CMPD Interim Report 2008

Interim Report 2008 Announcement No. 【CMPD】2008－041

Chapter I. Important Prompt, Definitions and Table of Contents

(I) Important Prompt

The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report.

Mr. Sun Chengming - the legal representative, Mr. Huang Peikun – the chief financial officer, and Ms. Xu Yixia – the manager of accounting department declare: the financial reports carried in this report is secured for its truthfulness and completeness.

None of the directors, supervisors, or executives holds any opinion that is against the authenticity, accuracy and integrality of this report’s content.

This report is prepared both in English and Chinese. When there is any conflict in understanding, the Chinese version shall prevail.

The financial statements carried in this report are not audited.

(II) Definitions

These expressions are defined to the followings unless otherwise stated:

The Company, Company and CMPD: China Merchants Property Development Co., Ltd.

Shekou Industrial Zone: China Merchants Shekou Industrial Zone Co., Ltd.

Shenzhen CMRE: Shenzhen China Merchants Real Estate Co., Ltd.

CMPS: Shenzhen China Merchants Power Supply Co., Ltd.

CMWS: Shenzhen China Merchants Water Supply Co., Ltd.

CMPM: China Merchants Property Management Co., Ltd.

Xin An Realty: Shenzhen Xin An Realty Co., Ltd.

Hong Kong Ruijia: Ruijia Investment Industrial Co., Ltd.

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(III) Table of Contents

Chapter I. Important Prompt, Definitions and Table of Contents...... 1 Chapter II. Company Profile...... 3 Chapter III. Movement of Capital Share and Major Shareholders ...... 6 Chapter IV. Directors, Supervisors, and Senior Executives ...... 9 Chapter V. Board of Director’s Report ...... 9 Chapter VI. Important Events...... 16 Chapter VIII. Documents for Inquiring...... 24

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Chapter II. Company Profile

(I) Basic information 1. Legal Name of the Company in Chinese and English and Abbreviations: Full Name in Chinese: 招商局地产控股股份有限公司 Abbreviation in Chinese: 招商地产 Full Name in English: CHINA MERCHANTS PROPERTY DEVELOPMENT CO., LTD Abbreviation in English: CMPD

2. Legal Representative: Sun Chengming

3. Secretary of the Board: Liu Ning Securities Affairs Representative of the Board: Liu Ning (Temporary) Contact Address: 9/F, New Times Plaza, Shekou Industrial Zone, Nanshan District, Shenzhen Postcode: 518067 E-mail: [email protected] Tel.: (0755) 26819600 Fax: (0755) 26819680

4. Registered Address: 9/F, New Times Plaza, Shekou Industrial Zone, Nanshan District, Shenzhen Office Address: 9/F, New Times Plaza, Shekou Industrial Zone, Nanshan District, Shenzhen Postcode: 518067 E-mail: [email protected]

5. Presses Assigned by the Company for Information Disclosure: China Securities Journal, Securities Times and Hong Kong Commercial Daily Internet Website Designated by the CSRC: http://www.cninfo.com.cn Place Where the Interim Report Is Prepared and Kept: Secretariat of the Board of the Company

6. Stock Exchange Listed with: Shenzhen Stock Exchange The 2nd Stock Exchange Listed with: Singapore Exchange Short Forms of the Stocks: China Merchants, China Merchants B Stock Codes: 000024, 200024

7. Other Relevant Information (1) Initial Registration Date: Sep. 19, 1990 (2) Initial Registered Address: Shenzhen (3) Registration Number of the Business License for Enterprises as Legal Persons: QGYSZZ No. 101828 (4) Tax Registration Number: GSSZ 440305618845136, DSSZ 440305618845136 (5) Names and Office Addresses of the CPAs Engaged by the Company: Domestic: Deloitte Touche Tohmatsu CPA Ltd. Office Address: 30/F, Bund Center, Yandong E. Road, Shanghai

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(II) Financial Highlights End of the report Increase/decrease End of last year term (%) Gross Assets 27,799,439,351 25,107,163,682 10.72% Shareholders’ equity attributable to shareholders of the Company 8,047,617,581 7,902,920,455 1.83% Net asset per share attributable to shareholders of the Company 6.35 9.35 -32.09% Same period last Increase/decrease The report term year (%) Operation profit 305,378,795 510,665,365 -40.20% Total profit 316,151,035 530,682,282 -40.43% Net profit attributable to the shareholders of the listed company 218,729,005 417,246,419 -47.58% Net profit after deducting of non-recurring gain/loss attributable to the shareholders of the listed company 239,036,107 415,216,818 -42.43% Basic gains per share 0.207 0.635 -67.40% Diluted gains per share 0.207 0.635 -67.40% Net return on equity (Weighted) 2.74% 9.65% Decreased by 6.91% Cash flow generated by business operation, net -3,170,461,427 -1,689,354,444 87.67% Net Cash flow per share generated by business operation -2.502 -2.301 8.65%

Non-recurring gain and loss items

Non-recurring gain and loss items Amount Gains from disposal of non-current assets -20,658,051 Impairment provisions provided -5,897 Government allowance 948,965 Other non-business gain/expenditure (net) -545,978 Impact of income tax and minor shareholders’ gains/losses -46,141 Total -20,307,102

Indexes calculated in accordance with Regulations on the Information Disclosure of Companies Publicly Issuing Shares (No. 9) are as follows: Net return on equity (%) Earnings per share (RMB) Profit indices On full amortizing weighted Basic Diluted basis average Net profit attributable to the shareholders of the listed company 2.72% 2.74% 0.207 0.207 Net profit deducted non-recurring gain/loss 2.97% 3.00% 0.226 0.226

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Influences of adjustment made under IAS on net profit and net asset (RMB’000)

Net profit attributable to the shareholders Net asset attributable to the shareholders

of the listed company of the listed company

Amount under Chinese 218,729 8,047,618 Accounting Standard Adjusted upon IAS Adjustment of goodwill 1,339,829 Amount under IAS 218,729 9,387,447

[Note] Adjustment on the net asset according to International Accounting Standard was mainly caused by: according to Chinese Accounting Standard and relative regulations, the difference generated by consolidation of entities under same control shall be adjusted to capital reserves, whereas the goodwill generated by consolidation shall be presented as asset separately according to the IAS.

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Chapter III. Movement of Capital Share and Major Shareholders

(I) Movement of Capital Share (in share)

Changed Currently (+,-) Before the change After the change

Transferred from Amount Proportion Bonus shares Others Sub-total Amount Proportion reserves I. Shares with conditional 430,035,906 50.90% 129,010,772 86,007,182 - 214,940,078 644,975,984 50.89% subscription 77,876 1. State-owned legal person shares 301,299,211 35.66% 90,389,763 60,259,843 0 150,649,606 451,948,817 35.66% 2. Other domestic shares 149,494 0.02% 44,848 29,899 - 14,421 163,915 0.01% 60,326 Including: Domestic nature person shares 149,494 0.02% 44,848 29,899 - 14,421 163,915 0.01% (executive shares) 60,326 3. Share held by foreign investors 128,587,201 15.22% 38,576,161 25,717,440 - 64,276,051 192,863,252 15.22% 17,550 Incl. Overseas legal person shares 128,439,676 15.20% 38,531,903 25,687,935 0 64,219,838 192,659,514 15.20% Foreign nature person shares 147,525 0.02% 44,258 29,505 - 56,213 203,738 0.02% (executive shares) 17,550 II. Shares with unconditional 414,831,096 49.10% 124,449,329 82,966,218 77,876 207,493,423 622,324,519 49.11% subscription 1. Common shares in RMB 317,189,437 37.54% 95,156,831 63,437,887 60,326 158,655,044 475,844,481 37.55% 2. Foreign shares in domestic market 97,641,659 11.56% 29,292,498 19,528,331 17,550 48,838,379 146,480,038 11.56% III. Total of capital shares 844,867,002 100.00% 253,460,101 168,973,400 0 422,433,501 1,267,300,503 100.00%

Notes: 1. On February 18, the Company employed new executives, thus the conditional executive shares have increased by 10,171 of A shares and 6,750 of B shares respectively.

2. On April 22, 2008, the Company implemented the profit distribution and common reserve capitalization plan, namely 3 bonus shares and 2 new shares were allotted to each 10 shares.

3. Conditional shares held by former executives were released in the report term.

(II) Number of shareholders at end of term Number of shareholders at Changed in the report Number of shareholders at

beginning of term term (+/-) end of term A 30,000 +11,828 41,828 shares B shares 7,612 +586 8,198 Total 37,612 +12,414 50,026

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(III) Particulars about shares held by the top ten shareholders (in share) Properties of Share Pledged or Name of the shareholder Total shares Conditional shares shareholder proportion % frozen China Merchants Shekou Industrial Zone Co., State-owned legal 35.66% 451,948,817 451,948,817 0 Ltd. person Panorama Investment Ltd. Overseas legal person 7.43% 94,144,050 94,144,050 0 China Merchants Securities Hong Kong Ltd. Overseas legal person 3.59% 45,540,497 44,192,319 0 FOXTROTINTERNATIONAL LIMITED Overseas legal person 2.19% 27,720,000 27,720,000 0 ORIENTURE INVESTMENT LTD Overseas legal person 2.10% 26,603,145 26,603,145 0 China Industrial & Commercial Bank – 1.76% 22,353,427 0 N/A Domestic non-state- Guangfa Strategy Best Choice Combination owned legal person Securities Foundation GSI S/A GLODEN CHINA MASTER 1.14% 14,479,426 0 N/A Overseas legal person FUND China Industrial & Commercial Bank – Domestic non-state- 1.12% 14,227,545 0 N/A Guangfa Jufeng Stock Investment Fund owned legal person China Industrial & Commercial Bank – 0.94% 11,917,302 0 N/A Domestic non-state- Guangfa General Growth Stock Investment owned legal person Fund China Industrial & Commercial Bank – 0.83% 10,544,778 0 N/A Domestic non-state- Guangdong Development Bank Steadiness owned legal person Security Investment Fund Top 10 holders of unconditional shares Unconditional Name of the shareholder Category of shares shares China Industrial & Commercial Bank – Guangfa Strategy Best Choice Combination Securities 22,353,427 A shares Foundation GSI S/A GLODEN CHINA MASTER FUND 14,479,426 B shares China Industrial & Commercial Bank – Guangfa Jufeng Stock Investment Fund 14,227,545 A shares China Industrial & Commercial Bank – Guangfa General Growth Stock Investment Fund 11,917,302 A shares China Industrial & Commercial Bank – Guangdong Development Bank Steadiness Security 10,544,778 A shares Investment Fund China Agriculture Bank – Penghua Power Growth Stock Investment Fund 9,813,968 A shares China Life Insurance (Group) – traditional and common insurance products 9,796,133 A shares Bank of China – AIA Huatai Shengshi Chinese Stock Open Fund 9,705,796 A shares China Agriculture Bank – Changsheng Tongde Subject Growth Stock Investment Fund 9,168,912 A shares China Industrial & Commercial Bank – Yifangda Value Choice Securities Foundation 8,805,916 A shares (1) Dafeng International Limited, Hong Kong Panorama Investment Ltd., Foxtrot International Ltd., and Orienture Investment Ltd. are the wholly-owned subsidiaries of Notes to relationship or “action in concert” CMSIZ; among the top ten shareholders. (2) Guangfa Strategy Best Option Fund, Guangfa Jufeng Stocks Fund, Guangfa Steady Growth Stocks Fund, and Guangfa General Growth Stocks Fund are under the administration of Guangfa Fund Administration Co., Ltd.

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(IV) Conditional shares and their conditions Category Date when Amount of of shares the shares Name of the shareholder conditional are allowed Condition of subscription shares to be placed in market CMSIZ 451,948,817 A shares 11 1. Commitment in share relocation: The price of A- shares of the Company sold in the stock market before February 9, 2011 shall not be lower than 120% of the arithmetical average in 30 days prior to the publishing of share reallocation announcement, i.e. RMB11.51 Sept. 24 (after profit distribution of year 2005: RMB0.2 for 221,140,437 2010 each 10 shares; year 2006: RMB2.1 for each 10 shares; Including: year 2007: RMB1, 3 bonus shares and 2 capitalized shares for each 10 shares, the price has been adjusted to RMB7.43). 2.Promised not to dispose the Company’s shares until September 24 2010. 230,808,380 A shares Sept. 24 Promised not to dispose the Company’s shares until 2010 September 24 2010. Panorama Investment Ltd. 94,144,050 B shares Sept. 24 Promised not to dispose the Company’s shares until 2010 September 24 2010. These shares were purchased on behalf of Dafeng International Co., Ltd. – one of the subsidiaries of China Merchants Securities 44,192,319 B shares Sept. 24 Shekou Industrial Zone during 2005-2006, which was Hong Kong Ltd. 2010 not breaking the commitment of not selling before September 24, 2010. FOXTROTINTERNATIONAL B shares Sept. 24 Promised not to dispose the Company’s shares until LIMITED 27,720,000 2010 September 24 2010. ORIENTURE INVESTMENT B shares Sept. 24 Promised not to dispose the Company’s shares until LTD 26,603,145 2010 September 24 2010.

Note: In year 2007, the shares held by Shekou Industrial Zone and promised not to be sold before September 24 2010 which were privately placed were including the shares held by Shekou Industrial Zone directly and through its subsidiaries.

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Chapter IV. Directors, Supervisors, and Senior Executives

(I) Change of shareholding status of the directors, supervisors, and executives in the report term (in shares) Shares holding at the beginning of term (shares) Shares held at the end of term Name Cause of change A shares B shares A shares B shares Lin Shaobin 18,720 67,000 28,080 100,500 Yang Baiqian 40,400 - 60,600 - He Jianya 44,522 - 66,783 - Yang Zhiguang 19,900 22,000 29,849 33,000 Wang Li 13,561 - 20,342 - Bonus shares and capitalized shares Huang Peikun - 73,800 - 110,700 Liu Ning - 9,000 - 13,500 Xiong Yan - 4,200 - 6,300 Zhang Linmei 8,600 5,100 12,900 7,650

(II) Engaging and dismissing of directors, supervisors and senior executives.

The 21st meeting of the 5th term of Board held on February 18, 2008 has adopted the “Proposal on Employing the Vice General Manager” and “Proposal of Employing the Secretary of Board”, by which Mr. Wang Li and Zhu Wenkai were engaged as the vice general manager and Ms. Liu Ning was engaged as the secretary of Board.

Chapter V. Board of Director’s Report

I. Board of Directors’ business analyze

(I) Impact of macro economy on the industry

In the first half of 2008, further to the adjustment trend started in 2007, the property market has been declining both in price and sales. The expectation of the investors and consumers was changed significantly, which caused the fluctuation in the short term, and defeated the market confidence.

As of the Company’s investment territories, the areas which through previous significant inclining were greatly influenced, whereas the areas of Yangtze River Delta and Bohai area were under smaller influence. The sales in these areas were declining though.

Decreasing of sales, tightening of loan policies, and high rising costs have been making the Company’s capital chain more stressed, thus greater risks are expected.

From the Company’s point of view, the national macro policies were introduced to limit the overheating property investment and irrational product structure and inflation of property prices. Development of property industry will slow down along with the continuous of tight policies.

In the second half of year, the central government will put “long-term steady economical growth” and anti-inflation at the main targets of the macro adjustment. It implies the continuing of tight macro economy. Possible fine adjustment

9 CMPD Interim Report 2008 on loan policies conducted by the national government will mainly benefit mid-small enterprises and exporting enterprises, the tight capital supply for property industry will be carried forward.

However from the point of long-term trend, the basic trend of macro economy was not changed, and the long-term positive trend of property industry is still expectable. Thus we think it will lead the whole industry toward a healthy, rational, and regular direction.

(II) Challenges and opportunities brought by macro economic adjustment to the property development enterprises

Macro adjustment in 2008 has been concentrating on the implementation of the policies. Enforcing of these policies will bring great pressure on the enterprises both in market and capital operation.

1. Tight loan policies has greatly defeated the increasing of bank loans and brought great difficulty for obtaining of bank loans. Constant increasing of interest rates has caused increasing of financial cost. Furthermore, the newly introduced land policies have caused significant increasing of capital paid for purchasing of land. All of these have brought greater pressure on the capital operation of property developers. Enterprises have to broaden or change their financing resources to improve financial structure and resist the risks brought by external environment.

2. For large scale investment on land developing and time limit by the government, the Company will concentrate on project development and sales. Increasing of supply and decreasing of demand has greatly defeated the sales.

Overall, the severe situation will be challenging the Company’s capability in business operation and cost controlling. The developers will more concentrated on developing of their advantages and market reputation. Those which can fully adopt their advantages in cost, capital, and reputation may overcome the difficult situation. We take this adjustment as a rational trend. As soon as the prices have restored to a reasonable range, the market will be recovered to a increasing trend, which will benefit long-term development of the whole industry.

(III) Countermeasures to the macro environment

From the long-term point of view, market fluctuation is a natural economic trend. Enterprises in the economy have to enforce its capability to handle the situation. The Company is fully aware of the influences and made sufficient preparation for the macro adjustment.

1. Enhancing marketing force to realize the targets set for the year

Enforce market research on geographic segment, and overall trends to assist strategy adjustment and sales force.

Enforce after service and property management. Establish service system in product planning, engineering, sales, customer service, and property management.

According to the business plan of 2008, the Company has achieved the goals set for the first half of year. Against sound quality and reputation, the Company’s newly released projects such as Beijing Park 1872, Shanghai Haide Garden Phase II, Yiyunjun Phase II, Nanjing Yiyunxigu Phase II, and Tianjing Xikang Houses have achieved great sales performance. All of these products have been sold out for over 60% in the first day released. Both of sales prices and sales progress were higher than expected. Cash payback has obviously increased compared with the same period of last year.

In the 2nd half of year, there will be over 10 projects located in Shenzhen, Guangzhou, Foshan, Zhuhai, Shanghai, Nanjing, Suzhou, Tianjing, and Chongqing which will be released. Projects in Shenzhen, except for Longgang Yishanjun, are located in Shekou along with the mountains and seashore. They are regarded as scarce supplies and with advantages in cost control. The Company will carry forward the market research force and adjust its marketing strategies to ensure achieving of the annual sales goal.

2. Expand financing resources

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Enforce cooperation with major banks, maintain good credit, and well manage capital circulations.

Promote researching on new financial instruments to realize multiple and low cost financing portfolio. At the beginning of year, basing on the rental cash flow, the Company has raised RMB650 million of credit loans. On July 31, the Company’s application for issuing of new shares was approved by CSRC. Issuing of new shares will be conducted at appropriate time.

3. Enforce business planning and implementation

The Company has adopted a number of measures to enforce project management, which fully reduced development circle, revised the planning template, and improved the execution and inspection of plans.

The Company has maintained sufficient resources in personnel, finance, and supplies to support over 30 projects in 12 cities, all of these projects were carried forward smoothly on schedule.

4. Keep reinforce cost controlling

To face the constantly rising costs, the Company has performed cost controlling operation over the whole process of business operation. Which includes designing optimizing, reinforce economic index testing, promote bulk purchasing, and fine controlling of costs. Meanwhile, executive expenses and non-operational expenses were compressed and obvious achievement has been achieved.

(IV) Influences of natural disasters

In the first half of 2008, rare natural disasters came one after another. The Company has no project located in the area with suffered in the snow disaster and great earthquake, thus made no direct on the Company’s business operation.

Basing on the concept of “be a responsible enterprise”, the Company has donated to the disaster area and will participate in reconstruction projects. Capital used in these operation will be neutralized by reducing administrative expenses.

II. Business operation in the report term

1. Business performance

In RMB’000

Items Jan-Jun 2008 Jan-Jun 2007 Changed (±%) Turnover 1,446,934 1,717,369 -15.75% Operation profit 305,379 510,665 -40.20% Net profit attributable to the shareholders of the listed company 218,729 417,246 -47.58% [Remarks] Notes to the changes

(1) Turnover:

In the report term, turnover has decreased than the same period of last year, which was caused by decrease of transferring area of property projects has decreased.

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(2) Operation profit and net profit：

For enlarging of the Company’s scale, periodic expenses have increased. Whereas Xicheng Phase I – developed by the joint venture brought increasing in investment gains in the previous term. But this joint venture hasn’t contributed any profit. Thus the operational profit and net attributable to the shareholders of PLC have decreased by 40.20% and 47.58% respectively.

2. Financial position

In RMB’000 Changed (± Items 2008.06.30 2007.12.31 Major causes %) Total of assets 27,799,439 25,107,164 11% Expanding of business scale Monetary capital 2,847,641 3,588,096 -21% Payment for land and engineering payable in last year Inventories 20,259,720 17,167,331 18% Increase of developing costs and land reserves Construction in process 172,766 131,394 31% Increase of construction reconstruction payment Long-term prepaid expenses 16,972 8,101 110% Increase of amortizable expenses Short-term loans 5,437,608 5,671,532 -4% Returning of some short term loans Notes payable 149,717 97,216 54% Newly issued bank drafts Account payable 1,003,899 2,916,864 -66% Payment for land payable in last year Prepayment received 1,002,772 183,054 448% Property sales advances collected Employees’ wage payable 58,158 136,220 -57% Bonus paid for the end of last year Dividend payable 30,496 22,906 33% Dividend for minor shareholders Tax payable 119,290 317,190 -62% Payment of taxes Interest payable 56,221 30,686 83% Increasing of loan and loan costs Increasing of payment on behalf of minor Other account payable 3,192,635 2,139,592 49% shareholders of subsidiaries Non-current liability due in 1 year 640,000 300,000 113% Expanding of business scale Long-term borrowings 5,182,822 3,645,235 42% Expanding of business scale Long-term payable 832,549 28,791 2792% Borrowings from Hong Kong Dafeng Compensation paid and balance of provisions written Expected liabilities 802 1,211 -34% back

3. Major business situation

(1) Distribution over industries

On Industries Turnover Operation cost Gross profit Gross profit ratio %

Changed Changed Amount Amount Amount Changed over profit ratio Changed over over the over the RMB’000 RMB’000 RMB’000 the prev. year % the prev. year prev. year prev. year Property development and sales 700,098 -31.32% 292,198 -49.99% 407,900 -6.26% 58.26 15.57 Property investment 238,218 39.23% 113,254 35.71% 124,964 42.59% 52.46 1.24 Property agency 33,134 -54.02% 30,695 -12.89% 2,439 -93.38% 7.36 -43.74 Water and power supply 328,121 1.72% 236,517 -6.34% 91,604 30.77% 27.92 6.20 Property management 142,417 15.81% 113,067 16.68% 29,350 12.59% 20.61 -0.59

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[Remarks] Notes to the changes ① Developing and sales of property In the report term, property development and sales have decreased then the same period of last year, which was caused by decreasing of property area converted from construction in process in the report term, and the decreasing of gross profit ratio of property development was far lower than the decreasing turnover. That was because Lanxigu Phase II has achieved higher gross profit, which was converted in the report term. ② Property leasing business In the report term, rental income has increased significantly, and the gross profit ratio has increased by 1.24%, which was contributed by New Times Plaza and Marine Center which were acquired in the 2nd half of 2007. ③ Property agency service In the report term, influenced by the macro environment, property agency business was greatly reduced in gains, but the fixed costs have not reduced significantly, thus the gross profit ratio has decreased significantly. ④ Water and electricity supply The power supply business uses foreign currency in purchasing of imported electricity supply. Increasing of RMB has caused cost decrease in the report term. ⑤ Property management The property management project in Beijing was newly added, thus caused increasing in gains.

(2) Geographic distribution of main business In RMB’000 Regions Turnover Changed over same period of last year Pearl River Delta 1,049,423 -3.80% Yangtze River Delta 309,062 -48.12% Bohai Sea Coast Area 17,391 30.40% Other 71,058 306.35% Total 1,446,934 -15.75% Cause of change: decreasing of turnover in Yangtze River Delta area was because most of the projects will be converted in the 2nd half of 2008, thus contributed no turnover; increasing of turnover in Bohai coastal area was caused by increasing of projects converted in Beijing Area, thus relative management income has increased; increasing of turnover in other areas was caused by converting of construction projects to turnovers, which were not done in the same period of last year.

4. Difficulties and problems encountered in business operation

The entire property market has entered a decline cycle, thus brought great pressure on the Company’s capital and market operation. The company will fully develop its advantages in financing and reputation to overcome the difficulties, and carry forward administrative improvement, further enlarge high quality land reserves and seize opportunities for rapid growth.

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III. Investment 1. Application of financing proceeds in the report term.

