GREENTOWN CHINA HOLDINGS LIMITED GREENTOWN CHINA HOLDINGS LIMITED
綠城中國控股有限公司
期
中 2020
報
告 Interim Rep ort
C o n t e n t s
Corporate Profile | 002 | |
Corporate Information | 004 | |
Land Bank Information | 006 | |
Management Discussion and Analysis | ||
Operation Review | 009 | |
Outlook | 015 | |
Financial Analysis | 017 | |
Corporate Governance | 024 | |
Other Information | 026 | |
Report on Review of Condensed Consolidated Financial Statements | 033 | |
Condensed Consolidated Financial Statements | ||
Condensed Consolidated Statement of Profit or Loss and | 034 | |
Other Comprehensive Income | ||
Condensed Consolidated Statement of Financial Position | 035 | |
Condensed Consolidated Statement of Changes in Equity | 037 | |
Condensed Consolidated Statement of Cash Flows | 039 | |
Notes to the Condensed Consolidated Financial Statements | 041 | |
Definition | 075 |
C o r p o r a t e P r o f i l e
GREENTOWN CHINA HOLDINGS LIMITED IS A LEADING QUALITY PROPERTY DEVELOPER AND INTEGRATED LIVING SERVICE PROVIDER IN CHINA. IT MAINTAINS A LEADING POSITION IN THE INDUSTRY BY VIRTUE OF THE QUALITY OF ITS PROPERTIES, AND ITS UNIQUE ARCHITECTURAL AESTHETICS AND CUSTOMER CENTRIC SERVICES. THE COMPANY WAS AWARDED THE "TOP 10 AMONG 100 CHINESE REAL ESTATE ENTERPRISES BY COMPREHENSIVE STRENGTH" AND "TOP 10 CHINESE REAL ESTATE COMPANIES BY BRAND VALUE (MIXED OWNERSHIP)" FOR THE 16TH CONSECUTIVE YEAR AND CROWNED "TOP 10 AMONG 100 CHINA REAL ESTATE BY BRAND VALUE 2020" WITH ITS COMPREHENSIVE BRAND VALUE OF RMB86.8 BILLION. MEANWHILE, GREENTOWN CHINA WAS AWARDED THE "CHINESE LEADING REAL ESTATE COMPANIES BY CUSTOMER SATISFACTION" FOR THE 8TH CONSECUTIVE YEAR FOR ITS QUALITY PRODUCTS AND SERVICES AS WELL AS RECEIVED AWARDS SUCH AS "ENTERPRISE WITH SOCIAL RESPONSIBILITY" FOR MANY YEARS.
002 Greentown China Holdings Limited Interim Report 2020
Corporate Profile
Greentown China Holdings Limited was founded in Hangzhou, China in January 1995, and listed on the Hong Kong Stock Exchange in July 2006. In June 2012, Wharf was introduced as a strategic shareholder of Greentown. As at the date of this report, Wharf (through its wholly-owned subsidiary) held approximately 22.4% of the total issued share capital of the Company. In December 2014, China Communications Construction Group became a strategic shareholder of Greentown China. As at the date of this report, CCCG was interested in approximately 25.1% of the total issued share capital of the Company and became its single largest shareholder.
After 26 years of development, the Company has adhered to the development strategy of "quality first" and developed the upstream and downstream of the real estate business to form three major segments, namely asset-heavy, asset- light and "Greentown+". The asset-heavy segment focuses on the real estate investment and development business, the asset-light segment strengthens the project management business, while the "Greentown+" segment provides strong support for both the asset-heavy and asset-light segments by strengthening the industry integration of the upstream and extending the scope of services of the downstream.
Being a professional developer of premium properties in the PRC, Greentown Group has always insisted on innovation and continued to explore the relationship between human and dwellings with excellent accomplishment in low-rise,multi-storey and high-rise residential properties. Based on the construction of beautiful architecture, Greentown Group is committed to building a better life for more people. Greentown, based in Zhejiang, puts significant emphasis on the layout in the first- and second-tier cities as well as quality third- and fourth-tier cities. In addition to traditional development business, Greentown Group facilitates the development of featured projects including new businesses such as town projects, TOD projects, urban renewal and industry-city integration. Leveraging on its rich land bank, human resources with high caliber and highly effective management s t r u c t u r e , G r e e n t o w n C h i n a h a s established an outstanding brand image in all cities where it operates. Greentown's experience in developing numerous high-quality projects and outstanding operational capabilities accumulated so far has provided strong momentum for its future development.
Since September 2010, Greentown Group has commenced its project management business and has maintained rapid and steady growth every year. On 10 July 2020, Greentown Management Holdings Company Limited was officially spun off from Greentown China and listed separately on the Main Board of the Stock Exchange separately, which has since helped consolidate its leading position in the project management business, while accelerating the growth of Greentown G r o u p ' s a s s e t - l i g h t s e g m e n t a n d enhancing the business synergy between the asset-light and asset-heavy segments.
With the full support of CCCG, a state o w n e d e n t e r p r i s e , W h a r f , a H o n g Kong blue-chip enterprise, and Xinhu Zhongbao,a reputable enterprise, together with our founder Mr. SONG Weiping, a renowned entrepreneur in China's real estate industry, and other shareholders, Greentown will continue to adhere to the innovation and practice of mixed ownership enterprise and deem "quality first while taking into account others" as the development principle, and maintain its dedication to sincerity, meticulousness of strategies and excellence of operation, so as to build the brand of "No. 1 integrated service provider for an ideal life".
Greentown China Holdings Limited Interim Report 2020 003
C o r p o r a t e I n f o r m a t i o n
Board of Directors
Executive Directors | Audit Committee | Remuneration Committee |
Mr ZHANG Yadong | Mr SZE Tsai Ping, Michael | Mr JIA Shenghua (Chairman) |
(Chairman of the Board) | (Resigned on 17 April 2020) | Mr ZHANG Yadong |
Mr LIU Wensheng | Mr HUI Wan Fai | Mr LIU Wensheng |
Mr GUO Jiafeng | (Appointed as Chairman | Mr KE Huanzhang |
Mr ZHOU Lianying | on 17 April 2020) | (Resigned on 17 April 2020) |
Mr GENG Zhongqiang | Mr JIA Shenghua | Mr SZE Tsai Ping, Michael |
Mr LI Jun | Mr QIU Dong | (Resigned on 17 April 2020) |
(Appointed on 17 April 2020) | Mr HUI Wan Fai | |
Non-Executive Directors | Mr ZHU Yuchen | Mr QIU Dong |
Mr Stephen Tin Hoi NG | (Appointed on 17 April 2020) | (Appointed on 17 April 2020) |
(Mr Andrew On Kiu CHOW | Mr ZHU Yuchen | |
as his alternate) | Nomination Committee | (Appointed on 17 April 2020) |
Mr WU Yiwen | Mr SZE Tsai Ping, Michael | |
(Appointed on 26 May 2020) | (Resigned on 17 April 2020) | |
Mr ZHU Yuchen | ||
Independent Non-Executive Directors | (Appointed as Chairman | |
Mr JIA Shenghua | on 17 April 2020) | |
Mr KE Huanzhang | Mr ZHANG Yadong | |
(Resigned on 17 April 2020) | Mr LIU Wensheng | |
Mr SZE Tsai Ping, Michael | Mr JIA Shenghua | |
(Resigned on 17 April 2020) | Mr KE Huanzhang | |
Mr HUI Wan Fai | (Resigned on 17 April 2020) | |
Mr QIU Dong | Mr HUI Wan Fai | |
(Appointed on 17 April 2020) | Mr QIU Dong | |
Mr ZHU Yuchen | (Appointed on 17 April 2020) | |
(Appointed on 17 April 2020) |
004 Greentown China Holdings Limited Interim Report 2020
Corporate Information
Registered Office
Maples Corporate Services Limited
PO Box 309, Ugland House
South Church Street, George Town
Grand Cayman KY1-1104
Cayman Islands
Share Registrar in Hong Kong
Computershare Hong Kong Investor
-
Services Limited Shops 1712-1716
17th Floor, Hopewell Centre 183 Queen's Road East Wanchai, Hong Kong
Share Registrar in Cayman Islands
Royal Bank of Canada Trust Company (Cayman) Limited
4th Floor, Royal Bank House
24 Shedden Road, George Town Grand Cayman KY1-1110 Cayman Islands
Auditor
Deloitte Touche Tohmatsu
Legal Advisors
As to Hong Kong law:
Allen & Overy
As to the PRC law:
Zhejiang T&C Law Firm
As to Cayman Islands law and
- British Virgin Islands law: Maples and Calder
Joint Company Secretaries
Ms XU Ying
- (Appointed on 20 March 2020) Ms NG Sau Mei
- (Appointed on 20 March 2020)
Authorized Representatives
Mr ZHANG Yadong Ms XU Ying
(Appointed on 20 March 2020)
Principal Bankers
Bank of China Limited
Industrial and Commercial Bank of China
Limited
Agricultural Bank of China Ltd.
China Construction Bank Corp.
The Hong Kong And Shanghai Banking
Corp., Ltd.
China CITIC Bank Corp., Ltd.
China Merchants Bank Co.,Ltd.
Bank of Communications Co., Ltd.
The Bank of East Asia, Limited
China Everbright Bank Corp., Ltd.
Shanghai Pudong Development Bank
Co., Ltd.
Hangzhou Headquarters
10/F, Block A, Dragon Century Plaza No.1 Hangda Road
Hangzhou, Zhejiang
PRC
(Postal code: 310007)
Principal Place of Business in Hong Kong
Room 1406-1408, 14/F
New World Tower 1
16-18 Queen's Road Central
Central, Hong Kong
Investor Relations
Email: | ir@chinagreentown.com |
Tel: | (852) 2523 3138 |
Fax: | (852) 2523 6608 |
Public Relations
Hill + Knowlton Strategies Asia
Email: | greentown@hkstrategies.com |
Tel: | (852) 2894 6321 |
Fax: | (852) 2576 1990 |
Stock Code
HKEx: 03900
Websites
www.chinagreentown.com
www.greentownchina.com
Greentown China Holdings Limited Interim Report 2020 005
L a n d B a n k I n f o r m a t i o n
GREENTOWN IN
CHINA
Urumqi
Daqing
Shenyang
Beijing
Tangshan
Dalian
Tianjin
Jinan | Xuzhou | Qingdao | ||||||||||||||||||||||||||||||||
Xi'an | Nantong | |||||||||||||||||||||||||||||||||
Nanjing | ||||||||||||||||||||||||||||||||||
Zhengzhou | ||||||||||||||||||||||||||||||||||
Chengdu | Wuhan | Hefei | Shanghai | |||||||||||||||||||||||||||||||
Wuxi | ||||||||||||||||||||||||||||||||||
Chongqing | Changsha | Huangshi | Suzhou | |||||||||||||||||||||||||||||||
Total GFA Exceeds | Zhejiang | |||||||||||||||||||||||||||||||||
Guangzhou | Gaoan | |||||||||||||||||||||||||||||||||
Fuzhou | ||||||||||||||||||||||||||||||||||
48.01 Million sqm | Kunming | |||||||||||||||||||||||||||||||||
Region | No. of | Percentage | ||||||||||||||||||||||||||||||||
Foshan | ||||||||||||||||||||||||||||||||||
Projects | of GFA (%) | |||||||||||||||||||||||||||||||||
Hangzhou | 28 | 9.5% | ||||||||||||||||||||||||||||||||
Zhejiang (excluding Hangzhou) | 51 | 25.6% | ||||||||||||||||||||||||||||||||
Jiangsu-Shanghai-Anhui | 25 | 14.9% | ||||||||||||||||||||||||||||||||
Bohai Rim Area | 34 | 20.4% | ||||||||||||||||||||||||||||||||
Pearl River Delta Area | 5 | 2.9% | ||||||||||||||||||||||||||||||||
Chengdu-Chongqing Area | 6 | 3.2% | Lingshui, Hainan | |||||||||||||||||||||||||||||||
Others | 20 | 21.8% | ||||||||||||||||||||||||||||||||
Overseas | 3 | 1.7% | ||||||||||||||||||||||||||||||||
Total | 172 | 100% |
OVERSEAS | Seattle, USA |
Coquitlam, Canada Jakarta, Indonesia |
006 Greentown China Holdings Limited Interim Report 2020
Land Bank Information
The Yangtze River Delta Area
Zhejiang | Hangzhou | Jiangsu | Anhui | Shanghai |
(excluding Hangzhou) | ||||
12,276,891 | 4,537,602 | 5,745,882 | 907,994 | 490,403 |
Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) |
25.6% | 9.5% | 12.0% | 1.9% | 1.0% |
Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) |
The Bohai Rim Area | ||||
Shandong | Liaoning | Tianjin | Beijing | Hebei |
3,093,265 | 1,997,142 | 1,728,992 | 1,719,638 | 1,275,914 |
Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) |
6.4% | 4.2% | 3.6% | 3.6% | 2.6% |
Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) |
The Pearl River Delta Area | Chengdu-Chongqing Area | Overseas | ||
Guangdong | Chongqing | Sichuan | Overseas | |
1,391,455 | 897,126 | 620,728 | 835,746 | |
Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | |
2.9% | 1.9% | 1.3% | 1.7% | |
Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | |
Other Areas in China | ||||
Shaanxi | Hubei | Hainan | Henan | Jiangxi |
5,513,603 | 999,658 | 858,140 | 819,529 | 617,043 |
Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) |
11.5% | 2.1% | 1.8% | 1.7% | 1.3% |
Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) |
Fujian | Xinjiang | Hunan | Heilongjiang | Yunnan |
588,324 | 496,074 | 206,722 | 260,134 | 127,528 |
Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) | Total GFA (sqm) |
1.2% | 1.0% | 0.4% | 0.5% | 0.3% |
Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) | Proportion to total land bank (%) |
Note: | The figures of total GFA and site area are subject to adjustments due to planning changes. The relevant figures will only be finalized after project completion. |
Greentown China Holdings Limited Interim Report 2020 007
M a n a g e m e n t D i s c u s s i o n
a n d A n a l y s i s
008 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
Operation Review
During the first half of 2020, subject to the negative effects of the COVID-19 pandemic and geopolitical conflicts, as well as increasing uncertainties in global economic development, the real estate industry across the upstream and the downstream was exposed to unprecedented challenges. However, China's real estate sector is gradually returning to normalcy with orderly resumption of work and production, thanks to positive progress of the epidemic prevention and control measures in the country. During the Reporting Period, the prudent monetary policy is more flexible; the regulation policy of "houses are built to be inhabited, not for speculation" in the property market was further deepened to achieve the policy goal of "stabilizing land prices, housing prices and expectations" and to promote a steady and healthy development of the industry.
Adhering to the two-pronged approach of "fighting against the epidemic" and "stabilizing operation", Greentown China responded in a timely manner and took multiple measures while carrying out effective prevention and control of the epidemic, and it has basically completed the semi - annual contract sales and delivery targets, and maintained its steady development while making progress across the board. Since the beginning of 2020, the Group has made many
breakthroughs in land investment, capital markets and strategic coordination. First, land investment witnessed remarkable rises both in quality and quantity. In the first half of the year, the value of newly- added saleable value reached a record high of RMB175.6 billion, ranking among the top in the industry; benefited from the broadening of land acquisition channels and precise grasp of the timing in the market, the estimated average profit margins of the projects of the newly- added land bank increased significantly, and the conversion rate during the year improved notably, laying a solid foundation for achieving sales targets for the year and high-quality development in the future. Second, its subsidiary Greentown Management (9979.HK) was successfully spun-off and listed on the main board o f t h e H o n g K o n g S t o c k E x c h a n g e , which has become "China's First Stock of Project Management (中國代建第一 股)". Leveraging on the strength of the capital market, the scale growth and profit improvement of the light asset sector were accelerated, and the synergy of light and heavy asset businesses was fully utilized. Third, the Group's capital structure was improved by the issuance of shares to and introduction of a strategic investor, Xinhu Zhongbao (600208.SH), to further optimize the mixed-ownership enterprise model. Meanwhile, both parties thereof could complement and cooperate with each
other in terms of project development, which helps facilitate the consolidation of the advantage of Greentown China in the aspect of real estate development in China. Fourth, Greentown China and Greentown Service (2869.HK) jointly
established the "Greentown Living Services Committee (綠城生活服務委員會)", to
achieve strategic synergy and business integration in the living services sector.
The year of 2020 represents the first year for Greentown China to promote the "Strategic 2025" plan. The Group optimized its organizational structure and established 10 business committees to achieve a clear working mechanism and improve management decision-making efficiency. With a strategic vision and forward-looking perspective, we are committed to the strategic goal of "striving to uphold its excellent product quality, maintaining its number-one spot in customer satisfaction, a n d r a n k i n g a m o n g t h e t o p - t i e r i n comprehensive performance".
Operating Results Steadily Improved During the period, the Group generated r e v e n u e o f R M B 2 3 , 8 9 6 m i l l i o n , representing an increase of RMB5,238 million or 28.1% from RMB18,658 million in the corresponding period of 2019. Net profit was RMB3,130 million, slightly up when compared to RMB3,073 million in the corresponding period of 2019. During the period, profit attributable to owners of the Company amounted to RMB2,096 million,
Greentown China Holdings Limited Interim Report 2020 009
Management Discussion and Analysis
slightly up when compared to RMB2,058 million in the corresponding period of 2019. After deducting the net post-tax effects of foreign exchange gains and losses, gains from acquisitions, provision and reversal of impairment losses on certain assets and fair value adjustments on certain assets, the core net profit (non- GAAP measure adopted for illustrating the Group's performance results from natural growth and operation of its principal businesses and enabling comparison of business performance across different periods) attributable to owners of the Company amounted to RMB2,435 million, slightly up when compared to RMB2,430 million in the corresponding period of 2019.
Sales Scale Hit Record Highs Contract sales growth accelerated. For the six months ended 30 June 2020, Greentown Group (including Greentown China Holdings Limited and its subsidiaries, together with its joint ventures and associates) recorded a total contracted sales area of approximately 4.31 million sqm, representing a year-on-yeargrowth of 7%, and a total contracted sales amount of approximately RMB91.2 billion, representing a year-on-yeargrowth of 23%, hitting record highs compared to the corresponding periods of previous years. Cash collection ratio was 95%, at the top level of the industry.
