Corporate Information Ugland House South Church Street Post Office Box 309 George Town Grand Cayman Cayman Islands British West Indies

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1 Annual Report 2009 MIANYANG BEIJING HEFEI SHENYANG ANSHAN TIANJIN DALIAN QINGDAO CHENGDU WUXI CHONGQING WUHAN SUZHOU HANGZHOU CHANGSHA NINGBO FUZHOU XIAMEN SHENZHEN NANTONG SHANGHAI

2 Corporate Information Ugland House South Church Street Post Office Box 309 George Town Grand Cayman Cayman Islands British West Indies Directors Executive Director Wang Yin (Chairman) (Appointed as Chairman on 18 June 2009) Wu Xiangdong (Managing Director) (Appointed on 18 June 2009) Song Lin (Chairman) (Resigned on 18 June 2009) Non-Executive Director Jiang Wei Yan Biao Li Fuzuo Du Wenmin Ding Jiemin Liu Yan Jie (Resigned on 20 January 2010) Independent Non-Executive Director Wang Shi Andrew Y. Yan Ho Hin Ngai, Bosco Wan Kam To, Peter (Appointed on 3 March 2009) Frederick Ma Si Hang (Appointed on 8 March 2010) Chan Mo Po, Paul (Resigned on 1 January 2009) Company Secretary Lo Chi Lik, Peter (Appointed on 5 August 2009) Lee Yip Wah, Peter (Resigned on 5 August 2009) Auditor Deloitte Touche Tohmatsu Share Registrar Tricor Standard Limited 26/F., Tesbury Centre 28 Queen s Road East Wanchai, Hong Kong Registered Office Ugland House South Church Street Post Office Box 309 George Town Grand Cayman Cayman Islands British West Indies Head Office Room 4301, China Resources Building 26 Harbour Road, Wanchai, Hong Kong Website Address

3 Contents Group Structure Schedule of Principal Properties Chairman s Statement Management Discussion and Analysis Biographical Details of Directors and Senior Management Corporate Social Responsibility Corporate Governance Report Report of the Directors Independent Auditor s Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Financial Summary

4 Group Structure CHINA RESOURCES (HOLDINGS) COMPANY LIMITED 63.09% China Resources Land Limited Property Development Investment Property Construction & Decoration Furniture Manufacturing & Sales Beijing Shanghai Shenzhen Chengdu Wuhan Hefei Ningbo Changsha Suzhou Xiamen Tianjin Chongqing Mianyang Hangzhou Wuxi Dalian Shenyang Fuzhou Qingdao Nantong Anshan Beijing Shanghai Shenzhen Hangzhou Wuxi Shenyang Chengdu Dalian Suzhou Chongqing Hefei Qingdao Anshan Mainland China Mainland China Beijing Shenyang Anshan Dalian Tianjin Qingdao Chengdu Hefei Suzhou Nantong Wuxi Shanghai Hangzhou Ningbo Mianyang Wuhan Chongqing Changsha Fuzhou Xiamen Shenzhen 2 Annual Report 2009

5 Schedule of Principal Properties Properties held for Investment or Own Use Attributable Beneficial Interest of China Resources Land Limited Approximate Total Gross Floor Area (sqm) Type Lease Term 100% 65,222 O Beijing China Resources Building Medium Term 8 Lease No. 8 Jianguomen North Avenue, Dongcheng District, Beijing 100% 97,139 Shanghai China Resources Times Square Medium Term Mall 51,190 C Lease Office 36,843 O 500 No. 500 Zhangyang Road, Pudong, Shanghai 100% 323,748 Shenzhen City Crossing Medium Term The MIXc 159,585 C Lease China Resources Buliding 40,990 O Grand Hyatt 67,506 H Car Park 55,667 CP No Shennan East Road and No.1881 Baoan South Road, Luohu District, Shenzhen 100% 13,789 C Huarui Building Medium Term 1001 Lease No Baoan South Road, Luohu District, Shenzhen C Commercial CP Car Park O Office R Residential H Hotel Beijing China Resources Building Shanghai China Resources Times Square Shenzhen MIXc Annual Report

6 Schedule of Principal Properties Properties held for Investment or Own Use Attributable Beneficial Interest of China Resources Land Limited Approximate Total Gross Floor Area (sqm) Type Lease Term 96.07% 36,184 C Xidan Cultural Centre Medium Term 180 Lease No.180 Xidan North Avenue, Xicheng District, Beijing 48.04% 54,214 / Huawei Building R/C Medium Term Lease Xidan North Avenue, Xicheng District, Beijing 15.30% 70,058 / Huanan Building C/O Medium Term Lease Xidan North Avenue, Xicheng District, Beijing 96.07% 16,787 C Grand Constellation Shopping Mall Medium Term Lease Huayuan Street, Xicheng District, Beijing 96.07% 10,685 C U-Space Shopping Mall Medium Term 8 Lease No. 8 Guangqumenwai Avenue, Chaoyang District, Beijing 96.07% 17,952 C Jing Tong Shops Medium Term Lease Chaoyang Road, Chaoyang District, Beijing C Commercial CP Car Park O Office R Residential H Hotel 4 Annual Report 2009

