng ( ), Xiamen King Metropolis, Xiamen King Metropolis, Changsha The Paradiso, Changsha City Garden, Changsha The Dream Town, Changsha Machine Tool Factory, Changsha Jinjiang Project, Changsha Binjiang Project, Changsha King Metropolis, Fuzhou Jinyu Rongjun ( ), Fuzhou Yongtai Chibi ( ), Fuzhou Shanghai Xincun ( ), Fuzhou Minjiang Beian ( ), Fuzhou Senlin Lake Project, Sanya Football Headquarters Project, Sanya Sub-total Shanghai Region Qijiefang, Shanghai Floral City, Shanghai 187 Wuzhong Road, Shanghai No. 53, Qibao, Shanghai Chonggu Project, Shanghai Guangfulin Project, Shanghai Land Lot C4, Xinchang, Shanghai Blue Mountain Town, Shanghai Crystal Garden, Shanghai Charming Garden, Pudong New District Minhang Minhang Minhang Qingpu Songjiang Pudong New District Pudong New District Qingpu Songjiang 100% 100% 100% 100% 49% 45% 100% 100% 55% 49% 83,854 140,678 61,724 49,294 116,524 130,970 99,209 433,180 77,804 366,465 142,612 207,773 145,065 126,869 145,266 104,778 148,814 209,171 79,523 312,931 0 14,559 0 0 122,801 26,781 148,814 0 48,853 0 142,612 7,580 131,193 0 0 0 0 0 30,670 7,189 142,612 180,277 131,193 0 0 0 0 163,807 30,670 312,931 Nanhai Chancheng Nanhai Southern District Eastern District Tanzhou Town 100% 100% 55% 100% 100% 100% 110,001 337,544 75,916 338,516 76,387 32,103 240,170 776,350 184,607 523,177 175,133 127,742 0 0 41,678 59,863 175,133 127,742 0 28,474 34,563 20,254 0 0 215,518 219,416 78,988 395,901 0 0

Dongfeng Town Xiangzhou Xiangzhou Doumen Huli Xiangan Jimei Yuhua Furong Yuelu Kaifu Tianxin Yuelu Yuelu Cangshan Jinan Yongtai Taijiang Taijiang Sanya Sanya

100% 100% 50% 100% 100% 100% 100% 60% 100% 80% 70% 70% 78% 58% 100% 100% 51% 100% 60% 65% 80%

236,937 109,917 78,000 137,061 95,098 54,441 102,427 232,440 120,150 46,914 195,421 99,770 43,737 41,712 16,168 166,736 392,000 93,359 25,397 1,330,552 260,293 14,141,567

829,280 143,792 200,540 275,083 199,710 109,000 443,000 545,000 363,369 137,646 465,542 232,761 131,211 166,847 37,230 383,161 388,733 432,546 126,714 877,004 301,650 25,177,892

0 132,615 0 0 64,355 109,000 112,220 229,216 0 87,551 136,014 0 0 0 37,230 223,939 0 0 0 123,918 0 4,786,079

0 18,054 0 0 0 0 0 0 0 0 0 0 0 0 0 73,802 0 0 0 0 0 1,266,751

0 18,054 0 0 0 0 0 0 103,762 0 0 0 0 0 0 94,112 0 0 0 0 0 3,806,835

32

Shanghai Tongshan Street Project, Shanghai New City Garden, Shanghai Firenze, Shanghai Bingjiang Project, Shanghai North of Land Lot No. 35, Qibao, Shanghai Wujiefang, Shanghai Everest Town, Shanghai Jiyang Road Project, Shanghai Golden City, Shanghai Wonderland, Shanghai Castle Tudor, Shanghai Land Lot Nos.45, 46, Xinzhou New City, Jiaxing Land lot of Beiyi New City, Nantong Golf, Kunshan Nimble Bay, Suzhou Benan Project, Suzhou Golden Home, Suzhou Changfeng School, Suzhou Golden Paradise, Suzhou Wuyishan Road Project,Suzhou Glamorous City, Wuxi Golden Paradise,Wuxi The Paradiso, Wuxi Xincheng Road Project, Wuxi Liangzhu New Town, Hangzhou West Spring Butterfly Garden, Hangzhou Golden Home, Hangzhou Fuyang Gongwang ( ), Hangzhou Caozhuang Project, Hangzhou Land Lot R21-26, Caozhuang, Hangzhou Land Lot No.2, Xianlin Lake, Nanjing Anpin Street, Nanjing The Paradiso, Nanjing Golden Milestone ( ), Nanjing Glamorous City, Zhenjiang Blue Mountain, Zhenjiang Golden Town, Ningbo King Metropolis, Ningbo Jishigang Project, Ningbo Zhenhai Lvhe Project, Ningbo Yunluwan () ,

Pudong New District Minhang Minhang Pudong New District Minhang Pudong New District Pudong New District Pudong New District Pudong New District Baoshan Baoshan Xinzhou New District Gangzha Bacheng Town Industrial District Industrial District Canglang Canglang Industrial District Suzhou New District Binhu New District Binhu Binhu Yuhang Xihu Fuyang Fuyang Jianggan Jianggan Qixia Baixia Jiangning Yuehua Tanshan Road Runzhou Yinzhou Yinzhou Yinzhou Zhenhai Jiangbei

75% 51% 49% 100% 51% 100% 90% 100% 60% 100% 100%

74,555 287,741 296,295 38,753 39,366 121,463 238,920 19,392 405,627 383,576 231,753

182,230 334,669 285,793 103,132 69,913 129,242 321,275 16,500 809,929 471,700 241,169

0 91,873 82,609 0 0 129,242 0 0 0 0 66,308

0 40,278 33,493 0 0 0 11,862 16,500 120,967 33,514 77,369

0 40,278 63,390 0 0 0 321,275 16,500 244,437 471,700 77,369

100% 100% 100% 70% 51% 55% 49% 51% 55% 60% 100% 100% 100% 100% 51% 55% 100% 100% 50% 100% 100% 100% 100% 100% 60% 100% 10% 100% 49% 15%

166,273 99,910 433,916 384,042 155,673 134,771 48,713 47,177 89,098 960,000 224,376 154,468 154,119 3,095,310 155,838 55,576 517,900 37,181 68,564 91,751 27,325 272,298 42,318 795,100 285,683 190,369 18,500 95,242 226,777 314,200

282,194 218,650 328,678 821,664 124,538 242,588 48,693 117,936 83,220 1,346,963 620,713 431,592 385,299 2,183,173 354,038 110,834 208,981 86,938 150,841 201,388 20,340 544,540 82,404 942,820 416,285 313,602 49,948 171,435 488,148 393,740

0 0 0 113,380 14,051 0 27,754 107,492 28,144 220,914 118,008 28,968 0 186,298 110,281 0 21,629 34,294 0 0 3,000 53,035 0 66,243 19,304 0 0 77,527 0 75,367

0 0 0 86,228 55,688 38,016 20,974 0 0 89,780 43,887 80,847 0 89,005 0 0 51,790 0 0 0 0 0 12,310 99,889 0 51,768 49,948 0 0 0

0 0 0 580,269 101,402 227,175 20,974 0 0 730,593 43,887 80,847 0 665,030 60,295 0 51,790 0 0 0 0 0 12,310 260,969 0 251,167 49,948 0 0 0

33

CichengNingbo Golden Mingjun, Hefei King Metropolis, Hefei Qingshan Lake, Nanchang Dew Garden (), Nanchang Chaoyangzhou, Nanchang North part of Wonderland, Nanchang Longwan Project, Wenzhou Shugang, Yangzhou Sub-total Beijing region Land Lot C3 in Xibeiwang, Beijing Land Lot C1 in Xibeiwang, Beijing No. 5 Park Front Boutique Apartment, Beijing Blue Mountain, Beijing Yingjia Center, Beijing Changyang Project, Beijing Changyang No, 3 Project, Beijing Tianjiayuan, Beijing Shuiniantun Project, Beijing Jinyu Vanke City, Beijing Land Lot 028 in Huilongguan, Beijing Land Lot at the eastern end of Huilongguan, Beijing Holiday Town, Beijing Hongshi Jiayuan ( ), Beijing Huanqingcheng, Langfang Fenghuang New City, Tangshan South Lake Project, Tangshan Jinse Yazhu ( ), Tianjin Waterfront, Tianjin A Glamorous City, Tianjin New Milestone, Tianjin Holiday Dew Garden, Tianjin Jinao International, Tianjin Binhai Modern, Tianjin Park Residence, Tianjin Harbor (), Tianjin Jinlu (), Tianjin New Elm Mansion, Shenyang The Paradiso, Shenyang Shushan Shushan Qingshan Lake Qingyunpu Xihu Gaoxin Longwan Weiyang 50% 50% 50% 50% 50% 50% 60% 65% 107,326 115,628 97,061 97,109 21,818 374,335 125,219 297,139 14,275,246 387,447 412,101 133,693 144,011 75,338 459,013 179,768 313,970 18,465,878 121,320 135,335 116,977 54,925 0 0 0 0 2,466,086 60,087 0 14,926 0 0 29,120 0 0 1,527,490 60,087 0 14,926 0 0 459,013 0 0 5,867,121

Haidian Haidian

49% 49%

53,545 85,099

92,719 187,218

0 0

0 0

0 0

Chaoyang Chaoyang Chaoyang Fangshan Fangshan Fangshan Fangshan Changping Changping

60% 100% 50% 50% 50% 68% 50% 49% 50%

37,917 55,885 5,329 437,179 78,325 71,912 77,834 178,908 68,917

97,044 147,249 36,466 853,165 157,992 137,808 146,002 543,461 192,967

0 4,372 0 355,717 0 0 0 89,842 0

69,552 0 0 0 0 0 0 0 0

69,552 0 0 0 0 0 0 169,353 0

Changping Fengtai Fengtai Xianghe County Lubei Lunan Dongli Dongli Dongli Dongli Xiqing Xiqing Development District Development District Binhai New District Binhai New District Hunnan New District Hunnan New District

50% 50% 100% 50% 60% 100% 49% 100% 100% 51% 100% 100% 100% 100% 51% 95% 100% 100%

137,090 224,289 59,800 545,545 78,977 153,527 90,792 2,708,886 176,773 136,524 229,300 58,577 6,538 32,270 149,483 90,604 182,139 226,356

364,613 413,304 184,502 1,082,200 197,442 96,661 171,281 1,763,059 258,579 204,786 343,101 162,566 40,312 48,731 373,691 126,600 289,647 666,376

0 16,030 34,443 0 0 46,901 156,665 184,340 69,111 110,809 66,439 83,678 40,312 22,522 97,415 47,002 16,187 88,093

0 52,045 146,009 0 0 0 0 86,457 18,715 0 47,757 0 0 0 0 0 0 64,241

0 318,026 146,009 0 0 0 0 634,245 94,142 0 107,664 0 0 0 0 0 232,183 152,161

34

A Glamorous City, Shenyang Dayu Road Project, Shenyang 2-A Dayu Road East, Shenyang Dream Town, Shenyang Jiyu International( ), Shenyang Gear Wheel Plant Project, Shenyan Sihai Logistic Project, Shenyang Tianqin Bay, Shenyang Chunhe Project, Shenyang Vanke Blue Mountain , Shenyang 8 Changbei, Shenyang Huisile East Project, Shenyang Rancho Phase II ( ), Shenyang Toudao Project, Shenyang Rancho Santa Fe, Shenyang South Lake Project, Fushun Golden Home, Anshan Dream Town, Anshan Huisile Project, Anshan A Glamorous City, Dalian Subsequent Projects of Glamorous City, Dalian Land Lot C, A Glamorous City, Dalian Land Lot D, E, A Glamorous City, Dalian Ravine Village, Dalian Habor, Dalian City Garden, Dalian Huisili Project, Changchun Park Residence Project, Changchun Yangpu Garden, Changchun Waterside Villa ( ), Changchun Blue Mountine Project, Changchun Binjiang Project, Jinlin Wonderland, Qingdao A Glamorous City, Qingdao Aureate City, Qingdao Blue Mountain, Qingdao Dream Town, Qingdao City Garden, Qingdao Project Licang, Qingdao Dituan Project, Yantai Zhonglian Logistic Project, Yantai Sub-total

Yuhong Yuhong Yuhong Heping Tiexi Tiexi Tiexi Shenhe Shenhe Dadong Changbai Heping Tiedong Dongling Dongling Dongling Development District Tiedong Gaoxin Tiedong Ganjingzi Ganjingzi Ganjingzi Ganjingzi

100% 49% 51% 49% 100% 70% 100% 55% 100% 60% 100% 100% 100% 70% 100% 100% 100% 100% 100% 55% 55% 100% 100%

156,817 190,156 135,464 361,320 27,249 66,356 40,971 83,227 81,378 74,527 120,333 118,500 43,334 315,362 344,366 135,000 48,874 167,664 303,700 195,526 20,474 50,083 68,797 363,716 757,350 28,580 399,715 276,769 89,678 75,000 251,356 728,139 153,284 200,289 61,873 68,153 154,607 130,873 141,273 311,614 190,281 13,970,348

297,026 339,550 270,928 874,752 108,581 180,363 102,013 291,295 392,500 232,043 360,999 296,250 21,245 378,434 111,539 391,100 97,969 393,838 414,816 404,240 44,272 100,000 129,822 380,922 1,253,300 33,942 484,714 503,349 176,615 49,016 501,678 2,155,910 241,280 340,491 179,756 204,459 395,794 231,647 265,321 444,065 361,220 23,816,596

46,151 0 0 112,660 0 0 0 116,783 0 131,124 0 0 21,245 0 0 0 0 88,089 130,357 195,379 0 0 0 118,141 0 0 67,432 0 25,637 12,662 134,254 0 103,824 26,019 53,529 76,676 90,450 116,734 0 76,624 0 3,273,648

0 0 0 64,795 0 0 0 0 0 0 0 0 0 0 21,880 0 14,601 43,898 0 127,999 0 0 0 59,851 0 0 0 0 8,365 23,028 0 0 43,368 65,625 48,411 0 0 0 0 0 0 1,006,597

206,703 0 0 492,941 0 0 0 0 0 0 0 0 0 0 111,539 0 97,969 119,400 0 127,999 0 0 0 234,706 0 0 0 0 97,108 35,600 0 0 79,683 237,409 87,574 0 0 0 0 0 0 3,851,966

Ganjingzi Puwan New District Shahekou Jingyue Chaoyang Economic Development Zone Jingyue Development Zone Erdao Jilin Jimo Chengyang Sifang Shibei District Sifang Chengyang Licang Zhifu Fushan

55% 55% 100% 50% 100% 100% 100% 100% 65% 55% 80% 60% 100% 55% 80% 100% 100% 70%

35

Chengdu region Phase 1, Wulong Mountain,Chengdu A Glamorous City, Chengdu The Paradiso, Chengdu Twin Riverside, Chengdu Jinyu Xiling ( ), Chengdu Golden Domain, Chengdu Jinrun Huafu, Chengdu Golden Hairong, Chengdu Haiyue Huicheng, Chengdu Golden Home, Wuhan Element Integration( ), Wuhan Golf City Garden, Wuhan King Metropolis, Wuhan Dream Town, Wuhan Final phase of City Garden , Wuhan

Xindu Chenghua Chenghua Xindu Jinniu Qingyang Jingjiang Wuhou Shuangliu Jianghan Jianghan Dongxihu Wuchang Jianghan East Lake HighTech Development Zone Wuhan Economic and Technological Development Zone Hongshan Jianghan Jianghan East Lake HighTech Development Zone Yubei Northern New District Northern New District Yuzhong Northern New District Yanta Qujiang New District Changan Xiaohe Yunyan Panlong Panlong New District

100% 60% 100% 100% 60% 100% 100% 49% 90% 100% 55% 49% 55% 100%

345,168 308,501 56,293 267,347 79,331 49,628 52,895 54,970 104,307 23,851 12,022 237,660 59,790 65,901

356,503 761,258 293,504 338,203 361,100 244,459 267,928 234,125 521,698 149,618 42,869 393,858 191,300 299,337

0 0 0 0 2,069 104,295 135,580 38,763 67,838 0 0 79,871 34,564 54,849

0 41,047 56,404 19,317 24,113 0 0 51,110 0 118,548 0 32,370 0 0

0 474,152 293,504 338,203 97,312 0 0 51,110 0 149,618 0 185,366 0 0

100%

230,970

349,607

186,167

The Paradiso, Chengdu Golden City, Wuhan Huanzi Lake, Wuhan Tangjiadun, Wuhan A Glamorous City, Wuhan Yuyuan() , Chongqing Tixiangjun (), Chongqing Yuefu (), Chongqing Vanke Jincheng ( ), Chongqing Zhaomu Hill, Chongqing Xinde City, Xian Jinyu Qujiang ( ), Xian Dream Town, Changan, Xian King Metropolis, Guiyang The Paradiso, Guiyang Jinyu Tixiang, Kunming Dew Garden (), Baisha, Kunming Liyushan Road Project, Urumqi Sub-total Total

100% 100% 100% 50%

213,440 135,600 102,500 267,200

533,600 470,000 542,700 1,324,300

160,655 99,163 0 0

0 0 0 0

0 0 0 0

100% 51% 100% 100% 100% 55% 100% 55% 85% 51% 100% 100% 100% 100%

225,258 229,581 41,448 138,071 105,463 278,165 20,156 152,667 176,056 351,800 90,456 104,724 192,104 53,339 4,826,662 47,213,823

405,457 344,372 145,067 376,737 533,486 647,378 106,616 385,408 614,377 581,217 201,012 267,084 230,094 136,956 12,651,228 80,111,594

21,037 35,839 0 92,788 262,995 0 0 157,608 139,076 121,294 0 163,112 0 0 1,957,563 12,483,376

79,441 144,637 0 0 0 0 56,187 0 0 0 0 0 0 0 623,174 4,424,012

268,300 157,757 0 0 0 0 56,187 0 0 0 0 0 0 0 2,071,509 15,597,431

3. Major Suppliers and Customers

36

(1) The aggregate purchase amount from the Companys five largest suppliers as a percentage of its total purchase during the year In 2010, the Company continued to expand the scope of sourcing, deepen the relationship with its partners and increase the proportion of centralised procurement and strategic collaborations, in order to achieve economies of scale.

During the year under review, the aggregate purchase amount from the five largest material and equipment suppliers was RMB1.43 billion, accounting for 4.75 per cent of the total purchase for the year, representing an increase of 1.52 percentage points from that of 2009.
(2) The aggregate sales amount to the Companys five largest customers as a percentage of its total sales during the year The Companys major project is commodity housing. Most of its customers are individual homebuyers from various cities. Government projects made up only a certain portion of total sales and sales to bulk purchasers generating a relatively high sales amount were seen only in a few cases. Sales to the five largest customers amounted to approximately RMB1.902 billion, accounting for 3.75 per cent of the Companys total sales revenue of 2010. 4. Financial status of the Company During the year under review, the Companys operation remained stable and financial position was sound.
Unit: RMB 000 Financial indicators Total assets 31-Dec-10 RMB000 215,984,662.72 31-Dec-09 RMB000 138,027,359.15 Change (+/-) 56.48% Reasons for changes Expansion of the Company Increase in advance payment for land premium of new projects, and increase in investment for the development of projects with associates and jointly controlled entities Increase in newly added projects Change in debt structure Increase in investment for the development of projects with associates and jointly controlled entities Reasons for changes Increased in sales from property development Optimisation of cost and decrease in booked scale Income from disposal of certain finacial assets Increase in dividends from investment using cost method Net profit increased during the year Less profits recognised from associates Increased in booked revenue of corporate projects Reasons for changes Greater increase in advance receipts, etc Relatively rapid increase in advance receipts and properties under development Relatively increase in advance receipts in advance

Trade and other receivables

34,370,341.24

17,235,320.84

99.42%

Properties under development Loansand borrowings(Current) Trade and other payables

78,982,068.16
16,783,690.79 106,138,344.68

41,872,964.96
8,628,670.48 55,244,411.87

88.62%
94.51% 92.13%

Financial indicators Revenue Cost of sales Other income Financial income Profit attributable to equity shareholders of the Company Share of profits less losses of associates Attributable to minority interests Other financial indicators Gearing ratio

Jan-Dec2010 47,763,550.43 29,528,521.37 404,359.94 787,638.33 7,283,127.04 135,391.17 1,556,483.47

Jan-Dec2009 46,047,893.25 34,056,087.55 263,313.11 503,223.73 5,329,737.73 392,250.94 1,100,269.81

Change(+/-) 3.73% -13.29% 53.57% 56.52% 36.65% 65.48% 41.46%

Jan-Dec 2010 74.73%

Jan-Dec 2009 67.10%

Change (+/-) Up by 7.63 percentage points Down by 0.33 Down by 0.03

Current ratio Quick ratio

1.59 0.56

1.92 0.59

37

Equity ratio

25.27%

32.90%

Accounts turnover (Day) Inventory turnover (Day)

9 1367

6 918

Down by 7.63 percentage points Decrease by 3 days Decrease by 449 days

Greater increase in receipts in advance, etc Increase in total accounts receivable, Relatively rapid increase in properties held for development and properties under development

5. Investment of the Company (1) Use of proceeds from the capital market Public issue of A Shares in 2007 Having obtained the approval from the relevant authorities, the Company issued a prospectus regarding the public issue of A shares on 22 August 2007. The Company issued 317,158,261 shares (par value: RMB1 per share) at an issue price of RMB31.53 per share, raising proceeds of RMB9,999,999,969.33. After deducting issuing expenses of RMB63,398,268.11, the net proceeds amounted to RMB9,936,601,701.22 and were received on 30 August 2007. Shenzhen Nanfang-Minhe CPA Firm Co., Ltd () had prepared and filed a capital verification report (Shen Nan Yan Zi (2007) No. 155). The aforesaid proceeds were used to invest in 11 projects. Details on the investment amount, investment gain, development progress of the projects as of 31 December 2010 are as follows:
Unit: RMB000 Total amount of proceeds, net Amount of proceeds with changed usage Percentage of proceeds with changed usage Investment projects Everest Town (former Science City H3 Project), Guangzhou The Paradiso (former Jinshazhou Project), Guangzhou The Dream Town (former Nanzhuang Project), Foshan Zhuhai Hotel Project, Xiangzhou District, Zhuhai West Spring Butterfly Garden (former Jiangcun Project), Hangzhou Liangzhu Project, Yuhang District, Hangzhou Golden Town Project, Yinzhou District, Ningbo Wujiefang Project, Pudong, Shanghai Jinse Yazhu (former Zhonglin Project), Shanghai Anpin Street Project, Baixia District, Nanjing Stratford (former Huangjiayu Project), Nanjing Total 9,936,600 Funds used for investment during the year 0 0% Accumulated funds used Income realised during the year 25,114 144,156 69,461 170,752 6,786 229,377 215,103 5,997 305 9,606,990 Does it Change achieve in estimated feasibility income Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No No No No No No No No No 92,110

Funds Is there used for any Accumulated Investment Planned investment change funds used progress investment during the in year project No No No No No No No No No No No 600,000 800,000 900,000 650,000 700,000 1,700,000 1,636,600 1,200,000 700,000 650,000 400,000 23,698 15,750 52,660 600,000 800,000 900,000 640,040 700,000 1,700,000 1,636,600 1,060,350 700,000 469,998 400,000 100% 100% 100% 98% 100% 100% 100% 88% 100% 72% 100%

No 9,936,600 No 92,108 9,606,988 97% 867,051 (1) The preconstruction of Shanghai Wujiefang Project was affected by the governments redirection of roads due to its location within the Expo area. Construction has already commenced, and the overall development plan of the project will be adjusted according to progress. Nanjing Anpin Street Project was not able to commence Remarks on delay and failure to achieve construction according to schedule, as the government was making adjustment to its estimated income (by project) planning to preserve the citys heritage. The Company is in the progress of submitting planning reports for approval. It is expected that construction will commence in the first half of 2011, and the overall development plan of the project will be adjusted according to progress.

38

(2) Stratford Project in Nanjing was almost sold out and delivered in 2010. Accumulative net margin amounted to 9.95%. The project had achieved brand effect but the income generated from the project did not reach the estimated level stated in the prospectus, while the income of other projects financed by the raised proceeds exceeded 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 No changes changes (by project) As of 31 December 2010, the Company had applied RMB9,606.99 million of the proceeds Application of the balance of the in accordance with the prospectus. The amount represented 96.7% of the net proceeds of RMB9,936.6 million. The balance of proceeds of RMB329.61 million will be applied in proceeds accordance with the progress of project development.

