CONTENTS CORPORATE INFORMATION 2 CHAIRMAN S STATEMENT 4 DIRECTORS AND SENIOR MANAGEMENT PROFILE 8 MANAGEMENT DISCUSSION AND ANALYSIS 20 ENVIRONMENTAL,

Transcription

1 Stock Code 978

2 CONTENTS CORPORATE INFORMATION 2 CHAIRMAN S STATEMENT 4 DIRECTORS AND SENIOR MANAGEMENT PROFILE 8 MANAGEMENT DISCUSSION AND ANALYSIS 20 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 48 REPORT OF THE DIRECTORS 63 CORPORATE GOVERNANCE REPORT 88 INDEPENDENT AUDITOR S REPORT 108 AUDITED CONSOLIDATED FINANCIAL STATEMENTS Statement of profit or loss and other comprehensive income 111 Statement of financial position 112 Statement of changes in equity 114 Statement of cash flows 116 Notes to the financial statements 119 FIVE-YEAR FINANCIAL SUMMARY 252

3 CORPORATE INFORMATION DIRECTORS Non-executive Directors Ms. WU Zhenqin (Chairman) Ms. LIU Ning Executive Directors Dr. SO Shu Fai Mr. YU Zhiliang Independent Non-executive Directors Dr. WONG Wing Kuen, Albert Ms. CHEN Yanping Dr. SHI Xinping Mr. HE Qi AUDIT COMMITTEE Dr. WONG Wing Kuen, Albert (Chairman) Ms. LIU Ning Dr. SHI Xinping NOMINATION COMMITTEE Ms. WU Zhenqin (Chairman) Ms. CHEN Yanping Dr. SHI Xinping REMUNERATION COMMITTEE Ms. CHEN Yanping (Chairman) Ms. WU Zhenqin Dr. WONG Wing Kuen, Albert AUTHORISED REPRESENTATIVES Ms. WU Zhenqin Mr. YU Zhiliang COMPANY SECRETARY Ms. CHAN Wing Yan AUDITOR SHINEWING (HK) CPA LIMITED REGISTERED OFFICE P.O. Box 309, Ugland House Grand Cayman KY Cayman Islands P.O. Box 309, Ugland House Grand Cayman KY Cayman Islands 2 CHINA MERCHANTS LAND LIMITED Annual Report 2015

4 CORPORATE INFORMATION HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS Room 1701, 17/F China Merchants Tower Shun Tak Centre Nos Connaught Road Central Hong Kong PRINCIPAL BANKERS Agricultural Bank of China Limited Bank of Beijing Co., Ltd. Bank of China (Hong Kong) Limited Bank of China Limited Bank of Communications Co., Ltd. Bank of Communications Co., Ltd. Hong Kong Branch Baoshang Bank Limited BNP Paribas, Hong Kong Branch China CITIC Bank Corporation Limited China Construction Bank Corporation China Construction Bank (Asia) Corporation Limited China Everbright Bank Co., Ltd. China Merchants Bank Co., Ltd. China Zheshang Bank Co., Ltd. DBS Bank Limited ING Bank N.V. Industrial and Commercial Bank of China (Asia) Limited Industrial and Commercial Bank of China Limited Industrial Bank Co., Ltd. Shanghai Pudong Development Bank Co., Ltd. Standard Chartered Bank (Hong Kong) Limited Sumitomo Mitsui Banking Corporation The Hongkong and Shanghai Banking Corporation Limited PRINCIPAL SHARE REGISTRARS AND TRANSFER OFFICE Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY Cayman Islands HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Tengis Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong WEBSITE STOCK CODE Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY Cayman Islands

5 CHAIRMAN S STATEMENT To Shareholders, I hereby present to you the report of annual results of China Merchants Land Limited ( China Merchants Land or the Company, Stock Code: 00978) and its subsidiaries (together as the Group ) as at 31 December BUSINESS REVIEW In 2015, the turnover of the Group was RMB6,394,944,000 (2014: RMB7,440,436,000). Profit attributable to the owners of the Company was RMB185,416,000 (2014: RMB380,245,000). Profit attributable to the shareholders per share was RMB3.78 cents (2014: RMB7.75 cents). The Board recommended payment of final dividend of HK$24,526,289 for the year ended 31 December 2015, representing payment of HK$0.005 per share. 6,394,944,000 7,440,436, ,416, ,245, ,526, STRATEGIC POSITIONING On 30 December 2015, China Merchants Shekou Industrial Zone Holdings Co., Ltd. ( CMSK ) completed its merger with China Merchants Property Development Co., Ltd. ( CMPD ) and become listed on the Shenzhen Stock Exchange. CMSK became the controlling shareholder holding 74.35% shares in China Merchants Land. Through the restructuring, the assets scale and financial strength of China Merchants Land s controlling shareholder were consolidated and the business scope became more diversified. In particular, the established overseas development plan and the implementation condition of the light-assets strategy of China Merchants Land became more mature % China Merchants Land upholds the principles of focus on specific cities, transform and develop by focusing on first and second tier cities such as Guangzhou, Nanjing, Chongqing, Foshan and Xi an in order to improve its profitability. Meanwhile, benefited from the resource advantages of China Merchants Group and CMSK, we progressively expanded into overseas markets and carried forward our light-assets business model. 4 CHINA MERCHANTS LAND LIMITED Annual Report 2015

