ANNUAL REPORT 2011 Fax 傳真: 86-575-84118792 E-Mail 電郵: [email protected]

BAOYE GROUP COM BAOYE GROUP COMPANY LIMITED 寶業集團股份有限公司 (A joint stock limited company incorporated in the People’s Republic of China) （於中華人民共和國註冊成立的股份有限公司） Stock Code 股票代碼：2355 P ANY LIMITED 寶業集團股份有限公司 Annaul Report 2011 年年報 CONTACT 聯絡方式 INVESTOR RELATIONS DEPARTMENT BAOYE GROUP COMPANY LIMITED 寶業集團股份有限公司投資者關係部 Tel 電話: 86-575-84135837 ANNUAL REPORT 2011 Fax 傳真: 86-575-84118792 E-mail 電郵: [email protected] WEBSITE 網址 www.baoyegroup.com 二零一一年年報 Our Mission 我們的使命 “From construction to manufacturing” leads construction industry towards industrialisation in China. 「從建設到製造」帶領中國建築業走向產業化 Contents 02 Corporate Profile 04 Financial Highlights 06 Chairman’s Statement 10 Management Discussion and Analysis 32 Corporate Governance Report 41 Investor Relations 42 Biographical Details of Directors, Supervisors and Senior Management 46 Directors’ Report 54 Supervisors’ Report 55 Independent Auditor’s Report 57 Consolidated Financial Statements 64 Notes to the Consolidated Financial Statements 118 Definitions 120 Corporate Information 2 Baoye Group Company Limited Corporate Profile Business Network Construction Property Building Business Development Materials Business Business • Zhejiang • Sichuan • Shanghai • Chongqing • Shaoxing • Shaoxing Building Materials Industrial Park • Jiangsu • Xinjiang • Hefei • Hefei Building Materials Industrial Park • Wuhan • Wuhan Building Materials Industrial Park • Anhui • Jiangxi • Hangzhou • Hubei • Fujian • Shanghai • Hunan • Guangdong • Kaifeng • Beijing • Djibouti • Tianjin • Botswana • Hebei • Seychelles • Henan • Shandong • Shanxi • Liaoning Building Materials Business Property Development Business Annual Report 2011 3 Business Structure BAOYE GROUP COMPANY LIMITED Construction Property Building Business Development Materials Business Business Government and Shaoxing “Baoye Four Curtain Wall Public Buildings Seasons Garden” Urban Facilities and Shaoxing “Daban Ready-mixed Infrastructure Fengqing” Concrete Commercial Buildings Shaoxing “Yuyuan” Furnishings and Interior Decorations Shaoxing “Yangxun Residential Buildings Steel Structure Commercial Center” Shaoxing “Jiangwan Industrial Buildings Green Garden” Wooden Products and Fireproof Materials Hefei “City Green Electrical and Electronic Garden” Concrete Pipes Installation Hefei “Baoye Tongcheng Fireproof Facilities Green Garden” Others Installation Hefei “Baoye Curtain Wall Installation Dongcheng Square” Wuhan “Baoye Gardening and Xudong Yayuan” Landscaping Wuhan “Baoye Guanggu Lidu” Hangzhou “Jiangwan Luyuan” Shanghai “Huinan Project” Henan “Kaifeng Project” 4 Baoye Group Company Limited Financial Highlights Year ended 31 December 2011 2010 2009 2008 2007 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Results Revenue 16,186,830 12,055,243 10,973,575 9,451,498 7,657,066 Profit Attributable to the Owners of the Company 710,196 527,875 502,239 150,044 225,795 Earnings per Share (RMB) 1.071 0.796 0.758 0.226 0.343 Assets and Liabilities Total Assets 13,103,562 10,959,300 9,977,724 9,440,012 7,692,050 Total Liabilities 8,655,852 7,129,822 6,498,535 6,449,484 4,795,642 Total Equity 4,447,710 3,829,478 3,479,189 2,990,528 2,896,408 Key Financial Ratios As at 31 December 2011 2010 Return on Equity of the Company 16.2% 14.0% Net Assets Value per Share (RMB) 6.59 5.69 Net Cash Ratio 18% 39% Current Ratio 1.28 1.32 Cash (Outflow)/ Inflow from Operating Activities (RMB’000) (587,160) 1,353,338 Annual Report 2011 5 Revenue (in RMB million) 16,187 12,055 10,974 9,451 7,657 2007 2008 2009 2010 2011 Profit Attributable to the Owners of the Company (in RMB million) 710 528 502 226 150 2007 2008 2009 2010 2011 6 Baoye Group Company Limited Chairman’s Statement Pang Baogen Chairman of the Board Annual Report 2011 7 On behalf of the Board, I am pleased projects in affordable housing, water supplies, electricity to report the audited financial results supplies, railway, rail transport, and public roads and of Baoye Group Company Limited highways have been increased steadily from time to time, (the “Company”) and its subsidiaries the construction industry will be benefit from this golden (collectively the “Group”) for the year opportune time resulting from these rapid development. ended 31 December 2011. As one of the national new premier construction operators, the Group will seize this opportunity to During the year of 2011, facing the complicated and develop our business to attain “Two-surpass and Two- rapid changes of economic conditions both home advance”, i.e. surpass in water supplies and transport and aboard, the Group managed quite prudently in its sectors as a general contractor and designer; advance business against the challenges that were eroded by in construction by integration of capital financing module high inflation, increased