(2) Use of capital not from the capital market

A. Equity investment During the year under review, the Companys net investment amount increased by RMB11,419 million. 1) During the year under review, the Company promoted and established 26 new subsidiaries, each with registered capital of over RMB30 million. The details are as follows:
No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Newly-established company Ningbo Wangang Real Estate Development Co., Ltd. () Yangzhou Wanwei Property Co., Ltd. () Beijing COFCO Vanke Property Co., Ltd. ( ) Shanghai Puhui Property Co., Ltd. () Shenzhen Vanke Zhongcheng Real Estate Co., Ltd. () Tangshan Vanke Real Estate Development Co., Ltd. () Wuhan Liantou Vanke Real Estate Co., Ltd. () Fuzhou Wanrong Real Estate Development Co., Ltd.() Xian Vanke Kaizhou Property Co., Ltd. () Guiyang Vanke Real Estate Co., Ltd. () Xian Vanke South Property Co., Ltd. () Jilin Vanke River Bank Real Estate Development Co., Ltd. () Tangshan Vanke Golden Real Estate Development Co., Ltd. ( ) Jiaxing Vanke Real Estate Development Co., Ltd. () Jiaxing Wanxing Real Estate Development Co., Ltd. () Xinjiang Vanke Real Estate Co., Ltd. ( ) Shenyang Vanke Dongman Property Co., Ltd. () Chengdu Vanke Xindu Property Co., Ltd. ( ) Langfang Wanheng Shengye Real Estate Development Co., Ltd. () Tianjin Wangang Investment Co., Ltd. ( ) Taiyuan Baojia Vanke Real Estate Development Co., Ltd. ( Currency RMB RMB RMB RMB RMB RMB RMB RMB USD RMB RMB RMB RMB RMB RMB RMB USD USD USD RMB RMB Registered capital 603,750,000.00 550,000,000.00 300,000,000.00 290,000,000.00 285,714,300.00 200,000,000.00 200,000,000.00 160,000,000.00 132,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 70,000,000.00 70,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 Actual investment by China Vanke (RMB) 603,750,000.00 357,500,000.00 150,000,000.00 290,000,000.00 85,714,300.00 200,000,000.00 100,000,000.00 160,000,000.00 495,590,700.00 100,000,000.00 85,000,000.00 65,000,000.00 60,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 286,246,800.00 472,543,900.00 168,045,560.00 25,500,000.00 25,500,000.00 Scope of business Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development Property development

39

22 23 24 25 26 Total

) BUCC Vanke Real Estate Development Co., Ltd. () Nanjing Wanhui Property Co., Ltd. ( ) Shenyang China Railway Vanke Xiangmeng Property Co., Ltd.( ) Tianjin Wanshang Property Investment Co., Ltd. () Yantai Vanke Real Estate Development Co., Ltd.()

RMB RMB RMB RMB RMB

50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 30,000,000.00

25,000,000.00 50,000,000.00 24,500,000.00 25,500,000.00 30,000,000.00 4,185,391,260.00

Property development Property development Property development Property development Property development

In addition to the aforesaid companies, the Group had promoted and established another 48 companies, with a total amount of investment of RMB392.88 million. 2). The major companies the Group acquired during the year under review are as follows: a) On 3 December 2010, the Company acquired 80% equity interests of Hainan Shibote Investment Co., Ltd. for a total cash consideration of RMB887.21million.. b) On 15 December 2010, the Company acquired 100% equity interests of Kunming Shencheng Real Estate Development Co., Ltd. for a total cash consideration of RMB401.13million. c) On 26 February 2010, the Company acquired 100% equity interests ofKunming Xinhemin (North District) Real Estate Co., Ltd. for a total cash consideration of RMB305.78 million. d) On 26 March 2010, the Company acquired 75% equity interests of Shanghai Zhongfang River Bank Property Co., Ltd. for a total cash consideration of RMB152.20 million. e) On 22 December 2010, the Company obtained 100% equity interests of Qingyuan Jinlong Zhengda Property Co., Ltd. for a total cash consideration of RMB110.21 million. The total amount of investment in another 19 companies acquired by the Company during the year under review was RMB361.77 million. 3) During the year under review, the Company increased the capital of 21 subsidiaries by RMB4.62 billion. Of the total amount, RMB1 billion was for Beijing Vanke Enterprises Company Limited and RMB950 million for Guangzhou Vanke Real Estate Co., Ltd. Capital injection to other companies amounted

to RMB2.67 billion.
B. Other investments During the year under review, the Company acquired 87 new projects, with a total site area attributable to China Vankes equity holding of approximately 9,410,000 sq m and planned GFA attributable to China Vankes equity holding of approximately 22,150,000 sq m.
GFA attributable to China Vankes equity holding 269,616 312,790 465,360 113,600 150,370

City

Project

Location

Equity interest

Site Area

Planned GFA

Progress

Shenzhen

Buji Shuijing Project Buji Sandy Bay Project Nanyuan Village Project Yuyi Village Project Vanke Hong

Longgang Longgang Nanshan Nanshan Longgang

60% 65% 80% 80% 100%

165,003 104,870 82,600 19,500 31,337

449,360 481,215 581,700 142,000 150,370

Preconstruction Under construction Preconstruction Preconstruction For sale

40

Huizhou Guangzhou

Yantian Central Line Project Final phase of Shuangyue Bay Tianhe Yupin Science City Dream Town

Yantian Huidong Baiyun Luogang Qingyuan Qingyuan Songshan Lake Humen Changan Nancheng Houjie Shunde Shunde Shunde Nanhai Chancheng Xiangzhou Doumen Tanzhou Dongfeng Yongtai Taijiang Taijiang Sanya Tianxin Yuelu Yuelu Pudong New District Qingpu Songjiang Xiuzhou New District Gangzha Jianggan Suzhou New District Binhu Qixia

100% 67% 100% 100% 100% 100% 51% 100% 100% 100% 100% 100% 100% 50% 100% 57% 50% 100% 100% 100% 51% 100% 60% 80% 70% 78% 58% 100% 49% 45% 100% 100% 50% 55% 100% 100%

89,177 327,000 22,297 177,588 689,326 79,164 136,151 60,570 75,653 4,771 88,788 80,571 117,854 30,382 66,533 114,429 78,000 137,061 32,103 236,937 392,000 93,359 25,397 260,293 99,770 43,737 41,712 99,209 116,524 130,970 166,273 99,910 68,564 89,098 154,119 91,751

344,670 490,500 120,850 454,175 1,356,279 312,820 381,000 151,426 249,654 42,937 257,486 241,712 294,636 75,954 79,839 564,667 200,540 275,083 127,742 829,280 388,733 432,546 126,714 301,650 232,761 131,211 166,847 148,814 145,266 104,778 282,194 218,650 150,841 83,220 385,299 201,388

344,670 328,635 120,850 454,175 1,356,279 312,820 194,310 151,426 249,654 42,937 257,486 241,712 294,636 37,977 79,839 322,989 100,270 275,083 127,742 829,280 198,254 432,546 76,028 241,320 162,933 102,344 96,771 148,814 71,180 47,150 282,194 218,650 75,421 45,771 385,299 201,388

Qingyuan

Qingcheng #29 The Paradiso Songshan Lake Humen Zitai

Dongguan

Changan Project Nancheng Headquarters Houjie Project Lunjiao Project Phase II of Chencun Project

Foshan

F04 Project Lishuiyan South Road Project South Village Project

Preconstruction Preconstruction For sale Preconstruction For sale Preconstruction Under construction For sale Preconstruction Preconstruction Preconstruction Under construction Under construction Preconstruction Under construction Preconstruction

Zhuhai

Haiyu Project Doumen Baijiao Project Tanzhou Project

Zhongshan

Dongfeng Central District Yongtai Red Cliff

Fuzhou

Shanghai New Village Project Min River North Coast Huxin Island Project Machine Tool Factory Jinjiang Project Binjiang Project Xinchang Lot No. C4 Chonggu Project Guangfulin Project

Sanya

Changsha

Shanghai

Under construction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Under construction For sale Under construction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction

Jiaxing Nantong Hangzhou Suzhou Wuxi Nanjing

Xiuzhou New City Land Lot No. 45 & 46 Beiyi New City land Hangzhou Caozhuang 2 Wuyishan Road Project Wuxi Xincheng Road Xianlin Lake Land Lot No. 2

41

Zhenjiang Yangzhou Ningbo Wenzhou Nanchang

Blue Mountain Shugang Jishi Port Project Zhenhai Luhe Project Longwan Project Chaoyangzhou Land Lot No. 3, Changyang Project Huilongguan Land Lot No. 28 Huilongguan East Land Lot Xibeiwang Land Lot C1 Xibeiwang Land Lot C3 Shuiniantun Project Yingjia Mansion Tianjiayuan South Lake Project

Runzhou Weiyang Yinzhou Zhenhai Longwan Xihu Fangshan Changping Changping Haidian Haidian Fangshan Chaoyang Fangshan Lunan Lubei Xianghe Binhai New District Dongli Dadong Tiexi Tiexi Yuhong Yuhong Shenhe Heping Changbei Tiedong Fushun Development Zone Ganjingzi Ganjingzi Puwan New District Jilin Licang Fushan Hongshan

60% 65% 100% 49% 60% 50% 50% 50% 50% 49% 49% 50% 50% 68% 100% 60% 50% 51% 49% 60% 70% 100% 49% 51% 100% 100% 100% 100% 100% 100% 55% 65% 100% 70% 100%

285,683 297,139 95,242 226,777 125,219 21,818 78,325 68,917 137,090 85,099 53,545 77,834 5,329 71,912 153,527 78,977 545,545 149,483 90,792 74,527 66,356 40,971 190,156 135,464 81,378 120,333 118,500 135,000 50,083 68,797 757,350 728,139 141,273 190,281 135,600

416,285 313,970 171,435 488,148 179,768 75,338 157,992 192,967 364,613 187,218 92,719 146,002 36,466 137,808 96,661 197,442 1,082,200 373,691 171,281 232,043 180,363 102,013 339,550 270,928 392,500 360,999 296,250 391,100 100,000 129,822 1,253,300 2,155,910 265,321 361,220 470,000

249,771 204,081 171,435 239,193 107,861 37,669 78,996 96,484 182,307 91,737 45,432 73,001 18,233 93,709 96,661 118,465 541,100 190,583 83,928 139,226 126,254 102,013 166,380 138,173 392,500 360,999 296,250 391,100 100,000 129,822 689,315 1,401,342 265,321 252,854 470,000

Beijing

Tangshan Phoenix New City Langfan Tianjin Huanqing City Harbour City Golden Yazhu Casa de Sol Gear Wheel Plant Project Sihai Logistic Project Shenyang Dayu Road Project Dayu Road East 2A Chunhe Project Changbai 8 Whistler East Project Fushun South Lake Project Glamorous City Land Lot C Glamorous City Land Lot D&E Harbour City Jilin Qingdao Yantai Wuhan Binjiang Project Licang Project China Union Logistics Project Aureate City

Preconstruction Preconstruction For sale Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction For sale Preconstruction Preconstruction For sale For sale For sale Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Under construction

Dalian

42

Wanzi Lake Tangjiadun Chengdu Chongqing Xian

Jianghan Jianghan Xindu Northern New District Qujiang New District Changan Panlong Panlong Xiaohe Yunyan New Town

100% 50% 100% 55% 55% 85% 100% 100% 51% 100% 100%

102,500 267,200 345,168 278,165 152,667 176,056 104,724 192,104 351,800 90,456 53,339 2,816,991

542,700 1,324,300 356,503 647,378 385,408 614,377 267,084 230,094 581,217 201,012 136,956 29,627,159

542,700 662,150 356,503 356,058 211,974 522,220 267,084 230,094 296,421 201,012 136,956 22,145,936

Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction For sale For sale Preconstruction Preconstruction Preconstruction -

Phase I, Wulong Mountain

Zhaomushan The Paradiso Qujiang Dream Town

Kunming

Jinyu Tixiang Baisha Runyuan King Metropolis

Guiyang The Paradiso Urumqi Liyushan Road Project Total

The total land premium of the above-mentioned new projects attributable to China Vankes equity holding was RMB61.46 billion. As at the end of 2010, the Company had paid a total premium of RMB32.7 billion for the above-mentioned new projects. Subsequent event: From the end of the year under review to the date of publication of this report, the Company acquired 16 new projects, with a site area of approximately 1,550,000 sq m attributable to China Vankes equity holding (GFA of approximately 3,630,000 sq m attributable to China Vankes equity holding).
(Unit: sq m) City Shenzhen Dongguan Project Subsequent phase of Langqi Project Shitanpu G003 Project, Tangxia Juyuan New District Land, Jiading Ledu Road Land Lot B, Songjiang Fuyang Golf Land Lot A Fuyang Golf Land Lot B Fuyang Golf Land Lot C Fuyang Golf Land Lot D Jinchang New Town Project Zhushan Road Land Lot No. 1 & 3 Northern Industrial Area Project Location Longgang Tangxia Jiading Songjiang Fuyang Fuyang Fuyang Fuyang Jinchang Jiujiang Northern Industrial Area Hunnan New District Binhai New District Hongshan Equity interest 100% 100% 100% 100% 20% 20% 20% 20% 49% 100% Site area 41,487 52,813 90,013 67,932 69,941 69,989 68,244 59,933 99,105 274,404 Planned GFA 22,403 105,626 180,026 108,691 104,912 83,987 68,244 59,933 247,763 493,927 GFA attributable to China Vankes equity holding 22,403 105,626 180,026 108,691 20,982 16,797 13,649 11,987 121,404 493,927 Progress Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Preconstruction Pre-

Shanghai

Hangzhou

Suzhou Wuhu Qinhuangdao

48%

270,549

642,357

308,331

Shenyang Baolida Project Dongjiang Port Project Subsequent phase of

65% 51% 100%

199,319 255,000 138,500

597,957 359,900 426,072

388,672 183,549 426,072

Tianjin Wuhan

43

Yangtze River Village Project Xian Changzhengcun Changan CA6-6-1 Total Hongshan Changan 100% 100% 282,255 113,118 2,152,602 871,800 348,730 4,745,370 871,800 348,730 3,634,397

construction Preconstruction Preconstruction -

6. Project development plan for the new year At the end of 2010, the Company had 245 development projects; the total GFA of projects under development attributable to China Vankes equity holding amounted to approximately 13,620,000 sq m, the total GFA of projects under planning attributable to China Vankes equity holding amounted to approximately 36,400,000 sq m. In 2011, the Company will continue to adopt the quick turnover strategy of not hoarding land resources; not stalling home sale, with an aim to further lift its operational efficiency. The expected construction area of existing projects amounted to 13,290,000 sq m, up by 6% from that of 2010. In addition, the Company will moderately speed up construction to complete projects faster so that it can recognize revenue as soon as possible to cope with the continued increase in advance receipts. It is expected that the completed construction area in 2011 will amount to 7,290,000 sq m, up by 65% from that of 2010. The Groups major projects in 2011:
Unit: sq m Planned area of newly commenced construction in 2011 Planned completed area in 2011 GFA construction of which not commenced as at the end of 2010

Project Name

Location

Equity interest

Site area

Planned GFA

Shenzhen Region Yuyi Village Project, Shenzhen Nanyuan New Village Project, Shenzhen East Coast, Shenzhen Vanke Centre, Shenzhen Tianqin Bay, Shenzhen Yantian Central Line Project King Metropolis, Shenzhen Golden Domain Project, Shenzhen Ravine Village, Shenzhen The Village, Shenzhen Golden Hill, Shenzhen Jiuzhou Project, Shenzhen Qianlin Shanju, Shenzhen Vanke Hong, Shenzhen Jinse Qinyuan Project, Shenzhen Shuijing Project, Buji, Shenzhen

Nanshan Nanshan Yantian Yantian Yantian Yantian Baoan Baoan Baoan Longgang Longgang Longgang Longgang Longgang Longgang Longgang

80% 80% 100% 100% 100% 100% 100% 100% 60% 100% 100% 100% 100% 100% 90% 60%

19,500 82,600 342,984 61,730 253,990 89,177 68,310 72,410 158,639 472,011 62,474 236,330 198,597 31,337 37,740 165,003

142,000 581,700 265,864 80,201 24,785 344,670 196,182 161,856 47,270 646,930 96,969 513,012 361,753 150,370 69,608 449,360

0 93,139 0 0 0 0 0 39,820 0 72,302 0 149,098 36,741 56,818 0 0

0 0 0 0 3,218 0 76,772 68,518 0 80,842 52,864 0 68,512 65,329 69,344 0

142,000 581,700 0 0 5,242 344,670 0 93,338 47,270 72,302 0 513,012 36,741 150,370 0 449,360

44

Sandy Bay Project, Buji, Shenzhen Eastern Metropolis, Shenzhen Water Cities, Shenzhen Dajia Island, Shenzhen Shuangyuewan, Huizhou Jinyu Huating, Huizhou Glorious Life, Guangzhou The Paradiso, Guangzhou Hillside Garden, Guangzhou Science City Project, Guangzhou Aureate City, Guangzhou King Metropolis, Guangzhou Tongfu West, Guangzhou Le Bonheur, Guangzhou Nansha Project, Guangzhou Jinshazhou B04 Project, Guangzhou Racho Santa Fe, Guangzhou Dream Town, Qingyuan 29# Qingcheng, Qingyuan Jinyu Songhu, Dongguan Changan Project, Dongguan Nancheng Headquarters, Dongguan Houjie Project, Dongguan Dream Town, Changping, Dongguan Vanke Luhu, Dongguan Hongxinuoya, Dongguan King Metropolis, Dongguan Feilishan, Dongguan The Paradiso, Dongguan, The Paradiso, Foshan Binfen Siji ( ) Project, Foshan Dengzhou Project, Foshan Lunjiao Qinyuna ( ) Project, Foshan Nancun Project, Foshan

Longgang Pingshan New District Tangxia, Dongguan Huizhou Huidong Huicheng Baiyun Baiyun Baiyun Luogang Panyu Liwan Haizhu Liwan Nansha Baiyun Huadu Qingyuan Qingyuan Songshan Lake Changan Town Nanchang Houjie Town Changping Dalingshan Songshan Lake Nancheng Nancheng Dalang Town Nanhai Shunde Shunde Shunde

65% 100% 51% 100% 67% 100% 100% 50% 50% 100% 100% 100% 100% 100% 95% 100% 49% 100% 100% 51% 100% 100% 100% 100% 100% 100% 51% 50% 51% 55% 100% 49% 100%

104,870 104,801 596,786 364,450 687,000 151,298 22,297 144,657 94,745 177,588 58,093 6,623 9,929 38,111 134,760 17,207 210,288 689,326 79,164 136,151 75,653 4,771 88,788 635,971 146,674 416,618 189,934 249,534 91,780 221,035 38,986 284,036 80,571 114,429

481,215 315,808 412,504 234,975 850,500 327,550 120,850 433,584 133,746 454,175 72,549 46,147 85,279 135,689 269,520 30,973 124,338 1,356,279 312,820 381,000 249,654 42,937 257,486 442,460 117,341 291,633 493,827 374,302 183,560 574,690 134,891 710,092 241,712 564,667

103,741 87,726 106,752 0 108,995 66,182 0 0 0 67,500 0 0 46,078 0 0 0 0 102,000 107,000 106,854 139,654 42,937 0 85,107 34,005 6,607 114,632 124,107 0 85,332 0 87,900 68,005 87,900

0 0 32,339 0 0 83,753 0 35,958 0 0 66,278 0 39,201 35,635 0 30,973 0 0 0 0 0 0 0 38,806 46,118 44,729 111,934 0 49,630 117,352 56,380 88,517 3,541 0

433,785 238,001 253,532 234,975 850,500 223,911 0 0 0 454,175 0 0 46,078 0 0 0 0 1,010,949 312,820 236,834 249,654 42,937 257,486 106,424 34,005 34,515 234,503 267,655 0 233,633 0 567,354 68,005 564,667

Chancheng

57%

45

Two projects in Chencun, Foshan F04 Project, Foshan Jinse Xigu Huayuan (), Foshan Xincheng Wanpan, Foshan Rancho Santa Fe,, Foshan King Metropolis, Foshan The Dream Town, Foshan Jinyu Huating, Foshan City Scenery, Zhongshan Spring Dew Mansion, Zhongshan Tanzhou Project, Zhongshan Central District, Dongfeng Town, Zhongshan Zhuhai Hotel, Zhuhai Haiyu Project, Zhuhai Baijiao, Doumen, Zhuhai Huxin Island, Xiamen Jinse Yuecheng, Xiamen King Metropolis, Xiamen King Metropolis, Changsha The Paradiso, Changsha City Garden, Changsha The Dream Town, Changsha Machine Tool Factory, Changsha Jinjiang Project, Changsha Binjiang Project King Metropolis, Fuzhou Jinyu Rongjun, Fuzhou Yongtai Chibi, Fuzhou Shanghai Xincun, Fuzhou Minjiang Beian, Fuzhou Senlin Lake Project, Sanya Huxin Island Project, Sanya Sub-total Shanghai Region Qijiefang, Shanghai Floral City, Shanghai 187 Wuzhong Road, Shanghai

Shunde Shunde 100% 50% 100% 100% 100% 100% 100% 55% 100% 100% 100% 100% 100% 50% 100% 100% 100% 100% 60% 100% 80% 70% 70% 78% 58% 100% 100% 51% 100% 60% 65% 80% 117,854 30,382 66,533 69,877 127,598 110,001 337,544 75,916 338,516 76,387 32,103 236,937 109,917 78,000 137,061 95,098 54,441 102,427 232,440 120,150 46,914 195,421 99,770 43,737 41,712 16,168 166,736 392,000 93,359 25,397 1,330,552 260,293 14,141,567 294,636 75,954 79,839 139,754 228,002 240,170 776,350 184,607 523,177 175,133 127,742 829,280 143,792 200,540 275,083 199,710 109,000 443,000 545,000 363,369 137,646 465,542 232,761 131,211 166,847 37,230 383,161 388,733 432,546 126,714 877,004 301,650 25,177,892 83,171 75,954 79,839 0 0 0 19,500 0 0 0 0 169,200 0 50,640 125,083 56,035 0 165,195 177,366 0 2,040 195,817 108,811 98,921 54,000 0 60,422 50,685 232,546 126,714 135,700 0 4,413,236 0 0 0 13,626 53,444 22,568 0 66,157 85,623 62,897 0 0 73,408 7,640 0 34,085 62,730 27,640 135,617 0 46,549 109,890 0 0 0 37,230 66,061 0 0 0 123,918 0 2,395,626 133,171 75,954 79,839 0 0 0 495,483 0 0 0 0 829,280 0 200,540 275,083 135,355 0 330,780 315,784 259,552 2,040 329,528 232,761 131,211 166,847 0 60,422 388,733 432,546 126,714 753,086 301,650 15,473,874

Nanhai Shunde Shunde Nanhai Chancheng Nanhai Southern District Eastern District Tanzhou Town Dongfeng Town Xiangzhou Xiangzhou Doumen Huli Xiangan Jimei Yuhua Furong Yuelu Kaifu Tianxin Yuelu Yuelu Cangshan Jinan Yongtai Taijiang Taijiang Sanya Sanya

Pudong New District Minhang Minhang

100% 100% 100%

83,854 140,678 61,724

142,612 207,773 145,065

0 0 0

0 27,496 13,872

0 0 0

46

No. 53, Qibao, Shanghai Chonggu Project, Shanghai Guangfulin Project, Shanghai Land Lot C4, Xinchang, Shanghai Blue Mountain Town, Shanghai Crystal Garden, Shanghai Charming Garden, Shanghai Tongshan Street Project, Shanghai New City Garden, Shanghai Firenze, Shanghai Bingjiang Project, Shanghai North of Land Lot No. 35, Qibao, Shanghai Wujiefang, Shanghai Jiyang Road, Shanghai Golden City, Shanghai Wonderland, Shanghai Castle Tudor, Shanghai Land Lot in Xinzhou New City, Jiaxing Land Lot in Beiyi New City, Nantong Golf, Kunshan Nimble Bay, Suzhou Benan Project, Suzhou Golden Home, Suzhou Changfeng School, Suzhou Golden Paradise, Suzhou Wuyishan Road Project, Suzhou A Glamorous City,Wuxi Golden Paradise, Wuxi The Paradiso, Wuxi Xincheng Road, Wuxi Liangzhu New Town, Hangzhou West Spring Butterfly Garden, Hangzhou Golden Home, Hangzhou Fuyang Gongwang, Hangzhou Caozhuang, Hangzhou

Minhang Qingpu Songjiang Pudong New District Pudong New District Qingpu Songjiang Pudong New District Minhang Minhang Pudong New District Minhang Pudong New District Pudong New District Pudong New District Baoshan Baoshan Xinzhou New District Gangzha Bacheng Town Industrial District Industrial District Canglang Canglang Industrial District Suzhou New District Binhu New District Binhu Binhu Yuhang Xihu Fuyang Fuyang Jianggan

100% 49% 45% 100% 100% 55% 49% 75% 51% 49% 100% 51% 100% 100% 60% 100% 100% 100% 100% 100% 70% 51% 55% 49% 51% 55% 60% 100% 100% 100% 100% 51% 55% 100% 100%

49,294 116,524 130,970 99,209 433,180 77,804 366,465 74,555 287,741 296,295 38,753 39,366 121,463 19,392 405,627 383,576 231,753 166,273 99,910 433,916 384,042 155,673 134,771 48,713 47,177 89,098 960,000 224,376 154,468 154,119 3,095,310 155,838 55,576 517,900 37,181

126,869 145,266 104,778 148,814 209,171 79,523 312,931 182,230 334,669 285,793 103,132 69,913 129,242 16,500 809,929 471,700 241,169 282,194 218,650 328,678 821,664 124,538 242,588 48,693 117,936 83,220 1,346,963 620,713 431,592 385,299 2,183,173 354,038 110,834 208,981 86,938

0 22,465 35,811 0 0 0 0 126,066 43,553 78,000 0 0 0 0 50,430 0 0 90,777 158,650 30,000 5,000 0 0 0 0 27,076 54,895 139,780 43,860 73,596 105,759 0 0 26,443 52,644

0 0 0 0 58,700 48,853 0 0 50,679 82,609 0 0 0 0 0 0 66,308 0 0 0 20,504 23,004 26,150 27,726 98,187 0 98,132 71,839 25,014 0 15,348 128,387 110,281 15,972 0

126,869 22,465 77,998 0 0 0 0 182,230 147,432 135,757 103,132 69,913 0 0 513,188 0 0 282,194 218,650 326,333 119,931 0 0 0 0 55,076 350,935 420,962 271,435 385,299 1,166,044 0 0 121,026 52,644