7 Schedule of Principal Properties Properties held for Investment or Own Use Attributable Beneficial Interest of China Resources Land Limited Approximate Total Gross Floor Area (sqm) Type Lease Term % 4,155 / Building 22, Guanyingyuan R/C Medium Term Lease Xinjiekou South Street, Xicheng District, Beijing 96.07% 3,926 C Jin Hui Garden Medium Term Lease Daxing District, Beijing A 96.24% 30,863 O Phoenix Place Tower A Medium Term Lease Sanyuanqiao, Chaoyang District, Beijing 96.07% 13,210 C Phoenix City Commercial Street Medium Term Lease Sanyuanqiao, Chaoyang District, Beijing % 5,681 C Building 49, Fortune Island, Jade City Medium Term Lease Daxing District, Beijing B % 2,007 C Building 1, Plot B2, Jade City Medium Term Lease Daxing District, Beijing C Commercial CP Car Park O Office R Residential H Hotel 2,872,524 Note: Not including Beijing Phoenix Plaza, Beijing Oak Bay Commercial Property, Beijing China Resources Building phase 2, Shanghai Bund Side Apartment, Chengdu Jade City Commercial Property, Chengdu Twenty-Four City Commercial Property, Chengdu Oak Bay Commercial Property, Mianyang Project Commercial Property, Chengdu Donghu Project Commercial Property, Hefei Park Lane Manor Commercial Property, Hangzhou MIXc, Wuxi Taihu International Community Commercial Property, Hotel in Dalian Oriental Xanadu, Suzhou Xiangcheng Project Commercial Property, Chongqing Twenty-Four City Commercial Property, Shenyang City Crossing, Shenyang CR Plaza, Qingdao Submarine School Project Commercial Property, Anshan Education Bureau Project Commercial Property, all of which are currently under construction, totalling 2,872,524 square meters. Annual Report

8 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Majestic Garden Jianxiangqiao, Chaoyang District, Beijing 96.07% 18,085 50,000 / O/C 11 6 Jun/11 Planning in Progress Eco Living 305 No.305 Guanganmenwai Aveune, Xuanwu District, Beijing 96.07% 51,620 95,303 / R/C Dec/10 Construction in Progress Beijing Oak Bay Phase 1 Qinghe, Haidian District, Beijing 98.00% 98,899 6,989 R Dec/09 Completed Beijing Oak Bay Phase 2 Qinghe, Haidian District, Beijing 98.00% 184, ,047 R Dec/11 Construction in Progress Mentougou Project Mentougou District, Beijing 96.07% 201, ,121 R Dec/11 Planning in Progress 17 Daxing Plot 17 Daxing District, Beijing 96.07% 123, ,323 R Dec/12 Planning in Progress C Commercial CP Car Park O Office R Residential H Hotel Eco Living Beijing Oak Bay 6 Annual Report 2009

9 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Hongtong Technology Building Project Dongcheng District, Beijing 100% 17,767 37,344 / R/C na Planning in Progress The Bund Side Phase 1 Huangpu District, Puxi, Shanghai 100% 26,569 7,472 / R/C Dec/08 Completed The Bund Side Phase 2 Huangpu District, Puxi, Shanghai 100% 32,935 83,735 / R/C Dec/10 Construction in Progress Shanghai Oak Bay Phase No.1088, Zhenghe Road, Shanghai 100% 68,215 14,540 / R/C Dec/09 Completed Shanghai Oak Bay Phase No.1088, Zhenghe Road, Shanghai 100% 38,155 71,835 / R/C Dec/10 Construction in Progress Shanghai Oak Bay Phase No.1088, Zhenghe Road, Shanghai 100% 37,877 91,352 / R/C Dec/11 Planning in Progress C Commercial CP Car Park O Office R Residential H Hotel The Bund Side Phase 2 Shanghai Oak Bay Annual Report

10 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Shanghai Jiading Nanxiang Project Jiading District, Shanghai 100% 266, ,197 R Dec/12 Planning in Progress Shanghai Songjiang Sijing Project Songjiang District, Shanghai 100% 121, ,719 R Dec/12 Planning in Progress Shenzhen Park Lane Manor Baoan South Road, Shenzhen 100% 14,265 10,950 R Dec/09 Completed -- Chengdu Jade City Phase 1 to Phase 4 Jinjiang District, Chengdu 100% 301,544 53,986 / R/C Dec/08 Completed Chengdu Jade City Phase 5 Jinjiang District, Chengdu 100% 69, ,392 / R/C Dec/10 Construction in Progress Chengdu Phoenix City Phase 1 South Third Ring Road, Chengdu 100% 72,267 60,983 R Dec/09 Completed Chengdu Phoenix City Later Phases South Third Ring Road, Chengdu 100% 84, ,786 R Dec/10 Construction in Progress C Commercial CP Car Park O Office R Residential H Hotel Shenzhen Park Lane Manor Chengdu Jade City Chengdu Phoenix City 8 Annual Report 2009

11 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion 24 Chengdu Twenty-Four City Phase 1 East Second Ring Road, Chengdu 100% 75,747 4,147 R Dec/09 Completed 24 Chengdu Twenty-Four City Later Phases East Second Ring Road, Chengdu 100% 476,445 1,266,148 R Dec/10 Construction in Progress Chengdu Oak Bay Pi County, Chengdu 100% 126, ,511 R Dec/11 Construction in Progress Chengdu Qiangyang Project Qingyang District, Chengdu 100% 112, ,420 R Dec/11 Planning in Progress Chengdu Wukuaishi Project Jinniu District, Chengdu 100% 23,567 84,483 / R/C Dec/11 Planning in Progress Chengdu Donghu Project Jinjiang District, Chengdu 100% 14,266 71,716 R Dec/11 Planning in Progress Mianyang Project Kechuangyuan District, Mianyang 100% 277, ,949 R Dec/11 Planning in Progress C Commercial CP Car Park O Office R Residential H Hotel 1 Chengdu Twenty-Four City 1 2 Chengdu Twenty-Four City 2 Annual Report