In the first half of 2020, the Company recorded a total contracted sales area of approximately 2.65 million sqm and a total contracted sales amount of approximately RMB66.1 billion (increased by 34% year- on-year) from its investment projects, of which approximately RMB38.2 billion was attributable to the Group (increased by 43% year-on-year). As at 30 June 2020, the Group recorded a total subscription sales
amount of approximately RMB4.3 billion, of which approximately RMB2.3 billion was attributable to the Group; the average selling price of investment projects reached approximately RMB24,922 per sqm, an industry-leading level. In addition, in the first half of 2020, Greentown Group recorded a contracted sales area of approximately 1.66 million sqm and a total contracted sales amount of approximately RMB25.1 billion in aggregate from the projects under project management b u s i n e s s w h e r e G r e e n t o w n G r o u p delivered brand value and management expertise (non-investment projects, referred to as "projects under project management").
Advanced sell-through structure. During the first half of 2020, the Group applied the marketing policy of "all staff, all people, all aspects" and responded actively to the unexpected epidemic and market change with its flexible marketing strategies . By carrying out special promotion campaigns such as "Spring
Plan (春天計劃)", "Refreshing Seasons in Spring and Summer (春夏煥新季)",
and by facilitating marketing promotion through online brand activities on three major online platforms: "Greentown+" APP, "Real Estate Greentown (置業綠城)" WeChat official account and "Greentown Cloud (綠城雲)" WeChat Mini Program, the Company achieved outstanding results. Benefited from the accurate investment strategies, excellent quality services and superior locations, the products of Greentown China were highly recognized by customers, and brilliant achievements have been made in sales of multiple projects, among which popular newly- launched hot-selling projects such as Ningbo Xiaofeng Yinyue, Fenghua Guiyu Chaoyang, Xi'an National Games Village and Chongqing Chunxi Yunlu were sold out immediately after their launch.
Quality and Customers First Greentown China continued to forge its core competence by insisting on the product-orientedconcept and carrying forward the artisan spirit. The Group has constantly improved product innovations and successfully gained innovative results in projects featuring multifunctional v e n u e , g a r d e n - l i k e o f f i c e , f l e x i b l e residential living space and fabricated interior decoration. The Group has also paid attention to people's living quality by increasing investment in green and healthy communities, smart communities as well as smart home, highlighting the advantages of its products. Meanwhile, the Group promoted Japanese-styledmanagement, industrialized technology application, comprehensive operation efficiency and smart site at all levels, and held the on-sitedemonstration of "standardized, industrialized, digitalized and eco-friendly"construction for the fourth time to continuously enhance the level of project construction. Moreover, the Group established a design sharing center, which formed a system lap with the construction research center to safeguard its leading position in product quality from various dimensions. According
to China Excellent Real Estate Developers on Product Quality (《中國房地產產品力 優秀企業》) by CIA research, in the first
half of 2020, Greentown China ranked first in the product quality list. Leveraging on its excellent service quality, it continued to lead in customer satisfaction in the industry. According to the "2020 Chinese
Urban Residents' Satisfaction Survey ( 2 0 2 0 中 國 城 市 居 民 居 住 滿 意 度 調 查 報
告)", Greentown China leads the industry for 10 consecutive years with an overall satisfaction score of 90.2, far above the industry average of 76.1, ranking first in 13 cities where it has presence, including Hangzhou, Hefei, Zhengzhou and Jinan.
010 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
Strategic Synergy, Business Linkage O n 2 1 J u l y , G r e e n t o w n C h i n a a n d Greentown Service jointly established the "Greentown Living Service Committee". Through strategic coordination, each party gives full play to its own advantages to build a living service platform together. Such an integrated service model and system covers a broad range of activities, from planning design to product creation a n d s e r v i c e o p e r a t i o n t o p r o d u c t promotion and service upgrades, while promoting the business linkage and synergy. Through enhancing the Housing 4S service cooperation mode, promoting integrated care for the elderly and building the brand of rental apartment, the two parties jointly promoted the "No. 1 Living Service Brand in China".
Improvement in Both Quantity and Quality of Land Bank
Well effect on accurate investment strategy . In the first half of 2020, Greentown China continued to deepen its strategy of "focusing on regions and deepening footprints in cities" . The Company always adheres to value i n v e s t m e n t a n d s e i z e s i n v e s t m e n t opportunities at the right time . The Company further expanded the land bank in core city clusters in Yangtze River Delta Area and the Bohai Rim Area and acquired multiple premium land parcels in first- and second-tiercities at a lower cost. During the period under review, the Group has newly-added43 projects, with a gross floor area of approximately 10.97 million sqm. It is estimated that
the newly-added saleable value will be RMB175.6 billion, of which approximately RMB101.2 billion will be attributable to the Group. Land cost/acquisition amount totaled approximately RMB64.8 billion, of which approximately RMB43.9 billion was payable by the Group. The average land cost of the new land parcels amounted to approximately RMB6,813 per sqm. In addition, about 25% of the newly-added saleable value is expected to be converted to the annual contracted sales, which brings an improvement in supply efficiency and effectively promotes the sales scale growth for the year and in the future.
Continue broadening investment c h a n n e l s . T h e G r o u p p r o a c t i v e l y broadened its investment channels, and stepped up its efforts in mergers and acquisitions . In the first half of 2020, the Group acquired 12 projects through mergers and acquisitions. It is estimated that the value will amount to RMB73.8 billion, accounting for 42%. The Group secured such strategic merger and acquisition projects of which Xinhu Shanghai Projects and Qidong Project serve as representatives, and managed to introduce Xinhu Zhongbao as its strategic investor. Moreover, the Group and each regional company have completed the official establishment of a special group for mergers and acquisitions, and will spare no efforts in promoting a batch of reserve merger and acquisition projects, further opening the channels for mergers and acquisitions.
Continuous optimization of regional distribution. The Group continued to adhere to the strategy of focusing on the layout in first- and second-tiercities as well as quality third- and fourth-tiercities. During the period under review, most of the newly-addedland parcels are situated in first- and second-tiercore cities such as Beijing, Hangzhou, Ningbo, Shijiazhuang, Shenyang and Xi'an, accounting for approximately 75% of the total saleable value. In respect of regional distribution, the Yangtze River Delta as an area of strategic importance accounted for 63% of the newly-addedsaleable value, which helped consolidate Greentown China's performance and industry position in Jiangsu and Zhejiang regions and enhance its risk resistance.
Steady growth forecast for earnings. During the period, the estimated saleable value of newly acquired land bank hit a record high. The newly-addedprojects are expected to generate net profit of nearly RMB18 billion in aggregate and the estimated average net profit margins of the projects of the newly-addedland bank increased by approximately 3 pps year- on-year,realizing a leap in the quality and quantity of land bank and laying a good profit foundation.
Greentown China Holdings Limited Interim Report 2020 011
Management Discussion and Analysis
Table of Newly-added Land Bank in the First Half of 2020 | |||||
Total Land Cost/ | |||||
Acquisition | |||||
No. | Land/Project Name | Acquired by | Equity | Cost | Total GFA |
(RMB million) | (sqm) | ||||
1 | Hangzhou Chunlai Fenghua | Auction | 50% | 2,697 | 140,044 |
2 | Hangzhou Guiyu Yingyue | Auction | 50% | 960 | 146,550 |
3 | Hangzhou Xihu District Sanshen Reserved Land | Auction | 24% | 400 | 95,458 |
4 | Hangzhou Jianggan District Sanbao Block 47 | M&A | 39% | 2,200 | 182,393 |
5 | Hangzhou Yuhang District Future Sci-tech City Block 81 | Auction | 51% | 2,913 | 126,207 |
6 | Hangzhou Lin'an Binhu Xincheng Block LA0607-15 | Auction | 100% | 2,135 | 226,455 |
7 | Hangzhou Longwu Unit XH1602-R21-14 Block | Auction | 100% | 1,209 | 81,443 |
8 | Ningbo Chunyue Jinsha | Auction | 100% | 1,402 | 82,668 |
9 | Ningbo Osmanthus Grace | Auction | 100% | 329 | 88,621 |
10 | Ningbo Chunyue Jianglan | M&A | 60% | 806 | 210,417 |
11 | Ningbo Yinzhou District Xurong Block | Auction | 100% | 2,882 | 127,575 |
12 | Ningbo Yinzhou District Rail Qianyin Blocks 3 & 4 | Auction | 51% | 3,550 | 222,960 |
13 | Wenzhou Osmanthus Grace | Auction | 34% | 2,542 | 255,181 |
14 | Shengzhou Opera Town Phase III East Block | Auction | 32.5% | 62 | 59,803 |
15 | Zhoushan Ruxin Town Changzhi Island Blocks CZ-c-14 & 15 | Auction | 96.88% | 70 | 32,987 |
16 | Lishui Guiyu Lanting | Auction | 60.8% | 2,170 | 255,600 |
17 | Yiwu Xiaofeng Yinyue | Auction | 51% | 1,210 | 114,956 |
18 | Jinhua Chunxi Mingyue | Auction | 67% | 1,399 | 157,620 |
19 | Anji Angel Town Changshuo Street Blocks 2019-16-1 & 17 | M&A | 40% | 65 | 74,838 |
20 | Anji Peach Garden Blocks 19 & 20 | Auction | 100% | 261 | 92,248 |
21 | Quzhou Lixian Future Community Blocks 1 & 2 | Auction | 66% | 2,252 | 633,643 |
22 | Shanghai Jing'an District Qinglan International Phase II | M&A | 35% | 1,900 | 184,826 |
23 | Suzhou Mingyue Binhe | Auction | 49% | 1,589 | 130,738 |
24 | Suzhou Mingyue Jiangnan | Auction | 100% | 300 | 46,130 |
25 | Wuxi Chenfeng Yunlu | M&A | 39.9% | 1,092 | 220,215 |
26 | Nantong Rudong Mingyue Jiangnan | Auction | 70% | 813 | 183,852 |
27 | Nantong Qidong Haishang Pearl City Project | M&A | 50% | 1,824 | 2,511,162 |
28 | Suqian Liyuanwan Town | Auction | 100% | 380 | 210,825 |
29 | Beijing Aohai Mingyue | Auction | 42.5% | 6,360 | 279,585 |
30 | Beijing Hejin Sincere Garden | Auction | 50% | 6,700 | 275,456 |
31 | Beijing Mingyue Tinglan | Auction | 70% | 1,348 | 73,528 |
32 | Tianjin Chentang Block W3 | Auction | 41% | 1,160 | 78,733 |
33 | Jinan Licheng District Party School New Campus East Block | M&A | 20% | 43 | 37,624 |
34 | Dalian Hupan Helu | M&A | 88% | 388 | 212,343 |
35 | Dalian Zhongshan District Hualian Hotel Project | Auction | 20% | 513 | 68,231 |
36 | Shenyang Shenbei New District Xianlin Golden Valley Project | M&A | 35% | 206 | 589,015 |
37 | Shenyang Yuhong District Beautiful Island Project and | M&A | 35% | 172 | 479,948 |
Xinhu Bay Project | |||||
38 | Shijiazhuang Chang'an District Nangaoying Block | Auction | 99% | 1,274 | 253,300 |
39 | Shijiazhuang Yuhua District Zhaobukou Project | M&A | 99% | 482 | 134,493 |
40 | Chengdu Sichuan Cuisine Town | Auction | 60% | 189 | 55,520 |
41 | Xi'an Hongji New Town Phrase I Blocks 24 and 27 | M&A | 80% | 2,513 | 1,062,858 |
42 | Fuzhou East 2nd Ring Road Lianpan Project | Auction | 50% | 3,188 | 167,815 |
43 | Urumqi High-tech District Changchun North Road Project | Auction | 100% | 826 | 303,174 |
Total | 64,774 | 10,967,038 | |||
012 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
As at 30 June 2020, Greentown Group had a total of 172 land reserve projects (including those under and pending construction) with a GFA of approximately
48.01 million sqm, of which approximately 27.98 million sqm was attributable to the Group. The total saleable area was approximately 32.97 million sqm, of which approximately 19.08 million sqm was attributable to the Group. The average GFA land cost was approximately RMB6,234 per sqm. Land reserve in first- and second- tier cities accounted for 74% of the total saleable value.
Featured Innovation and Multidimensional Development
In addition to traditional real estate investment and development business, the Group strives to create new driving force and growth pole for future profit, stays active in the operation of featured b u s i n e s s a n d m a k e s a l l e f f o r t s t o accelerate the layout and implementation of TOD, urban renewal and city-industry integration projects.
Comprehensively accelerating the formation of the layout. In terms of the TOD projects, the Group implements a nationwide development strategy focusing on multi-categoryand multi-typebusinesses. The Group has firmly seized the strategic opportunities brought by China's railway transportation. Currently, it has launched 13 TOD projects in various cities, such as Hangzhou, Ningbo, Fuzhou and Foshan. In respect of urban renewal, it had successfully won the tender for the reconstruction projects o f 3 o l d c o m m u n i t i e s i n H a n g z h o u a n d i m p l e m e n t i n g t h e f i r s t f u t u r e
community project in Quzhou, ushering in a new chapter of Greentown China's reconstruction of old towns. With regard to city-industry integration, the Group in line with the strategic deployment and policies of the country has pinpointed in the industry and opened up new business channels through an industrial development path combining "self-owned resources + partners".
Prominent performance in town business . In the first half of 2020, the newly-addedsaleable resources of Greentown China's town business amounted to RMB33.9 billion. As of 30 June 2020, the Company's town business had extended to 17 cities with 8.93 million sqm of planned GFA secured. 5 to 8 town projects will be initiated in the second half of 2020 with saleable resources close to RMB20 billion. After years of exploration and practice, the town business of Greentown has established a business development model empowered by the dual drive of property sale and industrial operation with focus on three major sectors of healthcare, agriculture and scientific innovation. With such advantages as large scale, low land cost to saleable value ratio and low peak of shareholder investments, the town projects will continue to contribute a steady cash flow and profit to the Group in the future.
Leader in Project Management Industry
In the first half of 2020, the Group's scale of the project management business expanded rapidly. As of 30 June 2020, the Group had had an aggregate of 268 projects under management, with
an accumulated contracted GFA of approximately 73.31 million sqm. Its commercial project management business has provided various services throughout the property development process to enhance efficiency and management value. Its government project management business has gained high recognition from different sectors of the society and generated outstanding social benefits. As the Group's project management business continues to expand, it maintains the leading position in the industry in terms of scale, which would in turn further increase the profit contribution of asset-light business to the Group.
Successful listing of Greentown Management. Greentown Management under Greentown China was spun off and officially listed on the main board of the Stock Exchange on 10 July 2020, becoming the "first stock of project management in China" . Upon listing, Greentown Management proactively implemented the asset-lightstrategy of Greentown China and continued to lead the innovation and development of China's project management industry. With excellent construction capabilities, high-qualityproducts and standardized operation, Greentown Management earns the trust of customers. It was successively awarded the "China's Leading Enterprise in Real Estate Project Management Operation", and was honored with "Annual Influential Business Model Award" and "Annual CSR Contribution Award".
Greentown China Holdings Limited Interim Report 2020 013
Management Discussion and Analysis
Healthy Financial Condition and | 5.65%. The issuance of USD bonds was |
Smooth Financing Channels | highly sought after by investors. The initial |
B a c k e d w i t h t h e c r e d i t a b i l i t y a n d | price guidance was set at 6.2% and the |
r e p u t e o f C h i n a C o m m u n i c a t i o n s | final price guidance was tightened by 55 |
Construction Group Ltd. ("CCCG"), its | bps to 5.65%, one of the largest tightening |
largest shareholder, and benefiting from | among offshore USD bond issuance by |
the Group's overall sound operating | Chinese real estate companies YTD. |
performance, the net gearing ratio of | |
the Group was 66.1% as at 30 June 2020, | For onshore financing, the Group in the |
maintaining at a reasonable level. Debts | first half of 2020 launched the public |
due within one year accounted for 31.1% | issuance of bonds in an aggregate amount |
of total, down 5.5 pps compared to that | of RMB14.595 billion with an average |
at the end of 2019. Bank deposits and | interest cost of 3.54%, representing a |
cash (including pledged bank deposits) | decrease of 133 bps compared to 4.87% |
amounted to RMB62.849 billion. The | in the corresponding period of 2019. It |
weighted average interest cost of the total | reflected a record low in onshore financing |
borrowings in the first half of 2020 was | costs, presence of barrier-free channels |
5.2%, a drop of 20 bps compared to 5.4% | and reasonable structure. Among these, |
in the first half of 2019. | the Group issued corporate bonds in an |
aggregate principal amount of RMB2.93 | |
Funding cost hit record low level. | billion with interest rates ranging from |
By studying the policy environment | 3.19% to 3.87% per annum, medium- |
and through innovative financing, the | term notes of RMB3 billion with interest |
Group has widely expanded its financing | rates ranging from 3.27% to 3.86% per |
channels and continuously deepened its | annum and perpetual medium-term notes |
strategic cooperation with various financial | of RMB1.5 billion with an interest rate of |
institutions so as to optimize its financing | 4.2% per annum. Meanwhile, the Group |
structure and decrease its capital cost. | further improved its financing innovation |
For offshore financing, the Company | capabilities, explored new financing |
in January and July 2020 entered into a | channels and innovatively promoted |
USD730 million, three-year and unsecured | securitization. During the period, the Group |
syndicated loan agreement with an | successfully issued balance payment ABS |
interest rate of only LIBOR/HIBOR + 2.48%. | for house purchase in the amount of RMB2 |
In July 2020, Greentown China kept abreast | billion with an interest rate of 3.9% per |
of market dynamics and strategically | annum and the supply chain ABS in the |
captured the optimal market window, | amount of RMB5.165 billion with interest |
successfully issuing the five-year (non- | rates ranging from 2.5% to 3.98% per |
redeemable in first three years) USD300 | annum. |
million senior notes with a coupon rate of |
Lean Management to Improve Quality and Efficiency
Efficient cost management and control. During the Reporting Period,
the Group achieved significant results in respect of product cost management a n d c o n t r o l . B y f u r t h e r e n r i c h i n g its standardization system, product adaptability was secured, greatly improving the speed and efficiency of product execution. Meanwhile, through promoting centralized strategic procurement and strategic cooperation, 70 product categories were procured with application rate of procured materials reaching 96%. Dynamic cost decreased by RMB2.95 billion, representing a drop of 1 . 2% compared to the target cost, resulting in pre-settled cost savings of approximately RMB249 million for the first half of 2020. Benefited from highly efficient operations management and results of enhancing digital operational capabilities, the project operation cycles from land acquisition to construction commencement to presale to return on shareholders' investment and delivery were significantly accelerated by 24%, 10%, 14% and 5% year-on-year, respectively.