47

Land Lot No. 25, Caozhuang 2, Hangzhou Land Lot No.2, Xianlin Lake, Nanjing Anpin Street, Nanjing The Paradiso, Nanjing Golden Milestone, Nanjing Glamorous City, Zhenjiang Blue Mountain Zhenjiang Golden Town, Ningbo King Metropolis, Ningbo Jishigang Project, Ningbo Zhenhai Lvhe Project, Ningbo Yunluwan () Project, CichengNingbo Golden Mingjun, Hefei King Metropolis, Hefei Qingshan Lake, Nanchang Dew Garden, Nanchang Chaoyangzhou Project, Nanchang North part of Wonderland, Nanchang Longwan Project, Wenzhou Shugang Project, Yangzhou Sub-total Beijing region Land Lot C3 in Xibeiwang, Beijing Land Lot C1 in Xibeiwang, Beijing No. 5 Park Front Boutique Apartment, Beijing Blue Mountain, Beijing Yingjia Center, Beijing Changyang Project, Beijing Changyang No, 3 Project, Beijing Tianjiayuan Project, Beijing Shuiniantun Project, Beijing Jinyu Dream Town, Beijing Land Lot 028 in Huilongguan, Beijing Land Lot at the

Jianggan Qixia Baixia Jiangning Yuehua Tanshan Road Runzhou Yinzhou Yinzhou Yinzhou Zhenhai Jiangbei Shushan Shushan Qingshan Lake Qingyunpu Xihu Gaoxin Longwan Weiyang

50% 100% 100% 100% 100% 100% 60% 100% 10% 100% 49% 15% 50% 50% 50% 50% 50% 50% 60% 65%

68,564 91,751 27,325 272,298 42,318 795,100 285,683 190,369 18,500 95,242 226,777 314,200 107,326 115,628 97,061 97,109 21,818 374,335 125,219 297,139 14,275,246

150,841 201,388 20,340 544,540 82,404 942,820 416,285 313,602 49,948 171,435 488,148 393,740 387,447 412,101 133,693 144,011 75,338 459,013 179,768 313,970 18,465,878

75,301 135,000 17,340 184,462 0 156,283 66,997 0 0 93,908 153,796 155,696 102,905 88,663 0 87,879 75,338 0 89,622 160,000 2,807,995

0 0 0 70,640 69,416 77,566 0 60,689 0 0 0 75,367 102,905 0 22,593 85,035 0 0 0 0 1,573,272

150,841 201,388 17,340 370,992 0 535,212 396,981 0 0 93,908 488,148 318,373 102,905 276,766 0 89,086 75,338 0 179,768 313,970 8,760,529

Haidian Haidian Chaoyang Chaoyang Chaoyang Fangshan Fangshan Fangshan Fangshan Changping Changping Changping

49% 49% 60% 100% 50% 50% 50% 68% 50% 49% 50% 50%

53,545 85,099 37,917 55,885 5,329 437,179 78,325 71,912 77,834 178,908 68,917 137,090

92,719 187,218 97,044 147,249 36,466 853,165 157,992 137,808 146,002 543,461 192,967 364,613

10,000 76,060 0 28,277 36,466 15,000 30,000 87,808 15,000 139,227 92,967 45,000

0 0 27,492 23,717 0 51,591 0 0 0 96,950 0 0

92,719 187,218 0 28,277 36,466 497,448 157,992 137,808 146,002 189,227 192,967 364,613

48

eastern end of Huilongguan, Beijing Holiday Town, Beijing Hongshi Jiayuan, Beijing Huanqingcheng, Langfang Fenghuang New City, Tangshan South Lake Project, Tangshan Jinse Yazhu, Tianjin A Glamorous City, Tianjin Waterfront, Tianjin New Milestone, Tianjin Holiday Dew Garden, Tianjin Jinao International, Tianjin Binhai Modern, Tianjin Park Residence, Tianjin Harbor, Tianjin Jinlu, Tianjin The Paradiso, Shenyang New Elm Mansion, Shenyang A Glamorous City, Shenyang Dayu Road Project, Shenyang 2-A Dayu Road East, Shenyang Dream Town, Shenyang Jiyu International, Shenyang Gear Wheel Plant Project, Shenyan Sihai Logistic Project, Shenyang Tianqin Bay, Shenyang Chunhe Project, Shenyang Blue Mountain, Shenyang 8 Changbei, Shenyang Huisile East Project, Shenyang Rancho Phase II, Shenyang Toudao Project, Shenyang Rancho Santa Fe, Shenyang South Lake Project, Fushun Golden Home, Anshan Dream Town, Anshan

Fengtai Fengtai Xianghe County Lubei Lunan Dongli Dongli Dongli Dongli Xiqing Xiqing Development District Development District Binhai New District Binhai New District Hunnan New District Hunnan New District Yuhong Yuhong Yuhong Heping Tiexi Tiexi Tiexi Shenhe Shenhe Dadong Changbai Heping Tiedong Dongling Dongling Dongling Development District Tiedong Gaoxin

50% 100% 50% 60% 100% 49% 100% 100% 51% 100% 100% 100% 100% 51% 95% 100% 100% 100% 49% 51% 49% 100% 70% 100% 55% 100% 60% 100% 100% 100% 70% 100% 100% 100% 100%

224,289 59,800 545,545 78,977 153,527 90,792 176,773 2,708,886 136,524 229,300 58,577 6,538 32,270 149,483 90,604 226,356 182,139 156,817 190,156 135,464 361,320 27,249 66,356 40,971 83,227 81,378 74,527 120,333 118,500 43,334 315,362 344,366 135,000 48,874 167,664

413,304 184,502 1,082,200 197,442 96,661 171,281 258,579 1,763,059 204,786 343,101 162,566 40,312 48,731 373,691 126,600 666,376 289,647 297,026 339,550 270,928 874,752 108,581 180,363 102,013 291,295 392,500 232,043 360,999 296,250 21,245 378,434 111,539 391,100 97,969 393,838

0 0 112,180 90,483 49,760 14,616 30,465 52,200 0 93,856 0 0 0 77,796 20,400 69,710 0 416 140,341 0 97,346 0 76,449 0 0 79,601 56,288 124,185 0 0 0 0 50,724 0 112,058

54,167 0 70,000 0 46,901 56,064 64,275 77,108 150,951 39,848 33,393 0 0 0 0 111,673 57,843 57,429 0 0 59,211 108,581 0 0 0 0 0 0 0 21,245 0 7,709 0 0 36,097

0 0 1,082,200 197,442 49,760 14,616 30,466 1,134,244 0 93,856 1 0 26,209 276,276 79,598 327,270 0 416 339,550 270,928 149,776 0 180,363 102,013 174,512 392,500 100,919 360,999 296,250 0 378,434 0 391,100 0 186,313

49

Huisile Project, Anshan A Glamorous City, Dalian Subsequent Projects of Glamorous City, Dalian Land Lot C, A Glamorous City, Dalian Land Lot D, E, A Glamorous City, Dalian Ravine Village, Dalian Habor, Dalian City Garden, Dalian Huisili Project, Changchun Park Residence Project, Changchun Yangpu Garden, Changchun Waterside Villa ( ), Changchun Blue Mountain Project, Changchun Binjiang Project, Jinlin Wonderland, Qingdao A Glamorous City, Qingdao City Garden, Qingdao Aureate City, Qingdao Blue Mountain, Qingdao Dream Town, Qingdao Licang Project, Qingdao Dituan Project, Yantai Zhonglian Logistic Project, Yantai Sub-total Chengdu region Phase 1, Wulong Mountain,Chengdu A Glamorous City, Chengdu The Paradiso, Chengdu Twin Riverside, Chengdu Jinyu Xiling, Chengdu Golden Domain, Chengdu Jinrun Huafu, Chengdu Golden Hairong, Chengdu Haiyue Huicheng, Chengdu Golden Home,

Tiedong Ganjingzi Ganjingzi Ganjingzi Ganjingzi Ganjingzi Puwan New District Shahekou Jingyue Chaoyang Economic Development Zone Jingyue Development Zone Erdao Jilin Jimo Chengyang Chengyang Sifang Shibei Sifang Licang Zhifu Fushan

100% 55% 55% 100% 100% 55% 55% 100% 50% 100% 100% 100% 100% 65% 55% 80% 80% 60% 100% 55% 100% 100% 70%

303,700 195,526 20,474 50,083 68,797 363,716 757,350 28,580 399,715 276,769 89,678 75,000 251,356 728,139 153,284 200,289 130,873 61,873 68,153 154,607 141,273 311,614 190,281 13,970,348

414,816 404,240 44,272 100,000 129,822 380,922 1,253,300 33,942 484,714 503,349 176,615 49,016 501,678 2,155,910 241,280 340,491 231,647 179,756 204,459 395,794 265,321 444,065 361,220 23,816,596

87,742 26,914 44,272 40,000 77,280 33,780 125,000 0 108,420 150,370 0 0 167,302 39,580 30,698 51,604 63,370 0 71,112 86,600 164,321 0 0 3,293,044

85,909 142,932 0 0 0 118,341 0 0 0 0 78,856 12,663 0 0 70,578 55,544 87,146 62,612 0 0 0 0 0 1,966,826

284,459 26,914 44,272 100,000 129,822 33,780 1,253,300 33,942 417,282 503,349 0 0 367,424 2,155,910 30,698 51,604 114,913 0 127,783 305,344 265,321 367,441 361,220 15,641,526

Xindu Chenghua Chenghua Xindu Jinniu Qingyang Jingjiang Wuhou Shuangliu Jianghan

100% 60% 100% 100% 60% 100% 100% 49% 90% 100%

345,168 308,501 56,293 267,347 79,331 49,628 52,895 54,970 104,307 23,851

356,503 761,258 293,504 338,203 361,100 244,459 267,928 234,125 521,698 149,618

224,322 65,567 0 0 0 140,164 67,169 100,648 143,456 0

46,396 137,662 0 0 126,618 0 47,580 0 0 0

356,503 137,470 0 0 0 140,164 67,169 100,647 391,212 0

50

Wuhan Element Integration, Wuhan Golf City Garden, Wuhan King Metropolis, Wuhan Dream Town, Wuhan

Jianghan Dongxihu Wuchang Jianghan Economic and Technological Development Zone East Lake High-Tech Development Zone Hongshan Jianghan Jianghan East Lake High-Tech Development Zone Yubei Northern New District Northern New District Yuzhong Northern New District Yanta Qujiang New District Changan Xiaohe Yunyan Panlong Panlong New District

55% 49% 55% 100%

12,022 237,660 59,790 65,901

42,869 393,858 191,300 299,337

0 10,280 39,634 130,511

42,869 89,736 97,095 100,884

0 10,280 39,634 130,511

The Paradiso, Wuhan Final phase of City Garden , Wuhan Golden City, Wuhan Huanzi Lake, Wuhan Tangjiadun, Wuhan A Glamorous City, Wuhan Yuyuan, Chongqing Tixiangjun, Chongqing Yuefu, Chongqing Vanke Jincheng, Chongqing Zhaomu Hill, Chongqing Xinde City, Xian Jinyu Qujiang, Xian Dream Town, Changan, Xian King Metropolis, Guiyang The Paradiso, Guiyang Golden Paradise, Kunming Dew Garden, Baisha, Kunming Liyushan Road Project, Urumqi Sub-total Total

100%

213,440

533,600

175,817

372,945

100% 100% 100% 50%

230,970 135,600 102,500 267,200

349,607 470,000 542,700 1,324,300

163,440 148,176 67,980 170,410

83,012 0 0 0

163,440 370,837 542,700 1,324,300

100% 51% 100% 100% 100% 55% 100% 55% 85% 51% 100% 100% 100% 100%

225,258 229,581 41,448 138,071 105,463 278,165 20,156 152,667 176,056 351,800 90,456 104,724 192,104 53,339 4,826,662 47,213,823

405,457 344,372 145,067 376,737 533,486 647,378 106,616 385,408 614,377 581,217 201,012 267,084 230,094 136,956 12,651,228 80,111,594

0 39,248 0 124,678 261,583 100,000 0 56,800 270,117 106,400 27,840 0 0 136,956 2,771,196 13,285,471

136,149 122,671 54,846 23,178 147,450 0 50,429 14,890 0 30,393 0 0 0 0 1,351,858 7,287,582

0 63,573 0 283,949 270,491 647,378 0 227,800 475,301 459,923 201,012 103,972 230,094 136,956 7,248,261 47,124,192

Special Remarks on Risk Factors: The schedule for the commencement and completion of the above-mentioned projects may be adjusted due to the following factors: a) There may be changes in the macro economy and the property market or changes in the sale of an individual project; b) Approval requirements may be tightened by new rules and regulations such that the progress of application for permits will be slowed down, thereby affecting the schedule of project development;

c) Progress in demolition and resettlement of related projects may affect the development schedule;
d) Significant changes in weather conditions may affect the progress of project development, which in turn affect the schedule for completion; e) Impact of other unpredictable significant events on the construction progress of projects.

51

7. Fair value measurement and the holding of financial assets and financial liabilities in foreign currency Fair value measurement:
Item Balance at the beginning of the year Gain/loss from changes in fair value during the year under review Accumulated changes of fair value recognised in equity Provision for diminution in value during the year under review Unit: RMB000 Disposal Balance at during the the end of year under the year review under review

Financial assets Including: 1. Financial assets measured at fair value, and changes of which are recorded in profit and loss during the period2 Including: Derivative financial assets 2. Available-for-sale financial assets Sub-total of financial assets

740.5

-740.5

740.5 163,629.5 164,370.0

-740.5 -158,865.9 -159,606.4

4,763.6 4,763.6

Financial liabilities Investment properties Productive biological assets Others3 Total

15,054.5 -15,054.5

-159,606.4

15,054.5 -

Holding of financial assets and financial liabilities in foreign currency

Item Balance at the beginning of the year Gain/loss from changes in fair value during the year under review Accumulated changes of fair value recognised in equity Unit: RMB000 Provision Balance at for the end of diminution the year in value under during the review year under review

Financial assets Including: 1. Financial assets measured at fair value, and changes of which are recorded in profit and loss during the period Including: Derivative financial assets 2. Loans and accounts receivables 3. Available-for-sale financial assets 4. Held-to-maturity investment Sub-total of financial assets

740.5

740.5 740.5

740.5 -

Financial liabilities

15,054.5

15,054.5

Most of the above-mentioned items measured at fair value are legal person shares that have been held by the Company for a long time. Their value was low and they are being gradually disposed of. With respect to certain items, the Company refers to the control procedures for major investment projects: the Companys management reviewed and approved, within the scope of authority as conferred by the Board, the relevant items after they have been reviewed by the specialised departments with due diligence 52

VIII. Work Report of the Board of Directors (1) The Board held a total of five board meetings during 2010 A. On 26 February 2010, the Eighth Meeting of the Fifteenth Board was held to consider and approve the following resolutions: the resolution regarding the appropriation and write-off of the provision for diminution in asset value for the year 2009; the audited financial report for the year 2009; the special remarks on the deposit and use of proceeds raised from previous fund-raising exercises during 2009; the internal control self-assessment report for the year 2009; the proposal on profit appropriation and dividend distribution for the year 2009; the resolution regarding the Companys 2009 annual report and its summary; the corporate social responsibility report for the year 2009; the resolution regarding the appointment of auditors for the year 2010; the resolution regarding the amendment of the Companys Articles of Association; the resolution regarding the convention of the 2009 Annual General Meeting. The related announcement was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, respectively, on 2 March 2010. B. On 23 April 2010, the Ninth Meeting of the Fifteenth Board of Directors was held to consider and approve the Companys first quarterly report and financial statements for the year 2010, and the resolution regarding the establishment of a system to make claims against those liable for material errors in annual report information disclosure. The related announcement was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, respectively, on 27 April 2010. C. On 6 August 2010, the Tenth Meeting of the Fifteenth Board of Directors was held to consider and approve the following resolutions: the interim report, financial statements and the summary of the interim report for the year 2010; and the resolution regarding the proposal on no profit appropriation or transfer of surplus reserve to share capital for the 2010 interim period. The related announcement was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, respectively, on 10 August 2010. D. On 10 August 2010, the Eleventh Meeting of the Fifteenth Board was held to elect Director Mr Qiao Shibo as Deputy Chairman of the Board and Independent Director Zhang Liping as a member of the investment and decision-making committee and remuneration and nomination committee. The related announcement was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, respectively, on 11 August 2010. E. On 21 October 2010, the Twelfth Meeting of the Fifteenth Board was held to consider and approve the third quarterly report and financial statements for the year 2010; the resolution regarding the creation of a comprehensive, long-term incentive mechanism and the establishment of A-Share Stock Option Incentive Scheme For Year 2010; the resolution regarding submitting to the shareholders meeting for granting the Board the mandate to handle all the matters relating to the stock option incentive plan; the resolution regarding the measures for implementation and performance review of the stock option incentive plan. The related announcement was published in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong, respectively, on 25 October 2010. (2) In 2010, the Board had conducted 6 votings by correspondence A. On 13 May 2010, the resolutions regarding Mr Song Lins resignation as Director and Deputy Chairman of the Board and nomination of Mr Qiao Shibo as Director candidate and Mr Zhang Liping as Independent Director candidate were submitted for the Boards approval through voting by correspondence.

53

B. On 21 June 2010, the self-inspection report on standardization of financial and accounting basic tasks for the year 2010 was submitted for the Boards approval through voting by correspondence. C. On 16 July 2010, the resolution regarding the convention of the First Extraordinary General Meeting of 2010 was submitted for the Boards approval through voting by correspondence. D. On 31 August 2010, the resolution regarding the provision of counter guarantee for the relevant guarantee of Guangshengrong Company was submitted for the Boards approval through voting by correspondence. E. On 1 November 2010, report on reform on the standardization of financial and accounting basic tasks for the year 2010 and self-inspection report on the establishment and implementation of an effective mechanism for the prevention of capital being used were submitted for the Boards approval through voting by correspondence. F. On 20 November 2010, the resolution regarding the provision of counter guarantee for the relevant guarantee of Shenzhen Vanke Real Estate Co., Ltd. was submitted for the Boards approval through voting by correspondence. The progress and important facts of the relevant issues were disclosed pursuant to requirements in China Securities Journal, Securities Times, Shanghai Securities News and irasia.com, Hong Kong. (3) The Boards implementation of the resolutions approved at shareholders meetings The implementation of the proposal on dividend distribution for the year 2009 Following the resolutions passed at the 2009 (21st) Annual General Meeting, the Board had proceeded with the implementation of the proposal on dividend distribution for 2009. The dividend distribution proposal for 2009 is as follows: for every 10 existing shares held, a cash dividend of RMB0.7 (including tax; after deducting tax, a cash dividend of RMB0.63 would be paid for every 10 existing shares beneficially held by individual shareholders, investment funds, and non-resident enterprises holding A shares; a cash dividend of RMB0.63 would be paid for every 10 existing shares beneficially held by non-resident enterprises holding B shares; other holders of B shares are not subject to taxation for the time being) would be paid. The record date and ex-dividend date for A share were 17 May 2010 and 18 May 2010 respectively. The last trading date, ex-dividend date and record date for B share were 17 May 2010, 18 May 2010 and 20 May 2010 respectively. The exchange rate for B shares cash dividend was HK$1 = RMB0.8794, being the median price of the exchange rate of Hong Kong dollars for Renminbi published by the Peoples Bank of China on the first working day (24 March 2010) after the approval of the dividend distribution proposal at the Companys annual general meeting. (4) Specialised Committees Performance of Duties The audit committee, the remuneration and nomination committee, as well as the investment and decisionmaking committee, had dutifully performed their duties, in accordance with the Code of corporate governance for listed companies, Articles of Association, and Rules Governing the Procedures of Board Meetings and the responsibilities and obligations as stipulated in the implementation details of the different specialised committees. A. Audit committees performance of duties During the year under review, the audit committee held five audit committee meetings and communication meetings and conducted seven votings by correspondence. The audit committee considered the following issues: the arrangement of audit duties, the periodical financial reports, proposal on profit appropriation, the appointment of audit firm, opinions on the management of audit firm, appropriation for and write-off of diminution in value, guarantee issues, establishment of an internal control system, etc, standardization of

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financial and accounting basic tasks. The audit committee also communicated with the auditors several times. The audit committee actively performed its audit duties in 2010. Since the end of the year under review, the audit committee held two more meetings and communication meetings, supervised the auditors to strictly follow the audit schedule in order to ensure the audit could be completed as planned, reviewed the financial statements and provided feedback. It also considered and approved the appointment of auditors, internal control self-assessment report. The audit committee concluded the audit performed by KPMG Huazhen Certified Public Accountants in 2010 as follows: 1. Preparation before auditing i. Determination of audit schedule It took four months from pre-auditing, which commenced at the beginning of November 2010, up till the completion of preliminary auditing for the 2010 audit. Details of the work schedule are as follows: 1) November to December 2010: Pre-audit to perform pre-audit of new acquisitions, new markets and selected regions based on their importance in 2010; 2 10 January 2011: Started performing their audit in China Vankes office. On 25 February, the first draft of the 2010 Auditors Report was presented to the audit committee for review; and final draft of the Auditors Report was presented on 4 March. ii. Review of not-yet audited financial statements Before the auditors came in, the audit committee had reviewed, with due diligence, the financial statements prepared by the Company and provided their opinions in writing. 2. Audit process Starting from 10 January 2011, KPMG sent five different teams (for Shenzhen Region, Shanghai Region, Beijing Region, other areas and the Group as a whole) to perform audit for the Companys headquarters and its subsidiaries. During the auditing process, the audit committee supervised and made written requests to requested KPMG to arrange its audit work according to the audit work schedule, in order to ensure that the audit completed on time. On 25 February 2011, KPMG submitted to the audit committee the 2010 Auditors Report and special remarks on China Vanke Co., Ltd.s Internal Control Self-Assessment Report (2010). On 4 March 2011, the Board meeting approved this item and the on-site audit performed by KPMG for the Companys 2010 audit completed. 3. Audit results KPMG has issued its unqualified opinion for the 2010 Auditors Report and special remarks on China Vanke Co., Ltd.s Internal Control Self-Assessment Report (2010). The audit committee is of the opinion that the audit performance of KPMG on the Companys 2010 financial statements is satisfactory. The audit committee resolved to propose to the Board for approval the re-appointment of KPMG Huazhen Certified Public Accountants to audit the Companys 2011 financial statements according to the PRC and international accounting standards, and to present the internal control audit report according to the requirements of the regulatory bodies. B. Remuneration and nomination committees performance of duties During the year under review, the remuneration and nomination committee held three meetings. The committee discussed and reviewed the adjustment to the remuneration and incentive package, revised the measures for administration of internal subscription for housing by staff, A-share stock option incentive plan (draft) and remuneration of senior management staff. The committee had maintained regular contact with the management and held several debriefing sessions where the management reported their work. C. Investment and decision-making committees performance of duties

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During the year under review, the investment and decision-making committee maintained regular contact with the management, fully understanding the Boards acquisition of projects within their scope of authority and convened several communication meetings to discuss the development of new projects and related matters on financing. 9. Profit Appropriation and Dividend Distribution Proposal The Companys profit appropriation and dividend distribution was based on the Companys profit available for appropriation. Details on the profit available for appropriation of the Group and the Company in 2010 according to PRC Accounting Standards for Business Enterprises are as follows:
Unit: RMB The Group Profit available for appropriation after taxation Include: Net profit for 2010 Profit available for appropriation at the beginning of the year Allocation of dividend for 2009 15,320,149,201.99 7,283,127,039.15 8,808,398,744.05 The Company 3,097,103,376.12 3,083,108,153.24 785,371,804.09

-769,664,715.26 -769,664,715.26 *The significant difference between the profit of the Company and consolidated profit of the Group is attributable to the cost method used for recording investment in subsidiaries after the adoption of Accounting Standards for Business Enterprises 2006. The appropriations made by the subsidiaries legal persons to their statutory surplus reserve according to the Company Law were retained in the subsidiaries and the subsidiaries profit for the year has yet to be appropriated to the Company.

