RE IV Limited Bond Investor Report Q2 2020
www.wprei.com RE IV Limited, Interim Report Q2 2020
Table of contents
Section A 03 Overview 04 About this report 05 Green Bond factsheet 06 Project factsheet 07 Letter from the CEO 09 Highlights of Q2 2020 11 Quarterly data dashboard
Section B 12 Performance 13 Project status 24 Financial performance 25 - Highlights of financial performance 26 - Consolidated financial statements
Investor relations contacts
Karen Xu Fredrik Mandelholm Head of Investor Relations Head of Stockholm Office
[email protected] [email protected]
Financial Calendar
Financial Year 2020 2020-05-29 Q1 2020 Bond Investor Report 2020-08-28 Q2 2020 Bond Investor Report 2020-11-30 Q3 2020 Bond Investor Report 2021-02-26 Year-end 2020 Bond Investor Report (Unaudited) 2021-03-31 Year-end 2020 Bond Investor Report (Audited)
2 RE IV Limited, Interim Report Q2 2020
Section A Overview Pages 03—10
3 A — Overview RE IV Limited, Interim Report Q2 2020
About this report
Background Reporting Boundary Basis of Preparation The Quarterly Report has been prepared in The Quarterly Report pertains solely to RE IV The Consolidated Financial Statements are accordance with the terms and conditions Limited and no financial information regarding prepared in accordance with IFRS (IAS 34). governing the Green Bond issued by White Peak other affiliated entities is set out herein. However, during the third quarter of 2019. The reporting to facilitate the understanding of the Quarterly Caveat framework established by the Quarterly Report Report, certain non-financial information relating The Quarterly Report has not been reviewed by will enhance transparency, facilitate access to, inter alia, White Peak’s business platform the company’s auditor. to reliable information regarding White Peak’s which is not exclusively attributable to RE IV business operations and strengthen White Peak’s Limited has been included herein. communication with Green Bond investors.
White Peak Real Estate II L.P. White Peak Real Estate III L.P. White Peak Real Estate IV L.P.
RE IV Limited (Green Bond issuer)
Project 1 Project 2 Project 3 Project 4 Project 5 Project 1 Project 2 Project 3 Project 4 Project 5 Eco City A-2 Eco City B Fushan Pian Ling Print House Shenbei Xiazhuang
General non-financial information reporting boundary Financial information reporting boundary
4 A — Overview RERE IVIV Limited,Limited,Interim Interim Report Q2 2020
Green Bond factsheet
Issuer RE IV Limited
Volume SEK 600 million
Total framework SEK 1 billion
Tenure 3 years (Final Maturity Date at 5 July 2022)
Coupon Fixed 9%, semi-annual payments
Use of proceeds The proceeds will be used to finance investments and transaction costs in accordance with the Terms and Conditions governing the Green Bond.
Maintenance — Loan to Value <55% covenants — Minimum Cash: at least equal to 12 months scheduled interest payments
Listing At the end of Q2 2020, the Green Bond was traded on the Freiverkehr list at Deutsche Borse.
On 14 May 2020, the listing of the Green Bond on the Nasdaq Stockholm Corporate Bond list was completed. Thereby, the listing requirement set out in the terms and conditions governing the Green Bond has been fulfilled.
Hedging At the end of Q2 2020, RE IV Limited held RMB/SEK fx options of SEK 735 mil notional, at strike 1.3180. The notional amount is sufficient to cover both the future bond principal and coupon payments. The company intends to use this RMB/SEK fx options to hedge the foreign currency risk, should SEK appreciate beyond 1.3180 against RMB.
Covenant compliance Requirement Q2 2020 certificate Loan to Value¹ <55% 5.2% Minimum RMB 597 mil³ Cash² SEK 54 mil (c. SEK 787 mil)
¹ Loan to Value means the ratio of Net Interest Bearing Debt to Gross Asset Value as per the latest independent third party valuation. ² Based on currency exchange rates as of June 30, 2020 ³ As of June 30, 2020, the Group had cash and bank balances in the amount of RMB 835 million, of which RMB 237 million was not counted towards cash and cash equivalents in the financial statements, since it can only be used for payment of construction costs when approval from related government authority is obtained.
5 A — Overview RE IV Limited, Interim Report Q2 2020
Project factsheet
Current Investments 5% Equity Investment % by City 9% By the end of Q2 2020, RE IV Limited had made seven investments, Yantai located in five cities across three provinces, with a total population of over 15% 42% Shenyang 219 million. Chengde Qingdao The projects resulting from the first three investments made in Yantai in 29% Pingdu December 2018 launched sales in Q4 2019 and started to generate cash flows. The projects have estimated delivery dates ranging between 2021 and 2023. Equity Investment % by Project
In early December 2019, RE IV Limited expanded its portfolio by 5% Shenbei Project, Shenyang 9% acquiring two land parcels in Chengde (Hebei Province) and Pingdu 29% Eco City (Site B), Yantai (Shandong Province), respectively. During Q1 2020, RE IV Limited continued its 10% Eco City (Site A-2), Yantai growth by acquiring land parcels in Shenyang (Liaoning Pian Ling Project, Chengde Province) and Qingdao (Shandong Province), respectively, thereby 15% Fushan Project, Yantai 18% increasing the geographic diversification of the company’s investments. 14% Xiazhuang Project, Qingdao Print House Project, Pingdu
Year of Equity Property Year of project invested Estimated Project name type acquisition completion (RMB million) total GFA m² Status Eco City (Site A-2), Acquisition Yantai Mixed use 2018 2022 340 94,490² completed Eco City (Site B), Acquisition Yantai Mixed use 2018 2023 446 125,472² completed Fushan Project, Acquisition Yantai Residential 2018 2022 259 245,832² completed Pian Ling Project, Acquisition Chengde Residential 2019 2023 359¹ 180,321² completed Print House Project, Acquisition Pingdu Residential 2019 2022 117 44,434² completed Shenbei Project, Acquisition Shenyang Residential/ Retail 2020 2024 722 283,106² completed Xiazhuang Project, Won the Qingdao Residential 2020 2023 210 47,133² land auction Total 2,453 1,020,788² 1 The equity deployed includes equity contributions in the form of subordinated shareholder loans from RE IV Limited’s parent company White Peak Real Estate IV L.P. (indirectly through White Peak Real Estate IV L.P.'s wholly owned subsidiary White Peak Holdings IV Limited) and RMB 200 million from recycled onshore funds. 2 The building areas may change due to changes in project positioning.
