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Future Land Development Holdings Limited 新城發展控股有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 1030)
ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2018
ANNUAL RESULTS HIGHLIGHTS
– Achieved contracted sales of RMB221,098.0 million with corresponding contracted sales area of approximately 18,121,000 sq.m., representing an increase of 74.8% and 95.2%, respectively;
– Recognised revenue increased by 34.2% to RMB54,781.0 million;
– Gross profit increased by 40.3% to RMB19,057.4 million;
– Gross profit margin increased from 33.3% to 34.8%;
– Net profit for the year increased by 100.3% to RMB12,047.6 million, of which RMB6,761.0 million was attributable to equity holders of the Company, representing a year-on-year increase of 78.2%;
– Core earnings* increased by 104.4% to RMB10,187.6 million, of which RMB5,663.1 million was attributable to equity holders of the Company, representing a year-on-year increase of 83.4%;
– Total cash at hand** amounted to RMB47,655.8 million;
– Net debt-to-equity ratio as at year end decreased from 100.4% as at last year end to 78.6%; and
– The Board recommended a payment of final dividend of RMB30 cents per share.
* Core earnings equal to net profit less after-tax fair value gains or losses on investment properties and disposal (including direct sale and transfer of assets and equity interest) gains or losses (whether directly or through equity transfer) on investment properties including those recorded in other gains, and exclude unrealized foreign exchange gains or losses relating to borrowings, and after-tax gain on disposal of certain subsidiaries engaging in residential property management business.
** Including restricted cash.
1 The board (the “Board”) of directors (the “Directors”) of Future Land Development Holdings Limited (the “Company”) is pleased to announce the consolidated financial results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2018 together with the comparative figures for the year 2017 as follows:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2018
31 December 31 December Note 2018 2017 RMB’000 RMB’000
ASSETS Non-current assets Property, plant and equipment 3,014,910 2,919,703 Investment properties 40,758,000 23,496,000 Intangible assets 539,109 59,503 Investments in associates 6,840,149 1,953,166 Investments in joint ventures 12,633,050 11,966,336 Deferred income tax assets 3,031,448 1,658,730 Available-for-sale financial assets – 1,099,526 Financial assets at amortised costs 734,735 – Financial assets at fair value through profit or loss 1,032,194 – Derivative financial instruments – 162,539 Goodwill 10,260 777 Land use rights 427,949 429,592 Other receivables and prepayments 5 463,427 727,710
Total non-current assets 69,485,231 44,473,582
Current assets Prepayments for leasehold land 13,610,385 9,808,432 Properties held or under development for sale 145,596,570 76,396,636 Trade and other receivables and prepayments 5 58,906,517 34,071,920 Other financial assets at amortised cost 220,001 – Contract cost 1,229,533 – Derivative financial instruments 151,475 – Restricted cash 6,441,945 4,105,100 Cash and cash equivalents 41,213,881 20,542,676
Total current assets 267,370,307 144,924,764
Total assets 336,855,538 189,398,346
2 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONT’D) As at 31 December 2018
31 December 31 December Note 2018 2017 RMB’000 RMB’000
EQUITY Equity attributable to owners of the Company Share capital: nominal value 6 4,813 4,609 Reserves 19,147,278 12,776,397
19,152,091 12,781,006
Non-controlling interests 26,568,692 11,851,538
Total equity 45,720,783 24,632,544
LIABILITIES Non-current liabilities Borrowings 7 56,515,373 34,108,070 Deferred income tax liabilities 3,720,666 1,755,493 Trade and other payables 8 144,505 –
Total non-current liabilities 60,380,544 35,863,563
Current liabilities Trade and other payables 8 75,524,146 56,558,252 Advances from customers 435,133 50,866,242 Contract liabilities 118,230,992 – Current income tax liabilities 9,476,038 6,204,479 Borrowings 7 24,987,790 15,273,142 Financial liabilities at fair value through profit or loss 2,069,576 – Derivative financial instruments 12,478 – Dividends payables 18,058 124
Total current liabilities 230,754,211 128,902,239
Total liabilities 291,134,755 164,765,802
Total equity and liabilities 336,855,538 189,398,346
3 CONSOLIDATED STATEMENT OF INCOME For the year ended 31 December 2018
Year ended 31 December Note 2018 2017 RMB’000 RMB’000
Revenue 9 54,780,995 40,820,316 Cost of sales and services 10 (35,723,588) (27,239,193)
Gross profit 19,057,407 13,581,123
Fair value gains on investment properties 3,285,089 1,331,853 Fair value loss on financial instruments at fair value through profit or loss (235,790) – Selling and marketing costs 10 (2,374,416) (1,831,870) Administrative expenses 10 (2,650,816) (2,266,887) Net impairment losses on financial assets (157,769) – Other income 97,929 41,792 Other expenses (23,788) (2,486) Other gains – net 840,148 301,048
Operating profit 17,837,994 11,154,573
Financial income 11 229,626 176,332 Financial cost 11 (969,568) (844,529)
Finance costs – net 11 (739,942) (668,197)
Share of results of associates 990,068 266,631 Share of results of joint ventures 559,380 (10,597)
Profit before income tax 18,647,500 10,742,410
Income tax expense 12 (6,599,934) (4,728,785)
Profit for the year 12,047,566 6,013,625
Profit for the year attributable to: – Equity holders of the Company 6,761,004 3,793,998 – Non-controlling interests 5,286,562 2,219,627
12,047,566 6,013,625
Earnings per share for profit attributable to equity holders of the Company – Basic earnings per share 13 RMB1.15 RMB0.67 – Diluted earnings per share 13 RMB1.12 RMB0.67
4 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2018
Year ended 31 December 2018 2017 RMB’000 RMB’000
Profit for the year 12,047,566 6,013,625
Other comprehensive income Items that may be reclassified to profit or loss – Currency translation differences (304,371) (3,065)
Items that may not be reclassified to profit or loss – Changes in fair value of equity investments at fair value through other comprehensive income 10,674 20,077
Total comprehensive income for the year 11,753,869 6,030,637
Total comprehensive income for the year attributable to: – Equity holders of the Company 6,565,699 3,804,087 – Non-controlling interests 5,188,170 2,226,550
11,753,869 6,030,637
5 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2018
1 GENERAL INFORMATION
Future Land Development Holdings Limited (the “Company”) was incorporated in the Cayman Islands on 23 April 2010 as an exempted company with limited liability under the Companies Law (2010 Revision) of the Cayman Islands. The address of its registered office is Grand Pavilion, Hibiscus Way, 802 West Bay Road, P.O. Box 31119, Grand Cayman KY1-1205, Cayman Islands.
The principal activities of the Company and its subsidiaries (together, the “Group”) are property development and property investment in the People’s Republic of China (the “PRC”). The Company’s parent company is Wealth Zone Hong Kong Investments Limited (“Wealth Zone Hong Kong”) and the Company’s ultimate holding company is First Priority Group Limited, both of which are incorporated in the British Virgin Islands. The ultimate controlling party of the Group is Mr. Wang Zhenhua (“Mr. Wang” or the “Controlling Shareholder”).
To prepare for the initial listing of the Company’s shares on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), the Group has undertaken a reorganisation (the “Reorganisation”) pursuant to which the Company became the holding company of the subsidiaries comprising the Group. Details of the Reorganisation are set out in the prospectus of the Company dated 19 November 2012.
The Company’s shares began to list on the Main Board of the Stock Exchange on 29 November 2012 (the “Listing”).
The consolidated financial statements are presented in thousands of Renminbi (“RMB’000”), unless otherwise stated.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
(i) Compliance with HKFRS and HKCO
The consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”) and disclosure requirements of the Hong Kong Companies Ordinance Cap.622 (“HKCO”).
(ii) Historical cost convention
The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and investment properties, which are carried at fair value.
(iii) New standards, amendments and interpretation adopted by the Group
A number of new or amended standards became applicable for the current reporting period and the Group changed its accounting policies and make adjustments as a result of adopting the following standards:
• HKFRS 9 Financial Instruments
• HKFRS 15 Revenue from Contracts with Customers
• Amendments to HKFRS 2 – Classification and Measurement of Share-based Payment Transactions
• Amendments to HKFRS 4 – Applying HKFRS 9 Financial Instruments with HKFRS 4 Insurance Contents 6 • Annual improvements 2014 – 2016 cycle
• Amendments to HKAS 40 – Transfers of Investment Property, and
• HK (IFRIC) 22 Foreign Currency Transactions and Advance Consideration.
The effects of the adoption of HKFRS 9 and HKFRS 15 are disclosed in Note 3. The other standards, amendments and interpretations described above are either currently not relevant to the Group or had no material impact on the Group’s financial statements.
(iv) Impact of standards issued but not yet adopted by the Group
Certain new accounting standards, amendments and interpretations to existing standards have been published that are not mandatory for the financial year beginning 1 January 2018 and have not been early adopted by the Group.
Effective for annual periods beginning on or after
HKFRS 16 Leases 1 January 2019 HK (IFRIC) 23 Uncertainty over income tax treatments 1 January 2019 Amendment to HKFRS 9 Prepayment features with negative compensation 1 January 2019 Amendments to HKAS 28 Long-term interests in associates and joint ventures 1 January 2019 Amendments to HKAS 19 Plan amendment, curtailment or settlement 1 January 2019 Annual improvements to Annual improvements to HKFRS HKFRSs standards 2015-2017 cycle 1 January 2019 HKFRS 17 Insurance Contracts 1 January 2022 Amendments to HKFRS 10 Sale or contribution of assets between and HKAS 28 an investor and its associate or joint venture To be determined
The Group has commenced the assessment of the impact of these new standards, amendments and interpretations. According to the preliminary assessment, no significant impact on the financial statements is expected when they become effective, with the exception of HKFRS 16.
Nature of change
HKFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
7 Impact
The Group is the lessee of certain buildings which are currently classified as operating lease. The standard will affect primarily the accounting for the Group’s operating leases. As at 31 December 2018, the Group had non-cancellable operating lease commitments of RMB409,631,000. Among the lease commitments, approximately RMB135,371,000 of the commitments related to short- term leases and RMB245,000 of the commitments related to low value leases which will both be recognised on a straight-line basis as expense in the statement of comprehensive income. For the remaining lease commitments the Group expects to recognise right-of-use assets of approximately RMB236,247,000 and lease liabilities of RMB236,247,000 on 1 January 2019. Net assets will not be changed, however, net current assets will be RMB54,233,000 lower due to the presentation of a portion of the liability as a current liability. The Group expects that net profit after tax will decrease by approximately RMB4,954,000 for 2019 as a result of adopting the new rules. Operating cash flows will increase and financing cash flows decrease by approximately RMB56,891,000 as repayment of the principal portion of the lease liabilities will be classified as cash flows from financing activities.
The Group holds a number of investment properties and is the lessor of these properties. For lessors, the accounting remains largely unchanged and hence the Group does not expect any significant impact on the financial statements for these arrangement due to the new standard. However, some additional disclosures will be required.
Date of adoption by Group
The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption. Right-of-use assets will be measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
8 2.2 Accounting policies which became applicable first time during the year ended 31 December 2018
The Group has convertible bonds which are classified entirely as liabilities because they were issued in a currency other than the functional currency of the Company. As the instruments contains an embedded derivative, it has been designated at fair value through profit or loss on initial recognition and as such the embedded conversion feature is not separated. All transaction costs related to financial instruments designated at fair value through profit or loss are expensed as incurred.
The component of fair value changes relating to the company’s own credit risk is recognized in other comprehensive income. Amounts recorded in other comprehensive income related to credit risk are not subject to recycling in profit or loss, but are transferred to retained earnings when realized. Fair value changes relating to market risk are recognized in profit or loss.
3 CHANGE IN ACCOUNTING POLICIES
This note explains the impact of the adoption of HKFRS 9 Financial Instruments and HKFRS 15 Revenue from Contracts with Customers on the Group’s financial statements.
3.1 Impact on the financial statements
In accordance with transitional provisions in HKFRS 9, the Group did not restate prior periods for impact of HKFRS 9. In addition, the Group elected to apply modified retrospective approach under HKFRS 15. Accordingly, the comparative figures were not restated.