According to the relevant rules and requirements of the Companys Articles of Association, and considering shareholders interests and the Companys development needs in the long run, the Board of Directors submitted to the shareholders meeting the following profit appropriation proposal for the year 2010: 1. to appropriate 10 per cent of the net profit of the Company to statutory surplus reserve; 2. to appropriate 50 per cent of the net profit of the Company to discretionary surplus reserve; 3. to appropriate 40 per cent of the net profit of the Company and the unappropriated profit of last year for dividend distribution fund; The allocation of the profit available for appropriation for the year 2010 is as follows:
As a percentage of the Companys net profit for the year 100% 10% 50% 40% Unit: RMB As a percentage of the Companys consolidated net profit for the year 42.33% 4.23% 21.17% 16.93% -

The Company Net profit of 2010 Transfer to statutory surplus reserve Transfer to discretionary surplus reserve Transfer to 2010 dividend distribution fund Profit available for appropriation at the beginning of the year Distribution of cash dividend for 2010 Retained profit for appropriation for the following financial year 3,083,108,153.24 308,310,815.32 1,541,554,076.62 1,233,243,261.30 15,707,088.83 1,099,521,021.80 149,429,328.33

The Companys distribution of cash dividends for the past three years:
Unit: RMB As a percentage As a percentage of Consolidated profit available for of the net profit the consolidated net Year attributable to profit attributable to appropriation for the Company the year the Company 2009 769,664,715.26 2,874,475,278.28 5,329,737,727.00 26.78% 14.44% 10,964,255,202.76 2008 549,760,510.90 1,582,019,762.35 4,033,170,027.89 34.75% 13.63% 7,370,792,808.42 2007 687,200,638.70 1,727,621,268.51 4,844,235,494.21 39.78% 14.19% 5,026,288,447.07 Accumulated cash dividend in the past 3 years as a percentage to the 42.37% average consolidated net profit of past three years Cash dividend (before tax) Net profit attributable to the Company Consolidated net profit attributable to the Company

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Dividend distribution proposal: A cash dividend of RMB1.0 (before tax) will be distributed for every 10 existing shares held. Based on the total share capital of 10,995,210,218 shares as at 31 December 2010, the total amount of cash dividends for distribution for 2010 will be RMB1,099,521,021.80. 10. Media for Disclosure of Information The Company has chosen China Securities Journal, Securities Times, Shanghai Securities News and an English media in Hong Kong as media for disclosure of information. IX. Report of Supervisory Committee 2010 marked the year where the Sixth Supervisory Committee completed its mission and the Seventh Supervisory Committee began its new tenure. During the year under review, the Supervisory Committee performed their duties with due diligence, safeguarded the interests of the Company, shareholders and staff, in accordance with the requirements of the Company Law, the Articles of Association, and the relevant regulations of the Company. The major duties of the Supervisory Committee are as follows: 1. Supervisory Committee Meetings and Resolutions of Such Meetings In 2010, a total of five meetings were held by the Supervisory Committee. The details of the meetings and resolutions are as follows: (1) The Thirteenth Meeting of the Sixth Supervisory Committee was held on 26 February 2010. The meeting considered and approved the resolution regarding the appropriation and write-off of the provision for diminution in asset value for the year 2009; the audited financial report for the year 2009; the special remarks on the deposit and use of the proceeds raised from previous fund-raising exercises during 2009; special remarks on the use of proceeds raised from previous fund-raising exercises; the internal control selfassessment report for the year 2009; the proposal on profit appropriation and dividend distribution for the year 2009; the report of the Supervisory Committee for the year 2009; the Companys 2009 annual report; the resolution regarding the appointment of certified public accountants for the year 2010; the resolution regarding the amendment of the Companys Articles of Association and the resolution regarding the nomination of candidates for the Seventh Supervisory Committee nomination of Ding Fuyuan and Wu Ding as candidates for Shareholders Representative Supervisor and submission of such nomination to the shareholders meeting for consideration; and the resolution regarding the convention of the 2009 Annual General Meeting. (2) The 2010 Annual General Meeting held on 23 March 2010 elected Ding Fuyuan and Wu Ding as Shareholders Representative Supervisors who together with Mr Zhou Qingping, who was elected by democratic election by the Companys Staff Committee as the Staff Representative Supervisor, formed the Seventh Supervisory Committee. On the same day, the First Meeting of the Seventh Supervisory Committee elected Ding Fuyuan as chairman of the Seventh Supervisory Committee. (3) The Second Meeting of the Seventh Supervisory Committee was held on 23 April 2010. The meeting considered and approved the Companys 2010 first quarterly report and financial statements. (4) The Third Meeting of the Seventh Supervisory Committee was held on 9 August 2010. The meeting considered and approved the resolution regarding the Companys 2010 interim report, its summary and financial statements; the resolution regarding the proposals of no dividend distribution and transfer of capital surplus reserve to share capital for the 2010 interim period. (5) The Fourth Meeting of the Seventh Supervisory Committee was held on 21 October 2010. The meeting considered and approved the Companys 2010 Third Quarterly Report and establishment of the A-Share Stock Option Incentive Scheme For Year 2010 2. Inspection Tours by the Supervisory Committee To strengthen control over internal risks, the Supervisory Committee, in line with the Companys internal control development, conducted inspections in various aspects and further intensified inspection of frontline companies. During the year under review, the Supervisory Committee examined the Articles of Association, sales, financial items, etc, as well as conducted inspection tours of companies in

57

different cities. Through training, on-site investigation, individual interviews, group meetings, concluding debriefing, the Supervisory Committee had inspected and supervised the risk control in various aspects of the core business, discipline of management staff, implementation of the Companys development strategy, and protection of employees interests.
The Supervisory Committee also arranged inspection tours for certain directors to companies in Chengdu, Xian, etc. During the tours, they focused on examiniation of these companies financial situation, development of major projects, progress of implementation of business plans, protection of employees interests, participation in public welfare activities, thereby gaining a thorough understanding of the operation and development of the Company in different cities. 3. Independent Opinions of the Supervisory Committee on Certain Issues of the Company (1) Statutory compliance: During the year, members of the Supervisory Committee attended every Board meeting, supervised the Companys operation through reviewing reports, examination of various items and on-site inspection. The Supervisory Committee is of the opinion that the Companys decision-making process had been regulated, internal control effective and corporate governance structure further improved. In 2010, the directors and senior management team of the Company diligently carried out their duties, and none of their acts had violated the law, regulations, the Companys Articles of Association, nor had they prejudiced the Companys, shareholders and employees interests. The Supervisory Committee had reviewed the Companys internal control self-assessment report for the year 2010 and was of the view that the report reflected the actual situation of the Companys corporate governance and internal control and therefore had no objection to it. (2) Financial monitoring: During the year under review, the Supervisory Committee diligently performed its duty of monitoring the Companys financial situation and provided audited opinions to each regular report. The Supervisory Committee is of the opinion that the financial report reflects a true and accurate view on the Companys financial position and operating results. The auditors report issued on the Companys annual financial report by KPMG Huazhen Certified Public Accountants is objective and non-biased. (3) Use of proceeds from fund raising exercises: Through reviewing financial statements, inspecting investment projects, etc, the Supervisory Committee had tracked and inspected the use of proceeds raised from the subsequent offer of A shares in 2007. The Supervisory Committee is of the opinion that the proceeds had been used appropriately and the actual investment amount in various projects were in line with the amount undertaken in the prospectus. (4) Stock incentive plan: In 2010, the Supervisory Committee oversaw the implementation of Phase One Restricted Stock Incentive Plan, and examined the procedures for drafting the Companys 2010 Stock Option Plan, its contents and beneficiaries of the plan, and is of the opinion that the requirements set for determining a qualified beneficiary are legal and effective. (5) Major asset acquisitions and disposals as well as connected transactions: In 2010, the Company did not have any major asset acquisitions and disposals, nor any connected transactions. (6) The Supervisory Committee noticed that the Companys headquarters streamlined management and simultaneously strengthened its workforce in 2010. Class One departments shrank from 15 at the end of 2009 to 11; the number of employees was trimmed from 289 at the end of 2009 to 175. Such strategy not only produced outstanding results, but also provided many high calibre persons to front-line companies. After the achievement of a RMB100 billion sales, the Company gears itself up for new challenges in 2011.The new session of the Supervisory Committee will, as the previous sessions, continue to expand its scope of work, be active in response, and fully leverage its capacity to effectively safeguard shareholders interest. X. Significant Events 1. Material Litigation and Arbitration During the year under review, the Company did not involve in any material litigation or arbitration. 2. Major Acquisition and Disposal of Assets During the year under review, the Company did not have any major acquisition and disposal of assets. 58

3. Major Connected Transactions During the year under review, the Company did not have any major connected transactions. 4. Stock Incentive Plan A. Implementation of Phase One Restricted Stock Incentive Plan

As the incentive plan for year 2007 under Phase One Restricted Stock Incentive Plan did not meet the condition for stock price performance target, the termination of the incentive plan was confirmed in the announcement dated 5 January 2010. All of the 46,551,761 Vanke A shares held by the incentive plan for year 2007 were sold on the secondary market within the tradable window period. The total amount of funds, together with the accrued interest, under the incentive plan for year 2007, in an aggregate amount of RMB468,728,083.89 was transferred to the Companys designated account during the reporting period. Termination of the implementation of the incentive plan for year 2007 was completed. The implementation of Phase One Restricted Stock Incentive Plan had completed.
B. Implementation of A-Share Stock Option Incentive Scheme For Year 2010 To increase shareholder interests orientation, to create a comprehensive, long-term incentive mechanism, and to enhance corporate governance, the Company announced on 25 October 2010 the A-Share Stock Option Incentive Scheme For Year 2010 (Draft) after it was considered by the Twelfth Meeting of the Fifteenth Board. The relevant plan is still subject to CSRCs filing for record without dispute and submission to a shareholders meeting for consideration and approval. 5. Major Contracts and Their Implementation (1) During the year under review, the Company was not entrusted with and did not sub-contract or lease any material assets from other companies, nor were any material assets of the Company put under the custodial management of, subcontracted or leased by other companies. (2) Details on the new guarantees made by the Company during the year under review are as follows:
No. Guarantor (% of equity interest held by China Vanke ) Chengdu Vanke Real Estate Co., Ltd. (100%) Company for which guarantee was granted (% of equity interest held by China Vanke ) Chengdu Yihang Vanke Binjiang Real Estate Development Co., Ltd. (49%) Guarantee amount Remarks Provided a guarantee in proportion to the Companys equity holding (15%) for a bank loan of RMB130 million Provided a guarantee in proportion to the Companys equity holding (51%) for a letter of guarantee of RMB34.023 million Provided a guarantee in proportion to the Companys equity holding (15%) for a bank loan of RMB90 million Guarantee Period From 16 March 2010 to 21 December 2012

RMB19.50 million

Zhejiang Vanke Nandu Real Estate Co., Ltd. (100%)

Hangzhou Wan Kun Property Co., Ltd. (51%)

RMB17,352,000

From 30 June 2010 to 30 December 2011

Chengdu Vanke Real Estate Co., Ltd. (100%)

Chengdu Yihang Vanke Binjiang Real Estate Development Co., Ltd. (49%)

RMB13.50 million

From 18 August 2010 to 21 December 2012 From 27 September 2010 to the 30 days after the date of completion of initial registration of the ownership of the public facilities included in the redevelopment project that are transferred to the government From 10 November 2010 to 9 May 2012

Shenzhen Vanke Real Estate Co., Ltd. (100%)

Shenzhen Guangshengrong Investment Co., Ltd. (90%)

RMB8,692,550

Provided a counter guarantee for a letter of guarantee of RMB8,692,550 for fulfillment of contract

Beijing Company (100%)

Vanke Limited

Changchun Vanke Jingcheng Real Estate Development Co., Ltd. (10%)

RMB993 million

Provided a guarantee for a loan of RMB993 million

59

Shenzhen Vanke Real Estate Co., Ltd. (100%) China Vanke Co., Ltd. Shenzhen Vanke Real Estate Co., Ltd. (100%)

Shanghai Vanke Real Estate Co., Ltd. (100%) Shenzhen Vanke Real Estate Co., Ltd. (100%) Shanghai Vanke Real Estate Co., Ltd. (100%)

RMB800 million

RMB120 million

RMB800 million

Provided a guarantee for a loan of RMB800 million Provided a counter guarantee for a letter of guarantee of RMB120 million for fulfillment of contracts Provided a guarantee for a loan of RMB800 million

From 16 November 2010 to 5 November 2012 From 25 November 2010 to 1 September 2012 From 10 December 2010 to 7 December 2012

During the year under review, the new amount of guarantees (including counter guarantees) made by the Company and its subsidiaries was RMB2,772 million, and the amount of guarantees withdrawn was RMB800 million. As at the end of the year under review, the outstanding amount of guarantees made by the Company was RMB3,213 million, accounting for 7.26 per cent of the Companys net assets. The outstanding amount of guarantees made by the Company and its majority-owned subsidiaries for other majority-owned subsidiaries was RMB2,172 million, the outstanding amount of guarantees made by the Company and its majority-owned subsidiaries for associated and joint venture companies was RMB1,041 million. As at the end of the year under review, the Company and its majority-owned subsidiaries did not have any external guarantees. During the year under review, the Company did not provide guarantee for shareholders, beneficial controller and its connected parties, nor did it, directly or indirectly, provide guarantee for companies with an assets/liabilities ratio exceeding 70 per cent. (3) During the year under review, the Company did not have any entrustment of financial management. (4) For details on the projects acquired by the Company during the year under review, please refer to Project investment under the Use of capital not from the capital market section. 6. 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 year under review, the Company, in strict compliance with the related rules, regulated its external guarantee activities in order to control risks. There was no violation against the Notice regarding the regulation of external guarantees by listed companies. The Companys guarantees had been made to meet its production and operational needs and the requirements for reasonable use of capital. The procedures for the determination of providing guarantees are legal and reasonable, without prejudice to the interests of the Company and its shareholders.
7. Implementation of the undertakings given by the Company or shareholders holding 5% or more of the equity interests in the Company CRNC the parent company of CRC, being the Companys 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 Companys development, and that it would remain impartial in the event of any competition between the investment projects of the Company and that of CRNC and its subsidiaries, and in the event of any disagreements or disputes arising from horizontal competition. CRNC had fulfilled its undertaking. 8. Interaction with investors In 2010, the Company maintained close contact with its investors. During the year, the Company received close to 600 investor visits, participated in 68 large-scale investor meetings organized by both domestic and international corporations. The Company also organised 4 investor meetings and 2 online presentations. In addition, via telephone and e-mail, the Company communicated with and gathered opinions from investors,

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as well as disseminated information about the Company. Trust had been built between the Company and its investors. In 2010, the Company was named among the 10 Best IR Companies by Nanjing University and Research Centre for Investor Relations Management of Listed Companies in China. The Company was named the Most Sustainable Listed Company in Chinas Securities Market in the Past 20 Years and Investors Most Favourite Listed Company, while the Companys secretary to the Board was awarded Chinas Best Value Creation IR Award in a selection organized by the Centre for Research on the Market Value Management in Chinese Listed Companies, China Securities Journal, Shanghai Securities News and Securities Times. In the Top 100 Most Valuable Listed Companies on the Main Board in China selection organized by Securities Times, the Company was named among the Top 100 Most Valuable Listed Companies in China, while the Companys secretary to the Board was named among the Top 100 Secretaries to the Board of Listed Companies on the Main Board in China. Details on the Companys investor meetings in 2010:
Type of meeting Date Location Approach Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Classification of visitors Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, individual investors, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Issues discussed and information provided (I) Major issues discussed: (1) The Companys daily operations; (2)The Companys development strategies; (3)The Companys opinion on the changes in the industry. (II) Major information provided: Published information including the Companys regular reports.

China Jianyin Investment Securities meeting China Galaxy Securities meeting Deutsche Bank meeting UBS meeting HSBC meeting Annual results presentation CLSA meeting Credit Suisse Securities meeting BNP meeting Daiwa Securities meeting Credit Suisse Securities meeting Macquarie meeting Daiwa Securities meeting Deutsche Bank meeting Morgan Stanley meeting BOC International meeting CLSA meeting Shenjin Wanguo meeting Great Wall Securities meeting

2010.1 2010.1

Shenzhen

Beijing 2010.1 2010.1 2010.1 Beijing Shanghai Hong Kong Hong Kong, Shenzhen Shanghai, Beijing Hong Kong Hong Kong 2010.3 2010.3 2010.3 Hong Kong 2010.4 2010.4 Hong Kong 2010.5 2010.5 2010.5 Qingdao 2010.5 2010.5 Hong Kong 2010.5 Beijing Shanghai Singapore Hong Kong Hong Kong Hong Kong Tokyo

2010.3 2010.3 2010.3

61

UBS meeting China Jianyin Investment Securities meeting Essence Securities meeting JP Morgan meeting Everbright Securities meeting Guosen Securities meeting Changjiang Securities meeting Credit Suisse Securities meeting Guotai Junan meeting CITIC Securities meeting BNPmeeting Credit Suisse Securities meeting CLSA meeting CITIC Securities meeting Interim results presentation Credit Suisse Securities meeting BNP meeting Shenjin Wanguo meeting Guotai Junan meeting Nomura Securities meeting CITIC Securities meeting UBS meeting CLSA meeting BNP meeting Goldman Sachs meeting Merrill Lynch meeting Morgan Stanley meeting

2010.5 2010.5

Huhhot

Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting

Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, individual investors, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including funds, etc Investors including funds, etc Investors including funds, etc Investors including funds, etc Investors including funds, etc Investors including funds, etc securities companies, securities companies, securities companies, securities companies, securities companies, securities companies,

Shanghai 2010.6 Beijing 2010.6 Beijing Shenzhen

2010.6 2010.6

Shenzhen 2010.6 Yichang 2010.6 Shanghai 2010.6 Qingdao Qingdao 2010.7 2010.7 2010.7 Hong Kong 2010.7 Hong Kong Shenzhen 2010.7 Hong Kong, Shenzhen Shanghai, Beijing Hong Kong 2010.8 2010.8 Beijing 2010.8 Shenzhen Tokyo 2010.9 Dongguan 2010.9 2010.9 2010.9 2010.10 2010.11 2010.11 2010.11 Hong Kong Hong Kong Guilin Beijing Beijing Singapore Hong Kong Hong Kong

2010.8 2010.8

Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting

62

Qilu Securities meeting Shenjin Wanguo meeting CLSA meeting Samsung Securities meeting Macquarie meeting Everbright Securities meeting China Galaxy Securities meeting Huatai United Securities meeting Guangfa Securities meeting Standard Chartered meeting China Merchants Securities meeting China Jianyin Investment Securities meeting Essence Securities meeting CITIC Securities meeting HuaChuang Securities meeting Guosen Securities meeting Haitong Securities meeting

2010.11 2010.11

Shanghai Sanya

Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting

Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc

2010.11 2010.11

Hong Kong Guangzhou

2010.11 2010.12

Hong Kong Beijing

2010.12 Beijing 2010.12 Shenzhen 2010.12 Shenzhen 2010.12 Hong Kong 2010.12 Shenzhen 2010.12 Shenzhen 2010.12 Shenzhen 2010.12 Guilin 2010.12 Shenzhen 2010.12 Beijing 2010.12 Shanghai

Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting Face to Face Meeting

Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc Investors including securities companies, funds, etc

Note: The above-mentioned meetings included one-on-one meetings, small group meetings and large group presentation. The Company received or met with investors from over 50 companies. Shenjin Wanguo, CLSA, South West Securities, Citi, Huatai United Securities, Changjiang Securities, UBS, CICC, Bohai Securities, Daiwa Securities, Everbright Securities, China Galaxy Securities, Credit Suisse Securities, Essence Securities, China Jianyin Investment Securities, ABN Amro Bank, JP Morgan, Merrill Lynch, RBS, Morgan Great Wall Securities, Securities During Shenzhen, Small group Stanley, companies the year Guangzhou, or one-on- Mitsubishi UFJ Securities, Goldman Sachs Gaohua, CITIC Securities, under Dongguan, one Guangfa Securities, CSC Securities, review Foshan, Nomura Securities, Deutsche Bank, Zhongshan, Macquarie, Hong Kong First Shanghai Zhuhai, Xiamen, Securities Co., Ninjing Securities, Fuzhou,Changsha, Computershare, Meiwa Securities Haikou, Sanya, Co.,Ltd, 82 Securities Co., Ltd, CEBM Shanghai. Nanjing, Suzhou, Hangzhou, Wuxi, Ningbo, Beijing, 63 Tianjin, Shenyang, Dalian, Anshan,

Chongqing, Xian, Kunming etc.

Funds and other investment companies and individual investors

During the year under review

Shenzhen, Guangzhou, Dongguan, Foshan,, Zhongshan, Zhuhai, Xiamen, Fuzhou,Changsha, Haikou, Sanya, Shanghai, Nanjing, Suzhou, Hangzhou, Wuxi, Ningbo, Beijing, Tianjin, Shenyang, Dalian, Anshan, Changchun, Qingdao, Wuhan, Chengdu, Chongqing, Xian, Kunming etc.

Small group or one-onone

Group Ltd., Nikko Cordial Securities Inc., Orient Securities, Qilu Securities, Master Link Securities, Daewoo Securities, Guosen Securities, Guotai Junan, Sinolink Securities, KGI Securities, Huatai Securities, BNP, Piper Jaffray Asia Securities Limited, Phillip Securites Group, DBS Vickers, Aviate Global, Auerbach Grayson, Samsung Securities, and Yuanta Securities, CIMB, Keefe, Bruyette & Woods etc. China AMC, Taikang Life, Yinhua Fund, China Universal Fund, First-Trust Fund, China Merchants Fund, Penghua Fund, Bank of Communications Schroders Fund, Cephei Investment, CCB Principal Asset Management, E Fund, Congrong Investment, Rongtong Fund, Bosera Fund, Hanwha Securities Co., Ltd, Fullgoal Fund, BOCGI, China Taiping Insurance, Fuh Hwa Securities Investment Trust, Franklin Templeton Sealand Fund, SYWG BNP Paribas Asset Management, Fortune SGAM Fund, Allianz Fund, Zeal Asset Management Limited, Shanghai Hao Tong Investment Consulting Co., Ltd, Shenzhen Huize Zhangfu Iinvestment consulting Co, Perry Capital, Government of Singapore Investment Corporation Pte Ltd, Harvest Fund, Changsheng Fund, Invesco Great Wall Fund, Wanjia Asset Management, Manulife Teda Fund, Orient Securities Asset Management Company Limited, Tianhong Fund, Orient Fund, Southern Fund, Fortis Haitong Fund, Hua An Fund, Huashang Fund , ING Fund, Capital Fund, Sinopac Sitc Fund, HSBC Fund, Invesco Great Wall Fund, Fubon Fund, Shin Kong Life Insurance, Mercuries Life Insurance, TransGlobe Life, KDB bank, Japan Taiyo Life Insurance Company, Great Wall Fund, Lion Fund, Baoying Fund, Changjiang Pension, Shanghai Fortune Investment Co.,Ltd., Avenue Capital, Caxton Associates, GSI Management Limited, Wellington, University of Pennsylvania, Orange Capital, Merchant GatesLaSalle Investment Management, Deutsche Asset Management, T. Rowe Price International, JF Asset Management, Martin Currie Investment Management, Grand River Investments, First State Investments, Oaktree Capital Management, Western Asset Management, Keefe Bruyette & Woods, Mitsubishi UFJ Asset Management, Ballie Gifford, Duquesne Capital Mgt, Pyrford International, Christensen, Pictet Asset Management, Goldman Sachs Principal Strategies, Chugoku Bank, Robeco, Clairvoyance Capital, Morgan Stanley Asset Mgt, AllianzBerstein, Weitz Funds, Partner Funds, Tiger Asia Asset, Hamblin Watsa, Henderson TR Pacific, One Investment & Trinity Street, Jupiter, State Teachers Retirement System of Ohio, Broad Peak Investment Advisers Pte Ltd., BT Investment

64

Management, GMO, Invesco Hong Kong Limited, GLG Partners, Capital research, NPJ Asset Management, Algebris, Lazard Asset Management, Mondrian,Baring Assets, Abu Dhabi Investment Authority, Chuo Mitsui Investment,BSI Generale,DBS AM,HT Capital,PHEIM,Chilton Investment Company,The Blackstone Group,Cadwalader, Wickersham & Taft,William McAree Investment Partners,TT International,Boyer Allan,Noondays,Moore Capital,Buenavista Fund,Bennelong Asset Management,Harvest Global Investments,Standard Life Investments,Blue Ridge Capital LLC,Baillie Gifford,Penta,Spinner Asset Management,Tuboron Partners,Highbridge,AMP,Perpetual,OchZiff,Trivest,Prudential,Waddell & Reed,NSSF,BOC Group Life Assurance,EMIC,JTM Capital Partners,Tudor Investments Corporation,Tantallon Capital,Resolution Capital,Colonial First State,Cathay Life,Kingdon Capital,Neuberger Berman,Mount Kellett Capital,Sumitomo Mitsui Asset,Clough Capital Partners, Absolute Asia Asset Management,Pedder Capital,Legatum,DWS Investment,APG Asset Management,TCW Capital,Hillhouse,AEW Global,Lone Pine Capital,AB Growth,Argyle Street,28 Holdings,Target AM,Meridian AM,Joho Capiatl,Genesis Investment Management Ltd,Overlook Investment Inc,Rexiter,Threadneedle, Alpine Woods Capital,Azimut,Presima Inc,Alkeon Capital,APG Asset Management,Fullerton Fund Management, etc, Noonday Asset Management, Equinox Partners, Highbridge, LaSalle, Primero Asset Mgmt, Pacific Eagle, UOB AM, DBS Asset Mgmt, Winnington, VL AM, Nomura Asset Management, Emerging Markets Management L.L.C., Value Partners, Public Mutual Investment Management, FrontPoint Partners, William Blair, Marsico Capital Mgmt., Mason Capital Mgmt LLC, RHG Capital LP, WRA Invs LLC, Brandes Investment Management, Maverick Capital, RCM Asia Pacific, Keywise, Brevan Howard, SunAmerica, Blackrock, Thornburg Investment, Northern Trust, AP3, Franklin Templeton, Mapple Brown Abbott, Perennial Value, ING Investment Management, EXANE, DEXIA, SANDERSON AM, PIONEER, BRUMMER, SAC GLOBAL, NEW JERSEY INVESTMENT, DIAM Asset Mgmt, GE Capital Management, Brown University Asset Management, Ward Ferry Management Ltd, TY Advisor, Newport Asia LLC, US Steel Corp, Moore Capital, and Third Avenue Management, etc.

65

9.Corporate bonds and related matters The Shenzhen Branch of China Construction Bank Corporation (authorised by the headquarters) provided an unconditional and irrevocable joint liability guarantee for the full payment of the principal and interest of the secured corporate bonds, 08 Vanke G1, issued by the Company. During the year under review, the guarantor continued to be profitable, with sound assets structure, and there was no significant change in its credit status. During the year under review, the Company paid the second-year interest on 08 Vanke G1 and 08 Vanke G2. Pursuant to the tracked ratings of the Companys bonds by China Chengxin Securities Rating Co., Ltd ( ), 08 Vanke G1 and 08 Vanke G2 were rated AAA and AA+ respectively. The Companys overall corporate credit rating was AA+, and the rating outlook was raised from stable to positive. During the year under review, the Company had maintained a good credit standing. Citic Securities Co., Ltd., the trustee of the Companys corporate bonds, is 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. 10.Other investments 10.1 Investment of securities No. 10.2 Equity interests held in other listed companies
Booked value as at the end of the year under review 143,600.00 143,600.00 Gains/(losses) during the year under review 43,480,910.81 44,208,569.16 28,385,052.13 116,074,532.10 Changes in equity attributable to equity holders during the year under review (61,866,882.60) (40,907,808.62) (32,361,871.93) (135,136,563.15)

Stock code 000001 600697 600680 600751 Total

Stock abbreviation Shenzhen Development Bank Co., Ltd A Changchun Eurasia Group Co., Ltd Shanghai Potevio Co., Ltd. SST Tianjin Marine Shipping Co., Ltd.