Eco City Eco City Fushan Pian Ling Print House Shenbei Xiazhuang In RMB Total (Site A-2) (Site B) Project Project Project Project Project CBRE Valuation³ 3,990,000,000 633,000,000 690,000,000 750,000,000 634,000,000 142,000,000 953,000,000 188,000,000 Book value of properties⁴ 3,494,812,624 492,183,493 500,362,127 699,511,689 618,670,685 141,362,952 854,825,263 187,896,415 Revaluation gain 495,187,376 140,816,507 189,637,873 50,488,311 15,329,315 637,048 98,174,737 103,585
3 The latest CBRE Valuation was carried out as per 30 June 2020. 4 The book value pertains to properties under development for sale in the balance sheet as per 30 June 2020.
6 A — Overview RE IV Limited,Interim Report Q2 2020
Letter from the CEO
China was the first country to be affected by the outbreak of COVID-19 and has also proven to be the first country to begin to recover from the negative economic effects that the pandemic has given rise to. In Q2, China’s GDP growth turned positive at 3.2% year-on-year, with key economic indicators – including total retail sales, investments and PMI – all significantly improved from Q1, demonstrating the country’s resilience compared to its international peers. In June, the IMF estimated that China would be the only major economy to achieve positive growth in 2020.
Following months of strict and swift control measures being applied nationwide, China took action to ensure that its economy and society could reopen in an efficient manner as soon as the situation allowed it. As of the date of this investor report, the government has taken various measures to incentivize the broad scale resumption of industry production while simultaneously maintaining regular prevention and control measures, an equilibrium that is expected to be the new norm over an extended period of time. The various private sectors across the country have made extensive efforts, of both traditional and innovative nature, in order to ensure survival and to thrive again. As a result of this resilience and the fundamental dynamics of the Chinese economy, China is gradually rising from the financial slump caused by the COVID-19 outbreak. We expect the economy to continue to improve since domestic consumption and investments are leading the growth.
In the real estate sector, market indicators such as price and volume growth have improved from the bottom in February, implying a continuous recovery in the sector. As of the end of Q2, price growth year-to-date had returned to pre-COVID levels. In addition, the monthly data shows that price growth has been positive since March. Sales volumes have developed on a similar trajectory as consumer confidence is bouncing back.
Overall, White Peak’s project locations in Northern and Eastern China have been less affected by the COVID-19 outbreak than the Central and Southern parts of China. However, the new clusters of COVID-19 cases that occurred in Beijing, Liaoning and Xinjiang in the recent months have created some challenges. As already noted, regular control and prevention measures will remain the new norm over the foreseeable future.
We are pleased to share this update concerning the development of our business during Q2 2020 with you.
7 A — Overview RE IV Limited, Interim Report Q2 2020
Project updates Green Bond listed on Nasdaq Stockholm In the Hammarby Eco City Project, 65% of the residential units on On 14 May 2020, the listing of the Green Bond on the Nasdaq Site A-2 have been sold by the end of Q2. The ice hockey stadium on Stockholm Corporate Bond list was completed. Thereby, the listing Site B is under construction and the sales of residential apartments requirement set out in the terms and conditions governing the will be launched in September. In Q2, White Peak entered into Green Bond has been fulfilled. preliminary agreements with ABB, IKEA, Assa Abloy and Envac pertaining to the procurement of Swedish technology and products Hammarby Alliance Event to be used in the Hammarby Eco City Project. On June 9, the Hammarby Eco City Alliance held an event at the Swedish Embassy in China to celebrate its one-year anniversary. The In the Fushan Nordic Park Project, 31% of the residential units have event was attended by the Swedish Ambassador, the Counsellor been sold by the end of Q2. Construction of residential towers is and senior management representatives from ABB, IKEA, Assa Abloy, proceeding according to plan. Envac and White Peak. Approximately ten Chinese national media outlets attended and reported on the event. The two projects acquired in December 2019 (the Pian Ling Project in Chengde and the Print House Project in Pingdu, respectively) Sustainability Report are proceeding according to plan. In the Pian Ling Project, the We published the annual sustainability report on our website in construction of the sales centre has been completed. Sales are early August. The sustainability report is prepared with reference expected to be initiated in Q4 this year. As regards the Print House to the Global Reporting Initiative (GRI) standards and ISO Project, we received construction permit and completed the Guidance on Social Responsibility. The independent third-party construction of the sales centre during Q2 2020. Bureau Veritas has assured that the report, and the information set out therein, is objective, reliable and free from material We also made substantial progress on the two projects acquired and mistake or misstatement. initiated in Q1 (the Shenbei Project in Shenyang and the Xiazhuang Project in Qingdao, respectively). The design for the Shenbei Project I look forward to any questions or comments that you may have. was approved and the construction of the sales centre in Xiazhuang Project was completed. Jesper Jos Olsson Founding Partner and Group CEO, White Peak H1 2020 Sales update White Peak ranked No. 2 in terms of total sales in H1 2020 among all developers in Yantai. We sold 537 units during Q2 in Yantai (Q1:112 units). During H1 2020, Hammarby Eco City sold 314 units and ranked No.1 among all projects in Zhifu District, while Fushan Nordic Park sold 335 units and ranked No. 2 among all projects in Fushan District. Sales in the Pingdu Print House Project was launched in July. All of our existing seven projects will have launched sales by the end of this year.
8 A — Overview RE IV Limited, Interim Report Q2 2020
Highlights of Q2 2020 Existing portfolio
Yantai Hammarby Eco City (Site A-2 and Site B)
In H1 2020, Eco City (Site A-2) ranked No.1 in Ice hockey stadium on Site B is under construction On June 9, White Peak signed LOIs with ABB, terms of sales among all projects in Zhifu District IKEA, Assa Abloy and Envac pertaining to the in Yantai procurement of Swedish technology and products to be used in the Hammarby Eco City Project
Yantai Fushan Nordic Park Chengde Pian Ling
White Peak ranked No. 2 among all developers in Construction of the sales centre and ice hockey Sales centre structure completed Yantai in terms of total sales in H1 2020 stadium is completed
Pingdu Print House Shenyang Shenbei Qingdao Xiazhuang
Construction permit obtained and sales centre Design work was completed in Q2 2020 Sales centre structure completed completed in Q2 2020
9 A — Overview RE IV Limited, Interim Report Q2 2020
Highlights of Q2 2020 Hammarby Eco City Alliance Anniversary Event
On June 9, the Hammarby Eco City Alliance held an event at the Swedish Embassy in China to celebrate its one-year anniversary. The event was attended by the Swedish Ambassador, the Counsellor and senior management representatives from ABB, IKEA, Assa Abloy, Envac and White Peak as well as by, approximately, ten Chinese national media outlets that reported on the event.