Steady improvement in efficiency per capita. Adhering to the strategy of "Improve Quality and Efficiency", the Group actively implemented project group management in marketing to improve efficiency per capita. 2020 YTD, 2 project groups were upgraded to city
014 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
companies; at present there are 29 project groups, with resources coordination and efficiency enhancement in full play. During the period, area under construction per capital saw an increase of 29% compared to that in the corresponding period of 2019. In addition, win-win mechanism has achieved huge success, supporting the implementation of strategic plans, promoting quality investment, accelerating o p e r a t i o n e f f i c i e n c y , f a c i l i t a t i n g profitability growth and boosting employee remuneration.
Introduction of Strategic Investor to achieve Win-win Collaboration
In May 2020, the Company introduced Xinhu Zhongbao as a strategic investor and the third largest shareholder by issuing 323 million shares to a wholly- owned subsidiary of Xinhu Zhongbao. Listed on Shanghai Stock Exchange, Xinhu Zhongbao is mainly engaged in real estate, financial services, fintech and high-tech investment in the PRC, and is a constituent of each of CSI300 and MSCI China A Index. The Group has formed a strong alliance with Xinhu Zhongbao Group to achieve
Qufu Confucius Museum
complementary advantages and mutual benefit. Through exploring cooperation opportunities in various projects, especially in the real estate sector in the PRC, the Group will rapidly increase its high-quality land bank resources and further optimize the mixed-ownership enterprise model.
Outlook
Looking forward to the second half of 2020, the global economy will still be facing a complex and volatile situation. However, the Chinese economy is steadily improving and its basic trend of long- term improvement remains unchanged. Meanwhile, it has responded to the tide of anti-globalization with further liberalization. In a long run, the further advancement of new urbanization process has improved the comprehensive carrying capacity and resource allocation capabilities of the country's central cities and urban agglomerations, enhanced population mobility and formed a stable support on the demand side. The demand for urban renewal and redevelopment, including
transformation of old towns and urban operations, will also generate momentum and create opportunities for the industry's long-term sustainable development. However, in the meantime, the continuous regulation and control together with increasingly strict financial supervision, rising industry concentration, and shrinking industry gross profit margins will remain to be the challenges for the development and operation of real estate enterprises.
Greentown China will adapt to the trend, follow the trend, seize the opportunities, steadily march ahead, and further deepen the three main business layouts of heavy assets, light assets and "Greentown+".
First, the asset-heavy segment refers t o t h e r e a l e s t a t e i n v e s t m e n t a n d development business. The Group will focus on strengthening forward-looking city research and improving merger and acquisition capabilities, so as to enhance investment efficiency and drive profitability. The national layout will be
Greentown China Holdings Limited Interim Report 2020 015
Management Discussion and Analysis
further optimized by deeply cultivating the Zhejiang base camp and the Yangtze River Delta Area, while proactively deploying the core cities of key urban agglomerations including the Bohai Rim Area, the Pearl River Delta Area, Chengdu-Chongqing Area and the middle reaches of the Yangtze River Area. Meanwhile, in order to improve business structure, we will proactively promote the implementation of featured projects including town projects, TOD projects, and industry-city integration, and reserve a batch of long- term projects with land dividends. Second, the asset-light segment refers to the real estate project management business. In the future, Greentown Management will further expand its room for development, establish the sub-brand of Greentown's project management, enhance its existing project management model and R&D capabilities, and improve its management
mechanism to ensure the quality of project management products. Third, the "Greentown+" segment refers to the diversified businesses centering on real estate development. The Group will lengthen the industry chain and expand the industrial clusters, thus tapping into the value points in the upstream and downstream of the real estate industry as well as creating more value for customers.
Looking forward, Greentown China will be committed to continuing the growth m o m e n t u m o f t h e f i r s t h a l f o f t h e year, further optimize its development structure, and strengthen its development momentum. We will uphold the product- centric, growth- and profit-oriented principles and improve our development quality to lay a solid foundation for the "Greentown China Strategy 2025", striving to become a benchmark in quality among superior real estate enterprises, and achieve sustainable development with higher quality.
Saleable Resources in the Second Half of 2020
For the second half of 2020, the total saleable area of Greentown Group is expected to reach approximately 13.08 million sqm, with a total saleable amount of approximately RMB272.2 billion. Among which, investment projects are expected to provide a saleable area of approximately
7.90 million sqm, and a saleable amount of approximately RMB202.8 billion, (of which in the first half of 2020 approximately RMB50 . 2 billion will be attributable to inventory property projects and approximately RMB152.6 billion to new saleable properties). The total saleable area in first- and second-tier cities is expected to be approximately 5.65 million sqm, and the saleable amount is expected to be approximately RMB159.3 billion. In the second half of 2020, the saleable area of Greentown Group's projects under project management is estimated to reach approximately 5.18 million sqm, with a saleable amount of approximately RMB69.4 billion.
Haikou Spring Blossom
016 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
Financial Analysis
Revenue
The revenue of the Group mainly derives from the sales of properties, as well as from project management, design and decoration, hotel operations, property rental, sales of construction materials, etc. During the Period, the revenue of the Group amounted to RMB23,896 million, representing an increase of 28.1% from RMB18,658 million of the same period of 2019, which was mainly due to the increase in sales of properties. During the Period, the Group's revenue from property sales amounted to RMB20,714 million, accounting for 86.7% of the total revenue and representing an increase of 30.4% from RMB15,889 million of the same period of 2019.The area of properties with recognised revenue amounted to 976,036 sqm, representing an increase of 2.8% from 949,684 sqm of the same period of 2019. The average selling price of properties with recognised revenue was RMB21,222 per sqm, representing an increase of 26.8% from RMB16,731 per sqm of the same period of 2019, which was mainly because Yiwu Peach Garden, one of the projects with recognised revenue for the Period accounting for relatively high percentage of sales, is mostly composed of villas with relatively high selling prices, and projects like Hangzhou Osmanthus Grace and Jinan Yulan Garden are located in the first- and second-tier cities, which elevated the average selling price to certain extent.
Properties with the revenue recognised by subsidiaries for the first half of 2020 are as follows:
Average Selling | |||||
Project Name | Type of Properties | Area Sold | Sales Revenue | % of Total | Price |
(sqm) | (RMB | (RMB | |||
(Note) | million) | per sqm) | |||
Yiwu Peach Garden | High-rise Apartment, Villa | 71,430 | 2,820 | 13.6% | 39,479 |
Hangzhou Osmanthus | High-rise Apartment, Villa | 58,312 | 1,898 | 9.2% | 32,549 |
Grace | |||||
Ningbo Young City | High-rise Apartment | 101,683 | 1,755 | 8.5% | 17,260 |
Lishui Liuxiangyuan | High-rise Apartment, Villa | 109,329 | 1,748 | 8.4% | 15,988 |
Beijing Jinghang Plaza | Commercial | 90,333 | 1,659 | 8.0% | 18,365 |
Hainan Blue Town | Integrated Community | 45,999 | 1,257 | 6.1% | 27,327 |
Qingdao Ideal City | Integrated Community | 49,247 | 961 | 4.6% | 19,514 |
Daishan Sky Blue | High-rise Apartment | 89,397 | 827 | 4.0% | 9,251 |
Apartment | |||||
Jinan Yulan Garden | High-Rise Apartment, Low-Rise | 16,952 | 559 | 2.7% | 32,975 |
Apartment, Villa | |||||
Shanghai Bund House | High-rise Apartment | 2,049 | 317 | 1.5% | 154,710 |
Others | 341,305 | 6,913 | 33.4% | 20,255 | |
Total | 976,036 | 20,714 | 100.0% | 21,222 | |
Note: | Areas sold include aboveground and underground areas. |
During the Period, projects in Zhejiang area achieved property sales revenue of RMB13,148 million, accounting for 63.5% of the total property sales and ranking top. Projects in Beijing area achieved property sales revenue of RMB2,232 million, accounting for 10.8% of the total property sales and ranking second. Projects in Shandong area achieved property sales revenue of RMB1,813 million, accounting for 8.8% of the total property sales and ranking third.
During the Period, the Group's revenue from sales of high-rise apartments, low-rise apartments, serviced apartments, etc. amounted to RMB14,542 million, accounting for 70.2% of the total property sales; sales revenue from villas amounted to RMB5,682 million, accounting for 27.4% of the total property sales; and that from offices amounted to RMB490 million, accounting for 2.4% of the total property sales.
Greentown China Holdings Limited Interim Report 2020 017
Management Discussion and Analysis
During the Period, the Group's revenue f r o m p r o j e c t m a n a g e m e n t s e r v i c e amounted to RMB797 million, representing a decrease of 19.5% from RMB990 million in the corresponding period of 2019. Affected by the outbreak of COVID-19, the construction, sales and delivery of the Company's projects under project management were delayed by one to two months. The delay in the construction of the projects under project management and sales schedule will affect the progress of completion for the current period. The service income under project management has not been lost, but only postponed to be recognised in the subsequent service cycle.
During the Period, the Group recorded RMB1,073 million in the revenue from its design and decoration business, representing a decrease of RMB85 million or 7.3% from RMB1,158 million in the corresponding period of 2019. During the Period, the Group's revenue from hotel operations amounted to RMB213 million, representing a decrease of 45.8% from RMB393 million in the corresponding period of 2019. During the Period, the Group's rental income from investment properties amounted to RMB67 million, representing a decrease of 19.3% from RMB83 million in the corresponding period of 2019, mainly due to the impact on the hotels and commercial operations resulted from the outbreak of COVID-19, and daily operations have gradually resumed.
Gross Profit and Gross Profit Margin During the Period, the Group recorded a gross profit of RMB6,184 million, representing an increase of 3.6% from RMB5,969 million in the corresponding period of 2019. The increase was mainly due to a substantial increase in the scale of property sales revenue in the Period, which lifted the gross profit of property sales.
During the Period, the Group achieved a gross profit margin of 25.9%, representing a decrease of 6.1 pps from 32.0% in the corresponding period of 2019. In particular, the gross profit margin of property sales was 25.6%, representing a decrease of
5.7 pps from 31.3% in the corresponding p e r i o d o f 2 0 1 9 , w h i c h w a s m a i n l y attributable to the insufficient reflection of brand premium affected by price control, resulting the decrease in the gross profit margin.
Other Income
During the Period, the Group recorded other income of RMB1,557 million, representing an increase of RMB195 million from RMB1,362 million in the corresponding period of 2019, which was mainly comprising interest income, comprehensive service income, etc., representing an increase of 14.3% from the corresponding period of last year, which was mainly attributable to the addition of new projects, generating more interest income from the increase in the amounts due from related parties.
Administrative Expenses Administrative expenses include human resource costs, daily operating expenses and other expenses, such as product research and development expenses. During the Period, the Group incurred administrative expenses of RMB1,447 million, representing an increase of RMB42 million or 3.0% from RMB1,405 million in the corresponding period of 2019. Administrative expenses are divided into real estate development and related business expenses, non- real estate development and related business expenses, and depreciation and amortisation fees. Non-realestate development and related businesses are mainly project management, hotel business, design and decoration, sales of construction materials and other services.
During the Period, the Group incurred administrative expenses of RMB715 million in its real estate development and related business, of which human resource costs amount to RMB306 million (the corresponding period of 2019: RMB309 million) and daily operating expenses amounted to RMB86 million (the corresponding period of 2019: RMB99 million), roughly on par with RMB713 million in the corresponding period of 2019, which benefited from the continuous optimization of its management and control model while constantly improving per capita efficiency in recent years, recording a 19.6% decline in the ratio of expenses as compared with the corresponding period of 2019. In addition, subject to the COVID-19 pandemic during the first half of 2020, there was a decrease in a portion of expenses.
018 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
Administration expenses of non-real estate development and related business amounted to RMB452 million for the Period, representing an increase of RMB46 million or 11.3% from RMB406 million in 2019, mainly due to the continuous expansion of revenue for non-real estate development and related business, income grew from RMB2,769 million in the corresponding period of 2019 to RMB3,182 million in the Period, with a 3.3% decline in the ratio of expenses compared with the corresponding period of 2019.
The Group incurred depreciation and amortisation fees of RMB280 million for the Period, in line with RMB286 million in the corresponding period of 2019.
Selling Expenses
Selling Expenses mainly include human resource costs, marketing activities expenses and daily operating expenses. During the Period, the Group incurred selling expenses of RMB624 million, representing a decrease of RMB41 million
or 6.2% from RMB665 million for the corresponding period of 2019. Selling expenses are divided into the expenses for real estate development and related business and the expenses for non-real estate development and related business.
During the Period, the Group incurred selling expenses of RMB526 million for its real estate development and related business, representing a decrease of RMB6 million from RMB532 million for the corresponding period of 2019. The ratio of real estate-related expenses decreased by 20.7% as compared with that of the corresponding period of 2019, mainly due to the Group's flexible use of sales strategies to transfer part of offline marketing campaign to online platform implementation and promotion in the first half of the year, in addition, the Group's high quality properties are more in demand by the market after the COVID-19. As the single largest expenditure in selling expenses incurred by real estate development and related business, marketing activities expenses amounted to RMB226 million for the Period (the corresponding period of 2019: RMB301
million), representing a decrease of RMB75 million or a year-on-year decrease of 24.9%. During the Period, human resource costs incurred in real estate development and related business amounted to RMB210 million, representing an increase of RMB63 million from RMB147 million for the corresponding period of 2019, mainly due to an increase in the recognised revenue and in the corresponding apportionment of sales commission for the Period. During the Period, the daily operating expenses incurred in real estate development and related business amounted to RMB90 million (the corresponding period of 2019: RMB84 million), representing an increase of RMB6 million or a year-on-year increase of 7.1%.
During the Period, the Group incurred selling expenses of RMB98 million for non-real estate development and related business, representing a decrease of RMB35 million or 26.3% from RMB133 million for the corresponding period of 2019, of which RMB32 million of hotel expenses was saved. This was mainly due to the decrease of relevant expenses resulting from hotel business contraction as affected by the COVID-19. The ratio of expenses decreased by 36.4% compared with that of the corresponding period of 2019.
Greentown China Holdings Limited Interim Report 2020 019
Management Discussion and Analysis
Finance Costs
During the Period, interest expenses recorded in the Group's condensed consolidated statement of profit or loss and other comprehensive income amounted to RMB1,252 million (the corresponding period of 2019: RMB801 million). Interest expenses for the Period totaled RMB3,829 million, representing an increase of RMB843 million from RMB2,986 million for the corresponding period of 2019, mainly because the Group had more projects under development with a higher weighted average of loan balance outstanding in the Period. Weighted average interest cost was 5.2% during the Period, which represented a decrease from 5.4% for the corresponding period of 2019. During the Period, the Group continued to improve its debt structure, actively innovate its financing model and expand its financing channels, which enabled finance costs to stay at a lower level. Capitalised interest amounted to RMB2,577 million for the Period with a capitalisation rate of 67.3%, which represented a decrease from 73.2% for the corresponding period of 2019, mainly due to the greater increment of joint ventures and associates, as the interest income and expenditure accrued from the transactions between the Group and these companies were directly included in the income statement. During the Period, interest income amounted to RMB1.3 billion (the corresponding period of 2019: RMB743 million), and net interest amounted to RMB2.529 billion, representing an increase of 12.8% from RMB2.243 billion for the corresponding period of 2019.
Share of Results of Joint Ventures and Associates
During the Period, the Group's share of results of joint ventures was a gain of RMB70 million and the share of results of associates was a gain of RMB402 million, which amounted to an aggregate gain of RMB472 million, in line with RMB497 million for the corresponding period of 2019. During the Period, revenue from property sales recognised by joint ventures and associates totaled RMB7,464 million, representing a decrease of 29.7% from RMB10,616 million for the corresponding period of 2019, which was mainly due to the uneven distribution of the area recognised in the first and second halves of the year. During the Period, the area of properties with recognised revenue amounted to 270,114 sqm, representing a decrease of 31.4% from 393,479 sqm for the corresponding period of 2019.
Projects with the revenue recognised by joint ventures and associates in the first half of 2020 are as follows:
Sales | Average | |||||
Project Name | Category | Type of Properties | Area Sold | Revenue | % of Total | Selling Price |
(sqm) | (RMB | (RMB | ||||
(Note) | million) | per sqm) | ||||
Ningbo Phoenix Mansion | Joint Venture | High-rise Apartment | 18,879 | 827 | 11.1% | 43,805 |
Foshan Guiyu Lanting | Joint Venture | High-rise Apartment, | ||||
Villa | 27,357 | 641 | 8.6% | 23,431 | ||
Beijing Xifu Haitang | Joint Venture | Low-rise Apartment | 10,930 | 491 | 6.6% | 44,922 |
Hangzhou Hujing Yunlu | Joint Venture | Villa | 10,794 | 441 | 5.9% | 40,856 |
Foshan Fengqi Lanting | Joint Venture | High-rise Apartment, | ||||
Villa | 12,428 | 309 | 4.1% | 24,863 | ||
Shenyang National Games | Joint Venture | High-rise Apartment, | ||||
Village | Villa | 19,839 | 256 | 3.4% | 12,904 | |
Shanghai Changfeng Centre | Associate | High-rise Apartment, | ||||
(上海長風中心) | Office | 27,984 | 1,038 | 13.9% | 37,093 | |
Chengdu Phoenix Mansion | Associate | High-rise Apartment, | ||||
Low-rise | ||||||
Apartment | 29,096 | 611 | 8.2% | 20,999 | ||
Ningbo Mingyue Jiangnan | Associate | High-rise Apartment | 17,076 | 472 | 6.3% | 27,641 |
Qingdao Deep Blue Centre | Associate | Serviced Apartment | 9,303 | 457 | 6.1% | 49,124 |
Others | 86,428 | 1,921 | 25.8% | 22,227 | ||
Total | 270,114 | 7,464 | 100.0% | 27,633 | ||
Note: | Areas sold include aboveground and underground areas. |
020 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
Taxation Expenses
During the Period, taxation included LAT of RMB589 million (the corresponding period of 2019: RMB865 million) and EIT of RMB929 million (the corresponding period of 2019: RMB1,149 million). During the Period, the effective EIT rate was 26.5% (excluding the share of results of joint ventures and associates as well as the losses of certain offshore subsidiaries and net foreign exchange loss), higher than the statutory tax rate of 25.0%. This was mainly attributable to the early provision for withholding tax on dividend, the losses of certain onshore subsidiaries with unrecognised deferred tax assets and expenses non-deductible for taxation purposes.