Initial investment amount 143,600.00 143,600.00

Percentage of shareholdings 0.04% -

Note:1. The above-mentioned equity interests are legal person shares of the Company over the years. Up till now, the SST Tianjin Marine Shipping Co., Ltd has not undergone share reform; 2. During the year under review, all equity interests held in Shenzhen Development Bank Co., Ltd A, Changchun Eurasia Group Co., Ltd, and Shanghai Potevio Co., Ltd. by the Company were disposed. Gains from the disposal of the equity interests have been recognised as investment income.

10.3 Shareholding of non-listed financial corporations and companies planning for listing No. 10.4 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) agreement to hedge floating rate foreign currency loan. Remarks on risk analysis and management of derivative The Company would charge the counterparty an interest positions during the year under review (including but not according to a floating rate, in order to pay the floating-rate limited to market risk, liquidity risk, credit risk, operational interest to the original lender, while paying a fixed rate to the counterparty. risk and legal risk, etc.) In terms of the time limit and amount of foreign currency loan, IRS limited the risk of fluctuations of interest rate through fixed forward rate.

66

Change in market price or fair value of the derivatives The effect of the change in the IRS value on the Companys invested during the year under review, as well as the profit or loss during the year under review amounted to method, related assumptions and parameters used to RMB(15,054,493.43). The value of the IRS was determined analyse the fair value of derivatives should be disclosed based on the fair value assessed on 31 December 2010 Remarks on whether there has been a material change in the accounting policy and accounting measurement principles for the Companys derivatives during the year under review Nil as compared with those of the previous reporting year The Companys independent directors are of the view that Special advice on derivative investment and risk control by financial instruments such as IRS prevent the possible loss associated with foreign currency loan in the event of significant independent directors, sponsors or financial advisors fluctuations in interest rate. The relevant arrangement of the Company has been prudent and reasonable.

Derivative positions as at the end of the year under review Unit: RMB000
Contract Contract amount as at the end of the Contract amount amount as at the Profit/loss during the year as a percentage of the as at the end of the Type of contracts year under review beginning of the Companys net assets as at the end of year year 2010 (%) Interest rate swap 462,610.55 1,249,109.39 -15,054.49 2.82 (IRS) agreement 462,610.55 1,249,109.39 -15,054.49 2.82 Total

11. Was there any use of the Companys funds by the controlling shareholder and other related parties for non-operation purpose? There had not been any use of the Companys funds by the controlling shareholder and other related parties for non-operation purpose. 12. Appointment and termination of certified public accountants The 2009 Annual General Meeting resolved to confirm the appointment of KPMG Huazhen Certified Public Accountants as the Companys auditors for the year 2010. The following table shows the details on the appointment of the certified public accountants of the Company:

2010

Audited item The Groups consolidated financial statements prepared in accordance with the PRC Accounting Standards for Business Enterprises The Groups consolidated financial statements prepared in accordance with the IFRS

Auditor

Audit fee

Year of service

2009 Auditor Audit fee

KPMG Huazhen Certified Public Accountants

10 years
RMB7,350,000.00

KPMG Huazhen Certified Public RMB6,800,000.00 Accountants

18 years

The above-mentioned audit fee included the travelling expenses incurred during the auditing period. 13. There was no disciplinary action taken against the Company nor its Directors, members of Supervisory Committee and senior management during the year under review XI. Chronology of 2010

67

On 4 February 2010, the Company, Shanghai Environment Energy Exchange and China Quality Certification Centre entered into an agreement, pursuant to which a voluntary emission reduction scheme of China Vanke Pavilion at the Shanghai World Expo was launched. China Vanke Pavilion became the first pavilion to engage in voluntary emission reduction at the World Expo.

On 26 March 2010, the charity and enviromantal-friendly event Everest 2010 promoted by China Vankes Charity Foundation together with Tencents Charity Foundation was officially launched.
On 29 March 2010, the Company and the Ministry of Housing and Urban-Rural Development of the PRC entered into a strategic cooperation framework agreement to jointly promote a low-carbon development for the housing industry. On 19 April 2010, the five pavilions from Guangdong, including China Vanke Pavilion, Guangdong Pavilion, Guangzhou Pavilion, Shenzhen Pavilion and Chaofu Pavilion, together held a ribbon-cutting ceremony at the Shanghai Expo Park. 2049ChinaVanke Pavilion was ready to welcome its first group of visitors. On 22 May 2010, all the climbers who chose the South Col route to complete the Everest 2010 expedition, including Mr Wang Shi, reached the summit of Mount Everest. A flag of Shanghai World Expo was brought to the top of the mountain. 20 September 2010 was China Vanke Pavilion Day at Shanghai World Expo. On 26 November 2010, the Company, Beijing Municipal Commission of Housing and Urban-Rural Development and the government of Fangshan District entered a strategic cooperation framework agreement regarding the construction of a green-architecture theme park in Beijing city. On 3 December, 2010, the Company made an announcement regarding sales. As at 1 December 2010, the accumulated sales amount of the Company in 2010 amounted to RMB100.06 billion and China Vanke became the first residential property developer in China with a sales amount exceeding RMB100 billion. XII. Financial Report

68

China Vanke Co., Ltd.

31 December 2010

69

Independent auditors report to the shareholders of China Vanke Co., Ltd.

(Established as a joint stock company in the Peoples Republic of China with limited liability)

We have audited the accompanying consolidated financial statements of China Vanke Co., Ltd. (the Company) and its subsidiaries (together with the Company referred to as the Group), which comprise the consolidated statement of financial position as at 31 December 2010, and the consolidated income statement and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Managements responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

70

Independent auditors report to the shareholders of China Vanke Co., Ltd. (continued)
(Established as a joint stock company in the Peoples Republic of China with limited liability)

Opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2010, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

Certified Public Accountants 8th Floor, Tower E2, Oriental Plaza 1 East Chang An Avenue Beijing, Peoples Republic of China 4 March 2011

71

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated income statement for the year ended 31 December

(Expressed in Renminbi Yuan)
Note Revenue Cost of sales Gross profit Other income Distribution expenses Administrative expenses Other expenses Results from operating activities Finance income Finance costs Net finance costs Share of profits less losses of associates Share of profits less losses of jointly controlled entities Profit before income tax Income tax expense Profit for the year Attributable to: Owners of the Company Non-controlling interests Profit for the year Basic and diluted earnings per share 15 7,283,127,039 1,556,483,466 8,839,610,505 0.66 5,329,737,727 1,100,269,812 6,430,007,539 0.48 13(a) 12 21 22 9 8 2010 2009

47,763,550,428 46,047,893,250 (29,528,521,373) (34,056,087,552) 18,235,029,055 404,359,936 (2,079,092,849) (1,881,498,927) (112,130,581) 11,991,805,698 263,313,108 (1,513,716,870) (1,472,764,647) (173,102,051)

10

14,566,666,634 9,095,535,238 -------------------- -------------------787,638,332 (1,103,140,985) 503,223,726 (847,616,939)

(315,502,653) (344,393,213) -------------------- -------------------135,391,172 156,311,874 14,542,867,027 (5,703,256,522) 8,839,610,505 392,250,939 149,609,924 9,293,002,888 (2,862,995,349) 6,430,007,539

The accompanying notes form part of these consolidated financial statements.

72

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated statement of comprehensive income for the year ended 31 December

(Expressed in Renminbi Yuan)
Note Profit for the year Other comprehensive income (after tax and reclassification adjustments) 14 Foreign currency translation differences - foreign operations Net change in fair value of available-for-sale financial assets Total comprehensive income for the year Attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year 7,289,704,340 1,556,483,466 8,846,187,806 5,392,108,575 1,100,269,812 6,492,378,387 2010 2009

8,839,610,505 6,430,007,539 -------------------- --------------------

113,410,847

(586,681)

(106,833,546) 62,957,529 -------------------- -------------------8,846,187,806 6,492,378,387

The accompanying notes form part of these consolidated financial statements.

73

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated statement of financial position at 31 December

(Expressed in Renminbi Yuan)
Note Assets Property, plant and equipment Investment properties Construction in progress Interest in associates Interest in jointly controlled entities Other financial assets Deferred tax assets Other non-current assets Non-current assets Inventories Properties held for development Properties under development Completed properties for sale Trade and other receivables Financial derivatives Cash and cash equivalents and pledged deposits Current assets Total assets Equity Share capital Reserves Awarded Shares purchased for the Employees Share Award Scheme Equity attributable to owners of the Company Non-controlling interests Total equity 30 31 36 10,995,210,218 33,237,466,573 44,232,676,791 10,353,522,851 10,995,210,218 26,866,813,259 (486,135,416) 37,375,888,061 8,032,624,393 26 27 27 27 28 17 18 19 21 22 23 24(a) 25 1,625,695,230 129,176,195 764,282,141 1,035,875,902 3,374,074,020 488,565,309 1,643,158,028 1,055,992,715 1,469,262,036 228,143,158 593,208,234 709,512,280 2,763,877,398 255,622,796 1,265,649,479 2010 2009

10,116,819,540 7,285,275,381 -------------------- -------------------93,090,534 49,314,694,209 78,982,068,164 5,290,716,117 34,370,341,244 37,816,932,912 59,998,046 43,259,163,354 41,872,964,957 5,311,972,269 17,235,320,841 740,471 23,001,923,831

29

205,867,843,180 130,742,083,769 -------------------- -------------------215,984,662,720 138,027,359,150

54,586,199,642 45,408,512,454 -------------------- --------------------

The accompanying notes form part of these consolidated financial statements.

74

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated statement of financial position at 31 December (continued)

(Expressed in Renminbi Yuan)
Note Liabilities Loans and borrowings Deferred tax liabilities Other non-current liabilities Provisions Non-current liabilities Loans and borrowings Financial derivatives Trade and other payables Current tax liabilities Current liabilities Total liabilities Total equity and liabilities 32 34 13(c) 32 24(b) 33 35 30,611,643,798 1,086,104,338 8,816,121 41,107,323 23,296,534,102 1,221,268,786 8,408,145 34,355,815 2010 2009

31,747,671,580 24,560,566,848 -------------------- -------------------16,783,690,787 15,054,493 106,138,344,681 6,713,701,537 8,628,670,478 55,244,411,867 4,185,197,503

129,650,791,498 68,058,279,848 -------------------- -------------------161,398,463,078 92,618,846,696 -------------------- -------------------215,984,662,720 138,027,359,150

Approved and authorised for issue by the board of directors on ) ) ) ) )

Directors

The accompanying notes form part of these consolidated financial statements.

75

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated statement of changes in equity Year ended 31 December 2010

(Expressed in Renminbi Yuan)

Attributable to equity shareholders of the Company Employee share-based compensation reserve 473,226,067 Awarded shares purchased for Employees Share Award Scheme (486,135,416) -

Note Balance at 1 January 2010 Changes in equity in 2010: Transfer of retained earnings 31(a) Dividend to owners of the Company 16 Dividends to non-controlling interests Capital injections from non-controlling interests of subsidiaries Non-controlling interests arising from acquisitions of non-wholly owned subsidiaries Equity settled share-based transactions 36 Acquisitions of non-controlling interests Disposals of non-controlling interests Other movement in non-controlling interests Total comprehensive income for the year Balance at 31 December 2010

Share capital 10,995,210,218 -

Share premium 8,826,644,405 -

Foreign exchange reserve 276,721,079 -

Statutory reserves 8,737,841,437 1,849,864,892 -

Revaluation reserve 107,604,654 -

Other reserves (363,623,127) -

Retained earnings 8,808,398,744 (1,849,864,892) (769,664,716) -

Total 37,375,888,061 (769,664,716) -

Non-controlling interests 8,032,624,393 (1,022,809,351) 900,024,038

Total equity 45,408,512,454 (769,664,716) (1,022,809,351) 900,024,038

10,995,210,218

8,826,644,405

113,410,847 390,131,926

10,587,706,329

473,226,067

(106,833,546) 771,108

(17,407,332) (130,267,112) (511,297,571)

(1,711,866) 7,283,127,039 13,470,284,309

486,135,416 -

467,016,218 (130,267,112) 7,289,704,340 44,232,676,791

1,504,670,237 (305,717,961) (318,921,473) 7,169,501 1,556,483,467 10,353,522,851

1,504,670,237 467,016,218 (435,985,073) (318,921,473) 7,169,501 8,846,187,807 54,586,199,642

The accompanying notes form part of these consolidated financial statements. 76

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated statement of changes in equity For the year ended 31 December 2009
(Expressed in Renminbi Yuan)
Attributable to owners of the Company Employee share-based compensation reserve 473,226,067 Awarded shares purchased for Employees Share Award Scheme (1,250,040,934) -

Note Balance at 1 January 2009 Changes in equity in 2009: Transfer of retained earnings 31(a) Dividend to owners of the Company 16 Dividends to non-controlling interests Capital injections from non-controlling interests of subsidiaries Non-controlling interests arising from acquisitions of non-wholly owned subsidiaries Equity settled share-based transactions 36 Other movement in non-controlling interests Acquisitions of non-controlling interests Total comprehensive income for the year Balance at 31 December 2009

Share capital 10,995,210,218 -

Share premium 8,826,644,405 -

Foreign exchange reserve 277,307,760 -

Statutory reserves 6,581,984,978 2,155,856,459 -

Revaluation reserve 44,647,125 -

Other reserves (241,332,344) -

Retained earnings 6,184,277,987 (2,155,856,459) (549,760,511) -

Total 31,891,925,262 (549,760,511) -

Non-controlling interests 6,926,624,219 (135,528,732) 829,084,667

Total equity 38,818,549,481 (549,760,511) (135,528,732) 829,084,667

10,995,210,218

8,826,644,405

(586,681) 276,721,079

8,737,841,437

473,226,067

62,957,529 107,604,654

(143,249,210) 20,958,427 (363,623,127)

5,329,737,727 8,808,398,744

763,905,518 (486,135,416)

620,656,308 20,958,427 5,392,108,575 37,375,888,061

65,659,742 (20,751,055) (732,734,260) 1,100,269,812 8,032,624,393

65,659,742 620,656,308 (20,751,055) (711,775,833) 6,492,378,387 45,408,512,454

The accompanying notes form part of these consolidated financial statements. 77

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated statement of cash flows for the year ended 31 December

(Expressed in Renminbi Yuan)
Note Cash flows from operating activities Cash received from customers Cash generated from other operating activities Cash paid to suppliers Cash paid to and for employees Cash paid for other taxes Cash used in other operating activities Cash generated from operations PRC Corporate Income Tax paid Land Appreciation Tax paid Net cash generated from operating activities Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired Formation of equity-accounted investees Acquisition of other investments Acquisition of property, plant and equipment and construction in progress Proceeds from disposals of subsidiaries, net of cash disposed of Proceeds from disposal of property, plant and equipment Proceeds from sales of investments Interest received Dividends received Net cash used in investing activities 88,119,694,493 57,595,333,546 2,976,047,157 1,889,792,191 (66,645,895,260) (34,560,212,562) (1,848,827,752) (1,197,521,165) (4,557,884,632) (3,466,498,213) (10,982,177,870) (7,936,728,231) 7,060,956,136 (3,030,580,597) (1,793,120,088) 12,324,165,566 (2,088,636,153) (982,178,093) 2010 2009

2,237,255,451 9,253,351,320 --------------------- ---------------------

315,779,459 (1,407,601,113) (776,246,945) (261,938,551)

(2,975,942,928) (942,738,623) (634,728,868) (806,062,158) 119,164,800 142,450,545 210,421,894 304,714,390 392,060,351

(1,065,359,615) 462,242 282,454,288 353,021,647 367,769,278

(2,191,659,310) (4,190,660,597) --------------------- ---------------------

The accompanying notes form part of these consolidated financial statements.

78

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Consolidated statement of cash flows (continued) for the year ended 31 December
(Expressed in Renminbi Yuan)
2010 Cash flows from financing activities Capital injections from non-controlling interests of subsidiaries Proceeds from loans and borrowings Repayment of loans and borrowings Dividends and interest paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of exchange rate fluctuations on cash held Cash and cash equivalents at 31 December 2009

1,979,021,435 829,084,667 27,070,090,551 20,731,516,741 (11,985,374,652) (21,640,510,970) (4,039,207,572) (2,948,745,658) 13,024,529,762 (3,028,655,220) -------------------- -------------------13,070,125,903 22,002,774,938 24,034,575 35,096,935,416 2,034,035,503 19,978,285,930 (9,546,495) 22,002,774,938

The accompanying notes form part of these consolidated financial statements.

79

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Notes to the consolidated financial statements

(Expressed in Renminbi Yuan)

Reporting entity
China Vanke Co., Ltd (the Company) is a company domiciled in the Peoples Republic of China (the PRC). The consolidated financial statements of the Company for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the Group and individually as Group entities) and the Groups interests in associates and jointly controlled entities. The Group is primarily involved in the development and sale of properties in the PRC (see note 8).

2
(a)

Basis of preparation
Statement of compliance The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRSs). The consolidated financial statements were authorised for issue by the Companys board of directors on 4 March 2011.

(b)

Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

derivative financial instruments are measured at fair value; available-for-sale financial assets are measured at fair value.

(c)

Functional and presentation currency The consolidated financial statements are presented in Renminbi Yuan, which is the Groups functional currency.

80

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

2
(d)

Basis of preparation (continued)

Use of estimates and judgements The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes:

Notes 17, 18 and 19 depreciation and/or impairment of property, plant and equipment, investment properties and construction in progress Note 27 write down of properties Note 28 impairment of trade debtors and other receivables Note 43 accounting estimates and judgements

Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities except as explained in note 4, which addresses changes in accounting policies.

(a) (i)

Basis of consolidation Business combinations The Group has changed its accounting policy with respect to accounting for business combination. See note 4(ii) for further details.

(ii)

Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interest in a subsidiary are allocated to the non-controlling interests even if doing so causes the noncontrolling interests to have a deficit balance.

81

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(a) (iii)

Significant accounting policies (continued)

Basis of consolidation (continued) Acquisitions from entities under common control Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are revised. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholders consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity except that any share capital of the acquired entities is recognised as part of share premium. Any cash paid for the acquisition is recognised directly in equity.

(iv)

Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v)

Investment in associate and jointly controlled entity (equity-accounted investees) Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Investments in associates and jointly controlled entities are accounted for using the equity method (equity-accounted investees) and are recognised initially at cost. The cost of the investment includes transaction costs. The consolidated financial statements include the Groups share of the profit or loss and other comprehensive income, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Groups share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

(vi)

Jointly controlled operations A jointly controlled operation is a joint venture carried on by each venturer using its own assets in pursuit of the joint operations. The consolidated financial statements include the assets that the Group controls and the liabilities that it incurs in the course of pursuing the joint operation, and the expenses that the Group incurs and its share of the income that it
82

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

earns

from

the

joint

operation.

83

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(a) (vii)

Significant accounting policies (continued)

Basis of consolidation (continued) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Groups interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(viii) Goodwill Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill at initial recognition, see note 4(ii). Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of equityaccounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted investee. (b) (i) Foreign currency Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity investments, which are recognised in other comprehensive income. Foreign currency differences arising on retranslation are recognised in profit or loss. (ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Renminbi at exchange rate at the end of the reporting period. The income and expenses of foreign operations are translated to Renminbi at exchange rates at the dates of the transactions.

84

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(b) (ii)

Significant accounting policies (continued)

Foreign currency (continued) Foreign operations (continued) Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

(c) (i)

Financial instruments Non-derivative financial assets The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group classifies non-derivative financial assets into the following categories: loans and receivables and available-for-sale financial assets.

85

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(c) (i)

Significant accounting policies (continued)

Financial instruments (continued) Non-derivative financial assets (continued) Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recongnised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise cash and cash equivalents, and trade and other receivables. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the above categories of financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3(h)(i)), are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. Available-for-sale financial assets comprise equity securities and debt securities.

(ii)

Non-derivative financial liabilities The Group initially recognises debt securities issued on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other financial liabilities comprise loans and borrowings, and trade and other payables.

(iii)

Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

86

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(c) (iv)

Significant accounting policies (continued)

Financial instruments (continued) Derivative financial instruments Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised in the profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair values, and changes therein are recognised immediately in profit or loss. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.

(d) (i)

Property, plant and equipment Recognition and measurement Hotel and other properties held for own use, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs (see note 3(m)). Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net within other income/other expenses in profit or loss.

(ii)

Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

87

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(d) (iii)

Significant accounting policies (continued)

Property, plant and equipment (continued) Depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. The estimated useful lives for the current and comparative years are as follows: Estimated residual value as a percentage of costs 0%-4% 4% 4% 4%

Year Hotel and other buildings Improvements to premises Plant and machinery Furniture, fixtures and equipment Motor vehicles 12.5 - 70 5 years or over terms of leases 5 - 10 5 - 10 5

Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period and adjusted if appropriate. (e) Investment properties Investment properties are property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of land use rights, materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs (see note 3(m)). (f) Construction in progress Construction in progress represents items of property, plant and equipment under construction and pending installation, and is stated at cost less impairment losses (see note 3(h)(ii)). Cost comprises cost of materials, direct labour and capitalised borrowing costs (see note 3(m)). Capitalisation of those costs ceases and the construction in progress is transferred to property, plant and equipment, as appropriate, when the asset is substantially ready for its intended use. No depreciation is provided in respect of construction in progress.

88

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(g)

Significant accounting policies (continued)

Leased assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognised in the Groups consolidated statement of financial position. The Group has changed its accounting policy with respect to accounting for leases of land. See note 4(iv) for further details except where the property is held for development, under development or completed and held for sale (see notes 3(j) and 3(k)).

(h) (i)

Impairment Non-derivative financial assets A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. Loans and receivables The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant loans and receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics. In assessing collective impairment the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for managements judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

89

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(h) (i)

Significant accounting policies (continued)

Impairment (continued) Non-derivative financial assets (continued) An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the assets original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. Available-for-sale financial assets Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity, to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in impairment provisions attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

(ii)

Non-financial assets The carrying amounts of the Groups non-financial assets, other than properties held for development, properties under developments, completed properties for sale, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. 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 or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
90

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(h) (ii)

Significant accounting policies (continued)

Impairment (continued) Non-financial assets (continued) The Groups corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i)

Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(j)

Properties under development and properties held for development Properties under development are stated at the lower of cost and net realisable value. The cost of properties under development and properties held for development comprise specifically identified cost, including the acquisition cost of land, aggregate cost of development, materials and supplies, wages and other direct expenses, an appropriate proportion of overheads and capitalised borrowing costs (see note 3(m)). Net realisable value represents the estimated selling price less the estimated costs of completion and the estimated costs to be incurred in selling the properties.

91

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(k)

Significant accounting policies (continued)

Completed properties for sale Completed properties for sale are stated at the lower of cost and net realisable value. Cost is determined by apportionment of the total development costs for that development project attributable to the unsold properties. Net realisable value represents the estimated selling price less the estimated costs to be incurred in selling the properties. The cost of completed properties for sale comprises all costs of purchase, costs of conversion and other costs incurred in bringing completed properties for sale to their present location and condition. When properties are sold, the carrying amount of those properties is recognised as an expense in the period in which the related revenue is recognised. The amount of any writedown of properties to net realisable value and all losses of properties are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of properties is recognised as a reduction in the amount of properties recognised as an expense in the period in which the reversal occurs.

(l)

Revenue recognition Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows: (i) Sale of properties Revenue from the sale of completed properties for sale is recognised upon the signing of the sale and purchase agreement and the receipt of the deposits pursuant to the sale and purchase agreement or the achievement of status ready for hand-over to customers as stipulated in the sales and purchase agreements, whichever is the later. Deposits and instalments received on properties sold prior to the date of revenue recognition are included in the consolidated balance sheet under sales deposits received in advance. (ii) (iii) Provision of services Revenue from services is recognised when services are rendered. Construction contracts Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue is recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity. The stage of completion is assessed by reference to surveys of work performed. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

92

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(l)

Significant accounting policies (continued)

Revenue recognition (continued) (iv) Rental income Rental income from investment properties is recognised in profit or loss on a straightline basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from subleased property is recognised as other income. (v) Interest income Interest income is recognised as it accrues using the effective interest method. The above revenue is net of the relevant taxes and is after the deduction of any trade discounts. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(m)

Borrowing costs Borrowing costs are expensed in profit or loss in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

(n)

Employee benefits Short term employee benefits and contributions to defined contribution retirement plans Salaries, annual bonuses, paid annual leave and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. The Groups contributions to defined contribution retirement plans administrated by the PRC government are recognised as an expense when incurred according to the contribution defined by the plans.

93

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(o)

Significant accounting policies (continued)

Income tax Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that

is not a business combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries and jointly controlled entities

to the extent that it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

94

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(p)

Significant accounting policies (continued)

Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, and demand deposits with banks. Bank overdrafts that are repayable on demand and form an integral part of the Groups cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

(q)

Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(r)

Related parties For the purposes of the consolidated financial statements, a party is considered to be related to the Group if: (i) the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group; the party is an associate of the Group or a joint venture in which the Group is a venturer; the party is a member of key management personnel of the Group, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals; the party is close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or the party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group.