12 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Wuhan Phoenix City Jiyuqiao, Wuchang District, Wuhan 100% 50,464 8,173 / R/C Dec/07 Completed Wuhan Minzhulu Project Minzhu Road, Wuchang District, Wuhan 100% 13,744 41,231 / R/C Dec/10 Construction in Progress Wuhan Central Park Phase 1 Hanyang District, Wuhan 100% 52,555 29,944 / R/C 10 6 Jun/10 Construction in Progress Wuhan Central Park Later Phases Hanyang District, Wuhan 100% 71, ,602 CP Dec/10 Planning in Progress Hefei Park Lane Manor Phase 1 Crossing of Wangjiang West Road and Hezuohua South Road, Hefei 100% 76,552 56,767 / R/C Dec/09 Completed C Commercial CP Car Park O Office R Residential H Hotel Wuhan Phoenix City Wuhan Central Park 10 Annual Report 2009

13 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Hefei Ziyunfu Project Changjiang East Avenue, Yaohai District, Hefei 100% 53, ,500 R 11 6 Jun/11 Construction in Progress Hefei Zhengwuqu Project Zhengwu District, Hefei 100% 221, ,000 / R/C Dec/12 Planning in Progress Hangzhou MIXc Residence 737 No.737, Fuchun Road, Jianggan District, Hangzhou 60% 23,556 5,113 R 10 4 Apr/10 Construction in Progress Hangzhou MIXc Service Apartment 701 No.701, Fuchun Road, Jianggan District, Hangzhou 60% na 92,500 R Dec/12 Planning in Progress Hangzhou Zhijiang Project South Zhijiang Road, Zhijiang District, Hangzhou 100% 90, ,280 R Dec/12 Planning in Progress C Commercial CP Car Park O Office R Residential H Hotel Hangzhou MIXc Residence Hangzhou MIXc Annual Report

14 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Wuxi Taihu International Community Phase 2 60% 101,976 89,918 R Dec/09 Completed 88 No.88, Jinshi Road, Wuxi Wuxi Taihu International Community Phase 3 60% 79,263 60,211 R Dec/10 Construction in Progress 88 No.88, Jinshi Road, Wuxi Wuxi Taihu International Community Later Phases 60% 356, ,325 R Dec/11 Planning in Progress 88 No.88, Jinshi Road, Wuxi Dalian Maritime Phase 1 100% 74,418 24,748 R Dec/09 Completed Binhai New District, Development Zone, Dalian Dalian Maritime Phase 2 Binhai New District, Development Zone, Dalian 100% 59, ,583 R Dec/12 Construction in Progress C Commercial CP Car Park O Office R Residential H Hotel Wuxi Taihu International Community Dalian Maritime 12 Annual Report 2009

15 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Dalian Maritime Later Phases Binhai New District, Development Zone, Dalian 100% 323, ,195 R Dec/12 Planning in Progress Dalian Oriental Xanadu Phase 1 Xinghaiwan No.4 Road, Shahekou District, Dalian 55% 71,400 11,112 R Dec/09 Completed Dalian Oriental Xanadu Phase 2 Xinghaiwan No.4 Road, Shahekou District, Dalian 55% 10,374 73,920 R Oct/13 Planning in Progress Dalian Oriental Xanadu Phase 3 Xinghaiwan No.4 Road, Shahekou District, Dalian 55% 23,700 22,760 R 12 8 Aug/12 Planning in Progress Ningbo Tuscany Lake Valley Phase 2 Dongqianhu District, Ningbo 100% 96,442 24,274 R Dec/10 Construction in Progress C Commercial CP Car Park O Office R Residential H Hotel Dalian Oriental Xanadu Ningbo Tuscany Lake Annual Report

16 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Ningbo Tuscany Lake Valley Phase 3 Dongqianhu District, Ningbo 100% 107,013 33,875 R Dec/12 Planning in Progress Ningbo Cixi Cenrtal Park Phase 2 Kandun Street, Cixi, Ningbo 100% 47,125 64,929 R Dec/10 Construction in Progress Ningbo Cixi Cenrtal Park Later Phases Kandun Street, Cixi, Ningbo 100% 72, ,431 R Dec/11 Planning in Progress Suzhou Villa Pingjiang District, Suzhou 100% 96,564 55,085 R 10 6 Jun/10 Construction in Progress Suzhou Xiangcheng Project Xiangcheng District, Suzhou 100% 170, ,543 R Dec/12 Planning in Progress Changsha Phoenix City Phase 1 Changsha Town, Changsha 100% 92,165 20,399 R Dec/09 Completed C Commercial CP Car Park O Office R Residential H Hotel Ningbo Cixi Central Park Suzhou Villa 14 Annual Report 2009

17 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Changsha Phoenix City Phase 2 Changsha Town, Changsha 100% 129, ,374 R Dec/10 Construction in Progress Changsha Phoenix City Later Phases Changsha Town, Changsha 100% 162, ,497 R Dec/11 Planning in Progress Wang Jiang Project Hanpu Town, Wangcheng county, Changsha 100% 153, ,296 R Dec/12 Planning in Progress Chongqing Qianweichang Project Dashiba Street, Jiangbei Disrict, Chongqing 100% 171, ,665 R Dec/12 Planning in Progress Chongqing Twenty-Four City Phase 1 P Section P of Dayangshi, Jiulongpo District, Chongqing 100% 86, ,354 R 10 6 Jun/10 Construction in Progress Chongqing Twenty-Four City Later Phases P Section P of Dayangshi, Jiulongpo District, Chongqing 100% 322,082 1,589, Dec/11 Planning in Progress C Commercial CP Car Park O Office R Residential H Hotel Changsha Phoenix City Chongqing Twenty-Four City Annual Report