3.2 HKFRS 9 Financial Instruments – Impact of adoption
HKFRS 9 replaces the provisions of HKAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of HKFRS 9 Financial Instruments from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements. In accordance with the transitional provisions in HKFRS 9, comparative figures have not been restated.
The total impact on the Group’s retained earnings by application of HKFRS 9 as at 1 January 2018 is as follows:
Notes 1 January 2018 RMB’000
Reclassify investments from available-for-sale to FVPL (a) 20,904 Increase in provision for trade receivables (b) (1,167) Increase in provision for other receivables (b) (263,284) Increase in deferred tax assets relating to impairment provisions 65,265
Total impact (178,282)
Adjustment to retained earnings (115,747) Adjustment to non-controlling interests (62,535)
9 (a) Classification and measurement
On 1 January 2018 (the date of initial application of HKFRS 9), the Group’s management has assessed which business models apply to the financial assets held by the Group and has classified its financial instruments into the appropriate HKFRS 9 categories. The main effects resulting from this reclassification are as follows:
Available- for-sales financial assets FVPL FVOCI Financial assets – 1 January 2018 RMB’000 RMB’000 RMB’000
Closing balance as at 31 December 2017 1,099,526 – – Reclassify investments from available-for-sale to FVPL (1,027,427) 1,027,427 – Reclassify investments from available-for-sale to FVOCI (72,099) – 72,099
Opening balance as at 1 January 2018 – HKFRS 9 – 1,027,427 72,099
Related fair value gains of RMB20,904,000 related to available-for-sale financial assets were transferred from other reserve to retained earnings on 1 January 2018.
There is no impact on the Group’s accounting for financial liabilities, as the new requirement only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities as of 1 January 2018. The derecognition rules have been transferred from HKA 39 and have not been changed.
(b) Impairment of financial assets
The Group has the following types of financial assets that are subject to HKFRS 9’s new expected credit loss model:
• Trade receivables • Other receivables
The Group revised its impairment methodology under HKFRS 9 for each of these classes of assets.
While cash and cash equivalent are also subject to the impairment requirement of HKFRS 9, the identified impairment loss was immaterial.
(i) Trade receivables
For trade receivables, the Group applies the simplified approach to providing for expected credit losses prescribed by HKFRS 9, which requires the use of the lifetime expected loss provision for all trade receivables. RMB1,167,000 was recognised in retained earnings as at 1 January 2018. A deferred tax assets of RMB292,000 was recognised.
(ii) Other receivables
For other receivables already in place at 1 January 2018, the Group applies the general model for expected credit loss prescribed by HKFRS 9, since credit risk has not significantly increased after initial recognition, the loss allowance recognised was therefore limited to 12 months expected losses. RMB263,284,000 was recognised in retained earnings as at 1 January 2018. A deferred tax assets of RMB64,973,000 was recognised.
10 3.3 HKFRS 15 Revenue from Contracts with Customers – Impact of adoption
HKFRS 15 replaces the provisions of HKAS 18 Revenue (“HKAS 18”) and HKAS 11 Construction contracts (“HKAS 11”) that relate to the recognition, classification and measurement of revenue and costs.
The total impact on the Group’s retained earnings by application of HKFRS 15 as at 1 January 2018 is as follows:
1 January Notes 2018 RMB’000
Recognition of asset for costs to fulfil a contract by subsidiaries (a) 488,493 Recognition of asset for costs to fulfil a contract by associates (a) 1,027 Recognition of asset for costs to fulfil a contract by joint ventures (a) 26,637 Increase in deferred tax liabilities (122,124)
Total impact 394,033
Adjustment to retained earnings 262,800 Adjustment to non-controlling interests 131,233
(a) Accounting for cost incurred to obtain a contract
Under HKFRS 15, costs did not qualify for recognition as an asset were expensed when incurred. Costs related directly to the contract, generating resources used in satisfying the contract and expectedly to be recovered are capitalized as contract cost. The Group capitalized cost amounting to RMB488,493,000 as at 1 January 2018 relating to obtaining a contract as incremental costs. At the same time, the Group increased its balance of investments in associates and investments in joint ventures with the amount of RMB1,027,000 and RMB26,637,000 respectively due to the capitalisation of contract cost. A corresponding deferred tax liability of RMB122,124,000 was recognised.
(b) Presentation of assets and liabilities related to contracts with customers
Contract liabilities amounted to RMB50,866,242,000 in relation to property development and sales contracts and management services contracts were previously included in advanced proceeds received from customers and were reclassified to contract liabilities under HKFRS 15.
(c) The existence of a significant financing component in the contract
The Group has contracts where the period between the transfer of the promised goods or service to the customer and payment by the customer is different. As a consequence, the Group adjusted transaction prices for time value of money. The adjustment to contract liabilities as at 1 January 2018 was RMB1,245,166,000.
11 4 SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the chief operating decision maker (the “CODM”) that are used to make strategic decisions. The chairman, Mr. Wang has been identified as the CODM.
The Group manages its business by two operating segments, which is consistent with the way in which information is reported internally to the Group’s CODM for the purpose of resources allocation and performance assessment. No operating segments have been aggregated to form the following reportable segments.
• Seazen Holdings Co., Ltd (formerly known as “Future Land Holdings Co., Ltd”) a company listed on the Shanghai Stock Exchange (the “A share company” or “Seazen Holdings”).
• Property management and other service companies not within the A share company (the “Non-A share companies”).
The A share company is mainly engaged in development of residential properties and mixed-use complexes for sale and investment, while the Non-A share companies are mainly engaged in services. Corporate expenses are also primarily included in the Non-A share companies segment. All the property development projects are in the PRC, and accordingly majority of the revenue of the Group are derived from the PRC and most of the assets are located in the PRC.
The CODM assesses the performance of the operating segments based on a measure of revenue and profit before income tax. The measurement basis excludes the effects of income tax expense.
Year ended 31 December 2018 Non-A A share share Total company companies segment Elimination Total Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue 54,133,311 716,791 54,850,102 (69,107) 54,780,995 – At a point in time 51,096,362 374,724 51,471,086 (4,381) 51,466,705 – Over time 1,753,593 342,067 2,095,660 (24,229) 2,071,431 – Rental income 1,283,356 – 1,283,356 (40,497) 1,242,859 Segment profit/(loss) before income tax expense 19,094,619 792,840 19,887,459 (1,239,959)* 18,647,500 Fair value gains on investment properties 3,285,089 – 3,285,089 – 3,285,089 Finance income 186,680 509,021 695,701 (466,075) 229,626 Finance costs (922,778) (512,865) (1,435,643) 466,075 (969,568) Depreciation and amortisation (264,079) (180,498) (444,577) – (444,577) Share of results of associates 951,683 38,385 990,068 – 990,068 Share of results of joint ventures 560,039 (659) 559,380 – 559,380
* The elimination represents mainly the dividend declared by the A share company.
A reconciliation to profit for the year is as follows:
Total segment profits before income tax expense after elimination 18,647,500 Income tax expense (6,599,934) Profit for the year 12,047,566
12 As at 31 December 2018
Segment assets 330,318,417 14,718,956 345,037,373 (8,181,835) 336,855,538
Segment assets include: Investments in associates 6,288,449 5,031,770 11,320,219 (4,480,070)* 6,840,149 Investments in joint ventures 12,520,106 112,944 12,633,050 – 12,633,050 Additions to non-current assets (other than financial instruments and deferred tax assets) 16,160,864 193,275 16,354,139 – 16,354,139
Segment liabilities 279,361,543 13,996,032 293,357,575 (2,222,820) 291,134,755
* The elimination represents mainly the Non-A’s associate interests in companies controlled by the A Share Company.
Year ended 31 December 2017 Non-A A share share Total company companies segment Elimination Total Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue 40,525,685 320,599 40,846,284 (25,968) 40,820,316
Segment profit/(loss) before income tax expense 11,268,492 (25,508) 11,242,984 (500,574)* 10,742,410 Fair value gains on investment properties 1,331,853 – 1,331,853 – 1,331,853 Finance income 154,143 172,852 326,995 (150,663) 176,332 Finance costs (533,194) (461,998) (995,192) 150,663 (844,529) Depreciation and amortisation (180,695) (160,383) (341,078) – (341,078) Share of results of associates 244,896 21,735 266,631 – 266,631 Share of results of joint ventures (20,508) 9,911 (10,597) – (10,597)
* The elimination represents mainly the dividend declared by the A share company.
A reconciliation to profit for the year is as follows:
Total segment profits before income tax expense after elimination 10,742,410 Income tax expense (4,728,785)
Profit for the year 6,013,625
As at 31 December 2017
Segment assets 183,526,661 10,705,682 194,232,343 (4,833,997) 189,398,346
Segment assets include: Investments in associates 1,522,878 430,288 1,953,166 – 1,953,166 Investments in joint ventures 11,864,142 102,194 11,966,336 – 11,966,336 Additions to non-current assets (other than financial instruments and deferred tax assets) 10,603,401 388,891 10,992,292 – 10,992,292
Segment liabilities 157,544,887 10,575,608 168,120,495 (3,354,693) 164,765,802
13 5 TRADE AND OTHER RECEIVABLES AND PREPAYMENT
As at 31 December 2018 2017 RMB’000 RMB’000
Trade accounts receivables 309,362 116,677 Notes receivables 89,605 4,000
Total trade receivables 398,967 120,677 Less: Impairment losses (3,094) –
Trade receivables – net 395,873 120,677
Prepayment – Prepaid income tax and land appreciate tax 5,145,787 2,219,597 – Prepaid value-added tax and input VAT to be deducted 6,197,867 2,160,103 – Prepaid surcharges and other taxes 344,843 186,055 – Prepayments for construction costs 560,693 497,393 – Others 723,146 432,066
12,972,336 5,495,214
Receivables from government related bodies – Earnest money for reconstructing villages 2,300,000 2,000,000 – Tender deposits 345,000 – – Advanced proceeds received from customers deposited with a government designated entity 187,759 36,211 – Government issued coupon for house buyers 294,478 250,382 – Deposits with public housing fund centres 140,923 136,940 – Deposits with property maintenance 183,340 171,607 – Others 1,557,689 577,459
5,009,189 3,172,599 Less: Impairment losses (5,009) –
5,004,180 3,172,599
Due from related parties 24,350,112 16,019,760
Less: Impairment losses (243,501) –
24,106,611 16,019,760
Receivables from joint ventures partners 5,636,983 3,788,658 Receivables from non-controlling shareholders of subsidiaries 9,983,992 2,737,549
15,620,975 6,526,207
Less: Impairment losses (156,210) –
15,464,765 6,526,207
Receivables from others – Lending to an investee company 390,485 339,081 – Other deposits 121,901 114,077 – Deposits for acquisition of subsidiaries – 1,055,097 – Bank loans receivables rights – 1,355,781 – Others 944,819 617,757 14 As at 31 December 2018 2017 RMB’000 RMB’000
1,457,205 3,481,793 Less: Impairment losses for a particular item (16,620) (16,620)
Less: Other impairment losses (14,406) –
1,426,179 3,465,173
Total trade and other receivables and prepayments 59,808,784 34,816,250 Less: Total impairment losses (438,840) (16,620)
59,369,944 34,799,630
Less: Non-current portion (463,427) (727,710)
Current portion 58,906,517 34,071,920
The aging of trade receivables and notes receivables as at 31 December 2018 and 2017 are as follows:
As at 31 December 2018 2017 RMB’000 RMB’000
Less than 1 year 367,084 120,677 Between 1 and 2 years 31,883 –
398,967 120,677
The maximum exposure to credit risk at 31 December 2018 and 2017 is the carrying value of each class of receivables mentioned above. The Group does not hold any collateral security.
As at 31 December 2018 and 2017, the fair value of trade and other receivables approximate their carrying amounts.
As at 31 December 2018 and 2017, the carrying amounts of trade and other receivables and prepayments are primarily denominated in RMB.
