RE IV Limited Bond Investor Report Q2 2021
www.wprei.com RE IV Limited, Interim Report Q2 2021
Table of contents
Section A 03 Overview 04 About this report 05 Green Bond factsheet 07 Project factsheet 08 Letter from the CEO 10 Highlights of Q2 2021 12 Quarterly data dashboard
Section B 13 Performance 14 Project status 29 Financial performance 30 - Highlights of financial performance 31 - Consolidated financial statements
Investor relations contact
Karen Xu Head of Investor Relations
[email protected] +86 158 2156 4358
Financial Calendar
2021 Financial Year 2021-05-31 Q1 2021 Bond Investor Report 2021-08-31 Q2 2021 Bond Investor Report 2021-11-30 Q3 2021 Bond Investor Report 2022-02-28 Year-end 2021 Bond Investor Report (Unaudited) 2022-03-31 Year-end 2021 Bond Investor Report (Audited)
2 RE IV Limited, Interim Report Q2 2021
Section A Overview Pages 03—12
3 A — Overview RE IV Limited, Interim Report Q2 2021
About this report
Background Reporting Boundary Basis of Preparation The Quarterly Report has been prepared in The Quarterly Report pertains solely to RE IV The Consolidated Financial Statements are accordance with the terms and conditions Limited and no financial information regarding prepared in accordance with IFRS (IAS 34). governing the Green Bond issued by White other affiliated entities is set out herein. Peak during the third quarter of 2019 and the However, to facilitate the understanding of Caveat fourth quarter of 2020. The reporting framework the Quarterly Report, certain non-financial The Quarterly Report has not been reviewed by established by the Quarterly Report will enhance information relating to, inter alia, White Peak’s the company’s auditor. transparency, facilitate access to reliable business platform which is not exclusively information regarding White Peak’s business attributable to RE IV Limited has been included operations and strengthen White Peak’s herein. communications with Green Bond investors.
General non-financial information reporting White Peak Real Estate II L.P. White Peak Real Estate III L.P. boundary
Financial information reporting boundary
Project 1 Project 2 Project 3 Project 4 Project 5 Project 1 Project 2 Project 3 Project 4 Project 5
White Peak Real Estate IV L.P.
RE IV Limited (Green Bond issuer)
ECO ECO Pian Print Xia Huanshan Jufu Junbu Fushan Shenbei City A-2 City B Ling House zhuang Road Road Street
4 A — Overview RERE IVIV Limited,Limited,Interim Interim Report Q2 2021
2019 Green Bond factsheet (ISIN: SE0012741064)
Issuer RE IV Limited
Volume SEK 600 million
Total framework SEK 1 billion
Tenure 3 years (Final Maturity Date at 5 July 2022)
Coupon Fixed 9%, semi-annual payments
Use of proceeds The proceeds will be used to finance investments and transaction costs in accordance with the Terms and Conditions governing the Green Bond
Maintenance — Loan to Value <55% covenants — Minimum Cash: at least equal to 12 months scheduled interest payments
Listing The Green Bond is listed on the Nasdaq Stockholm Corporate Bond list as well as on the Freiverkehr list at Deutsche Borse.
Hedging At the end of Q2 2021, RE IV limited held RMB/SEK FX options of SEK 600 mil notional, at strike 1.2325. The notional amount is sufficient to cover the future bond principal amount. The company intends to use this RMB/SEK FX option to hedge the foreign currency risk, should SEK appreciate beyond 1.2325 against RMB.
Covenant compliance Requirement Q2 2021 certificate Loan to Value¹ <55% 19.2%
Minimum RMB 450 mil Cash SEK 78 mil² (SEK 596 mil)³
¹ Loan to Value means the ratio of Net Interest Bearing Debt to Gross Asset Value as per the latest independent third-party valuation. ² The sum of the minimum cash requirements of the 2019 Green Bond (SEK 54 mil) and the 2020 Green Bond (SEK 24 mil) ³ As of June 30, 2021, the Group had cash and bank balances in the amount of RMB 888 million, of which RMB 438 million was not counted towards cash and cash equivalents in the financial statements, since it can mainly be used for payment of construction costs when approval from related government authority is obtained. The amount in SEK is based on currency exchange rates as of June 30, 2021.
5 A — Overview RERE IVIV Limited,Limited,Interim Interim Report Q2 2021
2020 Green Bond factsheet (ISIN:SE0015195847)
Issuer RE IV Limited
Volume SEK 600 million
Total framework SEK 1.5 billion
Tenure 3 years (Final Maturity Date at 27 November 2023)
Coupon Fixed 8%, semi-annual payments
Use of proceeds The proceeds will be used to finance investments and transaction costs in accordance with the Terms and Conditions governing the Green Bond
Maintenance — Loan to Value <55% covenants — Minimum Cash: at least equal to 6 months scheduled interest payments
Listing The Green Bond is listed on the Nasdaq Stockholm Corporate Bond list.
Hedging At the end of Q2 2021, RE IV limited held RMB/SEK FX options of SEK 585 mil notional, at strike 1.2579. The notional amount is sufficient to cover the future bond principal amount. The company intends to use this RMB/SEK FX option to hedge the foreign currency risk, should SEK appreciate beyond 1.2579 against RMB.
Covenant compliance Requirement Q2 2021 certificate Loan to Value¹ <55% 19.2% Minimum RMB 450 mil Cash² SEK 78 mil² (SEK 596 mil)³
¹ Loan to Value means the ratio of Net Interest Bearing Debt to Gross Asset Value as per the latest independent third-party valuation. ² The sum of the minimum cash requirements of the 2019 Green Bond (SEK 54 mil) and the 2020 Green Bond (SEK 24 mil). ³ As of June 30,2021, the Group had cash and bank balances in the amount of RMB 888 million, of which RMB 438 million was not counted towards cash and cash equivalents in the financial statements, since it can mainly be used for payment of construction costs when approval from related government authority is obtained. The amount in SEK is based on currency exchange rates as of June 30, 2021.
6 A — Overview RE IV Limited, Interim Report Q2 2021
Project factsheet
Current investments Equity investment % by city
By the end of Q2 2021, RE IV Limited had made ten investments, 3% Yantai 5% located in seven cities across three provinces, with a total population 8% Tai’an exceeding 230 million. 35% Shenyang 13% Linyi The projects resulting from the first seven investments made have Chengde started to generate sales cash flows. The two projects acquired in 17% 19% Qingdao October 2020 (the Jufu Project in Yantai and the Huanshan Project in Pingdu Tai’an) are proceeding according to plan with pre-sales expected to be initiated in Q3 this year. The projects have estimated delivery dates ranging between 2022 and 2025. Equity investment % by project 3% 5% Huanshan Road Project, Tai’an 6% 19% 8% Shenbei Project, Shenyang Junbu Street, Linyi 9% 17% Eco City (Site B), Yantai 10% Jufu Road Project, Yantai 13% 11% Pian Ling Project, Chengde Eco City (Site A-2), Yantai Fushan Project, Yantai Xiazhuang Project, Qingdao Print House Project, Pingdu
Property Year of Year of project Equity invested Estimated Project name type(1) acquisition completion(2) (RMB million) (3) total GFA m2 (4) Status
Eco City (Site A-2), Yantai Residential 2018 2022 340 94,300 Sales launched
Eco City (Site B), Yantai Residential 2018 2023 446 125,600 Sales launched
Fushan Project, Yantai Residential 2018 2022 259 245,832 Sales launched
Pian Ling Project, Chengde Residential 2019 2023 359 181,432 Sales launched
Print House Project, Pingdu Residential 2019 2022 117 44,509 Sales launched
Shenbei Project, Shenyang Residential 2020 2024 722 283,106 Sales launched
Xiazhuang Project, Qingdao Residential 2020 2023 210 47,133 Sales launched
Huanshan Road Project, Tai’an Residential 2020 2024 790 90,492 Acquisition completed
Jufu Road Project, Yantai Residential 2020 2024 419 178,763 Acquisition completed
Junbu Street Project, Linyi Residential 2021 2025 532 203,563 Acquisition completed Total 4,194 1,494,730
(1) Some projects have a small commercial portion, but the residential portion is above 90% for all the projects. (2) Project completion means all properties are sold and starting to be delivered to customers. Depending on the duration of the sales period, it could take 1-2 more years for all units to be delivered and revenue to be recognised. (3) The equity deployed includes equity contributions in the form of subordinated shareholder loans from White Peak Real Estate IV L.P. and recycled onshore funds. (4) The building areas may change due to changes in project positioning. Huanshan Junbu In million RMB Total Site A-2 Site B Fushan Pian Ling Print House Shenbei Xiazhuang Road Jufu Road Street
CBRE valuation(5) 8,535 897 1,039 1,231 965 307 1,259 374 975 523 965
Book value of properties(6) 7,795 766 887 1,109 874 291 1,184 350 906 478 949
Revaluation gain/ loss 740 131 152 122 91 16 75 24 69 45 16
(5) The latest CBRE valuation was carried out as per 30 June 2021. (6) The book value pertains to properties under development for sale in the balance sheet as per 30 June 2021. 7 A — Overview RE IV Limited,Interim Report Q2 2021
Letter from the CEO
Dear Investor,
During the second quarter of 2021, China's GDP grew by 7.9% year-on-year. The year-to-date GDP growth as of June 30 was 12.7% year-on-year, putting it on track to reach the annual growth target of 6% set at the National People’s Congress (NPC) in March this year. Several financial institutions who expected growth rates of 8-9% in their earlier forecasts, made downward adjustments in view of the weakening economic indicators during Q2.