Provision and Reversal of Impairment Losses for Certain Assets
In light of the rapid change of market environment, the Company conducted an impairment test on certain properties based on the principle of prudence during the Period. According to the test results, the reversal of impairment by Hangzhou Yuhang Jinteng Real Estate Development Co., Ltd., a subsidiary of the Company, for its completed properties for sale amounted to RMB94 million during the Period.
In addition, provision for an impairment loss of RMB315 million were made based on the expected credit loss impairment m o d e l a n d t a k i n g i n t o a c c o u n t a comprehensive range of factors such as the objects of receivables and aging, which was mainly attributable to the impairment
provision of RMB368 million due from
Shandong Gaosu Greentown Laiwu Xueye Lake Development Co., Ltd. (山東高速綠 城萊蕪雪野湖開發有限公司) as a result
of the demolition of constructions within
the planned area of Laiwu Xueye Lake Scenic Area (萊蕪雪野湖風景區) by the
government.
Contract Liabilities
Contract liabilities mainly represent the amounts received from the pre-sale of properties. As at 30 June 2020, the balance of contract liabilities of the Group was RMB88,121 million, representing an increase of RMB11,796 million or 15.5% from RMB76,325 million as at 31 December 2019. Such increase was mainly due to the increase in contract sales of the Group during the Period.
As at 30 June 2020, the balance of contract liabilities of joint ventures and associates was RMB68,156 million, representing an increase of RMB17,544 million or 34.7% from RMB50,612 million as at 31 December 2019. Such increase was mainly due to the increase in contract sales of these companies during the Period.
Financial Resources and Liquidity
As at 30 June 2020, the Group had bank balances and cash (including pledged bank deposits) of RMB62,849 million (31 December 2019: RMB51,894 million). Total borrowings amounted to RMB111,852 million (31 December 2019: RMB95,577 million) and net liabilities (total borrowings less bank balances and cash) amounted
to RMB49,003 million (31 December 2019: RMB43,683 million). The net gearing ratio (net liabilities divided by total equity) was 66.1%, which was slightly higher than the ratio of 63.2% as at 31 December 2019 but remained at a reasonable level. Balance of borrowings due within one year amounted to RMB34,788 million, accounting for 31.1% (31 December 2019: 36.6%) of the total borrowings. The closing balance of bank deposits and cash was 1.8 times (31 December 2019: 1.5 times) the balance of borrowings due within one year. Cash flow was sufficient, coupled with a reasonable debt structure, providing a strong support for the subsequent development of the Company.
Greentown Group has obtained facilities of more than RMB239.7 billion from financial institutions, of which approximately RMB131.2 billion was available as of 30 June 2020.
Transactions with Xinhu Zhongbao
In April 2020, the Company entered into various agreements with Xinhu Zhongbao Co., Ltd. (Xinhu Zhongbao) and its subsidiaries, pursuant to which it conditionally agreed the Group to conduct the following transactions with Xinhu Zhongbao and its subsidiaries: (a) acquisition of 100% of the total number
of shares of Zhejiang Qifeng Industrial Co., Ltd. (浙江啟豐實業有限公司) (which
holds 35% of the total number of shares
of Shenyang Shenbei Jingu Real Estate C o.,L t d. (瀋陽沈北金谷置業有限公司)
and Shenyang Xinhu Pearl Real Estate
Greentown China Holdings Limited Interim Report 2020 021
Management Discussion and Analysis
Co., Ltd. (瀋陽新湖明珠置業有限公司)), with a total transaction price of RMB379 million, which includes an equity transfer consideration of RMB186 million and a financial support of RMB193 million, and gains from the acquisition increased the net profit of the Company by RMB62 million for the Period; (b) acquisition of 100% of the total number of shares of
Zhejiang Qizhi Industrial Co., Ltd. (浙江啟 智實業有限公司) (which holds 50% of the
total number of shares of Nantong Qixin Real Estate Co., Ltd. (南通啟新置業有限公
司) and Nantong Qiyang Construction and Development Co., Ltd. (南通啟陽建設開發
有限公司)), with a total transaction price of RMB1.151 billion, which includes an equity transfer consideration of RMB398 million and a financial support of RMB753 million, and gains from the acquisition increased the net profit of the Company by RMB62 million for the Period; (c) acquisition of 50%
of the total number of shares of Nantong Xinhu Real Estate Co., Ltd. (南通新湖置業
有限公司), with a total transaction price of RMB672 million, which includes an equity transfer consideration of RMB72 million and a financial support of RMB600 million, and gains from the acquisition increased the net profit of the Company by RMB16 million for the Period; (d) acquisition of 35%
of the total number of shares of Shanghai Zhonghan Real Estate Co., Ltd. (上海中瀚置
業有限公司), with a total transaction price
of RMB1.9 billion, which includes an equity transfer consideration of RMB517 million and a financial support of RMB1.383 billion, and gains from the acquisition increased the net profit of the Company by RMB184 million for the Period.
For details of the acquisition agreements mentioned above, please refer to the announcements of the Company dated 19 April 2020 and 24 April 2020.
Risks of Foreign Exchange Fluctuation The principal place of operation of the Group is in the People's Republic of China, and the majority of the income and expenditure was settled in RMB. As the Group had deposits in foreign currencies, amounts due from and to related parties and third parties denominated in foreign currencies, as well as bank borrowings in foreign currencies and overseas senior notes, the Group was exposed to foreign exchange risks. No foreign exchange hedging arrangements was entered into by the Company during the Period. A provision of net foreign exchange loss of RMB266 million was made for RMB depreciation, though there was no effective cash outflow. The Company will heed the changes in the foreign exchange market and actively ascertain with major banks on foreign exchange hedging proposals.
Financial Guarantees
The Group provided guarantees in respect of certain banks' mortgage granted to the buyers of the Group's properties. As at 30 June 2020, such guarantees for mortgage facilities amounted to RMB33,288 million (31 December 2019: RMB35,651 million).
Pledge of Assets
As at 30 June 2020, the Group pledged right-of-use assets, investment properties, properties for development, properties under development, completed properties for sale, property, plant and equipment, pledged bank deposits, trade and other receivables, deposits and prepayments and interests in an associate, with an aggregate carrying value of RMB93,752 million (31 December 2019: RMB95,868 million) to secure general credit facilities granted by banks and other financial institutions to the Group.
Capital Commitments
A s a t 3 0 J u n e 2 0 2 0 , t h e G r o u p h a d c o n t r a c t e d , b u t n o t p r o v i d e d f o r , capital expenditure commitments of RMB38,732 million (31 December 2019: RMB30,769 million) in respect of properties for development, properties under development or construction in progress.
022 Greentown China Holdings Limited Interim Report 2020
Management Discussion and Analysis
Capital Expenditure Plan
In consideration of the complicated and highly uncertain economic environment, the Group takes a prudent approach towards the use of funds to secure the capital chain. Currently, therefore, the Group has no material capital expenditure plan.
Events After the Balance Sheet Date
After the end of the Reporting Period:
Repurchase of the 2020 Notes
On 14 July 2020, the Company completed the repurchase of an aggregate principal amount of US$149,999,000 out of its US$600,000,000 4.55% senior notes due 2020 (ISIN XS2076070619) (the "2020 Notes"). The repurchased 2020 Notes has been cancelled. After cancellation of the repurchased 2020 Notes, the aggregate outstanding principal amount of the 2020 Notes is US$450,001,000. For details of the repurchase of the 2020 Notes, please refer to the announcements of the Company dated 7 July 2020, 15 July 2020 and 20 July 2020.
Issuance of Senior Notes
On 13 July 2020, the Company announced that approval has been granted for the listing of its US$300,000,000 5.65% senior notes due 2025 (the "2025 Notes"). The gross proceeds from the Notes Issue, without deducting subscription discounts, c o m m i s s i o n s a n d o t h e r e s t i m a t e d expenses payable in connection with the issue of 2025 Notes, was US$300,000,000. The listing and permission to deal became
effective on 14 July 2020. For details, please refer to the announcements of the Company dated 7 July 2020 and 13 July 2020.
Redemption of Notes issued by Wisdom Glory
On 20 July 2020, Wisdom Glory Group Limited ("Wisdom Glory"), a wholly- owned subsidiary of the Company, has exercised its option to redeem its US$450,000,000 senior perpetual notes (the "Senior Perpetual Notes") issued and listed on the Stock Exchange. The Senior Perpetual Notes were redeemed in full and there were no outstanding Senior Perpetual Notes in issue. The withdrawal of listing of the Senior Perpetual Notes took effect on 29 July 2020. For details, please refer to the announcement of the Company dated 22 July 2020.
Redemption of 2015 USD Notes
The Company has fully redeemed its senior notes issued in 2015 with the aggregate principal amount of USD500,000,000 ("2015 USD Notes") on 11 August 2020, the final maturity date of the 2015 USD Notes.
Listing of Greentown Management On 10 July 2020, Greentown Management Holdings Company Limited ("Greentown Management"), a subsidiary of the Group, was listed on the Main Board of Hong Kong Stock Exchange. Greentown Management issued a total of 525,316,000 new shares at an offer price of HK$2.50 under its global offering (including 47,756,000 shares issued as a result of the exercise of the over-allotmentoption ("Over-allotment
Option") by the joint representatives on behalf of the international underwriters in the global offering). The Company's shareholding in Greentown Management was approximately 73.17% immediately after the completion of the global offering and the issuance and allotment of shares pursuant to the full exercise of the Over- allotment Option. The total proceeds of approximately HK$1,213.1 million (after deducting underwriting fees, commissions and other estimated listing expenses payable by Greentown Management and as disclosed in the announcements of Greentown Management dated 9 July 2020 and 27 August 2020) from the global offering (including the over-allotment) will be utilized for the purposes as set out in the prospectus dated 29 June 2020 and the announcement of the offer price and allotment results dated 9 July 2020 of Greentown Management. For details, please refer to the announcements of the Company dated 9 July 2020, 10 July 2020 and 30 July 2020 and the announcements of Greentown Management.
Human Resources
As at 30 June 2020, the Group employed a total of 7,608 employees (31 December 2 0 1 9 : 7 , 4 1 8 ) . T h e e m p l o y e e s w e r e r e m u n e r a t e d o n t h e b a s i s o f t h e i r performance, experience and prevailing i n d u s t r y p r a c t i c e s . T h e G r o u p ' s remuneration policies and packages were reviewed by the remuneration committee and the Board on a regular basis. As an incentive for the employees, bonuses, cash awards and share options may also be granted to the employees based on their individual performance evaluation.
Greentown China Holdings Limited Interim Report 2020 023
C o r p o r a t e G o v e r n a n c e
024 Greentown China Holdings Limited Interim Report 2020
Corporate Governance
Corporate Governance Code
In the opinion of the Board, unless otherwise disclosed, the Company has complied with the requirements of all the applicable code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited throughout the Reporting Period.
There has been concurrent appointment of Chairman and Chief Executive Officer of the Company. Under Code Provision A.2.1, the roles and functions of chairman and chief executive are separate. Having assessed the practical circumstances of the Company, its current governance structure can better facilitate the execution of its business strategies and enhancement of operation efficiency. Since the Board and senior management of the Company comprise of experienced
and diversified individuals, the balance of power and authority between the Board and the management of the Company will be maintained. Furthermore, under the supervision of the independent non- executive Directors who represent one- thirds of the members of the Board, the balance of the Board will be adequately and fairly safeguarded.
Compliance with the Model Code
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (the "Model Code") as the code for dealing in securities of the Company by the Directors of the Company. After specific enquiry for all the Directors, each of the Directors confirmed that he has complied with the required standards set out in the Model Code throughout the Reporting Period.
Relevant employees who are likely to be in possession of inside information of the Group are also subject to compliance with written guidelines on same terms as the Model Code.
Review of Interim Results
The interim results announcement and the interim report for the Reporting Period have been reviewed by the Audit Committee and approved by the Board.
Deloitte Touche Tohmatsu (DTT), the auditor of the Company, has performed a review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" on the interim financial information of the Group for the six months ended 30 June 2020 prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", and issued a review report dated 27 August 2020.
Xuzhou Lagerstroemia Mansion
Greentown China Holdings Limited Interim Report 2020 025
O t h e r I n f o r m a t i o n
026 Greentown China Holdings Limited Interim Report 2020
Other Information
Directors' and Chief Executive's Interests in Securities
As at 30 June 2020, the interests and short positions of Directors and chief executive of the Company and their associates in the Shares, underlying shares and debentures of the Company and any of its associated corporations, as recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code, were as follows:
Long Positions in Shares and Underlying Shares of the Company
Personal Interests | |||||
in Shares and | |||||
Underlying Shares | Total Number | ||||
(including Share | of Shares and | % of | |||
Options or Award | Interest of | Underlying | Issued Share | ||
Shares Granted | Family | Controlled | Shares | Capital of | |
Name of Director | to Directors) | Interests | Corporation | Interested | the Company |
Mr ZHANG Yadong | 8,270,949 | - | - | 8,270,949 | 0.332% |
(note 1) | |||||
Mr LIU Wensheng | 7,986,129 | - | - | 7,986,129 | 0.320% |
(note 2) | |||||
Mr LI Jun | 3,433,573 | - | - | 3,433,573 | 0.138% |
(note 3) | |||||
Mr Andrew On Kiu CHOW | 500,000 | - | - | 500,000 | 0.020% |
(note 4) | |||||
Notes:
- It includes (i) 7,600,000 share options granted on 28 August 2018 pursuant to the 2016 Share Option Scheme and are only exercisable based on the latest closing price per share stated on the daily quotation sheet of the Stock Exchange which is at least 30% higher than the initial exercise price of HK$8.326 per share from 28 August 2018 to 27 August 2028; and (ii) 670,949 award shares subject to vesting conditions granted in 2019.
- It includes (i) 7,400,000 share options granted on 27 December 2017 pursuant to the 2016 Share Option Scheme and are only exercisable based on the latest closing price per share stated on the daily quotation sheet of the Stock Exchange which is at least 30% higher than the initial exercise price of HK$9.10 per share from 27 December 2017 to 26 December 2027; and (ii) 586,129 award shares subject to vesting conditions granted in 2019.
- It includes (i) 1,900,000 share options granted on 27 December 2017 pursuant to the 2016 Share Option Scheme and are only exercisable based on the latest closing price per share stated on the daily quotation sheet of the Stock Exchange which is at least 30% higher than the initial exercise price of HK$9.10 per share from 27 December 2017 to 26 December 2027; (ii)1,300,000 share options granted on 28 August 2018 pursuant to the 2016 Share Option Scheme and are only exercisable based on the latest closing price per share stated on the daily quotation sheet of the Stock Exchange which is at least 30% higher than the initial exercise price of HK$8.326 per share from 28 August 2018 to 27 August 2028. The aforesaid represents an aggregate of 3,200,000 share options; and (iii) 233,573 award shares subject to vesting conditions granted in 2019.
- Shares held as beneficial owner.
Save as disclosed above, as at 30 June 2020, none of the Directors and chief executive of the Company had any interest or short positions in any Shares, underlying shares or debentures of the Company or any of its associated corporations, as recorded in the register required to be maintained by the Company pursuant to Section 352 of the SFO or required to be notified to the Company and the Stock Exchange pursuant to the Model Code.
Greentown China Holdings Limited Interim Report 2020 027
Other Information
Substantial Shareholders' Interests in Securities
As at 30 June 2020, according to the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO and so far as the Company is aware, the following shareholders, other than those disclosed in the section headed "Directors' and Chief Executive's Interests in Securities", had notified the Company of relevant interests in the shares and underlying shares of the Company:
Interest or | |||
Short Position | |||
in the Shares | % of Issued | ||
or Underlying | Share Capital | ||
Name of Substantial Shareholder | Shares | Capacity in Which Interests are Held | of the Company |
(note 1) | (note 2) | ||
CCCG (note 3) | 624,851,793 (L) | Interest of controlled corporations | 25.055% |
CCCG Holding (HK) Limited (note 4) | 524,851,793 (L) | Beneficial owner | 21.045% |
HSBC Trustee (C.I.) Limited (note 5) | 557,554,793 (L) | Interest of controlled corporations | 22.357% |
Wheelock and Company Limited ("Wheelock") | 557,554,793 (L) | Interest of controlled corporations | 22.357% |
(note 6) | |||
The Wharf (Holdings) Limited ("Wharf") (note 7) | 557,554,793 (L) | Interest of controlled corporations | 22.357% |
HUANG Wei (note 8) | 323,000,000 (L) | Interest of controlled corporations | 12.951% |
LI Ping (note 9) | 323,000,000 (L) | Interest of spouse | 12.951% |
Zhejiang Xinhu Group Co., Ltd. (note 10) | 323,000,000 (L) | Interest of controlled corporations | 12.951% |
Xinhu Zhongbao Co., Ltd. (note 11) | 323,000,000 (L) | Interest of controlled corporations | 12.951% |
Hong Kong Xinhu Investment Co., Limited | 323,000,000 (L) | Beneficial owner | 12.951% |
(note 12) | |||
Mr SONG Weiping | 8,150,000 (L) | Personal interests in underlying | |
(note 13) | Shares (share options) | 9.009% | |
216,530,924 (L) | Interest of controlled corporations | in total | |
(note 14) | |||
Ms XIA Yibo (note 15) | 224,680,924 (L) | Interest of spouse | 9.009% |
Notes:
- The list of substantial shareholders of the Company and their respective interests in the shares and underlying shares of the Company set out in the table are based on the information available to the Company after making reasonable enquiry.
- The letter "L" denotes a long position.
- CCCG is deemed to be interested in 624,851,793 Shares through its controlled corporations, namely CCCG Real Estate Group Company Limited* (中交房地產集團有 限公司) (which is wholly-owned by CCCG) and CCCG Holding (HK) Limited and CCCG Real Estate Holding Limited, each of which is wholly-owned by CCCG Real Estate Group Company Limited.
- A company controlled by CCCG by virtue of SFO.
- HSBC Trustee (C.I.) Limited is deemed to be interested in 557,554,793 Shares through its controlled corporations, namely Wheelock, Wheelock Investments Limited, WF Investment Partners Limited, Wharf, Wharf China Holdings (0004) Limited and Target Smart Investments Holdings Limited ("Target Smart").
- Wheelock is deemed to be interested in 557,554,793 Shares through its controlled corporations, namely Wheelock Investments Limited, WF Investment Partners Limited, Wharf, Wharf China Holdings (0004) Limited and Target Smart.
028 Greentown China Holdings Limited Interim Report 2020
Other Information
- Wharf is deemed to be interested in 557,554,793 Shares through its controlled corporations, namely Wharf China Holdings (0004) Limited and Target Smart.