Swedish Ambassador to China Ms. Helena Panelists from ABB, IKEA and White Peak Sångeland delivering keynote speech discussing about how to collaborate on sustainable urban development in China
During the event, White Peak entered into agreements with ABB, IKEA, Assa Abloy and Envac pertaining to the procurement of Swedish technology and products to be used in our projects. The total value of the contracts amount to RMB 100 million (c. SEK 130 million).
IKEA (Freda Zhang, IKEA China Commercial ABB (Zhiqiang Zhang, Senior Vice President of Vice President) - White Peak (Jesper Jos Olsson) ABB Group and Managing Director of ABB in China) - White Peak (Jesper Jos Olsson)
10 A — Overview RE IV Limited, Interim Report Q2 2020
Quarterly data dashboard
Property market indicators Q2’20 vs Q1’20 Q1’20 VS Q4’19 Data source / notes National Price +4.9% decelerating +5.3% decelerating NBS 70 Cities YoY (weighted): June/March Volume -7.6% Less negative -25.9% declining NBS New Home Sales GFA YTD YoY: June/March MTC 14.1 increasing 13.1 increasing Months-to-clear(MTC) @6M for 11 Major Cities: June/March New Starts -8.2% Less negative -26.9% declining NBS Residential New Starts GFA YTD YoY: June/March Land Sales -0.9% Less negative -22.6% more negative NBS Land Sales (Area) YTD YoY: June/March
Macro indicators Q2’20 Q1’20 Data source/ notes Growth GDP -1.6% Less negative -6.8% turned negative Quarterly, Q2 2020/ Q1 2020 Resi RE Inv +2.6% turned positive -7.2% decelerating YTD YoY, June/March PMI- Manu. 50.9 exp.slower 52.0 exp.faster. June/March
PMI- Non Manu. 54.4 exp. faster 52.3 exp. slower June/March
Retail Sales -11.4% less negative -19.0% declining YTD YoY, June/March Monetary M2 +11.1% accelerating +10.1% accelerating YoY, June/March RMB loans +13.2% accelerating +12.7% accelerating YoY, June/March Mortgage loans +15.7% decelerating +15.9% decelerating Quarterly, Q2 2020/ Q1 2020 Mortgage cost 5.28% falling 5.45% falling First-time Buyers, Rong360 Survey, Major 35 Cities, June/March CPI +2.5% lower +4.3% lower YoY, June/March PPI +0.4% higher -0.1% lower YoY, June/March Currency RMB vs USD +1.2% appreciating -0.9% depreciating 90D Change, 27 Jul &26 Apr/ 26 Apr & 3 Feb RMB vs SEK -12.0% depreciating +3.2% appreciating 90D Change, 27 Jul &26 Apr/ 26 Apr & 3 Feb
Sources: Real Estate Foresight analysis based on data from SouFun-CREIS, China National Bureau of Statistics (NBS), Thomson Reuters’calculation, The People's Bank of China, Quandl/DataYES 11 RE IV Limited, Interim Report Q2 2020
Section B Performance Pages 12—49
12 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Yantai Hammarby Eco City (“Eco City”) Site A-2 and Site B
Eco City Site A-2 Site B Development type Residential Residential Loft Loft Retail Retail Ice Hockey Stadium Land size, m² 39,356 52,341 GFA, m² 94,490 125,472 Number of 738 990 residential units Estimated year 2022 2023 of project completion
Project Description ——Eco City (Site A-2) and Eco City (Site B) is the initial phase of the Eco City Project. ——The Eco City Project is an urban redevelopment project comprising eight land parcels for which White Peak has entered into an exclusive Eco City (Site A-2 and Site B) master plan rendering cooperation agreement with the local government, the purpose of which is the joint development and incorporation of the Hammarby Sjöstad planning concept over the next several years.
Site A-2 Estimated schedule
2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2021 2022 2023
Site foundation works Project completion Sales and construction in phases started in Jan 2019 in Q2 2022
Design completed in Q2 2019
Construction permit obtained in Q3 2019
Sales launched in Q4 2019
Site B Estimated schedule
2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2021 2022 2023
Site foundation work Construction permit Sales to be launched Project completion Sales and construction in phases started in Jan 2019 obtained in Q1 2020 in Q3 2020 in Q1 2023
Design completed in Q2 2019
13 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Yantai Hammarby Eco City (“Eco City”) Site A-2 and Site B
We have achieved important milestones in the Eco City project. ——Conceptual design prepared by Sweco has been approved; ——The Sales Centre construction has been completed; ——Construction is proceeding according to plan; ——Pre-sales of the first Eco City residential apartments launched in November 2019 with 483 units located at Site A-2 sold by the end of Q2 2020; ——Eco City A-2 obtained BREEAM rating of “Very Good”.
1
3 Site B 2
Site A-2 2 1
3
14 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Yantai Hammarby Eco City (“Eco City”) Site A-2 and Site B
Sales Progress • Sales of Site A-2 launched in November 2019 with Site B to be launched in Q3 2020; • In total, 483 units located at Site A-2 had been sold by the end of Q2 2020; • In H1 2020, Eco City ranked No.1 in terms of sales among all projects in Zhifu District in Yantai;
54% 23%
0%
Site A-2 Site B Total Saleable area m² 94,490 125,472 219,962 Area sold m² 50,955 0 50,955
15 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Yantai Fushan Nordic Park (“Fushan Project”)
Yantai Fushan Nordic Park Development type Residential Land size, m² 99,500 GFA, m² 245,832 Number of 2,400 residential units Estimated year 2022 of project completion
Project Description ——Fushan Project is located in Fushan District, which is one of the five urban districts of Yantai. ——Fushan District still has the lowest housing prices among all core districts in Yantai, therefore it represents the cheapest access to urban infrastructure and amenities for the newly urbanised population. ——Fushan Project comprises a parcel of residential land with a site area of 99,500 m² and a parcel of industrial land planned for an ice hockey Fushan Project master plan rendering stadium and an international school with a site area of 97,500 m².