6 CHAIRMAN S STATEMENT BUSINESS REVIEW Market Review In 2015, the Chinese economy stayed in downturn with annual GDP grew by approximately 6.9% along with the weak recovery of the global economy. Inventories of real estate operated at its highs with available-forsales area of domestic real estates amounting to million sq.m. as at the end of With an insufficient motivation in new investment, the investment in national real estate development was RMB9,597.9 billion in 2015, representing a year-on-year growth of only approximately 1%. The differentiation in regional cities and property enterprises deteriorated, as evidenced in the rising prices and quantities of properties sold in first tier cities, the divergence in performances in second tier cities and the notable difficulties in sell-through in third and forth tier cities. The trends of elimination of the weak and survival of the strongest in property enterprises and call for transformation in development have become more apparent in the property industry. Property Development In 2015, given the difficulties of late launch of saleable resources and higher proportion of commercial and office saleable resources, the Group achieved aggregate contracted sales of RMB8,950,200,000 and aggregate contracted sales area of 787,010 sq.m., representing a decrease of 2% and an increase of 9% over that of last year respectively. At the same time, the Group continuously reinforces the forging of projects in terms of six abilities, namely progress, quality, safety, customer services as well as cost and marketing in order to ensure a sustainable and quality development. Land Bank The Group acquired 2 pieces of land with a total permissible area of 239,624 sq.m. for a total land cost of RMB715 million in One of them was acquired in Foshan with a total permissible area of 99,407 sq.m. for a total land cost of RMB627 million and the other in Jurong with a total permissible area of 140,217 sq.m. for a total land cost of RMB88 million. As at 31 December 2015, the Group had land bank of approximately 6,433,740 sq.m. The management believes that the existing land bank is sufficient to fulfill the needs of the Company s project development in the upcoming period. GDP 6.9% 71,853 95,979 1% 8,950,200, ,0102% 9% , , , ,433,740 5

7 CHAIRMAN S STATEMENT Capital and Finance At the end of 2015, the net gearing ratio of the Group was 69%, which is at a healthy level in the property industry. The bank balances and cash amounted to RMB3,697 million and the balance of the interest-bearing debts was amounted to RMB11,797 million. The average cost of the capital was 4.91% of the annualized interest rate in % 3,697 11, % At the same time, the Group placed great efforts to improve the cash collection of sales proceeds, the Group achieved an annual cash collection of sales proceeds of RMB10,423 million and a cash collection rate of 116%. The capital turnover remains stable and safe. 10,423116% In addition, in June 2015, the Group successfully issued the credit enhanced convertible bonds due in June 2020 in the aggregate principal amount of US$290,000,000 bearing coupon rate at only 0.50% per annum, which is conducive to lower the capital costs and optimize the Company s capital structure as well % OUTLOOK AND PROSPECT Looking ahead to 2016, there are increasing uncertainties in the global economy while China is still suffering from a low speed economic growth. Property Destocking has become one of the key missions of the Chinese government in The real estate policy will continue to be easing but those first tier cities with overheated property prices may face the risk of a tightening policy. Notwithstanding that, with the emergence of a turning point of the property industry, the development model featured in high turnover, high leverage, high scale is gradually changing and property developers are pursuing a transformation and cross-industry development. 6 CHINA MERCHANTS LAND LIMITED Annual Report 2015

8 CHAIRMAN S STATEMENT Keeping up with the development trend in the industry and adapting to the changes in market policies, the Group will make profit-oriented efforts to improve its sales of properties and gains therefrom. The Group will continuously optimize its assets and type of currency, term and distribution of its liabilities to forge a robust foundation for its businesses. In addition, based on the resources of China Merchants Group and CMSK, the Group will make full use of the advantages of the offshore listing platform to promote the transformation and development with an aim to become stronger and bigger. APPRECIATION On behalf of the Board, I wish to thank our customers, business partners and staff for their trust and support during last year and would appreciate your continued support for the Company s development in the future. As the Chairman of the Board, I would also like to express our sincere gratitude to our shareholders for their unfailing support and in approving the major changes of the Company. I believe and have confidence that we will create better return for the shareholders in the future. Wu Zhenqin Chairman 26 February

9 DIRECTORS AND SENIOR MANAGEMENT PROFILE NON-EXECUTIVE DIRECTORS Ms. Wu Zhenqin, aged 57, was appointed as a nonexecutive Director of the Company and was elected as a member of the remuneration committee of the Board on 22 September On 27 August 2015, Ms. Wu was appointed as the chairman of the Board and the chairman of the nomination committee of the Board. Ms. Wu has been the chief financial officer of CMPD since July Ms. Wu served as the general manager of the finance department of China Merchants Shekou Industrial Zone Co., Ltd. from January 1998 to September 2000, and served as the chief financial officer of CMPD from October 2000 to January She worked as the general manager in the auditing department of China Merchants Group Co., Ltd. from January 2003 to July Ms. Wu graduated from Shanghai Ocean Shipping Institute (currently known as Shanghai Maritime University ) with a bachelor s degree in Economics in July Ms. Wu is a senior accountant of the PRC. Ms. Liu Ning, aged 47, joined the Company as a non-executive Director on 2 June Ms. Liu is a member of the audit committee of the Board. Ms. Liu has over 15 years experience in securities industry and served as the secretary to the board of directors of CMSK since December She was appointed as a representative for securities affairs of CMPD in October 2001, a director of secretariat to the board of CMPD in July 2004 and the Board Secretary of CMPD from 2008 to Ms. Liu currently serves as an independent director in Tianjin Zhonghuan Semiconductor Co., Ltd. ( ) (Stock Code: ); Shenzhen Changfang Light Emitting Diode Lighting Co., Ltd. ( ) (Stock Code: ); and Shenzhen Sunwin Intelligent Co., Ltd. ( ) (Stock Code: ), all of which are listed on the Shenzhen Stock Exchange. On 10 March 2015, Ms. Liu was appointed as the non-executive director of Shenzhen Fenda Technology Co., Ltd. (Stock Code: ), a company listed on the Shenzhen Stock Exchange CHINA MERCHANTS LAND LIMITED Annual Report 2015