(ii) (iii)

(iv) (v)

Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the Group.

95

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

3
(s)

Significant accounting policies (continued)

Earnings per share The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

(t)

Operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. All operating segments operating results are reviewed regularly by the Groups most senior executive management to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. Segment results that are reported to the most senior executive management include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Groups headquarters), head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

4
(i)

Changes in accounting policies

Overview From 1 January 2010, the Group has changed its accounting policies in the following areas:
Accounting for business combinations Adoption of IAS 27 Consolidated and Separate Financial Statements (2008) Accounting for leases of land

(ii)

Accounting for business combinations From 1 January 2010 the Group has applied IFRS 3 Business Combinations (2008) in accounting for business combinations. The change in accounting policy has been applied prospectively and has had no material impact on earnings per share. Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

96

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

4
(ii)

Changes in accounting policies (continued)

Accounting for business combinations (continued) For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business

combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and

liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of preexisting relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. For acquisitions before 1 January 2010, goodwill represents the access of the cost of acquisition over the Groups interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of acquisition. (iii) Adoption of IAS 27 Consolidated and Separate Financial Statements (2008) As a result of the adoption of IAS 27 (amended 2008), the following changes in policies will be applied as from 1 January 2010: If the Group acquires an additional interest in a non-wholly owned subsidiary, the transaction will be accounted for as a transaction with equity shareholders (the non-controlling interests) in their capacity as owners and therefore no goodwill will be recognised as a result of such transactions. Similarly, if the Group disposes of part of its interest in a subsidiary but still retains control, this transaction will also be accounted for as a transaction with equity shareholders (the non-controlling interests) in their capacity as owners and therefore no profit or loss will be recognised as a result of such transactions. Previously the Group treated such transactions as step-up transactions and partial disposals, respectively.

97

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

4
(iii)

Changes in accounting policies (continued)

Adoption of IAS 27 Consolidated and Separate Financial Statements (2008) (continued) If the Group loses control of a subsidiary, the transaction will be accounted for as a disposal of the entire interest in that subsidiary, with any remaining interest retained by the Group being recognised at fair value as if reacquired. Previously such transactions were treated as partial disposals. In accordance with the transitional provisions in IAS 27, these new accounting policies will be applied prospectively to transactions in current or future periods and therefore previous periods have not been restated.

(iv)

Accounting for leases of land From 1 January 2010 the Group has applied the amendment to IAS 17 Leases (the Amendment). The change in accounting policy has been applied retrospectively but has had no impact on earnings per share. Under the new accounting policy, except where the property is held for development, under development or completed and held for sale (see notes 3(j) and 3(k)), if a lease of land transfers substantially all of the risks and rewards incidental to ownership of the land to the lessee, then the lease is a finance lease; otherwise it is an operating lease.

Determination of fair values

A number of the Groups accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (i) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. (ii) Property, plant and equipment, lease prepayment, investment properties, construction in progress, properties held for development, properties under development and completed properties for sale The fair value of property, plant and equipment, lease prepayment, investment properties, construction in progress, properties held for development, properties under development and completed properties for sale is based on market values. The market value of these properties is the estimated amount for which an item could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably and willingly. The fair value of items of property, plant and equipment, lease prepayment, investment properties, construction in progress, properties held for development, properties under development and completed properties for sale is based on the quoted market prices for similar items when available and replacement cost when appropriate.

98

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Determination of fair values (continued)

(iii) Investments in debt and equity securities The fair value of listed available-for-sale financial assets is determined by reference to their quoted closing bid price at the reporting date without any deduction for transaction costs. There is no quoted market price in an active market for the unlisted equity and debt securities and thus their fair value cannot be reliably estimated.

Acquisitions of subsidiaries
(a) Pursuant to an equity transfer agreement dated 29 December 2009, the Group acquired a 51% equity interest in Yongtaiyouxin Property Development Co., Ltd (Yongtaiyouxin) at a consideration of about RMB 20 million. Yongtaiyouxin is principally engaged in property development and sale. The acquisition was completed on 1 March 2010. (note) (b) Pursuant to an equity transfer agreement dated 5 March 2010, the Group acquired a 51% equity interest in Guiyang Vanke Jingjia Real Estate Co., Ltd. (Guiyangjingjia) at a consideration of about RMB 5 million. Guiyang Jingjia is principally engaged in property development and sale. The acquisition was completed on 22 March 2010. (note) (c) Pursuant to an equity transfer agreement dated 26 February 2010, the Group acquired a 100% equity interest in Kunming Xinhemin North Town Real Estate Co Ltd (Xinhemin) at a consideration of about RMB 306 million. Xinhemin is principally engaged in property development and sale. The acquisition was completed on 26 February 2010. (note) (d) Pursuant to an equity transfer agreement dated 1 March 2010, the Group acquired a 75% equity interest in Shanghai Zhongfang Binjiang Real Estate Co., Ltd (Zhongfang Binjiang) at a consideration of about RMB 152 million. Zhongfang Binjiang is principally engaged in property development and sale. The acquisition was completed on 26 March 2010. After the acquisition, the company holds a 100% equity interest in Zhongfang Binjiang.(note) (e) Pursuant to an equity transfer agreement dated 27 August 2009, the Group acquired a 90% equity interest in Shenzhen Guangshengrong Investment Co., Ltd (Guangshengrong) at a consideration of RMB 45 million. Guangshengrong is principally engaged in investment holding. The acquisition was completed on 5 February 2010. (f) Pursuant to an equity transfer agreement dated 30 December 2009, the Group acquired a 60% equity interest in Shenzhen Hechenghongye Investment Development Company Limited (Hechenghongye) at a consideration of RMB 6 million. Hechenghongye is principally engaged in investment holding. The acquisition was completed on 21 January 2010. (g) Pursuant to an equity transfer agreement dated 28 December 2009, the Group acquired a 95% equity interest in Tianjin Eco-city Wanhong Property Company Limited (Tianjin Eco-city) at a consideration of about RMB 29 million. Tianjin Eco-city is principally engaged in property development and sale. The acquisition was completed on 18 January 2010. (note)
99

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Acquisitions of subsidiaries (continued)

(h) Pursuant to an equity transfer agreement dated 4 May 2010, the Group acquired a 25% equity interest in Dalian Vanke Charming City Property Development Company Limited (Charming) at a consideration of about RMB 99 million. Charming is principally engaged in property development and sale. The acquisition was completed on 30 June 2010. After the acquisition, the Company holds a 55% equity interest in Charming. (note) (i) Pursuant to an equity transfer agreement dated 25 February 2010, the Group acquired a 65% equity interest in Shenzhen Julongwan Investment Development Company Limited (Julongwan) at a consideration of about RMB 7 million. Julongwan is principally engaged in investment holding. The acquisition was completed on 1 May 2010. (j) Pursuant to an equity transfer agreement dated 1 May 2010, the Company acquired a 51% equity interest in Zhuhai Wanrun Property Development Company Limited (Wanrun) at a consideration of about RMB 3 million. Wanrun is principally engaged in property development and sale. The acquisition was completed on 20 May 2010. (note) (k) Pursuant to an equity transfer agreement dated 8 April 2010, the Company acquired a 80% equity interest in Shenzhen Jinhui Property Development Co., Ltd (Shenzhen Jinhui) at a consideration of RMB 24 million. Shenzhen Jinhui is principally engaged in property development and sale. The acquisition was completed on 6 May 2010. (note) (l) Pursuant to an equity transfer agreement dated 14 April 2010, the Company acquired a 100% equity interest in Shenzhen Jiuzhou Property Development Co Ltd (Shenzhen Jiuzhou) at a consideration of about RMB 98 million. Shenzhen Jiuzhou is principally engaged in property development and sale. The acquisition was completed on 20 April 2010. (note) (m)Pursuant to an equity transfer agreement dated 30 December 2009, the Group acquired a 60% equity interest in Shenzhen Wanlianjia Investment Development Company Ltd. (Wanlianjia) at a consideration of RMB 600,000. Wanlianjia is principally engaged in property development and sale. The acquisition was completed on 17 June 2010. (note) (n) Pursuant to an equity transfer agreement dated 8 January 2010, the Group acquired a 100% equity interest in Citi Victory Limited (Citi Victory) at a consideration of HKD 1,000. Citi Victory is principally engaged in investment holding. The acquisition was completed on 8 January 2010. (o) Pursuant to an equity transfer agreement dated 8 January 2010, the Group acquired a 100% equity interest in Full Act Limited (Full Act.) at a consideration of HKD 1,000. Full Act. is principally engaged in investment holding. The acquisition was completed on 8 January 2010. (p) Pursuant to an equity transfer agreement dated 8 January 2010, the Group acquired a 100% equity interest in Gain Honour Limited (Gain Honour) at a consideration of HKD 1,000. Gain Honour is principally engaged in investment holding. The acquisition was completed on 8 January 2010.
100

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Acquisitions of subsidiaries (continued)

(q) Pursuant to an equity transfer agreement dated 13 October 2009, the Group acquired a 51% equity interest in Dongguan Zhongwan Property Development Co., Ltd (Zhongwan) at a consideration of RMB 510,000. Zhongwan is principally engaged in property development and sale. The acquisition was completed on 1 January 2010. (note) (r) Pursuant to an equity transfer agreement dated 11 September 2010, the Group acquired a 78% equity interest in Changsha Lihe Property Development Co., Ltd. (Lihe) at a consideration of about RMB 5 million. Lihe is principally engaged in property development and sale. The acquisition was completed on 11 September 2010. (note) (s) Pursuant to an agreement with partners to make amendments to the Article of Association of Shenyang Vanke Yongda Property Development Co., Ltd. (Yongda) dated 18 October 2010, the Group obtained control in Yongda. Yongda is principally engaged in property development and sale. The acquisition was completed on 18 October 2010. (note) (t) Pursuant to an equity transfer agreement dated 10 December 2010, the Group acquired a 58% equity interest in Changsha Junjie Property Development Company Limited (Junjie) at a consideration of about RMB 12 million. Junjie is principally engaged in property development and sale. The acquisition was completed on 10 December 2010. (note) (u) Pursuant to an equity transfer agreement dated 22 December 2010, the Group acquired a 100% equity interest in Qingyuan Jinlongzhengda Property Development Company Limited (Jinlongzhengda) at a consideration of about RMB 110 million. Jinlongzhengda is principally engaged in property development and sale. The acquisition was completed on 22 December 2010. (note) (v) Pursuant to an equity transfer agreement dated 3 December 2010, the Group acquired a 80% equity interest in Hainan Shibote Investment Company Limited (Shibote) at a consideration of about RMB 887 million. Shibote is principally engaged in property development and sale. The acquisition was completed on 3 December 2010. (w) Pursuant to an equity transfer agreement dated 15 December 2010, the Group acquired a 100% equity interest in Kunming Shencheng Property Development Company Ltd. (Shencheng) at a consideration of about RMB 401 million. Shencheng is principally engaged in property development and sale. The acquisition was completed on 15 December 2010. (note) (x) Pusuant to an equity transfer agreement dated 2 December 2010, the Group acquired a 100% equity interest in Beijing Tianjiayuan Property Development Company Ltd. (Tianjiayuan) at a consideration of about RMB 10 million. Tianjiayuan is principally engaged in property development and sale. The acquisition was completed on 2 December 2010. (note) Note: In the circumstances, the acquired subsidiaries major assets are properties held for development, properties under development and/or completed properties for sale. The directors consider that the purpose of acquiring those subsidiaries is solely to acquire the underlying properties.

101

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Acquisitions of subsidiaries (continued)

The acquisitions had the following effect on the Groups cash flow on acquisition dates: Considerations, satisfied in cash Cash acquired Considerations prepaid in prior years Considerations to be paid subsequent to 2010 Considerations paid in 2010 Cash paid for acquisitions in prior years Net cash inflow All subsidiaries set out above were acquired from third parties. 2,218,302,211 (1,792,379,167) (180,702,231) (627,976,689) (382,755,876) 66,976,417 (315,779,459)

Disposal of subsidiaries
(a) On 1 January 2010, the Group disposed of 100% equity interest in Xiamen Xinlu Orient Trading Company Limited to an independent party, at a consideration of RMB 194 million. On 20 May 2010, the Group disposed of 50% equity interest in Changchun Vanke Xizhigu Property Development Company Limited (Xizhigu), which was previously wholly owned by the Group, to an independent party, at a consideration of RMB 4 million. Subsequent to the transfer, Xizhigu became a jointly controlled entity of the Group. On 31 May 2010, the Group disposed of 85% equity interest in Guangzhou Yinyejunrui Property Development Company Limited (Yinyejunrui), which was previously 100% owned by the Group, to an independent party, at a consideration of RMB 47 million. Subsequent to the transfer, Yinyejunrui became an associate of the Group. On 2 December 2010, the Group disposed of 90% equity interest in Changchun Vanke Jingcheng Property Development Company Limited (Jingcheng), which was previously wholly owned by the Group, to an independent party, at a consideration of RMB 8 million. Subsequent to the transfer, Jingcheng became a jointly controlled entity of the Group. On 28 September 2010, the Group disposed of 85% equity interest in Shanghai Vanke Changning Property Development Company Limited (Changning), which was previously wholly owned by the Group, to an independent party, at a consideration of RMB 26 million. Subsequent to the transfer, Changning became an associate of the Group. On 11 Aug 2010, the Group disposed of 50% equity interest in Beijing Wanxin Investment Development Company Limited (Wanxin), which was previously wholly owned by the Group and at the disposal date held 100% equity interest in Hangzhou Dafan Investment Management Company Limited, to an independent party, at a consideration of RMB 301 million. Subsequent to the transfer, Wanxin became a jointly controlled entity of the Group.

(b)

(c)

(d)

(e)

(f)

102

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Disposal of subsidiaries (continued)

Effect of the disposal on individual assets and liabilities of the Group for the year ended 31 December 2010 Cash and cash equivalents Trade and other receivables Properties held for development, properties under development and completed properties for sales Investment properties Property, plant and equipment Other non-current assets Interest-bearing loans and borrowings Trade and other payables Equity interests not disposed of by the Group Net assets and liabilities disposed of by the Group Gain on disposal of subsidiaries Considerations received in prior years Considerations to be received subsequent to 2010 Considerations received, satisfied in cash Cash disposed of Net cash outflow 1,424,211,615 475,209,270

2,625,447,000 101,509,070 409,813 106,517,221 (993,000,000) (2,916,049,535) (325,675,386) 498,579,068 80,716,139 (160,004,500) (60,438,707) 358,852,000 (1,424,211,615) (1,065,359,615)

Operating segments
The Group manages its business by divisions, which are organised by a mixture of both business lines (products and services) and geography. In a manner consistent with the way in which information is reported internally to the Groups most senior executive management for the purpose of resource allocation and performance assessment, the Group has presented the following five reportable segments. Property development (Beijing Region / Shenzhen Region / Shanghai Region / Chengdu Region): given the importance of the property development division to the Group, the Groups 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 Groups activities in this regard are carried out in mainland China. Details about the specific cities covered by each region are set out in note 8(b). Property management services: this segment provides house-keeping services to the property development segment, as well as the external property developers. Currently the Groups activities in this regard are also carried out in mainland China.

103

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

Operating segments (continued)

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.

(a)

Segment results, assets and liabilities For the purpose of assessing segment performance and allocating resources among segments, the Groups most senior executive management monitors the results, assets and liabilities attributable to each reportable segment on the following bases: (i) Segment assets and liabilities Segment assets include all tangible, intangible assets, other investments and current assets with the exception of deferred tax assets and other corporate assets. Segment liabilities include trade creditors, accruals, loans and borrowings, and the provision for the estimated losses to be borne by the Group in relation to the property management projects with the exception of defined tax liabilities. (ii) Segment revenue and expenses Revenue and expenses are allocated to the reportable segments with reference to sales generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation or amortisation of assets attributable to those segments. (iii) Segment profit The measure used for reporting segment profit is the profit before the PRC corporate income tax expense, excluding share of profit or loss of associates or jointly controlled entities and non-operating income and expense, but including the profit arising from the inter-segment transactions. Land appreciation tax is deducted from segment profit for the review by the Groups senior executive management for it is considered directly attributable to the sale of properties. (iv) Inter-segment transactions Inter-segment sales are priced with reference to prices charged to external parties for similar transactions.

104

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

8
(a)

Operating segments (continued)

Segment results, assets and liabilities (continued)
Real Estate Development Shenzhen Region Shanghai Region (note(2)) (note(3))

Beijing Region (note(1)) For the year ended 31 December 2010 Revenue from external customers, before sales taxes Inter-segment revenue Reportable segment revenue, before sales taxes Reportable segment profit Interest income Interest expense Share of profits less losses of associates and jointly controlled entities Reportable segment assets Reportable segment liabilities

Chengdu Region (note(4))

Property Management

Total

10,324,888,304 10,324,888,304 1,969,412,177 297,871,988 274,297,333 17,015,765 53,778,086,390 43,475,617,968

16,482,194,816 16,482,194,816 4,345,328,349 90,030,365 182,362,008 (10,741,625) 52,460,609,703 40,477,188,702

19,222,902,404 19,222,902,404 5,393,578,850 137,223,646 210,000,328 196,202,992 47,129,625,040 35,914,966,655

4,132,851,367 4,132,851,367 751,640,139 53,921,874 31,512,583 7,193,474 30,539,923,831 25,736,417,392

536,494,865 552,002,057 1,088,496,922 125,798,420 2,937,734 2,318,979 1,133,295,422 1,019,282,557

50,699,331,756 552,002,057 51,251,333,813 12,585,757,935 581,985,607 700,491,231 209,670,606 185,041,540,386 146,623,473,274

105

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

8
(a)

Operating segments (continued)

Segment results, assets and liabilities (continued)
Real Estate Development Shenzhen Region Shanghai Region (note(2)) (note(3))

Beijing Region (note(1)) For the year ended 31 December 2009 Revenue from external customers, before sales taxes Inter-segment revenue Reportable segment revenue, before sales taxes Reportable segment profit Interest income Interest expense Share of profits less losses of associates and jointly controlled entities Reportable segment assets Reportable segment liabilities

Chengdu Region (note(4))

Property Management

Total

12,061,318,325 12,061,318,325 1,808,198,638 72,965,199 80,421,830 123,247,053 24,359,649,868 17,289,333,777

16,456,704,832 16,456,704,832 2,408,254,876 34,370,258 120,888,768 6,454,819 33,198,931,234 24,557,753,557

15,168,178,905 15,168,178,905 3,197,239,875 38,281,749 168,072,746 351,762,901 37,134,037,436 30,312,262,600

4,736,657,399 4,736,657,399 936,581,046 13,995,834 73,305,846 799,140 12,138,735,205 10,281,755,747

446,870,162 450,762,770 897,632,932 142,240,124 2,082,086 1,134,494 936,713,213 691,455,231

48,869,729,623 450,762,770 49,320,492,393 8,492,514,559 161,695,126 443,823,684 482,263,913 107,768,066,956 83,132,560,912

106

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

8
(b)

Operating segments (continued)

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities (continued)

2010 Revenue Reportable segment revenue Unallocated head office and corporate revenue Sales taxes Elimination of inter-segment revenue Consolidated turnover Profit Reportable segment profit Elimination of inter-segment profit Share of profits less losses of associates and jointly controlled entities Other income Other expenses, excluding provision for doubtful debts Dividend income Unallocated head office and corporate expenses Land appreciation tax Consolidated profit before taxation Assets Reportable segment assets Elimination of inter-segment receivables Unallocated head office and corporate assets Deferred tax assets Consolidated total assets Liabilities Reportable segment liabilities Elimination of inter-segment payables Unallocated head office and corporate liabilities Deferred tax liabilities Consolidated total liabilities

2009

51,251,333,813 49,320,492,393 14,519,688 11,283,521 (2,950,301,016) (2,833,119,894) (552,002,057) (450,762,770) 47,763,550,428 46,047,893,250

12,585,757,935 (957,133,667) 291,703,046 404,359,936 (40,914,385) 153,595,420 (496,615,706) 2,602,114,448 14,542,867,027

8,492,514,559 (390,445,091) 541,860,863 263,313,108 (144,826,118) 198,509,336 (343,498,849) 675,575,080 9,293,002,888

185,041,540,386 107,768,066,956 (56,191,186,937) (44,631,419,049) 85,491,151,243 73,625,061,764 1,643,158,028 1,265,649,479 215,984,662,720 138,027,359,150

146,623,473,274 83,132,560,912 (55,308,570,754) (39,100,106,359) 68,997,456,220 47,365,123,357 1,086,104,338 1,221,268,786 161,398,463,078 92,618,846,696

107

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

8
(b)

Operating segments (continued)

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities Notes: (1) (2) (3) (4) (5) Beijing region represents Beijing, Tianjin, Shenyang, Anshan, Dalian, Qingdao, Changchun, Yantai, Jilin, Taiyuan, Tangshan, Langfang and Fushun. Shenzhen region represents Shenzhen, Guangzhou, Dongguan, Foshan, Zhuhai, Zhongshan, Changsha, Xiamen, Fuzhou, Huizhou, Hainan and Qingyuan. Shanghai region represents Shanghai, Hangzhou, Sunan, Ningbo, Nanjing, Zhenjiang, Nanchang, Hefei, Yangzhou and Jiaxing. Chengdu Region represents Chengdu, Wuhan, Xian, Chongqing, Kunming, Guiyang and Urumqi. Share of profits less losses of associates and jointly controlled entities that is attributable to head office and not allocated to the respective segments is RMB 82,032,440 (2009: RMB 59,596,950).

Other income
2010 Forfeited deposits and compensation from customers Gain on disposals of subsidiaries Gain on disposals of equity-accounted investees Gain on disposals of other investments Gain on disposals of property, plant and equipment Unrealised gain on financial derivatives Other sundry income 25,074,031 80,716,139 127,868,200 124,048,435 1,021,397 45,631,734 404,359,936 2009 19,150,446 150,738,396 19,176,868 20,283,706 7,883,854 2,435,351 43,644,487 263,313,108

10

Other expenses
2010 Provision for doubtful debts Compensation to customers Donations Loss on disposals of property, plant and equipment Realised and unrealised loss on financial derivatives Penalties Other sundry expenses 71,216,196 2,819,065 14,419,165 1,211,776 15,054,493 5,080,836 2,329,050 112,130,581 2009 28,275,933 30,544,937 47,819,939 1,577,638 6,492,341 10,635,324 47,755,939 173,102,051

108

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

11

Personnel expenses
2010 Wages, salaries and other staff costs Contributions to defined contribution plans 2,238,847,211 155,987,818 2,394,835,029 2009 1,366,033,170 120,229,614 1,486,262,784

12

Finance income and finance costs

2010 Interest income Dividend income Finance income Interest expense and other borrowing costs Less: Interest capitalised Finance costs Foreign exchange loss Net finance costs 634,042,912 153,595,420 2009 304,714,390 198,509,336

787,638,332 503,223,726 -------------------- -------------------3,003,034,365 2,174,111,158 (1,877,395,535) (1,329,102,436) 1,125,638,830 845,008,722 (22,497,845) 2,608,217 -------------------- -------------------(315,502,653) (344,393,213)

Interest expense and other borrowing costs have been capitalised at an average rate of 7.6% (2009: 6.7%) per annum.

109

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

13
(a)

Taxation
Taxation in the consolidated income statement represents: 2010 Current tax PRC Corporate Income Tax Land Appreciation Tax 3,513,818,714 2,673,807,790 2009 2,086,679,824 769,460,459

6,187,626,504 2,856,140,283 -------------------- -------------------Deferred tax Fair value adjustments arising from business combinations - PRC Corporate Income Tax - Land Appreciation Tax Accrual for Land Appreciation Tax Tax losses Bad debt provision Provision for diminution in value of properties Accruals for construction costs Other temporary differences

(77,459,714) (71,693,343) (216,117,919) (206,466,350) (5,764,734) 154,318,116 (19,785,672) (41,400,366)

(83,090,710) (93,885,379) 209,408,887 (147,899,296) (9,488,406) 153,322,143 30,038,912 (51,551,085)

(484,369,982) 6,855,066 -------------------- -------------------5,703,256,522 2,862,995,349

The provision for PRC Corporate Income Tax is calculated based on the estimated taxable income at the rates applicable to each company in the Group. The income tax rates applicable to the principal subsidiaries in the PRC range between 22% and 25% (2009: between 20% and 25%). According to the China's Corporate Income Tax (CIT) Law that was passed by the Standing Committee of the Tenth National People's Congress (NPC) on 16 March 2007 and the Notice of the State Council on the Transitional Preferential Policy regarding implementation of the CIT Law (Guo Fa [2007] No.39) issued on 26 December 2007, income tax rate is revised to 25% with effect from 1 January 2008. For certain enterprises that are entitled to preferential income tax rate of 15% before the implementation of the CIT Law, the income tax rate applicable will be 18%, 20%, 22%, 24% and 25% in 2008, 2009, 2010, 2011, and 2012 and thereafter respectively. As at 31 December 2010 and 2009, deferred tax assets and liabilities are calculated based on the applicable income tax rates enacted by the NPC from 1 January 2008. Land Appreciation Tax is levied on properties developed by the Group for sale, at progressive rates ranging from 30% to 60% on the appreciation of land value, which under the applicable regulations is calculated based on the proceeds of sales of properties less deductible expenditures including lease charges of land use rights, borrowing costs and relevant property development expenditures.