China has been accelerating the national vaccination program in Q2. By early July, China had administered over 1.4 billion doses of COVID-19 vaccine, which has greatly restored the confidence of consumers and businesses alike. A few local outbreaks and sporadic cases occurred in Guangdong province of Southern China in June but were quickly contained. Since the end of July, a larger and more challenging outbreak started from the Nanjing Lukou International Airport and spread to other regions in China. Many cities have stepped up the prevention measures and asked the residents to cancel all non-essential travel. China managed to eliminate the local infection cases within one month, once again demonstrating the effectiveness of China’s COVID-19 containment model. Many industries, including real estate have, nevertheless, experienced negative economic impact due to the outbreak. Our sales offices in Yantai were closed for approximately one month from July, after several locally transmitted infection cases occurred in the city, but were reopened in mid-August.
In the past few months, China imposed regulatory crackdowns on IT companies, the after-school education industry and overseas listings, triggering an increase in equity market volatility and reducing valuations. The purpose of the policy considerations is diverse, but broadly aiming at addressing income inequalities, curtailing monopolistic competition, protecting data privacy and national security. The ultimate goal is to develop China into a country with common prosperity, green sustainable development and independence in key companies/industries.
In the real estate sector, the national housing sales volumes (GFA) in the first six months increased by 29.4% year- on-year. The price growth accelerated marginally to 4.7% on a year-on-year basis in Q2 2021 from 4.6% in Q1 2021. Continuing the restrictive policy trend, key measures such as financial leverage restrictions for developers have been tightened with the focus on deleveraging the sector and maintaining a stable housing market. The deleveraging policy’s direct impact on us is limited since we have conservative levels of leverage. However, we expect the reduced market liquidity will incentivize some highly leveraged developers to give discounts in order to generate cashflow, which may have an indirect impact on pricing.
Staying aligned with China’s long-term strategic goals is critical for a company’s development in this market. We believe our prudent financial strategy coupled with our ESG focus and operating in markets where demand is driven by “housing for living and not speculation” are very much aligned with China’s long-term strategic goals.
8 A — Overview RE IV Limited, Interim Report Q2 2021
Project Updates Publication of White Peak Sustainability Report
The construction is proceeding according to plan for all projects in At the end of June, we published the 2020 Sustainability Report of the portfolio. We have completed landscape demonstration zones White Peak on our website Sustainability (wprei.com). The report for the seven projects that are currently on sale. In conjunction summarised our continued efforts and achievements in driving with the launch of the demo zones, various marketing events were sustainability in our projects and daily operations during the past held to allow customers to get a sense of the delivery standard year. With China’s carbon neutrality commitments, our vision of and community environment, albeit that the projects are still under sustainable living for Chinese homeowners is more relevant today construction. than ever before.
We have also made substantial progress on the latest acquired I look forward to sharing more progress on our development with projects, namely the Jufu Project in Yantai, the Huanshan Project in you throughout the year. Tai'an, and Junbu Street Project in Linyi. For the Jufu Road Project, the sales centre was completed and open to the public in Q2. Pre- sales are expected to be initiated in Q3 this year. For the Huanshan Project, the wood-structure community centre has been completed in Q2 and became a headline in the city, paving the way for the Sincerely, pre-sales launch scheduled in Q3 2021. The Junbu Street Project Jesper Jos Olsson in Linyi has also completed its sales centre and launched the pre- Beijing, August 2021 sales in August.
H1 2021 Sales Update
RE IV Limited sold 847 units with total contracted sales of RMB 1,051 million during H1 2021 (H1 2020: RMB 734 million), which is in line with our expectations.
During H1 2021, Chengde Pian Ling sold 174 units and ranked No.1 among all projects in the core areas of Chengde. Pingdu Print House Project also achieved the highest average selling price among all the bare-shell projects in the city.
The majority of the sales this year will be achieved in the 2nd half, as we are launching the sales for the three projects in Yantai, Tai'an and Linyi. We are confident all the existing ten projects will have launched the sales by the end of this year.
9 A — Overview RE IV Limited, Interim Report Q2 2021
Highlights of Q2 2021 Continued sales and construction
Yantai Hammarby Eco City (Site A-2 and Site B) Fushan Nordic Park
Construction is on schedule with 22 units sold on Site A-2 and 81 units sold on Site B in Q2 2021 Construction is on schedule with 39 units sold in Q2 2021
Pingdu Print House Chengde Pian Ling
Construction is on schedule with 84 units sold Construction is on schedule with 113 units sold in Q2 2021, making it the best-selling project within the in Q2 2021 core area of Chengde
Shenyang Shenbei Qingdao Xiazhuang
Construction is on schedule with 176 units sold in Construction is on schedule with 44 units sold in Q2 2021 Q2 2021
Yantai Jufu Road Tai'an Huanshan Road Linyi Junbu Street
Construction is on schedule Construction is on schedule Construction is on schedule
10 A — Overview RE IV Limited, Interim Report Q2 2021
Highlights of Q2 2021 Launch of landscape demonstration zone and sales centre
Pingdu Print House Chengde Pian Ling
The landscape demo zone is completed and open to the public Marketing events held to launch the demonstration zone to the public
Shenyang Shenbei Qingdao Xiazhuang
The landscape demo zone is completed and open to the public Potential customers visiting the completed demonstration zone
Tai’an Huanshan Road
The Sales Centre with wood structure has been completed and open to the public
Yantai Jufu Road Linyi Junbu Street
Sales Centre is completed and open to Potential customers attended the Sales Centre is completed and open to the public the public first sales event 11 A — Overview RE IV Limited, Interim Report Q2 2021
Quarterly data dashboard
Property market indicators Q2’21 Q1’21 Calculation Method Data Source National Price 4.7% accelerating 4.6% accelerating Weighted Average of Y/Y for NBS/ Thomson 70 Cities, Last Month of the Reuters Quarter Volume 11.6% decelerating 68.1% accelerating New Home Sales GFA Quarterly NBS Y/Y MTC* 8.7 decreasing 9.9 decreasing Months-to-clear @6M for 9 Major CREIS Cities,Last Month of the Quarter New Starts -4.6% turned negative 30.1% accelerating Residential New Starts NBS GFA Quarterly Land Sales -21.3% turned negative 16.9% accelerating Land Sales (Area) Quarterly Y/Y NBS
Macro indicators Q2’21 Q1’21 Calculation Method Data Source Growth GDP 7.9% decelerating 18.3% accelerating Quarterly Y/Y NBS Resi RE Inv 10.8% decelerating 28.8% accelerating Quarterly Y/Y NBS PMI- Manu. 50.9 expansion slower 51.9 same End-of-quarter Data NBS PMI- Non 53.5 expansion slower 56.3 expansion faster End-of-quarter Data NBS Manu. Retail Sales 13.9% decelerating 33.9% accelerating Quarterly Y/Y NBS
Monetary M2 8.6% decelerating 9.4% decelerating Y/Y, Last Month of Each Quarter PBoC
RMB loans 12.3% decelerating 12.6% decelerating Quarter-end Balance Y/Y PBoC Mortgage 13.0% decelerating 14.5% decelerating Quarter-end Balance Y/Y PBoC loans Mortgage 5.33% rising 5.28% rising Average of First-time Buyer Mort- Rong360 cost** gage Rates for 41 Major Cities, Last Month of Each Quarter CPI 1.1% higher 0.4% higher Y/Y, Last Month of Each Quarter NBS PPI 8.8% higher 4.4% higher Y/Y, Last Month of Each Quarter NBS Currency RMB vs USD 0.7% appreciating -0.5% decelerating 90D Change, X-RATES Jul 15 & Apr 24 vs Apr 20 & Jan 24 RMB vs SEK 3.9% appreciating 0.9% appreciating 90D Change, X-RATES Jul 15 & Apr 24 vs Apr 20 & Jan 24
Sources: Real Estate Foresight analysis based on data from NBS, PBoC, Rong360, X-RATES, CREIS, Thomson Reuters’ calculation.