10 DIRECTORS AND SENIOR MANAGEMENT PROFILE Ms. Liu received a bachelor s degree in wood processing from Central South University of Forestry and Technology in June She completed a post-graduate course in Department of Business Administration of Business School of Nankai University in December 2000 and subsequently obtained an MBA degree from Macau University of Science and Technology in March Ms. Liu is an economist of the PRC. EXECUTIVE DIRECTORS Dr. So Shu Fai, aged 64, joined the Company as an executive Director and chairman of the executive committee on 11 December 2010 and was elected chairman of the Company on 31 December Dr. So resigned from his position as the chairman of the Board and his board committee position on 23 June 2012 and remains an executive Director. 64 Dr. So is an executive director of SJM Holdings Limited (listed on the Stock Exchange of Hong Kong Limited (the Stock Exchange )) and is currently the Chairman of Shenzhen Super Perfect Optics Limited. He is a director of Estoril-Sol, SGPS, S.A. which is listed on Euronext Lisbon and the chairman of the board of directors of MACAUPORT Sociedade de Administração de Portos, S.A. Besides, Dr. So retired from office as an independent non-executive director of SHK Hong Kong Industries Limited (listed on the Stock Exchange) on 2 June Euronext Estoril-Sol, SGPS, S.A. MACAUPORT Sociedade de Administração de Portos, S.A. Dr. So is a member of the 12th National Committee of the Chinese People s Political Consultative Conference ( CPPCC ), a member of the Committee of Foreign Affairs of the National Committee of CPPCC, the honorary consul of the Republic of Portugal in the Hong Kong SAR, as well as a consultant of the Economic Development Council and a member of the Cultural Consultative Council of the Macau SAR Government. Dr. So is the president of Clube Militar de Macau, a member of the board of directors of The University of Hong Kong Foundation for Educational Development and Research, as well as a member of the 9th National Committee of China Federation of Literary and Arts Circles. 9

11 DIRECTORS AND SENIOR MANAGEMENT PROFILE Dr. So was awarded the Medal of Merit Culture by the Macau SAR Government in He was awarded the Doctor of Social Sciences honoris causa by the University of Macau in 2012, the Honorary University Fellowship by The University of Hong Kong in 2005 and the Commendador Order of Merit by the President of Portugal in Dr. So is a Chartered Secretary and a Fellow member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators. He graduated with a Bachelor of Science degree from The University of Hong Kong in 1973, and received a doctoral degree in Management Studies from IMC/Southern Cross University in IMC/Southern Cross University Mr. Yu Zhiliang, aged 37, joined the Company as an executive Director on 2 June 2012 and appointed as Group Chief Financial Officer with effect from 29 June Mr. Yu has been serving as a director of Champion Apex Limited since January 2013 and a director of Harvest Allied Investments Limited since April Mr. Yu is responsible for managing accounting, monitoring internal control and overseeing the financial activities of the Group. 37 Mr. Yu has been serving as a chief financial officer of China Merchants Property (Xiamen) Co. Ltd. ( ) and Fujian Zhong Lian Sheng Estate Development Ltd. () since Mr. Yu worked as a director of China Merchants Properties Development Ltd. () and he was a director of Wahsheung Finance Ltd. ( ). He received a bachelor s degree in accounting from Xiamen University () and obtained an MBA degree with a concentration in finance at the Chinese University of Hong Kong. Mr. Yu is an accountant of the PRC. 10 CHINA MERCHANTS LAND LIMITED Annual Report 2015

12 DIRECTORS AND SENIOR MANAGEMENT PROFILE INDEPENDENT NON-EXECUTIVE DIRECTORS Dr. Wong Wing Kuen, Albert, aged 64, joined the Company as an independent non-executive Director on 2 June Dr. Wong is the chairman of the audit committee and a member of the remuneration committee of the Board. 64 Dr. Wong currently holds the following positions in other listed companies: independent non-executive director of China VAST Industrial Urban Development Company Limited, a company listed on the Stock Exchange (Stock Code: 6166); 6166 independent non-executive director of APAC Resources Limited, a company listed on the Stock Exchange (Stock Code: 1104); 1104 independent non-executive director of Solargiga Energy Holdings Limited, a company listed on the Stock Exchange (Stock Code: 757); and 757 In addition, Dr. Wong served as the managing director of Charise Financial Planning Limited, a private professional consulting firm in Hong Kong since October 2005 to 2 January Thereafter, Dr. Wong has been appointed as the Principal Consultant by KND & Co. CPA Limited, Hong Kong, since 2 January

13 DIRECTORS AND SENIOR MANAGEMENT PROFILE Dr. Wong was elected or admitted: a fellow of The Institute of Chartered Secretaries and Administrators in September 2002; a fellow of The Hong Kong Institute of Chartered Secretaries in February 2002; a fellow of the Taxation Institute of Hong Kong in January 1999; an ordinary member of The Hong Kong Securities and Investment Institute in November 2012; a fellow member of Association of International Accountants in September 2005; a member of The Institute of Certified Public Accountants in Ireland in August 2000; a member of the Chartered Institute of Arbitrators in May 2002; and a Certified Tax Adviser of Hong Kong for the year 2013 by the Taxation Institute of Hong Kong. Dr. Wong received a doctoral degree in Business Administration from Bulacan State University, Republic of the Philippines in December 2010 and a bachelor s degree in commerce from a joint program held by Shenzhen University and Clayton University, Missouri, USA in May He also received a bachelor s degree and a master s degree in business administration from Nottingham Trent University, UK in December 2005 and December 2007, respectively. Clayton University Nottingham Trent University 12 CHINA MERCHANTS LAND LIMITED Annual Report 2015