- HUANG Wei is deemed to be interested in 323,000,000 Shares through his controlled corporations, namely Zhejiang Xinhu Group Co., Ltd., Xinhu Zhongbao. Co., Ltd. and Hong Kong Xinhu Investment Co., Limited.
- Ms LI Ping is the spouse of Mr HUANG Wei. Accordingly, pursuant to Part XV of the SFO, Ms. LI Ping is deemed to be interested in Mr HUANG Wei's interests in the Company.
- Zhejiang Xinhu Group Co., Ltd. is controlled by Mr HUANG Wei.
- Xinhu Zhongbao Co., Ltd. is deemed to be interested in 323,000,000 Shares through its controlled corporation, namely Hong Kong Xinhu Investment Co., Limited.
- A company controlled by Xinhu Zhongbao Co., Ltd. by virtue of SFO.
- Share options granted on 27 December 2017 pursuant to the 2016 Share Option Scheme and are only exercisable based on the latest closing price per share state on the daily quotation sheet of the Stock Exchange which is at least 30% higher than the initial exercise price of HK$9.10 per share from 27 December 2017 to 26 December 2027.
- Mr SONG Weiping, being the sole shareholder of Delta House Limited, is deemed to be interested in 116,530,924 Shares held by Delta pursuant to Part XV of the SFO. Hong Kong Orange Osmanthus Foundation Limited ("HKOO Foundation") is a company limited by guarantee and established by Mr SONG Weiping as a charitable institution of a public character exempt from tax under Section 88 of the Inland Revenue Ordinance, Chapter 112 of the Laws of Hong Kong. As Mr SONG Weiping is the sole member of HKOO Foundation, pursuant to Part XV of the SFO, Mr SONG Weiping is deemed to be interested in 100,000,000 Shares held by HKOO Foundation notwithstanding that Mr SONG Weiping is not beneficially interested in such shares.
- Ms XIA Yibo is the spouse of Mr SONG Weiping. Accordingly, pursuant to Part XV of the SFO, Ms XIA Yibo is deemed to be interested in: (i) 116,530,924 Shares held by Delta, a company of which Mr SONG Weiping is the sole shareholder; (ii) 100,000,000 Shares held by HKOO Foundation, a charitable institution established by Mr SONG Weiping of which Mr SONG Weiping is the sole member (notwithstanding that neither Mr SONG Weiping nor Ms XIA Yibo is beneficially interested in those Shares); and (iii) 8,150,000 share options of the Company held by Mr SONG Weiping. The aforesaid represents an aggregate of 224,680,924 Shares.
Save as disclosed above, as at 30 June 2020, the Company had not been notified of any other interests or short positions notifiable to the Company held by any other person in the Shares or underlying shares of the Company required to be recorded under section 336 of the SFO.
Share Option Scheme
The 2006 Share Option Scheme has been terminated upon adoption of the 2016 Share Option Scheme by ordinary resolution of shareholders of the Company at the annual general meeting of the Company held on 17 June 2016 (the "Effective Date"). Upon termination of the 2006 Share Option Scheme, no further options of the 2006 Share Option Scheme can be offered thereunder but the provisions of the scheme shall remain in force to the extent necessary to give effect to the exercise of any options granted prior to its termination, and options granted prior to such termination shall continue to be valid and exercisable. The 2016 Share Option Scheme was adopted for the primary purpose of providing incentives and/or reward to Directors and employees of the Group and will expire on 16 June 2026 unless otherwise cancelled or amended. Under the Share Option Scheme, the Board may grant options to eligible employees to subscribe for shares in the Company. The eligible participants of the Share Option Scheme are any Director or employee of the Group and any other person (including a consultant or adviser) who in the sole discretion of the Board has contributed or will contribute to the Group. The offer of a grant of share options may be accepted within 21 days from the date of grant, upon receipt by the Company of the payment of a consideration of HK$1 and signed acceptance of offer by the eligible participant.
Subject to the terms and conditions of the Share Option Scheme, the total number of Shares in respect of which share options may be granted under the Share Option Scheme is not permitted to exceed 10% of the Shares in issue at the adoption date, without prior approval from the Company's shareholders. The number of Shares issued and to be issued in respect of which share options granted or may be granted to any individual in any one year is not permitted to exceed 1% of the Shares in issue at any point of time, without prior approval from the Company's shareholders. Share options granted to independent non-executive Directors and substantial shareholders of the Company in excess of 0.1% of the Company's issued share capital or with a value in excess of HK$5,000,000 must be approved in advance by the Company's shareholders.
Greentown China Holdings Limited Interim Report 2020 029
Other Information
Share options may be exercised at any time from the date of grant of the share option to the expiry of the Share Option Scheme, unless otherwise specified in the Share Option Scheme. The exercise price is determined by the Board, and will not be less than the higher of (i) the closing price of the Shares of the Company as stated in the Stock Exchange's daily quotations sheet on the date of grant; (ii) the average of the closing prices of the Shares of the Company as stated in the Stock Exchange's daily quotation sheets for the five business days immediately preceding the date of grant; and (iii) the nominal value of the Shares.
Details of the Company's share options granted, exercised and cancelled pursuant to the 2016 Share Option Scheme during the six months ended 30 June 2020 were as follows:
No. of Share | |||||||||||
Options | No. of Share | No. of Share | No. of Share | No. of Share | No. of Share | ||||||
Outstanding | Options | Options | Options | Options | Options | ||||||
at the | Granted | Exercised | Cancelled | Lapsed | Outstanding | Exercise | |||||
Beginning of | during | during | during | during | at the End | Period during which | Price | ||||
Name of Grantee | the Period | the Period | the Period | the Period | the Period | of the Period | Date of Grant | Share Options are Exercisable | per Share | ||
(HK$) | |||||||||||
Directors | |||||||||||
Mr ZHANG Yadong | 2,280,000 | - | - | - | - | 2,280,000 | 28 | August 2018 | 28 | August 2019 to 27 August 2028 | 8.326 |
2,280,000 | - | - | - | - | 2,280,000 | 28 | August 2018 | 28 | August 2020 to 27 August 2028 | 8.326 | |
1,520,000 | - | - | - | - | 1,520,000 | 28 | August 2018 | 28 | August 2021 to 27 August 2028 | 8.326 | |
760,000 | - | - | - | - | 760,000 | 28 | August 2018 | 28 | August 2022 to 27 August 2028 | 8.326 | |
760,000 | - | - | - | - | 760,000 | 28 | August 2018 | 28 | August 2023 to 27 August 2028 | 8.326 | |
7,600,000 | - | - | - | - | 7,600,000 | ||||||
Mr LIU Wensheng | 2,220,000 | - | - | - | - | 2,220,000 | 27 | December 2017 | 27 | December 2018 to 26 December 2027 | 9.100 |
2,220,000 | - | - | - | - | 2,220,000 | 27 | December 2017 | 27 | December 2019 to 26 December 2027 | 9.100 | |
1,480,000 | - | - | - | - | 1,480,000 | 27 | December 2017 | 27 | December 2020 to 26 December 2027 | 9.100 | |
740,000 | - | - | - | - | 740,000 | 27 December 2017 | 27 December 2021 to 26 December 2027 | 9.100 | |||
740,000 | - | - | - | - | 740,000 | 27 December 2017 | 27 December 2022 to 26 December 2027 | 9.100 | |||
7,400,000 | - | - | - | - | 7,400,000 | ||||||
Mr LI Jun | 570,000 | - | - | - | - | 570,000 | 27 | December 2017 | 27 | December 2018 to 26 December 2027 | 9.100 |
570,000 | - | - | - | - | 570,000 | 27 December 2017 | 27 December 2019 to 26 December 2027 | 9.100 | |||
380,000 | - | - | - | - | 380,000 | 27 December 2017 | 27 December 2020 to 26 December 2027 | 9.100 | |||
190,000 | - | - | - | - | 190,000 | 27 December 2017 | 27 December 2021 to 26 December 2027 | 9.100 | |||
190,000 | - | - | - | - | 190,000 | 27 December 2017 | 27 December 2022 to 26 December 2027 | 9.100 | |||
390,000 | - | - | - | - | 390,000 | 28 | August 2018 | 28 | August 2019 to 27 August 2028 | 8.326 | |
390,000 | - | - | - | - | 390,000 | 28 | August 2018 | 28 | August 2020 to 27 August 2028 | 8.326 | |
260,000 | - | - | - | - | 260,000 | 28 | August 2018 | 28 | August 2021 to 27 August 2028 | 8.326 | |
130,000 | - | - | - | - | 130,000 | 28 | August 2018 | 28 | August 2022 to 27 August 2028 | 8.326 | |
130,000 | - | - | - | - | 130,000 | 28 | August 2018 | 28 | August 2023 to 27 August 2028 | 8.326 | |
3,200,000 | - | - | - | - | 3,200,000 | ||||||
Employees | |||||||||||
Certain other employees of | 14,865,000 | - | - | - | 1,830,000 | 13,035,000 | 27 | December 2017 | 27 | December 2018 to 26 December 2027 | 9.100 |
the Company's subsidiaries, | 14,865,000 | - | - | - | 1,830,000 | 13,035,000 | 27 | December 2017 | 27 | December 2019 to 26 December 2027 | 9.100 |
associates and joint | 9,910,000 | - | - | 1,220,000 | - | 8,690,000 | 27 | December 2017 | 27 | December 2020 to 26 December 2027 | 9.100 |
ventures | 4,955,000 | - | - | 610,000 | - | 4,345,000 | 27 | December 2017 | 27 | December 2021 to 26 December 2027 | 9.100 |
4,955,000 | - | - | 610,000 | - | 4,345,000 | 27 | December 2017 | 27 | December 2022 to 26 December 2027 | 9.100 | |
49,550,000 | - | - | 2,440,000 | 3,660,000 | 43,450,000 | ||||||
Total | 67,750,000 | - | - | 2,440,000 | 3,660,000 | 61,650,000 | |||||
030 Greentown China Holdings Limited Interim Report 2020
Other Information
The vesting period of the above share options is from the date of grant until the commencement of the period during which they are exercisable.
During the Period, no share options were exercised, 2,440,000 share options were cancelled and 3,660,000 share options lapsed.
For other details regarding the share option scheme(s) of the Company, please refer to note 26 to the condensed consolidated financial statements of the Company in this report.
Updates on Directors' Information under Rule 13.51B of the Listing Rules
In the Reporting Period, Mr KE Huanzhang and Mr SZE Tsai Ping, Michael have resigned as independent non-executive Directors.
Mr QIU Dong and Mr ZHU Yuchen were appointed as independent non-executive Directors on 17 April 2020. Mr WU Yiwen was appointed as non-executive Director on 26 May 2020. For the details of the abovementioned changes in the composition of the Board, please refer to the announcements of the Company dated 17 April 2020 and 26 May 2020.
On 9 July 2020, Mr ZHANG Yadong, the Chairman of the Board, and Mr LIU Wensheng and Mr GUO Jiafeng, executive Directors, were appointed as non-executive directors of Greentown Management Holdings Company Limited (listed on the Main Board of the Stock Exchange with the stock code 9979), a subsidiary of the Company.
Purchase, Sale or Redemption of the Listed Securities of the Company
Save as disclosed, during the Reporting Period, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities.
During the Reporting Period, the Company has, by way of general mandate, issued 323,000,000 ordinary shares (par value: HK$0.1
per share; aggregate nominal value: HK$32,300,000) at a subscription price of HK$9.50 per share to Hong Kong Xinhu Investment Co., Limited, a wholly-owned subsidiary of Xinhu Zhongbao Co., Ltd., a company listed on the Shanghai Stock Exchange principally engaged in the businesses of, among other things, real estate, financial service and financial technology and high technology investment. The reasons for the issuance included introduction of strategic shareholder, creation of opportunities for enhanced strategic dialogue and cooperation, strengthening the capital base and financial position of the Group, and broadening Shareholder base of the Company.
The aggregate gross proceeds of the issuance was HK$3,068,500,000 and the aggregate net proceeds after deduction of all relevant costs and expenses were approximately HK$3,067,500,000, representing a net issue price of approximately HK$9.497 per issued share.
The date on which the terms of the issuance were fixed was 26 April 2020 (Sunday) and the closing price of the shares of the Company on the immediately preceding trading day was HK$7.01 per share, as quoted on the Stock Exchange.
As disclosed in the announcement of the Company dated 26 April 2020, the net proceeds from the issuance were intended to be used for general corporate purposes, repayment of loan and/or as general working capital, and had been fully applied as at the date of this report:
Purpose | Amount |
(HK$) | |
General corporate purposes and working capital including funding the operation of principal businesses and | 1,897,500,000 |
projects and setting aside for final dividend payment | |
Repayment of loan | 1,170,000,000 |
Greentown China Holdings Limited Interim Report 2020 031
Other Information
Interim Dividend
The Board has resolved not to declare any interim dividend for the six months ended 30 June 2020 (for the six months ended 30 June 2019: Nil).
Appreciation
The Board would like to take this opportunity to express gratitude to our shareholders, customers, suppliers, banks, professional parties and employees for their continuous patronage and support to the Group.
