Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 FINANCIAL HIGHLIGHTS • Total contracted sales amounted to a record high of RMB130,030 million, representing an increase of 19% as compared to that of 2018. • Revenue increased by 23% to RMB50,926 million as compared to that of 2018. • Operating profit (excluding fair value gains on investment properties) increased by 14% to RMB10,502 million as compared to that of 2018. • Profit attributable to owners of the Company amounted to RMB2,656 million. Core profit amounted to RMB2,084 million. Basic earnings per share was RMB0.349. • As at 31 December 2019, net gearing ratio was 77% and total cash resources amounted to RMB33,566 million, maintaining financial soundness. • Total assets amounted to RMB243,699 million. • The Board is pleased to propose a final dividend of HKD0.026 per share, in the form of cash. Together with the interim dividend of HKD0.110 per share, total dividend declared for the year was HKD0.136 per share. – 1 – The board of directors (the “Board”) of Sino-Ocean Group Holding Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively “our Group”, “the Group” or “we”) for the year ended 31 December 2019. For the twelve months ended 31 December 2019, the Group recorded RMB50,926 million in revenue, an increase of 23% compared to the previous year. Due to the significant gain on fair value of investment properties in 2018, profit attributable to owners of the Company and earnings per share in 2019 decreased to RMB2,656 million and RMB0.349, respectively, decreasing by 26% as compared to the previous year. Based on the profit attributable to owners of the Company in 2019, the Board is pleased to propose a final dividend of HKD0.026 per share for the year ended 31 December 2019. Together with the interim dividend of HKD0.110 per share, total dividend per share for 2019 was HKD0.136 (2018: HKD0.213). The payment of the 2019 final dividend would be subject to the approval of the shareholders of the Company (the “Shareholders”) at the Company’s annual general meeting (the “AGM”). MARKET REVIEW AND PROSPECT 2019 market review Although global economic growth in 2019 slowed down and foreign demands were restricted, economy in China still demonstrated considerable resilience. On the basis of ‘six stabilities’ rolled out by the Central Government the economy moved forward in a steady pace. As reforms entered an advanced stage, substantial adjustments have been made to the economic structure leading to increasingly higher quality development, with 6.1% growth in GDP year-on-year. As the Central Government demanded ‘stable housing prices, stable land prices and stabilized expectations’ the main theme of macro measures for the real estate industry was firmly on stability. The Politburo Conference in July first proposed ‘not using real estate as a means to stimulate short-term economy’, thus carried on the notion of ‘housing for accommodation not speculation’. In this context, the Central Government placed even more emphasis on the management of bottom line and early warning. Under ‘one city one policy’ regime, local authorities adopted varying and flexible policies as the situation dictated. While empowering local authorities to assume responsibilities for administering policies, the Central Government effectively monitored and supervised their macro measures efforts to maintain a stable and healthy market. At the same time, the Central Bank made it clear that the financial policy for real estate must have continuity and stability, and there should be more stringent regulatory and risk warning measures for the financing activities of those large property enterprises that operated on high gearing to ensure proper control on their interest-bearing debts and assets and liabilities. As financing policy tightened and property enterprises were being progressively regulated, large-scale financing has become increasingly difficult. Enterprises had to speed up turnover time to facilitate cash collection. – 2 – Amid the real estate market became more stable, total GFA sold and sales volume of commodity housing in 2019 nationwide broke new record, albeit at a slower growth rate. GFA sold was 1.72 billion sq.m., a drop of 0.1% year-on-year while sales volume reached RMB15,900 billion, up by 6.5% year-on-year. Market sentiments were positive at the beginning of the year, releasing suppressed demand and sales were boosted in March and April. However, the Central Government’s reiteration of ‘housing for accommodation not speculation’ in July put some of the demands on hold and slowed down sales visibly. In addition as financing was tightened, enterprises adjusted their prices downwards to encourage turnover and the golden months of September and October were nothing like what they were before. Differentiation between regions and cities widened, transactions in tier one and tier two cities were higher than the previous year while those in the next two tiers were slacking. During the year, the land market also appeared ‘buoyant then subdued’. As financing in the first half of the year was relatively relaxed, the ‘small boom’ in the property market found its way to the land market, encouraging certain enterprises to become more zealous in land acquisition, resulting in higher floor price and premium rate. Since then the Central Government resumed a firm stance in July, calming the land market and lowering the premium rate. As a result, aborted auctions and withdrawals of land plot sales increased for the rest of the year. 2020 market outlook It is China’s target to build a moderately prosperous society in all respects in 2020. It is also an important year for the satisfactory conclusion of the 13th five-year plan. Economic development is still very much focused on ‘stability’ and progress should be made within a reasonable range. The real estate industry will firmly adhere to the principle of ‘housing for accommodation not speculation’ in the future. Local authorities will exercise macro measures precisely through ‘one city one policy’ to ensure a stable and healthy market, and implement long-term control mechanisms aimed at upholding the policy of ‘three stabilities’ (i.e. stable housing prices, stable land prices and stabilized expectations). Right at the beginning of 2020, the novel coronavirus first assaulted Wuhan and soon spread to the entire country. In view of the severity of the epidemic, the Central Government made it clear that there will be strong financial support for affected regions and industries, and adjustments in investment structure to stabilize people’s consuming ability. The Group took its corporate social responsibility seriously. We set up a fund of RMB10 million to provide monetary support and materials to various affected areas including Wuhan in Hubei Province both to fight the virus and to prevent infection. Meanwhile, the Group reduced rentals by half in the six self-operated shopping complexes during the entire restricted period to ride out the storm together with the retailers. At the same time, the Group activated online flat viewing channels for 75 projects in 44 cities to enable customers to examine and purchase properties in safety. Online sales may well be a battleground where property enterprises compete in the future. – 3 – In the medium to long term, the development of the property industry is highly in accordance with the economic growth in China. As the country’s urbanization advances, the aggregation effect of cities and city clusters will sustain people’s demands for housing and upgrading and thus create plenty of room for industry growth. Meanwhile the Central Government at conferences dealing with the epidemic has emphasized that people’s need for healthy living must be satisfied to nourish better life habits. Therefore healthy building may well be the future of real estate. The concept of ‘Building • Health’ that the Group has always advocated will be favoured by the market and customers, giving our products a competitive edge. FINANCIAL REVIEW Revenue The components of the revenue are analyzed as follows: (RMB million) 2019 2018 Change Property development 43,100 35,493 21% Property investment 678 1,077 –37% Property management 1,249 1,129 11% Other real estate related businesses 5,899 3,723 58% Total 50,926 41,422 23% The Group’s revenue in 2019 increased by 23% to RMB50,926 million, from RMB41,422 million in 2018. Property development segment remained the largest contributor which accounted for about 85% of total revenue. During the year, 86% of revenue from property development was contributed by the five major city clusters (2018: 79%). We will persistently maintain a balanced project portfolio for mitigating the risk from single market fluctuations and enabling more effective usage of resources, which allows the Group to stay focused on the future development plan. – 4 – Cost of sales The Group’s total cost of sales is mainly the cost of property development. The land cost and construction cost accounted for approximately 85% of the cost of property development during the year (2018: 84%). Excluding carparks, average land cost per sq.m. of property development business in 2019 decreased to approximately RMB5,400 compared to RMB6,400 in 2018. This was mainly due to more projects in tier-two cities being delivered, which were at relatively lower land cost. Average construction cost per sq.m.