14 DIRECTORS AND SENIOR MANAGEMENT PROFILE Ms. Chen Yanping, aged 57, joined the Company as an independent non-executive Director on 2 June Ms. Chen has been an independent director of CMPD from October 2007 to November Ms. Chen is the chairman of the remuneration committee and a member of the nomination committee of the Board. 57 Ms. Chen has been a professor of Architecture and Urban Planning School in Shenzhen University since December Ms. Chen attended a China Management Training Program in University of California, Los Angeles from November 2003 to November Ms. Chen received a bachelor s degree and a master s degree in the faculty of architecture urban planning profession from Tongji University in January 1982 and November 1984, respectively. Ms. Chen was qualified as a senior engineer in December 1993 and subsequently qualified as a registered planner of the PRC in October Dr. Shi Xinping, aged 57, joined the Company as an independent non-executive Director on 2 June Dr. Shi has been an independent director of CMPD from July 2001 to October Dr. Shi is a member of the audit committee and a member of the nomination committee of the Board. 57 Dr. Shi is currently an associate professor of the Department of Finance and Decision Sciences in Hong Kong Baptist University. He is also an independent nonexecutive director of Renewable Energy Trade Board Corporation (formerly known as China Technology Development Group Corporation ), a company listed on Nasdaq. Dr. Shi received a bachelor s degree from North-western Polytechnic University in July 1982, an MBA degree from Lancaster University, UK in December 1990 and a PhD degree from Middlesex University, UK in July Lancaster University Middlesex University 13

15 DIRECTORS AND SENIOR MANAGEMENT PROFILE Mr. He Qi, aged 60, was appointed as an independent non-executive Director of the Company on 1 November Mr. He has been serving as an independent non-executive director of Evergrande Real Estate Group Limited, a company listed on the Stock Exchange (Stock Code: 3333), since 14 October Since 3 October 2014, Mr. He has been serving as the independent non-executive director of Orient Victory China Holdings Limited, a company listed on the Stock Exchange (Stock code: 265). Since 2006, Mr. He has been serving as the deputy secretary of the China Real Estate Association, and the secretary of the Distribution Services Committee of the China Real Estate Association. He was an executive of the Development Centre of the China Real Estate Association from 1995 to CHINA MERCHANTS LAND LIMITED Annual Report 2015

16 DIRECTORS AND SENIOR MANAGEMENT PROFILE SENIOR MANAGEMENT Mr. Deng Jinlei, aged 39, is responsible for the management of property development projects. 39 Mr. Deng joined the Marketing Center of Shenzhen China Merchants Real Estate Co., Ltd. in February 2005 as marketing planning manager and was subsequently promoted to senior planning manager and marketing director before he was redesignated to Guangzhou Management Area as marketing director in August In November 2010, he returned to Marketing Center of Shenzhen China Merchants Real Estate Co., Ltd. as deputy general manager. In November 2012, he was redesignated to Guangzhou Company as deputy general manager and was subsequently promoted to general manager of Guangzhou Company in January Prior to joining the Group, Mr. Deng worked in World Union Property Agency (Shenzhen) Co., Ltd. ( ) as Planning Department Manager from January 2002 to December 2004., Mr. Deng graduated from Central China University of Science and Engineering and received a bachelor s degree of plastic formation technology and equipment in July 1998 and a master s degree of western economics from Huazhong University of Science and Technology in January Mr. Deng finished a business administration course for real estate entrepreneurs in Sun Yat-sen University in December Subsequently, he was awarded a master s degree of Sociology from Nanjing University in March

17 DIRECTORS AND SENIOR MANAGEMENT PROFILE Mr. Huang Qinghao, aged 40, is responsible for the management of property development projects. 40 Mr. Huang joined the Construction Management Center of CMPD in May 2005 as a structural engineer and was subsequently redesignated to Foshan Company in February He initially served as a manager of design and engineering department and was subsequently promoted to general manager assistant and deputy general manager. In January 2014, he was promoted as the general manager of Foshan Company. Prior to joining the Group, Mr. Huang worked in Shenzhen General Institute of Architectural Design & Research Third Institute ( ) from October 2001 and October 2003 as a structural engineer. Thereafter, from October 2003 to May 2005, Mr. Huang worked in Arch Engineers Design Co. Ltd ( ) as a structural engineer. Mr. Huang graduated from Central South University and was awarded a bachelor s degree in industrial and civil construction in June Mr. Huang was qualified as an engineer in September 2001 and subsequently was qualified as a first-class qualified structural engineer in October He was awarded a master s degree in civil engineering profession from Shenzhen University in June 2006 and qualified as an architectural construction senior engineer in December Mr. Li Zhaohui, aged 45, is responsible for the management of property development projects. 45 Mr. Li joined the Project Department of CMPD as an engineer in March 2002 and subsequently, he worked as a senior project manager for Construction Management Center in February 2005 and was promoted to deputy technical director in December In April 2007, he was redesignated to Chongqing Company as general manager assistant and was subsequently promoted to deputy general manager of Chongqing Company in February He was further promoted to deputy general manager of Chongqing Company (monitoring works) in July CHINA MERCHANTS LAND LIMITED Annual Report 2015