15 6 SHARE CAPITAL
(a) Authorised shares
Number of authorised shares HKD share
As at 1 January 2017, 31 December 2017, and 31 December 2018 10,000,000,000
(b) Issued shares
Number of Ordinary issued shares shares HKD0.001 each RMB’000
Opening balance as at 1 January 2018 5,658,000,000 4,609 Issue of new share (i) 267,168,000 219 Buy back and cancellation (ii) (18,168,000) (15)
Balance as at 31 December 2018 5,907,000,000 4,813
(i) On 18 January 2018, the Company issued 267,168,000 ordinary shares at a placing price of HKD5.86 (equals to RMB4.81 approximately) per share. Total proceeds of HKD1,565,604,000 (equivalent to RMB1,283,952,000 approximately), deducting relevant issue expenses of HKD18,866,000 (equivalent to RMB15,472,000 approximately), were recorded as increase of share capital of HKD267,000 (equivalent to RMB219,000 approximately) and increase of share premium of HKD1,546,471,000 (equivalent to RMB1,268,261,000 approximately).
(ii) During the year ended 31 December 2018, the Company bought back 26,168,000 shares at the cost of HKD145,309,000 (equivalent to RMB127,320,000 approximately), of which 18,168,000 shares had been cancelled as of 31 December 2018 and 8,000,000 shares were recorded in reserve as of 31 December 2018 and were subsequently cancelled in January 2019.
16 7 BORROWINGS
As at 31 December 2018 2017 RMB’000 RMB’000
Non-current, secured: – Bank loans and non-bank financial institutions 30,360,065 19,701,362 – Trust financing arrangements 3,576,239 3,116,452 – Senior notes 4,408,200 2,261,099 – Guaranteed senior notes 8,067,678 1,281,435 – Asset backed notes 2,100,000 2,100,000
48,512,182 28,460,348
Non-current, unsecured: – Middle term notes 6,500,000 4,500,000 – Private placement notes 4,500,000 2,000,000 – Corporate bonds 11,193,345 11,543,927
22,193,345 18,043,927
Less: Current portion of long-term borrowings (14,190,154) (12,396,205)
56,515,373 34,108,070
Current, secured: – Bank loans 1,339,067 1,041,937 – Trust financing arrangements 2,212,060 – – Guaranteed senior notes 2,058,022 – – Financing under securitisation arrangements 1,811,800 –
7,420,949 1,041,937
Current, unsecured: – Bank loans 136,687 – – Corporate bonds 840,000 1,085,000 – Short-term Commercial Paper 2,400,000 – – Trust financing arrangement – 750,000
3,376,687 1,835,000
Current portion of long-term borrowings 14,190,154 12,396,205
24,987,790 15,273,142
17 8 TRADE AND OTHER PAYABLES
As at 31 December 2018 2017 RMB’000 RMB’000
Trade payables 26,291,978 20,573,426 Notes payable 1,680,056 2,020,262 Payables to related parties 31,415,600 24,968,538 Payables for acquisition of subsidiaries, joint ventures and associations 1,215,328 2,186,793 Advances from non-controlling shareholders of subsidiaries 5,812,882 1,982,049 Accrued payroll 1,360,853 1,186,074 Amounts received from potential investors for project companies 1,679,451 504,650 Value-added and other taxes payable 1,623,750 834,002 Deposits for construction biddings and rental deposits 1,506,274 715,677 Interest payable 1,212,088 624,487 Amounts received from participants of the A share company’s restricted share incentive scheme 61,862 145,460 Intention deposits from potential property purchasers 317,287 142,838 Deed tax collected on behalf 80,551 125,256 Maintenance & decoration fees collected on behalf 138,197 50,242 Others 1,272,494 498,498 75,668,651 56,558,252 Less: Non-current portion (144,505) –
Current portion 75,524,146 56,558,252
The aging analysis of trade payables and notes payable as at 31 December 2018 and 2017 are as follows:
As at 31 December 2018 2017 RMB’000 RMB’000
Less than 1 year 23,829,427 21,256,762 Between 1 and 2 years 3,479,076 831,622 Between 2 and 3 years 593,155 169,898 Over 3 years 70,376 335,406
27,972,034 22,593,688
As at 31 December 2018 and 2017, the fair value of trade and other payables approximate their carrying amounts.
As at 31 December 2018 and 2017, the carrying amounts of trade and other payables are primarily denominated in RMB.
18 9 REVENUE
Revenue of the Group consists of the following for the years ended 31 December 2018 and 2017:
Year ended 31 December 2018 2017 RMB’000 RMB’000
Revenue from contract with customers recognised at a point in time A share Company – Sales of properties 50,838,235 38,790,128 – Others services 258,127 210,423 Non-A share Company – Others services 370,343 147,670
51,466,705 39,148,221
Revenue from contract with customers recognised over time A share Company – Commercial property management services 905,831 421,144 – Others services 823,533 504,486 Non-A share Company – Others services 342,067 172,929
2,071,431 1,098,559
Rental income 1,242,859 573,536
54,780,995 40,820,316
19 10 EXPENSES BY NATURE
Expenses included in cost of sales, selling and marketing expenses and administrative expenses:
Year ended 31 December 2018 2017 RMB’000 RMB’000
Land use rights costs 11,799,749 11,064,593 Construction costs 15,935,062 12,327,734 Capitalised interest 5,154,272 1,516,587 Tax and surcharges 327,362 605,779 Provision for impairment of properties held or under development for sale 263,684 13,267 Depreciation of property, plant and equipment 397,925 325,474 Amortisation of intangible assets and land use rights 46,652 15,604 Bank charges 123,228 80,778 Staff costs 3,248,609 2,963,833 Entertainment expenses 202,863 114,055 Stamp duty and other taxes 334,662 186,844 Professional fees 138,050 98,612 Auditors’ remuneration – annual audit and interim review of the Group 2,400 2,400 – annual audit of the A share company charged by its auditor 4,200 3,600 – non-audit services 1,041 2,500 Sales commission 287,088 263,310 Advertising and publicity costs 1,027,253 744,370 Rental expenses 187,313 85,774 Travelling expenses 226,278 94,151 Provision for other receivables – 16,620 Other expenses 1,041,129 812,065
Total cost of sales, selling and marketing expenses and administrative expenses 40,748,820 31,337,950
20 11 FINANCE INCOME AND COSTS
Year ended 31 December 2018 2017 RMB’000 RMB’000
Finance costs – Interest on borrowings (4,025,386) (2,501,117) – Interest on proceeds from pre-sale to customers (5,360,337) – – Less: Interest capitalised 8,850,411 1,673,192
(535,312) (827,925)
– Loss from early redemption of Senior notes – (191,810) – Net foreign exchange (losses)/gains relating to borrowings (722,143) 333,491 – Net foreign exchange gains/(losses) on cash and cash equivalents 287,887 (158,285)
Total finance costs (969,568) (844,529)
Finance income – Interest income on bank deposits 229,626 176,332
Net finance costs (739,942) (668,197)
12 INCOME TAX EXPENSE
Year ended 31 December 2018 2017 RMB’000 RMB’000
Current income tax – PRC land appreciation tax 2,851,589 2,475,278 – PRC corporate income tax 3,729,925 2,607,704
6,581,514 5,082,982 Deferred income tax 18,420 (354,197)
Total income tax charged for the year 6,599,934 4,728,785
21 Hong Kong profits tax
Hong Kong profits tax has been provided at 16.5% for as the Group has assessable profits in Hong Kong during the year (2017: 16.5%).
PRC corporate income tax
Under the Corporate Income Tax Law of the PRC (“CIT Law”), the CIT rate applicable to the Group’s subsidiaries located in mainland China is 25%.
The CIT Law and its implementation rules impose a withholding tax at 10% for dividends distributed by a PRC-resident enterprise to its immediate holding company outside PRC for earnings generated beginning 1 January 2008 and undistributed earnings generated prior to 1 January 2008 are exempted from such withholding tax. A lower 5% withholding tax rate may be applied when the immediate holding companies are established in Hong Kong according to the tax treaty arrangement between the PRC and Hong Kong. For the year ended 31 December 2018, the Group accrued for PRC withholding tax with amount of RMB84,974,000 (2017: RMB53,695,000) based on the tax rate of 5% on a portion of the earnings generated by its PRC entities. The Group controls the dividend policies of these subsidiaries and it has been determined that it is probable that a majority of these earnings will not be distributed in the foreseeable future.
Land appreciation tax
PRC land appreciation tax is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds from sales of properties less deductible expenditures including lease charges for land use rights and all property development expenditures, and is included in the consolidated statement of income as income tax expense.
13 EARNINGS PER SHARE
Basic earnings per share for the year is calculated by dividing the profit of the Group attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.
Year ended 31 December 2018 2017
Consolidated profit attributable to equity holders of the Company (RMB’000) 6,761,004 3,793,998 Weighted average number of ordinary shares in issue (’000) 5,903,687 5,658,000
Basic earnings per share (RMB) 1.15 0.67
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: convertible bonds. The convertible bonds are assumed to have been converted into ordinary shares.
22 Year ended 31 December 2018 2017
Consolidated profit attributable to ordinary equity holders of the Company (RMB’000) 6,761,004 3,793,998 Add: interest savings of convertible bonds (RMB’000) 58,746 – Consolidated profit attributable to equity holders of the Company in calculating diluted earnings per share (RMB’000) 6,819,750 3,793,998 Weighted average number of ordinary shares in issue (’000) 5,903,687 5,658,000 Add: maximum conversion (’000) 205,933 – Weighted average number of ordinary shares in issue and potential ordinary shares used as the denominator in calculating diluted earnings per share (’000) 6,109,620 5,658,000 Diluted earnings per share (RMB) 1.12 0.67
14 DIVIDENDS
Year ended 31 December 2018 2017 RMB’000 RMB’000
Proposed final dividend of RMB0.3 (2017: RMB0.162) per ordinary share 1,769,700 959,877 Special dividend of HKD7 cents (2017: HKD: Nil) per ordinary share 367,894 –
No interim dividend was declared during the year (2017: Nil).
At a Board meeting held on 8 March 2019, the directors proposed a final dividend for 2018 of RMB0.3 per ordinary share using the share premium account and the retained earnings account. This proposed dividend is not reflected as a dividend payable in these financial statements, but will be reflected as an appropriation of reserves for the year ending 31 December 2019 upon approval by the shareholders at the forthcoming annual general meeting of the Company.
The final dividend in respect of 2017 of RMB0.162 per ordinary share using the share premium account, amounting to RMB959,877,000 was proposed in Board meeting dated 14 March 2018 and the amount was subsequently adjusted downward to RMB958,642,000 as approved at the annual general meeting of the Company held on 2 May 2018 due to the buy-back of 7,622,000 shares in April 2018. The amount was fully paid in 2018.
In August 2018, the Board declared the payment of a special dividend of HKD7 cents per share, totally HKD414,228,000 (equivalent to RMB367,894,000) to the shareholders of the Company. The amount was fully paid in 2018.
15 EVENTS AFTER THE BALANCE SHEET DATE
Convertible bonds classified as financial liabilities at fair value through profit or loss with book value of RMB2,069,576,000 as at 31 December 2018 was due on 10 February 2019 and none of the principal amount of the convertible bonds was converted. The Company redeemed the outstanding convertible bonds in whole at a redemption price equal to 100% of the outstanding principal amount of HKD2,346,000,000 together with all accrued and unpaid interests thereon and completed all relevant procedures thereafter pursuant to the terms and conditions of the convertible bonds.
23 MANAGEMENT DISCUSSION AND ANALYSIS
General overview
In 2018, the Group continued to implement the development strategy of “Regional Focus, Rapid Turnover and Diversified Products” to achieve a leapfrog development in its business scale. The Group recorded contracted sales of RMB221,098.0 million, representing a year-on-year increase of 74.8%, and exceeded our annual preset sales target by 22.8%. The Company continued to climb up the industry ranking and reached the eighth place within the country, marking a new milestone for the Group’s development. During the reporting period, the Group achieved a revenue of RMB54,781.0 million, representing a year-on-year increase of approximately 34.2%, and core earnings attributable to equity holders of the Company of RMB5,663.1 million, representing a year-on-year increase of 83.4%. The Board has recommended a final dividend of RMB30 cents per share, representing an increase of 85.2% compared to the previous year.