The Company conducted no share issuing in the report term. Followings are the details about proceeds raised from private placing of shares to Shekou Industrial Zone in September 2007 (RMB0’000):

Total of proceeds used in the report 18,045 Total of proceeds 229,217 term Accumulated fund used 191,085 Planned Changed or Practical Accumulative total Schedule fulfilled Profit prediction Committed projects investment not investment profit realized or not fulfilled? Purchasing of the 5% No 40,000 equities of Shenzhen CMPD 40,000 3,708 Yes Yes Purchasing of the office No building of New Times 88,000 Plaza 88,000 2,042 Yes Note 1 Purchasing the land using

right of Meilun Department No 25,000 and construct 13,259 - Note 2 Note 2 Haiyue Huating 33,000 No 10,340 - Note 2 Note 2 Nanjing Xianlin (phase 1-2) 43,217 No 39,486 6,524 Note 2 Yes Total 229,217 191,085 12,274 Note 1. For Jan-Jun 2008, New Times Plaza has contributed gross profit of RMB12.67 million and net profit RMB10.39 million. For the depreciation age practically adopted by the Company is shorter than the one adopted by the Share Listing Prospectus, the depreciation of this building is RMB9.59 million higher than that according Statement for overdue (in to the Share Listing Prospectus. Except for the depreciation method, New Times Plaza is expected to detailed projects) achieve the proposed profitability in year 2008. Note 2. For delay of payment than expected, Meilun Apartment, Haiyue Huating, Nanjing Xianlin (Phase 1, 2) have fallen behind the schedule. As of June 30, 2008, Meilun Apartment and Haiyue Huating were under construction and contributed no profit to the Company. Statement for reason of changing and procedure (in No change detailed projects) Application plan of retained Proceeding as planned fund from financing

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2. Progress and profitability of major projects supported by non-financing fund (RMB’000)

Investment in the report Investment progress of the Gains contributed in the report Projects term project term Construction finished, decoration Gross profit RMB151,804 Lanxi Valley 2nd Phase 57,340 in process thousand Phase I block 9 under decoration, block 10 in construction; Phase II Park 1872 112,938 under construction; Phase III under planning. Land #1 is under construction, Shanghai Haide Garden 39,080 Land #2 is under planning Nanjing International Finance Center 91,985 completed Phase I under construction, others CM Jiangwan City 65,040 under planning Houses completed, tower in 36 Xikang Road Tianjin 56,572 construction Former Mt. Diamond Project, Tianjin Star City 109,971 Phase I body completed, Phase II designing finished Former Yiyunjun project, Phase Yiyun Tingxiangyuan , Shanghai 32,257 II under construction CM Lanyuan 163,761 Under construction Former Ruiqiao Project, basement Shanghai CM Yonghua Garden 25,445 under construction Former Xincheng Project, Phase I Foshan Yiyunshui’an 24,674 under construction, others under planning Phase I, II delivered, Phase III Suzhou Yiyunshuian 62,691 Gross profit of 11,226 thousand under construction Phase I under construction, Phase Suzhou Xiaoshicheng 90,575 II, III in preparation procedures Zhangzhou Ziweiyuan Phase I 11,822 Construction completed Zhangzhou CM Garden City 18,435 Foundation nearly finished Former Chancheng, under Foshan Yiyun Shangcheng 63,189 preparation procedures Chongqing Hi-tech Garden Project 7,778 Initial planning Former Weiting, under Suzhou Yongjingwan Garden 7,381 preparation procedures CM Guanyuan 50,645 Initial planning Phase I section I construction Jinshan Valley 77,424 finished, others under initial planning Former Nanqiao project, Shanghai Nanqiao Yayuan 55,309 foundation under construction Zhuhai CM Garden City A 2,206 Initial planning Zhuhai CM Garden City B 4,530 Initial planning Xixiang Garden 16,228 Initial planning Lanxigu Phase II, land II 329 Initial planning Beijing Lishuiqiao Project 1,653,384 Initial planning Shanghai Haiwan Project 429,028 Initial planning

3. Profile of newly established subsidiaries

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(1) Newly established subsidiaries

On January 25, 2008, Shenzhen CM Real-Estate invested RMB30 million to incorporate CM (Chongqing) Garden City Co., Ltd. and hold 100% of the voting power.

On April 17, 2008, Shenzhen CM Real-Estate established CM Jiaming (Beijing) Property Co., Ltd. together with Jiaming Investment Co., Ltd. The new company is registered for capital of RMB200 million, in which RMB100 million was invested by Shenzhen CM Real-Estate and take 50% of the share capital. Shenzhen CM Real-Estate is holding major voting power in the Board, thus may control over the financial and decision making power.

On April 11, 2008, Shenzhen CM Real-Estate invested RMB51 million to setup Shenzhen CM Commerce Development Co., Ltd. as a fully-owned subsidiary, i.e. holding 100% of its voting power.

4. Newly acquired land reserves

(1) Lishuiqiao

On April 2, 2008, Shenzhen CM Real-Estate Co., Ltd. and Beijing Jiaming Property Development Co., Ltd. acquired the land of 380,057.872 square meter located in Xiaokou Town, Changping, Beijing with RMB1,650 million through bidding. Each of the two parties paid 50% of the price.

(2) Zhangzhou

On June 17, 2008, Zhangzhou China Merchants Property Co., Ltd. acquired the land using right of 38,382.4 square meter by RMB81 million through bidding.

IV. Amendment on the business plan of the 2nd half of year No revising of business plan has been undertaken in the report term.

Chapter VI. Important Events

(I) Company Administration The Company keeps following with the requirement and standard provided by the Company Law, Listed Company Administrative Rules, and Share Listing Rules of Shenzhen Stock Exchange. There is no difference between the practical situation of the Company’s administration and the requirements of above documents. In 2008, according to “Circular about enforcing the administration of listed companies” issued by China Securities Regulatory Commission, and the relative requirements of Shenzhen Securities Regulatory Bureau and Shenzhen Stock Exchange, the Company performed internal verification on the Company’s administration and conducted special improving operation. The Administration Improvement Report was released duly as required by CSRC. Business administration is a long-term work, thus the Company will keep doing it to upgrade the administration system according to the new trend of the industry. In June 2008, according to the requirement of document [2008]27 issued by CSRC, the Company performed another investigation on the subjects listed in the Improvement Report as of June 30, 2008, and announced the results on July 18 2008. In the report term, the Company newly produced the Criteria of Independent Directors’ Annual Report, and revised the Financing Proceeds Administration Rules and Auditing Procedures of the Auditing Committee. The internal

16 CMPD Interim Report 2008 controlling system was further improved.

(II) Execution of profit distribution plan for year 2007 The proposal of profit distribution and capitalizing of common reserves was adopted at the Annual General Meeting 2007 held on March 17, 2008. Profit distribution plan: upon the basis of capital shares amounted to 844,867,002, 3 bonus shares are given to each 10 shares, and RMB1 of dividend is to given to each 10 shares in cash (tax included, RMB0.6 for each 10 current shares of the individual shareholders and investment foundations after tax. B shareholders are free of tax temporarily.) Capitalizing of capital reserves: upon the basis of capital shares amounted to 844,867,002, 2 shares are to be added to each 10 shares by capitalizing of capital reserves. The Company issued the Announcement of Dividend Distribution of 2007 on April 16, 2008 issues of China Securities Journal, Securities Times, and http://www.cninfo.com.cn. The announcement has provided the details of the dividend distribution for year 2006. And the share equity registration day would be April 21, 2008 and the ex-dividend day would be April 22, 2008. Dividend distribution has been accomplished in the report term.

(III) Interim profit distribution plan of 2008 Neither profit distribution nor capitalizing of common shares will be implemented for the interim of 2008.

(IV) Material Lawsuits and Arbitration The Company has not involved in any material lawsuit or arbitration in the report period.

(V) Status of shareholding in other listed companies

Change of owners’ Initial Book value at Gain/loss of Stock Code Stock ID Share portion equity in the report investment the end of term the report term term 000004 ST Guonong 1,572,275 0.58% 3,887,829 - - Total 1,572,275 0.58% 3,887,829 - -

(VI) Major purchasing, selling or restructuring process of assets Neither acquisition / selling of asset, intake, nor merger event occurred during the report term.

(VII) Major related transactions

1. The Company has no material related transactions of product sale or labor service provision in the report period.

2. The Company has no material related transactions of asset purchase or sale in the report period.

3. In the end of the report period, the Company has the credit, liability or guarantee events with related parties:

17 CMPD Interim Report 2008

(1) Guarantee and assurance End of term Beginning of term RMB Yuan RMB Yuan

CMSIZ (Note 1) 2,074,040,806 2,105,488,068 China Merchants Group Co., Ltd. (Note 2) 779,370,796 852,197,019

Dafeng International Inc., a wholly owned subsidiary of China Merchants Shekou Industrial Zone Co., Ltd., provided clearance assurance for the long-term foreign currency exchange in ING Bank N.V., Hong Kong Branch conducted by Hong Kong Ruijia Investment Industrial Co., Ltd.

Note 1: China Merchants Shekou Industrial Zone Co., Ltd. provided loan guarantee for the company, the amount guaranteed 660 million Yuan; and provided loan guarantee for Shenzhen China Merchants Real Estate Co., Ltd., the amount guaranteed 810 million Yuan; and provided loan guarantee for Shenzhen China Merchants Power Supply Co., Ltd., the amount guaranteed 24.686 million US dollars(169,323,7434 RMB Yuan); and provided loan guarantee for Tianjing China Merchants Real Estate Co., Ltd., the amount guaranteed 135 million Yuan; provided loan guarantee for China Merchants Real Estate (Shuzhou) Co., Ltd., the amount guaranteed 100 million Yuan; and provided loan guarantee for Shanghai Fengyang Co., Ltd. with amount of RMB50 million. Provided guarantee for the bank draft applied by Shenzhen China Merchants Real-Estate Co., Ltd. amounted to RMB149,717,063.

Note 2: China Merchants Group Co., Ltd. provided loan guarantee for Hong Kong Ruijia investment industrial Co., Ltd, the amount guaranteed HKD130,000,000 and USD97,000,000, translated to RM779,370,796.

(2) Balance of debts and credits

Detailed information on the balance of credit and debt between the related parties and the Company, as follows:

Accounts Name of the parties End of term Beginning of term RMB Yuan RMB Yuan

Other account receivable Beijing Hengshihuarong Real-estate Development Co., Ltd. 207,004,655 210,679,716 Shenzhen China Merchants OCT Investment Co., Ltd. 295,627,584 194,152,935 ______Total 502,632,239 404,832,651

______Account payable China Merchants Shekou Industrial Zone Co., Ltd. 5,338,724 5,338,724

Other account payable Tianjin Xinhai real Estate Development Co., Ltd. 89,431,399 63,431,399 China Merchants Shekou Industrial Zone Co., Ltd. 4,852,099 4,852,099 Shenzhen China Merchants Guangming Technologies Zone Ltd. 17,012,986 22,895,913 CM Zhangzhou Development Zone Ltd. 79,823,705 8,621,528 Dafeng International Holdings 164,569,048 175,310,400 ______Total 355,689,237 275,111,339 ______Dividend payable Shenzhen Shekou Dazhong Investment Co., Ltd. 20,913,265 CMSIZ 30,129,921 Shenzhen China Merchants Landmark Co., Ltd. 365,991 365,991 ______Total 30,495,912 21,279,256 ______

Long-term payable Dafeng International Holdings 802,203,620

18 CMPD Interim Report 2008

The above issues made no major influence on the Company’s business operation.

4. Other related transactions

(1) China Merchants Water Services supplies water to the principal shareholder, Shekou Industrial Zone and its subsidiaries.

(2) China Merchants Power Supply supplies power to the principal shareholder, Shekou Industrial Zone and its subsidiaries.

(3) Related transactions concerning land use

The facilities, equipments, and offices locations of supplying electricity and water business of the Company were located in Shekou. Most of the leasing properties in real estate business were built in Shekou. Therefore, the Company and subsidiaries rent land of CMSIZ since they were set up. For the 1st half of 2008, land using expenses of the Company and controlling subsidiaries were totaled to RMB7.85 million.

(4) Entrusted loan

New Times Branch of China Merchants Bank accepted the commission of China Merchants Shekou Industrial Zone Co., Ltd. to issue entrusted loans to the Company.

Current term Name of the parties End of term Loan terms Annual interest rate Interest paid RMB Yuan RMB Yuan China Merchants Shekou Industrial Zone Co., Ltd. 300,000,000 Sept. 28 2005 – Sept. 27 5.184% 7,776,000 2008 China Merchants Shekou Industrial Zone Co., Ltd. 200,000,000 Dec. 17 2007 – Dec. 16 2008 7.290% 7,290,000 China Merchants Shekou Industrial Zone Co., Ltd. 300,000,000 May 31 2007 – May 31 2008 5.913% 7,391,250 China Merchants Shekou Industrial Zone Co., Ltd. 300,000,000 June 2 2008 – June 1 2010 7.56% 1,764,000

(5) Capital interchange

In the report term, Ruijian Investment & Industry Co., Ltd. has acquired the loan of USD20 million and USD300 million of credit quota from Dafeng International Co., Ltd. The credit quota can be drawn in batches. Both of the loan and quota are available for five years (fixed for the first 3 years and the later 2 years to the Company’s option), and can be drawn in batches. The interest and relative integral cost was LIBOR+3.5%.

Up to June 30, 2008, Dafeng International has provided USD141 million of loan to Ruijia (USD24 million ended December 31, 2007).

(6) Rental income

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Shenzhen China Merchants Landmark Co., Ltd. (Note 1) 1,019,720 - China Merchants Shekou Industrial Zone Co., Ltd. (Note 1) 5,691,260 - China Merchants Port Service (Shenzhen) Ltd. (Note 2) - 5,304,939 Shenzhen Beike Venture Co., Ltd. (Note 3) 335,000 335,000 ______Total 15,084,365 11,279,879

19 CMPD Interim Report 2008

______

Note 1: This was the rental income of Shenzhen China Merchants Real Estate Co., Ltd. paid by Shenzhen China Merchants Landmark Co., Ltd. and China Merchants Shekou Industrial Zone Co., Ltd.

Note 2: The rental income from leasing the port facilities to China Merchants port (Shenzhen) Co., Ltd. These facilities were sold in December 2007, thus no more rental would be collected in 2008.

Note 4: The deterred rental income paid by Shenzhen Beike Ventrures Co., Ltd. for renting Shekou Beike Ventures Building of the subsidiary China Merchants Real Estate Co., Ltd. In 2000, the Company charged the rent 10 million Yuan in one time, and will collect rent 670,000 yuan each year since that year. For Jan-Jun 2008, the rental income transferred were amounted to RMB335,000 Yuan.

The above transactions are implemented according to agreement price.

(VIII) Material Contracts and Implementation

1. In the report period, there was no other material trust, contract or lease events.

2. Material contracts

(1) The Company received the confirmation letter for integrated credit from China Industrial and Commercial Bank Shekou Branch. It includes the credit of RMB0.4 billion for the Company, RMB0.89 billion for property development projects outside Shenzhen, RMB1.65 billion for the residential project under Shenzhen China Merchants Property Co., Ltd., and RMB0.2 billion for Shenzhen China Merchants Power Supply Co., Ltd. The above credit is available from January 4, 2008 over to January 4, 2009.

(2) The Company entered the agreement with Shenzhen Branch of Agriculture Bank for the credit up to RMB2 billion with term from January 21, 2008 through October 21, 2008.

(3) The Company entered the agreement with China Merchants Bank for the credit up to RMB3 billion with term from April 16 2007 to April 16 2009.

(5) The Company entered the agreement with Shenzhen Branch of Industrial Bank for the credit up to RMB1.5 billion with term from July 31, 2007 through July 31, 2008.

(8) The Company entered the agreement with Shenzhen Branch of Industrial Bank for the credit up to RMB1 billion with term from October 26, 2007 through October 26, 2008.

(7) The Company entered the contract with Xinhua Trust & Investment Co., Ltd. for loans of RMB1 billion and financial consulting services with term from July 18th 2006 to July 17th 2009. According to the notification letter dated August 18th 2006 from Xinhua Trust & Investment Co., Ltd., Xinhua has transferred all of the credits and debts under this contract over to Shanghai Branch of Industrial Bank.

(7) The company has entered the “Capital Support Trust Contract” and “Capital Support Trust Priority Purchase Contract” with Shanghai International Trust Co., Ltd. with valid period from January 18, 2008 through January 17, 2011. The Company has entered the agreement on issuing of letter of guarantee with China Construction Bank. Shenzhen Branch of China Construction Bank will provided the letter of guarantee on the trust with credit of RMB1 billion.

Apart from the aforementioned events, the Company was not involved with any material contract the amount of which takes up over 10% of the Company net assets.

20 CMPD Interim Report 2008

3. Major guarantee issues

According to the requirements of Notification on Standardizing Capital Current between the Listed Companies and Related Parties and Several Problems about External Guarantee of Listed Companies (ZJF[2003] No. 56) and Notification on Normalizing External Guarantee of Listed Companies (ZJF[2005]No.120) promulgated by CSRC, the Company performed internal verification about the capital trade with the related parties and external guarantee:

Relations to the Accounting Amount Amount parties subjects used at occurred in Balance at occupied kept by the beginning current the end of Causatio Name of the parties the capital listed co. of 2008 term report term n Property Other None Beijing Henshihuarong Property Partnershi account Current business Co., Ltd. p company receivable 210,679,716 -3,675,061 207,004,655 account adoption Other None Shenzhen China Merchants OCT Joint account Current business Investment Co., Ltd. venture receivable 194,152,935 101,474,649 295,627,584 account adoption Total 404,832,651 97,799,588 502,632,239 In the report term, other than the periodic guarantee provided to the mortgage of property sales, the Company provided no external guarantee nor to holding subsidiaries.

4. Special statement and independent opinions of the independent directors regarding capital occupation by the related parties and providing of external guarantees.

According to the requirements of Notification on Standardizing Capital Current between the Listed Companies and Related Parties and Several Problems about External Guarantee of Listed Companies (ZJF[2003] No. 56), the Notification on Information Disclosing over the Capital Occupied by the Controlling Shareholders and Invalid Guarantees (SZJFZ [2004] No. 338) and Notification on Normalizing External Guarantee of Listed Companies (ZJF[2005]No.120), we performed inspection on the situation of external guarantee of the Company. The situation is as:

CMPD has been following with the regulations regarding related transactions setout by the Administrative Rules of PLC. Related transactions occurred in the report term were fair and rational without any illegal occupation of capital by the controlling shareholder.

In the report term, except for periodical guarantees provided for properties sold in term of mortgage, none of the Company or its controlled subsidiaries has provided external guarantees. The Company hasn’t practically provided any guarantee to its controlled subsidiaries.

Independent directors: Liu Hongyu, Mengyan, Chen Yanping, Gong Xinglong

5. In the report period, the Company did not commissioned others to manage cash assets.

21 CMPD Interim Report 2008

(IX) Accepting of visiting, investigating, and communicating requests in the report term were as the followings

Main content involved and Time/date Place Way Visitors material provided Shekou Hua’an Fund, Yifangda Fund, ABN AMRO Introduction of the Company and Jan 8 Investigation Shenzhen TEDA Fund, and Doric Capital Corporation the industry by PPT Shekou Company introduction and onsite Jan 30 Group research Organized by CITIC Securities Shenzhen visiting Shekou CALSA-PACIFIC MARKETS、PEDRA Introduction of the Company and Feb 20 Investigation Shenzhen INVESTMENT MANAGEMENT, etc. the industry by PPT Shekou Company introduction and onsite Feb 26 Group research Organized by Orient Securities Shenzhen visiting CM Securities, Southern Fund, Zhongtou Introduction of the Company and Shekou Mar Investigation Securities, Huabao Xingye Fund, Pacific the industry by PPT, Annual Shenzhen Insurance, Shenyin Wanguo Securities, etc. Report of the Company Shekou Introduction of the Company’s Mar 11 Online meeting Shareholders and investors Shenzhen development and industry Introduction of the Company and Organized by the Company, Southern Fund, Shekou the industry by PPT, onsite Mar 14 Investor conference Boshi Fund, Penghua Fund, Yifangda Fund, Shenzhen visiting, Annual Report of the Huaxia Fund, Guangfa Fund, and Yinhua Fund Company. Introduction of the Company and Shekou April Investigation Taizheng Securities, Yelu Fund, etc. the industry by PPT, Annual Shenzhen Report of the Company Morgan Datong – China UBS, RCM, BlackRock, Morgan Datong, Introduction to the Company and April 26 Beijing Investment Forum Alliance Bernstein, Hengmao Investment the industry trend. Guangda Securities – Introduction to the Company and Boshi Fund, Penghua Fund, Yifangda Fund, Jun 15 Shanghai Finance and Property the industry trend. Providing PPT Huaxia Fund, Guangfa Fund, Yinhua Fund, etc. Industry Forum documents of the Company. Anxin Securities – 08 Jiashi Fund, Jianxin Fund, Tainhong Fund, Introduction to the Company and Jun 23 Shanghai Mid-term Investment Pacific Insurance Asset Management, Nuode the industry trend. Providing PPT Forum Fund documents of the Company. Oriental Securities - 08 LEHMAN BROTHERS, Rongtong Fund, Introduction to the Company and Jun 23 Shanghai Mid-term Investment Boshi Fund, Zhongyin Fund, Penghua Fund, the industry trend. Providing PPT Forum Jiashi Fund documents of the Company. Introduction to the Company and Morgan Datong – A UBS, RCM, BARINGS, Morgan Datong, Jun 27 HK the industry trend. Providing PPT share enterprise forum Shouyu Investment, Maoheng Investment documents of the Company.

(X) Fulfilling of commitment made by shareholders with 5% or over shares

(1) CMSIZ, the controlling shareholder of the Company, promised not to conduct or participate with 3rd parties in any business or activities possibly competing with the Company in terms of business, new commodities and new technology in any forms (including but not limited to direct operation, indirect operation, joint investment). Never use the information obtained from the Company to conduct or participate in and competitive activities against the Company. CMSIZ has fulfilled the commitment thoroughly for the report period.

22 CMPD Interim Report 2008

(2) In the report term, Shekou Industrial Zone has been fulfilling its commitments made during the share equity relocation process, i.e. hasn’t put any of the Company’s shares on sale, and is planning to input high-quality assets, such as lands, into the Company.

(3) During the process of application for convertible bonds in 2007, Shekou Industrial Zone promised not to dispose the shares in three years since completion of share converting. The commitment has been kept in the report term.

(4) Dafeng International Co., Ltd. – the fully owned subsidiary of Shekou Industrial Zone has committed not to reduce its shareholding before October 12, 2008. In the report term, Dafeng International has been fulfilling its promise.

(XI) Engaging and dismissing of CPAs

On March 17, 2008, the Company held its Annual General Meeting 2007 and it has been agreed to extend the service of Deloitte Touche Tohmatsu Certified Public Accountants Ltd. as the external auditor.

(XII) None of the Company, the Board of Directors, or the directors were criticized or condemned by any superior governing bodies.

(XIII) Other major events

1. The proposal on issuing new A shares was adopted at the Annual General Meeting 2007 held on March 17, 2008. On June 30, 2008, the application for issuing of new A shares was approved by China Securities Regulatory Commission with certain condition.

The Company received document Zheng-Jian-Xu-Ke [2008]989 “Approval for issuing of new shares by China Merchants Property Co., Ltd.” issued by China Securities Regulatory Commission on July 31, 2008. Which approved the Company to issue up to 450 million new shares. It is effective in 6 months since the day of the document was issued.

2. The Company’s businesses are of the real estate industry. According to the relevant regulations of People’s Republic Bank of China, the Company should provided mortgage loan guarantee for the purchaser of commercial houses. At present, the guarantee that the Company provided for he purchaser of commercial houses was staggered collateral guarantee with the guarantee term from the date that the mortgage bank gives loan to the date the purchaser transact certificate of house ownership. Provided that the purchaser didn’t fulfill the obligation of debtors, the Company was authorized to call back the houses sold. Therefore, the guarantee would not cause actual loss to the Company. As of the end of report term, the Company has provided totally RMB184.32 million of above kind of guarantees.

3. The Company has been initiatively undertake its social responsibilities and carry on its enterprise culture and tradition. At the beginning of 2008, the Company has produced special plan to fulfil its social responsibilities. The process of company development is also the process of fulfilling social responsibilities.

The Company has been assuming the responsibilities in environmental protection and energy saving, and kept researching in green real-estate. Several projects have been awarded the Green Architecture Award.

For years, the Company has laid great importance on education and public affairs, such as participating in “New Great Wall College Student Aid” and setup scholarship in several colleges.

23 CMPD Interim Report 2008

As soon as the natural disaster happened, the Company and its employees have donated to help. This has reflected the tradition in assuming social responsibilities.

Chapter VIII. Documents for Inquiring

(I) Financial Statements carring the personal signature and seal of the Chairman of the Board, Chief Financial Officer and Accounting Manager. (II) Original of all documents and announcements published in the presses designated by CSRC during the first half of 2008. (III) English version of the Interim Report 2008.

China Merchants Property Development Co., Ltd. The Board of Directors August 28, 2008

24

China Merchants Property Development Co., Ltd.

Financial Statements The Period from January 1 2008 to June 30 2008

25 Interim Report 2008 CMPD

BALANCE SHEET OF THE PARENT COMPANY AND THE CONSOLIDATED June 30, 2008

Consolidated The Company Note End of term Beginning of term End of term Beginning of term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Assets Current asset: Monetary capital 8 2,847,640,831 3,588,095,863 1,262,794,070 2,454,024,042 Transactional financial assets 9 29,688,898 Account receivable 10 43,588,615 56,498,734 Prepayment 11 2,803,286 7,295,171 Dividend receivable 2,447,054,932 2,447,054,932 Other account receivable 12 875,698,939 836,891,695 12,610,363,810 9,790,585,234 Inventories 13 20,259,720,311 17,167,330,873 1,256,600,000 Other current asset 14 ______9,895,078 ______9,608,644 ______

Total of current asset 24,069,035,958______21,665,720,980______16,320,212,812______15,948,264,208______Non-current assets Disposable financial asset 15 3,887,829 3,887,829 3,887,829 3,887,829 Long-term share equity investment 16 591,326,596 568,290,424 1,447,401,473 1,421,238,125 Investment real estate 17 2,595,212,820 2,377,676,137 Fixed assets 18 301,527,740 289,152,145 345,890 432,040 Construction in process 19 172,765,791 131,394,118 Intangible assets 20 38,160,113 52,463,926 Goodwill 21 1,460,212 1,460,212 Long-term prepaid expenses 16,972,146 8,100,944 445,283 540,835 Differed income tax asset 22 ______9,090,146 ______9,016,967 ______2,422,142 ______2,422,142

Total of non-current assets ______3,730,403,393 ______3,441,442,702 ______1,454,502,617 ______1,428,520,971 Total of assets 27,799,439,351 25,107,163,682 17,774,715,429 17,376,785,179 ______

26 Interim Report 2008 CMPD

BALANCE SHEET OF THE PARENT COMPANY AND THE CONSOLIDATED (CONT.) June 30, 2008

Consolidated The Company Note End of term Beginning of term End of term Beginning of term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Liabilities and shareholders’ equity Current liabilities Short-term loans 24 5,437,608,434 5,671,532,494 3,967,683,300 3,735,866,600 Trade off financial liabilities 25 57,070,068 50,589,723 Notes payable 26 149,717,063 97,215,654 Account payable 27 1,003,899,034 2,916,864,090 1,111,940,000 Prepayment received 28 1,002,771,900 183,053,832 Employees’ wage payable 29 58,157,656 136,219,785 844,950 3,667,614 Tax payable 30 119,290,022 317,190,250 12,778,342 51,263,149 Interest payable 31 56,221,068 30,685,761 35,713,763 25,934,411 Dividend payable 32 30,495,912 22,905,569 30,129,921 Other account payable 33 3,192,635,315 2,139,591,897 2,501,499,016 2,325,027,310 Non-current liability due in 1 year 34 640,000,000 300,000,000 450,000,000 300,000,000 Other current liability 35 462,437,875 415,608,438 77,559 77,559 ______Total of current liability 12,210,304,347 12,281,457,493 6,998,726,851 7,553,776,643 ______Non-current liabilities Long-term borrowings 36 5,182,822,060 3,645,235,019 3,240,000,000 2,160,000,000 Long-term payable 37 832,549,346 28,790,682 Expected liabilities 38 801,911 1,211,060 Differed income tax liability 39 547,380 547,380 547,380 547,380 Other non-recurring liabilities 40 5,154,584 5,177,320 ______Total of non-current liabilities 6,021,875,281 3,680,961,461 3,240,547,380 2,160,547,380 ______Total of liability 18,232,179,628 15,962,418,954 10,239,274,231 9,714,324,023 ______Shareholders’ equity Share capital 41 1,267,300,503 844,867,002 1,267,300,503 844,867,002 Capital reserves 42 3,158,309,569 3,413,857,995 3,602,481,041 3,771,454,441 Surplus reserves 43 612,044,107 612,044,107 561,092,714 561,092,714 Retained profit 44 2,907,357,859 3,026,575,655 2,104,566,940 2,485,046,999 Different of foreign currency translation 102,605,543 5,575,696 ______Total of shareholders’ equity attributable to the 8,047,617,581 7,902,920,455 7,535,441,198 7,662,461,156 parent company Minor shareholders’ equity 45 1,519,642,142 1,241,824,273 ______Total of shareholders’ equity 9,567,259,723 9,144,744,728 7,535,441,198 7,662,461,156 ______Total of owners’ equity and liabilities 27,799,439,351 25,107,163,682 17,774,715,429 17,376,785,179 ______

The notes are the constitutional parts of the Financial Statements.