Fushan Estimated schedule
2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2021 2022
Site foundation work Project completion Sales and construction in phases started in Jan 2019 in Q2 2022
Design completed in Q2 2019
Construction permit obtained in Q3 2019
Sales launched in Q4 2019
16 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Yantai Fushan Nordic Park (“Fushan Project”)
Significant progress has been made on Fushan Nordic Park in Yantai. ——Design approved and construction permit obtained in Q3 2019; ——Construction of the Sales Centre and Ice Hockey Stadium is completed; ——Construction is proceeding according to plan; ——Pre-sales commenced in Q4 2019 with 750 units sold by the end of Q2 2020; ——Fushan Nordic Park obtained BREEAM rating of “Very Good”
1
Residential Towers
3 2 2 1 Sales Centre Ice Hockey Stadium
3
17 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Yantai Fushan Nordic Park (“Fushan Project”)
Sales Progress • Sales launched in Dec 2019; • In total, 750 units had been sold in the Fushan Project by the end of Q2 2020; • In H1 2020, the Fushan Project ranked No.2 in terms of units sold among all projects in Fushan District;
92%
31%
10% 0%
Phase 1 Phase 2 Phase 3 Total Saleable area m² 73,493 99,084 73,255 245,832 Area sold m² 67,465 9,842 0 77,307
18 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Chengde Pian Ling (“Pian Ling Project”)
Chengde Pian Ling Development type Residential Land size, m² 120,215 GFA, m² 180,321 Number of 1,594 residential units Estimated year 2023 of project completion
Project Description Pian Ling Project master plan rendering ——Chengde Pian Ling Project comprises a land parcel with a site area of 120,215 m² and a planned GFA of 180,321 m², for residential uses. ——By the end of 2020, Chengde will be accessible via the high-speed rail within 1 hour from Beijing, which is expected to stimulate the economic development and drive demand for housing over the next few years. ——Compared with the strong demand, the current residential inventory is limited, primarily because of the scarce land supply in Chengde due to its mountainous typography. ——White Peak acquired the land on December 6, 2019. Construction is scheduled to commence in Q3 2020 and pre-sales is expected to launch in Q4 2020. ——White Peak has been active in Chengde since 2017 and has sold approximately 1,200 units totaling 130,000 sqm residential area in the city over the past two years.
Pian Ling Estimated schedule
Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2021 2022 2023
Land acquisition Site foundation works Design completed in Construction permit to Sales to be launched Sales and construction in phases Project completion started in Q1 2020 Q2 2020 be obtained in Q3 2020 in Q4 2020 in 2023
19 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Pingdu Print House (“Print House Project”)
Pingdu Print House Development type Residential Land size, m² 24,733 GFA, m² 44,434 Number of 327 residential units Estimated year 2022 of project completion
Project Description ——Pingdu is a county level city in Qingdao, with a total population of around 1.38 million. ——White Peak successfully acquired the land on December 11, 2019. ——White Peak has been active in Pingdu since 2008 and has sold around 1,100 units totaling 96,000 sqm residential area in the city over these years.
Print House Estimated schedule
Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2021 2022
Land acquisition Site foundation works Construction permit Sales to be launched Sales to be launched Project completion started in Q1 2020 obtained in Q2 2020 in Q3 2020 in Q4 2020 in 2022
Design completed in Q1 2020
20 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Pingdu Print House (“Print House Project”)
Significant progress has been made on Print House Project in Pingdu. — Design approved and construction permit obtained in Q2 2020; — Construction is proceeding according to plan; — Pre-sales commenced in early July 2020.
1
Residential Building 2 2
Showroom
1
21 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Shenyang Shenbei (“Shenbei Project”)
Shenyang Shenbei Development type Residential / Retail Land size, m² 141,553 GFA, m² 283,106 Number of 2,758 residential units Estimated year 2024 of project completion
Project Description ——Shenbei New District is the most affordable Shenyang district with access to urban infrastructure and amenities for the new urbanizing population. ——White Peak successfully acquired the land on February 20, 2020. ——WP has a strong team with extensive local market knowledge derived from the previous project in Shenyang (i.e. the Yuhong Nordic Cloud project of Fund II). ——WP Shenyang project company was established in 2015. During the past 4 years, the project company has sold around 1,500 units totaling 120,000 sqm residential area.
Shenbei Project Estimated schedule
Q1 2020 Q2 2020 Q3 2020 Q4 2020 2021 2022 2023 2024
Land acquisition Design completed Construction permit to Sales to be launched Sales and construction in phases Project completion in Q2 2020 be obtained in Q3 2020 in Q4 2020 in 2024
Site foundation work Planning permit started in Q1 2020 obtained in Q2 2020
22 B — Performance RE IV Limited, Interim Report Q2 2020
Project status Qingdao Xiazhuang (“Xiazhuang Project”)
Qingdao Xiazhuang Development type Residential Land size, m² 46,666 GFA, m² 47,133 Number of 445 residential units Estimated year 2023 of project completion
Project Description ——Chengyang District is located north of downtown Qingdao. The acquired land is situated in the south of the Chengyang District and is, thereby, adjacent to downtown. ——White Peak successfully won the land auction on March 31, 2020. ——The land has a low plot ratio and is located at the foot of the famous scenic spot Mount. Lao. Therefore, the land will be developed into premium products tailored to attract high-end customers. ——WP’s presence in Qingdao dates back to as early as 2008. With more than ten years’ experience in the market, WP has invested in Ruiping Centre (Exited), Ruiping Financial Centre (Exited) and Nordic Light (Exited) for its Fund I, and Jiaozhou Central Park, Pingdu Weekly for Fund II and Pingdu Hongqi Road for Fund III. So far, White Peak has sold around 5,200 units in Qingdao.
Xiazhuang Project Estimated schedule
Q1 2020 Q2 2020 Q3 2020 Q4 2020 2021 2022 2023
Won the land auction Site foundation works Planning permit Sales to be launched Sales and construction in phases Project completion started in Q2 2020 obtained in Q3 2020 in Q4 2020 in 2023
Design completed Construction permit to in Q2 2020 be obtained in Q3 2020
23 B — Performance RE IV Limited, Interim Report Q2 2020
Highlights of financial performance
24 B — Performance RE IV Limited, Interim Report Q2 2020
Highlights of financial performance
Valuation of Book value of properties under properties under Cash and development for sale development for sale cash equivalents RMB Million RMB Million RMB Million 3,990¹ 3,495² 597³
Cumulative Cumulative Operating loss Contract sales Contract GFA during the period RMB Million Square meter RMB Million 1,371⁴ 128,262⁴ 60⁵
Total borrowing Total bond payable Equity loan Loan to Value RMB Million RMB Million RMB Million % 340⁶ 465⁷ 2,374⁸ 5.2⁹
Notes:
1&2: Valuation is based on the latest independent third party valuation while properties under development for sale is based on the book value of properties. Due to actual appreciation of the land and developments since acquisition, valuation is higher than property under development.