18 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Shengyang Oak Bay Yuhong District, Shenyang 100% 445, ,476 R Dec/10 Construction in Progress Shenyang City Crossing Heping District, Shenyang 100% 44, ,083 / R/C Dec/11 Construction in Progress The Arch Shenyang Tiexi District, Shenyang 100% 96, ,461 / R/C 11 6 Jun/11 Construction in Progress Shenyang CR Plaza Tiexi District, Shenyang 100% 37, ,040 / R/C Dec/12 Construction in Progress Fuzhou Oak Bay West Hongwan Road, Cangshan District, Fuzhou 100% 360, ,108 R Dec/11 Construction in Progress Xiamen Oak Bay Xingbei Road, Jimei District, Xiamen 100% 94, ,826 R Dec/12 Construction in Progress C Commercial CP Car Park O Office R Residential H Hotel Shenyang Oak Bay Shenyang City Crossing 16 Annual Report 2009

19 Schedule of Principal Properties Properties under Development Attributable Beneficial Interest of China Resources Land Limited Approximate Total Site Area (sqm) Approximate Unsold Gross Floor Area (sqm) Type Estimated Date of Completion State of Completion Tianjin Xiangweidi Jiulong Street,Shuanggang Town, Jinnan District, Tianjin 100% 105, ,541 R Dec/11 Construction in Progress Anshan Education Bureau Project Tiedong District, Anshan 100% 101, ,200 R 12 6 Jun/12 Planning in Progress Anshan Carrefour North Project Tiedong District, Anshan 100% 54, ,200 R 12 9 Sep/12 Planning in Progress Nantong Nengda Commercial Zone Project East Xinkai North Road, Economic Technical Development Zone, Nantong 100% 185, ,200 R Dec/11 Planning in Progress Qingdao Submarine School Project 10 No. 10, Shangdong Road, Shinan District, Qingdao 100% 135, ,700 / R/C na Planning in Progress C Commercial CP Car Park O Office R Residential H Hotel Tianjin Xiangweidi Anshan Education Bureau Project Annual Report

20 Chairman s Statement The Group aims to become a competitive and leading integrated provider of quality property and to become an industry leader both in terms of business scale and of profitability in the coming years. During the course of 2009, the Group adhered to the existing and effective products and marketing strategies. At the same time, the Group has made great efforts in strengthening its internal management, and reinforcing its cost control measures with an aim to achieve a higher operating efficiency. Consequently, the Group has not only achieved a balanced and steady growth for the year of 2009 in both of its core business segments, namely residential property development and property leasing, but also laid down a solid foundation for satisfactory results of Annual Results and Dividend Distribution In the year of 2009, the Group adopted the interpretation to the Accounting Standard Agreements for the Construction of Real Estate, which requires to change the timing of revenue recognition of property sales from completion of properties to delivery of properties to the purchasers. The impact of new accounting policy in the recognition of revenue from property sales started to be reflected in the Group s 2009 interim results. 18 Annual Report 2009

21 Chairman s Statement % 121.1% 107.9% % According to the new accounting policy in the recognition of the revenue from property sales, the Group s consolidated turnover and profit attributable to shareholders for 2009 reached 16,601 million and 4,409 million respectively, representing a respective increase of 77.3% and 121.1% over the corresponding period of Though affected by the policy changes in the revenue recognition, the residential development business s turnover still recorded a strong increase, rising to HK$14,450 million with a year on year growth of 107.9%. For 2009, the business of property leasing and management sustained its growth, with a turnover of HK$1,292 million, an increase of 14.2% over the same period of % 34.3% EBITDA EBITDA 69.1% 69.5% For 2009, the gross profit margin of the residential development business was 34.1%, at par with 34.3% for the whole year of 2008; EBITDA profit margin of property leasing business stayed high at 69.1%, compared with 69.5% for 2008 if excluding revenue portion from property management fee % % , , In consistence with its payout policy, the Group declared a final dividend of HK18.3 cents per share, an increase of 120.5% compared to HK 8.3 cents per share for the corresponding period of Together with the interim dividend of HK 5.4 cents, the annual dividend of 2009 reached HK23.7 cents per share. The payout ratio of 2009 was 27.0%, the same level as for Land Bank In 2009, the Group acquired new land bank with a total gross floor area of 6.05 million square meters. As of 31 December 2009, the Group had established its presence in 21 cities nationwide with a total land bank of million square meters in gross floor area. Land bank for residential projects, investment properties under construction and investment properties in operation was million square meters, 2.87 million square meters and 0.80 million square meters respectively. Annual Report

22 Chairman s Statement Now the Group has basically formed a land bank that is ideally balanced in its proportion for residential development and investment properties, in its geographic mix. The size of this land bank is sufficient for the Group s development in the coming years. Development Strategy Our long-stated and well-articulated mission is to provide quality and innovative properties and services in mainland China to constantly enhance the productivity along the full value chain of the property business by way of differentiation in product design and provision of comprehensive and integrated services. We are also dedicated to cater for the increasing demand for residential properties from middle-to-high income consumers, the demand for rental premises from brand retailers and that for office space from high-end corporate clients in order to raise the brand awareness of our products and projects. Ultimately, the Group aims to become a competitive and leading integrated provider of quality property and to become an industry leader both in terms of business scale and of profitability in the coming years. + + The differentiation, the unique business model of residential development + property investment + value-added customer services along with quality excellence form the core components of the Group s development strategy, which in turn assures the Group to achieve its vision and helps to build its long-term core competitiveness. 20 Annual Report 2009