Review for 2018
In 2018, the central government clearly stated that the regulation and control over the industry will remain strict, but the direction of policies will undergo a transition from short-term regulation and control to a long-term effective mechanism. The Group will also focus on expansion of effective supply and actively issue related supportive policies for housing at the same time. While suppressing irrational demand, the Group shifted towards increasing its medium- and long-term supply to stabilise the market through the state of “efficient supply and demand”.
During the year, with the operation model of “residential and commercial” and the business strategy of “regional penetration, high turnover and large-scale operation”, the Group embraced change, adapted to trends, executed plans at speed, focused on project operation and capitalised on synergies among industries to achieve remarkable growth of business. The Group achieved contracted sales of RMB221,098.0 million, representing a year-on-year increase of 74.8%, and continued to climb up the industry ranking and reached the eighth place within the country.
Regarding land expansion, the Group made accurate judgment on the land market conditions of each region and actively studied the supply-and-demand relationships among different cities. The Group expanded its land resources by way of participating in tender invitation, auction and listing, acquisitions and mergers, and increased its land reserve by approximately 47.7 million sq.m. During the year, the Group entered markets in cities including Beijing, Xining, Guiyang, Baotou, Shenyang, etc. While replenishing land resources in previously established cities, the Group further expanded its nationwide coverage. As of 31 December 2018, the Group has entered 98 cities in total, with total land reserve reaching approximately 109.5 million sq.m., which laid a solid foundation for the sustainable growth of the Company’s profits and consolidated its position as one of the top players in the industry.
As for commercial properties, the Group has opened a total of 19 new Wuyue Plazas during the year and generated RMB2,116 million in rental income*, which exceeded our preset rental target of RMB2.0 billion. As of the end of the year, the Group has opened a total of 42 Wuyue Plazas with an average occupancy rate of 98.84% as the “Wuyue Plaza” brand continued to gain popularity.
* Rental income includes management fees.
24 As for finance and the capital market, against the backdrop of tighter financing channels and rising interest rates, the Group maintained a prudent and sound financial and cash flow management policy, while actively exploring a variety of financing channels through its own domestic and overseas platforms to provide stable capital resources for the rapid development of the Company. As of 31 December 2018, cash held by the Group amounted to approximately RMB47,655.8 million, reflecting sound management of short-term risks. During the reporting period, the Group’s ratings were raised to “Ba2”, “BB” and “BB” by three international rating agencies, namely Moody, Fitch Ratings and Standard & Poor’s. The Group was also given an “AAA” rating by China Chengxin International, a credit-rating agency in Mainland China, as a strong recognition of the Group’s ability in high-efficiency sales, multiple financing channels and strong liquidity. In addition, the Group was included in the Hong Kong Stock Connect list under the Shanghai-Hong Kong Stock Connect, Hang Seng Composite LargeCap and MidCap Index and MSCI China Index, respectively in 2018, reflecting full confidence of the capital market in the Group’s strategic planning and prospects.
Prospects for 2019
As an integral part of the macro-economy, the real estate industry is in need of more stable development. The Group strongly agrees with the relevant control policies and stabilising measures formulated by the central government to stabilise the industry and expects the policies to maintain their continuity, stability and differentiation among different regions. The Group will continue to enhance studies on policies, particularly to fully carry out studies on “one policy for one city” and “one policy for one project” and keep tapping into existing regional markets as well as strive to improve regional market share. Meanwhile, the Group will actively addresses customers’ needs, strives to optimise product structure, accelerate project turnover and steadily increase contracted sales.
The Group has substantially completed the “residential + commercial” business layout in key city clusters and key cities throughout the country. In the future, the Group will continue to broaden its knowledge in fields such as real estate development, investment and commercial operation management, and continuously enable product synergies and extend strategic coverage. As for land strategies, the Group will handle all types of investment and merger and acquisition opportunities in a prudent manner and spare no efforts to obtain high-quality land resources. As for financial management, the Group will continue to maintain strategies for high turnover and quick capital recovery. It will also enhance capital management and reasonably adopt new ways of financing to ensure the Company’s financial security. For internal management, the Group will focus more on the enhancement of refined management capabilities to optimise cost management and enhance product and brand premium with higher staff efficiency to make further contributions to the continuous improvement of the Company’s profitability. As for product development, the Group will continue to innovate around its existing rich product lines of residential property with a focus on customers’ needs, and at the same time build high-quality shopping centres that are “showing character, non-replicating and large-scale” based on the existing and well-established business operation capabilities to fulfill the mission of “being a service provider for an ideal life”.
For the year 2019, the Group’s target for contracted sales is RMB270.0 billion and that for rent and management fees income is RMB4.0 billion, which we are confident to meet.
25 Property Development
In 2018, the Group recorded contracted sales of approximately RMB221,098.0 million, representing an increase of 74.8% as compared with 2017. Contracted sales was approximately 18,121,000 sq.m. in gross floor area (“GFA”), representing an increase of 95.2% over 2017. A total of 77 cities across the country to our contributed contracted sales. Average contracted selling price (excluding carparks) for the year was RMB12,824 per sq.m.
Table 1: Details of contracted sales of the Group in 2018
The following table sets out the geographic breakdown of the Group’s contracted sales* in 2018:
Name of City Contracted GFA sold Contracted sales (sq.m.) (RMB million)
Changzhou 1,385,044 18,655.30 Suzhou 1,314,999 17,161.40 Qingdao 761,222 12,440.96 Shanghai 175,110 9,088.15 Hefei 577,639 8,608.65 Taizhou 590,659 7,156.45 Tianjin 491,739 7,155.10 Hangzhou 264,020 6,988.90 Ji’nan 512,436 6,846.41 Huai’an 633,770 6,025.78 Chongqing 503,035 5,502.63 Nanjing 275,206 5,495.45 Chengdu 488,237 5,450.84 Wuhan 397,499 5,278.33 Wenzhou 222,854 5,107.82 Changsha 528,675 5,085.39 Nantong 409,467 4,986.24 Kunming 388,807 4,782.88 Shaoxing 383,098 4,143.21 Jiaxing 286,823 4,129.29 Suqian 546,821 4,126.88 Xi’an 286,135 3,424.23 Taizhou 282,115 3,128.41 Foshan 210,151 3,085.67 Lianyungang 286,157 2,892.87 Yangzhou 233,000 2,865.46 Huzhou 247,005 2,749.05 Ningbo 178,299 2,533.87 Wuxi 150,737 2,331.58 Changchun 194,759 2,231.99 Taiyuan 161,532 2,110.16 Beijing 40,220 2,079.75 Zhenjiang 188,509 2,052.54 Xuzhou 247,546 2,014.95 Jinhua 160,912 1,938.57 Huizhou 184,593 1,822.37 Yancheng 172,609 1,706.22 Yan’an 153,624 1,487.50 26 Name of City Contracted GFA sold Contracted sales (sq.m.) (RMB million)
Zhengzhou 150,435 1,289.19 Shangrao 112,097 1,281.51 Baoji 126,998 1,031.83 Huainan 148,551 1,021.02 Meishan 93,057 987.14 Hanzhong 129,570 985.03 Nanning 60,725 900.99 Baotou 96,883 890.04 Xiaogan 100,194 878.49 Qinzhou 118,283 773.63 Jingzhou 71,908 771.42 Tangshan 64,895 673.73 Chuzhou 55,620 626.86 Guilin 82,111 614.20 Nanchang 49,019 585.28 Zhaoqing 59,233 511.71 Linyi 35,130 484.75 Huaibei 64,675 428.93 Ezhou 39,329 404.87 Bengbu 53,512 399.69 Anqing 70,023 370.42 Dezhou 49,970 356.23 Liaocheng 35,440 266.45 Huanggang 39,564 264.23 Langfang 15,687 232.49 Fuyang 7,132 184.00 Suzhou 18,614 173.79 Huangshi 21,435 166.76 Xiangtan 31,602 164.06 Rizhao 17,813 142.23 Xuchang 21,114 139.13 Weifang 17,549 130.38 Quanzhou 8,495 101.96 Xiangyang 11,070 62.70 Zhuzhou 5,776 54.54 Ya’an 7,546 53.96 Leshan 9,016 48.02 Weihai 3,723 33.97 Jiangmen 1,469 10.34 Others 24,796 293.19 Carparks 1,475,472 7,637.57
Total 18,120,594 221,098.00
* Including joint ventures and associates’ projects
27 Land Bank
As at 31 December 2018, the land bank of the Group was approximately 109,520,929 sq.m. The average acquisition cost of land bank was approximately RMB2,518 per sq.m. The geographic spread of the land bank of the Group as at 31 December 2018 was as follows:
Table 2: Breakdown of land bank of the Group
Percentage GFA of GFA Percentage attributable attributable of the to the to the Group’s Group’s Group’s City/Region Total GFA total GFA interests interests (sq.m.) (%) (sq.m.) (%)
Yangtze River Delta Suzhou 7,256,704 6.63% 2,395,143 4.49% Changzhou 6,963,955 6.36% 3,041,035 5.70% Xuzhou 2,692,415 2.46% 1,112,985 2.09% Nantong 2,600,234 2.37% 819,747 1.54% Taizhou 2,265,746 2.07% 1,390,094 2.61% Hefei 2,163,315 1.98% 781,569 1.47% Huai’an 2,114,171 1.93% 1,266,217 2.37% Nanjing 1,977,997 1.81% 869,302 1.63% Zhenjiang 1,972,026 1.80% 1,016,303 1.91% Yangzhou 1,944,356 1.78% 1,027,984 1.93% Yancheng 1,904,614 1.74% 1,046,216 1.96% Taizhou 1,898,900 1.73% 1,061,540 1.99% Suqian 1,876,410 1.71% 988,235 1.85% Wenzhou 1,787,257 1.63% 659,229 1.24% Jiaxing 1,733,564 1.58% 955,676 1.79% Huzhou 1,712,775 1.56% 819,129 1.54% Shanghai 1,378,497 1.26% 393,966 0.74% Lianyungang 1,358,116 1.24% 896,409 1.68% Shaoxing 1,288,028 1.18% 565,078 1.06% Hangzhou 1,159,743 1.06% 396,949 0.74% Ningbo 1,099,542 1.00% 687,695 1.29% Jinhua 979,264 0.89% 403,963 0.76% Wuxi 812,504 0.74% 120,553 0.23% Huaibei 701,483 0.64% 468,744 0.88% Lu’an 666,319 0.61% 445,247 0.83% Fuyang 585,430 0.53% 306,467 0.57% Huainan 454,769 0.42% 303,885 0.57% Bengbu 417,245 0.38% 275,314 0.52% Suzhou 367,095 0.34% 245,300 0.46% Anqing 318,598 0.29% 212,893 0.40% Ma’anshan 206,683 0.19% 133,744 0.25% Chuzhou 170,312 0.16% 36,368 0.07%
28 Percentage GFA of GFA Percentage attributable attributable of the to the to the Group’s Group’s Group’s City/Region Total GFA total GFA interests interests (sq.m.) (%) (sq.m.) (%)
Central and Western China Chongqing 3,475,426 3.17% 1,530,456 2.87% Chengdu 3,260,723 2.98% 1,326,811 2.49% Kunming 2,184,033 1.99% 1,299,220 2.44% Changsha 1,799,281 1.64% 905,904 1.70% Zhengzhou 1,682,632 1.54% 663,791 1.24% Xi’an 1,456,805 1.33% 935,390 1.75% Wuhan 1,396,068 1.27% 819,375 1.54% Baotou 1,121,241 1.02% 726,078 1.36% Zunyi 1,057,655 0.97% 709,498 1.33% Xiaogan 956,664 0.87% 528,871 0.99% Guilin 946,847 0.86% 578,164 1.08% Xiangyang 831,467 0.76% 447,092 0.84% Zhaotong 818,916 0.75% 443,244 0.83% Jingzhou 784,880 0.72% 426,658 0.80% Guiyang 777,254 0.71% 446,078 0.84% Xiangtan 719,790 0.66% 485,204 0.91% Xuchang 716,923 0.65% 228,765 0.43% Guigang 642,107 0.59% 429,068 0.80% Baoji 613,813 0.56% 410,161 0.77% Nanning 610,250 0.56% 393,756 0.74% Shangrao 592,553 0.54% 395,955 0.74% Qinzhou 583,835 0.53% 390,129 0.73% Huangshi 565,798 0.52% 268,408 0.50% Hanzhong 558,860 0.51% 373,441 0.70% Yan’an 526,726 0.48% 351,968 0.66% Beihai 521,074 0.48% 348,191 0.65% Nanchang 448,308 0.41% 300,660 0.56% Taiyuan 435,720 0.40% 218,367 0.41% Xining 340,078 0.31% 227,246 0.43% Zhuzhou 285,688 0.26% 96,290 0.18% Ya’an 280,441 0.26% 180,260 0.34% Leshan 231,497 0.21% 148,801 0.28% Huanggang 217,647 0.20% 46,166 0.09% Ezhou 112,692 0.10% 72,435 0.14%
29 Percentage GFA of GFA Percentage attributable attributable of the to the to the Group’s Group’s Group’s City/Region Total GFA total GFA interests interests (sq.m.) (%) (sq.m.) (%)
Bohai Rim Qingdao 4,527,682 4.13% 1,827,222 3.43% Tianjin 2,397,926 2.19% 1,150,384 2.16% Weifang 1,483,019 1.35% 900,120 1.69% Jinan 1,439,579 1.31% 777,475 1.46% Shenyang 1,011,156 0.92% 675,673 1.27% Dezhou 1,004,952 0.92% 671,527 1.26% Tangshan 988,352 0.90% 491,332 0.92% Beijing 922,395 0.84% 230,054 0.43% Changchun 729,100 0.67% 489,617 0.92% Zibo 411,936 0.38% 192,693 0.36% Liaocheng 390,293 0.36% 242,269 0.45% Rizhao 372,989 0.34% 171,192 0.32% Linyi 357,942 0.33% 239,184 0.45% Cangzhou 313,213 0.29% 146,513 0.27% Langfang 285,416 0.26% 144,470 0.27% Weihai 234,511 0.21% 109,693 0.21% Yantai 150,408 0.14% 70,354 0.13% Laiwu 111,502 0.10% 38,003 0.07%
Pearl River Delta Huizhou 2,099,679 1.92% 575,976 1.08% Shanwei 1,038,306 0.95% 420,452 0.79% Zhaoqing 991,826 0.91% 561,969 1.05% Foshan 842,728 0.77% 349,007 0.65% Zhongshan 254,045 0.23% 74,960 0.14% Dongguan 197,212 0.18% 115,503 0.22% Quanzhou 164,079 0.15% 109,641 0.21% Jiangmen 136,734 0.12% 71,190 0.13%
Other completed projects 282,189 0.26% 190,449 0.36%
Total 109,520,929 100.00% 53,331,804 100.00%
In 2018, the Group acquired a total of 164 projects to replenish its land bank. The acquired land bank was approximately 47.7 million sq.m. (including those of the Group’s joint ventures and associates’ projects on a 100% basis) (including underground floor area) whilst the average acquisition cost was approximately RMB2,330 per sq.m.