By order of the Board
Chairman
ZHANG Yadong
Hangzhou, the PRC
27 August 2020
032 Greentown China Holdings Limited Interim Report 2020
Report on Review of
Condensed Consolidated Financial Statements
TO THE BOARD OF DIRECTORS OF GREENTOWN CHINA HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability)
Introduction
We have reviewed the condensed consolidated financial statements of Greentown China Holdings Limited (the "Company") and its subsidiaries set out on pages 34 to 74, which comprise the condensed consolidated statement of financial position as of 30 June 2020 and the related condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34") issued by the International Accounting Standards Board. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with IAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
Scope of review
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
27 August 2020
Greentown China Holdings Limited Interim Report 2020 033
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended 30 June 2020
Six months ended 30 June | |||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | ||
Revenue | 3 | 23,896,208 | 18,658,115 |
Cost of sales | (17,712,331) | (12,689,609) | |
Gross profit | 6,183,877 | 5,968,506 | |
Other income | 4 | 1,557,250 | 1,362,461 |
Other gains and losses | 5 | 58,724 | (57,081) |
Selling expenses | (623,642) | (665,302) | |
Administrative expenses | (1,446,688) | (1,404,919) | |
Finance costs | 6 | (1,252,360) | (800,890) |
Impairment losses under expected credit loss model, | |||
net of reversal | 17 | (314,509) | 145,350 |
Impairment losses on non-financial assets, net of reversal | 93,690 | (44,706) | |
Loss from change in fair value of an investment property | 11 | (108,114) | - |
Gain on re-measurement of an associate to acquisition date fair value in business | |||
combination achieved in stages | 27 | - | 43,487 |
Net gain on disposal of subsidiaries | 28 | 27,957 | 42,371 |
Share of results of associates | 402,226 | 504,926 | |
Share of results of joint ventures | 69,951 | (7,623) | |
Profit before taxation | 7 | 4,648,362 | 5,086,580 |
Taxation | 8 | (1,517,992) | (2,013,946) |
Profit for the period | 3,130,370 | 3,072,634 | |
Other comprehensive income item that will not be reclassified to profit or loss | |||
Fair value gain on equity instruments at fair value through other comprehensive | |||
income for the period (net of tax) | 84,916 | 40,757 | |
Total comprehensive income for the period | 3,215,286 | 3,113,391 | |
Profit for the period attributable to: | |||
Owners of the Company | 2,095,812 | 2,057,571 | |
Non-controlling interests | 1,034,558 | 1,015,063 | |
3,130,370 | 3,072,634 | ||
Total comprehensive income attributable to: | |||
Owners of the Company | 2,180,728 | 2,098,328 | |
Non-controlling interests | 1,034,558 | 1,015,063 | |
3,215,286 | 3,113,391 | ||
Earnings per share | 10 | ||
Basic | RMB0.65 | RMB0.67 | |
Diluted | RMB0.65 | RMB0.67 | |
034 Greentown China Holdings Limited Interim Report 2020
Condensed Consolidated Statement of
Financial Position
As at 30 June 2020
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | ||
NON-CURRENT ASSETS | |||
Property, plant and equipment | 11 | 11,256,942 | 9,817,931 |
Right-of-use assets | 11 | 1,004,293 | 1,038,724 |
Investment properties | 11 | 3,749,194 | 4,032,818 |
Goodwill | 769,241 | 769,241 | |
Interests in associates | 12,370,366 | 12,084,907 | |
Interests in joint ventures | 4,358,979 | 3,869,730 | |
Equity instruments at fair value through | |||
other comprehensive income | 1,943,740 | 1,511,985 | |
Deferred tax assets | 2,967,211 | 3,238,893 | |
38,419,966 | 36,364,229 | ||
CURRENT ASSETS | |||
Properties for development | 12 | 29,186,326 | 30,907,247 |
Properties under development | 13 | 155,054,629 | 136,615,966 |
Completed properties for sale | 11,391,095 | 12,167,498 | |
Inventories | 283,483 | 203,711 | |
Trade and other receivables, | |||
deposits and prepayments | 14 | 15,101,371 | 11,312,810 |
Contract assets | 15 | 3,100,503 | 2,815,007 |
Contract costs | 329,680 | 336,467 | |
Amounts due from related parties | 51,016,254 | 46,378,836 | |
Prepaid income taxes | 3,553,376 | 3,559,887 | |
Prepaid other taxes | 5,013,600 | 4,440,223 | |
Pledged bank deposits | 30 | 6,276,370 | 5,326,761 |
Bank balances and cash | 56,572,693 | 46,567,729 | |
336,879,380 | 300,632,142 | ||
Assets classified as held for sale | 16 | 285,364 | 95,747 |
337,164,744 | 300,727,889 | ||
CURRENT LIABILITIES | |||
Trade and other payables | 18 | 40,420,088 | 43,453,333 |
Contract liabilities | 88,121,385 | 76,324,981 | |
Amounts due to related parties | 39,267,025 | 28,653,456 | |
Dividend payable | 9 | 748,176 | - |
Income taxes payable | 7,077,248 | 10,473,519 | |
Other taxes payable | 9,056,525 | 8,420,517 | |
Lease liabilities | 13,017 | 27,397 | |
Bank and other borrowings | 19 | 16,806,229 | 13,950,984 |
Senior notes | 20 | 7,884,638 | 7,712,382 |
Corporate debt instruments | 21 | 10,091,057 | 11,643,848 |
Receipts under securitisation arrangements | 22 | 6,175 | 1,633,966 |
219,491,563 | 202,294,383 | ||
Greentown China Holdings Limited Interim Report 2020 035
Condensed Consolidated Statement of Financial Position
As at 30 June 2020
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | ||
Liabilities associated with assets classified as held for sale | 16 | 86,003 | 70,409 |
219,577,566 | 202,364,792 | ||
NET CURRENT ASSETS | 117,587,178 | 98,363,097 | |
TOTAL ASSETS LESS CURRENT LIABILITIES | 156,007,144 | 134,727,326 | |
NON-CURRENT LIABILITIES | |||
Bank and other borrowings | 19 | 57,292,509 | 45,642,189 |
Corporate debt instruments | 21 | 17,880,096 | 14,993,416 |
Receipts under securitisation arrangements | 22 | 1,890,899 | - |
Lease liabilities | 102,175 | 89,038 | |
Deferred tax liabilities | 4,718,039 | 4,847,211 | |
81,883,718 | 65,571,854 | ||
74,123,426 | 69,155,472 | ||
CAPITAL AND RESERVES | |||
Share capital | 23 | 239,242 | 209,694 |
Reserves | 31,020,481 | 27,434,904 | |
Equity attributable to owners of the Company | 31,259,723 | 27,644,598 | |
Perpetual securities | 24 | 22,635,164 | 21,229,002 |
Non-controlling interests | 20,228,539 | 20,281,872 | |
74,123,426 | 69,155,472 | ||
The condensed consolidated financial statements on pages 34 to 74 were approved and authorised for issue by the Board of Directors on 27 August 2020 and are signed on its behalf by:
ZHANG Yadong | GENG Zhongqiang |
DIRECTOR | DIRECTOR |
036 Greentown China Holdings Limited Interim Report 2020
Condensed Consolidated Statement of
Changes in Equity
For the six months ended 30 June 2020
Attributable to owners of the Company | |||||||||||||
Non- | |||||||||||||
Share | Treasury | Share | Special | Statutory | Share option | Revaluation | Retained | Perpetual | controlling | ||||
capital | Shares | premium | reserve | reserve | reserve | reserve | earnings | Subtotal | securities | Interests | Total | ||
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
(i) | (ii) | ||||||||||||
At 1 January 2019 (audited) | 209,501 | - | 8,565,385 | (1,818,272) | 1,946,114 | 343,295 | 688,159 | 17,640,228 | 27,574,410 | 15,408,315 | 17,136,115 | 60,118,840 | |
Profit for the period | - | - | - | - | - | - | - | 2,057,571 | 2,057,571 | - | 1,015,063 | 3,072,634 | |
Other comprehensive income for the period | - | - | - | - | - | - | 40,757 | - | 40,757 | - | - | 40,757 | |
Total comprehensive income for the period | - | - | - | - | - | - | 40,757 | 2,057,571 | 2,098,328 | - | 1,015,063 | 3,113,391 | |
Dividends recognised as distributions (note 9) | - | - | - | - | - | - | - | (499,312) | (499,312) | - | - | (499,312) | |
Dividends paid to non-controlling interests | - | - | - | - | - | - | - | - | - | - | (188,753) | (188,753) | |
Transfer | - | - | - | - | 100,472 | - | - | (100,472) | - | - | - | - | |
Issue of perpetual securities | - | - | - | - | - | - | - | - | - | 8,412,002 | - | 8,412,002 | |
Redemption of perpetual securities | - | - | - | - | - | - | - | - | - | (6,082,347) | - | (6,082,347) | |
Transfer on redemption of perpetual securities | - | - | - | - | - | - | - | (475,581) | (475,581) | 475,581 | - | - | |
Recognition of share-based incentive | - | - | - | - | - | 1,751 | - | - | 1,751 | - | - | 1,751 | |
Recognition of equity-settledshare-based payments | - | - | - | - | - | 28,919 | - | - | 28,919 | - | - | 28,919 | |
Exercise of share options | 193 | - | 12,712 | - | - | (3,775) | - | - | 9,130 | - | - | 9,130 | |
Interest in perpetual securities recognised as | |||||||||||||
distribution | - | - | - | - | - | - | - | (835,986) | (835,986) | 835,986 | - | - | |
Interest in perpetual securities paid | - | - | - | - | - | - | - | - | - | (477,971) | - | (477,971) | |
Acquisition of subsidiaries (note 27) | - | - | - | - | - | - | - | - | - | - | 2,672 | 2,672 | |
Purchase of additional interest in subsidiaries | - | - | - | (28,609) | - | - | - | - | (28,609) | - | (68,958) | (97,567) | |
Partial disposal of interest in subsidiaries without loss | |||||||||||||
of control | - | - | - | 31,903 | - | - | - | - | 31,903 | - | (3,773) | 28,130 | |
Disposal of subsidiaries | - | - | - | - | - | - | - | - | - | - | (26,988) | (26,988) | |
Liquidation of subsidiaries | - | - | - | - | - | - | - | - | - | - | (21,565) | (21,565) | |
Shares repurchased (note 26) | - | (37,852) | - | - | - | - | - | - | (37,852) | - | - | (37,852) | |
Capital contribution from non-controlling shareholders | |||||||||||||
of subsidiaries | - | - | - | - | - | - | - | - | - | - | 1,160,377 | 1,160,377 | |
At 30 June 2019 (unaudited) | 209,694 | (37,852) | 8,578,097 | (1,814,978) | 2,046,586 | 370,190 | 728,916 | 17,786,448 | 27,867,101 | 18,571,566 | 19,004,190 | 65,442,857 | |
Greentown China Holdings Limited Interim Report 2020 037
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2020
Attributable to owners of the Company | ||||||||||||
Non- | ||||||||||||
Share | Treasury | Share | Special | Statutory | Share option | Revaluation | Retained | Perpetual | controlling | |||
capital | Shares | premium | reserve | reserve | reserve | reserve | earnings | Subtotal | securities | Interests | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
(i) | (ii) | |||||||||||
At 1 January 2020 (audited) | 209,694 | (37,852) | 8,578,098 | (1,901,327) | 2,197,467 | 398,043 | 944,911 | 17,255,564 | 27,644,598 | 21,229,002 | 20,281,872 | 69,155,472 |
Profit for the period | - | - | - | - | - | - | - | 2,095,812 | 2,095,812 | - | 1,034,558 | 3,130,370 |
Other comprehensive income for the period | - | - | - | - | - | - | 84,916 | - | 84,916 | - | - | 84,916 |
Total comprehensive income for the period | - | - | - | - | - | - | 84,916 | 2,095,812 | 2,180,728 | - | 1,034,558 | 3,215,286 |
Dividends recognised as distributions (note 9) | - | - | - | - | - | - | - | (748,176) | (748,176) | - | - | (748,176) |
Dividends paid to non-controlling interests | - | - | - | - | - | - | - | - | - | - | (1,118,433) | (1,118,433) |
Transfer | - | - | - | - | 148,375 | - | - | (148,375) | - | - | - | - |
Issue of perpetual securities | - | - | - | - | - | - | - | - | - | 1,493,850 | - | 1,493,850 |
Share issued (note 23) | 29,548 | - | 2,777,732 | - | - | - | - | - | 2,807,280 | - | - | 2,807,280 |
Recognition of share-based incentive | - | - | - | - | - | 12,690 | - | - | 12,690 | - | - | 12,690 |
Recognition of equity-settledshare-based payments | - | - | - | - | - | 7,865 | - | - | 7,865 | - | - | 7,865 |
Exercise of share award | - | 18,383 | - | - | - | (18,383) | - | - | - | - | - | - |
Interest in perpetual securities recognised as | ||||||||||||
distribution | - | - | - | - | - | - | - | (646,240) | (646,240) | 646,240 | - | - |
Interest in perpetual securities paid | - | - | - | - | - | - | - | - | - | (733,928) | - | (733,928) |
Acquisition of subsidiaries (note 27) | - | - | - | - | - | - | - | - | - | - | 48,380 | 48,380 |
Purchase of additional interest in subsidiaries | - | - | - | (1,672) | - | - | - | - | (1,672) | - | (93,462) | (95,134) |
Partial disposal of interest in subsidiaries without loss | ||||||||||||
of control | - | - | - | 2,650 | - | - | - | - | 2,650 | - | 79,246 | 81,896 |
Disposal of subsidiaries (note 28) | - | - | - | - | - | - | - | - | - | - | (463,139) | (463,139) |
Liquidation of subsidiaries | - | - | - | - | - | - | - | - | - | - | (39,559) | (39,559) |
Disposal of equity instruments at fair value through | ||||||||||||
other comprehensive income | - | - | - | - | - | - | (12,001) | 12,001 | - | - | - | - |
Capital contribution from non-controlling shareholders | ||||||||||||
of subsidiaries | - | - | - | - | - | - | - | - | - | - | 499,076 | 499,076 |
At 30 June 2020 (unaudited) | 239,242 | (19,469) | 11,355,830 | (1,900,349) | 2,345,842 | 400,215 | 1,017,826 | 17,820,586 | 31,259,723 | 22,635,164 | 20,228,539 | 74,123,426 |
Notes:
- Special reserve mainly represents changes in equity attributable to owners' of the Company risen from partial acquisition or disposal of subsidiaries without losing control over those subsidiaries by the Group. The changes are calculated based on the difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or received for the partial acquisition or disposal.
- The statutory reserve is non-distributable and the transfer to this reserve is determined by the board of directors of the relevant companies in accordance with the relevant laws and regulations of the People's Republic of China ("the PRC"). This reserve can be used to offset accumulated losses and increase capital upon approval from the relevant authorities.
038 Greentown China Holdings Limited Interim Report 2020
Condensed Consolidated
Statement of Cash Flows
For the six months ended 30 June 2020
Six months ended 30 June | |||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | ||
Operating cash flows before movements in working capital | 4,626,428 | 4,805,305 | |
Decrease in properties for development | 2,577,443 | 4,829,308 | |
Increase in properties under development | (20,034,495) | (21,640,397) | |
Decrease in completed properties for sale | 870,093 | 2,077,325 | |
Increase in contract liabilities | 12,169,755 | 12,565,475 | |
Income taxes paid | (4,820,404) | (3,306,115) | |
Other operating cash flows | (2,733,502) | 2,144,058 | |
Net cash (used in) from operating activities | (7,344,682) | 1,474,959 | |
Net cash used in investing activities | |||
Purchase of property, plant and equipment | (254,335) | (217,136) | |
Purchase of investment property | - | (38,832) | |
Proceeds from disposal of property, plant and equipment | 12,059 | 4,236 | |
Investments in associates | (321,385) | (1,348,120) | |
Investments in joint ventures | (268,694) | (704,724) | |
Disinvestments in associates | 36,000 | 126,990 | |
Disinvestments in joint ventures | 882,253 | 296 | |
Dividends received from associates and joint ventures | 534,369 | 47,036 | |
Dividends received from equity instruments at fair value through | |||
other comprehensive income | 56,000 | 19,939 | |
Purchase of equity instruments at fair value through | |||
other comprehensive income | (579,710) | - | |
Proceeds from disposal of equity instruments at fair value through | |||
other comprehensive income | 128,000 | 12,791 | |
Proceeds from disposal of interests in associates | 19,500 | 9,034 | |
Consideration received for disposal of subsidiaries | |||
recognised in prior year | 2,726 | 12,000 | |
Acquisition of subsidiaries (net of cash and cash equivalents acquired) | 27 | (281,578) | 158,262 |
Disposal of subsidiaries (net of cash and cash equivalents disposed) | 28 | (471,388) | (755,415) |
Acquisition of associates and joint ventures | (1,172,953) | - | |
Advance to third parties | (3,138,759) | (1,586,027) | |
Advance to related parties | (19,479,041) | (11,376,626) | |
Repayment from related parties | 15,123,765 | 9,956,366 | |
(Increase) decrease in pledged bank deposits | (949,609) | 3,323,448 | |
Interest received | 1,336,021 | 773,068 | |
Receipt in advance for an asset classified as held for sale | 192,181 | - | |
(8,594,578) | (1,583,414) | ||
Greentown China Holdings Limited Interim Report 2020 039
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2020
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | |
Net cash from financing activities | ||
Bank and other borrowings raised | 32,975,601 | 17,425,566 |
Repayment of bank and other borrowings | (17,186,219) | (7,753,177) |
Repayments of leases liabilities | (24,107) | (31,314) |
Interest paid | (3,826,411) | (3,274,026) |
Advance from related parties | 18,482,749 | 8,384,266 |
Repayment to related parties | (7,144,926) | (10,509,669) |
Repayment to third parties | (2,176,237) | - |
Contribution by non-controlling shareholders of subsidiaries | 652,076 | 1,160,377 |
Dividends paid to non-controlling interests | (1,118,433) | (188,753) |
Repayment of non-controlling shareholders capital contribution | ||
upon liquidation of subsidiaries | (39,559) | (21,565) |
Proceeds from issue of perpetual securities | 1,493,850 | 8,412,002 |
Redemption of perpetual securities | - | (6,082,347) |
Distribution relating to perpetual securities | (733,928) | (477,971) |
Proceeds from issue of corporate debt instruments | 5,912,226 | 496,113 |
Repayment of corporate debt instruments | (4,547,000) | (4,000,000) |
Proceeds from issue of receipts under securitisation arrangements | 1,990,667 | - |
Repayment of receipts under securitisation arrangements | (1,600,000) | - |
Proceeds from exercise of share options | - | 9,130 |
Payment on repurchase of shares | - | (37,852) |
Purchase of additional interests in subsidiaries | (95,134) | (97,567) |
Proceeds from partial disposal of subsidiaries | 81,896 | 28,130 |
Proceeds from issue of shares | 2,807,280 | - |
25,904,391 | 3,441,343 | |
Net increase in cash and cash equivalents | 9,965,131 | 3,332,888 |
Cash and cash equivalents at 1 January | 46,567,729 | 43,347,301 |
Effect of foreign exchange rate changes | 39,833 | 3,846 |
Cash and cash equivalents at 30 June, represented by bank balances and cash | 56,572,693 | 46,684,035 |
040 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed
Consolidated Financial Statements
For the six months ended 30 June 2020
1. BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" issued by the International Accounting Standards Board (the "IASB") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").
2. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments and investment properties, which are measured at fair values.
Other than additional accounting policies resulting from application of amendments to International Financial Reporting Standards ("IFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those presented in the Group's consolidated financial statements for the year ended 31 December 2019.
Application of amendments to IFRSs
In the current interim period, the Group has applied the Amendments to Reference to the Conceptual Framework in IFRS Standards and the following amendments to IFRSs issued by the IASB, for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:
Amendments to IAS 1 and IAS 8 | Definition of Material |
Amendments to IFRS 3 | Definition of business |
Amendments to IFRS 9, IAS 39 and IFRS 7 | Interest Rate Benchmark Reform |
The application of the Amendments to References to the Conceptual Framework in IFRS Standards and the amendments to IFRSs in the current interim period has no material impact on the Group's financial positions and performance for the current and prior periods and on the disclosures set out in these condensed consolidation financial statements.
Greentown China Holdings Limited Interim Report 2020 041
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION
A. Disaggregation of revenue from contracts with customers
For the six months ended 30 June 2020 | ||||||||
Design | Sales of | |||||||
Property | Hotel | Project | and | construction | Other | |||
sales | operations | management | decoration | materials | business | Total | ||
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
Recognised at a point in time | 15,230,233 | - | - | - | 42,928 | - | 15,273,161 | |
Recognised over time | 5,483,318 | 213,086 | 797,007 | 1,072,659 | - | 990,459 | 8,556,529 | |
Revenue from contracts | ||||||||
with customers | 20,713,551 | 213,086 | 797,007 | 1,072,659 | 42,928 | 990,459 | 23,829,690 | |
For the six months ended 30 June 2019 | ||||||||
Sales of | ||||||||
Property | Hotel | Project | Design | construction | Other | |||
sales | operations | management | and decoration | materials | business | Total | ||
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
Recognised at a point in time | 8,918,342 | - | - | - | 33,339 | - | 8,951,681 | |
Recognised over time | 6,971,025 | 393,480 | 989,551 | 1,157,621 | - | 111,815 | 9,623,492 | |
Revenue from contracts | ||||||||
with customers | 15,889,367 | 393,480 | 989,551 | 1,157,621 | 33,339 | 111,815 | 18,575,173 | |
042 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
-
Disaggregation of revenue from contracts with customers (continued)
Set out below is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the segment information.