*Months-to-Clear (MTC) indicates the number of months to clear inventory for a group of 9 major cities with consistent data, assuming the constant pace of GFA sold (here we take 6-month average GFA sold as the pace).
** As Jun’21 data for mortgage cost is not available yet, we show May’21 data for Q2’21 for reference.
12 RE IV Limited, Interim Report Q2 2021
Section B Performance Pages 13—56
13 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Yantai Hammarby Eco City (“Eco City”) Site A-2 and Site B
Eco City Site A-2 Site B Development type Residential Residential Loft Loft Retail Retail Ice Hockey Stadium Land size, m² 39,356 52,341 GFA, m² 94,490 125,472 Number of 812 1,075 residential units Estimated year 2022 2023 of project completion
Eco City (Site A-2 and Site B) master plan rendering
Project Description • Eco City (Site A-2) and Eco City (Site B) is the initial phase of the Eco City Project. • The Eco City Project is an urban redevelopment project for which White Peak has entered into an exclusive cooperation agreement with the local government, the purpose of which is the joint development and incorporation of the Hammarby Sjöstad planning concept over the next several years.
Site A-2 Estimated Schedule
• Site foundation works started in Jan 2019 • Design completed in Q2 2019 • Construction permit obtained in Q3 2019 • Sales launched in Q4 2019
• Project completion Sales and construction in phases
2019 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023
Sales and construction in phases • Project completion
• Construction permit obtained in Q1 2020 • Sales launched in Q3 2020
• Site foundation work started in Jan 2019 • Design completed in Q2 2019
Site B Estimated Schedule
14 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Yantai Hammarby Eco City (“Eco City”) Site A-2 and Site B
We have achieved important milestones in the Eco City project. • Conceptual design prepared by Sweco has been approved; • The Sales Centre construction has been completed; • Construction is proceeding according to plan; • Eco City obtained BREEAM rating of “Very Good”.
1
3 Residential Tower Site B 1 Ice Hockey Stadium 2 Landscape 2
Site A-2 3
Sales Progress
• Sales of Site A-2 launched in November 2019 with Site B launched in Q3 2020; • In total, 744 units located at Site A-2 had been sold by the end of Q2 2021; • In total, 305 units located at Site B had been sold by the end of Q2 2021. 51%
83% 26%
Site A-2 Site B Total Saleable area m² 92,591 121,286 213,877 Area sold m² 76,978 32,087 109,065
15 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Yantai Fushan Nordic Park (“Fushan Project”)
Yantai Fushan Nordic Park Development type Residential Land size, m² 99,500 GFA, m² 245,832 Number of 2,305 residential units Estimated year 2022 of project completion
Fushan Project master plan rendering
Project Description • Fushan Project is located in Fushan District, which is one of the five urban districts of Yantai. • Fushan District still has the lowest housing prices among all core districts in Yantai, therefore it represents the cheapest access to urban infrastructure and amenities for the newly urbanised population. • Fushan Project comprises a parcel of residential land with a site area of 99,500 m² and a parcel of industrial land planned for an ice hockey stadium and an international school with a site area of 97,500 m².
Fushan Estimated Schedule
• Site foundation works started in Jan 2019 • Design completed in Q2 2019 • Construction permit obtained in Q3 2019 • Sales launchedin Q4 2019
• Project completion Sales and construction in phases
2019 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023
16 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Yantai Fushan Nordic Park (“Fushan Project”)
Significant progress has been made on Fushan Nordic Park in Yantai. • Design approved and construction permit obtained in Q3 2019; • Construction of the Sales Centre and Ice Hockey Stadium is completed; • Construction is proceeding according to plan; • Structure of the international school has been completed； • Fushan Nordic Park obtained BREEAM rating of “Very Good”.
2 Sales Centre 3 Residential Tower
4 International school
1 Ice Hockey stadium
1 2 3 4
Sales Progress
• Sales launched in Dec 2019; • In total, 1,494 units had been sold in the Fushan Project by the end of Q2 2021. 63%
97% 97%
20% 0%
Phase 1 Phase 2 Phase 3 Phase 4 Total Saleable area m² 73,492 74,432 50,211 46,188 244,323 Area sold m² 71,612 72,361 10,109 0 154,082
17 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Pingdu Print House (“Print House Project”)
Pingdu Print House Development type Residential Land size, m² 24,733 GFA, m² 44,509 Number of 347 residential units Estimated year 2022 of project completion
Print House Project master plan rendering
Project Description
• PingduPrint House is a county Project level master city in plan Qingdao, rendering with a total population of around 1.38 million. • RE IV Limited successfully acquired the land on December 11, 2019. • White Peak has been active in Pingdu since 2008 and has sold around 1,100 units totaling 96,000 sqm residential area in the city over these years.
Print House Estimated Schedule
• Land acquisition in Q4 2019
• Site foundation works started in Q1 2020 • Design completed in Q1 2020 • Construction permit obtained in Q2 2020 • Sales launched in Q3 2020 • Project completion
2019 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023
18 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Pingdu Print House (“Print House Project”)
Significant progress has been made on Print House Project in Pingdu. • Design approved and construction permit obtained in Q2 2020; • Construction is proceeding according to plan; • Print House obtained BREEAM rating of “Very Good” and the LEED for Communities Precertification, achieving the LEED Gold level.
1
2 Residential Tower
2
1 Sales Centre
3 3 Landscape
Sales Progress
• Sales launched in July 2020; 87% 87% • In total, 344 units had been sold in the Print House Project by the end of Q2 2021.
Phase 1 Total Saleable area m² 43,095 43,095 Area sold m² 37,591 37,591
19 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Chengde Pian Ling (“Pian Ling Project”)
Chengde Pian Ling Development type Residential Land size, m² 120,215 GFA, m² 180,432 Number of 1,551 residential units Estimated year 2023 of project completion
Pian Ling Project master plan rendering
Project Description • Chengde Pian Ling Project comprises a land parcel with a site area of 120,215 m² and a planned GFA of 181,432 m², for residential uses. • By the end of 2020, Chengde was made accessible via the high-speed rail within 1 hour from Beijing, which will boost the economic development and drive demand for housing over the next few years. • Compared with the strong demand, the current residential inventory is limited, primarily because of the scarce land supply in Chengde due to its mountainous typography. • RE IV Limited acquired the land on December 6, 2019. • White Peak has been active in Chengde since 2017 and has sold approximately 1,200 units totaling 130,000 sqm residential area in the city over the past years.