18 DIRECTORS AND SENIOR MANAGEMENT PROFILE Prior to joining the Group, Mr. Li worked in Zhenjiang Construction and Design Institute in Jiangsu Province from July 1992 to March Mr. Li graduated from the faculty of water supply and drainage engineering of urban construction in Chongqing Construction Engineering University in July 1992 and subsequently obtained the qualification as a water supply and drainage professional engineer in November Mr. Jiang Tiefeng, aged 42, was appointed as a project general manager of the Company on 1 November Mr. Jiang is responsible for the management of property development projects. 42 Mr. Jiang joined Merchants Nanjing Real Estate Co., Ltd. in February 2007 initially as an assistant to the general manager and was subsequently promoted to deputy general manager in September He has been working as a general manager since 27 February Prior to joining the Group, Mr. Jiang worked in Shenzhen China Merchants from November 2001 to October 2004 initially as an engineer and was subsequently promoted to an assistant to the general manager. Under the arrangement of Shenzhen China Merchants, Mr. Jiang was sent to Shenzhen China Merchants Overseas Chinese Town Investments Co., Ltd. ( ) to work as an assistant to the general manager from October 2004 to February Mr. Jiang graduated from Huazhong University of Science and Technology with a bachelor s degree in construction engineering in July 1995 and graduated from Qinghua University with a master s degree in architectural and civil engineering in January Mr. Jiang was qualified as a first-class qualified structural engineer in the PRC in June

19 DIRECTORS AND SENIOR MANAGEMENT PROFILE Mr. Shi Jun (), aged 53, is responsible for the management of property development projects. 53 Mr. Shi joined the Operating Management Center of CMPD in November 2007 as general manager assistant and as the deputy general manager of from December 2008 to February From February 2011 to February 2012, Mr. Shi was redesignated as the deputy general manager of Yongjinwan project and from February 2012 to September 2013, Mr. Shi was the deputy general manager (General) of the Zhuhai Company. He was subsequently transferred to Xi an Company as the leader of the preparatory team in September 2013 and was promoted to general manager of Xi an Company in May Prior to joining the Group, Mr. Shi worked in Shenzhen Continental Ocean Through Enterprise Company ( ) as general manager from December 2004 to November Mr. Shi graduated from in July 1984 and received a diploma of industrial and domestic construction and was awarded a bachelor s degree in engineering. He was qualified as a senior engineer in December 2004 and as a first-class qualified construction engineer in December Mr. Wang Yu, aged 42, is responsible for the overseas property investment and development business. 42 Mr. Wang joined the Construction Management Center of CMPD as a deputy engineer in August 2009 and was subsequently promoted and redesignated to China Merchants Property Development (Shenzhen) Limited as general manager assistant of Project Department of Sea World Huanchuan Plaza in February In January 2014, he was redesignated as a deputy general director for investment and development of the Group. 18 CHINA MERCHANTS LAND LIMITED Annual Report 2015

20 DIRECTORS AND SENIOR MANAGEMENT PROFILE Prior to joining the group, Mr. Wang served in the Administrative Department of Ministry of Foreign Affairs of the People's Republic of China from August 1996 to June 2007 working as an attaché, an officer, the third secretary and the second secretary respectively. Mr. Wang graduated from Tianjin University with a bachelor s degree of Civil Structural Engineering in July 1996 and completed the International Engineering Management Professional supplementary course. Subsequently, he completed the Infrastructure Project Management Professional Training in the University of Hong Kong in May 2007 and obtained a master s degree in Business Administration with a concentration in Corporate Finance and Real Estate in the Business School of the University of North Carolina in United States of America in May Ms. Chan Wing Yan, aged 36, joined the Company in June 2012 and was appointed Company Secretary with effect from June 2012 in addition to her role as Deputy Group Chief Financial Officer and General Manager of the Finance Department of the Company. Ms. Chan is responsible for overseeing the Company s secretarial functions and also assisting Mr. Yu Zhiliang in managing accounting, monitoring internal control and overseeing the financing activities of the Company. 36 Ms. Chan is a professional accountant with over ten years experience in various accounting, finance and management positions. These include more than seven years with Deloitte Touche Tohmatsu to the rank of accountant, senior accountant and manager before taking up the position of Senior Finance Manager at Hanergy Thin Film Power Group Limited immediately before joining the Company. Ms. Chan graduated from City University of Hong Kong with a bachelor s degree in accounting in July She is a member of both Hong Kong Institute of Certified Public Accountants and Association of Chartered Certified Accountants of the United Kingdom. 19

21 MANAGEMENT DISCUSSION AND ANALYSIS MARKET REVIEW In 2015, the Chinese economy stayed in downturn with annual GDP grew by approximately 6.9% along with the weak recovery of the global economy. Inventories of real estate operated at its highs with available-forsales area of domestic real estates amounting to million sq.m. as at the end of With an insufficient motivation in new investment, the investment in national real estate development was RMB9,597.9 billion in 2015, representing a year-on-year growth of only approximately 1%. The differentiation in regional cities and property enterprises deteriorated, as evidenced in the rising prices and quantities of properties sold in first tier cities, the divergence in performances in second tier cities and the notable difficulties in sell-through in third and forth tier cities. The trends of elimination of the weak and survival of the strongest in property industries and call for transformation in development have become more apparent in the property industry. GDP 6.9% 71,853 95,979 1% FINANCIAL REVIEW For 2015, profit amounted to RMB355,467,000 (2014: RMB834,369,000), representing a decrease of approximately 57% as compared with last year. The profit attributable to the owners of the Company was RMB185,416,000 (2014: RMB380,245,000), representing a decrease of approximately 51% as compared with last year. Basic earnings per share was RMB3.78 cents (2014: RMB7.75 cents), representing a decrease of approximately 51% as compared with last year. 355,467, ,369,000 57% 185,416, ,245,000 51% % Equity attributable to owners of the Company was RMB5,178,196,000 as at 31 December 2015 (2014: RMB4,591,896,000), representing an increase of approximately 13% as compared with that as at the end of last year. 5,178,196,000 4,591,896,000 13% 20 CHINA MERCHANTS LAND LIMITED Annual Report 2015