For the six months ended 30 June 2020 | ||||||
Property | Hotel | Property | Project | |||
development | operations | investment | management | Others | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Revenue disclosed in segment | ||||||
information | ||||||
External customers | 20,713,551 | 213,086 | 66,518 | 797,007 | 2,106,046 | 23,896,208 |
Inter-segment | - | 176 | 7,645 | 151,317 | 758,726 | 917,864 |
20,713,551 | 213,262 | 74,163 | 948,324 | 2,864,772 | 24,814,072 | |
Adjustment for property rental income | - | - | (66,518) | - | - | (66,518) |
Eliminations | - | (176) | (7,645) | (151,317) | (758,726) | (917,864) |
Revenue from contracts with | ||||||
customers | 20,713,551 | 213,086 | - | 797,007 | 2,106,046 | 23,829,690 |
For the six months ended 30 June 2019 | ||||||
Property | Hotel | Property | Project | |||
development | operations | investment | management | Others | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Revenue disclosed in segment | ||||||
information | ||||||
External customers | 15,889,367 | 393,480 | 82,942 | 989,551 | 1,302,775 | 18,658,115 |
Inter-segment | - | 805 | - | 86,281 | 562,526 | 649,612 |
15,889,367 | 394,285 | 82,942 | 1,075,832 | 1,865,301 | 19,307,727 | |
Adjustment for property rental income | - | - | (82,942) | - | - | (82,942) |
Eliminations | - | (805) | - | (86,281) | (562,526) | (649,612) |
Revenue from contracts with | ||||||
customers | 15,889,367 | 393,480 | - | 989,551 | 1,302,775 | 18,575,173 |
Greentown China Holdings Limited Interim Report 2020 043
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
-
Segment information
An analysis of the Group's revenue and results by reportable and operating segments for the interim period is as follows:
Property | Hotel | Property | Project | Segment | ||||
development | operations | investment | management | Others | total | Eliminations | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
For the six months ended 30 June 2020 | ||||||||
Revenue from contracts with customers | 20,713,551 | 213,086 | - | 797,007 | 2,106,046 | 23,829,690 | - | 23,829,690 |
Rental income | - | - | 66,518 | - | - | 66,518 | - | 66,518 |
Total external segment revenue | 20,713,551 | 213,086 | 66,518 | 797,007 | 2,106,046 | 23,896,208 | - | 23,896,208 |
Inter-segment revenue | - | 176 | 7,645 | 151,317 | 758,726 | 917,864 | (917,864) | - |
Total | 20,713,551 | 213,262 | 74,163 | 948,324 | 2,864,772 | 24,814,072 | (917,864) | 23,896,208 |
Segment results | 3,007,377 | (26,572) | (40,309) | 183,126 | 97,117 | 3,220,739 | (176) | 3,220,563 |
Unallocated administrative expenses | (22,448) | |||||||
Unallocated other income | 9,818 | |||||||
Unallocated finance costs | (9,799) | |||||||
Unallocated taxation | (67,764) | |||||||
Profit for the period | 3,130,370 | |||||||
Property | Hotel | Property | Project | Segment | ||||
development | operations | investment | management | Others | total | Eliminations | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
For the six months ended 30 June 2019 | ||||||||
Revenue from contracts with customers | 15,889,367 | 393,480 | - | 989,551 | 1,302,775 | 18,575,173 | - | 18,575,173 |
Rental income | - | - | 82,942 | - | - | 82,942 | - | 82,942 |
Total external segment revenue | 15,889,367 | 393,480 | 82,942 | 989,551 | 1,302,775 | 18,658,115 | - | 18,658,115 |
Inter-segment revenue | - | 805 | - | 86,281 | 562,526 | 649,612 | (649,612) | - |
Total | 15,889,367 | 394,285 | 82,942 | 1,075,832 | 1,865,301 | 19,307,727 | (649,612) | 18,658,115 |
Segment results | 2,856,835 | 43,926 | 45,417 | 220,910 | 23,602 | 3,190,690 | - | 3,190,690 |
Unallocated administrative expenses | (65,846) | |||||||
Unallocated other income | 19,878 | |||||||
Unallocated finance costs | (11,739) | |||||||
Unallocated taxation | (60,349) | |||||||
Profit for the period | 3,072,634 | |||||||
044 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
3. REVENUE AND SEGMENT INFORMATION (continued)
-
Segment information (continued)
The following is an analysis of the Group's assets and liabilities by reportable segment:
Segment assets
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Property development | 345,881,636 | 311,117,245 |
Hotel operations | 9,980,647 | 8,922,880 |
Property investment | 4,040,238 | 4,183,051 |
Project management | 3,352,590 | 3,164,715 |
Others | 10,102,781 | 8,225,251 |
Total segment assets | 373,357,892 | 335,613,142 |
Unallocated | 2,226,818 | 1,478,976 |
Consolidated assets | 375,584,710 | 337,092,118 |
Segment liabilities | ||
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Property development | 288,824,379 | 257,604,573 |
Hotel operations | 187,120 | 251,621 |
Property investment | 1,048,803 | 1,077,581 |
Project management | 1,523,077 | 1,355,663 |
Others | 8,212,087 | 6,733,581 |
Total segment liabilities | 299,795,466 | 267,023,019 |
Unallocated | 1,665,818 | 913,627 |
Consolidated liabilities | 301,461,284 | 267,936,646 |
Greentown China Holdings Limited Interim Report 2020 045
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
4. | OTHER INCOME | ||
Six months ended 30 June | |||
2020 | 2019 | ||
RMB'000 | RMB'000 | ||
Interest income | 1,299,892 | 742,855 | |
Comprehensive service income | 86,185 | 6,088 | |
Dividends from equity instruments at fair value through | |||
other comprehensive income ("FVTOCI") | 56,000 | 17,740 | |
Default penalty income | - | 460,651 | |
Others | 115,173 | 135,127 | |
1,557,250 | 1,362,461 | ||
5. OTHER GAINS AND LOSSES
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Net foreign exchange losses | (265,899) | (59,738) |
Gain on acquisition of associates and joint ventures at discount (note) | 324,414 | 1,915 |
Gain on disposal of an associates | - | 478 |
Gain on disposal of property, plant and equipment | 209 | 264 |
58,724 | (57,081) | |
Note: The gain on acquisition of associates and joint ventures at discount are from the acquisition of Shanghai Zhonghan Real Estate Co., Ltd. ("Shanghai Zhonghan"), Shenyang Shenbei Jingu Real Estate Co., Ltd. ("Shenyang Shenbei Jingu"), Shenyang Xinhu Pearl Real Estate Co., Ltd. ("Shenyang Xinhu Pearl"), Nantong Qiyang Construction Development Co., Ltd. ("Nantong Qiyang"), Nantong Qixin Real Estate Co., Ltd. ("Nantong Qixin") and Nantong Xinhu Real Estate Co., Ltd. ("Nantong Xinhu").
During the interim period, the Group acquired 35% equity interests in Shanghai Zhonghan, acquired 100% equity interests in Zhejiang Qifeng Industrial Co., Ltd., which is an investment holding company and directly holds 35% of the equity interests in Shenyang Shenbei Jingu and Shenyang Xinhu Pearl, acquired 100% equity interest in Zhejiang Qizhi Industrial Co., Ltd., which is an investment holding company and directly holds 50% of the equity interests in Nantong Qiyang and Nantong Qixin, and acquired 50% of the equity interests in Nantong Xinhu for a consideration of RMB517,373,000, RMB186,314,000, RMB397,719,000 and RMB71,547,000 respectively.
The Group recognised the gain on acquisition of associates and joint ventures at discount of RMB183,677,000, RMB62,517,000, RMB62,268,000 and RMB15,952,000 respectively. After the acquisitions, Shanghai Zhonghan, Shenyang Shenbei Jingu, Shenyang Xinhu Pearl, Nantong Qiyang, Nantong Qixin and Nantong Xinhu were classified as associates and joint ventures using equity method of the Group. Details of the transaction set out above are disclosed in the Company's announcement dated 19 April 2020 and 24 April 2020.
046 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
6. | FINANCE COSTS | ||
Six months ended 30 June | |||
2020 | 2019 | ||
RMB'000 | RMB'000 | ||
Interest on bank and other borrowings, senior notes, | |||
corporate debt instruments and receipts under securitisation arrangements | 3,826,222 | 2,981,557 | |
Interest on leases | 2,728 | 4,272 | |
Total borrowing costs | 3,828,950 | 2,985,829 | |
Less: Interest capitalised in properties under development and construction in progress | (2,576,590) | (2,184,939) | |
1,252,360 | 800,890 | ||
7. PROFIT BEFORE TAXATION
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Profit before taxation has been arrived at after charging: | ||
Salaries and other benefits | 1,132,815 | 1,030,551 |
Retirement benefits scheme contributions (note) | 20,864 | 68,729 |
Less: Capitalised in properties under development | (384,987) | (351,978) |
768,692 | 747,302 | |
Depreciation of property, plant and equipment | 247,877 | 256,939 |
Less: Capitalised in properties under development | (2,708) | (2,781) |
245,169 | 254,158 | |
Cost of properties and inventories recognised as an expense | 17,407,416 | 12,537,566 |
Depreciation of right-of-use assets | 45,041 | 67,806 |
Note: The government assistance have been implemented for the relief of the social insurance in respect of Covid-19. According to the notice issued by the Ministry of Social Affairs (2020) No.11, in order to minimize the impact of the Covid-19 on social and economic development, the government has reduced the social security fees for medium-sized enterprises from February to June 2020.
Greentown China Holdings Limited Interim Report 2020 047
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
8. | TAXATION | |||
Six months ended 30 June | ||||
2020 | 2019 | |||
RMB'000 | RMB'000 | |||
Current tax: | ||||
PRC Enterprise Income Tax ("EIT") | 890,143 | 1,201,259 | ||
PRC Land Appreciation Tax ("LAT") | 575,387 | 1,143,355 | ||
1,465,530 | 2,344,614 | |||
Deferred tax: | ||||
EIT | 38,888 | (52,684) | ||
LAT | 13,574 | (277,984) | ||
52,462 | (330,668) | |||
1,517,992 | 2,013,946 | |||
No provision for income tax has been made for the Company and its subsidiaries incorporated in Hong Kong as they have no assessable profits derived from Hong Kong.
PRC EIT is recognised based on management's best estimate of the annual income tax rate expected for the full financial year, which is 25% or 15%. Greentown Decoration Project Group Co., Ltd., Zhejiang Greentown Lianhe Design Co., Ltd. and Greentown Project Management Group Co., Ltd. are high and new technology enterprises and the applicable income tax rate is 15% from year 2018 to 2020, year 2017 to 2019 and year 2019 to 2021 respectively.
In addition, the Law of the People's Republic of China on Enterprise Income Tax (the "EIT Law") provides that qualified dividend income between two resident enterprises that have a direct investment relationship is exempted from income tax. Otherwise, such dividends will be subject to a 5% or 10% withholding tax under the EIT Law. A 10% withholding tax rate is applicable to the Group.
The Group recognised LAT based on management's best estimates and in accordance to the requirements set forth in the relevant PRC tax laws and regulations. For the six months ended 30 June 2020, the Group has estimated and made a provision for LAT in the amount of RMB588,961,000 (for the six months ended 30 June 2019: RMB865,371,000). The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.
9. DIVIDENDS
During the interim period, a final dividend of RMB0.30 per ordinary share, or RMB748,176,000 in total, for the year ended 31 December 2019 (for the six months ended 30 June 2019: RMB0.23 per ordinary share, or RMB499,312,000 in total, for the year ended 31 December 2018) was declared by the Board and approved by the shareholders at the annual general meeting. The final dividend was subsequently paid on 30 July 2020.
The Board has resolved not to declare any interim dividend for the six months ended 30 June 2020 (for the six months ended 30 June 2019: nil).
048 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
10. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:
Earnings
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Profit for the period attributable to the owners of the Company | 2,095,812 | 2,057,571 |
Distribution related to perpetual securities | (646,240) | (594,351) |
Earnings for the purpose of basic earnings per share | 1,449,572 | 1,463,220 |
Earnings for the purpose of diluted earnings per share | 1,449,572 | 1,463,220 |
Number of shares | ||
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Weighted average number of ordinary shares for the purpose of | ||
basic earnings per share | 2,230,435,196 | 2,168,636,944 |
Effect of dilutive potential ordinary shares: | ||
Share options | 960,438 | 1,027,563 |
Weighted average number of ordinary shares for the purpose of | ||
diluted earnings per share | 2,231,395,634 | 2,169,664,507 |
The computation of diluted earnings per share for the six months ended 30 June 2020 and 30 June 2019 does not assume the exercise of some of the share options because the exercise price of these share options was higher than the average market price for shares for the periods.
Greentown China Holdings Limited Interim Report 2020 049
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
11. MOVEMENT IN PROPERTY, PLANT AND EQUIPMENT, RIGHT-OF-USE ASSETS AND INVESTMENT PROPERTIES
During the current interim period, the Group incurred additional expenditure on property, plant and equipment in the amount of RMB254,335,000 (for the six months ended 30 June 2019: RMB217,136,000).
During the current interim period, the Group entered into additional new lease agreements for office buildings and apartments. The Group is required to make fixed monthly payments. On lease commencement, the Group recognized RMB25,153,000 of right-of-use assets and RMB25,153,000 lease liabilities.
Details of the property, plant and equipment pledged to secure banking facilities granted to the Group are disclosed in note 30.
The Group's investment properties at the end of the current interim period were valued by the directors. The basis of determining the valuation methods, inputs and assumptions used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019. The resulting decrease in fair value of investment properties of RMB108,114,000 (for the six months ended 30 June 2019: nil) has been recognised directly in profit or loss for the six months ended 30 June 2020. Except for the investment property classified as held for sale, the directors of the Company considered that there was no material change on the fair value of those investment properties. Please refer to note 16 for details.
12. PROPERTIES FOR DEVELOPMENT
Included in properties for development as at 30 June 2020 was an amount of RMB11,577,669,000 (as at 31 December 2019: RMB10,066,178,000) in respect of long-term leasehold land for which the Group was in the process of obtaining the land use rights certificates.
All properties for development are expected to be recovered after more than 12 months from the end of the interim period.
13. PROPERTIES UNDER DEVELOPMENT
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Long-term leasehold land - at cost | 99,872,771 | 81,552,082 |
Development costs | 39,078,559 | 40,506,043 |
Finance costs capitalised | 16,103,299 | 14,557,841 |
155,054,629 | 136,615,966 | |
Properties under development for sale amounting to RMB111,833,791,000 (as at 31 December 2019: RMB108,238,953,000) are expected to be recovered after more than 12 months from the end of the interim period.
050 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
14. TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Trade receivables | 1,142,735 | 1,141,212 |
Less: allowance for credit losses | (89,398) | (75,566) |
Trade receivables, net of allowance for credit losses | 1,053,337 | 1,065,646 |
Other receivables, net of allowance for credit losses | 7,133,145 | 6,850,336 |
Prepayments and deposits | 6,846,889 | 3,326,102 |
Consideration receivables from disposal of subsidiaries | 68,000 | 70,726 |
15,101,371 | 11,312,810 | |
The Group allows an average credit period of 90 days to trade customers. The aged analysis of trade receivables before impairment is stated as follows:
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
RMB'000 | RMB'000 | ||
Within 90 days | 506,480 | 537,955 | |
91-180 days | 112,617 | 131,557 | |
181-365 days | 176,435 | 129,033 | |
Over 365 days | 347,203 | 342,667 | |
Trade receivables | 1,142,735 | 1,141,212 | |
Details of the impairment assessment are set out in note 17. | |||
15. CONTRACT ASSETS | |||
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
RMB'000 | RMB'000 | ||
Design and decoration (note) | 2,153,906 | 2,157,885 | |
Project management (note) | 388,548 | 299,394 | |
Others | 565,429 | 375,044 | |
Less: allowance for credit losses | (7,380) | (17,316) | |
Contract assets, net of allowance for credit losses | 3,100,503 | 2,815,007 | |
Note: The contract assets primarily relate to the Group's right to consideration for work completed and not billed because the rights are conditioned on the Group's future performance in achieving specified milestones stipulated in the relevant contracts at the reporting date on design and decoration and project management service. The contract assets are transferred to trade receivables when the rights become unconditional. The Group typically transfer the contract assets to trade receivables when the relevant revenue is billed.
Greentown China Holdings Limited Interim Report 2020 051
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
16. DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE
On 30 September 2019, the directors of Greentown Management Holdings Company Limited, a wholly-owned subsidiary of the Company, resolved to dispose of Zhejiang Greentown Landscape Garden Project Co., Ltd. and Zhejiang Greentown Public City Garden Construction Co., Ltd. Negotiation with interested party have subsequently taken place. The assets and liabilities attributable to the business, which are expected to be sold within 12 months, have been classified as a disposal group held for sale and are separately presented in the condensed consolidated statement of financial position. The net proceeds of disposal are expected to exceed the net carrying amount of the relevant assets and liabilities and accordingly, no impairment loss has been recognised.
On 21 April 2020, the Group entered into a sales and purchase agreement to dispose of one investment property in Qingdao to an independent third party for a total cash consideration of RMB192,181,000. At 30 June 2020, the Group has fully received the consideration according to the sales and purchase agreement. The disposal has not been completed according to the agreement. As such, the investment property attributable to the Group that are expected to be sold within 12 months has been classified as held for sale asset and is separately presented in the condensed consolidated statement of financial position. The Group recognised a loss from change in fair value of an investment property of RMB108,114,000 according to the consideration compared with the carrying amount of the investment property.
The major classes of assets and liabilities classified as held for sale are as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Property, plant and equipment | 4,481 | 4,216 |
Deferred tax assets | - | 774 |
Right-of-use assets | 401 | 730 |
Inventories | 4,837 | 4,761 |
Trade and other receivables deposits and prepayments | 28,800 | 25,025 |
Investment properties | 181,886 | - |
Amounts due from related parties | 42,355 | 47,850 |
Contract assets | 18,184 | - |
Bank balances and cash | 4,420 | 12,391 |
Assets classified as held for sale | 285,364 | 95,747 |
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Trade and other payables | 79,275 | 60,258 |
Contract liabilities | 482 | 482 |
Amounts due to related parties | - | 8,762 |
Income taxes payable | - | 140 |
Bank and other borrowings | 6,000 | - |
Lease liabilities | 246 | 767 |
Liabilities associated with assets classified as held for sale | 86,003 | 70,409 |
052 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
17. IMPAIRMENT ASSESSMENT ON FINANCIAL ASSETS AND OTHER ITEMS SUBJECT TO EXPECTED CREDIT LOSS ("ECL") MODEL
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Impairment loss (reversed) recognised in respect of | ||
Contract assets | (9,936) | 15,767 |
Trade receivables | 13,832 | (14,623) |
Other receivables and amounts due from related parties | 310,613 | (146,494) |
314,509 | (145,350) | |
The basis of determining the inputs and assumptions and the estimation techniques used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019.
18. TRADE AND OTHER PAYABLES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Trade payables | 29,156,425 | 31,182,085 |
Other payables and accrued expenses | 10,910,291 | 12,174,941 |
Consideration payables on acquisition of subsidiaries and associates | 161,191 | 96,307 |
Receipt in advance for an investment property held for sale (note 16) | 192,181 | - |
40,420,088 | 43,453,333 | |
Trade payables principally comprise amounts outstanding for trade purchases and contractor payments. The aged analysis of trade payables is stated as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Within 180 days | 20,480,415 | 24,376,904 |
181-365 days | 6,225,469 | 4,524,362 |
Over 365 days | 2,450,541 | 2,280,819 |
Trade payables | 29,156,425 | 31,182,085 |
Greentown China Holdings Limited Interim Report 2020 053
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
19. BANK AND OTHER BORROWINGS
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Secured bank loans | 48,971,774 | 39,518,402 |
Unsecured bank loans | 21,998,745 | 15,560,289 |
70,970,519 | 55,078,691 | |
Secured other loans | 2,145,566 | 2,119,000 |
Unsecured other loans | 982,653 | 2,395,482 |
3,128,219 | 4,514,482 | |
74,098,738 | 59,593,173 | |
The amount is repayable as follows: | ||
Amounts due within one year | 16,806,229 | 13,950,984 |
Amounts due after one year | 57,292,509 | 45,642,189 |
74,098,738 | 59,593,173 | |
At the end of the interim period, certain bank loans were also supported by guarantees from the following parties:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Secured bank loans, guaranteed by: | ||
Non-controlling shareholders of subsidiaries | 3,390,647 | 2,857,153 |
Unsecured bank loans, guaranteed by: | ||
Non-controlling shareholders of subsidiaries | 1,807,778 | 1,941,538 |
054 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
20. SENIOR NOTES
2015 USD Notes - Unsecured
The movement of 2015 USD notes during the interim period is set out below:
RMB'000 | |
At 1 January 2020 | 3,538,956 |
Exchange realignment | 51,758 |
Interest charged during the interim period | 127,645 |
Interest paid during the interim period | (102,472) |
At 30 June 2020 | 3,615,887 |
The principal terms of 2015 USD Notes are disclosed in the Group's 2015 consolidated financial statements. The 2015 USD Notes contain a liability component and an early redemption option:
-
Liability component represents the present value of the contractually determined stream of future cash flows discounted at the prevailing market interest rate at that time applicable to instruments of comparable credit status and providing substantially the same cash flows, on the same terms, but without the embedded derivatives.