3.As of June 30, 2020, the Group had cash and bank balances in the amount of RMB 835 million, of which RMB 238 million was not counted towards cash and cash equivalents in the financial statements, since it can only be used for payment of construction costs when approval from related government authority is obtained.
4.As at June 30, 2020, the Group has cumulative contracted pre-sales amounting to RMB 1,371,029,654 (31 March 2020: 763,158,972) with cumulative contract GFA from presale of residential properties of 128,262 (31 March 2020: 73,030) square meters.
5.Development profits are only recognized at delivery.
6.Local loans related to the projects denominated in RMB and sourced in China.The repayment schedule is determined by sales progress of the project.
7. On 5 July 2019, the company issued SEK 600,000,000 Senior Secured Fixed Rate Bonds.The term of the bonds is 3 years and the coupon is 9%.Please refer to Note 10 in consolidated financial statements for more information.
8.Long term subordinated shareholders loan, deemed as equity in the balance sheet.
9.Loan to Value means the ratio of Net Interest Bearing Debt to Gross Asset Value as per the latest Valuation.
25 B — Performance RE IV Limited, Interim Report Q2 2020
Consolidated financial statements As at and for the three months ended 30 June 2020
26 B — Performance RE IV Limited, Interim Report Q2 2020
Condensed consolidated balance sheet For the period ended 30 June 2020
Unaudited Audited As at 30 June As at 31 December 2020 2019 Note RMB RMB Assets Non current assets Fixed assets 5 46,340,181 52,390,162 46,340,181 52,390,162
Current assets Properties under development for sale 6 3,494,812,624 2,314,764,400 Prepayments, deposits and other receivables 206,896,013 442,134,983 Financial assets at fair value through profit or loss 7 9,568,150 7,029,841 Restricted cash 8 237,496,257 124,142,492 Cash and cash equivalents 597,356,609 390,896,716 4,546,129,653 3,278,968,432 Total assets 4,592,469,834 3,331,358,594
27 B — Performance RE IV Limited, Interim Report Q2 2020
Condensed consolidated balance sheet (continued) For the period ended 30 June 2020
Unaudited Audited As at 30 June As at 31 December 2020 2019 Note RMB RMB Liabilities Non current liablities Borrowing 9 130,000,000 100,000,000 Bonds payable 10 443,334,346 432,974,510 573,334,346 532,974,510
Current liabilities Borrowing 9 210,000,000 100,000,000 Bonds payable 10 22,052,681 21,543,967 Trade and other payables 11 250,606,805 347,701,666 Contract liabilities 12 1,287,853,472 471,513,855 1,770,512,958 940,759,488
Total liabilities 2,343,847,304 1,473,733,998
Net assets/(liabilities) 2,248,622,530 1,857,624,596
Equity Paid-in capital 13 87,813 87,813 Equity loan 14 2,373,906,197 1,922,558,997 Accumulated losses (125,371,480) (65,022,214)
Total equity 2,248,622,530 1,857,624,596
The above condensed consolidated balance sheet should be read in conjunction with the accompanying notes.
The condensed consolidated financial statements on pages 27 to 49 were approved by the Board of Directors on 28 August 2020 and were signed on its behalf.
Jesper Lars Jos OLSSON HAO, XUETAO Director Director
28 B — Performance RE IV Limited, Interim Report Q2 2020
Condensed consolidated income statement For the period ended 30 June 2020
Unaudited Unaudited Period from Period from 1 Jan 2020 to 1 Jan 2019 to 30 Jun 2020 30 Jun 2019 Note RMB RMB
Revenue — — Cost of sales 15 (3,132,598) (1,649,569)
Gross loss (3,132,598) (1,649,569)
Selling expenses 15 (39,121,419) (4,818,166) Administrative expenses 15 (8,311,213) (2,504,842) Interest income 951,621 5,006 Other (losses)/gains - net 15 (10,735,657) (4,281,171)
Operating loss (60,349,266) (13,248,742)
Loss before income tax 15 (60,349,266) (13,248,742)
Income tax expenses — —
Loss for the period attributable to the equity holders of the Company (60,349,266) (13,248,742)
The above condensed consolidated income statement should be read in conjunction with the accompanying notes. 29 B — Performance RE IV Limited, Interim Report Q2 2020
Condensed consolidated statement of comprehensive income For the period ended 30 June 2020
Unaudited Unaudited Period from Period from 1 Jan 2020 to 1 Jan 2019 to 30 Jun 2020 30 Jun 2019 RMB RMB
Loss for the period (60,349,266) (13,248,742) Other comprehensive income — —
Total comprehensive income for the period attributable to the equity holder of the Company (60,349,266) (13,248,742)
The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 30 B — Performance RE IV Limited, Interim Report Q2 2020
Condensed consolidated statement of changes in equity For the period ended 30 June 2020
Paid-in Equity Accumulated capital loan losses Total Note RMB RMB RMB RMB
Balance at 1 January 2019 87,813 — (1,379,246) (1,291,433)
Comprehensive income Loss for the period — — (13,248,742) (13,248,742) Other comprehensive income — — — —
Total comprehensive income — — (13,248,742) (13,248,742)
Inception of equity-natured shareholder’s loans — 1,045,846,690 — 1,045,846,690
Balance at 30 June 2019 87,813 1,045,846,690 (14,627,988) 1,031,306,515
Balance at 1 January 2020 87,813 1,922,558,997 (65,022,214) 1,857,624,596
Comprehensive income Loss for the period — — (60,349,266) (60,349,266) Other comprehensive income — — — —
Total comprehensive income — — (60,349,266) (60,349,266)
Inception of equity-natured shareholder’s loans 14 — 451,347,200 — 451,347,200
Balance at 30 June 2020 87,813 2,373,906,197 (125,371,480) 2,248,622,530
The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 31 B — Performance RE IV Limited, Interim Report Q2 2020
Condensed consolidated statement of cash flows For the period ended 30 June 2020
Unaudited Unaudited Period from Period from 1 Jan 2020 to 1 Jan 2019 to 30 June 2020 30 June 2019 Note RMB RMB
Cash flows from operating activities Cash (used in)/generated from operations 16 (346,044,377) 4,746,468
Net (used in)/generated from operating activities (346,044,377) 4,746,468
Cash flows from investing activities Interest received 951,621 5,006 Disposal financial assets at fair value through profit or loss 1,991,907 — Purchase of fixed assets (3,309,933) （2,474,204） Purchase of financial assets at fair value through profit or loss (10,858,540) —
Net (used in)/generated from investing activities (11,224,945) （2,469,198）
Cash flows from financing activities
Proceeds from borrowing 140,000,000 — Shareholder’s loans from immediate holding company 451,347,200 — Interest paid (28,589,044) —
Net cash generated from financing activities 562,758,156 —
Net (decrease) increase in cash and cash equivalents 205,488,834 2,277,270
Cash and cash equivalents at beginning of the period 390,896,716 1,615,713
Effects of exchange rate changes on cash and cash equivalents 971,059 (43,395)
Cash and cash equivalents at end of the period 597,356,609 3,849,588
The above condensed consolidated statement of cash fows should be read in conjunction with the accompanying notes. 32 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
1. General information
Re IV Limited (the “Company”) and its subsidiaries (the “Group”) are engaged in land and property development in the People’s Republic of China (the “PRC”). The Company is a limited liability incorporated in Hong Kong on 13 November 2018. The registered address is 2602, Universal Trade Centre, 3-5A Arbuthnot Road, Central, Hong Kong.