labour costs, and tightened and construction-operation model. credit policies, all three business segments had registered commendable operating results. For the The property market in major cities had been severely year ended 31 December 2011, the Group achieved affected by austerity macro-economic measures an audited consolidated revenue of approximately undertaken by the Chinese government, which imposed RMB16,186,830,000 representing an increase of restrictions on home purchase, price tag, and bank approximately 34% as compared to last year; profit finance, leading to decreased buy-sell volume and attributable to the owners of the Company amounted softening selling prices during the year. It appears that to approximately RMB710,196,000 representing an this phenomenon will be spillover into 2012. In the near increase of approximately 35% as compared to last term, the relative risk in property market will increase year; earnings per share was RMB1.071, representing a primarily due to changes in market demand and selling growth of approximately 35% from the preceding year. price, tightening bank credit policies, and increased Details of operating and financial performance of the costs in construction. However, with limited supply Group will be discussed in the “Management Discussion of land, fast pace of industrialisation and urbanisation and Analysis” section of this annual report. development, and improved domestic consumption capability and increased demand for quality housing, all Looking ahead to 2012, the volatile global financial and of which are the key drivers to support the continuous economic conditions will remain unchanged. Under growth and development for the property market the central government’s fiscal policy and direction in the longer term. The primary initiative of Chinese in spearheading the structural economic reform and government’s restrictions on home purchase is to development, the Chinese government will continue regulate the property market development in an orderly to adopt and implement proactive fiscal policy and manner; however, the basic fundamental towards the prudent monetary policy with some moderate and fine betterment of property market in China in the long term adjustments from time to time. Under such preserved remains unchanged. Of these, it presents challenges and macro-economic environment and market condition, opportunities for the industry leading operators with solid as a construction conglomerate company with three-in- foundation and foresight. one businesses in construction, property development and building materials, the Company is able to capture Under these new restricted rules and regulations against this growing opportunity and to set the right direction to home purchase, the Group always adopts prudent sustain continuous growth and prudent development. strategy and takes into consideration of the renewed macro-economic policies and market changes, assessing The year of 2012 is an important year of implementation the returns on investment properties in target locations under China’s twelfth “Five-Year-Plan”, followed by and increase land reserve, where appropriate, and the execution of various local government directions, ensuring the sustainable development of the property guidances and policies, the infrastructural construction development business. During the year, with the increase 8 Baoye Group Company Limited Chairman’s Statement (continued) in land supply and the lowered of land costs, the Group housing industrialisation in the construction of affordable has successfully bid for three parcels of land use rights housing. At present, the Group has possessed the in Wuhan, Shanghai and Henan through public tender proprietary technologies of two systems of industrialised and auction, adding approximately 1,209,000 square housing in light steel structure and PC structure and metres gross floor area in land reserve. On the regional three building materials industrial parks in Shaoxing, front, the Group will focus on second and third tier cities Hefei and Wuhan, and as a leader of its kind, to lead the in Hubei, Anhui and Henan, where are less affected by development in the areas of Yangtze River Delta and the home restriction purchase rules and call for high central China. demand in residential housing, reaping the development opportunities in these rapid economic growth and The Group highly values the importance and availability of speedy urbanisation pace regions in history. steady operating cash flow, and has actively established banking relationship with commercial banks. The Group Benefiting from the accelerating development in central will endeavour to strengthen the control over cash China, the Group’s regional companies in Hubei and utilisation and reservation,

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