110

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

13
(a)

Taxation (continued)
Taxation in the consolidated income statement represents (continued): The following is a reconciliation between tax expense and accounting profit at applicable tax rates: 2010 2009 Profit before income tax Less: Land Appreciation Tax 14,542,867,027 (2,602,114,448) 11,940,752,579 Notional tax on profit before taxation calculated at effective income tax rate of the relevant group subsidiaries concerned Non-taxable income Non-deductible expenses Recognition of previously unrecognised tax losses Effect of temporary difference not recognised Effect of change in tax rates on deferred tax in respect of current year temporary differences PRC Corporate Income Tax Land Appreciation Tax Income tax expense 9,293,002,888 (675,575,080) 8,617,427,808

2,913,273,639 (102,612,170) 223,236,055 (8,174,970) 86,633,938

2,091,230,130 (141,411,577) 180,626,272 (16,101,473) 80,843,778

(11,214,418) 3,101,142,074 2,602,114,448 5,703,256,522

(7,766,861) 2,187,420,269 675,575,080 2,862,995,349

(b)

Taxation recognised directly in equity 2010 Arising from fair value adjustments on available-for-sale securities (note 24(c)) 28,303,017 2009 (17,757,247)

111

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

13
(c)

Taxation (continued)
Current taxation in the consolidated statement of financial position represents: 2010 PRC Corporate Income Tax Land Appreciation Tax 1,677,498,217 5,036,203,320 6,713,701,537 2009 720,023,458 3,465,174,045 4,185,197,503

Land Appreciation Tax provisions have been made pursuant to Guo Shui Fa (2006) No. 187 Circular of State Administration of Taxation on Relevant Issues of Settlement and Management of Land Appreciation Tax for Real Estate Developers. The management considers the timing of settlement is dependent on the practice of local tax bureaus. As a result of the uncertainty of timing of payment of Land Appreciation Tax, the provisions have been recorded as current liabilities as at 31 December 2010 and 2009.

14
(a)

Other comprehensive income

Tax effects relating to each component of other comprehensive income
2010 Tax expense 2009 Tax benefit

Beforetax amount Foreign currency translation differences foreign operations 113,410,847 Net change in fair value of available-for-sale financial assets (135,136,563) Other comprehensive income (21,725,716)

Net-oftax amount

Beforetax amount

Net-oftax amount

- 113,410,847

(586,681)

(586,681)

28,303,017 (106,833,546) 28,303,017 6,577,301

80,714,776 80,128,095

(17,757,247)

62,957,529

(17,757,247) 62,370,848

(b)

Reclassification adjustments relating to components of other comprehensive income 2010 RMB000 Available-for sale securities: Changes in fair value recognised during the year Reclassification adjustments for amounts transferred to profit or loss: - gains on disposal Net movement in the fair value reserve during the year recognised in other comprehensive income 2009 RMB000

(14,296,524)

69,897,086

(92,537,022) (106,833,546)

(6,939,557) 62,957,529

112

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

15

Basic and diluted earnings per share

The calculation of basic and diluted earnings per share is based on the net profit for the year attributable to owners of the Company of RMB 7,283,127,039 (2009: RMB 5,329,737,727) and on the weighted average number of ordinary shares outstanding during the year of RMB 10,995,210,218 (2009: RMB 10,995,210,218) shares. There were no dilutive potential shares during the years presented above.

16

Dividends
A cash dividend of RMB 0.07 per share, resulting in a dividend payment of RMB 769,664,715 in respect of the year ended 31 December 2009 was declared and paid during the year ended 31 December 2010. A cash dividend of RMB 0.05 per share, resulting in a dividend payment of RMB 549,760,511 in respect of the year ended 31 December 2008 was declared and paid during the year ended 31 December 2009. A cash dividend of RMB 0.10 per share, resulting in a dividend payment of RMB 1,099,521,022 in respect of the year ended 31 December 2010 are to be proposed at the Companys forthcoming annual general meeting. The dividend has not been recognised as a liability at the balance sheet date.

113

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

17

Property, plant and equipment

Hotel and other buildings held for own use Cost: At 1 January 2009 Additions: - via acquisitions of subsidiaries - others Disposals At 31 December 2009 At 1 January 2010 Additions Disposals At 31 December 2010 1,274,268,771 Improvements to premises 76,140,788 Plant and machinery 26,226,836 Furniture, fixtures and equipment 180,480,657 Motor vehicles 90,150,078

Total 1,647,267,130

369,095,382 (157,500,457) 1,485,863,696 -------------------1,485,863,696 328,253,317 (128,580,968) 1,685,536,045 --------------------

8,874,508 (14,958,775) 70,056,521 -------------------70,056,521 18,673,900 (3,756,875) 84,973,546 --------------------

262,924 (284,494) 26,205,266 -------------------26,205,266 1,594,310 (620,128) 27,179,448 --------------------

1,829,457 15,328,150 (9,929,704) 187,708,560 -------------------187,708,560 26,835,907 (11,150,925) 203,393,542 --------------------

7,879,982 (9,908,872) 88,121,188 -------------------88,121,188 23,042,503 (10,354,929) 100,808,762 --------------------

1,829,457 401,440,946 (192,582,302) 1,857,955,231 -------------------1,857,955,231 398,399,937 (154,463,825) 2,101,891,343 --------------------

114

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

17

Property, plant and equipment (continued)

Hotel and other buildings held for own use Accumulated depreciation and impairment loss: At 1 January 2009 150,629,531 Additions: - via acquisitions of subsidiaries Charge for the year 44,132,194 Written back on disposals (28,034,425) At 31 December 2009 At 1 January 2010 Additions Written back on disposals At 31 December 2010 Net book value: At 31 December 2010 At 31 December 2009 166,727,300 -------------------166,727,300 59,567,105 (1,792,661) 224,501,744 -------------------1,461,034,301 1,319,136,396 Improvements to premises Plant and machinery Furniture, fixtures and equipment Motor vehicles

Total

38,650,942

9,698,874

99,458,158

58,228,694

356,666,199

5,720,427 (13,159,161) 31,212,208 -------------------31,212,208 18,387,544 (3,678,689) 45,921,063 -------------------39,052,483 38,844,313

1,368,366 (218,800) 10,848,440 -------------------10,848,440 2,103,299 (515,275) 12,436,464 -------------------14,742,984 15,356,826

630,938 26,715,773 (7,231,490) 119,573,379 -------------------119,573,379 18,498,107 (9,999,578) 128,071,908 -------------------75,321,634 68,135,181

9,897,271 (7,794,097) 60,331,868 -------------------60,331,868 13,005,762 (8,072,696) 65,264,934 -------------------35,543,828 27,789,320

630,938 87,834,031 (56,437,973) 388,693,195 -------------------388,693,195 111,561,817 (24,058,899) 476,196,113 -------------------1,625,695,230 1,469,262,036

115

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

18

Investment properties
2010 Cost: At 1 January Reclassification from completed properties for sale Disposals At 31 December Accumulated depreciation and impairment loss: At 1 January Charge for the year Written back on disposals At 31 December Net book value: At 31 December 256,641,320 15,216,622 (121,457,222) 2009 225,849,490 117,043,338 (86,251,508)

150,400,720 256,641,320 -------------------- -------------------28,498,162 5,245,393 (12,519,030) 27,454,723 7,738,355 (6,694,916)

21,224,525 28,498,162 -------------------- -------------------129,176,195 228,143,158

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 Groups investment properties, consider the estimated fair value of the investment properties to be RMB 147,471,563 (2009: RMB 258,970,079). 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 Groups total future minimum lease payments under non-cancellable operating leases are receivable as follows: 2010 2009 Within 1 year After 1 year but within 5 years After 5 years 2,737,406 6,211,900 5,354,500 14,303,806 11,881,321 45,034,409 97,352,090 154,267,820

19

Construction in progress
2010 At 1 January Additions Transferred to property, plant and equipment 593,208,234 183,514,194 (12,440,287) 764,282,141 2009 188,587,023 622,987,458 (218,366,247) 593,208,234

Construction in progress represents self-constructed office premises and owner managed hotel under construction.

116

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

20

Principal subsidiaries
Place of establishment and operation Anshan Ownership Paid in capital USD5,172,700 interest 100% Principal activities Property development

Name of company Anshan Vanke Property Development Co., Ltd. Beijing Chaoyang Vanke Property Development Company Limited Beijing Vanke Enterprises Shareholding Company Limited Beijing Vanke Property Management Company Limited Beijing Vanke Zhongliang Jiarifengjing Real Estate Development Company Limited (note) Changchun Vanke Real Estate Company Limited Changsha Vanke Property Management Company Limited Chengdu Vanke Chenghua Property Company Limited Chengdu Vanke Guanghua Property Company Limited Chengdu Vanke Guobin Property Company Limited Chengdu Vanke Huadong Real Estate Company Limited Chengdu Vanke Jinjiang Property Company Limited Chengdu Vanke Property Management Company Limited Chengdu Vanke Real Estate Company Limited Chongqing Yu Development Coral Property Company Limited Dalian Vanke City Real Property Company Limited Dalian Vanke Real Estate Development Company Limited Dongguan Songhuju Property Company Limited

Beijing

RMB200,000,000

60%

Property development

Beijing

RMB2,000,000,000

100%

Property development

Beijing

RMB22,000,000

100%

Property management

Beijing Changchun

RMB830,000,000 RMB50,000,000

50% 100%

Property development Property development

Changsha Chengdu Chengdu Chengdu Chengdu Chengdu

RMB5,000,000 RMB554,479,142 USD131,428,571 USD140,000,000 RMB77,680,000 RMB10,000,000

100% 100% 100% 60% 90% 100%

Property management Property development Property development Property development Property development Property development

Chengdu Chengdu

RMB5,000,000 RMB80,000,000

100% 100%

Property management Property development

Chongqing Dalian

RMB20,000,000 USD42,000,000

51% 55%

Property development Property development

Dalian Dongguan

RMB32,000,000 RMB10,000,000

100% 100%

Property development Property development

117

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

20

Principal subsidiaries (continued)

Place of establishment and operation Dongguan Ownership Paid in capital RMB20,000,000 interest 100% Principal activities Construction research

Name of company Dongguan Vanke Construction Research Company Limited Dongguan Vanke Property Management Company Limited Dongguan Vanke Real Estate Company Limited Dongguan Xintong Industry Investment Company Limited Dongguan Xinwan Property Development Company Limited Foshan Nanhai District Jinyulanwan Propoerty Company Limited Foshan Vanke Real Estate Company Limited Fushun Vanke Property Development Co., Ltd. Fuyang Vanke Real Estate Development Company Limited Fuzhou Vanke Real Estate Company Limited Guangzhou Pengwan Property Company Limited (note) Guangzhou Vanke Property Management Company Limited Guangzhou Vanke Real Estate Company Limited Guangzhou Wanxin Property Company Limited Guiyang Vanke Real Estate Company Limited Hainan Fuchun East Real Estate Development Company Limited Hainan Vanke Property Development Company Limited Hangzhou Liangzhu Culture Town Development Company Limited Hangzhou Liangzhu Egret Bay Holiday Hotel Company Limited Hangzhou Linlu Property Development Company Limited

Dongguan Dongguan Dongguan

RMB5,000,000 RMB20,000,000 RMB10,000,000

100% 100% 51%

Property management Property development Property development

Dongguan

RMB10,000,000

51%

Property development

Foshan Foshan Fushun

USD190,000,000 RMB80,000,000 RMB10,000,000

55% 100% 100%

Property development Property development Property development

Hangzhou Fuzhou Guangzhou

RMB300,000,000 RMB20,000,000 RMB200,000,000

100% 100% 50%

Property development Property development Property development

Guangzhou Guangzhou Guangzhou Guiyang

RMB5,000,000 RMB100,000,000 HKD760,000,000 RMB100,000,000

100% 100% 100% 100%

Property management Property development Property development Property development

Hainan

RMB20,000,000

100%

Property development

Hainan

RMB10,000,000

100%

Property development

Hangzhou

RMB30,000,000

100%

Property development

Hangzhou

RMB10,000,000

100%

Hotel services

Hangzhou

RMB170,000,000

100%

Property development

118

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

20

Principal subsidiaries (continued)

Place of establishment and operation Hangzhou Ownership Paid in capital USD66,660,000 interest 100% Principal activities Property development

Name of company Hangzhou Vanke Junyuan Property Company Limited Hangzhou Wankun Property Development Company Limited Hefei Vanke Property Company Limited Huizhou Vanke Property Company Limited Jiangsu Sunan Vanke Real Estate Company Limited Jiaxing Vanke Property Development Co., Ltd. Kunming Vanke Property Development Co., Ltd. Nanjing Hengyue Property Company Limited Nanjing Jinyu Blue Bay Property Company Limited Nanjing Vanke Property Company Limited Ningbo Jiangbei Vanke Property Development Company Limited Ningbo Vanke Real Estate Company Limited Qingdao Da Shan Real Estate Development Company Limited Qingdao Vanke Real Estate Company Limited Qingdao Vanke Yinshengtai Real Estate Development Co., Ltd Qingyuan Hongmei Investment Company Limited Shanghai Dijie Property Company Limited (note) Shanghai Hengda Property Shareholding Company Limited Shanghai Luolian Property Company Limited. Shanghai Meilanhuafu Property Company Limited Shanghai Tianyi Property Development Company Limited Shanghai Vanke Baobei Property Company Limited Shanghai Vanke Investment Management Company Limited

Hangzhou Hefei Huizhou Suzhou Jiaxing Kunming Nanjing Nanjing Nanjing

RMB350,000,000 RMB20,000,000 RMB10,000,000 RMB30,000,000 RMB100,000,000 RMB20,000,000 RMB10,000,000 RMB90,000,000 RMB150,000,000

51% 100% 100% 100% 100% 100% 100% 100% 100%

Property development Property development Property development Property development Property development Property development Property development Property development Property development

Ningbo Ningbo

RMB675,000,000 RMB150,000,000

100% 100%

Property development Property development

Qingdao Qingdao

RMB100,000,000 RMB20,000,000

60% 100%

Property development Property development

Qingdao Qingyuan Shanghai

RMB100,000,000 RMB280,000,000 RMB20,000,000

80% 95% 50%

Property development Property development Property development

Shanghai Shanghai Shanghai

RMB141,348,200 RMB470,000,000 RMB700,000,000

99.8% 100% 100%

Property development Property development Property development

Shanghai Shanghai

RMB50,000,000 RMB10,000,000

90% 100%

Property development Property development

Shanghai

RMB204,090,000

100%

Property development

119

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

20

Principal subsidiaries (continued)

Place of establishment and operation Paid in capital Hangzhou RMB320,000,000 Ownership interest 100%

Name of company Hangzhou Vanke Property Company Limited Shanghai Vanke Property Management Company Limited Shanghai Vanke Pudong Property Company Limited Shanghai Vanke Real Estate Company Limited Shanghai Xiangda Real Estate Development Company Limited Shanxi Hualian Property Development Company Limited Shenyang Vanke Hunnan Jinyu Property Development Company Limited Shenyang Vanke Jinyu Blue Bay Property Development Company Limited Shenyang Vanke Property Management Company Limited Shenyang Vanke Real Estate Development Company Limited Shenyang Vanke Tianqinwan Property Company Limited Shenzhen Fuchun East (Group) Company Limited Shenzhen Fuchun East Real Estate Company Limited Shenzhen Longcheer Yacht Club Company Limited Shenzhen Vanke City Scenery Property Company Limited Shenzhen Vanke Daolin Investment Development Company Limited Shenzhen Vanke Financial Consultancy Company Limited Shenzhen Vanke Nancheng Real Estate Company Limited Shenzhen Vanke Property Management Company Limited Shenzhen Vanke Real Estate Company Limited Shenzhen Vanke Xingye Property Company Limited Shenzhen Vanke Xizhigu Real Estate Company Limited Suzhou Huihua Investment and Property Company Limited

Principal activities Property development

Shanghai Shanghai Shanghai

RMB12,260,000 RMB160,000,000 RMB800,000,000

100% 100% 100%

Property management Property development Property development

Shanghai

RMB1,783,000,000

75%

Property development

Xi'an

RMB367,850,000

51%

Property development

Shenyang

RMB1,022,520,258

100%

Property development

Shenyang

RMB578,150,000

100%

Property development

Shenyang

RMB10,000,000

100%

Property management

Shenyang Shenyang Shenzhen Shenzhen Shenzhen Shenzhen

RMB100,000,000 USD99,980,000 USD14,600,000 RMB158,000,000 RMB57,100,000 RMB120,000,000

100% 55% 100% 100% 100% 100%

Property development Property development Property development Property development Club service Property development

Shenzhen

RMB20,000,000

100%

Property development Investment trading and Consultancy services

Shenzhen

RMB15,000,000

100%

Shenzhen

RMB10,000,000

100%

Property development

Shenzhen Shenzhen Shenzhen Shenzhen Suzhou

RMB50,000,000 RMB600,000,000 RMB62,413,230 RMB10,000,000 RMB355,000,000

100% 100% 100% 60% 51%

Property management Property development Property development Property development Property development

120

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

20

Principal subsidiaries (continued)

Place of establishment and operation Suzhou Suzhou Beijing Ownership interest 70% 51% 100%

Name of company Suzhou Nandu Jianwu Company Limited Suzhou Vanke Zhongliang Property Company Limited Tangshan Vanke Property Development Co., Ltd. Tianjin Vanke Property Management Company Limited Tianjin Vanke Real Estate Company Limited Tianjin Vanke Xinlicheng Company Limited Tianjin Wanbin Real Estate Development Company Limited Tianjin Wanfu Investment Company Limited Tianjin Wanzhu Investment Company Limited Tianjin Zhongtian Wanfang Investment Company Limited Vanke (Chongqing) Real Estate Company Limited Vanke Property (Hong Kong) Company Limited Vanke Real Estate (Hong Kong) Company Limited Wuhan Guohao Property Company Limited Wuhan Vanke Property Management Company Limited Wuhan Vanke Real Estate Company Limited Wuhan Vanke Tiancheng Real Estate Company Limited Wuhan Wangjiadun Morden City Property Company Limited Wuxi Dongcheng Real Estate Company Limited Wuxi Vanke Real Estate Company Limited Wuxi Wansheng Real Estate Development Company Limited Xiamen Vanke Real Estate Company Limited Xi'an Vanke Real Estate Company Limited

Paid in capital RMB300,000,000 RMB230,000,000 RMB200,000,000

Principal activities Property development Property development Property development

Tianjin Tianjin Tianjin

RMB10,000,000 RMB390,000,000 RMB230,000,000

100% 100% 100%

Property management Property development Property development

Tianjin Tianjin Tianjin Tianjin Chongqing Hong Kong Hong Kong Wuhan

RMB455,000,000 RMB192,000,000 RMB20,000,000 RMB20,000,000 RMB100,000,000 USD9,500,000 HKD15,600,000 RMB10,000,000

60% 100% 100% 100% 100% 100% 100% 55%

Property development Property development Property development Property development Property development Investment Investment Property development

Wuhan Wuhan Wuhan

RMB12,000,000 RMB150,000,000 USD12,100,000

100% 100% 55%

Property management Property development Property development

Wuhan Wuxi Wuxi

RMB200,000,000 USD149,400,000 RMB300,000,000

100% 100% 60%

Property development Property development Property development

Wuxi Xiamen Xi'an

USD49,200,000 RMB50,000,000 RMB20,000,000

100% 100% 100%

Property development Property development Property development

121

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

20

Principal subsidiaries (continued)

Place of establishment and operation Wulumuqi yangzhou Taiyuan Hong Kong Yantai Hangzhou Zhenjiang Zhenjiang Zhenjiang Zhenjiang Zhuhai Ownership interest 100% 65% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Name of company Xinjiang Vanke Real Estate Company Limited Yangzhou Wanwei Property Company Limited Taiyuan Vanke Real Estate Company Limited Tander China Investment Company Limited Yantai Vanke Property Development Co., Ltd. Zhejiang Vanke Nandu Real Estate Company Limited Zhenjiang Rundu Property Company Limited Zhenjiang Runnan Property Company Limited Zhenjiang Runqiao Property Company Limited Zhenjiang Runzhong Property Company Limited Zhuhai Vanke Real Estate Company Limited Zhuhai Zhubin Property Development Company Limited

Paid in capital RMB100,000,000 RMB550,000,000 RMB20,000,000 HKD10,000 RMB30,000,000 RMB150,000,000 RMB20,000,000 RMB50,000,000 RMB10,000,000 RMB10,000,000 RMB10,000,000

Principal activities Property development Property development Property development Investment Property development Property development Property development Property development Property development Property development Property development

Zhuhai

RMB109,000,000

95%

Property development

Note: The directors consider these entities as subsidiaries of the Group as the Group has the power to govern the financial and operating policies of these entities.

21

Interest in associates
Details of the Groups principal associates at 31 December 2010 are as follows:
Place of establishment and operation Beijing Wuhan Shanghai Chengdu Hefei Ownership Paid in capital RMB190,000,000 RMB219,000,000 RMB27,000,000 RMB140,000,000 RMB101,500,000 interest 49% 49% 49% 49% 50% Principal activities Property development Property development Property development Property development Property development

Name of company Beijing Jinyu Vanke Property Development Company Limited Wuhan Golf City Gardern Real Estate Company Limited (note 1) Shanghai Nandu White Horse Real Estate Company Limited (note 1) Chengdu Yihang Vanke Binjiang Real Estate Company Limited (note 1) Hefei Yihang Vanke Real Estate Company Limited (note 2) Suzhou Zhonghang Vanke Changfeng Real Estate Company Limited(note 1) Changsha Oriental City Real Esteate Company Limited

Suzhou Changsha

RMB280,000,000 RMB20,000,000

49% 20%

Property development Property development

122

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

21

Interest in associates (continued)

Place of establishment and operation Shanghai Foshan Xiamen Guangzhou Shanghai Ownership Paid in capital RMB3,000,000 RMB600,000,000 RMB400,000,000 RMB10,000,000 RMB30,000,000 interest 30% 15% 30% 49% 45% Principal activities Property management Property development Property development Property development Property development

Name of company Shanghai Zunyi Property Management Company Limited Foshan Shunde District Zhonghang Vanke Property Company Limited Xiamen Wantefu Property Development Company Limited Guangzhou Yinyejunrui Property Development Company Limited Shanghai Jingyuan Property Development Company Limited Langfang Kuangshijiye Property Development Company Limited (note 2) Shanghai Vanke Changning Property Development Company Limited Shanghai Chongwan Property Development Company Limited Shenyang Zhongtie Vanke Langyu Property Development Company Limited (note 2) Chongqing Wanbin Property Development Company Limited

Langfang Shanghai Shanghai

USD50,000,000 RMB30,000,000 RMB10,000,000

50% 49% 49%

Property development Property development Property development

Shenyang Chongqing

RMB100,000,000 RMB40,000,000

51% 45%

Property development Property development

Notes: (1) (2) Except for the 15% equity interest held directly, the Group also hold 34% effective equity interest in these associates through a jointly controlled entity. Pursuant to the voting rights in the board of directors, the Group has significant influence in these entities.

Summary financial information for associates:

Equity attributable to parent 2,902,399,562 1,035,875,902

Assets 2010 100 per cent Groups effective interest 2009 100 per cent Groups effective interest

Liabilities

Revenue 2,132,331,659 6,802,932,796

Profit 259,959,560 135,391,172

18,944,068,998 16,041,669,436 7,936,100,353 6,900,224,451

10,271,806,802 4,220,037,527

8,013,212,222 3,510,525,247

2,258,594,580 709,512,280

7,412,023,684 2,276,229,781

1,562,276,704 392,250,939

123

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

22

Interest in jointly controlled entities

Details of the Groups principal jointly controlled entities at 31 December 2010 are as follows:
Name of company Shanghai Jialai Real Estate Development Company Limited (note 1) Zhonghang Vanke Company Limited (note 1) Dongguan Vanke Property Company limited Wuhan Vanke Qinganju Property Development Limited (note 1) Yunnan Vanke City Property Company Limited (note 2) Changsha Lingyu Real Estate Development Company Limited (note 1) Changsha Lingyu Investment Company Limited (note 1) Beijing Zhongliang Vanke Real Estate Development Company Limited (note 1) Changchun Vanke Xizhigu Real Estate Development Company Limited Shanghai Anhong Real Estate Investment Company Limited (note 1) Tianjin Diwan Investment Company Limited (note 1) Hangzhou Xiangge Investment Management Company Limited Hangzhou Dongshang Property Development Company Limited Beijing Wanxin Investment Development Company Zhuhai Haiyu Property Development Company Limited Shenzhen Haixuan Investment Development Company Limited Shenzhen Mingjue Investment Development Company Limited Changchun Vanke Jingcheng Real Estate Development Company Limited (note 1) Tianjin Songke Real Estate Company Limited Place of establishment and operation Ownership Paid in capital interest Principal activities

Shanghai Beijing Dongguan

RMB180,000,000 RMB3,000,000,000 RMB10,000,000

49% 40% 50%

Property development Property development Property development

Wuhan Kunming

RMB100,000,000 RMB10,000,000

30% 51%

Property development Property development

Changsha Changsha

RMB100,000,000 RMB100,000,000

60% 60%

Property development Property development

Beijing

RMB800,000,000

50%

Property development

Changchun

RMB50,000,000

50%

Property development

Shanghai Tianjin

RMB5,000,000 RMB39,215,700

65% 40%

Property development Property development

Hangzhou

RMB2,000,000

50%

Management advisory

Hangzhou Beijing

RMB20,000,000 RMB740,000,000

50% 50%

Property development Investment

Zhuhai

RMB63,800,000

50%

Property development

Shenzhen

RMB10,000,000

50%

Property development

Shenzhen

RMB15,000,000

50%

Property development

Changchun Tianjin

RMB230,000,000 RMB20,000,000

10% 49%

Property development Property development

124

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

22 Interest in jointly controlled entities (continued)

Notes: (1) A contractual arrangement between the Group and the counterparty of these entities establishes joint control over the financial and operating policies of these entities. (2) The Group is entitled to 50% voting right of the entity as the board of directors are appointed by the Group and the counterpart equally.