27 Interim Report 2008 CMPD

INCOME STATEMENT OF THE PARENT COMPANY AND THE CONSOLIDATED The Period from January 1 2008 to June 30 2008

Consolidated The Company Items Not Accumulated Accumulated same Accumulated Accumulated same e this term period last year this term period last year RMB Yuan RMB Yuan RMB Yuan RMB Yuan

46 1,446,933,596 1,717,369,129 5,304,939 I. Turnover Less: Operation cost 47 791,405,045 1,054,329,342 5,456,740 Business tax and surcharge 48 141,354,234 152,764,687 267,899 Sales expense 70,454,628 25,252,865 Administrative expense 74,156,042 54,268,411 9,727,718 7,644,437 Financial expenses 49 34,916,090 15,885,209 24,839,168 15,080,222 Asset impairment loss 50 5,897 11,873,947 (1,695,201) Plus: Income from change of fair value 51 (1,977,278) 1,124,281 Investment income 52 (27,285,587) 106,546,416 (7,966,372) 13,053,302 Incl. Investment income from affiliates and joint-ventures Investment gains from joint businesses 52 ______(5,458,504) ______103,352,707 ______(1,695,548) ______10,395,479 II. Operation profit 305,378,795 510,665,365 (42,533,258) (1,879,856) Plus: Non business income 53 12,835,038 20,338,201 Less: Non-business expenses 54 2,062,798 321,284 Incl. Loss from disposal of non-current 54 123,147 36,361 assets ______III. Total of profit 316,151,035 530,682,282 (42,533,258) (1,879,856) Less: Income tax expenses 55 ______98,456,436 ______94,628,142 ______IV. Net profit 217,694,599 436,054,140 (42,533,258) (1,879,856) Net profit attributable to shareholders 218,729,005 417,246,419 of the parent company Minor shareholders’ equity (1,034,406) 18,807,721 Incl. Net profit of the consolidated party under common control before being consolidated

V. Earnings per share (I) Basic earnings per share 57 0.207 0.635 (II) Diluted earnings per share 57 0.207 0.635

The notes are the constitutional parts of the Financial Statements.

28 Interim Report 2008 CMPD CASH FLOW STATEMENT OF THE PAPRENT COMPANY AND THE CONSOLIDATED The Period from January 1 2008 to June 30 2008

Consolidated The Company Not Accumulated Accumulated same period Accumulated Accumulated same e this term last year this term period last year RMB Yuan RMB Yuan RMB Yuan RMB Yuan I. Net cash flow from business operation Cash received from sales of products and providing of services 2,370,421,500 1,642,147,108 5,304,939 Tax returned 1,607 31,027,844 Other cash received from business 61 operation 744,898,884 196,085,128 144,071,808 56,965,863 ______Sub-total of cash inflow from business activities 3,115,321,991 1,869,260,080 144,071,808 62,270,802 ______Cash paid for purchasing of merchandise and services 4,759,721,748 2,889,001,748 Cash paid to staffs or paid for staffs 293,307,234 205,006,663 11,036,012 8,561,344 Taxes paid 450,227,717 261,702,799 14,617,769 1,587,020 Other cash paid for business 61 activities 782,526,719 202,903,314 2,517,044,083 835,927,023 ______Sub-total of cash outflow from business activities 6,285,783,418 3,558,614,524 2,542,697,864 846,075,387 ______Cash flow generated by business operation, net (3,170,461,427) (1,689,354,444) (2,398,626,056) (783,804,585) ______II. Cash flow generated by investing Cash received from investment retrieving 40,702,143 2,657,823 40,702,143 2,657,823 Cash received as investment gains 12,515,977 17,218,796 Disposal of fixed assets, intangible assets and others Net cash retrieved due to long- term assets 179,113 202,643 ______Sub-total of cash inflow due to investment activities 53,397,233 20,079,262 40,702,143 2,657,823 ______Cash paid for construction of fixed assets, intangible assets and other long-term assets 45,104,698 14,631,539 Cash paid as investment 147,957,709 24,220,904 90,000,000 97,089,300

Net cash received from subsidiaries 64 and other operational units (3,010,125) (471,613) Other cash paid for investment 62 activities 21,803,244 2,427,405 ______Sub-total of cash outflow due to investment activities 211,855,526 40,808,235 90,000,000 97,089,300 ______Net cash flow generated by investment (158,458,293) (20,728,973)(49,297,857) (94,431,477) ______III. Cash flow generated by financing Cash received as investment 226,985,250 157,271,980

29 Interim Report 2008 CMPD Incl. Cash received as investment from minor shareholders 226,985,250 157,271,980 Cash received as loans 4,411,118,702 2,686,259,307 1,949,295,800 1,408,513,600 ______Subtotal of cash inflow from financing activities 4,638,103,952 2,843,531,287 1,949,295,800 1,408,513,600 ______

30 Interim Report 2008 CMPD

CASH FLOW STATEMENT OF THE PAPRENT COMPANY AND THE CONSOLIDATED (CONT.) The Period from January 1 2008 to June 30 2008

Consolidated The Company Not Accumulated Accumulated Accumulated this Accumulated last e this year last year year year RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Cash to repay debts 1,806,588,162 831,933,413 430,704,800 524,782,529 Cash paid as dividend, profit, or interests 391,557,622 306,079,973 265,903,015 255,915,435 Incl. Dividend and profit paid by subsidiaries to minor shareholders 20,913,265 - Other cash paid for financing activities 63 95,000 95,000 ______Subtotal of cash outflow due to financing activities 2,198,145,784 1,138,108,386 696,607,815 780,792,964 ______Net cash flow generated by financing 2,439,958,168 1,705,422,901 1,252,687,985 627,720,636 ______IV. Influence of exchange rate alternation on cash and cash equivalents 18,289,630 36,571,594 4,005,956 22,887,966 ______V. Net increase of cash and cash equivalents (870,671,922) 31,911,078 (1,191,229,972) (227,627,460) Plus: Balance of cash and cash equivalents 59 at the beginning of term ______3,544,984,914 ______910,028,347 ______2,454,024,042 ______547,191,487 VI. Balance of cash and cash equivalents at 59 the end of term ______2,674,312,992 ______941,939,425 ______1,262,794,070 ______319,564,027

The notes are the constitutional parts of the Financial Statements.

31 Interim Report 2008 CMPD

STATEMENT OF CHANGE IN SHAREHOLDERS’ EQUITY (PARENT COMPANY AND CONSOLIDATED) The Period from January 1 2008 to June 30 2008

Consolidated Parent company Different of Shareholders’ Minor Total of Total of Surplus foreign equity Surplus Share capital Capital reserves Retained profit shareholders’ shareholders’ Share capital Capital reserves Retained profit shareholders’ reserves currency attributable to the reserves equity equity equity translation parent company I. Balance at the end of last year 844,867,002 3,413,857,995 612,044,107 3,026,575,655 5,575,696 7,902,920,455 1,241,824,273 9,144,744,728 844,867,002 3,771,454,441 561,092,714 2,485,046,999 7,662,461,156 1. Change of accounting policies ------2. Correction of previous errors ------II. Balance at the beginning of current year 844,867,002 3,413,857,995 612,044,107 3,026,575,655 5,575,696 7,902,920,455 1,241,824,273 9,144,744,728 844,867,002 3,771,454,441 561,092,714 2,485,046,999 7,662,461,156 III. Changed in the current year (“-“ for decrease) 422,433,501 (255,548,426) - (119,217,796) 97,029,847 144,697,126 277,817,869 422,514,995 422,433,501 (168,973,400) - (380,480,059) (127,019,958) (I) Net profit - - - 218,729,005 - 218,729,005 (1,034,406) 217,694,599 - - - (42,533,258) (42,533,258) (II) Gains/losses accounted into owners’ equity directly - (86,575,026) - - 97,029,847 10,454,821 26,469,975 36,924,796 - - - - - 1. Change in fair value of sellable financial assets, net ------2. Influence of change in other owners’ equity of invested enterprises on equity basis ------3. Influence of income tax related to own ers’ equity items ------4. Others - (86,575,026) - - 97,029,847 10,454,821 26,469,975 36,924,796 - - - - - Total of (I) and (II) - (86,575,026) - 218,729,005 97,029,847 229,183,826 25,435,569 254,619,395 - - - (42,533,258) (42,533,258) (III) Capital inputted by the owners ------252,382,300 252,382,300 - - - - - 1. Capital inputted by the owners in the report term ------252,382,300 252,382,300 - - - - - 2. Amount of shares paid and accounted as owners’ equity ------3. Others ------(IV) Profit allotment 253,460,101 - - (337,946,801) - (84,486,700) - (84,486,700) 253,460,101 - - (337,946,801) (84,486,700) 1. Providing of surplus reserves ------2. Common risk provision ------3. Allotted to owners 253,460,101 - - (337,946,801) - (84,486,700) - (84,486,700) 253,460,101 - - (337,946,801) (84,486,700) 4. Others ------(V) Internal transferring of owners’ equity 168,973,400 (168,973,400) ------168,973,400 (168,973,400) - - - 1. Capital reserves transferred to share capital 168,973,400 (168,973,400) ------168,973,400 (168,973,400) - - - 2. Surplus reserves transferred to share capital ------3. Making up losses by surplus reserves ------4. Others ------IV. Balance at end of this year 1,267,300,503 3,158,309,569 612,044,107 2,907,357,859 102,605,543 8,047,617,581 1,519,642,142 9,567,259,723 1,267,300,503 3,602,481,041 561,092,714 2,104,566,940 7,535,441,198

32 Interim Report 2008 CMPD STATEMENT OF CHANGE IN SHAREHOLDERS’ EQUITY (PARENT COMPANY AND CONSOLIDATED) (CONT.) Year ended December 31st, 2007

Consolidated Parent company Shareholders’ Different of equity Minor Total of Total of Surplus foreign Surplus Share capital Capital reserves Retained profit attributable to shareholders’ shareholders’ Share capital Capital reserves Retained profit shareholders’ reserves currency reserves the parent equity equity equity translation company I. Balance at the end of last year 618,822,672 1,491,566,681 706,035,235 1,535,728,546 (13,966,720) 4,338,186,414 211,480,520 4,549,666,934 618,822,672 1,491,566,681 655,083,842 1,586,679,939 4,352,153,134 1. Change of accounting policies - (1,264,888,649) (209,778,892) 603,462,903 - (871,204,638) - (871,204,638) - (1,213,989,543) (209,778,892) (1,330,327,385) (2,754,095,820) 2. Correction of previous errors ------II. Balance at the beginning of current year 618,822,672 226,678,032 496,256,343 2,139,191,449 (13,966,720) 3,466,981,776 211,480,520 3,678,462,296 618,822,672 277,577,138 445,304,950 256,352,554 1,598,057,314 III. Changed in the current year (“-“ for decrease) 226,044,330 3,187,179,963 115,787,764 887,384,206 19,542,416 4,435,938,679 1,030,343,753 5,466,282,432 226,044,330 3,493,877,303 115,787,764 2,228,694,445 6,064,403,842 (I) Net profit - - - 1,157,877,638 - 1,157,877,638 37,253,250 1,195,130,888 - - - 2,499,187,877 2,499,187,877 (II) Gains/losses accounted into owners’ equity directly - (388,322,115) - - 19,542,416 (368,779,699) (125,344,362) (494,124,061) - (81,624,775) - - (81,624,775) 1. Change in fair value of sellable financial assets, net - (11,694,664) - - - (11,694,664) (291,262) (11,985,926) - (4,859,955) - - (4,859,955) 2. Influence of change in other owners’ equity of invested enterprises on equity basis - 1,028,970 - - - 1,028,970 - 1,028,970 - - - - - 3. Influence of income tax related to owners’ equity items ------4. Others - (377,656,421) - - 19,542,416 (358,114,005) (125,053,100) (483,167,105) - (76,764,820) - - (76,764,820) Total of (I) and (II) - (388,322,115) - 1,157,877,638 19,542,416 789,097,939 (88,091,112) 701,006,827 (81,624,775) - 2,499,187,877 2,417,563,102 (III) Capital inputted by the owners 226,044,330 3,575,502,078 - - - 3,801,546,408 1,120,372,907 4,921,919,315 226,044,330 3,575,502,078 - - 3,801,546,408 1. Capital inputted by the owners in the report term 226,044,330 3,575,502,078 - - - 3,801,546,408 1,120,372,907 4,921,919,315 226,044,330 3,575,502,078 - - 3,801,546,408 2. Amount of shares paid and accounted as owners’ equity ------3. Others ------(IV) Profit allotment - - 115,787,764 (270,493,432) - (154,705,668) (1,938,042) (156,643,710) - - 115,787,764 (270,493,432) (154,705,668) 1. Providing of surplus reserves - - 115,787,764 (115,787,764) ------115,787,764 (115,787,764) - 2. Common risk provision ------3. Allotted to owners - - - (154,705,668) - (154,705,668) (1,938,042) (156,643,710) - - - (154,705,668) (154,705,668) 4. Others ------(V) Internal transferring of owners’ equity ------1. Capital reserves transferred to share capital ------2. Surplus reserves transferred to share capital ------3. Making up losses by surplus reserves ------4. Others ------IV. Balance at end of this year 844,867,002 3,413,857,995 612,044,107 3,026,575,655 5,575,696 7,902,920,455 1,241,824,273 9,144,744,728 844,867,002 3,771,454,441 561,092,714 2,485,046,999 7,662,461,156

The notes are the constitutional parts of the Financial Statements.

33 Interim Report 2008 CMPD

1. Basic Information

China Merchants Property Development Co., Ltd. (the Company), originally China Merchants Shekou Shareholding Co., Ltd., is a sino-foreign joint venture established on the base of Shenkou China Merchants Port Service Co., Ltd. by China Merchants Sekou Industrial Zone Co., Ltd. (Shekou Industrial Zone). The Company was incorporated in Shenzhen China in September 1990.

On February 23 1993, the Company raised finance by placing 27,000,000 A shares to the local investors, and 50,000,000 B shares to foreign investors. Upon placing of these shares, the Company’s capital shares had increased up to 210,000,000 shares. The A shares and B shares were listed at Shenzhen Stock Exchange in June 1993.

On May 7 1994, the dividend plan for year 1993 was adopted by the 2nd shareholders’ general meeting, which was, upon the total capital shares of 210,000,000 shares at December 31 1993, 2 bonus shares were distributed to each 10 shares. The capital shares have thus increased up to 252,000,000 shares.

On May 6 1995, the dividend plan for year 1994 was adopted by the 3rd shareholders’ general meeting, which was, upon the total capital shares of 252,000,000 shares at December 31 1994, 1 bonus shares was distributed to each 10 shares. The capital shares have thus increased up to 277,200,000 shares. In July 1995, part of B shares were listed in Singapore Stock Exchange by mean of SDR (Singapore Depository Receipts).

As passed by the 4th shareholders’ general meeting held in 1996, upon the capital share of 277,200,000 shares at the end of 1995, the Company alloted 3 share option to each 10 shares. A shares went first and then the B shares. As approved by China Securities Regulatory Commission with Zheng-jian-guo-zi [1996]23 and Zheng- jian-pei-shen-zi[1997]2, the Company accomplished the share option allotting for A shares and B shares in August 1996 and July 1997 respectively. After this, the Company’s total capital shares was increased up to 360,360,000 shares.

On May 4 1999, the dividend plan for year 1998 was adopted by the shareholders’ annual meeting 1998, which was, upon the total capital shares of 360,360,000 shares at December 31 1998, 1 bonus share were distributed to each 10 shares. The capital shares have thus increased up to 396,396,000 shares.

As approved by China Securities Regulatory Commission with Zheng-jian-fa-xing-zi [1999]149, the Company issued 80,000,000 new current A shares on February 23 2000. Thus the total capital shares of the Company was increased to 476,396,000 shares.

As approved by China Securities Regulatory Commission with Zheng-jian-fa-xing-zi [2003]124, upon the capital share of 476,396,000 shares at December 31 2002, the Company allotted 3 share option to each 10 shares. In the process, for the current B share holders and legal person shareholders waived the option, the actual amount of allotted was 39,289,560 shares. Thus the total capital share was increased to 515,685,560 shares.

The shareholders’ general meeting 2004 held on April 9th 2004 passed the profit distribution plan for year 2003, which was, basing on the 515,685,560 shares placed in the market, 2 bonus shares were allotted to each 10 shares to the shareholders. Since then, the total capital shares have increased up to 618,822,672 shares.

In June 2004, the Company changed its name to “China Merchants Property Development Co., Ltd.”

On January 18, 2006, as approved by the shareholders’ meeting, the A share relocation plan was implemented. Namely holders of current A shares received 2 A shares and RMB3.14 upon each 10 current A shares from the holders of non-current A shares. The total number of capital shares remains unchanged after completion of the relocation plan.

As approved by Document [2006]67 issued by China Securities Regulatory Commission, the Company has made full right issue of 15,100,000 convertible corporation bonds to original A shareholders on August 30, 2006, the part of right issue waived by the original A shareholders would be placed offline to institution investors. The bonds are with face value of RMB100 each. The convertible part became negotiable in Shenzhen Stock Exchange since September 11, 2006 with ID of “CM Convertible Bond” and the convertible date was March 1, 2007.

34 Interim Report 2008 CMPD On May 25, 2007, CM Convertible Bond was terminated from trading and converting. All of the bonds not converted yet were repurchased by the Company. Till then, there were totally 15,093,841 bonds (with total face value of RMB1,509,384,100) converted into 115,307,691 shares. The remained 6,159 convertible bonds (with face value of RMB615,900) were repurchased by the Company. Thus the capital shares of the Company had increased up to 734,130,363 shares.

As approved by document Zheng-Jian-Fa-Xing-Zi [2007]299 issued by China Securities Regulatory Commission, the company has placed 110,736,639 shares privately to China Merchants Shekou Industrial Zone Co., Ltd. on September 19, 2007. The Company’s capital shares has increased up to 844,867,002 shares since then.

On March 17, 2008, the dividend plan for 2007 was adopted by the Annual General Meeting 2007, namely:upon total capital shares of 844,867,002 outstanding at the end of year, upon total capital shares of 844,867,002 outstanding at the end of year, 3 bonus shares will be delivered to each 10 shares. Upon total capital shares of 844,867,002 outstanding at December 31 2007, 2 shares will be capitalized to each 10 shares. Totally RMB168,973,400 will be capitalized. Since then, the total of capital shares has increased up to 1,267,300,503 shares.

The Company has its headquarter located in Shenzhen Guangdong.

The Company and its subsidiaries (refered to as “the Group”) are mainly engaged in property development, public utilities (water and power supply), and property management.

China Merchants Shekou Industrial Zone Co., Ltd. is the parent company of the Company, and China Merchants Group Ltd. is the ultimate holding shareholder.

2. Basis for the preparation of financial statements

The Accounting Standards for Business Enterprises issued on February 15, 2006 was initiated with the Company’s accounts since January 1, 2007.

In addition, the financial statements had also presented and disclosed the relevant financial information in accordance with the "No. 15 of the rules for information disclosure reporting for companies whihc publicly issue securities -- the general provisions of financial report (2007 Amendment)".

3. Statement of compliance to the Enterprise Accounting Standard

The financial statements prepared by the Company comply with the requirement of New Accounting Standards, and had truly and completely reflected the company and consolidated balance sheets on June 30, 2008, the company and consolidated profit reports in Jan-Jun 2008, the consolidated operation results and the cash flow of the Company.

4. Significant accounting policies and accounting estimates.

The following significant accounting policies and accounting estimates are based on the Enterprise Accounting Standards.

Fiscal Year

The fiscal year of the Group is the solar calendar year, that is from January 1 to December 31.

Standard currency for bookkeeping

RMB is the primary currency in main economic environments, the accounting currency of the Group is RMB.

The business of the subsidiaries of the Group in Hong Kong, Singapore shall be accounted according to the local currency, in addition, the offshore businesses are relatively independent to the domestic business of the Group. All the 35 Interim Report 2008 CMPD offshore subsidiaries of the Group shall take the local currency (HK dollar in Hong Kong, Singapore dollar in Singapore) as accounting standard currency.

Basis of Presentation and Principle of Pricing

The accounting basis of the Group is the accrual system. Except that some non-financial tools and the assets consolidated company under the same control are accounted according to fair value, the financial statements take the historical cost as the accounting basis. If assets impair, account the corresponding provisions for impairment in accordance with the relevant provisions.

Recognition of cash equivalents

Cash equivalent refers to the investment held by the Company with short term, strong liquidity and low risk of value fluctuation that is easy to be converted into cash of known amount.

Translation of foreign currency

Foreign currency transactions at initial confirmation shall be translated with the approximate exchange rate on the exchange date, the exchange rates which are approximate to the exchange rate on the exchange date shall be determined according to the spot exchange rate of the current month of the transaction.

On the balance sheet date, foreign currency monetary items shall use the spot exchange rate to translate Renminbi, except exchange gains and losses for special foreign currency loans, the exchange differences due to differences between the spot exchange rate on that date and the spot exchange rate on the former balance sheet date, and the cost of capitalization of relavant assets, shall all be included in the current profit and loss.

Non-monetary items in foreign currency and measured with historical costs are still measured at standard currency with exchange rate of the day when the transaction is happened. Non-monetary foreign currency items in fair value are translated at the rate when the fair value is determined. Differences between the standard currency and original currency is handled as fair value fluctuation and accounted under current gain/loss account or shareholders’ equity.

When preparing of consolidated financial statements is involving in overseas business operation, if it is a foreign currency item practically formed net investment in overseas business, the difference caused by exchange rate fluctuation will be accounted under “difference of foreign currency translation” of shareholders’ equity. When the overseas business is disposed of, it will be accounted into current gain/loss.

Financial instrument

Whenever the Company entered a financial instrument contract as one party, it would be recognized as corresponding financial assets or financial liabilities. Recognition of financial assets or financial liabilities is measured at fair value primarily. For those financial assets or liabilities measured by fair values and their changes were accounted as gain/loss of current term, relative trading expenses are accounted into gain/loss account of current term directly; as for those financial assets or liabilities under other categories, the trading expenses are accounted into initial amount recognized.

Derivative financial instruments

Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value. Other than those assigned to hedge instrument with high validity for which changes in the fair value of derivative financial instruments are accounted according to the period decided by the hedge accounting, those which do not qualify for hedge accounting are recognized in profit or loss.

Embedded derivative tools

For those complex instruments with embedded derivative financial instruments, if they are not assigned as such financial assets or liabilities which are measured at fair value and their changes are accounted into current income account, and the particular embedded derivative financial instrument is not closely related to the economical features and risks of the main contract, and under same conditions, the individual instrument is complying with the definition of derivative instrument, then the embedded instrument will be partitioned off from the complex instrument and handled as an individual derivative instrument. In case of an embedded derivative financial instrument is not able to be measured separately when obtained or at the succeeding balance sheet date, then the complex instrument will be wholly assigned as financial asset or liability to be measured by 36 Interim Report 2008 CMPD fair value and its changes will be accounted into current income account.

Categorizing and measuring of financial assets

At initial recognition of financial assets, they are classified into: financial assets measured at fair value and changes recorded into current income account, held till expiration, loan, account receivable, and available-for- sale financial assets.

- Financial assets measured at fair value and changes recorded into current income account

It includes transactional financial assets and financial assets measured at fair value and changes recorded into current income account.

Transactional financial assets are those which satisfied one of the following conditions: (1) Obtaining of the financial asset was for the purpose of selling or repurchasing it in a short period; (2) It was a recognizable part of financial instrument package which is under collective administration, and objective evidence shows that the Company was operating the package to gain a profit in a short period of time. (3) Regarded as a derivative instrument, but with exclusion of those assigned as effective hedge instrument; and those regarded as a derivative instrument of financial guarantee contract; and those bonded to an equity instrument without quotation in an active market and cannot be reliably measured for its fair value, and can only be settled by giving of the equity instrument.

Financial assets satisfying one of the following conditions can be assigned as financial assets measured at fair value and changes recorded into current income account when initially recognized: (1) This assignment may eliminate or obviously reduce the discordance in recognition or measurement of gains caused by different accounting basis of this financial asset; (2) As stated by the official documents of the Company regarding risk management or investment strategies, managing, assessing and reporting of the financial asset package or financial asset and liability package in which the particular financial asset is included, is on the basis of fair value.