30 Table 3: Breakdown of land acquisition from January to December 2018
Proportion Total land City Name of Land Parcel Land use of interest Site area Total GFA premium (sq.m.) (sq.m.) (RMB million)
Beijing SY00 0013 6022 Land Parcel Project, Shunyi District Residential 67.49% 69,856 186,290 2,330.00 Nanjing Land Parcel No. Xin Qu 2018G01 Commercial-1 along Residential 19.41% 7,025 31,543 113.00 Metro Line 3 in Jiangbei New Area Land Parcel G56 Project in Pukou, Nanjing Residential 64.71% 51,750 151,376 1,750.00 Nanjing Banqiao Wuyue Plaza Complex 54.13% 46,662 293,686 340.00 Suzhou Wujiang Zhenze Yuejun Pinglanfu Residential 46.78% 80,196 201,866 662.11 Zhangjiagang Nonglianbei Project Residential 20.95% 58,862 172,663 648.97 Zhangjiagang Mingyue Huating Residential 20.95% 8,579 26,045 37.19 Zhangjiagang Shili Jinxiu Residential 10.95% 98,783 172,015 459.55 Zhangjiagang Jiangcheng Yuanzhe Residential 8.69% 69,982 122,187 399.41 Taicang Huangjing Project Residential 10.79% 21,638 48,957 118.79 Taicang Shaxi Land Parcel Residential 10.79% 19,763 49,160 185.61 Changshu Liantang Shangjun Huating Residential 33.41% 39,410 96,286 272.50 Changshu Binjiang Yuejun Huating Residential 34.08% 60,373 178,244 803.30 Changshu Binjiang Yuanjiangzhu Residential 32.74% 64,192 198,049 854.10 Wujiang Fenhu Old Logistics Centre Land Parcel Residential 20.05% 33,578 69,267 449.56 Changshu Shanghu Yonglanyuan Residential 6.76% 54,052 97,142 653.00 Hangzhou Land Parcel Hangda Jiangdong Chu Chu No. [2017]8 Residential 13.50% 88,404 285,100 1,981.86 Chengdu Meidi Future Land Gongyuan Tianxia Residential 19.28% 51,108 218,013 463.81 Future Land Yuejun Tianjiao Residential 52.06% 33,489 99,495 135.00 104 Mu in Qionglai, Chengdu Residential 64.28% 76,247 176,797 533.35 86 Mu in Qionglai, Chengdu Residential 64.28% 60,440 119,011 374.79 21 Mu in Jianyang Residential 52.06% 14,589 51,028 109.78 23 Mu in Jianyang Residential 52.06% 15,819 56,894 201.29 Future Land Ruisheng Yuejun Xijiang Residential 32.14% 14,960 42,671 116.69 Chongqing Chongqing Langyue Jiangshan Residential 21.21% 130,592 468,101 1,486.63 Projects at Sub-zone L of Xiyong Unit, Shapingba District Residential 21.85% 74,503 260,482 701.83 Chongqing Heyu Linyun Residential 64.28% 121,313 491,691 648.90 Chongqing Daishandao No. 8 Project Residential 22.50% 136,246 385,170 682.00 Chongqing Xiyue Jiuli Residential 35.35% 182,766 576,212 1,918.75 Chongqing Yuejun Fenghua Residential 64.28% 56,578 139,024 285.66 Wuhan Tingrui Junyue Guanlan Residential 51.42% 211,158 422,862 640.00 Xi’an 118 Mu Project in Lintong Residential 47.08% 78,882 125,581 485.00 96 Mu Project in Lintong, Xi’an Residential 64.28% 64,033 107,506 390.00 Gaoling Future Land Yuejun Gongyuanli Residential 64.28% 49,933 198,769 161.78 Hefei CF201802 in Changfeng Residential 52.41% 69,878 189,649 900.10 FD18-09 in Feidong Residential 52.41% 49,137 143,815 732.00 Land Parcel BH2018 08 in Binhu Residential 64.63% 63,341 176,627 1,102.14 Zhengzhou Xingyang Project-Land Parcel B Residential 34.08% 87,165 370,132 265.40 Xingyang Project-Land Parcel A Residential 34.08% 42,850 199,540 130.00 Zhengzhou Xingyang Wuyue Plaza Complex 66.82% 72,351 275,840 270.81 Kunming Anning Future Land Country Garden Yayue Residential 67.49% 56,075 298,032 581.00 Kunming Future Land Langyue Residential 37.79% 264,021 558,719 747.59
31 Proportion Total land City Name of Land Parcel Land use of interest Site area Total GFA premium (sq.m.) (sq.m.) (RMB million)
Jinan Laiwu Future Land Yuejun Residential 34.08% 26,532 111,502 126.00 Land Parcel A7B10 Project in Tangye District Residential 66.82% 53,737 152,750 722.51 Tianjin Located to the east of Jinqi Road and to the south of Residential 33.41% 79,928 120,313 313.00 Yongming Road, Dagang District, Tianjin Land Parcel located to the west of Baodi Jiuzhong, Tianjin Residential 67.02% 86,603 215,675 910.00 Tianjin Cangzhou Wuyue Plaza Complex 46.78% 97,407 313,213 759.40 Ningbo Ningbo Lakeview Yueshan Residential 22.49% 54,003 106,118 569.68 Ningbo Cixi Wuyue Plaza Complex 66.82% 152,092 566,729 763.42 Xuchang Changge Future Land Jinyuefu Residential 52.06% 64,063 238,613 377.80 Land Parcel Project No. FD15(2) at Xueyuan North Road, Residential 21.85% 127,850 478,309 1,168.92 Xuchang Qingdao Pingdu Future Land Yuejun Da Dou Hui Residential 53.46% 44,624 113,411 218.43 Nanchang 33 Mu Land Parcel at Sanjing Road, Nanchang Residential 67.49% 21,980 70,398 497.85 Nanning Future Land Yuejun Jiangshan Project Residential 54.67% 42,116 130,707 547.09 Land Parcel located to the north of Xinyong Road, Nanning Residential 67.49% 65,516 278,751 982.75 Shenyang Shenyang Wuyue Plaza Complex 66.82% 257,103 1,011,156 1,153.25 Changzhou Land Parcel in Luoyang Township Residential 52.58% 40,967 98,569 241.63 Changzhou Future Land Handu Garden Residential 21.35% 69,261 162,027 393.62 Mendi Jingyuan Project, Tianning District, Changzhou Residential 31.81% 77,263 225,700 1,170.00 Changzhou Future Land Heyu Residential 64.63% 58,792 142,808 383.87 Yuehua Mingyuan Residential 36.20% 65,474 195,153 955.00 Land Parcel located to the south of Yancheng, Wujin Residential 44.70% 137,836 295,562 2,170.00 District, Changzhou Green City Wanhecheng Residential 23.75% 480,685 1,338,356 1,450.00 Land Parcel Project located to the east of Hengshan Road Residential 55.68% 51,695 157,340 950.00 and to the north of Hehai Road, Xinbei District, Changzhou Taihu Land Parcel located to the west of Wujin District Residential 64.63% 38,108 111,794 203.00 Yancheng Yancheng Dafeng Future Land Yuejun Residential 66.82% 153,226 364,560 841.80 Yancheng Yuejun Shi Dai Residential 34.08% 95,586 235,569 403.56 Yancheng Jianhu Yuejun Capital Residential 52.35% 75,950 202,728 388.30 Yancheng Dongtai Tianyuefu Residential 16.70% 55,320 136,099 274.94 Yancheng Wuyue Plaza Complex 54.13% 138,103 407,993 659.12 Yancheng Sheyang Wuyue Plaza Complex 66.82% 167,738 557,664 339.40 Nantong Nantong Rugao Yuejun Shi Dai Residential 19.39% 94,378 314,106 1,197.66 Nantong Haimen Jianghaiduhui Residential 16.87% 107,183 252,400 1,504.63 Nantong Tongzhou Yungjingwan Residential 32.74% 149,668 372,587 1,689.75 Leshan 60 Mu in Emeishan Residential 64.28% 55,386 121,308 242.00 54 Mu in Emeishan Residential 64.28% 48,805 110,189 218.00 Zhuzhou Zhuzhou Yuefu Residential 33.70% 84,518 285,688 1,042.13 Jiaxing Pinghu Future Land Yuejun Residential 51.93% 18,857 43,865 168.01 Jiashan Yuejun Consequence Residential 32.38% 57,661 186,869 1,020.61 Jiashan Huijun Mansion Residential 31.73% 39,735 102,164 703.31 Jiashan Xiyue Xitang Residential 31.73% 38,881 65,973 295.50 Jiashan Weitang Project Residential 14.25% 48,995 132,240 734.92 Jiaxing Haiyan Wuyue Plaza Complex 66.82% 114,546 442,339 651.67 Suqian Shuyang H1, H2 Residential 32.35% 110,740 303,835 414.01 Land Parcel B02 Project in Sucheng Residential 38.83% 139,330 425,683 730.73 Land Parcel 2018C2 Project in Siyang County, Residential 52.41% 61,218 160,712 197.43 Suqian City
32 Proportion Total land City Name of Land Parcel Land use of interest Site area Total GFA premium (sq.m.) (sq.m.) (RMB million)