Pian Ling Estimated Schedule
• Land acquisition in Q4 2019
• Site foundation works started in Q1 2020 • Design completed in Q2 2020 • Construction permit obtained in Q3 2020 • Sales launched in Q4 2020 • Project completion
Sales and construction in phases
2019 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023
20 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Chengde Pian Ling (“Pian Ling Project”)
Significant progress has been made on Pian Ling Project in Chengde. • Design approved and construction permit obtained in Q2 2020; • Construction is proceeding according to plan; • Pian Ling obtained the LEED for Communities Precertification, achieving the LEED Gold level.
4 Residential Tower 1 Residential Tower 3 Landscape
2 Sales Centre
1 2 3 4
Sales Progress
• Sales launched in October 2020; • In total, 364 units had been sold in the Pian Ling Project by the end of Q2 2021.
23% 59%
0% 0%
Phase 1 Phase 2 Phase 3 Total Saleable area m² 72,229 65,209 43,827 181,265 Area sold m² 42,511 0 0 42,511
21 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Shenyang Shenbei (“Shenbei Project”)
Shenyang Shenbei Development type Residential / Retail Land size, m² 141,553 GFA, m² 283,106 Number of 2,758 residential units Estimated year 2024 of project completion
Shenbei Project master plan rendering
Project Description • Shenbei New District is the most affordable Shenyang district accessible to urban infrastructure and amenities for the new urbanizing population. • RE IV Limited successfully acquired the land on February 20, 2020. • White Peak has a strong team with extensive local market knowledge derived from the previous project in Shenyang (i.e.Yuhong Nordic Cloud project of Fund II). • White Peak has been active in Shenyang since 2015 and has sold around 1,500 units totaling 120,000 sqm residential area in the city over the past years.
Shenbei Estimated Schedule
• Land acquisition in Q1 2020 • Site foundation works started in Q1 2020 • Design completed in Q2 2020 • Planning permit obtained in Q2 2020 • Construction permit obtained in Q3 2020 • Sales launched in Q4 2020 • Project completion
Sales and construction in phases
2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023 2024
22 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Shenyang Shenbei (“Shenbei Project”)
Significant progress has been made on Shenbei Project in Shangyang. • Design approved and construction permit obtained in Q2 2020; • Construction is proceeding according to plan; • Shenbei obtained BREEAM rating of “Very Good” and the LEED for Communities Precertification, achieving the LEED Gold level.
1
3 Residential Tower
2
2 Landscape Demo Zone
1 Sales Centre 3
Sales Progress
• Sales launched in November 2020; • In total, 334 units had been sold in the Shenbei Project by the end of Q2 2021.
27% 11% 0% 0%
Phase 1 Phase 2 Phase 3 Total Saleable area m² 115,269 107,954 59,684 282,907 Area sold m² 31,637 0 0 31,637
23 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Qingdao Xiazhuang (“Xiazhuang Project”)
Qingdao Xiazhuang Development type Residential Land size, m² 46,666 GFA, m² 47,133 Number of 352 residential units Estimated year 2023 of project completion
Xiazhuang Project master plan rendering
Project Description • Chengyang District is the northern access to downtown Qingdao. The Target Land is located in the south of Chengyang District and is adjacent to downtown. • RE IV Limited successfully won the land auction on March 31, 2020. • The land has a low plot ratio and is located at the foot of the famous scenic spot Mount. Lao. Thus the land will be developed into premium products attracting high-end customers. • White Peak’s presence in Qingdao dates back to as early as 2008. With over 10 years’ experience in the market, White Peak invested in Ruiping Centre (Exited), Ruiping Financial Centre (Exited) and Nordic Light (Exited) for its Fund I, and Jiaozhou Central Park, Pingdu Weekly for Fund I and Pingdu Hongqi Road for Fund III. So far, White Peak has sold around 5,200 units in Qingdao.
Xiazhuang Estimated Schedule
• Land acquisition in Q1 2020 • Site foundation works started in Q2 2020 • Design completed in Q2 2020 • Planning permit obtained in Q3 2020 • Construction permit obtained in Q3 2020 • Sales launched in Q4 2020 • Project completion
Sales and construction in phases
2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023
24 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Qingdao Xiazhuang (“Xiazhuang Project”)
Significant progress has been made on Xiazhuang Project in Qingdao. • Design approved obtained in Q2 2020 and construction permit obtained in Q3 2020; • Construction is proceeding according to plan; • Xiazhuang obtained BREEAM rating of “Very Good”.
1
3 Residential Tower 2 2 Landscape Demo Zone 1 Sales Centre
3
Sales Progress
• Sales launched in December 2020; • In total, 92 units had been sold in the Xiazhuang Project by the end of Q2 2021.
29% 45%
0%
Phase 1 Phase 2 Total Saleable area m² 29,050 17,023 46,073 Area sold m² 13,159 0 13,159
25 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Yantai Jufu Road (“Jufu Road Project”)
Yantai Jufu Development type Residential Land size, m² 89,387 GFA, m² 178,763 Number of 1,454 residential units Estimated year 2024 of project completion
Jufu Project master plan rendering
Project Description • Jufu Road project is RE IV Limited’s 4th project in Yantai. Current developments are Eco-city (Site A-2) Project, Eco-city (Site B) Project, and Fushan Nordic Park Project. The project is located in the central living area of Fushan District. • RE IV Limited successfully won the land auction on Oct 18, 2020. • Jufu Project is located in the central living area of Fushan District, which is one of the five urban districts of Yantai. • Fushan District has the lowest housing prices among all core districts in Yantai, therefore it represents the cheapest access to urban infrastructure and amenities for the newly urbanised population.
Jufu Road Estimated Schedule
• Land acquisition in Q4 2020
• Site foundation works started • Design completed • Project completion
• Planning permit obtained Sales and construction • Construction permit obtained in phases
• Sales to be launched
2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023 2024
26 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Tai'an Huanshan Road (“Huanshan Road Project”)
Tai’an Huanshan Road Development type Residential Land size, m² 82,300 GFA, m² 90,492 Number of 513 residential units Estimated year 2024 of project completion
Huanshan Road Project master plan rendering
Project Description • Huanshan Road project is White Peak’s 3rd project in Tai’an. Current and previous developments are Chateau Mount. Tai (a Fund II project) and Cherry Garden (a Fund III project). The project is located in the Mountain Edge Area, an attractive area for potential buyers. • RE IV Limited successfully won the land auction on October 26, 2020.
Huanshan Road Estimated Schedule
• Land acquisition in Q4 2020
• Site foundation works started • Design completed • Project completion
• Planning permit obtained Sales and construction • Construction permit obtained in phases
• Sales to be launched
2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023 2024
27 B — Performance RE IV Limited, Interim Report Q2 2021
Project status Linyi Junbu Street (“Junbu Street Project”)
Linyi Junbu Street Development type Residential, Retail, Office and utilities Land size, m² 101,782 GFA, m² 203,563 Number of 1,693 residential units Estimated year 2025 of project completion Junbu Street Project master plan rendering
Project Description • Linyi Junbu Street project is White Peak's 3rd project in Linyi. Previous developments are Urban Blocks and London Gardens (two Fund I projects). The project is located in the eastern part of the city, which is planned to be one of the major development zones of Linyi. • RE IV Limited successfully won the land auction on February 1, 2021.
Junbu Street Estimated Schedule
• Land acquisition
• Site foundation works started • Design completed • Planning permit obtained • Construction permit obtained • Project completion Sales and construction in phases • Sales to be launched
Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023 2024 2025
28 B — Performance RE IV Limited, Interim Report Q2 2021
Highlights of financial performance
29 B — Performance RE IV Limited, Interim Report Q2 2021
Highlights of financial performance
Latest valuation of Book value of properties under properties under Cash and development for sale development for sale cash equivalents RMB Million RMB Million RMB Million 8,535¹ 7,795² 450³
Cumulative Cumulative Operating loss contracted sales contracted GFA year-to-date as of Q2 RMB Million Square meter RMB Million 4,277⁴ 388,045⁴ 113⁵
Total borrowing Total bond payable Equity loan Loan to Value RMB Million RMB Million RMB Million % 1,172⁶ 914⁷ 2,798⁸ 19.2⁹
Notes:
1&2: Valuation is based on the latest independent third party valuation while properties under development for sale is based on the book value of properties.