Successive measurement of financial assets measured at fair value and changes recorded into current income account will be on fair value basis. Gain or loss from change of fair value, together with the dividend and interest incurred with this financial asset will be recorded under the income account of current term.

- Loans and receivables

Loans and receivables are those non-derivative financial assets without quotation in an active market, but with fixed or recognizable recovery amounts.

Accounting of loans and receivables is on practical interest basis; the successive measurement is on cost balance; and their gains or losses incurred due to final recognition, impairment, or amortizing will be counted into current income account.

- Available-for-sale financial assets

It includes non-derivative financial assets that were recognized as disposable at initial recognition, and those financial assets other than financial assets measured at fair value and their changes recorded into current income account, held till expiration, loan, and account receivable.

Successive measurement of available-for-sale financial assets is on fair value basis. While gains or losses from change of fair value, except for the impairment loss and exchange difference of foreign currency monetary financial asset which are accounted to current income account, are counted into shareholders’ equity directly, and transferred over to current income account upon recognition of termination.

Interests or cash dividend gained during the period of holding the available-for-sale financial asset are counted into investment gains.

Financial asset impairment

Other than those financial assets that are measured at fair value and their changes are counted into current income account, the Company performs verification over the book values of other financial assets at each 37 Interim Report 2008 CMPD balance sheet day. Impairment provision would be provided when objective evidence showing that impairment had practically happened.

- Impairment of loans and receivables

Financial assets accounted at amortized cost are reduced in their book value down to the predicted cash flow value, the reduced amounts are recognized as impairment loss and recorded into current income account. When a financial asset is recognized for its impairment loss, if practical evidence is showing that its value has recovered, and is practically related to the issue happened after recognition of loss, the impairment loss recognized before shall be recovered. The book value of the financial asset after recovering of impairment loss shall not be greater than the amortized cost at the recovery date on the assumption that no impairment provision was provided.

- Impairment of available-for-sale financial assets

When impairment occurred with a available-for-sale financial asset, the accumulated loss caused by impairment of fair value which originally recorded under capital reserves shall be transferred over to current income account. The accumulated loss is the balance of initial cost of the financial asset when obtained less retrieved principal, amortized amount, current fair value and the impairment loss originally recorded into income account.

Upon recognition of impairment loss, if there is evidence showing that the value of a financial asset has recovered, and is practically related to the issue happened after recognition of loss, the impairment loss recognized before shall be recovered. The impairment loss of the disposable equity investment instrument shall be recovered to equity, and impairment loss of the disposable credit instrument shall be recovered to current income account.

Impairment loss of equity instrument investment without quotation in an active market and cannot be reliably measured, derivative financial asset bonded to the equity instrument and only settled by giving of the equity instrument, and long-term equity investment not under control or common control or major influence and without quotation in an active market and cannot be reliably measured, shall not be recovered.

Recognition of financial asset termination

Financial assets satisfying one of the following conditions are recognized for termination: (1) The contract rights to retrieve the cash flow of the financial asset are terminated; (2) The financial asset has been transferred to others along with almost all risks and rewards attached to it. (3) The financial asset has been transferred to others, and the Company has given up the controlling power over the asset, although the Company neither transferred nor kept almost all of the risks and rewards attached to the asset.

Bad debt

- Recognition of bad debt the debts can still not be recovered after the liquidation of the debtor’s property or legacy due to his bankruptcy; the debts definitely can not been recovered due to the death of the debtor, and there’s neither legacy nor heir can cover the debt. The accounts receivable which have been delinquent and obviously can not be recovered.

- Measuring of bad debt

The bad debts of the Company are stated with the allowance method. According to the experience of the Company, the practical situation of the debtor, the cash flow situation and other related information, bade debt provisions will be provided individually upon the receivable accounts which are obviously differ from the others. Then, account age analysis is adopted to estimate the loss of bad debts and provide bad debts reserve at the end of term on the following schedule:

38 Interim Report 2008 CMPD Age Rate

Below 3 months 1% 3-6 months 2% 6-9 months 3% Nov-Dec 9 5% 1-2 yrs 10% 2-3 yrs 30% 3-4 yrs 50% 4-5 yrs 80% over 5 yrs 100%

Inventories

The inventories shall measured according the initial cost. Inventories are divided into real estate development products, raw materials, finished products and stocks, low-value and consumable products and others.

Property products

The real estate development products are the real estate development products under construction, development products which have been completed, the lands to be developed, etc. The actual costs of real estate development products include the land transfer amount, infrastructure expenses, and expenditures on construction and installation works, the borrowing costs before the completion of the development projects and other related costs. When the inventories are sent out, determine the actual cost by the individual valuation method.

Stock products

The actual costs of inventories include the purchase price, transportation cost, and insurance premium, taxes and other related costs for the expenses of making inventories reach the current site and state. When send out the inventories, determine its actual costs according to the method of weighted average.

Low-value consumables are amortized on one-off basis.

Inventory system is the perpetual inventory system.

Inventory impairment provision

On the balance sheet date, inventories are accounted depending on which is lower between the cost and the net realisable value. When its net realisable value is lower than the cost, provisions for impairment of inventories shall be drawn. Provisions for impairment of inventories shall be accounted according to the difference between the cost of individual inventory items and the net realisable value.

After providing of inventory impairment provision, if the impacting factors that caused impairment of inventory were eliminated, and the realizable value of the inventory becomes higher than the book value, the inventory impairment provision formerly provided shall be recovered and recorded into current income account.

Realizable net value is, in daily transaction, the amount of predicted sales price less predicted cost at completion of construction, less predicted sales expense and tax. Recognition of realizable net value of inventory shall base on confirmed evidence obtained, with reference to the purpose to hold the inventory, and influence of post balance sheet issues.

Investment real estate

Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both, including the rented land use rights and the land use rights which are held and prepared for transfer after appreciation, the rented buildings.

Investment real estate is measured according to the initial cost. The follow-up expenses that are related to investment real estate, if the economic interests related to the assets are is likely to inflow cost and its costs can be reliably

39 Interim Report 2008 CMPD measured, shall be included in the cost of investment real estate. The other follow-up expense shall be included in the current loss.

The Group adopts the cost model to have follow-up measurements of the investment real estate, and to conduct depreciation or amortization according to the policies that are in consistent with the land use rights.

Real estates for self use or inventories converted into investment real estate or investment real estate converted into real estate for self use, the book value before the conversion shall be taken as the recorded value after the conversion.

The difference of the income from the sale, transfer, dispose of the investment real estate deducting the book value and relevant taxes shall be included in the gains and losses in the current period.

Long-term share equity investment

For the long-term equity investment formed by corporate merger, if it is the long-term equity investment obtained from the corporate merger under the same control, the share of book value of owner's equity on the merger date shall be taken as the initial investment cost. The long-term equity investment obtained through the corporate merger under different control shall be taken as the initial investment cost of long-term equity investment. The other long-term investment besides the long-term equity investment formed by corporate merger shall conduct initial measurement according to its cost.

For the long-term equity investments that have no joint control or significant influence and have no price in active market and the fair value can not be reliably measured, shall adopt the the cost accounting method; for the long-term equity investments that have joint control or significant influence, shall adopt the method of equity to account. For those without controlling, joint control or significant influence, and can be measured reliably for their fair values, they are accounted as sellable financial assets.

In addition, in the financial statements of the Company, for long-term equity investment which can control the unit invested, shall adopt the method of cost to account.

- Long-term equity investment on cost basis

When cost basis is adopted, long-term equity investments are measured at initial cost. When the investment gains of current term are only the share of accumulative profit of the receiver of the investment since the investment was made, the balances of profit or cash dividend announced by the receiver over the above amount are treated as retrieving of initial investment cost and will be deducted from the book value of the investment.

- Long-term equity investment on equity basis

When equity basis is adopted, if the initial cost of the long-term equity investment is greater than the share of fair value of the receiver’s recognizable net asset, the initial investment cost of the long-term equity investment will not be adjusted; if the initial cost of the long-term equity investment is less than the share of fair value of the receiver’s recognizable net asset, the balance shall be counted into current income account, and the cost of long-term equity investment shall be adjusted.

When equity basis is adopted, investment gain/loss of the current term is the share of net gains or losses of the investment receiver of the current year. Recognition of the share of net gains or losses of the investment receiver shall be on the basis of fair value of recognizable asset of the receiver when the investment was made, and recognized after adjustment on the net profit of the receiver in accordance with the Company’s accounting policies and accounting period. Change of equities of the investment receiver other than net gains or losses shall be counted into shareholders’ equity, and the book value of long-term equity investment shall be adjusted correspondingly.

Recognition of the share of net loss by the investment receiver shall be limited to when the book value of long- term equity investment and other long-term equity forms substantial net investment has been reduced to zero. Beside, if the Company is responsible for other losses of the investment receiver, predicted liability shall be recognized upon the prediction of responsibilities and recorded into current investment loss account. If the receiver realized net profit in the period thereafter, the share of gains is recovered after making up of share of losses which has not been recognized.

40 Interim Report 2008 CMPD - Disposal of long-term equity investment

At disposing of long-term equity investment, the balance between its book value and practical amount received is accounted into current income account. For long-term equity investment on equity basis, the part which is formally counted into shareholders’ equity shall be transferred to current income account at corresponding portion when disposed.

Fixed asset and depreciation

Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for operation & management, and have more than one year of service life.

Initial measurement shall be conducted on fixed assets according to the actual cost when obtain them and also considering the expected costs for disposal. From the next month since reaching the intended use state, depreciations on fixed assets shall be accounted by using the method of average life length. The service life of fixed assets, expected net residual value and the year depreciation rate are as follows:

Categories Useful life Predicted retained value rate Annual depreciation ratio

Houses & buildings 10-50 yrs 5%-10% 1.8%-9.5% Equipment & machinery 10-20 yrs 5%-10% 4.5%-9.5% Transportation tools 5-10 yrs 5% 9.5%-19% Electronics, furniture, and appliances 5-10 yrs 5% 9.5%-19%

Estimated salvage value refers to the amount of value retrieved after deducting of predicted disposal expense when the expected using life of a fixed asset has expired and in the expected state of termination.

Successive expenses related to the fixed asset are counted into fixed asset cost if the financial benefit related to the fixed asset is possible to inflow and the cost can be reliably measured. Recognition of the replacing part for book value shall be terminated. Successive expenses other than the above are counted into current income account as soon as they occurred.

The Company revises, at least once at the end of year, the useful life, estimated salvage value, and depreciation policies of the fixed assets. If any change happened, it will be treated as changing of accounting estimations.

Income from treatment of fixed asset disposing, transferring, discarding or damage, the balance after deducting of book value and relative taxes is recorded into current income account.

Construction in process

Cost of construction in process is determined at practical construction expenditures, including all expenses during the construction, capitalized loan expenses before the construction reaches useful status, and other relative expenses. It is transferred to fixed asset as soon as the construction reaches the useful status.

Intangible assets

Intangible assets are those recognizable non-monetary assets without physical shape under the Company’s possess or control.

Intangible assets are measured by their costs. Those costs related to intangible assets, if the financial benefits are likely to inflow to the Company and can be reliably measured, then counted into intangible asset costs. Other expenditures related to intangible items are counted into current income account when occurred.

Land using rights purchased or by way of land using right payment for the Company’s own use are accounted as intangible assets; land using rights purchased or by way of land using right payment for developing of merchandise properties are accounted into property developing costs. For those houses or buildings purchased

41 Interim Report 2008 CMPD from outside, the related payments are allocated between land using rights and buildings. Those which can hardly be allocated are treated as fixed assets collectively.

Those intangible assets with limited useful life are evenly amortized on straight basis from the date when they become useable to the end of expected useful life.

At end of report term, revising will be performed on the useful life of intangible assets with limited useful life and the methods of amortizing. If any change happened, it will be treated as changing of accounting estimations.

Long-term amortizable expenses

Long-term amortizable expenses are those already occurred and amortizable to the current term and successive terms for over one year. Long-term amortizable expenses are evenly amortized to the benefit period.

Impairment of non-financial assets

At each balance sheet date, the Company verify on the long-term equity investment in subsidiaries, joint- ventures and partnerships, investment properties, fixed assets, constructions in process, and intangible assets with fixed useful life to find out whether there is sign of impairment. If evidence shows that impairment has happened, then the retrievable value will be estimated. Estimation of retrievable value is on basis of single asset. If it is hard to estimate the retrievable value of a particular asset, then the retrievable value shall be estimated upon the asset group in which the target asset is included. If the retrievable value of an asset is lower than its book value, impairment provision shall be provided at the balance of the two, and shall be counted into current income account.

Goodwill and intangible assets formed by merger of enterprises, whether or not there is impairment evidence, shall be verified annually for impairment. Verifying of goodwill is performed along with the asset group or combination of asset groups to which the goodwill is related. I.e. the book value of goodwill shall be reasonably amortized to the related asset group since the day acquired. Those can hardly be amortized to the related asset group shall be amortized to the combination of asset groups. Impairment loss is recognized when the retrievable value of the asset group or combination of asset groups including the goodwill is lower than its book value. Impairment losses shall be firstly amortized to the book value of goodwill of the asset group or combination of asset groups, then amortized to other assets in the group or combination of groups at their relative portions.

Retrievable value is the higher one of the net amount of fair value less disposal expenses and the current value of expected future cash flow the asset may cause. Fair value is determined according to a fair trade contract; for those without trade contract but has an active market, the fair value is determined at the price offered by the buyer; for those without trade contract and active market, the fair value can be determined according to the best information obtained. Disposal expenses include those legal expenses, taxes, truckage, and other direct expenses occurred in purpose of make the asset usable.

Once impairment losses are confirmed upon the long-term equity investment in subsidiaries, joint-ventures and partnerships, investment properties, fixed assets, constructions in process, intangible assets, and goodwill as said herein, they won’t be recovered in successive accounting periods.

Financial liabilities

At initial recognition, financial liabilities are classified into financial liabilities measured by fair value with changes counted into current income account and other financial liabilities.

- Financial liabilities measured by fair value with changes counted into current income account

Includes transactional financial liabilities and those being assigned to financial liabilities measured by fair value with changes counted into current income account.

Recognition conditions of transactional financial liabilities and those being assigned to financial liabilities measured by fair value with changes counted into current income account are similar with those conditions of transactional financial assets and those being assigned to financial assets measured by fair value with changes counted into current income account.

42 Interim Report 2008 CMPD

Successive measurements of financial liabilities measured by fair value with changes counted into current income account are on fair value basis. Gains or losses due to change of fair value and dividend or interest payment related to the financial asset are counted into current income account.

- Other financial liabilities

Derivative financial liabilities bonded to those equity instruments without quotation in an active market and cannot be reliably measured for fair value, and can only be settled by giving of the equity instrument, are measured on cost basis in successive measurement. Accounting of other financial liabilities is on practical interest basis; successive measurements are on amortized balance of cost; gains or losses due to termination recognition or amortizing are accounted into current income account.

- Financial guarantee contracts

Financial guarantee contracts that cannot be classified to financial liabilities assigned to be calculated by fair value with changes accounted into current income account, are initially recognized at fair value. Successive measurement will be on the greater one between the amount recognized according to “Enterprise Accounting Standard – Contingent Issues” and the balance of initially recognized amount less accumulative amortization decided according to “Enterprise Accounting Standard – Income”.

Employees’ remunerations

In the accounting period when the employees served the Company, the remunerations payable to the employees are recognized as liabilities.

According to the regulations, the Company has participated in the social security system setup by the government, including endowment insurance, medical insurance, housing reserves, and other social security policies. Corresponding expenses are accounted into relative asset cost or current income account.

Predictive liabilities

Responsibilities connected to contingent issues and satisfied all of the following conditions are recognized as predictive liabilities: (1) The responsibility is a current responsibility undertaken by the Company; (2) Fulfilling of the responsibility may lead to financial benefit outflow; (3) The responsibility can be measured reliably for its value.

At balance sheet day, with reference to the risks, uncertainty and periodic value of currency that connected to the contingent issues, the predicted liabilities are measured according to the best estimation on the payment to fulfil the current responsibility.

If clearing of predictive is fully or partially compensated by a third party, and the compensated amount can be definitely received, it is recognized separated as asset. Though the compensated amount shall not greater than the book value of the predictive liability.

Neutralizing of financial assets and financial liabilities

The Company is legally empowered to neutralize the recognized financial assets and financial liabilities. The power is currently executable. At the meantime, if the Company is about to liquidate by net amount or cash in the financial assets and discharge the financial liabilities simultaneously, the neutralized amounts of financial assets and liabilities are demonstrated in the Balance Sheet. Except for the above, financial assets and liabilities are demonstrated separately and shall not be neutralized by each other.

Equity instrument

Equity instruments are those contracts that witness the Company’s possession of retained equities of the assets after deducting of all liabilities. The considerations received at issuing of equity instrument shall be added to the 43 Interim Report 2008 CMPD owners’ equity after deducting of trading expenses. Whereas the considerations paid to repurchase its own equity instruments and trade expenses are used to reduce owners’ equity. None of gain or loss is recognized at issuing, repurchasing, disposing or cancelling of equity instruments.

All distributions carried out by the Company to holders of equity instruments (excludes share dividend) are used to reduce the owners’ equity. The Company doesn’t recognize change of fair value of equity instruments.

Repairing fund

Accounting method of repairing fund: For those property projects located in Shenzhen, the Company adopts “Shenzhen Property Public Utility Special Fund Administration Rules”. As of those property projects located outside Shenzhen, the Company adopts the local regulations.

Recognition of revenue

-- Goods sales income

When the Group transfers the main risks and rewards of the goods to buyers, and has no reservation of continual management right related to the ownership, and has no effective control on the goods sold out, and the income amount can be reliably measured, and relevant economic interests are likely to flow into the company, and the relevant cost happened or will happen can be reliably measured, the sales income of the goods shall be confirmed.

For the sales income from real estate development shall be recognized when the project is completed and has received a qualified acceptance and the procedures for the transfer have completed. The sales income from power supply and water supply shall be recognized when the electricity and water have been provided and have received the right to collect the money.

-- Rental income from rental development products.

For the rent agreed in contract or agreement within the lease term shall be recognized as the operating income according to the straight-line method.

-- Interest income.

Shall be determined and calculated according to the loan time and the actual rate.

-- Property management income.

When the property management services have been provided and the income from property management will flow into the company and the relevant income and cost can be reliably measured, the property management income shall be recognized.

Government subsidy

Government subsidies are those monetary and/or non-monetary assets obtained from the government by free, but not include those capital input by the government by way of ownership. Government subsidies are classified to asset-related government subsidies and income-related government subsidies. Government subsidies are recognized when the conditions attached to the subsidies are satisfied and the subsidies are received.

Monetary government subsidies are measured at the amount received or receivable. Non-monetary government subsidies are measured at fair value. If no fair value is available, nominal amount will be adopted. Government subsidies measured at nominal amount are accounted into current income account directly.

Asset-related government subsidies are recognized as differed income and accounted into current income evenly upon their useful life. Those income-related government subsidies used to neutralize relative expenses and losses of successive periods are recognized as differed income and accounted into current income at the period when the expenses are recognized; those used to neutralize relative expenses and losses which have already occurred are accounted into current income directly.

When a recognized government subsidy needs to be returned, if there is balance of relative deferred income, the booked balance of relative deferred income shall be neutralized, the exceeding part shall be accounted into current income account; if there is no relative deferred income, it will be accounted into current income account.

44 Interim Report 2008 CMPD

Borrowing expenses

Borrowing expenses include borrowing interests, amortizing of discount or premium, auxiliary expenses, and exchange balances due to borrowings in foreign currencies. Borrowing expenses that can be attributed for purchasing or construction of assets that are complying with capitalizing conditions start to be capitalized when the payment of asset and borrowing expenses have already occurred, and the purchasing or production activities in purpose of make the asset usable have started; Capitalizing will be terminated as soon as the asset that complying with capitalizing conditions has reached its usable or saleable status. The other borrowing expenses are recognized as expenses when occurred.

Interest expenses practically occurred at the current term of a special borrowing are capitalized after deducting of the bank saving interest of unused borrowed fund or provisional investment gains; Capitalization amounts of common borrowings are decided by the weighted average of exceeding part of accumulated asset expenses over the special borrowing assets multiply the capitalizing rate of common borrowings adopted. Capitalization rates are decided by the weighted average of common borrowings.

In the capitalization period, all of the exchange differences of special borrowings in foreign currencies are capitalized; exchange differences of common borrowings in foreign currencies are accounted into current income account.

Assets satisfying the conditions of capitalization are those fixed assets, investment assets or inventories which need a long period of time to purchase, construct, or manufacturing before becoming usable.

If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization is suspended abnormally for over 3 months, capitalizing of borrowing expenses shall be suspended until the purchasing, construction, or manufacturing process is resumed.

Income tax

- Income tax of the current term

At the balance sheet date, the income tax liabilities (or assets) formed at current term or previous terms are measured by the predicted income tax payable according to the tax law. The taxable amount of income used in calculating of income tax expenses of current term is the result of adjusted accounting profit before tax of the current year according to the relative tax laws.

- Deferred income tax asset and deferred income tax liabilities

The differences between the book values and taxable basis of certain assets and liability items, and provisional differences occurred between the book value and taxable basis which are not recognized as assets and liabilities, but may be recognized for taxable basis according to the law, are recognized as deferred income tax asset and deferred income tax liabilities on liability basis of the balance sheet.

Those taxable provisional differences, which are related to initial recognition of goodwill, and neither enterprise merger, nor initial recognition of assets or liabilities generated by trades make no influence on the accounting profit and taxable income (or deductible losses), are not recognized as relative differed income tax liabilities. Meanwhile, those taxable provisional differences related to investments in subsidiaries, joint businesses, and cooperative businesses, if the Company is able to control the writing back time of the provisional differences, and these provisional differences may neither be written back in an expectable future, are not recognized as relative differed income tax liabilities. Beside the above exemptions, all of the other taxable provisional differences are recognized as differed income tax liabilities.

Those deductible provisional differences, which are neither enterprise merger, nor initial recognition of assets or liabilities generated by trades make no influence on the accounting profit and taxable income (or deductible losses), are not recognized as relative differed income tax assets. Meanwhile, those deductible provisional differences related to investments in subsidiaries, joint businesses, and cooperative businesses, if these

45 Interim Report 2008 CMPD provisional differences may neither be written back in an expectable future, or may not possibly obtain taxable income used to deduct the provisional difference, are not recognized as relative differed income tax assets. Beside the above exemptions, to the extend of the amount of taxable income used to deduct the provisional difference which can possibly be obtained, all of the other taxable provisional differences are recognized as differed income tax assets.

Those tax deductions which can be used to deduct losses and can be carried on to future years, to the extend of the amount of taxable income used to deduct the deductible losses and deductible tax which can possibly be obtained, are recognized as corresponding differed income tax assets.

At the balance sheet day, those differed income tax assets and income tax liabilities, according to the tax law, calculation will be on tax rate applicable to retrieving period of assets or clearing of liabilities.

At the balance sheet day, verification will be performed on the book value of differed income tax assets. If it is not possible to obtain enough taxable income to neutralize the benefit of differed income tax assets, then the book value of the differed income tax assets shall be reduced. Whenever obtaining of taxable income became possible, the reduced amount shall be restored.

- Income tax expenditures

Income tax expenditures include current income tax and differed income tax.

Those current income taxes and differed income taxes related to trades which are directly accounted into shareholders’ equity are accounted into shareholders’ equity. Differed income tax generated by merger of businesses are adjusted in the book value of goodwill. All current income taxes and differed income taxes expenditures or incomes are accounted into current gain/loss account.

Merger of companies

Merger of companies refers to those trade or event that merges over two individual companies into one report subject. Merger of companies is divided into merger of enterprises under common control and merger of enterprises under different control.

Assets and liabilities acquired from merger of enterprises are recognized at consolidation day or purchasing day. Consolidation day or purchasing day is the date when the controlling power over the target enterprise are practically obtained, namely the date when the net asset or controlling power of business operation decision- making is transferred to the Company.

- Merger of companies under common control

Both before and after the merger, the enterprises are under common control of sole party or several parties, and the controlling power is by no means temporary, it is regarded as merger of enterprises under common control. The party which obtained the controlling power over other parties participated in the merger at the merger day is referred to as the merging party, where the other parties are referred to as the merged party.

Assets and liabilities obtained by the merging party are calculated at their book value with the merged parties at the merger day. The differences between the book value of net assets and the book value of consideration price (or the total of face value of share issued) are adjusted to the share capital premium under the capital reserves. If the share capital premium is not enough to neutralize the difference, it will be adjusted to the retained gains.

Direct expenses occurred to the merging party for the merger are accounted into current gain/loss account when occurred.

- Merger of enterprises under different control and goodwill

When the enterprises participated in the merger are not under controlling of the same party or group of parties, either before or after the merger, the merger is regarded as merger of enterprises under different control. At merging of enterprises under different control, the party which obtains power of control over other participants is regarded as the buying party, and the other parties are regarded as the bought parties. 46 Interim Report 2008 CMPD

For merger of enterprises under common control, the merger cost is the fair value of capital paid, liability occurred or undertaken, or equity instrument issued thereof, on the day of purchasing to obtain power of control over the bought party, and those expenses directly related to the merger. For merger done through multiple trades, the overall cost is the sum of cost of each single trade. If the merger contract provided faith on future events that may influence the merger cost, and the event has great possibility to happen, and its influence may be reliably measured, then it will be accounted into merger cost.

Recognizable assets, liabilities, and contingent liabilities obtained in merger of enterprises under different control, are measured at their fair value on the purchase day.

When the merger cost is greater than the share of fair value of recognizable net asset of the bought enterprise, the balance is recognized as goodwill. When the merger cost is lower than the share of fair value of recognizable net asset of the bought enterprise, revising will firstly be done on the merger cost and fair value of each recognizable assets, liabilities, and contingent liabilities of the bought party, and if the merger cost is still lower than the share of fair value of recognizable net asset of the bought enterprise, the balance will be accounted into current gain/loss account.

Leases

Financial leases are those which all of the risks and rewards attached to the assets have been substantially transferred, regardless its ultimate ownership will be transferred or not. Leases other than this are regarded as operational lease.