22 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL REVIEW (continued) The Group together with its associate and joint venture, achieved aggregate contracted sales of RMB8,950,200,000 (2014: RMB9,145,200,000), representing a decrease of approximately 2% over that of last year. Aggregate contracted sales area was 787,010 sq.m. (2014: 719,687 sq.m.), increased by approximately 9% over last year s. The average selling price was approximately RMB11,372 per sq.m. (2014: RMB12,707 per sq.m.), representing a decrease of approximately 11% compared with last year. 8,950,200,000 9,145,200,000 2% 787, ,6879% 11,372 12,707 11% The aggregate contracted sales target was RMB12,500,000,000 for the year ended 31 December 2015 while the actual aggregate contracted sales was RMB8,950,200,000. The major reasons for the difference between the targeted and actual contracted sales were as follows: 12,500,000,000 8,950,200,000 (i) the competition in the property market of Chongqing and Foshan were severe during the year of 2015 and resulted in the sales progress being slower than expected; (i) (ii) certain projects which met the pre-sales conditions were relatively late so that the period for pre-sales during 2015 was shorter than expected; and (ii) (iii) some of the projects have higher proportion of commercial properties of which sell-through rate were relatively low. (iii) 21

23 MANAGEMENT DISCUSSION AND ANALYSIS TURNOVER For 2015, the Group recorded turnover of RMB6,394,944,000 (2014: RMB7,440,436,000), representing a decrease of approximately 14% as compared with last year. The decrease was mainly due to the decrease in the total gross floor area completed and delivered during the year of For 2015, projects in Foshan, Guangzhou, Chongqing and Nanjing accounted for approximately 24%, 12%, 3% and 61%, respectively, of the total revenue of the Group. 6,394,944,000 7,440,436,000 14% 24% 12% 3% 61% GROSS PROFIT Gross profit amounted to RMB1,556,932,000 (2014: RMB2,072,912,000), representing a decrease of approximately 25% as compared with last year. The gross profit margin was approximately 24% (2014: 28%), representing a decrease by approximately 4 percentage points over last year. The decrease in gross profit was mainly due to the decrease in the total gross floor area completed and delivered during the year ,556,932,000 2,072,912,000 25% 24%28% 4 FINANCE COSTS In June 2015, the Company s direct wholly-owned subsidiary completed the issuance of a guaranteed convertible bonds due in June 2020 (credit enhanced until July 2018) in the aggregate principal amount of US$290,000,000 bearing coupon rate at 0.50% per annum. In December 2013, the Company issued a five-year term credit enhanced bonds in an aggregate principal amount of US$500,000,000 bearing coupon rate of 4.021% per annum. 290,000, % 500,000, % Total amount of interest of the convertible bonds and bonds amounted to approximately RMB69,749,000 (2014: RMB98,829,000) was recognised in the finance costs for the year ended 31 December ,749,000 98,829, CHINA MERCHANTS LAND LIMITED Annual Report 2015

24 MANAGEMENT DISCUSSION AND ANALYSIS NET FOREIGN EXCHANGE (LOSSES) GAINS Exchange losses were noted for the year ended 31 December 2015 while exchange gains were recorded for the year ended 31 December The exchange losses recorded in the year of 2015 were mainly due to the significant depreciation of RMB against United States Dollars ( US$ ) during the year ended 31 December BUSINESS REVIEW Property Development Business As at 31 December 2015, the Group s portfolio of property development projects consisted of 24 projects in Foshan, Guangzhou, Chongqing, Nanjing, Jurong and Xi an, with a primary focus on the development of residential properties, as well as residential and commercial complex properties with products types including apartments, villas, offices and retail shops etc. 24 Below are the breakdown of land bank by cities and a map showing the geographic locations and the land bank of the projects of the Group in the PRC. The saleable gross floor area ( GFA ) of the properties comprising the projects which had not been sold or pre-sold as at 31 December 2015 ( land bank ) was 6,433,740 sq.m.. 6,433,740 Land bank by cities as at 31 December 2015 Chongqing 52% Xi an 8% Nanjing & Jurong 12% Foshan 20% Guangzhou 8% 23

25 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) A map showing the geographical location and land bank of the projects of the Group in the PRC as at 31 December 2015 Chongqing Project Saleable GFA in the future (sq.m.) Changjiahui Evian River Bay Central Avenue Jin Xing Hui Xiao Qu Total 1,355, ,583 1,449,900 91,930 3,376,032 Xi an Project Saleable GFA in the future (sq.m.) Evian Qujiang 513,685 Nanjing and Jurong Project Saleable GFA in the future (sq.m.) Zijinshan No.1 49,708 Yonghuafu 2,813 Mr. Mountain 17,060 Evian County 123,425 Evian Huafu 226,454 The Orchid Ravine 212,935 China Merchants International E City E Total 115, ,587 Foshan Project Saleable GFA in the future (sq.m.) Evian Water Bank Evian Upper City Evian Tianhui Evian Xicheng Park China Merchants Land Centre Evian Yongjingwan Evian Huafu Evian Gongguan 230,257 China Merchants Zhenyuan 124,961 Total 5,628 2,823 82, , , , ,958 1,290,971 Guangzhou Project Saleable GFA in the future (sq.m.) Jinshan Valley 412,741 Huambo Total 92, , CHINA MERCHANTS LAND LIMITED Annual Report 2015