23 Chairman s Statement 13 4 In 2009, on the top of the metropolitan complex project City Crossing which has been highly recognized by the market and by peers in the industry, the Group has developed a new series of commercial products, i.e. regional commercial center, with an aim to broaden our commercial product line and to fit into our development plan for geographic expansion for commercial products. To this end, we have taken Beijing Oak Bay as the pilot project for such new commercial product line and will expand the product nationwide once it is proven commercially successful, During the year, the Group s value-added services won a great market response and achieved a great success in Beijing Oak Bay, the pilot project selected to promote the Group s value-added services and to test market reception. The standardized and serialized storage space was overwhelmingly well received by the market and customers in our pilot project Beijing Oak Bay and has now been extended to 13 cities; Coupled with Group s high-end brands and high quality image, the service-aided marketing model featuring tailor-made decoration, and integrated personalized service was successfully applied in King Nine project in Beijing. Having obtained a good response from customers and the market, such marketing practice is now being applied to high-end projects in four other cities. 6 During the year of 2009, the Group launched a number of new projects with distinguishing features, such as the Dalian Xanadu, representing the low-density products; Shenzhen Park Lane Manor, Shanghai Bund Side Phase 2, representing the urban core-area residential projects. All those projects have been well recognized by the industry peers and the market. During the year, six projects of the Group won High Quality Engineering Awards either at municipal or at provincial level. On 10 September 2009, the Group formally launched high-quality brand awareness campaign in Beijing Water Cube. During the public release conference, we have concluded to take quality makes more changes for the city as our brand appeal and fine design guidlines, the high quality engineering standards and service by heart as our brand connotation. The relentless pursuit of high-quality has become a common code of conduct for all staff throughout the Group. Annual Report

24 Chairman s Statement Prospects The Group is confident about the sustainability of a steady and rapid growth in China economy and the healthy development of the real estate industry As of 22 March 2010, the Group has achieved contracted sales of RMB2.93 billion in the year of 2010 at par over the same period of Including the contracted value of RMB19.11 billion in property sales that was achieved before the end of 2009 but not yet recognized, the Group has, as of 22 March 2010, a total development revenue of RMB22.04 billion available for booking overtime. Specifically, the Group has locked up a total revenue of RMB14.21 billion from the residential property development business for recognition in 2010, indicating a great degree of assurance for a sustained growth in the year of (Hang Seng Indexes Co.) On 5 February this year, Hang Seng Indexes Company Limited, the Hong Kong stock index compilation agency, announced that our Group will be included in Hang Seng Index since 8 March The constituent change of Hang Seng Indexes is the first adjustment since May 2009, and also an important milestone event in the Group s corporate history. It not only represents the full recognition of the Group in its development strategy, corporate governance, product competitiveness, future prospects and other aspects by the capital market, but also greatly enhances the image and the influence of the Group. I, on behalf of the Board, would like to take this opportunity to express my sincere thanks to all staff for the great efforts in making this remarkable achievement possible, and to all the shareholders, customers, tenants and different circles of the community for your consistent and persistent supports to our Group. Taking this as a new start, the Group is committed to continuously enhance its all-around capabilities in internal management and cost controls, in product innovation, marketing as well as risk management on its way to better realize its ultimate corporate objectives, i.e. to continuously create values for the society, shareholders, customers and also for our valuable employees. Wang Yin Chairman 26 March 2010, Hong Kong 22 Annual Report 2009

25 Management Discussion & Analysis The differentiation, the unique business model of residential development + property investment + value-added customer services along with quality excellence form the core components of the Group s development strategy, which in turn assures the Group to achieve its vision and help to build its longterm core competitiveness % % In the year of 2009, residential development and leasing operations of the Group delivered satisfactory performances. During the period under review, both contracted sales and progress of our projects were all on schedule, laying down a solid foundation for promising results of 2009 and Review of Residential Development Business in the Year of 2009 In the year of 2009, the Group achieved a contracted sales of RMB 25,089 million with the area sold totaling 2,152,459 square meters, representing a respective increase of 213.8% and 207.0% from the year of Annual Report

26 Management Discussion & Analysis Details in sales breakdown by cities during the year of 2009 are set out as follows: Contracted Value Area Sold City RMB 000 % Sqm % Beijing 5,068, % 277, % Shanghai 2,466, % 56, % Shenzhen 3,720, % 95, % Chengdu 4,321, % 623, % Wuhan 860, % 98, % Hefei 769, % 139, % Hangzhou 127, % 3, % Wuxi 1,451, % 200, % Ningbo 1,980, % 135, % Dalian 2,398, % 171, % Changsha 570, % 160, % Suzhou 373, % 11, % Chongqing 567, % 117, % Shenyang 413, % 60, % Total 25,089, % 2,152, % 24 Annual Report 2009

27 Management Discussion & Analysis Sales details of the Group by projects in the year of 2009: Project Name City Project Type Total GFA Average selling price in the year of 2009 Accumulated area sold as at 31 Dec 2009 Area sold in the year of 2009 (sqm) (sqm) (RMB/sqm) 356, ,186 20,965 22,517 Phoenix City Beijing High density residential 616, , ,261 18,819 Oak Bay Beijing High density residential 217, , ,596 18,143 Eco Living Beijing Mid-low density residential 189,776 98,569 21,824 63,361 The Bund Side Shanghai High density residential 230,795 53,068 34,268 31,631 Oak Bay Shanghai High density residential 110,000 95,352 95,352 39,016 Shenzhen Park Lane Manor Shenzhen High density residential 1,063, , ,630 7,319 Jade City Chengdu Mid-low density residential 1,640, , ,451 7,014 Twenty-Four City Chengdu High density residential 694, , ,632 6,374 Phoenix City Chengdu High density residential 141, ,128 6,604 7,891 Phoenix City Wuhan High density residential 346,696 91,150 91,150 8,837 Central Park Wuhan High density residential 202, ,457 26,346 5,351 French Annecy Hefei Mid-low density residential Annual Report