- Recording of operational lease businesses in which the Company is the undertaker

Rentals paid for operational lease are amortized to relative asset cost or current gain/loss account on straight basis to each term covered by the rental period. Initial direct expenses are counted into current gain/loss account. Contingent rentals are accounted into current gain/loss account as soon as happened.

- Recording of operational lease businesses in which the Company is a lender

Rentals gained for operational lease amortized to relative asset cost or current gain/loss account on straight basis to each term covered by the rental period. Contingent rentals are accounted into current gain/loss account as soon as happened.

Preparation of Consolidated Financial Statements

Consolidation range is determined on the basis of control power for the consolidated financial statements.

The Company adopts the date of gaining or losing power of control over the subsidiaries as the date of purchasing or disposal. For subsidiaries being disposed, their business result and cash flow before the disposal day have been appropriately demonstrated in the consolidated income statement and cash flow statement. For subsidiaries disposed in the current term, the initial amount of the consolidated balance sheet will not be adjusted.

Subsidiaries added as merger of enterprises under different control, their operation results and cash flow after the purchase day have been appropriately demonstrated in the consolidated income statement and cash flow statement. The initial amount and comparison amount of the consolidated financial statement will not be adjusted.

Subsidiaries added as merger of enterprises under common control, their operation results and cash flow from the beginning of current term to the merger day have been appropriately demonstrated in the consolidated income statement and consolidated cash flow statement. And the comparison amount in the consolidated financial statement shall be adjusted accordingly.

The accounting policies and accounting periods of the subsidiaries are decided accordingly with the Company’s accounting policies and accounting periods.

Trades and major accounts between the Company and subsidiary or any two subsidiaries shall be neutralized 47 Interim Report 2008 CMPD when consolidated.

Those share of owners’ equity in the subsidiaries not attributable to the parent company are treated as minor shareholders’ equity, and demonstrated as “minor shareholders’ equity” under the shareholders’ equity items in the consolidated balance sheet. The shares of minor shareholders’ equity in net income of current term are demonstrated under “minor shareholders’ gain/loss” under the net profit items in the consolidated income statement. When the share of losses attributable to the minor shareholders has exceeded their shares in the shareholders’ equity at the beginning of term, if the Articles of Association of the Company has decided beforehand that the minor shareholders has the responsibility to undertake the losses and have the power to make up them, the shareholders’ equity shall be deducted thereof. If not so, it will be deducted from the shareholders’ equity attributable to the parent company of the Company. Profits produced by the subsidiary in subsequent periods are attributable to the shareholders’ equity of the parent company of the Company before making up of the losses attributed to the minor shareholders but undertaken by the parent company of the Company.

Translation of foreign currency financial statements

Foreign currency financial statements prepared for the Company’s overseas businesses are translated by the following methods: All asset and liability items in the balance sheet are translated at the exchange rate of the balance sheet date; shareholders’ equity items except for “undistributed profit” are translated at the exchange rate of the day when they happened; all items in the income statement and items reflecting the amount of profit distribution are translated at the similar exchange rate of the date when the trades happened; undistributed profit at the beginning of year is the undistributed profit translated at the end of previous year; undistributed profit at the end of year are demonstrated according to the calculation of profit distribution items after translated; the differences between the translated asset items and liability items and total amount of shareholders’ equity items are demonstrated separately as difference of foreign currency statement translation under shareholders’ equity items in the balance sheet.

When disposing of overseas businesses, those foreign currency statement translation differences displayed under shareholders’ equity in balance sheet and related to the overseas businesses are fully or at the portion of the business transferred over to current gain/loss account regarding disposal.

Foreign currency cash flow and overseas subsidiaries’ cash flow are translated on the similar exchange rate of the day when the cash flow was happened. Influences of exchange rate movement on cash and cash equivalents are regarded as adjustment items and demonstrated under “Influence of exchange rates on cash and cash equivalents” in the cash flow statement.

The initial amount at the beginning of year and the practical amount of last year are presented according to the translated amount of the financial statements of last year.

Related parties

Related parties are formed when a party is controlled by another or collectively controlled by others, or there are major influences on another party, and two or more than two parties are under common control, collective control or under major influence.

5. Basis of Major Accounting Policies and Key Estimations and Uncertain Factors Adopted in Accounting Estimation

In application of the accounting policies as described in Note 4, for the uncertainty of business operation, the Company needs to determine, estimate, or make assumption on the book value of report subjects which are not able to be precisely measured. These determinations, estimations, or assumptions are made upon the Company’s experiences and with references to other relative factors. Their practical results may vary from the estimations of the Company.

48 Interim Report 2008 CMPD The Company performs periodic revision on the above determinations, estimations, and assumptions on the basis of constant operation. When a change in accounting estimation is just influencing the current term, its influenced amount is recognized in the current term. When a change is influencing not only the current term but also the future terms, its influenced amount is recognized in the current term and also the future terms.

6. Taxation

Main taxation items and rates applicable to the Company

Taxation Taxable bases Tax rate

Enterprise income tax Amount of income taxable (Note 1) Business tax Income from sales or rental of properties 5% VAT Sales of products 17% Power supply income 17%(Note 2) Water supply income 6% Land VAT Income from property sales – deducted amount At premium accumulative tax rate 30%-60% Contract tax Amount of receiving land and houses 3% Property tax 70% of the original value of the property 1.2%(Note 3) City maintenance and construction tax Operation tax (or VAT already paid) 1%-3% Education surtax Operation tax (or VAT already paid) 3%

Note 1: The other subsidiaries of the Company other than the followings are applicable for the income tax rate of 25%.

Tax rate Note

Shenzhen and Zhuhai 18% (1) Hong Kong 17.5% (2)

(1) Enterprise income tax rate is 18% for Shenzhen and Zhuhai are special economic zones.

(2) According to the “Taxation Regulations” of Hong Kong, enterprise income tax rate is 17.5%.

Note 2: VAT is the balance of output tax less deductible input tax. Output tax is calculated according to the sales income and taxable rate set forth by the relative taxation laws.

As approved by the Ministry of Finance and National Tax Bureau General with document Cai-Guan-Shui [2007]28, in the period from January 1, 2008 to December 31, 2008, the electric power imported by Shenzhen China Merchants Power Supply Co., Ltd. from Hong Kong is on the basic amount of 560 million Kwh. The VAT on the amount lower than the basic amount will be refunded at 40%, where the amount beyond the basic amount is subject to the import VAT according to the regulations.

Note 3: The fixed assets of buildings and rental properties are subject to the payment of property tax upon 70% of their original book value and stipulated tax rate. In which the newly constructed buildings are exempted from property taxes in 3 years since documented by the tax bureau.

49 Interim Report 2008 CMPD

7. Range of consolidated financial statements

Name Registered address Business Business Scope Registered Practical investment Consolidated share portion of Consolidated voting property capital at end of term by the the Group rights of the Group Group RMB’000 RMB’000

Major subsidiaries of the Group at end of previous term and end of the current term CMRE Shenzhen Property Property development and 106,000 1,450,312 100% 100% development sales Shenzhen CM Power Supply Shenzhen Power supply Power supply and sales 57,000 592,978 100% 100% Co., Ltd. Shenzhen CM Water Supply Shenzhen Water supply Water supply and 43,000 70,766 100% 100% Co., Ltd. installations Shenzhen China Merchants Shenzhen Property Leasing of self-owned 25,000 36,803 100% 100% Xin’an Properties Co., Ltd. properties Ruijia Investment Industrial HK Investment Investment HKD20,000 20,181 100% 100% Ltd. Shenzhen Taige Apartment Shenzhen Hotel service Inddor golf exercise court 1,000 1,000 100% 100% Management Co., Ltd. property leasing, restaurant shopping mall, sales of water supply facilities Shenzhen Maitesi Civil Shenzhen Engineering Water supply pipe 9,000 8,100 90% 90% Engineering Co., Ltd. engineering Shekou Xinghua Industrial Shenzhen Property Real-estate and other HKD47,420 38,065 65.07% 65.07% Holdings Co., Ltd. development properties Shekou Zhaofa Property Co., Shenzhen Property Building of commercial houses 36,000 36,000 100% 100% Ltd. and auxiliary facilities Guangzhou Wende Property Guangzhou Property Property management 600 600 100% 100% Management Co., Ltd. Shenzhen CM Property Shenzhen Property Real-estate operation, 2,000 2,000 100% 100% Consultancy Ltd. development information & consulting Shanghai China Merchants Shanghai Property Property development and 30,000 30,000 100% 100% Properties Co., Ltd. development sales of construction materials

50 Interim Report 2008 CMPD CM Garden City (Beijing) Beijing Property Property development, sales, 20,000 20,000 100% 100% Property Development Co., development and services Ltd. Guangzhou China Merchants Guangzhou Property Specialized property 50,000 33,923 100% 100% Real-estate Co., Ltd. development development, leasing and sales CM Property (Beijing) Ltd. Beijing Property Property development and 20,000 20,000 100% 100% development sales China Merchants (Suzhou) Co., Suzhou Property Property development, 30,000 30,000 100% 100% Ltd. development operation and sales CM (Chongqing) Ltd. Chongqing Property Property development, 30,000 30,000 100% 100% development leasing of self-owned properties Shenzhen City Main Plaza Shenzhen Investment Industry and domestic 10,000 - 100% 100% Investment Co., Ltd. commerce Shanghai China Merchants Shanghai Property Property development, sales, 30,000 30,000 100% 100% Real-estates Co., Ltd. development and services CM (Nanjing) Ltd. Nanjin Property Property development, sales, 30,000 30,000 100% 100% development and services Tianjin China Merchants Tianjin Property Property development, sales, 40,000 30,000 75% 75% Properties Co., Ltd. development and services Fucheng (China) Ltd. (Note *1) HK Property Property management, HKD10 192,240 100% 100% decoration, consulting, sales of property facilities Maintaining, sales and leasing of properties Shenzhen Meiyue Property Shenzhen Property Property agency, 1,000 21,050 100% 100% Consultancy Ltd. (Note 1) consultancy, and development Name Registered Business Business Scope Registered capital Practical Consolidated Consolidated address property investment share voting rights at end of term portion of the Group by the Group of the Group RMB’000 RMB’000 China Merchants Property Shenzhen Property Property management, decoration, consultancy, 25,000 169,200 100% 100% Management Co., Ltd. property facility sales, maintenance, property leasing and agency Beijing CM Property Beijing Property Property management, decoration, consultancy, 5,000 4,000 80% 80% Management Co., Ltd. property facility sales, maintenance, property leasing and agency

51 Interim Report 2008 CMPD Xi’an CM Property Xi’an Property Property management, decoration, consultancy, 1,000 1,000 100% 100% Management Co., Ltd. property facility sales, maintenance, property leasing and agency Nanjing CM Property Nanjin Property Property management, decoration, consultancy, 5,000 5,000 100% 100% Management Co., Ltd. property facility sales, maintenance, property leasing and agency Wuhan CM Property Wuhan Property Property management, decoration, consultancy, 5,000 5,000 100% 100% Management Co., Ltd. property facility sales, maintenance, property leasing and agency CM Property Management HK Property Property management, decoration, consultancy, HKD10 10 100% 100% (HK) Ltd. property facility sales, maintenance, property leasing and agency Shenzhen China Merchants Shenzhen Property Property management, decoration, consultancy, 11,200 11,200 100% 100% Property Management Co., property facility sales, maintenance, property leasing Ltd. and agency Zhangzhou CM Property Zhangzhou Property Property management, decoration, consultancy, 500 500 100% 100% Management Ltd. property facility sales, maintenance, property leasing and agency Nanjing Fucheng Real-estate Nanjin Property Property development, leasing, sales, and management USD4,000 29,215 80% 80% Development Co., Ltd. development Zhangzhou China Merchants Zhangzhou Property Property development and sales 50,000 25,500 51% 51% Properties Co., Ltd. development Zhuhai Huifeng Property Co., Zhuhai Property Property development and sales 8,000 8,000 100% 100% Ltd. development Zhuhai Yuanfeng Property Ltd. Zhuhai Property Property development and sales 8,000 4,080 51% 51% development Shanghai Fengyang Property Shanghai Property Property development and sales 30,000 353,250 60% 60% Ltd. development Foshan Xincheng Property Co., Foshan Property Property development, sales, and services USD127,000 478,690 50% 50% Ltd. (Note 2) development Huipeng Property Co., Ltd. HK Property Property development, sales, and services HKD10 5 50% 50% (Note 2) development Suzhou Shuanghu Property Suzhou Property Property development, sales, and services USD160,000 326,845 50% 50% Co., Ltd. (Note 2) development Tianjing Zhaosheng Property Tianjin Property Property development, sales, and services 30,000 30,000 100% 100% Co., Ltd. development Suzhou CM Nanshan Property Suzhou Property Property development, sales, and services 100,000 60,000 60% 60% Co., Ltd. development

52 Interim Report 2008 CMPD

Name Registered Business Business Scope Registered Practical investment at Consolidated share Consolidated voting address property capital end of term by the portion of the Group rights of the Group Group RMB’000 RMB’000 Chengdu CM Property Ltd. Chengdu Property Property development, sales, and services 50,000 30,000 60% 60% development Shenzhen CM Anye Shenzhen Investment Industrial investment, domestic commerce 5,000 2,550 51% 51% Investment Development Co., Ltd. Shanghai CM Minsheng Shanghai Property Property development, interior 30,000 30,000 100% 100% Property Ltd. development decoration, construction material sales Shanghai CM Fengsheng Shanghai Property Property development, interior 30,000 30,000 100% 100% Property Ltd. development decoration, construction material sales Shenzhen CM Construction Shenzhen Property Construction engineering, decoration, 50,000 50,000 100% 100% Co., Ltd. development elevator, air conditioner maintaining, sales of construction materials Guangzhou Qidi Tech & Guangzhou Property Ventual Investment 30,000 21,777 72.59% 72.59% Science Investment Co., Ltd. development Foshan Xijie Property Co., Foshan Property Property development, sales, and services USD99,900 729,755 50% 50% Ltd. development

New subsidiaries merged with different control in the report term

Shanghai CM Fengrui Shanghai Property Property development, interior 10,000 8,000 80% 80% Property Ltd. (Note 3) development decoration, sales of construction material

Subsidiaries newly established in current term

CM Property (Chongqing) Chongqing Property Property development, interior 30,000 30,000 100% 100% Garden City Ltd. (Note 4) development decoration, sales of construction material CM Jiaming (Beijing) Beijing Property Property development, interior 200,000 100,000 50% 50% Property Ltd. (Note 5) development decoration, sales of construction material Shenzhen CM Commerce Shenzhen Property Development of commercial property, 51,000 51,000 100% 100% Development Ltd. (Note 6) development operation, management, and leasing. Investment in industry

53 Interim Report 2008 CMPD Subsidiaries disposed in the current term China Merchants Port Service Singapore Trade Trade Singapore Dollar - 100% 100% (Singapore) Co., Ltd. (Note 15,000 7)

54 Interim Report 2008 CMPD

Note 1. In the report term, Ruijian Investment & Industrial Co., Ltd. – the subsidiary of the Company, acquired 20% shares of Fucheng (China) Co., Ltd. from the minor shareholders with RMB80 million. Share transferring procedures have been completed and Ruijian Investment & Industrial Co., Ltd. is holding 100% of the equity capital of Fucheng (China) Co., Ltd. since then.

In the report term, Shenzhen CM Real-Estate Co., Ltd. (SZ CM Real-Estate) acquired 45% of the shares of Shenzhen Meiyue Property Consultancy Ltd. from the minor shareholders with RMB20.88 million. Share transferring procedures have been completed and Shenzhen CM Real-Estate is holding 100% of the equity capital of Shenzhen Meiyue Property Consultancy Ltd. since then.

Note 2: Through its subsidiaries, the Company is holding 50% of the voting capital of Foshan Xincheng Real Estate Co., Ltd., Huipeng Real Estate Co., Ltd., and Suzhou Shuanghu Real Estate Co., Ltd. respectively. Because these subsidiaries are holding the major amount of voting capital in these companies, they are substantially controlling over the financial and business operations of these companies. Thus the Company includes them in the consolidate range of the consolidated financial statements. In which, Huipeng Real Estate Co., Ltd. is holding 100% of the equity capital of Foshan Xinjie Real Estate Co., Ltd., thus Foshan Xinjie Real Estate Co., Ltd. is included in the consolidation range.

Note 3. Shanghai CM Fengrui Property Co., Ltd. (Shanghai Fengrui) was incorporated on November 22, 2007 with registered capital of RMB30 million. It was incorporated jointly by Shenzhen CM Real-Estate and Shanghai Jiandu Real-Estate Development Co., Ltd. (Shanghai Jiandu). In which Shenzhen CM Real- Estate invested RMB1 million to take 10% of the share capital. In March 2008, Shenzhen CM Real-Estate entered the agreement with Shanghai Jiandu to takeover 70% shares of Shanghai Fengrui from Shanghai Jiandu with consideration of RMB7 million. As of the end of report term, the transferring procedures have been completed and Shenzhen CM Real-Estate is holding 80% of the share capital of Shanghai Fengrui since then. Thus it was included in the consolidation range.

Note 4. On January 25, 2008, Shenzhen CM Real-Estate invested RMB30 million to setup China Merchants Property (Chongqing) Garden City Co., Ltd. – a fully owned subsidiary, i.e. it is holding 100% of the voting rights. Thus it was included in the consolidation range.

Note 5. China Merchants Jianming (Beijing) Property Co., Ltd. was incorporated on April 17, 2008 with capital of RMB200 million. It was setup jointly by Shenzhen CM Real-Estate Co., Ltd. and Jianming Investment Co., Ltd. In which Shenzhen CM Real-Estate invested RMB100 million and take 50% of capital shares. For Shenzhen CM Real-Estate is holding major voting rights in the board of the company, thus take control over the financial and business decisions. Therefore it was included in the consolidation range.

Note 6. On April 11, 2008, Shenzhen CM Real-Estate invested RMB51 million to setup Shenzhen CM Commerce Development Co., Ltd. – a fully-owned subsidiary. It is holding 100% of the voting rights of the new company. Thus it is included in the consolidation range of the Company.

Note 7. For details about the financial situations of the disposed subsidiaries at the disposal day and business performances and cash flow in the period from beginning of year to the disposal day please see Note 65.

Note 8. Ended June 30 2008, subsidiaries merged as under common control or different control are as the followings:

Subsidiaries merged under same control Subsidiaries merged under different control CMRE Shenzhen City Main Plaza Investment Co., Ltd. Shenzhen CM Power Supply Co., Ltd. Shenzhen Meiyue Properties Consultants Co., Ltd. Shenzhen CM Water Supply Co., Ltd. Zhuhai Huifeng Property Co., Ltd. Shenzhen China Merchants Xin’an Properties Co., Ltd. Zhuhai Yuanfeng Property Ltd. Fucheng (China) Ltd. (Note *1) Shanghai Fengyang Property Ltd. Nanjing Fucheng Real-estate Development Co., Ltd. Shanghai CM Fengrui Property Ltd. China Merchants Property Management Co., Ltd. Huipeng Property Co., Ltd.

55 Interim Report 2008 CMPD Zhangzhou China Merchants Properties Co., Ltd. Foshan Xinjie Property Ltd. Shanghai China Merchants Real-estates Co., Ltd.

8. Monetary capital End of term Beginning of term Amount Exchange rate RMB Yuan Amount Exchange rate RMB Yuan

Cash -RMB 156,515 1.0000 156,515 103,917 1.0000 103,917 -HKD 7,208 0.8792 6,338 24,150 0.9364 22,614 － Singapore dollar 154 5.0473 776 Bank deposit -RMB 2,391,689,832 1.0000 2,391,689,832 3,460,019,252 1.0000 3,460,019,252 -HKD 11,346,023 0.8792 9,976,153 13,314,042 0.9364 12,467,269 - USD 58,687,526 6.8575 402,453,571 9,848,935 7.3046 71,942,532 Other monetary fund -RMB 14,229,930 1.0000 14,229,930 14,694,157 1.0000 14,694,157 - USD 4,248,340 6.8575 ______29,128,492 3,948,929 7.3046 ______28,845,346 2,847,640,831 3,588,095,863 ______Balances of other monetary fund are mainly transactions of foreign currency futures and deposits for project fund guarantees.

9. Transactional financial assets

ItemsFair value at end of term Fair value at beginning of term RMB Yuan RMB Yuan Deductive financial assets 29,688,898 (Note) - ______Note: Please see note 25.

10. Account receivable (1) Account age analyze of account receivable End of term Beginning of term Amount Proportion Bad debt provision Book value Amount Proportion Bad debt provision Book value RMB Yuan % RMB Yuan RMB Yuan RMB Yuan % RMB Yuan RMB Yuan

within 1 yr 41,437,740 88 456,312 40,981,428 54,400,839 91 478,083 53,922,756 1-2 years 497,410 1 188,613 308,797 284,577 1 25,546 259,031 2-3 years 269,185 1 269,185 - 912,803 1 265,236 647,567 Over 3 yrs ______4,712,365 ____10 ______2,413,975 ______2,298,390 ______4,223,585 ____7 ______2,554,205 ______1,669,380

Total ______46,916,700 ____100 ______3,328,085 ______43,588,615 ______59,821,804 ____100 ______3,323,070 ______56,498,734

(2) Accounts receivable are presented according to the categories as the following:

End of term Beginning of term Amount ProportionBad debt provisionBook valueAmount ProportionBad debt provision Book value Basis of categorizing RMB Yuan % RMB Yuan RMB Yuan RMB Yuan % RMB Yuan RMB Yuan

Single account with large amount ------Single sum over RMB10 mil. Single account without large amount but with greater risks after combined with credit features 4,712,365 10 2,413,975 2,298,390 4,223,585 7 2,554,205 1,669,380 Over 3 years Other minor accounts ______42,204,335 ______90 914,110______41,290,225______55,598,219 ______93 768,865______54,829,354

Total ______46,916,700 ____100 ______3,328,085 ______43,588,615 ______59,821,804 ____100 ______3,323,070 ______56,498,734

56 Interim Report 2008 CMPD

(3) Change of bad debt provisions provided upon account receivable Current term RMB Yuan Beginning of term 3,323,070 Provided this term 5,015 Carried back this term ______- End of term 3,328,085 ______

(4) Top 5 receivables are as the followings:

Total of top 5 receivables Age Portion in total receivables RMB Yuan %

12,827,919(Note) within 1 yr 27 ______

Note: The top 5 receivables were mainly property mortgage, rental, and commission receivable.

(5) No receivable account due from shareholders with 5% or above shares of the Company.

11. Prepayment

(1) Age analyze of prepaid accounts End of term Beginning of term Amount Proportion Amount Proportion RMB Yuan % RMB Yuan %

within 1 yr 2,376,562 85 6,987,171 96 1-2 years ___426,724______15 ______308,000 ____4 Total 2,803,286 100 7,295,171 100 ______

(2) Prepaid accounts are presented according to the categories as the following:

Categories End of term Beginning of term RMB Yuan RMB Yuan

Single account with large amount - - Single account with large amount - - Single account without large amount but with greater risks after combined with credit features Other minor accounts ______2,803,286______7,295,171 2,803,286 7,295,171 ______

(3) No prepaid account to shareholders with 5% or above shares of the Company.

57 Interim Report 2008 CMPD

12. Other account receivable

(1) Account age analyse of other account receivable

End of term Beginning of term Amount ProportionBad debt provisionBook value Amount ProportionBad debt provisionBook value RMB Yuan % RMB Yuan RMB Yuan RMB Yuan % RMB Yuan RMB Yuan

within 1 yr 859,440,083 98 104,899 859,335,184 802,223,107 96 22,917 802,200,190 1-2 years 15,181,131 2 5,810 15,175,321 32,852,904 4 65,553 32,787,351 2-3 years 33,434 - 33,434 434,824 - 7,240 427,584 Over 3 yrs ______3,143,347 ____- ______1,988,347 ______1,155,000 ______3,479,034__ ___- ______2,002,464 ______1,476,570 877,797,995 100 2,099,056 875,698,939 838,989,869 100 2,098,174 836,891,695 ______

(2) Other accounts receivable are presented according to the categories as the following:

End of term Beginning of term Amount Bad debt provision Book value Amount Bad debt provisionBook value Basis of categorizing RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Single account with large amount 799,896,760 - 799,896,760 531,199,497 - 531,199,497 Single sum

Single account without large amount but with greater risks after combined with credit features 3,143,347 1,988,347 1,155,000 3,479,034 2,002,464 1,476,570 Over 3 years Other minor accounts ______74,757,888 ______110,709 ______74,647,179 ______304,311,338 ______95,710 ______304,215,628

Total ______877,797,995 ______2,099,056 ______875,698,939 ______838,989,869 ______2,098,174 ______836,891,695

(3) Change of bad debt provisions provided upon other account receivable Current term RMB Yuan

Beginning of term 2,098,174 Provided this term 882 Carried back this term - Neutralised this year ______- End of term 2,099,056 ______

(4) Top 5 receivables are as the followings:

Name of the debtors Amount Age Cause of debt Portion in total RMB Yuan %

Shenzhen China Merchants OCT Investment Co., Ltd. 295,627,584 within 1 yr Project development account 34 Beijing Hengshihuarong Real-estate Development Co., Ltd. 207,004,654 within 1 yr Project development account 24 Nanjing land reserve center 115,000,000 within 1 yr Deposite for land bidding 13 Chengdu land reserve center 100,000,000 within 1 yr Land cleaning and starting fund 11 Jiaming Investment Ltd. ______25,000,000 within 1 yr Deposite for cooperation____ 3

Total 742,632,238______85

(5) No other receivable account due from shareholders with 5% or above shares of the Company.