These consolidated financial statements are presented in Renminbi (“RMB”), unless otherwise stated.
2. Basis of preparation
The financial information relating to the year ended 31 December 2019 that is included in the condensed consolidated interim financial information for the three months ended 31 March 2020 as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance (Cap. 622) is as follows:
The Company has delivered the financial statements for the year ended 31 December 2019 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance (Cap. 622).
The Company's auditor has reported on those financial statements. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance (Cap. 622)*.”
The Financial Information has been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”, issued by the International Accounting Standards Board.
The Financial Information does not include all the notes of the type normally included in an annual financial statement. Accordingly, it should be read in conjunction with the financial information for the year ended 31 December 2019.
The accounting policies adopted are consistent with those of the previous financial year.
(a) New standards, new interpretation and amendments to existing standards that have been adopted by the Company
The following new standards, new interpretation and amendments to existing standards are mandatory for accounting periods beginning on or after 1 January 2020:
IAS 1 and IAS 8 Amendment Definition of material IFRS 3 Amendment Definition of a business IFRS 9, IAS 39 and IFRS 7 (Amendments) Interest Rate Benchmark Reform
The application of the new standards, new interpretation and amendments to existing standards in the current period has had no material effect on the Company’s financial performance and position for the current period.
33 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
2. Basis of preparation (Continued)
(b) New standards, new interpretation and amendments to existing standards that have been issued but are not yet effective and have not been early adopted by the Company
The following new standards, new interpretation and amendments to existing standards have been issued and are mandatory for the Company’s accounting periods beginning on or after 1 January 2021 or later periods, but the Company has not early adopted them:
IFRS 10 and IAS 28 Amendment Sale or Contribution of Assets between an Investor and its Associate or Joint Venture2 IFRS 17 Insurance Contracts1
Notes: 1 Effective for financial periods beginning on or after 1 January 2023 2 Effective date to be determined
The Company is in the process of assessing the impact of other new standards, new interpretation and amendments to existing standards upon initial application.
3. Segment information
The Group is principally engaged in the land and property development.
The executive management, consisting of the Group CEO and Senior Partner of the Company (the “Executive Management”) are regarded as the chief operating decision makers of the Group. The Executive Management review the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.
The Executive Management considers the business from geographic perspectives. Reportable geographic segments identified are Yantai, Chengde, Qingdao, Pingdu and Shenyang.
The Executive Management assesses the performance of the operating segments based on the segment results. Corporate income/expenses, other (losses)/gains, net, are not included in the results for each operating segment that is reviewed by the Executive Management.
34 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
3. Segment information (Continued)
(a) Segment results
Segment results for the period from 1 January to 30 June in year 2019 and 2020 are as follows:
Segment result Period from Period from 1 January 1 January to 30 June to 30 June 2020 2019
RMB RMB
Property development Yantai (34,479,129) (8,624,180) Chengde (1,987,561) — Pingdu (5,139,488) — Qingdao (2,331,589) — Shenyang (3,225,782) —
Total (47,163,549) (8,624,180)
Unallocated corporate expenses (2,450,060) (343,391) Other income and other gains, net (10,735,657) (4,281,171)
Profit before tax (60,349,266) (13,248,742)
The Group primarily operates in Mainland China. No revenues are recognised for the period ended 30 June 2020 and 2019.
The unallocated corporate expenses mainly consists of administrative expenses of the head office.
35 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
3. Segment information (Continued)
(b) Other profit and loss disclosure
Amounts included in the measurement of segment result for the period from 1 January to 30 June in year 2019 and 2020 are as follows:
Depreciation of property, Selling expenses plant and equipment Period from Period from Period from Period from 1 January 1 January 1 January 1 January to 30 June to 30 June to 30 June to 30 June 2020 2019 2020 2019
RMB RMB RMB RMB
Property development Yantai (31,336,243) (4,818,166) (9,358,182) — Chengde (1,541,884) — (952) — Pingdu (2,450,655) — — — Qingdao (2,142,342) — — — Shenyang (1,650,295) — (780) — (39,121,419) (4,818,166) (9,359,914) —
36 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
3. Segment information (Continued)
(c) Segment assets
The segment assets by geographical areas are as follows:
Addition to Segment assets non-current assets Period from Period from As at As at 1 January 1 January 30 June 31 December to 30 June to 30 June 2020 2019 2020 2019
RMB RMB RMB RMB
Property development Yantai 2,516,923,095 1,962,905,907 3,166,895 — Chengde 672,881,349 583,290,824 46,170 — Pingdu 201,829,786 128,074,043 — — Qingdao 293,259,835 — 33,823 — Shenyang 871,774,329 — 63,045 —
Total segment assets 4,556,668,394 2,674,270,774 3,309,933 —
Unallocated assets: Prepayments and other receivables — 348,213,000 Financial assets at fair value through profit or loss 9,568,150 7,029,841
Cash and cash equivalents 26,233,290 301,844,979 35,801,440 657,087,820
As at 30 June 2020 and 31 December 2019, segment assets were located in Mainland China. Investments in financial assets are managed by head office and are not considered to be segment assets.