28 Management Discussion & Analysis Project Name City Project Type Total GFA Average selling price in the year of 2009 Accumulated area sold as at 31 Dec 2009 Area sold in the year of 2009 (sqm) (sqm) (RMB/sqm) 195, , ,123 5,579 Hefei Park Lane Manor Hefei High density residential 197, ,172 3,912 32,619 MIXc Residence Hangzhou High density residential 1,017, , ,710 7,234 Wuxi Taihu International Wuxi Mid-low density residential Community 130,352 90,524 70,626 17,073 Tuscany Lake Ningbo Low density residential 284,348 66,440 62,490 12,219 Central Park Cixi High density residential 166,137 58,345 45,298 30,318 Oriental Xanadu Dalian Mid-low density residential 1,309, , ,482 8,102 Maritime Dalian High density residential 67,595 12,510 11,793 31,646 Suzhou Villa Suzhou Low density residentia 1,198, , ,235 3,560 Phoenix City Changsha High density residential 1,951, , ,887 4,812 Twenty-Four City Chongqing High density residential 280,000 60,539 60,539 6,823 The Arc Shenyang High density residential 26 Annual Report 2009

29 Management Discussion & Analysis ,151, % 68.7% 34.1% 34.3% Details of the Projects Delivered and Booked in 2009 During 2009, the Group s residential development business achieved a turnover of HK$14,450 million with 1,151,089 square meters being recognized, representing a respective increase of 107.9% and 68.7% over the corresponding period in The Group s gross profit margin of the residential development business is 34.1% in the year of 2009, which maintains stable over the 34.3% of Details of the projects booked and turnover of the Group in 2009 are listed below: Project Name Turnover Area Booked 000 HK$ 000 sqm Phoenix City 540,048 22,156 Phoenix Plaza 636,447 39,866 Oak Bay 646,282 37,267 Others 40,990 3,021 Beijing Subtotal 1,863, ,310 The Bund Side 145,853 3,459 Oak Bay 1,362,858 43,842 Shanghai Subtotal 1,508,711 47,301 Shenzhen Park Lane Manor 3,891,481 88,334 Jade City 1,272, ,522 Phoenix City 1,196, ,970 Twenty-Four City 2,202, ,998 Chengdu Subtotal 4,671, ,490 Wuhan Phoenix City 62,700 7,250 French Annecy 162,920 26,988 Hefei Park Lane Manor 122,754 13,350 Hefei Subtotal 285,674 40,338 Wuxi Taihu International Community 628,197 76,261 Ningbo Tuscany Lake 1,156,460 68,060 Changsha Phoenix City 382, ,745 Total 14,450,365 1,151,089 Annual Report

30 Management Discussion & Analysis % % EBITDA 69.1%, 69.5% Since the beginning of 2010, the Group continues to deliver satisfactory performance in project sales. As of 22 March, the contracted value of sales was RMB2,930 million, maintained stable over the same period of Together with the contracted value of RMB13,113 million achieved before the end of 2009 but to be booked in 2010, the Group has so far locked in total development revenue of RMB14,212 million for 2010, thus laying down a solid foundation for promising financial results of Review of Leasing Business in 2009 As of 31 December 2009, book value of the investment properties of the Group totaled HK$16,742 million, which accounted for 17.3% of the total assets of the Group. In accordance with relevant accounting standards, the Group had conducted an evaluation for its investment properties, including projects under construction, and a revaluation gain of HKD$1,351 million (net off taxation) were booked during the period based on an appraisal performed by an independent third party. In the year of 2009, the turnover of property leasing and management business amounted to HK$1,069 million, representing a year-on-year increase of 10.5%. Along with rising rental income, the EBITDA profit margin of the leased properties remained at a relatively high level at 69.1% if excluding revenue portion from residential management fee, largely at par with 69.5% for the year of Annual Report 2009

31 Management Discussion & Analysis The following table sets out the turnover and occupancy rates of the key investment properties in the year of 2009: Investment Property Company 000 Turnover (HK$ 000) % Average Occupancy Rate (%) %YOY %YOY %yoy %yoy Beijing China Resources 152, , % 94.4% 96.4% -2.0% Building CR Land Beijing Others 103,065 84, % 96.6% 92.4% 4.2% Shanghai CR Times Square 189, , % 94.5% 95.5% -1.0% Shenzhen City Crossing 611, , % 99.9% 99.7% 0.2% Other Rental Income 12,314 na na na na na Property Management 223, , % na na na Details of the Group s major leased properties in the PRC are listed below: Property Name City Interest Attributable Attributable to Total GFA GFA the Group (sqm) (sqm) Usage % 323, ,748 Shenzhen City Crossing Shenzhen 159, ,585 The MIXc Retail 40,990 40,990 China Resources Building Office 67,506 67,506 Grand Hyatt Hotel Hotel 55,667 55,667 Car Park Car Park % 13,789 13,789 Huarui Building Shenzhen Hotel Annual Report

32 Management Discussion & Analysis Property Name City Interest Attributable Attributable to Total GFA GFA the Group (sqm) (sqm) Usage % 97,139 97,139 Shanghai CR Times Square Shanghai 51,190 51,190 Mall Retail 36,843 36,843 Office Office % 65,222 65,222 Beijing China Resources Beijing Office Building 96.24% 30,863 29,703 Beijing Office 96.24% 36,184 34,824 Xidan Cultural Centre Beijing Retail 96.24% 16,787 16,155 Grand Constellation Beijing Retail Shopping Mall 96.24% 10,685 10,283 U-Space Mall Beijing Retail 96.24% 17,952 17,277 Jing Tong Shops Beijing Retail 96.24% 13,210 12,714 Beijing Phoenix City Beijing Retail Commercial Street 48.12% 54,214 26,088 Huawei Centre Beijing Retail 15.30% 70,058 10,718 Huanan Building Beijing Retail % 4,155 3,999 Building 22, Guanyingyuan Beijing Office 30 Annual Report 2009