3. As of June 30, 2021, the Group had cash and bank balances in the amount of RMB 888 million, of which RMB 438 million was not counted towards cash and cash equivalents in the financial statements, since it can only be used for payment of construction costs when approval from related government authority is obtained.
4. As of June 30, 2021, the Group has cumulative contracted pre-sales amounting to RMB 4,276,731,794 (March 31, 2021: 3,616,271,400) with cumulative contract GFA from pre-sale of residential properties of 388,045 (March 31,2021: 329,420) square meters.
5. Development profits are only recognized at delivery.
6. Bank borrowings including: (1) Local loans related to the projects denominated in RMB and sourced in China. The repayment schedule is determined by sales progress of the project; (2) In year 2020, the Company received a two-year credit from a Swedish bank amounting to SEK 350,000,000. As of June 30, 2021, the borrowing amounted to RMB 261,925,068 (31 December 2020: RMB 280,231,468); (3) In year 2021, the Company received a three-year credit from a Swedish bank amounting to SEK 390,000,000. As of June 30, 2021, the borrowing amounted to RMB 300,259,401 (31 December 2020: Nil).
7. On July 5, 2019, the company issued SEK 600,000,000 Senior Secured Fixed Rate Bonds. The term of the bonds is 3 years and the coupon is 9%. On November 27, 2020, the company issued SEK 600,000,000 Senior Secured Fixed Rate Bonds. The term of the bonds is 3 years and the coupon is 8%. Please refer to Note 12 in consolidated financial statements for more information.
8. Long term subordinated shareholders loan, deemed as equity in the balance sheet.
9. Loan to Value means the ratio of Net Interest Bearing Debt to Gross Asset Value as per the latest Valuation.
30 B — Performance RE IV Limited, Interim Report Q2 2021
Consolidated financial statements As at and for the six months ended 30 June 2021
31 B — Performance RE IV Limited, Interim Report Q2 2021
Condensed consolidated balance sheet For the period ended 30 June 2021
Unaudited Audited As at 30 June As at 31 December 2021 2020
Note RMB RMB
ASSETS Non current assets Fixed assets 5 31,370,162 36,797,452 Right-of-use assets 460,188 622,904
Other non-current assets 7 8,018,900 8,018,900 Deferred income tax assets 18 32,541,950 27,645,740 72,391,200 73,084,996
Current assets Properties under development for sale 6 7,794,641,388 6,276,479,280
Prepayments, deposits and other receivables 7 458,108,372 341,379,056 Contract acquisition cost 8 74,499,224 53,128,751 Financial assets at fair value through profit or loss 9 5,672,490 22,010,332 Financial asset at fair value through other comprehensive income - 1,808,859 Restricted cash 10 438,436,664 397,459,896 Cash and cash equivalents 449,534,641 1,369,254,499 9,220,892,779 8,461,520,673
Total assets 9,293,283,979 8,534,605,669
32 B — Performance RE IV Limited, Interim Report Q2 2021
Condensed consolidated balance sheet (continued) For the period ended 30 June 2021
Unaudited Audited As at 30 June As at 31 December 2021 2020
Note RMB RMB
LIABILITIES Non current liabilities Borrowings 11 761,701,004 482,161,762 Bonds payable 12 887,752,482 930,633,683 Financial liabilities at fair value through profit or loss 15 378,570,150 200,000,000 Lease liabilities 81,755 251,015 2,028,105,391 1,613,046,460
Current liabilities Borrowings 11 410,483,465 390,169,706 Bonds payable 12 25,833,599 27,145,862 Trade and other payables 13 509,845,230 1,192,768,611 Contract liabilities 14 3,860,909,725 2,740,343,931 Lease liabilities 380,537 380,537 4,807,452,556 4,350,808,647
Total liabilities 6,835,557,947 5,963,855,107
Net assets 2,457,726,032 2,570,750,562
Equity Paid-in capital 16 87,813 87,813 Equity loans 17 2,798,019,897 2,798,019,897 Accumulated losses (340,381,678) (227,357,148) Total equity 2,457,726,032 2,570,750,562
The above condensed consolidated balance sheet should be read in conjunction with the accompanying notes.
The condensed consolidated financial statements on pages 32 to 56 were approved by the Board of Directors on 24 August 2021 and were signed on its behalf.
Jesper Lars Jos OLSSON HAO, XUETAO Director Director
33 B — Performance RE IV Limited, Interim Report Q2 2021
Condensed consolidated income statement For the period ended 30 June 2021
Unaudited Unaudited Period from Period from 1 Jan 2021 to 1 Jan 2020 to 30 Jun 2021 30 Jun 2020 Note RMB RMB
Revenue 19 28,537,165 - Cost of sales 20 (34,657,703) (3,132,598)
Gross loss (6,120,538) (3,132,598)
Selling expenses 20 (49,710,499) (39,121,419) Administrative expenses 20 (24,378,708) (8,311,213) Interest income 1,247,461 951,621 Finance cost (22,550) - Other losses – net 20 (38,935,906) (10,735,657)
Operating loss (117,920,740) (60,349,266)
Loss before income tax 20 (117,920,740) (60,349,266)
Income tax credit 4,896,210 - Loss for the period attributable to the equity holders of the Company (113,024,530) (60,349,266)
The above condensed consolidated income statement should be read in conjunction with the accompanying notes. 34 B — Performance RE IV Limited, Interim Report Q2 2021
Condensed consolidated statement of comprehensive income For the period ended 30 June 2021
Unaudited Unaudited Period from Period from 1 Jan 2021 to 1 Jan 2020 to 30 Jun 2021 30 Jun 2020 RMB RMB
Loss for the period (113,024,530) (60,349,266) Other comprehensive income - - Total comprehensive income for the period attributable to the equity holder of the Company (113,024,530) (60,349,266)
The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 35 B — Performance RE IV Limited, Interim Report Q2 2021
Condensed consolidated statement of changes in equity For the period ended 30 June 2021
Paid-in Equity Accumulated capital loan losses Total Note RMB RMB RMB RMB
Balance at 1 January 2020 87,813 1,922,558,997 (65,022,214) 1,857,624,596 Comprehensive income Loss for the period - - (60,349,266) (60,349,266) Other comprehensive income - - - -
Total comprehensive income - - (60,349,266) (60,349,266)
Inception of equity-natured share- holder’s loans - 451,347,200 - 451,347,200
Balance at 30 June 2020 87,813 2,373,906,197 (125,371,480) 2,248,622,530
Balance at 1 January 2021 87,813 2,798,019,897 (227,357,148) 2,570,750,562
Comprehensive income Loss for the period - - (113,024,530) (113,024,530) Other comprehensive income - - - -
Total comprehensive income - - (113,024,530) (113,024,530)
Balance at 30 June 2021 87,813 2,798,019,897 (340,381,678) 2,457,726,032
The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 36 B — Performance RE IV Limited, Interim Report Q2 2021
Condensed consolidated statement of cash flows For the period ended 30 June 2021
Unaudited Unaudited Period from Period from 1 Jan 2021 to 1 Jan 2020 to 30 Jun 2021 30 Jun 2020 Note RMB RMB Cash flows from operating activities Cash used in operations 21 (1,323,232,557) (346,044,377) Net used in operating activities (1,323,232,557) (346,044,377)
Cash flows from investing activities
Interest received 1,247,461 951,621 Proceeds from financial assets at fair value through profit or loss 6,960,289 1,991,907 Proceeds from financial assets at fair value through other comprehensive income 1,808,859 - Purchase of fixed assets (4,246,351) (3,309,933) Purchase of financial assets at fair value throughprofit or loss (27,502,182) (10,858,540)
Net used in investing activities (21,731,924) (11,224,945)
Cash flows from financing activities
Proceeds from borrowing 500,259,401 140,000,000 Repayment of borrowing (182,100,000) - Shareholder’s loans from immediate holding company - 451,347,200 Proceeds from financial liabilities at fair value through profit or loss 181,800,000 - Interest paid (69,428,756) (28,589,044)
Net cash generated from financing activities 430,530,645 562,758,156
Net increase in cash and cash equivalents (914,433,836) 205,488,834
Cash and cash equivalents at beginning of the period 1,369,254,499 390,896,716 Effects of exchange rate changes on cash and cash equivalents (5,286,022) 971,059
Cash and cash equivalents at end of the period 449,534,641 597,356,609
The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes. 37 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
1. General information
Re IV Limited (the “Company”) and its subsidiaries (the “Group”) are engaged in land and property development in the People’s Republic of China (the “PRC”). The Company is a limited liability incorporated in Hong Kong on 13 November 2018. The registered address is 2602, Universal Trade Centre, 3-5A Arbuthnot Road, Central, Hong Kong.
