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Work Report of Wanda Group in 2016


\Work Summary of Wanda Group in 2016

January 14, 2017

To begin with, I wish to, on behalf of the Board of Directors of Wanda Group, express a warm welcome to all of you present here at Wanda Group’s 2016 annual meeting at Hefei Wanda City! The year 2016 was a crucial year in Wanda’s transformation and saw the Group make major progress in diverse aspects including expansion in emerging industries, application of high technologies and business internationalization. In a year that also saw the country’s real estate market continue its upward climb, Wanda Group made the bold and surprising move to adjust down RMB 60 billion in real estate revenue to resolutely advance its transformation agenda, something that no other enterprise in China is capable of doing. In 2016, under the leadership of the Board of Directors, and under the concerted efforts of the management headed by Mr. Ding and the entire staff, we excellently accomplished all tasks set for the year. Here I will summarize our work in 2016 from two aspects:


 (I) All Tasks for the Year Accomplished

In 2016, the Group’s assets reached RMB 796.1 billion, up 21.4% y/y (using the cost method). Its operating revenue reached RMB 254.98 billion, or 103.2% of target, up 3.4%. In terms of revenues from real estate contracts, the Group’s revenue decreased by 13.9% y/y, mainly due to a downside adjustment of RMB 60 billion in real estate sales revenue. Beginning this year, Wanda will only measure operating revenue because transformation is not only about business and strategy but it should also be reflected in accounting. While Wanda’s operating revenue did not increase significantly, and indeed its contract revenue experienced a decrease, its net profit posted an impressive two-digit growth.

Dalian Wanda Commercial Properties achieved RMB 143.02 billion in revenue, or 100.4% of target, maintaining a positive y/y growth in net profit in spite of a 25% y/y decrease in revenue. Increased net profit achieved at a decrease in total revenue by one fourth means a significant improvement in the quality of revenue. Dalian Wanda Commercial Properties achieved RMB 112.27 billion in revenue from real estate, or 100% of target, and RMB 19.58 billion in rent receipts, or 102.3% of target, up 29.6% y/y, with its rent collection rate reaching 99.99%. Why it was not 100% is because one rent receivable in the amount of RMB 160,000 did not arrive until January 2, 2017 and barring the two days in delay, we would have achieved a rent collection rate of 100% for four consecutive years. Of course, while it was a tiny regret, a 99.99% rent collection rate is already satisfactory enough. Dalian Wanda Commercial Properties has set the world record of maintaining a collection rate of more than 99.5% for 11 consecutive

(II) Business Transformation Basically Completed

1. Services contributed more revenue and profit than real estate. In 2016, services contributed 55% of the Group’s total revenue, surpassing the real estate business for the first time, and the net profit (unaudited) from services in the year was also greater than that from the real estate business. Wanda has accomplished its preliminary goal of transformation one year in advance. Therefore, 2016 was a critical year of landmark significance to Wanda. While the real estate revenue of Dalian Wanda Commercial Properties, Wanda Group’s core enterprise undergoing transformation, still exceeds the revenue from its other operations such as property lease, property lease has taken up approximately 55% of its net profit, according to estimates. In other words, non-real estate operations including property lease have surpassed real estate development in profit generation of Dalian Wanda Commercial Properties which, so...

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