26 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) The table below details the Group s property development projects as at 31 December 2015 which (i) had been completed, (ii) were under development, or (iii) were held for future development. All figures in relation to area are rounded up to the nearest whole number: (i)(ii) (iii) Project The Company s attributable interest in the projects Total GFA Land bank GFA completed Total GFA saleable/ rentable Completed Under development Future development Of which sold and delivered Of which pre-sold but not yet delivered Of which not pre-sold/ held for investment GFA under development Total GFA saleable/ rentable Of which pre-sold Total GFA Total GFA saleable (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) Foshan Evian Water Bank 50.00% 655, , , ,181 11,215 Evian Upper City 50.00% 355,993 5, , , ,586 3,751 5,628 Evian Tianhui 50.00% 301,818 2, , , ,989 1,129 2,823 Evian Xicheng 50.00% 438,393 82, , , ,715 93,662 43,355 54,311 48,975 10,134 Park % 302, , , ,612 19,329 China Merchants Land Centre 51.00% 222, , , ,381 5,357 Evian Yongjingwan 50.00% 233, , , ,742 50,901 Evian Huafu 50.00% 362, , , ,616 66,133 15,733 48, , ,334 16, ,717 97,398 Evian Gongguan 55.00% 317, , , ,409 1,355 76,592 42, , ,963 79,016 76,832 China Merchants Zhengyun 50.00% 133, , , ,961 Foshan subtotal 3,324,902 1,290,971 1,958,517 1,792,059 1,446, , ,018 1,186,652 1,075, , , ,230 Guangzhou Jinshan Valley % 1,339, , , , ,494 8,288 86, , , , , ,011 Huambo 51.00% 126,363 92, , ,611 10,887 Guangzhou subtotal 1,465, , , , ,494 8,288 86, , , , , ,011 25

27 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Project The Company s attributable interest in the projects Total GFA Land bank GFA completed Total GFA saleable/ rentable Completed Under development Future development Of which sold and delivered Of which pre-sold but not yet delivered Of which not pre-sold/ held for investment GFA under development Total GFA saleable/ rentable Of which pre-sold Total GFA Total GFA saleable (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) Chongqing Changjiahui 50.00% 1,895,954 1,355, , , ,147 7, , , ,123 5,719 1,102, ,575 Evian River Bay % 536, , , ,838 29, , , ,420 Central Avenue 50.00% 1,550,496 1,449, , ,856 78,904 1,190,274 1,173,948 Jin Xing Hui Xiao Qu % 98,044 91,930 98,044 96,107 4,177 Chongqing subtotal 4,081,446 3,376, , , ,147 36, , , ,086 88,800 2,660,999 2,333,943 Nanjing & Jurong Zijinshan No % 213,870 49, , ,376 94,009 1,659 49,708 Yonghuafu 51.00% 179,048 2, , , ,288 1,297 2,813 3,404 Mr. Mountain 26.01% 74,573 17,060 74,573 64,495 47,435 Evian County 26.01% 212, , , ,905 65,480 Evian Huafu 51.00% 358, , , ,932 47,727 42,249 42,249 The Orchid Ravine 51.00% 347, , , ,373 65,335 96,704 66,897 China Merchants International E City E 70.00% 228, , , ,759 99,113 44,546 44,546 Nanjing & Jurong subtotal 1,613, , , , ,297 2,956 52,521 1,040, , , , ,692 Xi'an Evian Qujiang % 538, , , ,914 4, , ,352 Xi an subtotal 538, , , ,914 4, , ,352 Total 11,024,709 6,433,740 3,491,588 3,068,656 2,321, , ,510 3,962,405 3,550, ,716 3,570,716 3,136, CHINA MERCHANTS LAND LIMITED Annual Report 2015

28 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Note: The table below shows the address, existing usage and actual/ expected completion date of the property development projects of the Group as at 31 December Project Address Existing usage Actual/expected completion date (Year/Month) Foshan Evian Water Bank Northern side of Yuhe Road and eastern side of Fenjiang South Road Dongping New Town Foshan City Guangdong Province The PRC Commercial and residential July 2012 Evian Upper City Northern side of Kuiqi Road and western side of Guilan Road Chancheng District Foshan City Guangdong Province The PRC Residential and commercial May 2013 Evian Tianhui Qiandenghu Park Nanping Road Nanhai District Foshan City Guangdong Province The PRC Residential and commercial September 2014 Evian Xicheng No. 3 Keji North Road Shishan Town Nanhai District Foshan City Guangdong Province The PRC 3 Residential and commercial June 2017 Park Northern side of Xingye Road and eastern side of Longpan West Road Desheng Business District Shunde New Town Shunde District Foshan City Guangdong Province The PRC Residential and commercial August 2017 China Merchants Land Centre Western side of a planning road eastern side of Guilan Road northern side of a planning road and southern side of Haiqi Road A27 Block of Guicheng Street Nanhai District Foshan City Guangdong Province The PRC A27 Commercial May

29 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Project Address Existing usage Actual/expected completion date (Year/Month) Evian Yongjingwan North to Jihua Bridge west to Tung Ping River Chancheng District Foshan City Guangdong Province The PRC Residential and commercial September 2017 Evian Huafu Xinyou Innovative Technology Industrial Park Beihu 1st Road Luocun Management Office Shishan Town Nanhai District Foshan City Guangdong Province The PRC Residential and commercial September 2017 Evian Gongguan Dazheng Road Jiujiang Town Nanhai District Foshan City Guangdong Province The PRC Residential and commercial March 2018 China Merchants Zhenyuan East of Wenhua Road north of Caihong Road Chancheng District Foshan City Guangdong Province The PRC Residential and commercial February 2017 Guangzhou Jinshan Valley Fei E Ling Zhongcun Town Shatou Street Panyu District Guangzhou City Guangdong Province The PRC Residential and commercial March 2017 Huambo Huambo Business District Nancun Town Panyu District Guangzhou City Guangdong Province The PRC Commercial September CHINA MERCHANTS LAND LIMITED Annual Report 2015