These unaudited consolidated financial information are presented in Renminbi (“RMB”), unless otherwise stated.
2. Basis of preparation
The financial information relating to the year ended 31 December 2020 that is included in the condensed consolidated interim financial information for the three months ended 30 June 2021 as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance (Cap. 622) is as follows:
The Company has delivered the financial statements for the year ended 31 December 2020 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Companies Ordinance.
The Company's auditor has reported on these financial statements for the year ended 31 December 2020. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Companies Ordinance.
The Financial Information does not include all the notes of the type normally included in an annual financial statement. Accordingly, it should be read in conjunction with the financial information for the year ended 31 December 2020.
The accounting policies adopted are consistent with those of the previous financial year.
(a) New standards, new interpretation and amendments to existing standards that have been adopted by the Company
The following new standards, new interpretation and amendments to existing standards are mandatory for accounting periods beginning on or after 1 January 2021:
Amendments to IFRS 16 Covid-19-related Rent Concessions Amendments to IFRS 9, IAS 39, IFRS 7 Interest rate benchmark reform IFRS 4 and IFRS 16
The application of the amendments to existing standard in the current period has had no material effect on the Company’s financial performance and position for the current period.
38 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
2. Basis of preparation (Continued)
New standards, new interpretation and amendments to existing standards that have been issued but are not yet effective and have not been early adopted by the Company
The following new standards, new interpretation and amendments to existing standards have been issued and are mandatory for the Company’s accounting periods beginning on or after 1 January 2022 or later periods, but the Company has not early adopted them:
IFRS 17 and Amendments to IFRS 17 Insurance Contracts
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies
Amendments to IAS 8 Definition of Accounting Estimates Amendment to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction Amendments to IAS 16 Property, Plant and Equipment: Proceeds before intended use Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract Amendments to IFRS 3 Reference to the Conceptual Framework Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Amendments to IFRS 16 Covid-19-Related Rent Concessions beyond 30 June 2021 Accounting Guideline 5 (Revised) Merger Accounting for Common Control Combinations
IFRS 17 Insurance Contracts Amendments to IAS 1 Classification of Liabilities as Current or Non-current Amendments to IAS 16 Property, Plant and Equipment: Proceeds before intended use Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract Amendments to IFRS 3 Reference to the Conceptual Framework Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Annual Improvements to IFRS Standards 2018–2020
The Company is in the process of assessing the impact of other new standards, new interpretation and amendments to existing standards upon initial application.
3. Segment information
The Group is principally engaged in the land and property development.
The executive management, consisting of the Group CEO and Senior Partner of the Company (the “Executive Management”) are regarded as the chief operating decision makers of the Group. The Executive Management review the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.
The Executive Management considers the business from geographic perspectives. Reportable geographic segments identified are Yantai, Chengde, Qingdao, Pingdu, Shenyang, Taian and Linyi.
The Executive Management assesses the performance of the operating segments based on the segment results. Corporate income/ expenses and other (losses)/gains, are not included in the results for each operating segment that is reviewed by the Executive Management. 39 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
3. Segment information (Continued)
(a) Segment results
Segment results for the period from 1 January to 30 June in year 2020 and 2021 are as follows:
Segment result Period from Period from 1 January 1 January to 30 June to 30 June 2021 2020
RMB RMB Property development Yantai (30,100,904) (34,479,129) Chengde (10,589,444) (1,987,561) Pingdu (6,188,653) (5,139,488) Qingdao (9,107,285) (2,331,589) Shenyang (8,048,998) (3,225,782) Taian (5,601,705) - Linyi (6,934,538) -
Total (76,571,527) (47,163,549)
Unallocated corporate expenses (4,360,345) (2,450,060) Other gains/(losses), net (36,988,868) (10,735,657)
Loss before tax (117,920,740) (60,349,266)
The Group primarily operates in Mainland China. The unallocated corporate expenses mainly consists of administrative expenses of the head office.
40 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
3. Segment information (Continued)
(b) Other profit and loss disclosure
Amounts included in the measurement of segment result for the period from 1 January to 31 March in year 2020 and 2021 are as follows: Depreciation of property, Selling expenses plant and equipment Period from Period from Period from Period from 1 January 1 January 1 January 1 January to 30 June to 30 June to 30 June to 30 June 2021 2020 2021 2020
RMB RMB RMB RMB
Property development
Yantai (24,516,842) (31,336,243) (9,171,950) (9,358,182) Chengde (5,031,584) (1,541,884) (94,525) (952)
Pingdu (4,023,955) (2,450,655) (5,346) - Qingdao (4,483,713) (2,142,342) (10,697) -
Shenyang (5,068,107) (1,650,295) (390,786) (780) Taian (3,623,719) - (337) -
Linyi (2,962,579) - - - (49,710,499) (39,121,419) (9,673,641) (9,359,914)
41 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
3. Segment information (Continued)
(c) Segment assets
The segment assets by geographical areas are as follows:
Addition to Segment assets non-current assets Period from Period from As at As at 1 January 1 January 30 June 31 December to 30 June to 30 June 2021 2020 2021 2020
RMB RMB RMB RMB
Property development Yantai 3,733,742,737 3,821,846,282 4,095,400 3,166,895
Chengde 1,128,728,410 954,101,897 14,056 46,170 Pingdu 348,804,237 361,455,254 4,752 - Qingdao 621,790,600 558,890,384 10,499 33,823 Shenyang 1,327,104,095 1,169,042,389 16,505 63,045 Taian 917,604,628 856,101,051 16,654 - Linyi 956,067,272 - 88,485 -
Total segment assets 9,033,841,979 7,721,437,257 4,246,351 3,309,933
Unallocated assets: Prepayments and other receivables 17,400,769 - Financial assets at fair value through profit or loss 5,672,490 22,010,332 Cash and cash equivalents 236,368,741 791,158,080 259,442,000 813,168,412
As at 30 June 2021 and 31 December 2020, segment assets were located in Mainland China. Investments in financial assets are managed by head office and are not considered to be segment assets.
(d) Segment liabilities
No liabilities are included in the internal reporting that are used by the Executive Management for performance assessment and resource allocation. Accordingly, no segment liabilities are presented.
42 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
4. Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). Inputs other than quoted prices included within Level 1 that are observable for the asset or liabilities, wither directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). Inputs for the assets or liabilities that are not based on observable market data (that is, unobservable inputs) (Level 3).
The following table presents the Group’s financial assets that are measured at fair value at 30 June 2021 and 31 December 2020.
Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB At 30 June 2021 Financial assets at fair value through profit or loss - 5,672,490 - 5,672,490 Financial liabilities at fair value through profit or loss - - 378,570,150 378,570,150
At 31 December 2020 Financial assets at fair value through profit or loss - 22,010,332 - 22,010,332 Financial asset at fair value through other comprehensive income - - 1,808,859 1,808,859 Financial liabilities at fair value through profit or loss - - 200,000,000 200,000,000
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. There was no instrument included in level 1 at 30 June 2021 and 31 December 2020.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. Instrument included in level 1 represent Foreign Currency Option.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Financial liabilities at fair value through profit or loss is included in Level 3 as at 30 June 2021 and 31 December 2020. Consider that there is no material change from the transaction date up to the 30 June 2021 in relevant market data in determining the fair value of the financial instrument, therefore, it is believe that the consideration received on transaction date is a good proxy of the fair value as at 30 June 2021.