33 Management Discussion & Analysis Property Name City Interest Attributable Attributable to Total GFA GFA the Group (sqm) (sqm) Usage 96.24% 3,926 3,778 Jin Hui Garden Beijing Retail % 5,681 5,467 Building 49, Fortune Island, Beijing Retail Jade City B % 2,007 1,932 Building 1, Plot B2, Jade City Beijing Retail 96.24% 34,729 33,422 Others Beijing Office/Retail * 800, ,258 Total GFA* 441, ,011 Comprising: Retail 178, ,756 Office 81,295 81,295 Hotel 99,502 98,196 Others * 2,872,524 * Not including Beijing Phoenix Plaza, Beijing Oak Bay Commercial Property, Beijing China Resources Building Phase II, Shanghai Bund Side Apartment, Chengdu Jade City Commercial Property, Chengdu Twenty-Four City Commercial Property, Chengdu Oak Bay Commercial Property, Mianyang Project Commercial Property, Chengdu Donghu Project Commercial Property, Hefei Park Lane Manor Commercial Property, The MIXc in Hangzhou, Wuxi Taihu International Community Commercial Property, Hotel in Dalian Oriental Xanadu, Suzhou Xiangcheng Project Commercial Property, Chongqing Twenty-Four City Commercial Property, MIXc in Shenyang, Shenyang CR Plaza, Qingdao Submarine School Project Commercial Property, Anshan Education Bureau Project Commercial Property, all of which are currently under construction, totalling 2,872,524 square meters. Annual Report

34 Management Discussion & Analysis Properties, especially commercial properties will be the product line the Group emphasizes on in the future. Now the Group has formed three tiered commercial product series: metropolitan commercial complex, i.e. City Crossing, Residential plus regional commercial centre, Residential plus district commercial centre. With the success of Shenzhen MIXc, an example of City Crossing, the City Crossing product line is now being copied or will be copied in Hangzhou, Shenyang, Chengdu, Nanjing and Qingdao. Residential plus regional commercial centre product line is now being piloted in Beijing Oak Bay and will also be introduced nationwide after the success of the trial. Moreover, Residential plus district commercial centre, the new product line that is smaller in scale and lower-end than the other two commercial product lines, is now being piloted in our project in Anshan city, Liaoning province in cooperation with China Resource Vanguard, a retail subsidiary under China Resources Enterprises, Limited (0291.HK) and will then be introduced to other cities. 1 2 In the future, the Group plans to launch one to two investment property projects each year. The stable and recurrent rental income from rental properties will offer the Group a greater operational resilience to defend against risks from industry fluctuations while optimizing its earnings mix. Review of Value-added Services In the year of 2009, the Group has further enhanced its project management system and customer value-adding service system. We took Beijing King Nine project as the pilot project to test market reception by offering high-end customers with total personalized and tailor-made furnishing solutions. After the success in Beijing King Nine project, we have expanded such service-aided marketing model to other high-end projects in Shanghai, Suzhou, Dalian and Ningbo. 32 Annual Report 2009

35 Management Discussion & Analysis The standardized and serialized storage space designed by our Group after careful and thorough market research was first introduced in Beijing Oak Bay project, was overwhelmingly well received by the market and customers and is now been extended to other projects. To better meet customers needs, the Group promoted a brand slogan in 2009 quality brings more changes to cities, and principles such as fine design guidelines, the high quality engineering standards and service by heart have become a common code of conduct for all staff throughout the Group In the 2009 s Gallup Customer Satisfaction Survey, the Group s rating of customer satisfaction and overall satisfaction both reached the top end of the bench mark of the industry. Annual Report

36 Management Discussion & Analysis , Land Bank In 2009, the Group added 6.05 million square meters to its land bank. As of the end of December 2009, the total land bank of the Group amounted to million square meters in terms of GFA, which was located in 21 cities. Details are set out below: Location Total GFA (sqm) * Beijing* 2,124,262 Shanghai 1,000,539 Shenzhen 348,487 Chengdu 3,686,021 Wuhan 396,100 Hefei 482,123 Hangzhou 662,538 * Wuxi* 1,210,841 Ningbo 364,925 * Dalian* 1,551,867 Changsha 1,556,591 Suzhou 430,138 Chongqing 2,768,239 Shenyang 2,038,732 Mianyang 893,949 Xiamen 307,826 Tianjin 151,541 Fuzhou 603,108 Nantong 415,200 Anshan 586,400 Qingdao 610,400 Total 22,189,827 * 17# 100% 98.1% 96.2% 60.0% 55.0% * The Group s interest is 100% in Beijing Daxing 17# Project, 98.1% in Beijing Oak Bay Project and 96.2% in all other projects in Beijing. In addition, the Group s interests in Hangzhou MIXc project and Wuxi projects are both 60.0%, while the Group s interest in Dalian Oriental Xanadu Project is 55.0%. 34 Annual Report 2009

37 Management Discussion & Analysis % Share Placement, Borrowings and Debt Ratio In May 2009, the Group raised net proceeds of approximately HK$4,240 million by placing 300 million new shares in open market to independent investors at the net price of HK$14.13 per share. The share placement further enhanced the Group s financial strength and created a greater room for the Group to gear up its balance sheet to fund its growth in the future. As of 31 December 2009, the Group had a total gross borrowing of HK$27,459 million, as well as cash and bank balance of HK$19,514 million. The Group s net debt to equity ratio stood at 21.0%. 51.5% 48.5%6.7% 2.9% 6,411 As of 31 December 2009, 51.5% and 48.5% of the Group s borrowings were denominated in Renminbi and HK dollars respectively. Among the total borrowings, approximately 6.7% of the bank borrowings are repayable within one year while the rest are long term borrowings. The Group has kept its borrowing costs at a relatively low level, with its weighted average interest rate of its bank loans at approximately 2.9% per annum only. Employee and Compensation Policy As of 31 December 2009, the Group had approximately 6,411 full time staff in Mainland China and Hong Kong (including its property management and agency subsidiaries). The Group remunerates its employees based on their performance, experience and the prevailing market wage level. In addition, performance bonuses are granted on a discretionary basis. Other employee benefits include provident fund, insurance and medical coverage, share option scheme, restricted share award scheme, etc. Annual Report