58 Interim Report 2008 CMPD

13. Inventories End of term Beginning of term Amount Impairment provision Book value Amount Impairment provisionBook value RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Real property development costs 18,567,347,893 - 18,567,347,893 15,997,211,790 - 15,997,211,790 Property products 1,686,103,239 - 1,686,103,239 1,165,031,359 - 1,165,031,359 Raw materials 4,307,554 - 4,307,554 3,982,071 - 3,982,071 Low-value consumables and others ______2,124,607 ______162,982 ______1,961,625 ______1,268,635 162,982______1,105,653 20,259,883,293 162,982 20,259,720,311 17,167,493,855 162,982 17,167,330,873 ______

(1). Real estate development costs are as follows:

Projects Start Planned finish Expected total Beginning of End of term date date investment. term RMB0’000 RMB Yuan RMB Yuan

Development costs of real estate under construction: Park 1872 2006.12 2011.11 374,185 1,236,507,084 1,349,445,104 Shanghai Haide Garden Land No.1 2007.10 2010.01 177,464 730,344,470 762,151,348 Nanjing International Finance Center 2005.01 2008.04 70,074 608,751,475 - CM Jiangwan City 2007.10 2012.10 144,443 478,206,869 543,246,903 Xikang Proj. Tianjin 2007.11 2010.06 55,457 283,646,221 340,218,053 Haiyue Huating 2007.02 2009.06 57,746 156,405,242 212,187,644 Nanjing Yiyunxigu Phase I 2006.12 2008.05 23,609 146,494,943 - Najing Yiyunxigu Phase II 2008.04 2009.03 40,593 224,987,620 Tianjin Weijin Road Project 2007.12 2013.05 343,762 1,285,621,090 1,395,592,117 Yishanjun Phase II. III 2006.01 2009.09 62,469 134,380,464 132,078,908 Shanghai Yiyunjun Phase II 2007.12 2009.04 12,414 55,966,528 88,223,749 Meilun Apartment 2008.02 2009.11 31,672 139,564,735 CM Lanyuan 2008.02 2009.12 155,498 687,080,077 Shanghai Zhuanqiao Project 2008.06 2010.10 122,732 596,290,561 Foshan Xincheng 2008.03 2011.11 387,338 1,033,290,678 Yiyunshui’an Phase III 2008.02 2009.05 40,783 178,851,033 Suzhou Xiaoshicheng 2008.04 2013.10 462,932 1,350,433,764 Jinshangu Phase I 2008.01 2008.12 38,720 213,936,080 Ziweiyuan Phase I 2007.11 2008.12 5,313 25,225,352 37,047,651 Zhangzhou CM Garden City 2008.04 2010.12 62,455 212,052,325 Others ______86,899,602 ______115,494,164

Sub-total ______5,228,449,340 ______9,612,172,514

59 Interim Report 2008 CMPD

Projects Planned Planned Expected Beginning of End of term start date finish date total term investment. RMB0’000 RMB Yuan RMB Yuan

Land to be developed: Foshan Chancheng 2008.09 2011.08 287,795 1,520,896,368 1,584,085,495 Suzhou Xiaoshicheng 2008.04 2013.10 462,932 1,259,858,920 Chongqing Hi-tech Garden Project 2008.12 2012.10 296,180 1,256,600,000 1,264,378,011 Suzhou Weiting 2008.10 2010.12 170,818 1,010,191,231 1,017,572,358 Foshan Xincheng 2008.03 2011.11 387,338 1,008,616,615 CM Guanyuan 2008.09 2010.08 195,073 809,517,626 860,162,785 Jinshangu Phase II-VI 2008.07 2013.11 402,850 780,577,841 644,065,375 Ruiqiao Project 2008.06 2010.10 122,732 570,845,634 CM Lanyuan 2008.02 2009.12 155,498 523,319,068 Shanghai Nanqiao Project 2008.08 2010.03 78,944 366,785,374 422,094,588 Yiyunxigu Phase III 2008.10 2009.12 46,422 302,144,364 141,794,934 Zhuhai CM Garden City A 2008.09 2010.06 67,761 161,400,809 163,606,651 Zhangzhou CM Garden City 2008.04 2010.12 46,640 193,617,509 Zhuhai CM Garden City B 2008.11 2011.05 138,096 255,771,122 260,300,864 Xixiang Garden 2008.12 2010.12 88,651 147,464,045 163,692,346 Meilun Apartment 2008.02 2009.11 31,672 132,489,922 Yiyunshui’an Phase III 2008.02 2009.05 40,783 125,258,519 Lanxigu Phase II, land II 2008.11 2011.03 48,599 42,278,462 42,607,864 Beijing Lishuiqiao Project 2008.10 2011.06 385,369 1,653,384,275 Shanghai Haide Garden Land No.2 2009.06 2012.12 123,010 301,129,021 308,401,668 Shanghai Haiwan Project 2008.09 2012.03 126,309 429,028,165 ______

Sub-total 10,768,762,450 8,955,175,379 ______

Total 15,997,211,790 18,567,347,893

______

As of June 30 2008, among the land under planning, there were 548,093 square meters have engaged the land using right transferring contract. Whereas the land using certificate were under process.

(2). Products of real estate development are as follows:

Projects Date of Beginning of Increased this Decreased this End of term finish term term term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Lanxi Valley 2nd Phase 2007.08 627,743,060 57,339,760 37,992,423 647,090,397 Marine Center 2007.12 258,951,663 258,951,663 - Yiyunshui’an Phase II 2007.12 144,804,688 9,098,187 22,226,254 131,676,621 Shanhuyuan Phase IV 2007.12 54,877,256 18,632,301 36,244,955 Yishanjun Phase II 2007.10 37,455,521 68,501,696 51,208,136 54,749,081 Yishanhai Phase I basement 2006.06 11,855,101 11,855,101 Yishanhai Phase II 2007.12 10,075,953 10,075,953 Yiyunjun Phase I 2007.06 5,295,477 5,295,477 Shanghai Haide Garden Phase I 2006.10 4,516,472 4,516,472 Jingshanjiao Apartment 2004.12 1,439,657 1,439,657 Yiyunshui’an Phase I 2006.08 910,885 294,512 1,205,397 - Yishanjun 1st Phase 2006.06 473,655 473,655 Yiyunxigu Phase I. 2008.06 236,090,740 156,878,362 79,212,378 Nanjing International Finance Center 2008.04 700,736,160 700,736,160 Others 6,631,971 65,746 3,960,385 2,737,332 60 Interim Report 2008 CMPD ______

Total 1,165,031,359 1,072,126,801 551,054,921 1,686,103,239 By June 30 2008, the inventories of the Group do not exist mortgage, guarantee, and no suspension and failure projects. The capitalized amount of loan expenses in this year is RMB201,783,342.

14. Other current asset

Items End of term Beginning of term RMB Yuan RMB Yuan

Prepaid tax - 6,596,589 Commercial fee prepaid 6,878,336 - Other amortizable ______3,016,742 ______3,012,055 9,895,078 9,608,644 ______

15. Disposable financial asset At end of term At beginning of term Items fair value fair value RMB Yuan RMB Yuan

Sellable equity instruments 3,887,829 3,887,829 ______

16. Long-term share equity investment

(1) Particulars about long-term equity investment

Name of invested companies Initial Beginning of Newly invested Equity Cash dividend Other End of Term investment Term this year adjustment of of the year deduction this year RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

On equity basis Shenzhen China Merchants OCT Investment Co., Ltd. 50,000,000 230,568,095 (4,133,680) - 226,434,415

Guangzhou Panyu Innovation Technology Garden Co., Ltd. 200,000,000 200,000,000 - 200,000,000 Shenzhen China Merchants OCT Investment Co., Ltd. 2,500,000 2,629,851 (79,797) - 2,550,054 Beijing Tianping Property Management Co., Ltd. 490,000 890,261 158,920 - 1,049,180 Shenzhen China Merchants Guangming Technologies Zone Ltd. 98,000,000 94,369,571 (827,911) - 93,541,660 Shenzhen Haitao Hotel Co., Ltd. 4,996,675 5,635,361 306,000 - 5,941,361 Tianjin Xinhai real Estate Development Co., Ltd. 6,750,000 19,265,977 (651,199) (12,515,976) 6,098,801

Beijing Hengshihuarong Real-estate Development Co., Ltd. 24,220,904 13,831,308 (227,853) - 13,603,456 Shenzhen TCL Optical Electronic Technologies Ltd. (Note 1) 42,010,652 - 42,010,652 (2,983) - - 42,007,669 On cost basis Shanghai CM Fengrui Property Ltd. (Note 2) 1,000,000 1,000,000 - 1,000,000 Shenzhen Fisherman’s Warf Restaurant Co., Ltd. 100,000 100,000 - 100,000 Shenzhen China Merchants Engineering Co., Ltd. ______100,000 ______100,000 ______- ______100,000

Total ______430,168,231 ______568,390,424 ______42,010,652______(5,458,503)______(12,515,976)______1,000,000 ______591,426,596

Less: Impairment provision ______100,000 ______100,000

Long-term equity investment (net) ______568,290,424______591,326,596

61 Interim Report 2008 CMPD Change of long-term equity investment impairment provision:

Name of invested companies Beginning Increased Neutralised End of of term this term this year term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Shenzhen Fishermans’ Wharf Restaurant Co., 100,000 100,000 Ltd. (Note 3). ______

Note 1. Shenzhen CM Property acquired 40% share equities of Shenzhen TCL Optical Electronics Technologies Co., Ltd. (TCL Optical & Electronics) from Shenzhen TCL Property Co., Ltd. According to the Asset Appraisal Report [Xin-De-Zi-Ping-Bao-Zi (2007) 050], the acquisition was at price of RMB42,010,652.

Note 2. In the report term, Shenzhen CM Property acquired 70% of the shares of Shanghai Fengrui, thus it was included in the consolidated financial statements. For details please go to Note 7-3.

Note 5: Shenzhen Fisherman Port Restaurant Co., Ltd. was established by Shenzhen Taige Apartment Management Co., Ltd in 2001. Due to poor management, now it is closed. Shenzhen Taige Apartment Management Co., Ltd fully accounted provision for impairment on its long-term investment.

62 Interim Report 2008 CMPD

(2) List of joint ventures and affiliates and their major financial information

Name of invested Reg. Add. Business property Registered Portion in the Portion in Total assets of the Total liabilities of Total turnover of Net profit of the companies capital registered voting invested companies the invested the invested invested companies of capital rights companies companies the current year RMB Yuan % % RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Joint ventures Shenzhen China Merchants Shenzhen Property development OCT Investment Co., Ltd. 100,000,000 4,745,945,812 4,293,076,982 - (8,267,360) Guangzhou Panyu Guangzhou Property leasing and Innovation Technology management Garden Co., Ltd. 150,000,000 463,258,689 149,281 Shenzhen China Merchants Shenzhen Property management OCT Investment Co., Ltd. 5,000,000 5,640,000 539,892 1,844,892 (159,593)

Affiliates Beijing Tianping Property Beijing Property management Management Co., Ltd. 1,000,000 2,666,533 533,319 3,052,783 324,326 Shenzhen China Merchants Shenzhen Property development Guangming Technologies and management Zone Ltd. 200,000,000 207,244,094 16,342,747 720,000 (1,689,614) Shenzhen Haitao Hotel Co., Shenzhen Hotel management Ltd. 6,000,000 15,555,253 2,352,229 4,725,139 680,000 Tianjin Xinhai real Estate Tianjin Property development Development Co., Ltd. 15,000,000 728,277,779 714,724,888 12,219,041 (1,447,109) Beijing Hengshihuarong Beijing Property development Real-estate Development and operation Co., Ltd. 50,000,000 785,868,670 746,459,450 (949,388) Shenzhen TCL Optical Shenzhen Electronic parts, Electronics Technologies development of self- Co., Ltd. owned properties 200,000,000 94,547,578 600,705 (7,458)

(3) The Company’s long-term equity investment receivers as of June 30, 2008 were not limited in ability to transfer capital to the Company.

63 Interim Report 2008 CMPD

17. Investment real estate Houses & buildings Land using right Total RMB Yuan RMB Yuan RMB Yuan Original value Beginning of term 2,008,528,059 932,166,846 2,940,694,905 Purchased in this year 6,764 6,764 Private real estate or inventory converted into real 205,508,392 74,293,297 279,801,689 estate. Disposed in this year ______867,348 ______867,348

End of term ______2,213,175,867 1,006,460,143______3,219,636,010 Accumulated depreciation and accumulated amortization. Beginning of term 517,471,649 45,547,119 563,018,768 Provided in current year 40,131,671 14,959,110 55,090,781 Private real estate or inventory converted into real 7,078,840 7,078,840 estate. Disposed in this year ______765,199 ______765,199

At end of term ______556,838,121 ______67,585,069 ______624,423,190

Net amount Beginning of term 1,491,056,410 886,619,727 2,377,676,137 ______End of term 1,656,337,746 938,875,074 2,595,212,820 ______

As of June 30 2008 none of the Company’s investment properties is on collateral.

64 Interim Report 2008 CMPD

18. Fixed assets

(1) Changes in fixed assets in this year are as follows:

Houses & Equipment & Trasportation Electronics, furniture, Total buildings machinery tools and appliances RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Original value of fixed assets Beginning of term 203,225,138 342,354,720 46,022,024 51,841,848 643,443,730 Purchased this term 1,125,950 5,024,713 2,980,077 9,130,740 Transferred in from construction in current term 1,068,750 1,068,750 Transferred in from inventory of in current term 21,998,059 21,998,059 Disposed or sold in current term 54,765 705,725 340,611 1,101,101 Other decrease this term 94,150 398,000 219,095 711,245 ______End of term 225,223,197 344,400,505 49,943,012 54,262,219 673,828,933 ______Accumulated depreciation: Beginning of term 79,067,177 219,450,319 24,130,689 31,643,400 354,291,585 Depreciation provided this term 4,570,178 5,767,396 2,669,028 4,408,008 17,414,610 Increased by purchase 1,748,059 1,748,059 Disposed or sold in current term 28,214 640,112 317,274 985,600 Other decrease this term 28,588 7,462 131,411 167,461 ______End of term 83,637,355 225,160,913 27,900,202 35,602,723 372,301,193 ______Impairment provision Beginning of term - Decreased this term - ______End of term - ______Net amount Beginning of term 124,157,961 122,904,401 21,891,335 20,198,448 289,152,145 ______End of term 141,585,842 119,239,592 22,042,810 18,659,496 301,527,740 ______1______Including: Net assets leased out in the mode of operation lease:

Beginning of term - ______End of term - ______

(2) By June 30, 2008 the Group still has fixed assets net value RMB30,430,955 which the certificate of ownership is still processing.

19. Construction in process

65 Interim Report 2008 CMPD Project Beginning of Increased this Completed and End of term Budget Portion of Fund term term transferred to fixed investment on recourse asset this year budget RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan %

Transformer Own Station 23,668,881 4,366,842 1,068,750 26,966,973 59,630,000 45 capital Water supply Own project 12,126,102 1,742,723 13,868,825 29,057,008 48 capital Construction Own project 2,316,011 560,532 2,876,543 2,876,543 100 capital Reconstruction Own project 93,283,124 35,770,326 129,053,450 155,163,600 83 capital ______Total 131,394,118 42,440,423 1,068,750 172,765,791 ______Less: Impairment provision ______Net value of construction in progress 131,394,118 172,765,791 ______

20. Intangible assets Land using right Software Total RMB Yuan RMB Yuan RMB Yuan Original value Beginning of term 59,673,607 213,300 59,886,907 Increased this term - 9,280 9,280 Investment property turned in ______20,85______0,026 ______- 20,850,026 End of term ______38,823,581 ______222,580 ______39,046,161 Accumulated amortizing Beginning of term 7,338,820 84,161 7,422,981 Provided this term 519,959 21,950 541,907 Investment property turned in 7,078,840 - 7,078,840 ______

End of term ______779,939 ______106,111 ______886,048 Net amount Beginning of term 52,334,787 129,139 52,463,926 ______End of term 38,043,642 116,469 38,160,113 ______

66 Interim Report 2008 CMPD

21. Goodwill Current term RMB Yuan Cost Balance at the beginning of term 1,460,212 Amount increased due to merger ______- Balance at the end of term 1,460,212 ______Book value Balance at the beginning of term 1,460,212 ______Balance at the end of term 1,460,212 ______

Note: It was the goodwill recognized when Shenzhen China Merchants Real-estate Co., Ltd. took over Shanghai Fengyang Real-estate Co., Ltd. No impairment occurred on the goodwill at the end of year.

22. Differed income tax asset Temporary difference may be Differed income tax asset neutralized Items Beginning of term End of term Beginning of term End of term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Bad debt provision on receivables 3,323,070 3,328,085 996,921 996,921 Bad debt provision on other receivables 2,098,174 2,099,056 660,094 660,094 Inventory impairment provision 162,982 162,982 29,337 29,337 Long-term equity investment impairment 100,000 100,000 18,000 18,000 provision Fixed asset impairment provision - Expected liabilities 1,211,060 801,911 217,991 217,991 Land VAT drawn in advance 20,571,323 20,571,323 6,788,537 6,788,537 Amortizing of other long-term assets 823,128 823,128 271,632 271,632 Depreciation of fixed assets 191,416 597,963 34,455 107,634 ______Total 28,481,153 28,484,448 9,016,967 9,090,146 ______

23. Asset impairment provision Decreased this term Beginning of term Provided current Carried back this Neutralised this End of term term year term RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Bad debt provision 5,421,244 5,897 5,427,141 - Account receivable 3,323,070 5,015 3,328,085 - Other receivables 2,098,174 882 2,099,056 Inventory impairment provision 162,982 - 162,982 Long-term equity investment 100,000 - 100,000 impairment provision ______Total 5,684,226 5,897 5,690,123 ______

67 Interim Report 2008 CMPD

24. Short-term loans End of term Beginning of term RMB Yuan RMB Yuan

Credit loan 3,826,735,955 3,876,295,661 Guarantee loan ______1,610,872,479 ______1,795,236,833 Total 5,437,608,434 5,671,532,494 ______

Note: Including loan of RMB150,000,000 from China Merchants Bank Shenzhen Shekou Branch, loan of RMB300,000,000 from China Merchants Banks Shenzhen New Age Plaza Branch. Both of these loans were guaranteed by China Merchants Shekou Industrial Zone Co., Ltd.

Shenzhen China Merchants Real-estate Co., Ltd. raised the loan of RMB220,000,000 from China Merchants Bank Shenzhen Shekou Branch which was guaranteed by China Merchants Shekou Industrial Zone Co., Ltd.

Shenzhen China Merchants Power Supply Co., Ltd. raised the loan of USD24,686,000 from China Merchants Bank Shenzhen Shekou Branch which was guaranteed by China Merchants Shekou Industrial Zone Co., Ltd. Obtained the consigned loan of RMB200,000,000 from Guangdong Nuclear Joint Co., Ltd. through China Merchants Bank Shenzhen Shangbu Branch, which was guaranteed by Bank of China Shenzhen Branch.

Tianjin China Merchants Real-estate Co., Ltd., one of the Company’s subsidiaries, raised the loan of RMB35,000,000 from China Merchants Bank Tianjin Branch, which was guaranteed by China Merchants Shekou Industrial Zone Co., Ltd.

China Merchants Property (Suzhou) Co., Ltd., one of the Company’s subsidiaries, raised loan of RMB100,000,000 from China Merchants Bank Suzhou Branch, which was guaranteed by China Merchants Shekou Industrial Zone Co., Ltd.

Ruijia Investment Industrial Co., Ltd., one of the Company’s subsidiaries, raised loan of HKD130,000,000 from China Industrial & Commercial Bank (As ia), and loan of USD47,000,000 from China Industrial & Commercial Bank (Asia). Both of the two loans were guaranteed by China Merchants Group Ltd.

25. Trade off financial liabilities

Categories Fair value at end of term Fair value at beginning of term RMB Yuan RMB Yuan

Deductive financial liability 57,070,068(Note) 50,589,723 ______

Note: It was the fair value of foreign currency future trading contracts entered by Ruijia Investment Industrial Co., Ltd. and ING Bank N.V., Hong Kong Branch at the end of year. As of June 30, 2008, the nominal principal of this contract was amounted to USD424,834,000. These contracts will expire during the period from July 18, 2008 to April 15, 2009.

68 Interim Report 2008 CMPD

26. Notes payable

Categories End of term Beginning of term RMB Yuan RMB Yuan

Bank acceptance 149,717,063 97,215,654 ______

27. Account payable

(1). Information on shareholders holding more than 5% (include 5%) voting right are as follows:

Name of the shareholder End of term Beginning of term Property RMB Yuan RMB Yuan

China Merchants Shekou Industrial Zone Co., Ltd. 5,338,724 5,338,724 Fund for the land of maritime center. ______

(2). Information on big amounts payable due over one year are as follows: Amount at Account Reasons for delay Amount Company names. the year end. age repaid after RMB the date of asset and liability. RMB Chaoyang District 40,000,00 2-3 The payable cost for demolition assistance of - Real Estate years China Merchants Real Estate (Beijing) Co., Ltd., Management & after obtained the certificate for relocation issued Development Co., by State Land Bureau, paid RMB 140 million to Ltd. Chaoyang District Real Estate Management & Development Co., Ltd.

28. Prepayment received

(1) Age analyse of prepayment received End of term Beginning of term RMB Yuan % RMB Yuan %

within 1 yr 1,001,361,215 99 170,341,970 93 1-2 years 1,399,402 1 11,334,473 6 2-3 years ______11,283_ ____0 ______1,377,389 ____1 Total 1,002,771,900 100 183,053,832 100 ______

69 Interim Report 2008 CMPD

(2) Including: prepayment received for sales of houses

Projects Beginning of term End of term Planned finish date RMB Yuan RMB Yuan

Lanxi Valley 2nd Phase 47,889,837 221,365,302 completed Beijing Park 1872 - 400,287,557 2009 Yishanjun Phase II 29,927,317 5,590,754 completed Shanghai Haide Garden Phase II 20,440,687 139,586,069 2009 Shanhuyuan Phase IV 17,298,367 16,376,669 completed Yiyunxigu Phase I. 15,997,135 63,135,673 completed Seaview Plaza 2,903,977 1,328,604 completed Huaguoshan Building shops 2,731,255 648,821 completed Haiyue Phase III shops 2,687,974 - completed Garden City Phase III Land No.1 2,262,732 - completed Yishanhai Phase II 1,796,069 4,353,972 completed Yiyunshui’an Phase II 1,182,319 1,736,904 completed Tianjin Xikang No.36 - 54,990,000 2008-2009 Yiyuntiangxiangyuan Phase II. - 54,700,339 2008 Yiyunxigu Phase II - 8,103,269 2009 Others ______28,704,515 ______17,366,300 Total 173,822,184 989,570,233 ______

(3) No prepayment received was from shareholders holding 5% or over voting shares of the Company.

29. Employees’ wage payable Beginning of termIncreased this termDecreased this termEnd of term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Wage, bonus, allowance, subsidy 119,411,686 166,162,276 245,015,203 40,558,759 Employee welfare 1,009,976 13,682,055 13,685,617 1,006,414 Social insurance 1,934,547 17,783,105 18,344,606 1,373,046 Housing fund 275,771 1,843,759 2,025,147 94,383 Trade union and education allowance 13,357,210 4,834,961 3,293,547 14,898,624 Others ______230,595 ______636,292 ______640,457______226,430 Total 136,219,785 204,942,448 283,004,577 58,157,656 ______

The Company has no plan to lay off employees in a predictable future. Thus no compensation reserves need to be drawn for accepting of lay off suggestion by the employees.

30. Tax payable End of term Beginning of term RMB Yuan RMB Yuan

Enterprise income tax 27,976,138 156,482,683 VAT 2,675,492 2,872,475 Business tax (3,964,362) 49,706,755 Contract tax 43,947,047 71,908,728 Land VAT (Note) 33,339,852 35,355,661 Others ______15,315,855 ______863,948

70 Interim Report 2008 CMPD Total 119,290,022 317,190,250 ______

Note: Land VATs due upon income from sales of properties are accounted into tax payable, and Land VATs drawn in advance are accounted to other current liabilities.

31. Interest payable End of term Beginning of term RMB Yuan RMB Yuan

Short-term loan interest 9,230,478 11,135,761 Long-term loan interest ______46,990,590 ______19,550,000 Total 56,221,068 30,685,761 ______

32. Dividend payable End of term Beginning of term Name of the investor RMB Yuan RMB Yuan

Shenzhen Shekou Dazhong Investment Co., Ltd. (Note 1) - 20,913,265 Shekou Industrial Zone Co., Ltd. (Note 2) 30,129,921 - Hong Kong Chinese Businessman Property Co., Ltd. - 1,482,316 Shenzhen China Merchants Landmark Co., Ltd. 365,991 365,991 China Merchants Development Co., Ltd. ______- ______143,997 Total 30,495,912 22,905,569 ______

Note 1: According to the resolutions of the board meeting of Shenzhen China Merchants Real Estate Co., Ltd. held on December 31, 2007, its attributable profit at December 31, 2007 was distributed. Thus the dividend was payable to Shenzhen Shekou Dazhong Investment Co., Ltd.

Note 2. Dividend of A shares to Shekou Industrial Zone Co., Ltd. in accordance with the resolution adopted at the Annual General Meeting 2007.

33. Other account payable

(1) Particulars about other account payable due to shareholders holding 5% or above voting shares of the Company

Name of the shareholder End of term Beginning of term Property RMB Yuan RMB Yuan

China Merchants Shekou Industrial Zone Co., Ltd. 4,852,099 4,852,099Current account ______

(2) Particulars about other major amount payables due over one year: Name of the companies End of Term Age Reason for overdue Amount to be paid after balance sheet date RMB Yuan RMB Yuan Tianjing Shenmiao Investment Group Ltd. 20,000,000 1-2 yrs Deposit for project cooperation Will returned upon completion

71 Interim Report 2008 CMPD

34. Non-current liability due in 1 year

Categories End of term Beginning of term RMB Yuan RMB Yuan

Long-term loans expire in 1 year 640,000,000(Note) 300,000,000 ______

Note: Please refer to Note 36.