Financial asset at fair value through other comprehensive income is included in Level 3 as at 31 December 2020. The fair value is measured by using discounted cash flow with future cash flows that are estimated based on expected recoverable amounts and discounted at rates that reflect management’s best estimation of the expected risk level. The unobservable input includes the expected future cash flow at discounted rates that correspond to the expected risk level.
Except for financial assets at fair value through profit or loss and the financial liabilities at fair value through profit or loss, the carrying amounts of the Group’s financial assets and financial liabilities approximated their fair values due to their short maturities. 43 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
5. Fixed assets
Temporary Electronic Office sales centre equipment equipment Total
RMB RMB RMB RMB
Year ended 31 December 2020 Opening net book amount 51,687,913 368,111 334,138 52,390,162 Additions 2,399,714 418,129 526,811 3,344,654 Depreciation (18,634,904) (209,694) (92,766) (18,937,364)
Closing net book amount 35,452,723 576,546 768,183 36,797,452
As at 31 December 2020 Cost 54,087,627 853,725 869,498 55,810,850 Accumulated depreciation (18,634,904) (277,179) (101,315) (19,013,398)
Net book amount 35,452,723 576,546 768,183 36,797,452
Period ended 30 June 2021 Opening net book amount 35,452,723 576,546 768,183 36,797,452 Additions 3,940,338 291,895 14,118 4,246,351 Depreciation (9,460,735) (153,547) (59,359) (9,673,641)
Closing net book amount 29,932,326 714,894 722,942 31,370,162
As at 30 June 2021 Cost 58,027,965 1,145,620 883,616 60,057,201 Accumulated depreciation (28,095,639) (430,726) (160,674) (28,687,039)
Net book amount 29,932,326 714,894 722,942 31,370,162
44 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
6. Properties under development for sale
RMB At 1 January 2020 2,314,764,400 Additions 3,961,714,880
At 31 December 2020 6,276,479,280 Additions 1,518,162,108
At 30 June 2021 7,794,641,388
45 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
7. Other non-current assets and prepayments, deposits and other receivables
As at As at 30 June 31 December 2021 2020
RMB RMB
Non-current assets
Other non-current assets Other deposits 3,858,900 3,858,900 Other receivables 4,160,000 4,160,000
8,018,900 8,018,900
As at As at 30 June 31 December 2021 2020
RMB RMB Prepayment of expenses to a related party which is controlled by the same key management (note 24) 32,318,777 55,435,138 Prepayments to contractors 41,426,735 36,701,037 Other tax recoverable 365,590,824 245,568,316 Note receivable - 2,550,000 Others 18,772,036 1,124,565 458,108,372 341,379,056
The fair values of prepayments, deposits and other receivables are not materially different from their book values and are denominated in RMB.
8. Contract acquisition cost
As at As at 30 June 31 December 2021 2020 RMB RMB
Contract acquisition cost 74,499,224 53,128,751
The contract acquisition cost pertains sales commission for contracted property sales. The cost has been deferred to the balance sheet and will be charged to the Profit and Loss statement when the related revenue is recognized.
46 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
9. Financial assets at fair value through profit or loss
As at As at 30 June 31 December 2021 2020
RMB RMB Foreign currency option 5,672,490 22,010,332
The foreign currency option grants: a. The right to purchase Swedish Krona (SEK) of SEK 600,000,000 from RMB 486,815,416 at the rate of 1.2325 until 9 September 2021 (31 December 2020: SEK 681,000,000 from RMB 539,961,941 at the rate of 1.2612 on 12 March 2021). b. The right to purchase Swedish Krona (SEK) of SEK 350,000,000 from RMB 265,290,475 at the rate of 1.2650 until 15 July 2021 (31 December 2020: SEK 350,000,000 from RMB 276,679,842 at the rate of 1.2650 on 15 July 2021). c. The right to purchase Swedish Krona (SEK) of SEK 585,000,000 from RMB 465,060,816 at the rate of 1.2579 until 8 October 2021 (31 December 2020: Nil). d. The right to purchase Swedish Krona (SEK) of SEK 390,000,000 from RMB 312,500,000 at the rate of 1.2480 until 24 January 2022 (31 December 2020: Nil).
Changes in fair values of financial assets at fair value through profit or loss are recorded in the other gains/(losses)- net, in the consolidated income statement.
10. Restricted cash
The amount represented guarantee deposits for construction of pre-sale properties denominated in RMB placed in designated bank accounts.
In accordance with relevant government requirements, certain property development companies of the Group are required to place in designated bank accounts certain amount of pre-sale proceeds as guarantee deposits for the constructions of the related properties. The deposits can only be used for payments for construction costs of the relevant properties when approval from related government authority is obtained. Unused guarantee deposits will be released after the completion of construction of the related properties.
As at As at 30 June 31 December 11. Borrowing 2021 2020
RMB RMB
Secured long-term bank borrowing 1,172,184,469 872,331,468 Less: Amounts repayable within 1 year included in current liabilities (410,483,465) (390,169,706) 761,701,004 482,161,762
47 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
11. Borrowing (Continued)
The maturity of the secured long-term bank borrowing is as follow:
As at As at 30 June 31 December 2021 2020
RMB RMB
Within 1 year – Borrowing from bank in China 405,000,000 387,100,000
– Borrowing from bank in Sweden 5,483,465 3,069,706
In the second year – Borrowing from bank in China 205,000,000 205,000,000 – Borrowing from bank in Sweden 556,701,004 277,161,762
1,172,184,469 872,331,468
Notes:
(a) In year 2020, the Company received a two-year credit from a Swedish bank amounting to SEK 350,000,000. As at 30 June 2021, the borrowing amounted to RMB 261,925,068 (31 December 2020: RMB 280,231,468).
(b) In year 2021, the Company received a three-year credit from a Swedish bank amounting to SEK 390,000,000. As at 30 June 2021, the borrowing amounted to RMB 300,259,401 (31 December 2020: Nil).
(c) As at 30 June 2021, borrowings from banks in China amounted to RMB 610,000,000 (31 December 2020: RMB 592,100,000). The borrowings are secured by the related project companies’ properties under development. (31 December 2019: same)
The maturity date of the borrowings from banks in China is eighteen months and two years or based on specific hurdles of the property pre-sale, whichever is earlier. A 20% repayment of the principal amount is due when the contracted pre-sales area reaches 30% of the saleable area. When pre-sales reach 50%, a 50% repayment is required. The outstanding amount shall be fully repaid when the contracted pre-sales area for the project reaches 80% of the saleable area.
As at 30 June 2021, the management team estimated that the contracted pre-sales area of one of the projects will reach 80% of the saleable area within one year, and another project is expected to reach 50% pre-sales, which will then trigger a full repayment and 50% repayment, respectively.
The Chinese bank borrowing is denominated in RMB.
48 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
12. Bonds payable
As at As at 30 June 31 December 2021 2020
RMB RMB
Current 25,833,599 27,145,862 Non-current 887,752,482 930,633,683
913,586,081 957,779,545
On 5 July 2019, the company issued SEK 600,000,000 Senior Secured Fixed Rate Bonds. The term of the bonds is 3 years and the coupon is 9%. On 27 November 2020, the company issued another SEK 600,000,000 Senior Secured Fixed Rate Bonds. The term of the bonds is 3 years and the coupon is 8%.
The current portion represented interest accrued at the period/year end date.
13. Trade and other payables
As at As at 30 June 31 December 2021 2020
RMB RMB
Accruals to contractors 481,645,460 1,124,724,041 Other current tax payable 12,893,359 39,499,753 Other payables 15,306,411 28,544,817
509,845,230 1,192,768,611
The fair values of trade and other payables are not materially different from their book values.