(d) Segment liabilities
No liabilities are included in the internal reporting that are used by the Executive Management for performance assessment and resource allocation. Accordingly, no segment liabilities are presented.
37 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
4. Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). Inputs other than quoted prices included within Level 1 that are observable for the asset or liabilities, wither directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). Inputs for the assets or liabilities that are not based on observable market data (that is, unobservable inputs) (Level 3).
The following table presents the Group’s financial assets that are measured at fair value at 30 June 2020 and 31 December 2019.
Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB
At 30 June 2020 Financial assets at fair value through profit or loss — 9,568,150 — 9,568,150
At 31 December 2019 Financial assets at fair value through profit or loss — 7,029,841 — 7,029,841
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. There was no instrument included in level 1 at 30 June 2020 and 31 December 2019.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. Instrument included in level 1 represent Foreign Currency Option.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Instruments included in Level 3 represent unlisted equity securities. There was no instrument included in Level 3 at 30 June 2020 and 31 December 2019.
Except for financial assets at fair value through profit or loss, the carrying amounts of the Group’s financial assets and financial liabilities approximated their fair values due to their short maturities.
38 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
5. Fixed assets
Temporary Electronic Office sales center equipment equipment Total
RMB RMB RMB RMB
Year ended 31 December 2019 Opening net book amount — — — — Additions 51,687,913 435,596 342,687 52,466,196 Depreciation — (67,485) (8,549) (76,034)
Closing net book amount 51,687,913 368,111 334,138 52,390,162
As at 31 December 2019 Cost 51,687,913 435,596 342,687 52,466,196 Accumulated depreciation — (67,485) (8,549) (76,034)
Net book amount 51,687,913 368,111 334,138 52,390,162
Period ended 30 June 2020 Opening net book amount 51,687,913 368,111 334,138 52,390,162 Additions 3,086,550 156,865 66,518 3,309,933 Depreciation (9,258,458) (65,930) (35,526) (9,359,914)
Closing net book amount 45,516,005 459,046 365,130 46,340,181
As at 30 June 2020 Cost 54,774,463 592,461 409,205 55,776,129 Accumulated depreciation (9,258,458) (133,415) (44,075) (9,435,948)
Net book amount 45,516,005 459,046 365,130 46,340,181
39 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
6. Properties under development for sale
RMB At 1 January 2019 1,291,108,000 Additions 1,023,656,400
At 31 December 2019 2,314,764,400 Additions 1,180,048,224
At 30 June 2020 3,494,812,624
The analysis as at 30 June 2020 and 31 December 2019 of the properties under development for sale is as follows:
As at As at 30 June 31 December 2020 2019
RMB RMB
Current 3,494,812,624 2,314,764,400
Land use rights 3,038,826,271 2,011,269,775 Development costs 385,194,393 271,763,993 Borrowing costs capitalised 70,791,960 31,730,632 3,494,812,624 2,314,764,400
40 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
7. Financial assets at fair value through profit or loss
As at As at 30 June 31 December 2020 2019
RMB RMB
Foreign currency option 9,568,150 7,029,841
The foreign currency option grants the right to purchase Swedish Krona (SEK) of SEK 708,000,000 from RMB 557,663,126 at the rate of 1.318 on 10 September 2020 (31 December 2019: SEK 735,000,000 from RMB 553,047,404 at the rate of 1.329 on 9 March 2020). Changes in fair values of financial assets at fair value through profit or loss are recorded in the other gains/(losses)-net, in the consolidated income statement.
8. Restricted cash
The amount represented guarantee deposits for construction of pre-sale properties denominated in RMB placed in designated bank accounts.
In accordance with relevant government requirements, certain property development companies of the Group are required to place in designated bank accounts certain amount of pre-sale proceeds as guarantee deposits for the constructions of the related properties. The deposits can only be used for payments for construction costs of the relevant properties when approval from related government authority is obtained. Unused guarantee deposits will be released after the completion of construction of the related properties.
41 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
9. Borrowing
As at As at 30 June 31 December 2020 2019
RMB RMB
Secured long-term bank borrowing 340,000,000 200,000,000 Less: Amounts repayable within 1 year included in current liabilities (210,000,000) (100,000,000) 130,000,000 100,000,000
The maturity of the secured long-term bank borrowing is as follow:
As at As at 30 June 31 December 2020 2019
RMB RMB
Within 1 year 210,000,000 100,000,000 In the second year 130,000,000 100,000,000 340,000,000 200,000,000
Notes:
As at 30 June 2020, such bank borrowings were secured by certain properties under development. (31 December 2019: same)
The maturity of the bank borrowing is in the second year or based on the progress of the pre-sale of the properties of one of the property development projects, whenever is earlier. A repayment of 20% of the principal amount of borrowing is due when the contracted pre-sale area for the project reaches 30% of the saleable area. When the contracted pre-sale area reaches 50% of the saleable area, a 50% repayment is required. The outstanding amount should be fully repaid when the contracted pre-sale area for the project reach 80% of the saleable area. As at 31 December 2019, the management estimated that the contracted pre-sale area will reaches 50% of the saleable area in 2020, a 50% repayment is expected. As at 30 June 2020, the management estimated that the contracted pre-sale area of one of the projects will reaches 80% of the saleable area within one year, a fully repayment is expected, and another project will reach 50%.
The bank borrowing is denominated in RMB and the effective interest rate of the bank loan is 5.7%.
42 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
10. Bonds payable
As at As at 30 June 31 December 2020 2019
RMB RMB
Current 22,052,681 21,543,967 Non-current 443,334,346 432,974,510 465,387,027 454,518,477
On 5 July 2019, the company issued SEK 600,000,000 Senior Secured Fixed Rate Bonds. The term of the bonds is 3 years and the coupon is 9%. The current portion represented interest accrued at the period/year end date.
11. Trade and other payables
As at As at 30 June 31 December 2020 2019
RMB RMB
Tender deposit from contractors 57,460,000 177,460,000 Accruals to contractors 164,016,471 130,373,837 Other current tax payable 21,685,312 28,360,727 Other payables 7,445,022 11,507,102 250,606,805 347,701,666
The fair values of trade and other payables are not materially different from their book values.
The carrying amounts of trade and other payables are denominated in RMB.