35. Other current liability End of term Beginning of term RMB Yuan RMB Yuan

Land VAT drawn in advance (Note) 434,341,932 370,122,155 Land using rights 5,699,761 23,231,401 Outsourced cleaning and security guard services 3,921,762 7,237,384 Original water and power supply 6,316,653 3,964,082 Agencies 105,504 2,086,099 Visiting tours - 2,826,490 Uniforms 570,377 1,829,940 Improving of intelligent system 735,904 1,059,919 Travel 1,500,000 - Cooling fee 2,305,640 - Others ______6,940,342 ______3,250,968 Total 462,437,875 415,608,438 ______

Note: Land VATs are calculated and provided in accordance with Guo-Shui-Fa[2006]187 with the heading of “Circular about Settlement of Land VAT of Property Development Enterprises” issued by National Tax Bureau General, and accounted into current income account. Meanwhile, when calculating of the income tax of current year, corresponding adjustments were done by the subsidies of the Company on the taxable income account according to the relative income tax rules of local governments.

36. Long-term borrowings End of term Beginning of term Categories Original currency Exchange rate RMB Yuan Original currency Exchange rate RMB Yuan

Credit loan - RMB 2,880,000,000 1.0000 2,880,000,000 1,680,000,000 1.0000 1,680,000,000 Guaranteed loan (Note)- RMB 2,600,000,000 1.0000 2,600,000,000 1,900,000,000 1.0000 1,900,000,000 - USD 50,000,000 6.8564 ______342,822,060 50,000,000 7.3046 ______365,235,019

______5,822,822,060______3,945,235,019 Less: Long-term borrowings due in 1 year 640,000,000 1.0000 640,000,000 300,000,000 1.0000 300,000,000 Incl. Borrowings on credit 350,000,000 1.0000 ______350,000,000 300,000,000 1.0000 ______300,000,000 Cooling fee 5,182,822,060 3,645,235,019 ______

Interest rates of above loans are ranged between 4.60% to 7.29% per annum.

Note: In year 2006, Industrial Bank Shanghai Branch provided RMB1,000,000,000 of loan to the Company. According to the “Agreement for Issuing of Letter of Guarantee” engaged with China Construction Bank Shenzhen Branch, this loan was guaranteed by China Construction Bank Shenzhen Branch.

In year 2008, Shanghai International Trust Co., Ltd. provided RMB650,000,000 of loan to the Company. According to the “Agreement for Issuing of Letter of Guarantee” engaged with China Construction Bank Shenzhen Branch, this loan was guaranteed by China Construction Bank Shenzhen Branch.

The Company raised RMB110,000,000 of loan from China Merchants Bank New Times Branch, and RMB100,000,000 from Chian Merchants Bank Shekou Branch. Both of these two loans were secured by China Merchants Shekou Industrial Zone Co., Ltd.

72 Interim Report 2008 CMPD

Shanghai Fengyang Co., Ltd. – one of the Company’s subsidiaries, raised the loan of RMB50,000,000 from China Merchants Bank Shanghai Branch, which was secured by China Merchants Shekou Industrial Zone Co., Ltd.

Shenzhen CM Property Co., Ltd. – one of the subsidiaries of the Company raised RMB590,000,000 of loan from China Merchants New Times Branch, which was secured by China Merchants Shekou Industrial Zone Co., Ltd.

Tianjin China Merchants Real Estate Co., Ltd., one of the subsidiaries of the Company raised a loan of RMB100,000,000 from China Merchants Bank Tianjin Branch, which was secured by China Merchants Shekou Industrial Zone Co., Ltd.

Ruijia Investment Industrial Co., Ltd. Raised a loan of USD50,000,000 from ING Bank N.V., Hong Kong Branch, which was secured by China Merchants Group Co., Ltd.

37. Long-term payable End of term Beginning of term RMB Yuan RMB Yuan

Main body maintaining fund 30,345,726 28,790,682 Borrowing to Defeng Co. (Note) ______802,203,620 ______- Less: Long-term payables due in 1 year ______- ______- Long-term payables due beyond 1 year 832,549,346 28,790,682 ______Note: Please see Note 67 (4) (f).

38. Expected liabilities Beginning of Increased this Decreased this End of term term term term Categories RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Lawsuit of certificate delay 1,211,060 - 409,149 801,911 ______

Note : Some of the property owners appealed against Shenzhen China Merchants Real Estate Co., Ltd. in 2005 claiming for compensations for delay of application processes of Property Ownership Certificate. During Jan-Jun 2008, the Company paid RMB396,249 according to the court judgement. Thus the predic ted liability not to be paid was written back by RMB12,900

39. Differed income tax liability Taxable provisional difference Differed income tax liability Provisional items of difference Beginning of term End of Beginning of term End of term term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Disposable financial asset 3,194,784 3,194,784 547,380 547,380 ______

40. Other non-recurring liabilities End of term Beginning of term RMB Yuan RMB Yuan

73 Interim Report 2008 CMPD Differed rental income 3,981,680 4,316,680 Others ______1,172,904 ______860,640 Total ______5,154,584 ______5,177,320 Less: Other non-current liabilities due in 1 year ______- ______- Other non-current liabilities due beyond 1 year 5,154,584 5,177,320 ______

41. Share capital

Changed this term

Beginning of Bonus shares Transferred from Others End of term term (Note 1) reserves (Note 1) (Shares) (Shares) (Shares) (Shares) (Shares) I. Shares with conditional subscription 1. State legal person shares 301,299,211 90,389,763 60,259,843 451,948,817 2. Other domestic shares 149,494 32,783 21,855 (40,217) 163,915 3. Foreign shares 128,587,201 38,572,651 25,715,100 (11,700) 192,863,252 Incl. Shares held by foreign 128,439,676 38,531,903 25,687,935 192,659,514 legal persons Foreign natural person 147,525 40,748 27,165 (11,700) 203,738 shares ______Total of conditional shares 430,035,906 128,995,197 85,996,798 (51,917) 644,975,984 ______II. Shares with unconditional subscription 1. Common shares in RMB 317,189,437 95,168,896 63,445,931 40,217 475,844,481 2. Foreign shares in 97,641,659 29,296,008 19,530,671 11,700 146,480,038 domestic market ______Total of unconditional 414,831,096 124,464,904 82,976,602 51,917 622,324,519 shares ______III. Total of shares 844,867,002 253,460,101 168,973,400 1,267,300,503 ______

The above shares are with par value of RMB1 yuan.

Note 1: The dividend plan for 2007 was adopted by the Annual General Meeting 2007, namely:upon total capital shares of 844,867,002 outstanding at the end of year, upon total capital shares of 844,867,002 outstanding at the end of year, 3 bonus shares will be delivered to each 10 shares. Upon total capital shares of 844,867,002 outstanding at December 31 2007, 2 shares will be capitalized to each 10 shares. Totally RMB168,973,400 will be capitalized. Note 2. The above change in capital shares has been verified by Kaiyuan Xinde CPA and issued the Capital Verification Report Kai-Yuan-Xin-De-Shen-Yan-Zi-Zi (2008)No.04. Modifying of business registration is under process.

74 Interim Report 2008 CMPD

42. Capital reserves

Items Beginning of term Incr. this term Decr. this term End of term RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Share capital premium 3,295,677,809 255,200,026 3,040,477,783 Of which: capital invested by investors 3,557,191,993 - 168,973,400 3,388,218,593 Exercise the right of conversion on convertible bonds 1,394,072,217 - - 1,394,072,217 Difference formed by merger under the same control (1,354,694,800) - - (1,354,694,800) Purchasing of shares from minor shareholders of subsidiaries (or affiliates) (300,891,601) - 86,226,626 (387,118,227) Other capital reserves 118,180,186 - 348,400 117,831,786 Of which: Owner's equity besides the net profit and loss of the unit being invested 12,421,761 - 348,400 12,073,361 Profits or losses due to changes of fair value of financial assets for sale 1,346,667 - - 1,346,667 Capital reserve transferred in according to old system 104,411,758 - - 104,411,758 ______Total 3,413,857,995 - 255,548,426 3,158,309,569 ______

Note 1: Please see Note 41 - 1

Note 2: In the report term, Ruijian Investment & Industry Co., Ltd. and Shenzhen CM Properties – the subsidiaries of the Company have respectively purchased 20% of shares of Fucheng (China) Co., Ltd. and 45% of shares of Shenzhen Meiyue Property Consultancy Co., Ltd. from the minor shareholders. Which have decreased respectively the capital common reserves by RMB65,366,202 and RMB20,900,424.

43. Surplus reserves Statutory Optional surplus Total common reserves reserves RMB Yuan RMB Yuan RMB Yuan

Balance at the beginning of term 471,924,069 140,120,038 612,044,107 Increased this term Decreased this term ______Balance at the end of term 471,924,069 140,120,038 612,044,107 ______

75 Interim Report 2008 CMPD

44. Retained profit Current term Previous Year RMB Yuan RMB Yuan

Profit not distributed at the beginning of year 3,026,575,655 2,139,191,449 Plus: net profit of current term 218,729,005 1,157,877,638 Less: Statutory surplus reserves ______- ______115,787,764 Profit distributable to shareholders 3,245,304,660 3,181,281,323 Less: Dividend payable –approved by the shareholders’ meeting Cash dividend of last year (1) 84,486,700 154,705,668 Dividend payable – Share dividend approved by Annual General Meeting (2) ______253,460,101 ______- Retained profit at the end of term 2,907,357,859 3,026,575,655 ______Incl. Post balance sheet profit distributed - 84,486,700

(1) Cash dividend approved by Annual General Meeting of the year

According to the resolutions adopted at the Annual Meeting 2007 held in March 2008, basing on the total capital shares of 844,867,002 as of December 31, 2007, RMB1.00 (Tax included) was distributed to each 10 shares. i.e. RMB84,486,700 was distributed in cash.

(2) Share dividend approved by Annual General Meeting of the year

According to the resolutions adopted at the Annual Meeting 2007 held in March 2008, basing on the total capital shares of 844,867,002 as of December 31, 2007, 3 bonus shares was distributed to each 10 shares. i.e. RMB253,460,101was distributed in cash.

45. Minor shareholders’ equity

Minor shareholders’ equity of main subsidiaries of the Group are as the followings: End of term Beginning of term RMB Yuan RMB Yuan

Guangzhou Qidi Tech & Science Investment Co., Ltd. 8,230,927 8,230,533 Shanghai Fengyang Property Ltd. 233,332,933 234,526,526 Suzhou Shuanghu Property Co., Ltd. 484,671,715 332,285,294 Foshan Xincheng Property Co., Ltd. 476,168,942 477,968,253 Zhangzhou China Merchants Properties Co., Ltd. 59,038,440 55,104,448 Suzhou CM Nanshan Property Co., Ltd. 39,073,785 39,789,614 Shekou Xinghua Industrial Holdings Co., Ltd. 34,627,449 33,917,171 Fucheng (China) Ltd. (Note *1) - 13,137,740 Chengdu CM Property Ltd. 19,870,607 19,953,774 CM Jiaming (Beijing) Property Co., Ltd. 99,971,875 - Huipeng Property Development Co., Ltd. 34,905,367 17,081 Others ______29,750,102 ______26,893,839 Total 1,519,642,142 1,241,824,273 ______

76 Interim Report 2008 CMPD ______

46. Turnover Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Major business Incl. Property industry 978,538,128 1,267,702,179 Public Utilities 328,121,344 322,581,121 Property management 140,274,124 121,780,890 Other business ______- ______5,304,939 Total 1,446,933,596 1,717,369,129 ______

The operating income from top five customers amounted to RMB145,124,418 (Interim 2007: RMB95,169,316), occupying 10% of the total operating income (last year: 5.55%).

47. Operation cost Accumulated Accumulated same this term period last year

RMB Yuan RMB Yuan

Major business Incl. Property industry 443,610,732 701,759,627 Public Utilities 236,517,388 250,999,487 Property management 111,276,925 96,113,488 Other business 5,456,740 ______Total 791,405,045 1,054,329,342 ______

48. Business tax and surcharge Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Business tax 55,798,758 71,172,729 Land VAT 82,566,795 78,241,761 Education surtax 1,952,984 879,380 City maintenance and construction tax 886,873 2,148,321 Others 148,824 322,496 ______Total 141,354,234 152,764,687 ______

77 Interim Report 2008 CMPD

49. Financial expenses Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Interest expense 48,953,067 6,316,004 Less: Incoming interests 19,286,930 3,659,317 Exchange differences 3,313,912 972,053 Commission charges and others ______1,936,041 ______12,256,469 Total 34,916,090 15,885,209 ______

50. Asset impairment loss Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Bad debt losses 5,897 (4,901,476) Loss from long-term equity investment impairment ______- ______16,775,423 Total 5,897 11,873,947 ______

51. Income from change of fair value Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan Source of income from change of fair value Transactional financial liabilities (1,977,278) 1,124,281 ______

52. Investment income

Occurred current Amount occurred in

term same period last year RMB Yuan RMB Yuan Long-term equity investment income (26,145,808) 106,010,530 Of which: confirm the income by the method of equity

(Note) (5,458,504) 103,352,707 Income of disposal of long-term equity investment - CM Port Service (Singapore) Co., Ltd. (20,687,304) - - Shenzhen Keluo Warehousing Co., Ltd. - 2,657,823 Income of transactional financial assets (1,139,779) 535,886 Total (27,285,587) 106,546,416

Note: Income recognized on equity basis, for details see Note 16(1).

78 Interim Report 2008 CMPD

53. Non-business income Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Profit from disposal of fixed assets 185,428 23,879 Government subsidy 11,288,965 14,765,302 Write back of predicted debts 12,900 4,569,762 Others ______1,347,745 ______979,258 Total 12,835,038 20,338,201 ______

54. Non-operational expenditure Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Loss from fixed asset disposal 123,148 36,361 Outgoing donations 1,798,000 35,000 Others ______141,650 ______249,923 Total 2,062,798 321,284 ______

55. Income tax expenses Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Income tax of current term 98,529,615 92,914,334 Deferred income tax ______(73,179) ______1,713,808 98,456,436 94,628,142 ______

56. Government subsidy Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Income-related government subsidy received Refund of import VAT of electricity power (Note 1) 10,340,000 12,925,000 Tax refund (Note 2) 948,965 1,840,302 ______Government subsidy counted into current gain/loss account 11,288,965 14,765,302 ______Government subsidy counted into differed gain/loss - - ______

Note 1: As approved by the Ministry of Finance and National Tax Bureau General with document Cai-Guan-Shui [2008]6, in the period from January 1, 2008 to December 31, 2008, the electric power imported by Shenzhen China Merchants Power Supply Co., Ltd. from Hong Kong is on the basic amount of 560

79 Interim Report 2008 CMPD million Kwh. The VAT on the amount lower than the basic amount will be refunded at 40%, where the amount beyond the basic amount is subject to the import VAT according to the regulations.

Note 2. This was the tax refund received by Shanghai China Merchants Property Management Co., Ltd. according to the agreement engaged with Shanghai Hongkou District Government.

57. Earnings per share

(1) At calculating of diluted earnings per share, the current net profit attributable to the common shareholders is:

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Net profit of current term attributable to the common shareholders 218,829,005 417,246,419 Diluted potential common share interest recognized to expenditure at current term, the part attributable to common share holders after deducting of income tax influence - - Gains or expenses generated by converting of diluted potential common shares The part attributable to common share holders after deducting of income tax influence ______- ______- 218,829,005 417,246,419 ______

(2) At calculating of basic earnings per share, the denominator is the weighted average of common shares out in the market. The calculating process is as the following:

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Common shares out in the market at beginning of year 844,867,002 618,822,672 Plus: Weighted amount of common shares issued this term ______140,811,167 ______38,435,897 Common shares issued 985,678,169 657,258,569 ______

(3) At calculating of diluted earnings per share, the weighted average of common shares out in the market is calculated as the following:

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Weighted average of common shares used in calc ulating of basic earnings per share 985,678,169 657,258,569 Plus: Weighted average amount of common shares increased with assumption of the diluted potential common shares have been converted to current common shares ______- ______- Weight average amount of common shares used in calculating of diluted earning per share 985,678,169 657,258,569 ______

80 Interim Report 2008 CMPD

58. Net profit deducted non-recurring gain/loss Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan Net profit attributable to the owners of parent co. 218,829,005 417,246,419 Plus (less): None recurring gain/loss items - Net gains/loss by disposal of long term investment and fixed assets 20,658,051 12,482 - Impairment provisions provided 5,897 - - Other non-operational gain or expenditures (402,987) (2,532,487) - Influence of income tax (6,668) 469,885 - Influence of minor shareholders’ gain/loss ______52,809 ______20,519 Total 239,136,107 415,216,818 ______

59. Cash and cash equivalents End of term Beginning of term RMB Yuan RMB Yuan

Cash in stock 744,413 127,307 Bank savings could be used at any time 2,673,537,995 3,544,429,053 Other monetary capital could be used at any time ______30,584 ______428,554 Balance of cash and cash equivalents ______2,674,312,992 ______3,544,984,914 Constrained cash and cash equivalents of the parent company and internal subsidiaries173,327,839 43,110,949 ______

60. Appendix of Cash Flow Statement Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan (1) Net profit adjusted to cash flow of business operation Net profit 218,729,005 417,246,419 Plus: Asset impairment provision 5,897 11,873,947 Depreciation of fixed assets 17,414,610 22,044,750 Amortizing of intangible assets and investment properties 55,632,688 42,087,158 Amortizing of long-term expenses 1,696,538 1,322,067 Cash received from treatment of fixed assets, intangible assets and other long-term assets (less: gains) (62,281) 12,482 Loss of fair value change (less: gains) 1,977,278 (1,124,281) Financial expenses 34,916,090 15,885,209 Invest losses (Less: gains) 27,285,587 (106,546,416) Decrease of differed income tax assets (less: increase) (73,179) 1,713,808 Increase of differed income tax assets (less: decrease) - (19,744,263) Decrease of inventory (Less: increase) (3,092,389,438) (839,164,375) Decrease of operational receivables (Less: increase) (21,405,240) (887,156,082) Increase of operational payables (Less: decrease) ______(414,188,982) ______(347,804,867) Cash flow generated by business operation, net ______(3,170,461,427) ______(1,689,354,444) (2) Investment and financing activities not involved in cash flow: Credit converted to investment - 4,080,000 Debt converted to capital shares - 1,386,468,648

81 ______Interim Report______2008 CMPD (3) Change of cash and cash equivalantes, net: Balance of cash at period end 2,674,312,992 941,939,425 Less: Initial balance of cash 3,544,984,914 910,028,347 Plus: Balance of cash equivalents at the period end - - Less: Initial balance of cash equivalents ______- ______- Net increasing of cash and cash equivalents (870,671,922) 31,911,078 ______

61. Other cash flow related to business operation

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan Other cash received from business operation Operational trade money received 506,140,616 20,360,915 Project deposit received 108,413,538 79,647,321 Operational provisional money received 110,708,146 92,435,52 Interest received ______19,636,584 ______3,641,371 Sub-total 744,898,884 196,085,128 ______Other cash paid for business activities Operational trade money paid 535,419,106 95,443,139 Cash paid for administrative expenses 33,493,625 46,900,953 Project deposit refunded 49,206,810 44,238,745 Cash paid for sales expenses ______34,407,178 ______16,320,477 Sub-total 652,526,719 202,903,314 ______

62. Other cash flow related to investment activities

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan Other cash paid for investment activities Cash retrieved from foreign currency future trade ______21,803,244 ______2,427,405 Sub-total 21,803,244 2,427,405 ______

63. Other cash flow related to financing activities

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Other cash paid related to financing Expenses paid in connection to issuing of convertible bonds ______- ______95,000 Sub-total - 95,000 ______

64. Merger of companies ______82 Interim Report 2008 CMPD

Merged parties under common control of the Company happened in the first half of 2007 are as the followings:

(1.1) Shanghai CM Fengrui Property Ltd.

(1.1.1) Profile of Shanghai CM Fengrui Property Ltd.:

Please see Note 7 – 3.

(1.1.2) Financial highlights of Shanghai CM Fengrui Property Ltd.

Date of purchase Book value fair value RMB Yuan RMB Yuan

Recognizable assets: Current Assets 10,117,727 10,229,237 Non-current assets ______- ______- Sub-total ______10,117,727 ______10,229,237 Recognizable liabilities Current Liabilities 229,237 229,237 Non-current liabilities ______- ______- Sub-total ______229,237 ______229,237 Total of net assets ______9,888,490 ______10,000,000 Equity corresponding to the 70% of shares acquired 7,000,000 Less: Consideration paid to purchase ______7,000,000 Goodwill - ______

The Company uses cash capital as consideration of merger, the book value and fair value of the consideration paid at the merger day are as:

Book value fair value Merger consideration RMB Yuan RMB Yuan

Cash capital 7,000,000 7,000,000 ______

Amount RMB Yuan

Cash and cash equivalents paid as considerations 7,000,000 Less: Cash and cash equivalents hold by the company being merged 10,010,125______Cash and cash equivalents paid to acquire subsidiaries (3,010,125) ______

83 Interim Report 2008 CMPD

(1.1.3) Business results and net cash flow of Shanghai CM Fengrui Property Ltd. from the merger day to the end of the current term

: end of the term when merged RMB Yuan

Turnover - Operation cost and expenses - Total profit (403,442) Net profit (403,442) Net cash flow for business activities (426,199,542) Net cash flow for investment (29,700) Net cash flow of financing 417,391,600 Net increasing of cash and cash equivalents (8,837,642)

65. Disposal of subsidiaries

Liquidation of China Merchants Port Service (Singapore) Co., Ltd. has been completed. The company has officially disposed the long-term equity investment in this company. Gain/loss from disposal of this investment are available with Note 52. For this company has been suspended and in liquidation period since 2007, the business performance and cash flow from January 1 2008 to the disposal day were zero.

84 Interim Report 2008 CMPD

66. Segment report

For the risks and returns are mainly influenced by the differences of products and services, the Company takes business segment as the main form of report, whereas geographic segment as the secondary form of report.

(1) Main report form

Jan-Jun 2008

Items Property development Public Property management Others Offset among Total Utilities businesses RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

I. Business turnover External business turnover 978,538,128 328,121,344 140,274,124 - 1,446,933,596 ______II. Business costs External business costs 443,610,732 236,517,388 111,276,925 - 791,405,045 ______III. Gross profit 534,927,396 91,603,955 28,997,199 655,528,551 ______IV. Total of periodic expenses 102,715,535 (14,025,087) 10,801,070 80,035,242 179,526,760 ______V. Total of business profit 294,538,475 104,645,644 10,034,280 (103,839,604) 305,378,795 ______VI. Total of assets 24,104,114,222 1,765,069,959 315,161,205 1,593,183,313 27,777,528,69 9 ______VII. Total of liabilities 15,714,815,880 1,037,372,895 240,421,569 1,217,558,632 18,210,168,97 6 ______

85 Interim Report 2008 CMPD

Jan-Jun 2007

Items Public Offset among Property development Utilities Property management Others businesses Total RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

I. Business turnover External business turnover 1,267,702,179 322,581,121 121,780,890 5,304,939 - 1,717,369,129 ______II. Business costs External business costs 701,759,627 250,999,487 96,113,488 5,456,740 - 1,054,329,342 ______III. Gross profit 565,942,552 71,581,635 25,667,401 (151,800) 663,039,787 ______IV. Total of periodic expenses 77,646,979 3,909,467 7,656,401 6,193,638 95,406,485 ______V. Total of business profit 453,073,320 67,079,456 11,935,665 (21,423,076) 510,665,365 ______VI. Total of assets 14,211,951,14 11,968,603,353 1,269,681,609 353,065,526 620,600,659 7 ______VII. Total of liabilities 7,371,627,089 732,315,628 271,798,826 315,848,889 8,691,590,432 ______

(2) Secondary report form

Jan-Jun 2008

Items Pearl River Delta Yangtze River Delta Bohai Sea Coast Area Other Total RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

I. Business turnover External business 1,049,423,166 309,062,149 17,391,233 71,057,048 1,446,933,596 turnover ______

II. Total of assets ______13,951,375,504 ______6,264,322,262 5,088,829,269______2,473,001,663 27,777,528,699______

Jan-Jun 2007

Items Pearl River Delta Yangtze River Delta Bohai Sea Coast Area Other Total RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

I. Business turnover External business 1,090,876,298 595,669,560 13,336,821 17,486,450 1,717,369,129 turnover ______

II. Total of assets ______8,174,998,167 ______2,511,448,473 ______2,921,837,506 ______603,667,001 ______14,211,951,146

67. Related parties and transactions

(1) Controlling related parties

Name of Organization Registered Business property Registered Portion of Share companies code address capital voting proportion rights % RMB’000

86 Interim Report 2008 CMPD China 10001146-0 Shenzhen Establishment and 2,236,000 35.66% 35.66% Merchants Shekou management of various Industrial Zone types of enterprises. Co., Ltd.

The ultimate controlling party of the Group is China Merchants Group Co., Ltd. The parent company and the ultimate controlling party of the Group do not provide financial statements to outsiders.

(2) Information regarding the subsidiaries are available with Note 7.

(3) Other related parties have trades with the Company but without controlling relationships are:

Organization Relationship code

Shenzhen China Merchants Landmark Co., Ltd. 70844202-3 Subsidiary of the parent company Shenzhen China Merchants Guangming Technologies Zone Ltd. 76755303-0 Affiliate company CM Zhangzhou Development Zone Ltd. 61145106-2 Under common substantial controlling shareholder Shenzhen Shekou Dazhong Investment Co., Ltd. 61880956-5 Subsidiary of the parent company Shenzhen China Merchants OCT Investment Co., Ltd. 76915261-x Joint company of the Company Shenzhen Beike Venture Co., Ltd. 72304387-2 Subsidiary of the parent company Beijing Hengshihuarong Real-estate Development Co., Ltd. 74752398-5 Affiliate company Dafeng International Holdings - Subsidiary of the parent company

(4) The following material related transactions have occurred between the Company and the related parties in this year

(a) Leasing expenditures Accumulated Accumulated this term same period last year RMB Yuan RMB Yuan

Shenzhen China Merchants Landmark Co., Ltd. (Note 1) - 3,604,696 China Merchants Shekou Industrial Zone Co., Ltd. (Note 2) 7,853,035 6,864,708

Note 1: The rent paid by Shenzhen China Merchants Real Estate Co., Ltd to Shenzhen China Merchants Landmark Co., Ltd. for renting offices in New Times Plaza from January to September 2007. Shenzhen China Merchants Real Estate Co., Ltd. has acquired New Times Plaza from Shenzhen China Merchants Landmark Co., Ltd., thus no more rental paid since September 2007.