Zhenjiang Located to the west of Jingwu Road and to the Residential 21.35% 70,766 212,124 713.80 south of Dingmaoqiao Road, Zhenjiang (2017-4-7) 2018_14 Land Parcel Project in Yangzhong Residential 51.77% 72,780 319,577 1,080.52 Land Parcel 02 No. 10-2 of 2017 in Jurong City Residential 32.35% 53,873 149,304 521.18 Huai’an Huai Guo Tu (Kai) Gua 2017 No. 7 located to the east of Residential 22.00% 60,397 195,041 320.60 Xue Fu Road and to the south of Yun He South Road JY03 and 04 Land Parcel Projects, Lianshui, Huai’an Residential 64.49% 92,122 213,359 163.90 Land Parcels JG20189-1, 2 in Jinhu County, Huai’an City Residential 53.49% 92,915 250,937 245.60 Huai’an Wuyue Plaza Complex 66.82% 213,944 597,837 1,200.00 Shaoxing Land Parcel located to the north of Xinchangqian Gushan Residential 27.00% 34,487 102,009 393.65 West Road Land Parcel in Hutang Township, Keqiao, Shaoxing Residential 42.52% 114,175 252,207 1,247.05 Zibo Zibo Future Land Yuejun Jiangshan Residential 46.78% 170,643 411,936 672.69 Liaocheng Land Parcel located to the east of Saishi, Gaotang, Residential 54.13% 69,850 145,977 256.00 Liaochang Project at Huangshan Road, Yanggu, Liaocheng Residential 66.82% 76,166 244,316 311.91 Dezhou Project in Oulebao, Qihe, Dezhou Residential 66.82% 146,103 280,428 592.08 Huanggang Land Parcel No. 31 located to the west Residential 21.21% 65,582 217,647 357.00 of Chibi First Road, Huanggang Zhongshan Pingnan Project in Sanxiang, Zhongshan Residential 29.51% 77,214 259,907 376.08 Zhaoqing Zhaoqing University Residential 52.06% 34,001 124,737 352.00 Zhaoqing Sihui Wuyue Plaza Complex 54.13% 138,886 597,403 407.05 Jinhua Land Parcel No. 6 in Pujiang Residential 22.27% 61,030 183,014 922.16 Land Parcel No. 25 located to the south of Xibei Road, Residential 67.40% 32,369 131,774 516.00 Yingbin Avenue, Dongyang Dongyang Zhongnan Future Land Yuefu Residential 33.75% 68,369 228,304 912.00 Huzhou Wuyang Street 2#, Deqing Residential 67.49% 62,588 187,726 1,052.73 Hi-tech City 2#, Deqing Residential 34.42% 47,446 139,480 870.16 Hi-tech City 398#, Deqing Residential 33.75% 34,541 50,809 314.62 Huzhou Country Garden Future Land Boyafu Residential 33.70% 56,598 147,193 860.00 Huzhou Wuyue Plaza Complex 54.13% 100,671 528,611 902.00 Rizhao Jinyuefu, Ju County, Rizhao Residential 45.24% 88,574 213,285 519.10 Yuejun Yipin, Ju County, Rizhao Residential 46.78% 73,029 159,704 349.60 Weifang Yuejun Qingyunfu Project Residential 54.00% 78,363 252,758 312.67 Zhucheng Future Land Rongyue Dadouhui Residential 66.82% 310,849 938,695 1,553.54 Lakeview Yueshan, Anqiu Residential 46.78% 90,492 291,567 438.21 Wenzhou Gangkou Avenue Project in Rui’an City Residential 13.50% 43,447 168,673 1,317.80 Land Parcel Project in Zhongxin District, Yueqing City Residential 15.34% 42,017 114,605 707.20 Wenzhou Rui’an Project Residential 13.48% 56,250 204,990 2,060.00 Binjiang Centre F01 Land Parcel, Aojiang Township, Residential 20.86% 52,181 156,822 804.45 Pingyang County Binjiang Centre F02 Land Parcel, Aojiang Township, Residential 31.29% 50,746 151,923 792.91 Pingyang County Wenzhou Longwan Wuyue Plaza Complex 66.82% 136,040 627,078 3,338.74 Taizhou Project in Jinkai District, Yueqing Residential 15.34% 65,086 169,634 702.00 Shangjun Mansion Residential 42.95% 33,493 98,996 414.80
33 Proportion Total land City Name of Land Parcel Land use of interest Site area Total GFA premium (sq.m.) (sq.m.) (RMB million)
Guiyang 97 Mu Land Parcel Project in Sanma, Yunyan District, Residential 50.98% 64,870 233,070 1,016.98 Guiyang Guiyang Qingzhen Wuyue Plaza Complex 60.14% 133,333 544,184 389.80 Zunyi Land Parcel No. 45 in Xinpu New District, Zunyi City Residential 67.49% 47,277 160,395 282.21 Land Parcel No. 48 in Xinpu New District, Zunyi City Residential 67.49% 74,031 251,750 388.67 Zunyi Wuyue Plaza Complex 66.82% 183,802 645,510 796.79 Ya’an Future Land Jinyue Lan’an Residential 64.28% 65,343 280,441 636.00 Jiangmen Enping Future Legend Mansion Residential 52.06% 39,739 136,734 231.91 Bengbu Yuejun Tianzhe Residential 64.63% 54,115 159,423 256.00 Bengbu Wuyue Plaza Complex 66.82% 82,591 257,822 406.50 Yantai Yantai Xikou Project Residential 46.78% 107,015 150,408 326.38 Weihai Weihai Rongcheng Future Land Yuejun Mansion Residential 46.78% 84,492 234,511 455.65 Guilin Guilin Lingchuan Project Residential 40.49% 63,443 207,145 104.70 Yangzhou Yangzhou GZ092 Land Parcel Project Residential 64.71% 83,239 169,315 630.95 Yangzhou Baoying Wuyue Plaza Complex 54.13% 183,220 560,311 699.50 Yangzhou Gaoyou Wuyue Plaza Complex 54.13% 249,141 825,076 807.37 Ma’anshan Project at Caishihe Road, Ma’anshan Residential 64.71% 86,930 206,683 491.00 Xiangyang Nanzhang Future Land Yuejun Project Residential 52.06% 46,666 142,713 176.00 Xiangyang Wuyue Plaza Complex 54.13% 181,209 688,754 1,147.78 Huangshi Huangshi Yuejun Dadouhui Project Residential 31.50% 70,122 315,189 401.94 Dongguan Land Parcel Project at Yu Zhen Community, Residential 67.49% 38,842 105,957 907.41 Zhangmutou Township, Dongguan City Shanwei Shanwei Haifeng Project Residential 40.49% 190,523 1,038,306 1,460.00 Xuzhou Xuzhou Machanghu Project Residential 38.83% 74,449 227,287 1,203.00 Land Parcel in Fenghuangshan, Xuzhou Residential 64.71% 59,770 103,365 404.10 Xuzhou Wuyue Plaza Complex 54.13% 507,594 1,234,495 275.22 Jingzhou Jingzhou Wuyue Plaza Complex 66.82% 140,000 570,425 810.00 Fuyang Fuyang Wuyue Plaza Complex 52.35% 182,593 585,430 994.22 Guigang Guigang Wuyue Plaza Complex 66.82% 139,600 642,107 631.87 Baotou Baotou Wuyue Plaza Complex 64.76% 169,491 579,124 658.68 Baotou Donghe Wuyue Plaza Complex 64.76% 181,537 542,117 475.81 Tangshan Tangshan Wuyue Plaza Complex 54.13% 111,420 445,592 1,207.03 Beihai Beihai Wuyue Plaza Complex 66.82% 159,878 521,074 1,067.26 Hanzhong Hanzhong Wuyue Plaza Complex 66.82% 147,113 558,860 331.00 Yan’an Yan’an Wuyue Plaza Complex 66.82% 236,370 526,726 539.27 Huai’an Huai’an Wuyue Plaza Complex 66.82% 213,944 597,837 1,200.00 Changsha Changsha Lituo Wuyue Plaza Complex 54.13% 58,805 347,780 766.00 Lianyungang Lianyungang Haizhou Wuyue Plaza Complex 64.76% 138,228 537,920 891.50 Suzhou Suzhou Wuyue Plaza Complex 66.82% 121,986 367,095 584.49 Xining Xining Wuyue Plaza Complex 66.82% 77,076 340,078 404.64 Zhaotong Zhaotong Wuyue Plaza Complex 54.13% 206,779 818,916 873.64 Lu’an Lu’an Wuyue Plaza Complex 66.82% 262,662 666,319 617.00 Taizhou Taizhou Xinghua Wuyue Plaza Complex 66.82% 217,687 692,589 728.52
34 Property Delivery and Revenue from Sale of Properties
For the year ended 31 December 2018, revenue from sale of properties by the Group was approximately RMB50,838.2 million, representing an increase of 31.1% compared to 2017. Properties with a total GFA of approximately 4,453,962 sq.m. was delivered during the year ended 31 December 2018, representing an increase of 16.1% compared to 2017. Average selling price of properties delivered and recognized as sales was RMB11,414 per sq.m. in 2018.
The following table sets forth the revenue information relating to the properties the Group delivered for sale during 2018:
Revenue Average Projects City (million) GFA selling price RMB (million) (sq.m.) (RMB/sq.m.)
Yiwu Wuyue Plaza Jinhua 3,975.3 238,681 16,655 Hangzhou Xiwang Hangzhou 3,386.4 103,862 32,605 Shengzhou Wuyue Plaza Ningbo 3,003.5 351,294 8,550 Nanjing Xianlin Lake Nanjing 2,480.0 105,642 23,475 Nanjing Flourish France Nanjing 2,466.5 155,698 15,842 Yangzhou Wuyue Plaza Yangzhou 2,334.6 226,607 10,302 Jiaxing Haishang Fenghua Yuan Jiaxing 2,244.0 149,743 14,986 Xiaoshan Future Consequence Hangzhou 2,231.9 143,827 15,518 Changzhou County Changzhou 2,085.4 200,286 10,412 Ningbo Wuyue Plaza Ningbo 2,078.1 194,985 10,658 Changzhou Legend Mansion Changzhou 1,504.0 113,435 13,259 Jinjiang Wuyue Plaza Quanzhou 1,444.5 155,921 9,265 Suzhou Jun Wei Lai Hua Yuan Suzhou 1,398.2 89,510 15,621 Wuhan Future Land Jing Hui Wuhan 1,395.1 158,556 8,799 Suzhou Wanshangfenghua Suzhou 1,341.8 91,457 14,671 Other projects 17,468.9 1,974,458 8,847
Total 50,838.2 4,453,962 11,414
Of the properties the Group had pre-sold, a total GFA of 21,963,425 sq.m. with total pre-sale revenue of approximately RMB276,873 million, had not been delivered as at 31 December 2018 (including those of the Group’s joint ventures and associates’ projects). This laid a solid foundation for a steady growth in the Group’s revenue for the year to come.
Property Investment
The Group’s investment properties were mainly derived from the 42 Wuyue Plazas in operation as at 31 December 2018.
In 2018, the Group had 54 investment properties under development. As at 31 December 2018, the development of such investment properties has not been completed.