43 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
12. Contract liabilities
The Group has recognised the following revenue-related contract liabilities: As at As at 30 June 31 December 2020 2019
RMB RMB
Contract liabilities for pre-sale property (Note a) 1,212,853,472 396,513,855 Contract liabilities for construction service (Note b) 75,000,000 75,000,000 1,287,853,472 471,513,855
The Group has received payments from customers based on contracts pertaining to its pre-sale activities and construction service. Payments under pre-sale contracts are usually received in advance (i.e. before the recognition of revenue and before the transfer of property or any services are performed). The contract liabilities related to property sales increased during the year since the Group has initiated its pre-sale of certain properties during the year.
(a) The following table shows the amount of unsatisfied performance obligations resulting from fixed price contracts from property pre-sale with an original expected timing of revenue recognition in more than one year:
As at As at 30 June 31 December 2020 2019
RMB RMB
Revenue expected to be recognised after one year 1,371,029,654 636,678,298
As at 30 June 2020, the Group has cumulative contract sum from pre-sale of residential properties of RMB 1,371,029,654 (31 December 2019: RMB 636,678,298) with cumulative contract GFA from pre-sale of residential properties of 128,262 (31 December 2019: 61,381) square meter at 30 June 2020.
(b)The following table shows the amount of unsatisfied performance obligations resulting from variable price contracts from construction service with an original expected timing of revenue recognition in more than one year:
As at As at 30 June 31 December 2020 2019
RMB RMB
Revenue expected to be recognised after one year 125,000,000 125,000,000
44 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
13. Paid-in capital
As at As at 30 June 31 December 2020 2019
RMB RMB
Issued and fully paid 87,813 87,813
14. Equity loans
As at As at 30 June 31 December 2020 2019
RMB RMB
Shareholder’s loans - White Peak Holdings IV Limited 2,373,906,197 1,922,558,997
During the period ended 31 December 2018, the immediate holding company, White Peak Holdings IV Limited, has provided an interest free shareholder loan to the Company, which is subordinated to the bonds. The loan was interest free, unsecured and with no fixed repayment terms. During the year ended 31 December 2019, the immediate holding company had provided other loans of similar terms and made the whole balance as non-reciprocal in nature and the Company is not required to pay back the loan. During the period 30 June 2020, the immediate holding company provided additional loan of RMB 451,347,200 which is non-reciprocal in nature and the Company is not required to pay back the loan. Considering the equity characteristics of the shareholder’s loans, they have been classified as equity from this onwards in its entirety.
45 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
15. Expenses by nature
Expenses included in cost of sales, selling expenses, administrative expenses, finance cost and other losses/(gains) are analyzed as follows:
Period from Period from 1 January 1 January to 30 June to 30 June 2020 2019 RMB RMB
Professional service expenses 2,880,373 433,983 Employee benefit expense 33,186,807 2,431,801 Less: Contract acquisition cost related to property sales recognised (15,071,798) — Marketing expenses 11,272,656 3,289,936 Office and consumption 3,249,816 864,253 Tax and levies 3,132,598 1,649,569 Travel and accommodation 289,785 256,312 Depreciation 9,359,914 1,778 Operating lease payments 1,307,687 58,252 Fair value loss of financial assets at fair value through profit or loss 7,140,996 — Foreign exchange difference 12,262,564 4,263,790 Less: Foreign exchange difference capitalized to properties under development for sales (8,311,628) — Finance cost 30,749,700 — Less: Finance cost capitalized to properties under development for sales (30,749,700) — Others 601,117 4,074 61,300,887 13,253,748
46 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
16. Cash flow information
(a) Cash (used in)/ generated from operations
Period from Period from 1 January 1 January to 30 June to 30 June 2020 2019 RMB RMB
Loss before income tax (60,349,266) (13,248,742) Adjustments for: – Depreciation 9,359,914 — – Finance income (951,621) (5,006) – Exchange losses 3,950,936 4,263,790 – Fair value loss on financial assets at fair value through profit or loss 7,140,996 —
Operating loss before working capital changes (40,849,041) (8,989,958)
Changes in working capital: – Increase in restricted cash balances (113,353,765) — – Increase in properties under development for sale (1,140,986,896) (19,556,669) – Increase in prepayment, deposits and other receivables 229,900,569 (1,139,555) – Increase in trade and other payables (97,094,861) 34,432,650 – Increase in contract liabilities 816,339,617 —
Cash (used in)/ generated from operations (346,044,377) 4,746,468
17. Financial guarantees
The financial guarantees represented the guarantees in respect of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain customers from sales of properties. The outstanding guarantees amounted to RMB 462,045,000 as at 30 June 2020 (31 December 2019: RMB 74,360,000).
Such guarantees terminate upon: (i) the issuance of the real estate ownership certificate which will generally be available within six months after the Company delivers possession of the relevant property to its purchasers; (ii) the completion of the mortgage registration; and (iii) the issuance of the real estate miscellaneous right certificate relating to the relevant property.
47 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
18. Capital commitments
Commitments for properties under development
Commitments represent the contracted but not incurred development cost, mainly of construction contractors, attributable to properties under development for sales as at 30 June 2020 and 31 December 2019 as follows:
As at As at 30 June 31 December 2020 2019
RMB RMB
Contracted but not provided for 638,532,751 258,680,552
19. Related party transactions
Name Relationship with the Company
White Peak Holdings IV Limited Immediate holding company White Peak Real Estate IV L. P. Ultimate holding company WP Group Limited Controlled by the same key management Beijing Dingfeng Real Estate Investment Consulting Company Limited (the Beijing Dingfeng) Controlled by the same key management
(1) Purchase of service
Period from Period from 1 January to 1 January to 30 June 30 June 2020 2019
RMB RMB
Capitalised to properties under development: Initial construction design consultancy fees, site investigation fees, safety inspection fees and engineering quality control fees to Beijing Dingfeng 31,132,075 9,813,457 31,132,075 9,813,457
Notes:
Initial construction design consultancy fees, site investigation fees, safety inspection fees and engineering quality control fees were paid to Beijing Dingfeng Real Estate Investment Consulting Co. Ltd, which are charged based on actual cost incurred.
48 B — Performance RE IV Limited, Interim Report Q2 2020
Notes to the condensed consolidated financial statements
20. Implications of COVID-19
Regarding the outbreak of COVID-19, management are monitoring the situation closely. The Group does not carry out any business activity in the Hubei province and, as of the date of this report, none of our employees or their respective families had been infected. Both headquarters in Beijing and our project offices resumed work on 10 February 2020. For all property development projects, the onsite construction works have resumed and all of the project sales offices have reopened as at the report date. However, we are conscious about the global impact of COVID-19 on the Chinese economy and will continue to be financially prudent.
49 RE IV Limited www.wprei.com