The carrying amounts of trade and other payables are denominated in RMB.
49 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
14. Contract liabilities
The Group has recognised the following revenue-related contract liabilities: As at As at 30 June 31 December 2021 2020 RMB RMB
Contract liabilities for pre-sale property (Note a) 3,855,875,277 2,705,060,088 Contract liabilities for construction service (Note b) 5,034,448 35,283,843
3,860,909,725 2,740,343,931
The Group has received payments from customers based on contracts pertaining to its pre-sale activities and construction service. Payments under pre-sale contracts are usually received in advance (i.e. before the recognition of revenue and before the transfer of property or any services are performed). The contract liabilities related to property sales increased during the year since the Group has initiated its pre-sale of certain properties during the year.
(a) The following table shows the amount of unsatisfied performance obligations resulting from fixed price contracts from property pre-sale with an original expected timing of revenue recognition in more than one year:
As at As at 30 June 31 December 2021 2020 RMB RMB
Revenue expected to be recognised within one year 732,930,868 - Revenue expected to be recognised after one year 3,543,800,926 3,225,602,910 4,276,731,794 3,225,602,910
As at 30 June 2021, the Group has cumulative contract sum from pre-sale of residential properties of RMB 4,276,731,794 (31 December 2020: RMB 3,225,602,910) with cumulative contract GFA from pre-sale of residential properties of 388,045 (31 December 2020: 298,457) square meters.
(b) The following table shows the amount of unsatisfied performance obligations resulting from variable price contracts from construction service with an original expected timing of revenue recognition:
As at As at 30 June 31 December 2021 2020
RMB RMB
Revenue expected to be recognised within one year 44,843,819 73,380,984
50 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
15. Financial liabilities at fair value through profit or loss
As at As at 30 June 31 December 2021 2020
RMB RMB
Financial liabilities at fair value through profit or loss 378,570,150 200,000,000
The financial liabilities at fair value through profit or loss represents an unsecured interest-free loan of RMB 378,570,150 (31 December 2020: RMB 200,000,000), embedded with (a) derivative which give the third party lender potential voting rights and interest in one of our property development projects (b) a management service contract and (c) an additional interest-free loan of not less than RMB60 million (or loans, as required in the circumstances) after the successful land acquisition.
The repayment, under the mutual agreement with the third party lender, is based on the sales of properties under development and the cash utilization of the same property development project with an expected repayment term of 3 years.
16. Paid-in capital As at As at 30 June 31 December 2021 2020
RMB RMB
Issued and fully paid 87,813 87,813
17. Equity loan As at As at 30 June 31 December 2021 2020 RMB RMB
Shareholder’s loans - White Peak Holdings IV Limited 2,798,019,897 2,798,019,897
51 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
18. Deferred income tax assets
As at As at 30 June 31 December 2021 2020
RMB RMB
Deferred tax assets: – Tax losses 32,541,950 27,645,740
19. Revenue
Period from Period from 1 Jan 2021 1 Jan 2020 to to 30 Jun 2021 30 Jun 2020
RMB RMB
Construction services 28,537,165 -
Revenue of construction service is recognized over time by construction progress.
52 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
20. Expenses by nature
Expenses included in cost of sales, selling expenses, administrative expenses, finance cost and other losses/(gains) are analyzed as follows:
Period from Period from 1 Jan 2021 1 Jan 2020 to to 30 Jun 2021 30 Jun 2020
RMB RMB
Cost of construction service - Development costs 28,321,305 - Professional service expenses 14,129,274 2,880,373 Employee benefit expense 24,407,051 11,272,656 Marketing expenses 20,979,091 18,115,009 Contract acquisition cost 21,370,473 15,071,798 Less: Contract acquisition cost related to property sales recognised (21,370,473) (15,071,798) Office and consumption 5,071,562 3,249,816 Tax and levies 5,591,738 3,132,598 Travel and accommodation 879,729 289,785 Depreciation - Fixed assets 9,673,641 9,359,914 - Right-of-use assets 81,358 - Operating lease payments - 1,307,687 Fair value loss of financial assets at fair value through profit or loss 35,299,105 7,140,996 Fair value loss of financial liabilities at fair value through profit or loss (3,229,850) - Foreign exchange difference (58,315,896) 12,262,564 Less: Foreign exchange difference capitalized to properties under development for sales 64,651,893 (8,311,628) Finance cost 56,239,817 30,749,700 Less: Finance cost capitalized to properties under development for sales (56,217,267) (30,749,700) Others 142,815 601,117
147,705,366 61,300,887
53 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
21. Cash flow information
(a) Cash used in operations
Period from Period from 1 Jan 2021 1 Jan 2020 to to 30 Jun 2021 30 Jun 2020
RMB RMB
Loss before income tax (117,920,740) (60,349,266) Adjustments for:
– Depreciation of fixed assets 9,673,641 9,359,914 – Depreciation of right-of-use assets 81,358 - – Interest income (1,247,461) (951,621) – Finance cost 22,550 - – Exchange losses 6,866,651 3,950,936 – Fair value loss on financial assets at fair value through profit or loss 35,299,105 7,140,996 – Fair value loss on financial liabilities at fair value through profit or loss (3,229,850) -
Operating loss before working capital changes (70,454,746) (40,849,041)
Changes in working capital: – Increase in restricted cash balances (40,976,767) (113,353,765) – Increase in properties under development for sale (1,511,233,216) (1,140,986,896) –(Increase)/decrease in prepayment, deposits and other receivables (116,839,768) 229,900,569 – Increase in contract acquisition cost (21,370,473) - – Decrease in trade and other payables (682,923,381) (97,094,861) – Increase in contract liabilities 1,120,565,794 816,339,617
Cash used in operations (1,323,232,557) (346,044,377)
22. Financial guarantees
The financial guarantees represented the guarantees in respect of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain customers from sales of properties. The outstanding guarantees amounted to RMB 1,458,340,802 as at 30 June 2021 (31 December 2020: RMB 1,004,954,560).
Such guarantees terminate upon: (i) the issuance of the real estate ownership certificate which will generally be available within six months after the Company delivers possession of the relevant property to its purchasers; (ii) the completion of the mortgage registration; and (iii) the issuance of the real estate miscellaneous right certificate relating to the relevant property. 54 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
23. Capital commitments
Commitments for properties under development
Commitments represent the contracted but not incurred development cost, mainly of construction contractors, attributable to properties under development for sales as at 30 June 2021 and 31 December 2020 as follows:
As at As at 30 June 31 December 2021 2020
RMB RMB
Contracted but not provided for 3,163,153,311 2,697,496,823
24. Related party transactions
Name Relationship with the Company
White Peak Holdings IV Limited Immediate holding company White Peak Real Estate IV L. P. Ultimate holding company WP Group Limited Controlled by the same key management Beijing Dingfeng Real Estate Investment Consulting Company Limited (the “Beijing Dingfeng”) Controlled by the same key management
(1) Purchase of service Period from Period from 1 Jan 2021 1 Jan 2020 to to 30 Jun 2021 30 Jun 2020
RMB RMB
Charged to the consolidated income statement: Administrative fees to WP Group Limited 2,947,990 - Consulting service fees to Beijing Dingfeng 8,900,000 -
Capitalised to properties under development: Initial construction design consultancy fees, site investigation fees, safety inspection fees and engineering quality control fees to Beijing Dingfen 35,936,711 31,132,075
47,784,701 31,132,075
Notes:
Administrative fees were paid to WP Group Limited, which are recharged based on actual expenses incurred.
Consulting service fee, initial construction design consultancy fees, site investigation fees, safety inspection fees and engineering quality control fees were paid to Beijing Dingfeng, which are charged based on actual cost incurred.
55 B — Performance RE IV Limited, Interim Report Q2 2021
Notes to the unaudited consolidated financial information
24. Related party transactions (continued )
(2) Balance with related parties (note 7 ) As at As at 30 June 31 December 2021 2020
RMB RMB
Prepayment to Beijing Dingfeng 32,318,777 55,435,138
56 RE IV Limited www.wprei.com