38 Biographical Details of Directors and Senior Management Executive Directors MR. WANG YIN, aged 53 was appointed Chairman of the Company in June He is responsible for the overall business development and strategic planning of the Group s business. He is also a Director and a Vice President of China Resources (Holdings) Co. Ltd. and a Director of China Resources National Corporation. Mr. Wang is also a Director of China Vanke Co., Ltd, which is a listed company in China. Mr. Wang has a Bachelor of Economics degree from Shangdong University in China and an MBA degree from the University of San Francisco in the United States. He joined China Resources (Holdings) Company Limited in MR. WU XIANGDONG, aged 42 was appointed Managing Director of the Company in June 2009, he is also the General Manager of China Resources (Shenzhen) Co., Ltd. Mr. Wu has a double Bachelor s degree in Architectural Management and Mechanics and a Master s degree in Transportation Engineering from Tsinghua University, China and an MBA degree from the University of San Francisco in the United States. Mr. Wu has experience in corporate management and commercial property operation. Mr. Wu joined China Resources (Holdings) Company Limited in 1993 and was the Vice General Manager of China Resources Property Management Limited. Non-Executive Directors MR. JIANG WEI, aged 47, was appointed Non-Executive Director of the Company in February Mr. Jiang is currently a Director, Vice President of China Resources (Holdings) Company Limited and China Resources National Corporation. Mr. Jiang is a Non-Executive Director of China Resources Enterprise, Limited, China Resources Power Holdings Company Limited, China Resources Microelectronics Limited, China Assets (Holdings) Limited and is also an Executive Director of Cosmos Machinery Enterprises Limited and an Independent Non- Executive Director of Greentown China Holdings Limited. He is also a Director of China Vanke Co., Ltd., a listed company in China. Mr. Jiang obtained both his Bachelor s degree in International Trade and Master s degree in International Business and Finance from the University of International Business and Economics in Beijing, China. He joined China Resources (Holdings) Company Limited in Annual Report 2009

39 Biographical Details of Directors and Senior Management MR. YAN BIAO, aged 48 was appointed Executive Director of the Company in February 1996 and was re-designated as Non-Executive Director in February Mr. Yan is a Director of China Resources (Holdings) Company Limited and China Resources National Corporation and is the Director of Legal Affairs of the China Resources Group. He is also a Non-Executive Director of China Resources Enterprise, Limited. Mr. Yan has a Bachelor of Laws degree from the Peking University, China and an MBA degree from the University of San Francisco, USA. He joined China Resources (Holdings) Company Limited in MR. LI FUZUO, aged 45 was appointed Non-Executive Director of the Company in August Mr. Li is currently the Vice President and the Chief Strategy Management Officer of China Resources (Holdings) Company Limited, and the General Manager of its Strategy Management Department. He is also a Non-Executive Director of China Resources Enterprise, Limited, China Resources Gas Group Limited, China Resources Microelectronics Limited and China Resources Cement Holdings Limited. Mr. Li obtained both his Bachelor s and Master s Degrees in Mechanical Manufacturing Engineering from Beijing University of Aeronautics and Astronautics. He joined China Resources (Holdings) Company Limited in MR. DU WENMIN, aged 46 was appointed Non-Executive Director of the Company in August Mr. Du is currently a Vice President and Chief Human Resources Officer of China Resources (Holdings) Company Limited. Mr. Du is also the Non-Executive Director of China Resources Enterprise, Limited, China Resources Gas Group Limited, China Resources Microelectronics Limited, and China Resources Cement Holdings Limited. Mr. Du has an MBA degree from the University of San Francisco, USA. He joined China Resources (Holdings) Company Limited in Annual Report

40 Biographical Details of Directors and Senior Management PROF. DING JIEMIN, aged 52 was appointed Non-Executive Director of the Company in September Prof. Ding is currently the Assistant to the President of Tongji University, the Chairman of Shanghai Tongji Science & Technology Industrial Co., Ltd. (600846), and the President of the Architectural Design and Research Institute of Tongji University. Prof. Ding is also a researcher in structural engineering, an adviser of doctoral students, a China national class 1 registered structural engineer, a registered consultant engineer (in investment), and a senior registered structural engineer in British Royal Institution of Structural Engineers. Prof. Ding Jiemin graduated from Dept. of Building Engineering in Tongji University in He got his master s degree and doctor s degree from Tongji University in 1987 and Prof. Ding is engaged in the research and design in structural engineering. His research direction is super-high and large-span complex structural system. In recent years, he published more than 80 professional articles, and designed dozens of different kinds of buildings, well combining the structural research with the engineering design. Independent Non-Executive Directors MR. WANG SHI, aged 59 was appointed Independent Non-Executive Director of the Company in April Mr. Wang is also the Chairman of China Vanke Co., Ltd, which is listed on the Stock Exchange of Shenzhen, China. Mr. Wang is also an Independent Non-Executive Director of SOHU.Com Inc., Central China Real Estate Group Limited, Shanghai Metersbonwe Fashion and Accessories Co., Ltd. and Modern Media Holdings Limited. He has a Bachelor of Science degree from Lanzhou Railway College in China. II III MR. ANDREW Y. YAN, aged 52 was appointed Independent Non-Executive Director in July He also serves as the Chairman of the Company s Remuneration Committee. Currently, he is the Managing Partner of SAIF Partners III and SB Asia Investment Fund II, and the Executive Managing Director of Softbank Asia Infrastructure Fund (SAIF). Besides, Mr. Yan is also a Non-Executive Director of Digital China Holdings Limited and MOBI Development Co., Ltd, and an Independent Non- Executive Director of Fosun International Limited, all 3 are listed companies in Hong Kong. 38 Annual Report 2009