35 Table 5: Breakdown of rental and management fee income from investment properties of the Group in 2018
Year ended 31 December 2018 2017 Opening date RMB’000 RMB’000
Wujin Wuyue Plaza 179,418 145,004 Apr-2012 Wuyue International Plaza 134,531 115,129 Dec-2012 Qingpu Wuyue Plaza 121,126 101,693 Dec-2014 Wujiang Wuyue Plaza 55,198 35,568 Jun-2015 Zhangjiagang Wuyue Plaza 71,160 59,366 Sep-2015 Danyang Wuyue Plaza 78,814 60,129 Dec-2015 Haikou Wuyue Plaza 89,879 65,916 Oct-2016 Nanchang Wuyue Plaza 64,094 47,983 Nov-2016 Jintan Wuyue Plaza 73,452 52,138 Dec-2016 Anqing Wuyue Plaza 57,825 45,388 Dec-2016 Chengdu Wuyue Plaza 76,745 48,605 Dec-2016 Tongxiang Wuyue Plaza 75,376 43,355 May-2017 Quzhou Wuyue Plaza 59,999 32,417 Jun-2017 Changchun Wuyue Plaza 80,518 41,931 Jul-2017 Zhuji Wuyue Plaza 42,748 14,772 Jul-2017 Zhenjiang Wuyue Plaza 68,017 27,472 Aug-2017 Qingdao Wuyue Plaza 96,833 25,535 Sep-2017 Shengzhou Wuyue Plaza 62,828 16,549 Oct-2017 Rugao Wuyue Plaza 61,408 12,229 Nov-2017 Ningbo Wuyue Plaza 54,035 11,542 Nov-2017 Nanjing Wuyue Plaza 60,485 3,914 Dec-2017 Chengdu Wuhou Wuyue Plaza 64,031 7,925 Dec-2017 Jinjiang Wuyue Plaza 58,138 5,474 Dec-2017 Weinan Wuyue Plaza 21,058 – May-2018 Rui’an Wuyue Plaza 51,709 – Jul-2018 Yiwu Wuyue Plaza 40,365 – Jul-2018 Huainan Wuyue Plaza 23,515 – Aug-2018 Taizhou Huangyan Wuyue Plaza 23,496 – Sep-2018 Pinghu Wuyue Plaza 21,695 – Sep-2018 Kunshan Wuyue Plaza 20,808 – Sep-2018 Yangzhou Wuyue Plaza 21,724 – Sep-2018 Nanchang New District Wuyue Plaza 13,112 – Nov-2018 Kunming Wuyue Plaza 14,280 – Nov-2018 Taixing Wuyue Plaza 12,543 – Nov-2018 Changsha Wuyue Plaza 13,750 – Nov-2018 Nanning Wuyue Plaza 8,697 – Dec-2018 Jurong Wuyue Plaza 9,152 – Dec-2018 Linyi Wuyue Plaza 9,131 – Dec-2018 Yuhuan Wuyue Plaza 9,180 – Dec-2018 Qidong Wuyue Plaza 6,100 – Dec-2018 Taizhou Xianju Plaza 4,055 – Dec-2018 Cixi Wuyue Plaza 4,967 – Dec-2018 Future Land Holdings Tower B (office building) 47,755 45,876 Jan-2016
Total 2,163,749 1,065,913
36 Notes:
1. Qingpu Wuyue Plaza, Zhuji Wuyue Plaza, Qingdao Wuyue Plaza, Chengdu Wuhou Wuyue Plaza and Weinan Wuyue Plaza are commercial light-asset projects of the Company. The rental income amounted to RMB345,797,000; and
2. Management fee income includes management fees regarding carparks, various operations and other miscellaneous management fee income.
The Group did not hold any other significant investments except for the aforementioned investment properties as at 31 December 2018.
Principal Risks and Uncertainties
The PRC property market is volatile and may experience undersupply or oversupply of property units and significant property price fluctuations. The Group’s business depends and will continue to depend on the growth of the economy in the PRC. A significant downturn in the PRC economy could adversely affect the demand for commercial and residential properties. The PRC central and local governments frequently adjust monetary, fiscal or other economic policies to prevent and curtail the overheating of the economy, which may affect the PRC property market. Such policies may lead to changes in market conditions, including price instability and an imbalance of supply and demand in respect of commercial and residential properties, which may materially and adversely affect the Group’s business and financial condition.
The property market in the Yangtze River Delta and major cities along the Shanghai-Nanjing Economic Corridor has been highly competitive in recent years. Property developers from the PRC and overseas have entered the property development markets in the Yangtze River Delta and major cities along the Shanghai-Nanjing Economic Corridor where the Group has operations or where the Group may expand into. Many of the Group’s competitors, including overseas listed foreign developers and top-tier domestic developers, may have more financial or other resources than the Group and may be more sophisticated than the Group in terms of engineering and technical skills. Competition among property developers may cause an increase in land costs and raw material costs, shortages in quality construction contractors, surplus in property supply leading to property price decline, further delays in issuance of governmental approvals, and higher costs to attract or retain talented employees. Moreover, property markets across the PRC are influenced by various other factors, including changes in economic conditions, banking practices and consumer sentiment.
Compliance with Relevant Laws and Regulations
The PRC property market is heavily regulated and subject to frequent introduction of new regulations, including further measures by the PRC government to slow down the growth of the property sector, which may adversely affect property developers. The PRC government exerts considerable direct and indirect influence on the growth and development of the PRC property market through industry policies and other economic measures such as setting interest rates, controlling the supply of credit by changing bank reserve ratios and implementing lending restrictions, increasing tax and duties on property transfers and imposing foreign investment and currency exchange restrictions. From 2004 to 2018, the PRC government introduced a series of regulations and policies designed to generally control the growth of the property market, including, among others:
(i) strictly enforcing the idle land related laws and regulations;
(ii) restricting the grant or extension of revolving credit facilities to property developers that hold a large amount of idle land and vacant commodity properties;
37 (iii) prohibiting commercial banks from lending funds to real estate developers with an internal capital ratio of less than certain prescribed percentage; and
(iv) restricting PRC commercial banks from granting loans to property developers for the purpose of paying land grant premiums.
In particular, the PRC government also introduced the following policies, among others, to specifically control the growth of the residential property market:
(i) limiting the maximum amount of monthly mortgage and the maximum amount of total monthly debt service payments of an individual borrower;
(ii) imposing a business tax levy on the sales proceeds for second-hand transfers subject to the length of holding period and type of properties;
(iii) increasing the minimum amount of down payment of the purchase price of the residential property of a family;
(iv) tightening the availability of individual housing loans in the property market to individuals and their family members with more than one residential property; and
(v) limiting the availability of individual housing provident fund loans for the purchase of second (or more) residential properties by labourers and their family members.
These measures resulted in downward pricing pressures on the PRC property market and low transaction volumes in recent years. The PRC government may implement further tightening measures to restrain the PRC property market at the national, provincial, municipal and/or local level, which may lead to the declining trends in transaction volume and selling prices of properties in the PRC, and as a result, the Group’s financial condition and results of operations may be affected.
Environmental Policies and Performance
Property developers in China are subject to a number of environmental laws and regulations including the Environment Protection Law of the PRC (《中華人民共和國環境保護法》 ), the Prevention and Control of Noise Pollution Law of the PRC (《中華人民共和國環境噪聲污染防 治法》), the Environmental Impact Assessment Law (《環境影響評價法》), and Administrative Regulations on Environmental Protection in relation to Construction Projects (《建設項目環境保 護管理條例》). The Group is subject to these laws and regulations concerning the protection of health and environment. As required by PRC laws, independent environmental consultants have conducted environmental impact assessments at all of construction projects and environmental impact assessment documents were submitted to the relevant government authorities for approval before commencement of construction. The local authorities may request a developer to submit the environmental impact documents, issue orders to suspend the construction and impose a penalty for a project where environmental impact assessment documents have not been approved before commencement of construction. For the year ended 31 December 2018, no fines or penalties for non-compliance of PRC environmental laws and regulations were imposed on the Group. The Group is in compliance in all material respects with applicable environmental laws and regulations in China and has obtained all required approvals in relation to the environmental impact reports for property development projects.
38 Relationships with Customers and Suppliers
The Group maintained good relationships with customers and suppliers. The major suppliers of the Group are construction material suppliers and construction contractors, and the five largest suppliers accounted for approximately 13.7% of total purchases for the year ended 31 December 2018. The Group’s five largest customers accounted for approximately 0.4% of total revenue for the year ended 31 December 2018.
The Group engages third-party contractors to carry out various services relating to property development projects, including design, pile setting, foundation building, construction, equipment installation, electromechanical and pipeline engineering, elevator installation and landscaping. The Group generally selects third-party contractors through a tender process and endeavor to engage companies with a strong reputation and track record, high performance, reliability and adequate financial resources.
Financial Review
Revenue
The Group’s revenue comprises income from sale of properties and, to a lesser extent, property management, rental and other property related services earned during the year. The Group’s revenue increased by 34.2%, to approximately RMB54,781.0 million for the year ended 31 December 2018 from approximately RMB40,820.3 million for the year ended 31 December 2017. As a breakdown, income from sales of properties during the year ended 31 December 2018 was approximately RMB50,838.2 million, representing a year-on-year increase of 31.1%; management service fees from commercial properties were RMB905.8 million, representing a year-on-year increase of 115.1%; and rental income was RMB1,242.9 million, representing a year-on-year increase of 116.7%.
Cost of Sales
Cost of sales consists primarily of the costs the Group incurred directly in relation to its property development activities as well as its leasing and property management operations. Cost of sales includes construction costs, land use rights costs, business tax and surcharges, capitalized interest and other business costs. The Group’s cost of sales increased by 31.1% to approximately RMB35,723.6 million for the year ended 31 December 2018 from approximately RMB27,239.2 million for the year ended 31 December 2017.
39 The following table sets forth information relating to the Group’s cost of sales for the years indicated:
Table 6: Breakdown of the Group’s cost of sales
Year-on-year change compared Breakdown of the Group’s cost of sales 2018 2017 to 2017 RMB’000 RMB’000 %
Land use rights costs 11,799,749 11,064,593 7 Construction costs 15,935,062 12,327,734 29 Capitalised interest 5,154,272 1,516,587 240 Tax and surcharges 327,362 605,779 -46 Provision for impairment of properties held or under development for sale 263,684 13,267 1,888 Other expenses 2,243,459 1,711,233 31 Sub-total 35,723,588 27,239,193 31
Total GFA delivered (sq.m.) 4,453,962 3,837,800 16 Average cost per sq.m. sold (RMB) (Note) 7,384 6,490 14 Average selling price per sq.m. sold (RMB) 11,414 10,107 13 Average cost as percentage of average selling price 64.69% 64.21% 1
Note: Average cost per sq.m. sold refers to the average cost of the Group’s property sales (excluding the Group’s leasing and property management operations) and is derived by dividing the sum of construction costs, land use rights costs and capitalized interest for the year by the total GFA delivered in that year.
Gross Profit
The Group’s gross profit increased by 40.3% to approximately RMB19,057.4 million for the year ended 31 December 2018 from approximately RMB13,581.1 million for the year ended 31 December 2017. The Group reported a gross profit margin of approximately 34.8% for the year ended 31 December 2018, higher than that of approximately 33.3% for the year ended 31 December 2017, primarily attributable to the increase in selling price and favourable earnings recorded for most projects.
Fair Value Gains on Investment Properties
The Group develops and holds certain of its commercial properties such as retail shops, shopping malls and carparks for rental income or capital appreciation. The Group’s investment properties are appraised annually by an independent property valuer. Any appreciation or depreciation in the Group’s investment property value is recognized as fair value gains or losses in the Group’s consolidated statements of income. Valuation gains on investment properties was approximately RMB3,285.1 million before tax for the year ended 31 December 2018. The fair value gain recorded for investment properties was primarily attributable to the increase in capital value on the whole.
40 Other Gains – Net
Net other gains increased by 179.1% to approximately RMB840.1 million for the year ended 31 December 2018 from approximately RMB301.0 million for the year ended 31 December 2017. The increase in net other gains was mainly due to the gain of RMB72.5 million arising from the disposal of certain subsidiaries engaging in real estate development business and the remeasurement gain of RMB677.4 million arising from certain joint ventures engaging in real estate development which has been converted into subsidiaries.
Selling and Marketing Expenses
Selling and marketing expenses increased by 29.6% to approximately RMB2,374.4 million for the year ended 31 December 2018 from approximately RMB1,831.9 million for the year ended 31 December 2017. The increase was primarily attributable to an increase in selling and marketing expenses incurred as the Group launched more projects for pre-sale in 2018.
Administrative Expenses
Administrative expenses increased by 16.9% to approximately RMB2,650.8 million for the year ended 31 December 2018 from approximately RMB2,266.9 million for the year ended 31 December 2017. The increase in administrative expenses was primarily attributable to an increase in staff costs resulting from an increase in the Group’s staff headcount in 2018.