30 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Project Address Existing usage Actual/expected completion date (Year/Month) Chongqing Changjiahui Danzishi Nan an District Chongqing City The PRC Residential and commercial August 2021 Evian River Bay Eastern side of Babin Road and northern side of Neihuan Expressway Banan District Chongqing City The PRC Residential and commercial May 2019 Central Avenue Standard Sub-zone F Lianglu Zone Yubei District Chongqing City The PRC F Residential and commercial August 2024 Jin Xing Hui Xiao Qu East of Yu Ao Da Dao and west of Jian Bei Si Zhi Lu Jiang Bei District Chongqing City The PRC Residential and commercial July 2017 Nanjing & Jurong Zijinshan No.1 Northeast corner of Zhongshanmen Avenue and Taiyangcheng Road Qixia District Nanjing City Jiangsu Province The PRC Residential and commercial November 2013 Yonghuafu Southeast corner of Yikang Road and Taishan Road Jianye District Nanjing City Jiangsu Province The PRC Residential December 2015 Mr. Mountain South of 12th Xue Road east of Wushi Road High-tech Park Jiangning District Nanjing City Jiangsu Province The PRC Residential June

31 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Project Address Existing usage Actual/expected completion date (Year/Month) Evian County East of 7th Guihuajing Road Jiangning Airport Industrial District Nanjing City Jiangsu Province The PRC Residential December 2016 Evian Huafu West of Jing 5th Road in phrase 2 Maigaoqiao Street Qixia District Nanjing City Jiangsu Province The PRC Residential and commercial March 2019 The Orchid Ravine East of Xing Huo Bei Lu and south of Yong Xin Lu Pukou Gaoxin Zone Nanjing City Jiangsu Province The PRC Residential and commercial June 2019 China Merchants International E City E East of Baosi Road south of Jingjiu Road Baohua Town Jurong City Jiangsu Province The PRC Commercial and residential September 2017 Xi an Evian Qujiang South of Jinyang Road east of Xinkaimen South Road north of Chuangyi Avenue and west of Xikang Highway West Fudao Qujiang New District Xian City Shanxi Province The PRC Residential and commercial August 2019 North of Chuangyi Avenue west of Xikang Highway Qujiang New District Xi an City Shannxi Province, The PRC East of Xinkaimen South Road Qujiang New District Xi an City Shanxi Province The PRC 30 CHINA MERCHANTS LAND LIMITED Annual Report 2015

32 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Contracted sales, the Group, together with its associate and joint venture, recorded contracted sales amount of approximately RMB8,950,200,000 in aggregate from five cities and the contracted sales area in aggregate was approximately 787,010 sq.m.. 8,950,200, , contracted sales in area by region (sq.m.) 2015 contracted sales amount by region (RMB million) Foshan 35.4% (278,773) Nanjing & Jurong 38.5% (302,630) Foshan 23.2% (2,073.2) Nanjing & Jurong 45.5% (4,076.0) Xi an 0.4% (32.2) Xi an 0.6% (4,581) Guangzhou 15.4% (121,389) Chongqing 10.1% (79,637) Guangzhou 22.6% (2,021.9) Chongqing 8.3% (746.9) Newly Acquired Land Bank 2 parcels of land were acquired during the year ended 31 December 2015 as follows: Projects Foshan China Merchants Zhenyuan Jurong China Merchants International E City E Total consideration Total site area Total permissible area Average land premium (RMB million) (sq.m.) (sq.m.) (RMB/sq.m.) ,402 99,407 6, , , Total , ,624 2,984 31

33 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Foshan In 2015, contracted sales amount in Foshan were approximately RMB2,073.2 million and contracted sales area was 278,773 sq.m. As at 31 December 2015, total GFA of the Group s projects in Foshan reached 3,324,902 sq.m. and the saleable GFA in the future amounted to 1,290,971 sq.m. 2, ,773 3,324,902 1,290,971 In 2015, sales of the Group s projects in Foshan mainly comprised of Evian Huafu, Evian Yongjinwan and Evian Xicheng: Evian Huafu is a residential project located at the core area of Xiaode River Plate, Luocun, Nanhai District, Foshan City, with convenient transportation, shopping, entertainment, medical and educational facilities reachable within 5 minutes drive. It only takes 10 minutes drive to Foshan West Railway Station and Foshan Airport as well as the Changui Center of Foshan and 20 minutes drive to Guangzhou. The geographical location near Xiaode River bestows Evian Huafu a brilliant view of natural beauty Photo of Evian Huafu 32 CHINA MERCHANTS LAND LIMITED Annual Report 2015

34 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Foshan (continued) Evian Yongjinwan is a French style residential project located at the core area of Ludao River, Chancheng District, Foshan City. It features 40 sets of villa around Ludao River and 8 high-rise units with river view. In the surrounding area of the project stand the original ecological natural landscape of Ludao River of 1,500 mu and a unique Lingnan river view of Binjiang which runs for 4.5 km. As for transportation, Evian Yongjinwan has sophisticated and convenient transportation network in close proximity to main traffic lines like Jihua Road and Foshan First Ring Road , Computerised photo of Evian Yongjinwan Evian Xicheng is a residential and commercial complex located in Nanhai District of Foshan, enjoying the view of Bo Ai Lake to the south. Photos of Evian Xicheng 33

35 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW (continued) Property Development Business (continued) Guangzhou In 2015, contracted sales amount in Guangzhou were approximately RMB2,021.9 million and contracted sales area was 121,389 sq.m. As at 31 December 2015, total GFA of the Group s projects in Guangzhou reached 1,465,839 sq.m. and the saleable GFA in the future amounted to 505,465 sq.m. 2, ,389 1,465, ,465 In 2015, the Group s saleable project in Guangzhou was Jinshan Valley, which is a high-end residential and commercial complex located in Panyu District of Guangzhou. It is conveniently adjacent to various major expressways in the area and is within 15 minutes driving distance from the Pearl River New City, the central business district of Guangzhou. 15 Photos of Jinshan Valley 34 CHINA MERCHANTS LAND LIMITED Annual Report 2015