Summary of financial information for jointly controlled entities Groups effective interest 2010 Non-current assets Current assets Non-current liabilities Current liabilities Net assets Income Expenses Profit for the year 2009

1,007,854,238 413,738,553 11,412,162,663 6,212,322,249 (1,696,033,060) (82,050,000) (7,349,909,821) (3,780,133,404) 3,374,074,020 736,608,594 (580,296,720) 156,311,874 2,763,877,398 969,474,034 (819,864,110) 149,609,924

23

Other financial assets

2010 Available-for-sale securities in the PRC Equity securities - Unlisted - Listed in the PRC 2009

483,801,709 4,763,600 488,565,309

91,993,324 163,629,472 255,622,796

Unlisted equity securities include RMB 400,000,000 share of interest in an unquoted trust plan, which is measured at cost because it does not have a quoted market price in an active market and its fair value cannot be reliably measured.

125

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

24
(a)

Deferred tax assets / (liabilities)

Deferred tax assets Deferred tax assets are attributable to the items detailed as follows: 2010 Tax losses Bad debt provision Provision for diminution in value of properties Accruals for construction costs Accrual for Land Appreciation Tax Other temporary differences 496,291,102 23,576,692 1,852,014 164,906,761 791,527,641 165,003,818 1,643,158,028 Deferred tax assets have not been recognised in respect of the following items: 2010 Tax losses Deductible temporary differences 913,360,587 80,904,533 994,265,120 2009 1,006,670,048 158,420,591 1,165,090,639 2009 289,824,752 17,811,958 156,170,130 145,121,089 575,409,722 81,311,828 1,265,649,479

The tax losses expire between 2011 and 2015. 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.

126

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

24
(b)

Deferred tax assets / (liabilities) (continued)

Deferred tax liabilities Deferred tax liabilities are attributable to the items detailed as follows: 2010 Fair value adjustments on available-for-sale securities Fair value adjustments arising from business combinations Others (1,043,812,713) (42,291,625) (1,086,104,338) 2009 (28,303,017) (1,192,965,769) (1,221,268,786)

(c)

Movements in deferred taxation, net: 2010 At 1 January Transferred to consolidated income statement (note 13(a)) Recognised in other comprehensive income (note 13(b)) At 31 December 44,380,693 484,369,980 28,303,017 557,053,690 2009 68,993,006 (6,855,066) (17,757,247) 44,380,693

25

Other non-current assets

The other non-current assets mainly represent the entrusted loans and prepayments for acquisitions of equity-accounted investees.

26

Inventories
2010 Raw materials Inventories recognised as cost of sales for the year 93,090,534 14,611,519 2009 59,998,046 11,432,652

27
(a)

Properties held for development, properties under development and completed properties for sale
The analysis of carrying value of land held for property development for sale is as follows: 2010 With lease term of 50 years or more With lease term of less than 50 years 74,120,183,049 8,117,186,497 82,237,369,546 2009 56,788,947,082 3,624,287,723 60,413,234,805

127

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

27
(b)

Properties held for development, properties under development and completed properties for sale (continued)
The analysis of the amount of completed properties for sale recognised as an expense is as follows: 2010 Carrying amount of properties sold Write down of properties Reversal of write-down of properties 29,629,562,621 616,667,200 30,246,229,821 2009 34,219,897,859 150,693 (616,565,282) 33,603,483,270

The reversal of write-down of properties made in prior years arose due to an increase in the estimated net realisable value of certain properties held for development, properties under development and completed properties for sale as a result of recovery in certain regional property markets. (c) Included in properties held for development, property under development and completed properties for sale an amount of RMB 44,150 million (2009: RMB 52,736 million) is not expected to be recovered within one year.

28

Trade and other receivables

2010 Debtors and other receivables Less: allowance for doubtful debts 10,438,706,738 (196,807,448) 2009 4,381,802,497 (163,638,185)

10,241,899,290 4,218,164,312 -------------------- -------------------Amount due from associates and jointly controlled entities Less: allowance for doubtful debts 6,291,361,109 (922,620) 4,281,498,407 (661,378)

Prepaid taxes Deposits and prepayments

6,290,438,489 4,280,837,029 -------------------- -------------------4,900,760,138 1,979,482,542 -------------------- -------------------12,937,243,327 6,756,836,958 -------------------- -------------------34,370,341,244 17,235,320,841

Note: Deposits and prepayments represent deposits paid for purchasing properties held for development and prepayments to contractors for constructions. The Groups credit policy is set out in note 40(b). All of the trade and other receivables, apart from receivables of RMB 693 million (2009: RMB 806 million), are expected to be recovered within one year.

128

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

28

Trade and other receivables (continued)

Apart from the amounts due from associates and jointly controlled entities of RMB 1,843 million (2009: RMB 2,206 million) which are interest bearing at market interest rate, amounts due from associates and jointly controlled entities are interest free, unsecured and have no fixed terms of repayment. Deposits and prepayments mainly represent tendering deposits for acquisitions of land and prepayment for land and development costs of projects undertaken by the Group. Impairment of trade debtors and other receivables Impairment losses in respect of trade debtors and other receivables are recorded using an allowance account unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade debtors directly. The movements in the allowance for specific doubtful debts during the year are as follows: 2010 At 1 January Impairment loss recognised Uncollectible amounts written off At 31 December 164,299,563 71,216,196 (37,785,691) 197,730,068 2009 142,462,053 28,275,933 (6,438,423) 164,299,563

At 31 December 2010, the Groups trade debtors and other receivables of RMB 198 million, (2009: RMB 164 million) were individually determined to be impaired. The individually impaired receivables related to customers that were in financial difficulties and management assessed that only a portion of the receivables is expected to be recovered. Consequently, specific allowances for doubtful debts of RMB 198 million (2009: RMB 164 million) were recognised. The Group does not hold any collateral over these balances. Trade debtors and other receivables that are not impaired The ageing analysis of trade debtors and other receivables that are neither individually nor collectively considered to be impaired are as follows: 2010 Neither past due nor impaired Less than 1 year past due 14,703,122,236 1,829,215,543 16,532,337,779 2009 4,841,756,331 520,080,632 5,361,836,963

Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.

129

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

28

Trade and other receivables (continued)

Trade debtors and other receivable that are not impaired (continued) Receivables that were past due but not impaired relate to a number of independent debtors that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances.

29

Cash and cash equivalents and pledged deposits

2010 - Cash in hand - Deposits at banks - Other cash equivalents 1,993,017 37,809,601,086 5,338,809 37,816,932,912 2009 1,465,333 22,995,999,167 4,459,331 23,001,923,831

Cash and cash equivalents and pledged deposits consist of cash on hand and balances with banks. The balance includes deposits with banks of RMB 2,720 million (2009: RMB 999 million) and RMB 374 million (2009: RMB 403 million) unused proceeds raised in prior year share allotment with restriction for designated purposes.

30

Share capital
2010 Number of shares Registered, issued and fully paid: A shares of RMB1 each B shares of RMB1 each 9,680,254,750 1,314,955,468 Nominal value 2009 Number of shares 9,680,254,750 1,314,955,468 Nominal value

9,680,254,750 1,314,955,468

9,680,254,750 1,314,955,468

10,995,210,218 10,995,210,218 10,995,210,218 10,995,210,218

The holders of A and B share are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. There were no movement in share capital during 2009 and 2010.

130

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

31
(a)

Reserves
Statutory reserves Statutory reserves include the following items: (i) Statutory surplus reserve According to the PRC Company Law, the Company is required to transfer 10% of its profit after taxation, as determined under PRC Accounting Regulations, to statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of a dividend to shareholders. Statutory surplus reserve can be used to make good previous years losses, if any, and may be converted into share capital by the issue of new shares to equity shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by them, provided that the balance after such issue is not less than 25% of the registered capital. For the year ended 31 December 2010, the Company transferred RMB 308,310,815 (2009: RMB 287,447,528), being 10% of the Companys current years net profit as determined in accordance with the PRC accounting rules and regulations, to this reserve. (ii) Discretionary surplus reserve The appropriation to the discretionary surplus reserve is subject to the shareholders approval. The utilisation of the reserve is similar to that of the statutory surplus reserve. For the year ended 31 December 2010, the directors proposed to transfer RMB 1,541,554,077 (2009: RMB 1,868,408,931), being 50% (2009: 65%) of the Companys current years net profit as determined in accordance with the PRC accounting rules and regulations, to this reserve.

(b)

Revaluation reserve Revaluation reserve comprises the cumulative net change in fair value of available-for-sale securities held at the balance sheet date and is dealt with in accordance with the accounting policy as stated in note 3(c)(i).

(c)

Other reserves Other reserves are resulted from transactions with owners in their capacity as owners. The movement for the year ended 31 December 2010 mainly represents the capital reserve deficit arising from difference between the fair value and book value of the acquirees net assets at the dates of acquisitions of non-controlling interests.

(d)

Retained profits At 31 December 2010, included in the retained profits attributable to owners of the Group is an amount of RMB 3,343,250,838 (2009: RMB 2,581,661,025) which represents the Groups subsidiaries statutory reserves, being attributable to the owners of the Company.

131

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

31
(e)

Reserves (continued)
Capital management The Groups primary objectives when managing capital are to safeguard the Groups ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by pricing its properties commensurately with the level of risk and by securing access to finance at a reasonable cost. The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in the light of changes in economic conditions, inclusive latest market trend, land price, cash flow and profit forecasts. In order to maintain a sound capital position, the Group may adjust the amount of dividends payable to shareholders, issue new shares, issue bonds or raise new debt financing.

32

Loans and borrowings

This note provides information about the contractual terms of the Groups loans and borrowings. For more information about the Groups exposure to interest rate and foreign exchange risks, please refer to note 40. 2010 2009 Non-current Secured or guaranteed - bank loans (note (a)) 4,926,229,291 2,300,254,991 - corporate bonds (note (b)) 2,937,122,406 2,915,228,176 - other borrowings (note (c)) 1,600,000,000 1,200,000,000 -------------------- -------------------9,463,351,697 6,415,483,167 -------------------- -------------------Unsecured - bank loans (note(a)) 11,746,440,000 5,218,451,222 - corporate bonds (note (b)) 2,884,022,101 2,878,507,630 - other borrowings (note (c)) 6,517,830,000 8,784,092,083 21,148,292,101 16,881,050,935 -------------------- -------------------30,611,643,798 23,296,534,102

At 31 December, non-current interest-bearing borrowings and bonds were repayable as follows: 2010 2009 After 1 year but within 2 years After 2 years but within 5 years 19,850,291,042 10,761,352,756 30,611,643,798 15,934,138,520 7,362,395,582 23,296,534,102

132

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

32

Loans and borrowings (continued)

2010 Current Secured or guaranteed - bank loans (note (a)) - current portion of long term bank loans (note (a)) 2009

80,000,000 1,395,690,787

150,000,000 1,258,730,915

1,475,690,787 1,408,730,915 -------------------- -------------------Unsecured - bank loans (note (a)) 1,300,000,000 - entrusted bank loan from jointly controlled entity (note (a)) 98,000,000 - current portion of long term bank loans (note (a)) 3,710,000,000 - current portion of long term other borrowings (note (c)) 10,200,000,000 1,038,256,111 6,181,683,452 -

15,308,000,000 7,219,939,563 -------------------- -------------------16,783,690,787 Notes: (a) Bank loans The secured or guaranteed bank loans of RMB 6,402 million as at 31 December 2010 (2009: RMB 3,709 million) are secured over certain properties held for development and properties under development with aggregate carrying value of RMB 1,076 million (2009: RMB 3,496 million). The interest rate of bank loans ranges from 4.86% to 10.20% in 2010 (2009: from 4.86% to 8.33%). (b) Corporate bonds 2010 Corporate bonds Corporate bonds No.101688 No.101699 Brought forward value at 1 January Transaction costs amortised Carrying value at 31 December 2,878,507,630 5,514,471 2,884,022,101 2,915,228,176 21,894,230 2,937,122,406 8,628,670,478

2009 Corporate bonds Corporate bonds No.101688 No.101699 Brought forward value at 1 January Transaction costs amortised Carrying value at 31 December 2,873,650,747 4,856,883 2,878,507,630 2,894,365,250 20,862,926 2,915,228,176

133

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

32

Loans and borrowings (continued)

Notes (continued): (b) 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 are interests bearing at a rate of 7% per annum payable in arrears on 6 September 2009, 2010 and 2011. In accordance with the terms of the No. 101688 Bonds, on 6 September 2011 the Company has the option to adjust upward the interest rate of the Bonds for the next two years by 0-100 points and each of the Bond is, at the option of the bondholder, redeemable at its par value of RMB 100 each on the same date. If not being redeemed on 6 September 2011, the Bonds are repayable on 6 September 2013 and the interest for the next two years is payable in arrear on 6 September 2012 and 2013. The No. 101699 Bonds are guaranteed by the China Construction Bank Shenzhen branch and are repayable on 6 September 2013. The Bonds are interest bearing at a rate of 5.5% per annum payable in arrears on 6 September 2009, 2010, 2011, 2012 and 2013. (c) Other borrowings 2010 Non-current Proceeds Transaction costs 8,117,830,000 8,117,830,000 Current portion of long term other borrowings Proceeds 10,200,000,000 2009 10,200,000,000 (215,907,918) 9,984,092,082

Other borrowings represent interest bearing borrowings raised from third party lenders through trust companies at market interest rates. The interest rates of these borrowings ranges from 5.04% to 10.05% in 2010 (2009: 4.90% to 5.40%).

33

Other non-current liabilities

Other long term liabilities mainly represent the amounts that hold on behalf of the owners committees in the property management sector.

134

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

34

Trade and other payables

2010 Trade payable Amounts due to associates and jointly controlled entities Deposits received in advance Other payables and accrued expenses Other taxes Total 16,923,777,819 2,148,384,968 74,405,197,319 12,348,724,974 312,259,601 106,138,344,681 2009 16,300,047,906 924,056,119 31,734,801,164 6,101,542,047 183,964,631 55,244,411,867

35

Provisions
2010 Balance at 1 January Provisions made during the year Provisions used during the year Balance at 31 December 34,355,815 14,351,190 (7,599,682) 41,107,323 2009 41,729,468 2,667,737 (10,041,390) 34,355,815

The balance represents the estimated losses to be borne by the Group in relation to the property management projects.

36

Employees Share Award Scheme

The average closing price of the Companys A shares in 2009 is lower than those in 2007 and 2008. Therefore, the Awarded Shares held under the 2007 Scheme were forfeited as the market performance condition was not met. Such shares were disposed of and the Company received the proceeds in the amount of RMB468,728,084 on 25 January 2010. The deficit of the sale proceeds less the purchased value of the Awarded Shares under 2007 Scheme is transferred out to other reserves within equity.

135

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

37
(a)

Material related party transactions

Reference should be made to the following notes regarding related parties: Associates Jointly controlled entities Key management personnel Post-employment benefit plans (note 21, 28 & 34) (note 22, 28, 32 & 34) (see note (b) below) (note 11)

(b)

Key management personnel compensations The key management personnel compensations are as follows: 2010 Short-term employee benefits 91,208,160 2009 77,001,000

The above compensations are included in personnel expenses (see note 11). The Group also provides non-monetary employee benefits to the key management personnel in the form of purchase discount on sale of the Groups properties to them. Details of such transactions are as follows: 2010 Sales of properties to the key management personnel Related cost of sales Gross profit Estimated fair value of the properties sold to the key management personnel 8,803,583 (4,639,221) 4,164,362 8,803,583 2009 17,766,449 (9,844,936) 7,921,513 18,579,645

All the above were approved by the Board of Directors as a kind of employment benefits to the key management personnel. In 2010 the Group launched the Excellence Bonus Plan (the Plan) as a supplement to the existing employee remuneration system. The bonus amount attributable to each year is determined by reference to the key performance indicator of Economic Value Added in the corresponding year. The accrued bonus arising from the Plan attributable to the key management personnel has not been included in the short-term employee benefits above as the amount has not been determined or distributed up to 4 March 2011.

136

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

38
(a)

Commitments
Commitments outstanding at 31 December not provided for in the consolidated financial statements were as follows: 2010 Construction and development contracts Land agreements 19,939,290,788 19,829,659,037 39,768,949,825 2009 14,324,784,550 11,520,991,770 25,845,776,320

Commitments mainly related to land and development costs for the Groups properties under development. (b) At 31 December 2010, the total future minimum lease payments under non-cancellable operating leases are payable as follows: 2010 Within 1 year After 1 year but within 2 years After 2 year but within 5 years 24,570,464 20,546,767 32,852,954 77,970,185 2009 25,616,859 9,172,514 4,619,928 39,409,301

The Group is the lessee in respect of a number of properties held under operating leases. The leases typically run for an initial period of two to ten years. None of the leases includes contingent rentals. During the year, the operating lease expense of the Group amounted to RMB 68 million (2009: RMB 36 million).

39

Contingent liabilities
As at the balance sheet date, the Group has issued guarantees to banks to secure the mortgage arrangement of property buyers. The outstanding guarantees to the banks amounted to RMB 20,299 million (2009: RMB 22,083 million), including guarantees of RMB 20,184 million (2009: RMB 21,272 million) which will be terminated upon the completion of the transfer procedures with the buyers in respect of the legal title of the properties, and guarantees of RMB 115million (2009: RMB 811 million) which will be terminated upon full repayment of mortgage loans by buyers to the banks. The directors do not consider it probable that the Group will sustain a loss under these guarantees as the bank has the rights to sell the property and recovers the outstanding loan balance from the sale proceeds if the property buyers default payment. The Group has not recognised any deferred income in respect of these guarantees as its fair value is considered to be minimal by the directors.

137

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

40

Financial risk management and fair values

Exposure to interest rate, credit, liquidity and currency risks arises in the normal course of the Groups business. The risks are limited by the Groups financial management policies and practices described below.

(a)

Interest rate risk The Groups interest rate risk arises primarily from its borrowings and bonds. Borrowings and bonds issued at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rate and terms of repayment of bank loans, borrowings and bonds of the Group are disclosed in note 32 to the consolidated financial statements. At 31 December 2010, it is estimated that a general increase of 0.5% in interest rates, with all other variables held constant, would decrease the Groups profit after tax by approximately RMB 14 million (2009: RMB 12 million). The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate risk for non-derivative financial instruments in existence at that date. The analysis is performed on the same basis for 2009.

(b)

Credit risk The Groups credit risk is primarily attributable to trade and other receivables and other financial assets. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis. In respect of trade receivables, credit risk is minimised as the Group normally receives full payment from buyers before the transfer of property ownership. In respect of other receivables and other financial assets, the Group reviews the exposures and closely monitors the recoverability of the balances on an ongoing basis. Normally, the Group does not obtain collateral from debtors. The impairment losses on bad and doubtful accounts are within managements expectation.

(c)

Liquidity risk The Groups policy is to regularly monitor current and expected liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and long terms.

138

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

40
(c)

Financial risk management (continued)

Liquidity risk (continued) The following table details the remaining contractual maturities at the balance sheet date of the Groups non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the balance sheet date) and the earliest date the Group can be required to pay:
2010 Total contractual Carrying undiscounted amount cash flow Loans and borrowings Creditors and accrued charges Amounts due to jointly controlled entities and associates Other non-current liabilities 47,395,334,585 29,584,762,394 2,148,384,968 8,816,121 51,864,254,960 29,584,762,394 2,148,384,968 8,816,121 Within 1 year or on demand 19,066,509,124 29,584,762,394 2,148,384,968 2009 Total contractual Carrying undiscounted amount cash flow Loans and borrowings Creditors and accrued charges Amounts due to jointly controlled entities and associates Other non-current liabilities 31,925,204,581 22,401,589,953 924,056,119 8,408,145 36,077,559,099 22,401,589,953 924,056,119 8,408,145 Within 1 year or on demand 10,603,713,529 22,401,589,953 924,056,119 More than 1 year but less than 2 year 17,342,290,816 More than 2 years but less than 5 years 8,131,554,754 8,408,145 More than 1 year but less than 2 year 21,491,838,083 More than 2 years but less than 5 years 11,305,907,753 8,816,121

(d)

Foreign exchange risk The Group is exposed to foreign currency risk primarily on cash and cash equivalents and borrowings that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily United States dollars, Hong Kong dollars and Japanese Yen. Cash and cash equivalents denominated in a currency other than the functional currency of the entity to which they relate are as follows: 2010 United States Dollars Hong Kong Dollars Japanese Yen 282,659,984 15,734,761 192,437,536 2009 806,368,281 8,147,723 -

Interest-bearing borrowings denominated in a currency other than the functional currency of the entity to which they relate are as follows: 2010 United States Dollars 4,530,407,777 2009 2,602,202,906

139

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

40
(d)

Financial risk management (continued)

Foreign exchange risk (continued) Sensitivity analysis The following table indicates the approximate change in the Groups profit after tax and other components of consolidated equity in response to reasonably possible changes in the foreign exchange rates to which the Group has significant exposure at the balance sheet date. The sensitivity analysis includes balances between group companies where the denomination of the balances is in a currency other than the functional currencies of the lender or the borrower.
2010
Increase / (decrease) in foreign exchange rates United States Dollars United States Dollars Hong Kong Dollars Hong Kong Dollars JPY JPY 10% (10%) 10% (10%) 10% (10%) Effect on profit after tax and retained profits 318,581,085 (318,581,085) (1,180,107) 1,180,107 (14,432,815) 14,432,815 Effect on other components of equity 318,397,848 (318,397,848) (376,740,966) 376,740,966 -

2009
Effect on profit after tax and retained profits (134,687,597) 134,687,597 (611,079) 611,079 Effect on other components of equity (134,492,028) 134,492,028 (213,039,426) 213,039,426 -

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the balance sheet date and had been applied to each of the group entities exposure to currency risk for non-derivative financial instruments in existence at that date, and that all other variables, in particular interest rates, remain constant. (e) Accounting classifications and fair values Fair values versus carrying amounts The fair values of the financial assets and liabilities, together with the carrying amounts shown in the statement of the financial position, are as follows:
31 December 2010 In millions of RMB Trading Loans and borrowings Financial derivatives Trade and other payables (15) (15) Loans and receivables 34,370 37,817 1,056 73,243 Availablefor-sale 489 489 Other financial liabilities (47,395) (106,138) (153,533) Total carrying amount 34, 370 37,817 489 1,056 73,732 (47,395) (15) (106,138) (153,548)

Fair value 34, 370 37,817 489 1,056 73, 732 (47,395) (15) (106,138) (153,548)

Trade and other receivables Cash and cash equivalents and pledged deposits Other financial assets Other non-current assets

140

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

40
(e)

Financial risk management (continued)

Accounting classifications and fair values (continued) Fair values versus carrying amounts (continued)
31 December 2009 In millions of RMB Trading 1 1 Loans and borrowings Trade and other payables Loans and receivables 17,235 23,002 40,237 Availablefor-sale 256 256 Other financial liabilities (31,925) (55,244) (87,169) Total carrying amount 17,235 1 23,002 256 40,494 (31,925) (55,244) (87,169)

Fair value 17,235 1 23,002 256 40,494 (31,925) (55,244) (87,169)

Trade and other receivables Financial derivatives Cash and cash equivalents and pledged deposits Other financial assets

Fair values hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (observable inputs). 31 December 2010 In millions of RMB Financial derivatives 31 December 2009 In millions of RMB Other financial assets Financial derivatives Level 1 (15) Level 1 164 164 Level 2 Level 2 1 1 Level 3 Level 3 Total (15) Total 164 1 165

141

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

41

Non-adjusting post balance sheet events

After the balance sheet date the directors proposed a final dividend, further details of which are disclosed in note 16.

42

Comparative figures
Certain comparative figures have been reclassified to conform with the current years presentation.

43

Accounting estimates and judgments

Key sources of estimation uncertainty (i) Impairment provision for properties held for development, properties under development and completed properties for sale As explained in notes 3(j) and 3(k), the Groups properties held for development, properties under development and completed properties for sale are stated at the lower of cost and net realisable value. Based on the Groups 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. Given the volatility of the PRC property market and the unique nature of individual properties, the actual outcomes in terms of costs and revenue may be higher or lower than that estimated at the balance sheet date. Any increase or decrease in the provision would affect profit or loss in future years. (ii) Land appreciation tax As explained in note 13(a), land appreciation tax is levied on properties developed by the Group for sale, at progressive rates ranging from 30% to 60% on the appreciation of land value, which under the applicable regulations is calculated based on the proceeds of sales of properties less deductible expenditures including lease charges of land use rights, borrowing cost and relevant property development expenditures. Given the uncertainties of the calculation basis of land appreciation tax to be interpreted by the local tax bureau, the actual outcomes may be higher or lower than that estimated at the balance sheet date. Any increase or decrease in estimates would affect profit or loss in future years.

142

China Vanke Co., Ltd. Financial statements for the year ended 31 December 2010

44

Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended 31 December 2010
Up to date of issue of the consolidated financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 31 December 2010 and which have not been adopted in the consolidated financial statements. The Group is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to result in a restatement of the Groups results of operations and financial position. In addition, the following developments are expected to result in amended disclosures in the financial statements, including restatement of comparative amounts in the first period of adoption: Effective for accounting periods beginning on or after Amendments to IAS 24, Related Party Disclosures Amendments to IFRS 7, Financial instruments: Disclosures - Transfers of financial assets IFRS 9, Financial Instruments 1 January 2011 1 July 2011 1 January 2013

143