Finance Costs – Net
The Group’s finance costs primarily consists of interest expenses on bank loans, senior notes and corporate bonds less capitalized interest, and foreign exchange gains. Interest on borrowings relating to project development is capitalized to the extent that it is directly attributable to a particular project and used to finance the development of that project. Net finance costs of the Group increased by 10.7% to approximately RMB739.9 million for the year ended 31 December 2018 from approximately RMB668.2 million for the year ended 31 December 2017. This increase was mainly attributable to the foreign exchange loss on borrowings which are denominated in USD, at the depreciation of RMB against US dollars.
Income Tax Expense
The Group’s income tax expense includes provisions made for land appreciation tax, PRC corporate income tax and deferred income tax during the year. Income tax expense increased by 39.6% to approximately RMB6,599.9 million for the year ended 31 December 2018 from RMB4,728.8 million for the year ended 31 December 2017. The increase was primarily due to the increase in the Group’s profit from the property development segment in 2018.
Profit for the Year
Net profit attributable to equity holders of the Company increased by 78.2% to approximately RMB6,761.0 million for the year ended 31 December 2018 from approximately RMB3,794.0 million for the year ended 31 December 2017.
41 Core earnings attributable to equity holders of the Company increased by 83.4% to approximately RMB5,663.1 million for the year ended 31 December 2018 from approximately RMB3,087.6 million for the year ended 31 December 2017.
Liquidity, Financial and Capital Resources
Cash position
As at 31 December 2018, the Group’s cash at bank and at hand (including restricted cash) increased by 93.3% to approximately RMB47,655.8 million from approximately RMB24,647.8 million as at 31 December 2017. The carrying amount of the Group’s cash and cash equivalents increased by 100.6% to approximately RMB41,213.9 million as at 31 December 2018 from approximately RMB20,542.7 million as at 31 December 2017.
Borrowings and charges on the Group’s assets
The Group’s outstanding current and non-current borrowings and convertible bonds amounted to RMB83,572.7 million as at 31 December 2018, of which approximately RMB27,057.4 million of current and non-current borrowings and convertible bonds is repayable within one year, approximately RMB37,106.4 million of current and non-current borrowings and convertible bonds is repayable after one year but within two years, approximately RMB19,352.7 million of non- current borrowings is repayable after two years but within five years and approximately RMB56.2 million of non-current borrowings is repayable after five years. The Group’s current and non- current borrowings and convertible bonds increased by RMB34,174.9 million to RMB83,572.7 million as at 31 December 2018 from RMB49,381.2 million as at 31 December 2017.
As at 31 December 2018, the Group’s bank loans were approximately RMB28,696.4 million, all of which were secured by one or a combination of the following methods: land use rights, properties under development, investment properties, property, plant and equipment, shares of the Company’s subsidiaries, bank deposits and/or guarantees by the Company’s subsidiaries. The Group’s bank borrowings are from major commercial banks, all of which are independent third parties.
The proportion of the Group’s long-term borrowings in the total borrowings and convertible bonds was 67.6% as at 31 December 2018, ensuring the healthy and stable cash flow of the Group in the future. The Directors believed that the constant optimization of the Group’s debt level and financial structure had laid a solid foundation for the Group to withstand market volatility and diminish financial risks.
The weighted average interest rate for the Group’s bank borrowings, senior notes, corporate bonds etc. as at 31 December 2018 was 6.09%.
Net debt-to-equity ratio
As at 31 December 2018, the Group’s net debt-to-equity ratio decreased to 78.6% from 100.4% in 2017, primarily due to an increase in cash and net assets of the Group. Net debt-to-equity ratio is calculated by dividing net debt at the end of the period by total equity and multiplying by 100%. Net debt is calculated as total borrowings and convertible bonds less cash, cash equivalents and restricted cash.
42 Contingent Liabilities
Pursuant to the mortgage contracts, banks require the Group to guarantee its purchasers’ mortgage loans. Guarantees for mortgages on pre-sold residential properties are generally discharged at (i) the issue of the real estate ownership certificate by government authorities to the purchaser; or (ii) the satisfaction of mortgage loans by the purchasers of the properties (whichever is earliest). If a purchaser defaults on a mortgage loan, the Group is responsible to repay the outstanding mortgage principal together with accrued interest and penalties owed by the defaulting purchasers to the banks and the Group is entitled to take over the legal title and possession of the related properties. The Group’s guarantee period typically starts from the date of grant of the mortgage.
As at 31 December 2018, the Group’s contingent liabilities in respect of the guarantees given to the financial institutions for mortgage loan facilities granted to purchasers of the Group’s properties amounted to approximately RMB41,015.5 million (as at 31 December 2017: approximately RMB18,825.4 million). In light of the minimal historical default rates of such mortgage loans facilities, the Directors considered that the likelihood of default of payments by the purchasers is minimal and therefore the financial guarantee measured at fair value is immaterial.
There are certain corporate guarantees provided by the Company’s subsidiaries for each other in respect of borrowings as at 31 December 2018. The Directors consider that the Company’s subsidiaries are sufficiently and financially resourced to settle their obligations.
As at 31 December 2018, the Group provided guarantee with the amount of RMB25,218 million (as at 31 December 2017: RMB24,557 million) to its joint ventures and associates.
Save as those disclosed in this results announcement, the Group had no other material contingent liabilities as at 31 December 2018.
Foreign Exchange Risk
As at 31 December 2018, the Group had cash balances denominated in Renminbi of approximately RMB46,300.6 million, in Hong Kong dollars of approximately RMB187.6 million and in U.S. dollars of approximately RMB1,167.6 million.
Almost all of the Group’s operating activities are carried out in the PRC with most of the transactions denominated in Renminbi. The Group is exposed to foreign currency risk arising from the exposure of U.S. dollars and Hong Kong dollars against Renminbi as a result of certain cash balances and the settlement of certain general and administrative expenses and other loans in U.S. dollars or Hong Kong dollars.
As a result of the issuance of these senior notes, the Group became exposed to foreign currency risk arising from the exposure of Renminbi against U.S. dollars. The Directors have closely monitored the foreign exchange risks and have adopted hedging instruments to cover part of the exchange rate exposure.
In addition, Renminbi is not freely convertible into foreign currencies and the conversion of Renminbi into foreign currencies is subject to rules and regulations of the foreign exchange control promulgated by the PRC government.
43 Material Acquisition and Disposal
During the year ended 31 December 2018, the Group did not have any material acquisition or disposal of subsidiaries, associates or assets.
Future Plans for Material Investment or Capital Assets
The Directors confirmed that as at the date of this results announcement, there are no current plans to acquire any material investment or capital assets other than in the Group’s ordinary business of property development.
Employees and Compensation Policy
As at 31 December 2018, the Group had 22,903 full-time employees in the PRC and Hong Kong, 20,653 of which worked in the property development operations and management of commercial complexes and 2,250 were engaged in other operations.
The Group determines the remuneration packages of all employees (including the Directors) based on their performance, work experience and the prevailing market wage level, and provide promotional opportunities for them with reference to their individual strengths and potentials. The remuneration package of the employees consists of basic salary, cash bonus and share- based payments. The Group has established a performance appraisal system so as to evaluate the performance of its employees on an annual basis and use the evaluation results to determine their salary increment or promotion accordingly. The Group recognized an expense in relation to share- based payments of RMB29.5 million for the year ended 31 December 2018 (for the year ended 31 December 2017: RMB77.9 million).
ANNUAL GENERAL MEETING
The annual general meeting of the Company (the “AGM”) is to be held on Wednesday, 8 May 2019 and the notice of AGM is expected to be published and dispatched to the Shareholders on or about Thursday, 28 March 2019.
FINAL DIVIDEND
The Board recommended the payment of a final dividend of RMB0.3 per share for the year ended 31 December 2018 (2017: RMB0.162) to the shareholders of the Company (the “Shareholders”).
The proposed final dividend will be paid on or about 30 June 2019 after approval by the Shareholders at the forthcoming AGM.
The proposed final dividend shall be declared in RMB and paid in Hong Kong dollars. The final dividend payable in Hong Kong dollars will be converted from RMB at the average middle rate of RMB to Hong Kong dollars as announced by the People’s Bank of China for the business days during the period from 2 May 2019 to 6 May 2019.
44 CLOSURE OF THE REGISTER OF MEMBERS
The register of members of the Company will be closed from Friday, 3 May 2019 to Wednesday, 8 May 2019, both days inclusive, in order to determine the identity of the Shareholders who are entitled to attend the forthcoming AGM to be held on Wednesday, 8 May 2019. In order to be eligible to attend and vote at the forthcoming AGM, all transfers accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong before 4:30 p.m. on Thursday, 2 May 2019.
The record date for qualifying to receive the proposed final dividend is Friday, 17 May 2019. In order to determine the rights of Shareholders entitled to receive the proposed final dividend, which is subject to the approval by Shareholders at the forthcoming AGM, the register of members of the Company will also be closed from Wednesday, 15 May 2019 to Friday, 17 May 2019, both days inclusive. In order to qualify for the proposed final dividend, all transfers accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712- 1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong before 4:30 p.m. on Tuesday, 14 May 2019.
CORPORATE GOVERNANCE PRACTICES
The Group is committed to maintaining high standards of corporate governance to safeguard the interests of the Shareholders and to enhance corporate value and accountability. The Company has adopted the Corporate Governance Code and Corporate Governance Report (the “CG Code”) as set out in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) as its own code of corporate governance. The Company has complied with all applicable code provisions of the CG Code throughout the year ended 31 December 2018. The Company will continue to review and monitor its corporate governance practices to ensure compliance with the CG Code.
MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding Directors’ securities transactions. Having made specific enquiries with all the Directors, each of the Directors has confirmed that he has complied with the Model Code during the year ended 31 December 2018.
During the year ended 31 December 2018, the Company has also adopted its own code of conduct regarding employees’ securities transactions on terms no less exacting than the standards set out in the Model Code for compliance by its relevant employees who are likely to be in possession of inside information of the Company in respect of their dealings in the Company’s securities.
45 PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the year ended 31 December 2018, the Company has repurchased 26,168,000 Shares through the Stock Exchange at a total consideration of approximately HK$145.3 million. All such Shares repurchased have been cancelled. Details of the repurchases of such Shares were as follows:
Number of Shares Highest price Lowest price Aggregate Month/Year Repurchased paid per Share paid per Share price paid (HKD) (HKD) (HKD)
April 2018 7,622,000 6.64 6.36 49,899,000 September 2018 10,546,000 5.53 5.18 56,216,000 November 2018 8,000,000 5.05 4.77 39,194,000
26,168,000 145,309,000
Save for the above, neither the Company, nor any of its subsidiaries have purchased, sold or redeemed any of the Company’s shares during the reporting period.
REVIEW OF ANNUAL RESULTS BY AUDIT COMMITTEE
The audit committee of the Company, comprising all the independent non-executive Directors, has reviewed together with the management and external auditor the accounting principles and policies adopted by the Group and the consolidated financial statements for the year ended 31 December 2018.
The financial information contained in this announcement is based on the audited consolidated financial statements of the Group for the year ended 31 December 2018. Such information was extracted from the financial statements agreed with the auditors of the Company.
PUBLICATION OF THE CONSOLIDATED ANNUAL RESULTS AND 2018 ANNUAL REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY
This annual results announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.futureholdings.com.cn), and the 2018 annual report containing all the information required under the Listing Rules will be dispatched to the Shareholders and published on the respective websites of the Stock Exchange and the Company in due course.
By order of the Board Future Land Development Holdings Limited WANG Zhenhua Chairman
PRC, 8 March 2019
As at the date of this announcement, the Directors are Mr. Wang Zhenhua, Mr. Lv Xiaoping and Mr. Lu Zhongming as executive Directors, Mr. Zhang Shengman and Mr. Wang Xiaosong as non-executive Directors, and Mr. Chen Huakang, Mr. Zhu Zengjin and Mr. Zhong Wei as independent non- executive Directors.
* Denotes English translation of the name of a Chinese company or entity is provided for identification purpose only.
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