Note 2: The land use fees paid by Shenzhen China Merchants Real Estate Co., Ltd, Shenzhen Power Supply Co. Ltd. and Shenzhen China Merchants Water Works Co., Ltd. to China Merchants Shekou Industrial Zone Co., Ltd. for the period of Jan-Jun 2008.

87 Interim Report 2008 CMPD

(b) Rental income Accumulated Accumulated this term same period last year RMB Yuan RMB Yuan

Shenzhen China Merchants Landmark Co., Ltd. (Note 1) 1,019,720 - China Merchants Shekou Industrial Zone Co., Ltd. (Note 1) 5,691,260 - China Merchants Port Service (Shenzhen) Ltd. (Note 2) - 5,304,939 Shenzhen Beike Venture Co., Ltd. ______(Note 3) ______335,000 335,000 Total 7,045,980 5,639,939 ______

Note 1: This was the rental income of Shenzhen China Merchants Real Estate Co., Ltd. paid by Shenzhen China Merchants Landmark Co., Ltd. and China Merchants Shekou Industrial Zone Co., Ltd.

Note 2: The rental income from leasing the port facilities to China Merchants port (Shenzhen) Co., Ltd. These facilities were sold in December 2007, thus no more rental would be collected in 2008.

Note 4: The deterred rental income paid by Shenzhen Beike Ventrures Co., Ltd. for renting Shekou Beike Ventures Building of the subsidiary China Merchants Real Estate Co., Ltd. In 2000, the Company charged the rent 10 million Yuan in one time, and will collect rent 670,000 yuan each year since that year. For Jan-Jun 2008, the rental income transferred were amounted to RMB335,000 Yuan.

The above transactions are implemented according to agreement price.

(c) Income from power supply and water supply.

The subsidiary of the Company Shenzhen Water Works Co., Ltd. provided life and industrial water to China Merchants Shekou Industrial Zone Co., Ltd and its subsidiaries. The subsidiary of the Company Shenzhen China Merchants Power Supply Co., Ltd provided life and production power to China Merchants Shekou Industrial Zone Co., Ltd and its controlling subsidiaries.

The above transactions are implemented according to agreement price.

88 Interim Report 2008 CMPD

(d) Guarantee and assurance End of term Beginning of term RMB Yuan RMB Yuan

China Merchants Shekou Industrial Zone Co., Ltd. (Note 1) 2,074,040,806 2,105,488,068 China Merchants Group Co., Ltd. (Note 2) 779,370,796 852,197,019

Dafeng International Inc., a wholly owned subsidiary of China Merchants Shekou Industrial Zone Co., Ltd., provided clearance assurance for the long-term foreign currency exchange in ING Bank N.V., Hong Kong Branch conducted by Hong Kong Ruijia Investment Industrial Co., Ltd.

Note 1: China Merchants Shekou Industrial Zone Co., Ltd. provided loan guarantee for the company, the amount guaranteed 660 million Yuan; and provided loan guarantee for Shenzhen China Merchants Real Estate Co., Ltd., the amount guaranteed 810 million Yuan; and provided loan guarantee for Shenzhen China Merchants Power Supply Co., Ltd., the amount guaranteed 24.686 million US dollars(169,323,7434 RMB Yuan); and provided loan guarantee for Tianjing China Merchants Real Estate Co., Ltd., the amount guaranteed 135 million Yuan; provided loan guarantee for China Merchants Real Estate (Shuzhou) Co., Ltd., the amount guaranteed 100 million Yuan; and provided loan guarantee for Shanghai Fengyang Co., Ltd. with amount of RMB50 million; Guarantee provided to Shenzhen China Merchants Real-Estate for bankers’ draft amounted to RMB149,717,063.

Note 2: China Merchants Group Co., Ltd. provided loan guarantee for Hong Kong Ruijia investment industrial Co., Ltd, the amount guaranteed HKD130,000,000 and USD97,000,000, translated to RM779,370,796 ; details are available with Note 24 and 36.

(e) Entrusted loan

New Times Branch of China Merchants Bank accepted the commission of China Merchants Shekou Industrial Zone Co., Ltd. to issue entrusted loans to the Company.

Name of the parties End of Loan terms Annual interest Interest paid in term rate current term RMB Yuan RMB Yuan

China Merchants Shekou Industrial 300,000,000 Sept. 28 2005 – 5.184% 7,776,000 Zone Co., Ltd. Sept. 27 2008 China Merchants Shekou Industrial 200,000,000 Dec. 17 2007 – Dec. 7.290% 7,290,000 Zone Co., Ltd. 16 2008 China Merchants Shekou Industrial 300,000,000 May 31 2007 – May 5.913% 7,391,250 Zone Co., Ltd. 31 2008 China Merchants Shekou Industrial 300,000,000 June 2 2008 – June 1 7.56% 1,764,000 Zone Co., Ltd. 2010

(f) Capital interchange

End of term Beginning of term RMB Yuan RMB Yuan

Dafeng International Holdings 966,758,209 175,316,554

In the report term, Ruijian Investment & Industry Co., Ltd. has acquired the loan of USD20 million and USD300 million of credit quota from Dafeng International Co., Ltd. The credit quota can be drawn in batches. Both of the loan and quota are available for five years (fixed for the first 3 years and the later 2 years to the Company’s option), and can be drawn in batches. The interest and relative integral cost was LIBOR+3.5%. Up to June 30, 2008, Dafeng International has provided USD141 million of loan to Ruijia (USD24 million ended December 31, 2007). 89 Interim Report 2008 CMPD

(g) Balance of debts and credits

Detailed information on the balance of credit and debt between the related parties and the Company, as follows:

Accounts Name of the parties End of term Beginning of term RMB Yuan RMB Yuan

Other account receivable Beijing Hengshihuarong Real-estate Development Co., Ltd. 207,004,655 210,679,716 Shenzhen China Merchants OCT Investment Co., Ltd. 295,627,584 194,152,935 ______Total______502,632,239 404,832,651 Account payable China Merchants Shekou Industrial Zone Co., Ltd. 5,338,724 5,338,724 Other account payable Tianjin Xinhai real Estate Development Co., Ltd. 89,431,399 63,431,399 China Merchants Shekou Industrial Zone Co., Ltd. 4,852,099 4,852,099 Shenzhen China Merchants Guangming Technologies Zone Ltd. 17,012,986 22,895,913 CM Zhangzhou Development Zone Ltd. 79,823,705 8,621,528 Dafeng International Holdings 164,569,048 175,310,400 Total 355,689,237 275,111,339 Dividend payable Shenzhen Shekou Dazhong Investment Co., Ltd. 20,913,265 CMSIZ 30,129,921 - Shenzhen China Merchants Landmark Co., Ltd. 365,991 365,991 Total 30,495,912 21,279,256 Long-term payable Dafeng International Holdings 802,203,620 -

68. Financial Instruments and Risk Management

Financial instruments adopted by the Company are available-for-sale financial assets, long-term equity investments, loans, account receivable, account payable, transactional financial liabilities, and convertible bonds. Details of these financial instruments are available in respective notes herein. Risks attached to these financial instruments and the risk management policies adopted by the Company are illustrated hereafter. The executive team of the Company have been monitoring and controlling over the risk exposures to constrain them in a certain extent.

1. Objective and policies of risk management

The objective of the Company’s risk management is to achieve a balance between the risk and gains. Constrain the negative influence on business operation to the lowest limit, and maximum the interests of shareholders and other equity holders. With regard to this target, the basic policies of the Company are; locate and analyse the risks, set appropriate bottom line for risks, and manage and monitor on each risk and constrain them in a certain extent.

1.1 Market risk

1.1.1 Foreign currency risk

Foreign currency risks are those generated by vibration of exchange rates. Foreign currency risks of the Company are mainly involved with Hong Kong Dollar, Singapore Dollar, and US Dollar. Except for the overseas subsidiaries of the Company incorporated in Hong Kong Special Executive Zone and other countries, which are doing their businesses by local currencies, all other main business operations of the Company are in Renminbi. As of June 30, 2008, except for the following assets which are demonstrated in Hong Kong Dollar, Singapore Dollar, and US Dollar, all of the other assets and liabilities of the Company are demonstrated in RMB. Foreign currency risks brought by these assets and liabilities in foreign currencies may influence the Company’s business performance.

End of term Beginning of term

90 Interim Report 2008 CMPD RMB Yuan RMB Yuan

Monetary capital 441,564,555 113,278,537 Other account receivable 100,436,245 120,096,375 Account payable - 77,382,450 Other account payable 864,624,469 174,220,230 Short-term loans 2,107,608,434 2,231,531,334 Long-term payable 802,203,620 - Long-term borrowings 342,822,060 365,235,019

The Company pays close attention on the influences of exchange rate vibration. Some of the subsidiaries of the Company adopts future foreign currency contracts to eliminate foreign currency risks.

1.1.2 Interest rate risk

The Company’s loans are mainly in Renminbi, and foreign currency loans are just auxiliary measures. Foreign currency loans are mainly floating rate loans in USD and HKD without being influenced by adjustment of basic interest rate done by People’s Bank of China. As for loans in RMB, the Company eliminated the influence of increasing interest rate to a certain extent by obtaining fix rate loans in advance and raise the portion of fix rate loans in the whole loans, in both arrangements of short-term and long-term loans.

1.1.3 Other price risks

The financial assets available to sale (see Note 15) held by the Company are measured at their fair value at the balance sheet day. Thus the Company is exposed to the risks of securities market vibration. So far the Company adopted no countermeasures to minimize financial asset price change risks.

1.2 Credit risks

As at June 30, 2008, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties or debtors is arising from:

- the carrying amount of the respective recognized financial assets as stated in the consolidated balance sheet; As for the financial instruments measured by fair value, the book values are reflecting the exposure to risks, though they are not the biggest exposures. The biggest exposures change along with the change of future fair values.

- The financial guarantee contract amount disclosed in Note 69 – Contingent Issues.

In order to minimize the credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.

The Company adopted necessary policies to make sure that all clients and customers are attributed with merit credit records.

1.3 Liquidity risk

In the management of the liquidity risk, the Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilization of bank borrowings and ensure the loan

91 Interim Report 2008 CMPD contracts are properly exercised.

2. Fair value

Fair value of financial assets and financial liabilities are decided by the ways as provided hereafter:

- Fair values of financial assets and financial liabilities complying with standard conditions and with active market are decided respectively with reference to the current prices of the active market and current offers;

- Fair value of other financial assets and financial liabilities are recognized by general pricing matrix on future discounted cash flow basis, or recognized by observable current market prices;

- Fair values of derivate instruments are determined by the public offer in the active market.

The management of the Company deems that, the book values of financial assets and financial liabilities measured by amortized costs are close to the fair values of these assets and liabilities.

69. Contingent issues

As of June 30 2008, the Company has provided guarantees for property mortgages to the banks totalled to RMB184,321,620 (December 31, 2007: RMB96,783,374). This issue makes no material influence on the financial situations of the report term and the period after the report term.

70. Commitments

(1) Capital commitments End of term Beginning of term RMB Yuan RMB Yuan

Signed but not yet recognized in the financial statements －Real estate development projects 3,446,075,112 993,273,443 － Investment commitment to the outside ______- ______150,000,000 3,446,075,112 1,143,273,443 ______(2) . Commitment of operational lease

By the balance sheet date, information on non-cancelable operation lease contract signed with outside, as follows:

End of term Beginning of term RMB Yuan RMB Yuan

Minimum lease payments of non-cancelable operation lease: The first year since the balance sheet date. 13,814,066 14,965,478 The Second years since the balance sheet date. 12,662,654 12,662,654 The Third years since the balance sheet date. 7,501,727 7,501,727 The following years. ______43,860,778 ______44,656,406 Total 77,839,225 79,786,265 ______

71. None adjustment items in the post balance sheet items

92 Interim Report 2008 CMPD The Company received document Zheng-Jian-Xu-Ke [2008]989 “Approval for issuing of new shares by China Merchants Property Co., Ltd.” issued by China Securities Regulatory Commission on July 31, 2008. Which approved the Company to issue up to 450 million new shares. It is effective in 6 months since the day of the document was issued. The Board of Directors will conduct the relative procedures in accordance with the document and the authorization of the Shareholders’ General Meeting.

72. Notes to the main items of the financial statements of the parent company

(1) Other account receivable

(a) Age analysis of other receivable accounts

End of term Beginning of term Amount Proportio Bad debt Book value Amount Proportio Bad debt Book value n provision n provision RMB Yuan % RMB RMB Yuan RMB Yuan % RMB RMB Yuan Yuan Yuan within 1 yr 12,609,849,310 100 12,609,849,310 9,790,070,734 100 9,790,070,734 1-2 yrs 514,500 514,500 514,500 514,500 2-3 yrs Over 3 yrs ______Total 12,610,363,810 100 12,610,363,810 9,790,585,234 100 9,790,585,234 ______

(b) Other receivable accounts are classified as the following

End of term Beginning of term Amount Bad debt Book value Amount Bad debt Book value Basis of provision provision categorizing RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Major single amount Single account 12,595,530,60 12,595,530,60 over RMB10 2 2 9,781,885,244 9,781,885,244 million Single account without large amount but with greater risks after combined with credit features Others 14,833,208 14,833,208 8,699,990 8,699,990 ______Total 12,610,363,81 12,610,363,81 ______0 ______0 ______9,790,585,234 ______9,790,585,234

93 Interim Report 2008 CMPD

(2) Long-term share equity investment

(a) Details of long-term equity investments

Name of invested companies Investment Equity Cash Initial Beginning made in the adjustment of dividend of Other investment of term current term the term the term decreases End of term RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan

On equity basis Shanghai China Merchants Properties Co., Ltd. 3,000,000 996,065 (388,420) - 607,645 Shenzhen CM Property Consultancy Ltd. 400,000 3,914,922 (664,112) - 3,250,810 Shenzhen City Main Plaza Investment Co., Ltd. 1,310,651 184,895 - 1,495,546 Shanghai China Merchants Real- estates Co., Ltd. 3,000,000 3,000,000 - - 3,000,000 Shenzhen CM Guangming Technologies Garden Co., Ltd. 98,000,000 94,369,571 (827,911) - 93,541,660

On cost basis CMRE 106,000,000 692,841,461 - - 692,841,461 Shenzhen CM Power Supply Co., Ltd. 57,000,000 119,791,233 - - 119,791,233 Shenzhen CM Water Supply Co., Ltd. 43,000,000 127,209,610 - - 127,209,610 Shenzhen China Merchants Xin’an Properties Co., Ltd. 25,000,000 20,822,211 - - 20,822,211 China Merchants Port Service (Singapore) Co., Ltd. (Note) (Singapore dollar) 15,000,000 88,784,955 - 88,784,955 Ruijia Investment Industrial Ltd. (HKD) 20,000,000 20,180,700 - -- 20,180,700 China Merchants Garden City (Beijing) Real Estate Development Co., Ltd. 20,000,000 18,000,000 - -- - 18,000,000

CM Property (Beijing) Ltd. 20,000,000 18,000,000 - - 18,000,000 China Merchants (Suzhou) Co., Ltd. 30,000,000 27,000,000 - - - - 27,000,000 CM (Chongqing) Ltd. 30,000,000 27,000,000 - - 27,000,000 China Merchants Property Management Co., Ltd. 22,500,000 36,460,597 - - 36,460,597 CM (Nanjing) Ltd. 30,000,000 14,700,000 - - 14,700,000 Zhangzhou China Merchants Properties Co., Ltd. 25,000,000 25,500,000 - - 25,500,000 Tianjing Zhaosheng Property Co., Ltd. 18,000,000 18,000,000 - - 18,000,000 Suzhou CM Nanshan Property Co., Ltd. 60,000,000 60,000,000 - - 120,000,000 Chengdu CM Property Ltd. 30,000,000 30,000,000 - - 30,000,000 China Merchants Properties (Chongqing) Co., Ltd. 30,000,000 30,000,000 30,000,000 Long-term investment, net 1,447,881,976 1,447,401,473 ______Less: Impairment provision 26,643,851 ______Long-term investment, net 1,421,238,125 1,447,401,473 ______

Change of long-term equity investment impairment provision:

Name of invested companies Beginning Increased Neutralised End of term of term this term this year RMB Yuan RMB Yuan RMB Yuan RMB Yuan

CM Port Service (Singapore) Ltd. (Note) ______26,643,851 ______- ______26,643,851 ______- ______

Note: China Merchants Port Service (Singapore) Co., Ltd. has finished its process of liquidation, thus all of the investments in this company has been neutralized. 94 Interim Report 2008 CMPD

(b) List of joint enterprises and major financial data

Name of invested companies Reg. Add. Business Registered Portion in Portion in Total assets of Total liabilities Total turnover Net profit of property capital the registered voting rights the invested of the invested of the invested the invested capital companies companies companies companies of the current RMB Yuan % % RMB Yuan RMB Yuan RMB Yuan RMB Yuan

Joint enterprises Shanghai China Merchants Properties Co., Ltd. Shanghai Property development and operation 30,000,000 10 10 200,626,568 103,575,264 (3,884,200) Shenzhen CM Property Consultancy Ltd. Shenzhen Property agency and consultancy 2,000,000 20 20 32,113,623 14,644,271 33,133,796 (3,320,563) Shenzhen City Main Plaza Investment Co., Ltd. Shenzhen Industrial investment 10,000,000 10 10 65,845,063 44,257,411 3,996,802 1,848,955 Shanghai China Merchants Real-estates Co., Ltd. Shanghai Property development and operation 30,000,000 10 10 30,583,212 583,212 Shenzhen China Merchants Guangming Technologies Shenzhen Property Zone Ltd. development and management 200,000,000 49 49 207,244,094 16,342,747 (1,689,614)

(c) The Company’s long-term equity investment receivers as of June 30, 2008 were not limited in ability to transfer capital to the Company.

95 Interim Report 2008 CMPD

(4) Turnover Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Major business turnover - 5,304,939 Incl. Rental income ______- ______5,304,939 Total - 5,304,939 ______

(5) Operation cost Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Major business cost - 5,456,740 Incl. Rental cost ______- ______5,456,740 Total - 5,456,740 ______

(6) Investment income

Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

Long-term equity investment income Gain/loss recognized on equity basis (Note) (1,695,548) 10,395,479 Gain/loss from disposal of long-term equity investment ______(6,270,824) ______2,657,823 Total (7,966,372) 13,053,302 ______Note: Please see Note 71(2)(a) for details.

(7) Related parties and transactions

(a) Rental income Accumulated Accumulated same this term period last year RMB Yuan RMB Yuan

China Merchants Port Service (Shenzhen) Ltd. (Note) - 5,304,939 ______

Note: Please see Note 67 (4) (b).

96 Interim Report 2008 CMPD

(b) Balance of debts and credits

Details of credits and debts with related parties:

Accounts Name of the parties End of term Beginning of term

Other account Shenzhen China Merchants Landmark Co., Ltd. 13,827 receivable CMRE 2,523,146,346 2,230,556,937 Huipeng Property Co., Ltd. 7,525,000 7,525,000 Ruijia Investment Industrial Ltd. 79,416,111 26,400,599 China Merchants Port Service (Singapore) Co., Ltd. 473,388 Shenzhen China Merchants Xin’an Properties Co., 44,105,721 47,333,903 Ltd. CM Property (Beijing) Ltd. 1,307,711,356 1,374,658,479 China Merchants (Suzhou) Co., Ltd. 71,809,600 CM (Chongqing) Ltd. 541,825,140 466,490,284 Guangzhou China Merchants Real-estate Co., Ltd. 1,332,408,253 1,243,918,163 Zhangzhou China Merchants Properties Co., Ltd. 119,206,200 192,706,200 CM (Nanjing) Ltd. 396,274,950 418,500,383 Nanjing Fucheng Real-estate Development Co., Ltd. 549,240,807 434,740,257 Tianjin China Merchants Properties Co., Ltd. 107,634,021 99,124,021 Tianjing Zhaosheng Property Co., Ltd. 1,337,349,515 1,215,082,605 Shanghai CM Minsheng Property Ltd. 569,650,222 541,842,037 Suzhou CM Nanshan Property Co., Ltd. 669,519,352 683,353,490 Chengdu CM Property Ltd. 105,010,540 101,296,000 Suzhou Shuanghu Property Co., Ltd. 24,699,927 21,000,000 Zhuhai Huifeng Property Co., Ltd. 292,079,204 288,617,996 Zhuhai Yuanfeng Property Co., Ltd. 104,349 104,349 Shanghai CM Fengsheng Property Ltd. 378,121,746 355,561,746 Shanghai Fengrui Property Co., Ltd. 420,373,380 Foshan Xinjie Property Ltd. 66,876,420 Foshan Xincheng Property Co., Ltd. 15,000 Shenzhen Meiyue Property Consultancy Ltd. 40,110 Shanghai Fengyang Property Ltd. 179,459,104 CM Jiaming (Beijing) Property Co., Ltd. 727,482,068 Shenzhen CM Anye Investment Development Co., 2,000 Ltd. Guangzhou Qidi Tech & Science Investment Co., Ltd. 3,000 Guangzhou Wende Property Management Co., Ltd. 3,000 China Merchants Properties (Chongqing) Co., Ltd. 732,000,000 Sub-total 12,583,106,269 9,749,285,837

97 Interim Report 2008 CMPD

Accounts Name of the related party End of term Beginning of term Other account China Merchants Shekou Industrial Zone Co., Ltd. 4,852,099 4,852,099 payable Shenzhen China Merchants Guangming Technologies 17,012,986 22,895,913 Zone Ltd. Shenzhen CM Power Supply Co., Ltd. 1,292,095,468 1,399,400,004 China Merchants Water Supply Ltd. 74,308,880 70,626,857 Ruijia Investment Industrial Ltd. 3,407,858 2,993,961 CM (Nanjing) Ltd. 164,233,064 12,871,819 CM Property (Beijing) Ltd. 129,868,707 Shenzhen China Merchants Property Management Co., 107,924,875 103,731,591 Ltd. Shanghai China Merchants Properties Co., Ltd. 102,513,160 98,664,658 Beijing CM Property Management Co., Ltd. 96,510,196 74,922,141 Shekou Xinghua Industrial Holdings Co., Ltd. 88,446,909 86,216,872 Shenzhen Taige Apartment Management Co., Ltd. 66,231,113 49,094,132 Shenzhen City Main Plaza Investment Co., Ltd. 59,917,149 59,942,954 Shenzhen CM Commercial Development Co., Ltd. 49,971,617 Shenzhen CM Construction Co., Ltd. 49,766,590 49,768,590 Shanghai CM Property Management Co., Ltd. 42,436,361 40,152,333 Shanghai China Merchants Real-estates Co., Ltd. 30,500,688 30,510,688 China Merchants Properties (Chongqing) Co., Ltd. 23,759,941 China Merchants (Suzhou) Co., Ltd. 23,023,955 30,045,818 CM Garden City (Beijing) Property Development Co., 15,266,268 15,266,268 Ltd. Zhangzhou CM Honglong Property Ltd. 14,026,189 18,279,747 Wuhan CM Property Management Co., Ltd. 10,040,671 9,025,494 Shanghai CM Fengsheng Property Ltd. 9,995,347 16,716,867 Shenzhen CM Qile Property Management Ltd. 8,406,765 7,125,481 Zhangzhou China Merchants Properties Co., Ltd. 4,968,002 24,972,778 China Merchants Property Management Co., Ltd. 4,451,225 17,357,942 Nanjing CM Property Management Co., Ltd. 3,505,545 4,667,778 Xi’an CM Property Management Co., Ltd. 1,924,071 1,917,874 Tianjin China Merchants Properties Co., Ltd. 997,120 Shenzhen CM Property Consultancy Ltd. 12,657 10,248,249 Nanjing Fucheng Real-estate Development Co., Ltd. 1,413,211 China Merchants Port Service (Singapore) Co., Ltd. 58,632,883 CMRE 76,145 2,500,375,476 2,322,391,147

Accounts Name of the related party End of term Beginning of term Dividend China Merchants Shekou Industrial Zone Co., Ltd. 30,129,921 - payable

(c) Capital operation of Capital Clearance Center

The Company has established an internal capital clearance center to collectively manage and coordinate the capital inside the Company. All of the subsidiaries save their money in the center, and apply for fund when needed for project development. The Company charge the

98 Interim Report 2008 CMPD fund applied at practical financial cost.

Supplementary information:

1. Influences of adjustment made under IAS on net profit and net asset (RMB’000)

Net profit attributable to Net asset attributable to the shareholders of the the shareholders of the listed company listed company Amount under Chinese Accounting Standard 218,729 8,047,618 Adjusted upon IAS Adjustment of goodwill 1,339,829 Amount under IAS 218,729 9,387,447

[Note] Adjustment on the net asset according to International Accounting Standard was mainly caused by: according to Chinese Accounting Standard and relative regulations, the difference generated by consolidation of entities under same control shall be adjusted to capital reserves, whereas the goodwill generated by consolidation shall be presented as asset separately according to the IAS.

2. Details of asset impairment provisions

Balance of Decreased this term Balance of book value at Provided this book value at Items Written beginning of term Transferred end of term term back I. Bad debt provision 5,421,244 5,897 - - 5,427,141 II. Inventory impairment provision 162,982 - - - 162,982 III. Disposable financial asset - - - - - impairment provision IV. Investment equity hold till - - - - - expiring impairment provision V. Long-term equity investment 100,000 - - - 100,000 impairment provision VI. Property investment impairment - - - - - provision VII. Fixed asset impairment - - - - - provision VIII. Project material impairment - - - - - provision IX. Construction in process - - - - - impairment provision XII. Intangible asset impairment - - - - - provision XIII. Goodwill impairment - - - - - provision XIV. Other - - - - - Total 5,684,226 5,897 - - 5,690,123

99 Interim Report 2008 CMPD

3. Net income on asset and earnings per share

Profit indices as of the year Net return on equity (%) Earnings per share (yuan/share) On full amortizing weighted average Basic Dilluted basis Net profit 2.72% 2.74% 0.207 0.207 Net profit deducted non-recurring gain/loss 2.97% 3.00% 0.226 0.226

100