The interest charged for the interim period is calculated by applying an effective interest rate of approximately 6.23% per annum to the liability component since the senior notes were issued. - Early redemption option is regarded as an embedded derivative not closely related to the host contract. The directors consider that the fair value of the early redemption option is insignificant on 31 December 2019 and 30 June 2020.
On 11 August 2020, the Company redeemed 2015 USD Notes with an outstanding principal of USD500,000,000 (approximately RMB3,470,400,000) in full at face value and repaid all provided and interest.
Greentown China Holdings Limited Interim Report 2020 055
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
20. SENIOR NOTES (continued)
2019 USD Notes - Unsecured
The movement of 2019 USD notes during the interim period is set out below:
RMB'000 | |
At 1 January 2020 | 4,173,426 |
Exchange realignment | 61,791 |
Interest charged during the interim period | 103,856 |
Interest paid during the interim period | (70,322) |
At 30 June 2020 | 4,268,751 |
On 13 November 2019, the Company issued senior notes with an aggregate principal amount of USD600,000,000 at 100% of face value (the "2019 USD Notes"), which are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The 2019 USD Notes carry interest at the rate of 4.55% per annum payable semi-annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to approximately USD597,960,000 (approximately RMB4,187,275,000). The 2019 USD Notes will mature on 10 November 2020.
The principal terms of 2019 USD Notes are disclosed in the Group's 2019 consolidated financial statements.
The 2019 USD Notes contain a liability component and an issuer's early redemption option:
-
Liability component represents the present value of the contractually determined stream of future cash flows discounted at the prevailing market interest rate at that time applicable to instruments of comparable credit status and providing substantially the same cash flows, on the same terms, but without the embedded derivatives.
The interest charged for the interim period is calculated by applying an effective interest rate of approximately 4.90% per annum to the liability component since the senior notes were issued. - Early redemption option is regarded as an embedded derivative not closely related to the host contract. The directors consider that the fair value of the early redemption options is insignificant on 31 December 2019 and 30 June 2020.
The summary of movements of all senior notes during the interim period is set out below:
RMB'000 | |
At 1 January 2020 | 7,712,382 |
Exchange realignment | 113,549 |
Interest charged during the interim period | 231,501 |
Interest paid during the interim period | (172,794) |
At 30 June 2020 | 7,884,638 |
056 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
21. CORPORATE DEBT INSTRUMENTS
The summary of movements of corporate debt instruments during the interim period is set out below:
RMB'000 | |
At 1 January 2020 | 26,637,264 |
Fair value at the date of issuance (note) | 5,912,226 |
Interest charged during the interim period | 742,363 |
Interest paid during the interim period | (773,700) |
Principal repaid during the interim period upon maturity | (4,547,000) |
At 30 June 2020 | 27,971,153 |
Less: Amounts due within one year shown under current liabilities | (3,610,832) |
Amounts puttable within one year shown under current liabilities | (6,480,225) |
Amounts shown under non-current liabilities | 17,880,096 |
Note:
On 6 March 2020, Greentown Real Estate Group Co., Ltd. ("Greentown Real Estate") issued the first tranche of corporate bonds with an aggregate principal amount of RMB1,430,000,000 at 100% of face value (the "2020 First Bonds"). The 2020 First Bonds carry interest at the rate of 3.19% per annum payable annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to RMB1,423,085,000. The 2020 First Bonds will mature on 6 March 2025.
On 31 March 2020, Greentown Real Estate issued the second tranche of corporate bonds with an aggregate principal amount of RMB500,000,000 at 100% of face value (the "2020 Second Bonds"). The 2020 Second Bonds carry interest at the rate of 3.87% per annum payable annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to RMB498,041,000. The 2020 Second Bonds will mature on 31 March 2027.
On 31 March 2020, Greentown Real Estate issued the third tranche of corporate bonds with an aggregate principal amount of RMB1,000,000,000 at 100% of face value (the "2020 Third Bonds"). The 2020 Third Bonds carry interest at the rate of 3.26% per annum payable annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to RMB996,112,000. The 2020 Third Bonds will mature on 31 March 2025.
On 27 February 2020, Greentown Real Estate issued the medium-term notes with an aggregate principal amount of RMB1,500,000,000 at 100% of face value (the "2020 First Medium-term Notes"). The 2020 First Medium-term Notes carry interest at the rate of 3.30% per annum payable annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to RMB1,497,531,000. The 2020 First Medium-term Notes will mature on 27 February 2023.
On 27 February 2020, Greentown Real Estate issued the medium-term notes with an aggregate principal amount of RMB500,000,000 at 100% of face value (the "2020 Second Medium-term Notes"). The 2020 Second Medium-term Notes carry interest at the rate of 3.86% per annum payable annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to RMB499,174,000. The 2020 Second Medium-term Notes will mature on 27 February 2025.
On 16 March 2020, Greentown Real Estate issued the medium-term notes with an aggregate principal amount of RMB1,000,000,000 at 100% of face value (the "2020 Third Medium-term Notes"). The 2020 Third Medium-term Notes carry interest at the rate of 3.27% per annum payable annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to RMB998,283,000. The 2020 Third Medium-term Notes will mature on 16 March 2023.
Greentown Real Estate shall be entitled to adjust the coupon rate and the investors shall be entitled to sell back the 2020 First Bonds and the 2020 Third Bonds at the end of the third year, the 2020 Second Bonds at the end of the fifth year ("2020 Coupon Rate Adjustment Right").
Greentown China Holdings Limited Interim Report 2020 057
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
21. CORPORATE DEBT INSTRUMENTS (continued)
Note: (continued)
The principal terms of the 2020 First Bonds, the 2020 Second Bonds and the 2020 Third Bonds (collectively, the "2020 Corporate Bonds") are as follows:
- the 2020 First Bonds and the 2020 Third Bonds have fixed interest rate in the first three years. At the end of the fixed interest rate period, Greentown Real Estate has the right to adjust the coupon rate of the remaining outstanding bonds. If Greentown Real Estate choose to exercise the 2020 Coupon Rate Adjustment Right, the new fixed coupon rate for the remaining two years will be the coupon rate of the first three years plus adjusting basis points;
- the investors of the 2020 First Bonds and the 2020 Third Bonds have option to sell back the bonds, in whole or in parts, at a redemption price equal to 100% of the principal amount of the bonds plus accrued and unpaid interest, if any, to (but not including) the redemption date when Greentown Real Estate issue the announcement concerning whether to adjust the coupon rate of the bonds at the end of the third year;
- the 2020 Second Bonds has fixed interest rate in the first five years. At the end of the fixed interest rate period, Greentown Real Estate has the right to adjust the coupon rate of the remaining outstanding bonds. If Greentown Real Estate choose to exercise the 2020 Coupon Rate Adjustment Right, the new fixed coupon rate for the remaining two years will be the coupon rate of the first five years plus adjusting basis points;
- the investors of the 2020 Second Bonds have option to sell back the bonds, in whole or in parts, at a redemption price equal to 100% of the principal amount of the bonds plus accrued and unpaid interest, if any, to (but not including) the redemption date when Greentown Real Estate issue the announcement concerning whether to adjust the coupon rate of the bonds at the end of the fifth year;
Further details of the 2020 Corporate Bonds are published on the website of the Shanghai Stock Exchange (www.sse.com.cn).
The 2020 Corporate Bonds contain a liability component and a written put option:
-
Liability component represents the present value of the contractually determined stream of future cash flows discounted at the prevailing market interest rate at that time applicable to instruments of comparable credit status and providing substantially the same cash flows, on the same terms.
The interest charged for the interim period is calculated by applying an effective interest rate of approximately 3.36% per annum to the liability component since the corporate bonds were issued. - Written put option is regarded as an embedded derivative closely related to the economic characteristics and risks of the host contract, therefore, the written put option is not separated from the liability component.
As at 30 June 2020, the Group has had no plan nor intention to exercise the 2020 Coupon Rate Adjustment Right of the corporate bonds, therefore the interest expense for the interim period were calculated using the original coupon rates of the 2020 Corporate Bonds.
22. RECEIPTS UNDER SECURITISATION ARRANGEMENTS
The movements of receipts under securitisation arrangements during the interim period are set out below:
RMB'000 | |
At 1 January 2020 | 1,633,966 |
Fair value at the dates of issuance (note) | 1,890,667 |
Interest charged during the interim period | 12,441 |
Interest paid during the interim period | (40,000) |
Repaid during the interim period | (1,600,000) |
At 30 June 2020 | 1,897,074 |
Note: | On 17 June 2020, Greentown Real Estate issued receipts under securitisation arrangements (the "2020 Receipts Under Securitisation Arrangements") with |
an aggregate principal amount of RMB2,000,000,000 at 100% of face value comprising (i) RMB1,900,000,000 with a term of fixed annual coupon rate of | |
3.90% and provide distribution semi-annually (the "2020 Senior Tranche Securities"), and (ii) RMB100,000,000 with a term of no annual coupon rate (the | |
"2020 Junior Tranche Securities"). The Greentown Real Estate purchased all the 2020 Junior Tranche Securities. The 2020 Receipts Under Securitisation | |
Arrangements are listed on the Shenzhen Stock Exchange. The net proceeds of the 2020 Receipts Under Securitisation Arrangements, after deduction of | |
direct issuance costs, amounted to RMB1,990,667,000. Both Senior Tranche Securities and Junior Tranche Securities will mature on 16 June 2023. |
The receipts under securitisation arrangements are assets backed securitisation collateralised by certain future trade receivables for the remaining receipts from sales of properties.
058 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
23. SHARE CAPITAL
Number of | Share | |
shares | capital | |
HKD'000 | ||
Authorised | ||
Ordinary shares of HKD0.10 each | ||
At 1 January 2020 and 30 June 2020 | 10,000,000,000 | 1,000,000 |
Issued and fully paid | ||
Ordinary shares of HKD0.10 each | ||
As at 1 January 2020 | 2,170,920,190 | 217,092 |
Share issued (note) | 323,000,000 | 32,300 |
As at 30 June 2020 | 2,493,920,190 | 249,392 |
Note: On 26 April 2020, the Company entered into a subscription agreement with Hong Kong Xinhu Investment Co., Limited ("Hong Kong Xinhu Investment"), a company incorporated under the laws of Hong Kong with limited liability and a wholly-owned subsidiary of Xinhu Zhongbao Co., Ltd., pursuant to which the Company has conditionally agreed to allot and issue, and Hong Kong Xinhu Investment has conditionally agreed to subscribe for, a total of 323,000,000 shares to be allotted and issued by the Company. The shares has been allotted, issued and fully paid on 26 May 2020 at HKD 9.5 per share, amounting to RMB2,807,280,000.
RMB'000 | ||
Shown on the condensed consolidated statement of financial position | ||
As at 31 | December 2019 | 209,694 |
As at 30 | June 2020 | 239,242 |
24. PERPETUAL SECURITIES
2017 USD Perpetual Securities
On 19 July 2017, Wisdom Glory Group Limited ("Wisdom Glory"), a wholly-owned subsidiary of the Company, issued USD denominated guaranteed senior perpetual capital securities (the "2017 USD Perpetual Securities") with an aggregate principal amount of USD450,000,000. The Company has agreed to guarantee the due payment of all sums expressed to be payable by Wisdom Glory under the 2017 USD Perpetual Securities.
The principal terms of the 2017 USD Perpetual Securities are disclosed in the Group's 2017 consolidated financial statements.
2018 USD Perpetual Securities
On 28 December 2018, Twinkle Lights Holdings Limited ("Twinkle Lights"), a wholly-owned subsidiary of the Company, issued USD denominated guaranteed senior perpetual capital securities (the "2018 USD Perpetual Securities") with an aggregate principal amount of USD500,000,000. The 2018 USD Perpetual Securities are unlisted, guaranteed by the Company, and also benefit from a keepwell deed and deed of equity interest purchase undertaking provided by CCCG.
The principal terms of the 2018 USD Perpetual Securities are disclosed in the Group's 2018 consolidated financial statements.
Greentown China Holdings Limited Interim Report 2020 059
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
24. PERPETUAL SECURITIES (continued)
2018 First Domestic Perpetual Securities
On 26 October 2018, Greentown Real Estate issued listed and unsecured domestic perpetual securities (the "2018 First Domestic Perpetual Securities") with an aggregate principal amount of RMB1,400,000,000.
The principal terms of the 2018 First Domestic Perpetual Securities are disclosed in the Group's 2018 consolidated financial statements.
2018 Second Domestic Perpetual Securities
On 3 December 2018, Greentown Real Estate issued listed and unsecured domestic perpetual securities (the "2018 Second Domestic Perpetual Securities") with an aggregate principal amount of RMB2,000,000,000.
The principal terms of the 2018 Second Domestic Perpetual Securities are disclosed in the Group's 2018 consolidated financial statements.
2019 First USD Perpetual Securities
On 8 February 2019, Champion Sincerity Holdings Limited ("Champion Sincerity"), a wholly-owned subsidiary of the Company, issued USD denominated guaranteed senior perpetual capital securities (the "2019 First USD Perpetual Securities") with an aggregate principal amount of USD400,000,000. The Company has agreed to guarantee on a subordinated basis the due payment of all sums expressed to be payable by Champion Sincerity under the 2019 First USD Perpetual Securities.
The principal terms of the 2019 First USD Perpetual Securities are disclosed in the Group's 2019 consolidated financial statements.
2019 Second USD Perpetual Securities
On 8 February 2019, Champion Sincerity issued USD denominated guaranteed senior perpetual capital securities (the "2019 Second USD Perpetual Securities") with an aggregate principal amount of USD100,000,000. The Company has agreed to guarantee on a subordinated basis the due payment of all sums expressed to be payable by Champion Sincerity under the 2019 Second USD Perpetual Securities.
The principal terms of the 2019 Second USD Perpetual Securities are disclosed in the Group's 2019 consolidated financial statements.
2019 First Domestic Perpetual Securities
On 29 January 2019, Greentown Real Estate issued listed and unsecured domestic perpetual securities (the "2019 First Domestic Perpetual Securities") with an aggregate principal amount of RMB2,000,000,000.
The principal terms of the 2019 First Domestic Perpetual Securities are disclosed in the Group's 2019 consolidated financial statements.
060 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
24. PERPETUAL SECURITIES (continued)
2019 Second Domestic Perpetual Securities
On 24 April 2019, Greentown Real Estate issued listed and unsecured domestic perpetual securities (the "2019 Second Domestic Perpetual Securities") with an aggregate principal amount of RMB2,600,000,000.
The principal terms of the 2019 Second Domestic Perpetual Securities are disclosed in the Group's 2019 consolidated financial statements.
2019 Third Domestic Perpetual Securities
On 19 June 2019 and 30 August 2019, Greentown Real Estate issued unlisted and unsecured domestic perpetual securities with an aggregate principal amount of RMB500,000,000 and RMB1,500,000,000 respectively (collectively the "2019 Third Domestic Perpetual Securities").
The principal terms of the 2019 Third Domestic Perpetual Securities are disclosed in the Group's 2019 consolidated financial statements.
2019 Fourth Domestic Perpetual Securities
On 26 December 2019, Tianjin CCCG Greentown Urban Construction Development Co., Ltd. ("Tianjin CCCG Greentown") issued unlisted and unsecured domestic perpetual securities (the "2019 Fourth Domestic Perpetual Securities") with an aggregate principal amount of RMB1,014,326,000.
The principal terms of the 2019 Fourth Domestic Perpetual Securities are disclosed in the Group's 2019 consolidated financial statements.
2020 First Domestic Perpetual Securities
On 28 April 2020, Greentown Real Estate issued listed and unsecured domestic perpetual securities (the "2020 First Domestic Perpetual Securities") with an aggregate principal amount of RMB1,500,000,000.
Under the terms and conditions of the 2020 First Domestic Perpetual Securities (the "2020 First Domestic Perpetual Securities T&Cs"), the holders of the 2020 First Domestic Perpetual Securities have a right to receive distribution at the applicable distribution rate from 28 April 2020 annually in arrears. The distribution rate shall be (i) in respect of the period from, and including, 28 April 2020 to, but excluding, 28 April 2023, Initial Distribution Rate (as defined in the 2020 First Domestic Perpetual Securities T&Cs); and (ii) in respect of the periods from, and including, each Reset Date falling after 28 April 2020 to, but excluding, the immediately following Reset Date, the Relevant Reset Distribution Rate (as defined in the 2020 First Domestic Perpetual Securities T&Cs). A Reset Date is defined as each day falling every 3 calendar years after 28 April 2020.
Greentown Real Estate may at its sole discretion elect to defer any scheduled distribution to the next scheduled distribution payment date by giving prior written notice. Greentown Real Estate may further defer any arrears of distribution following the foregoing notice requirement and is not subject to any limits as to the number of times distributions and arrears of distribution can be deferred. Unless and until Greentown Real Estate satisfies in full all outstanding arrears of distribution and any additional distribution amount, Greentown Real Estate shall not declare or pay any dividends or reduce any share capital.
In the current interim period, the total interest in perpetual securities recognised as distribution is RMB646,240,000. The weighted average interest rate in perpetual securities is 6.49% as at 30 June 2020.
Greentown China Holdings Limited Interim Report 2020 061
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
25. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Fair value of the Group's financial assets and liabilities that are measured at fair value on a recurring basis
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (Levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.
- Level 1 fair value measurements are quoted prices (unadjusted) in active market for identical assets or liabilities;
- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Significant | ||||
Fair value | Valuation technique | unobservable | ||
Financial instrument | Fair value | hierarchy | and key inputs | inputs |
RMB'000 | ||||
Listed equity investment at | Assets: 1,158,285 | Level 1 | Quoted bid prices in |
FVTOCI | (31 December 2019: | an active market. | |
Assets: 1,058,755) | |||
Unquoted equity | Assets: 785,455 | Level 3 | Income approach - in |
investments at FVTOCI | (31 December 2019: | this approach, the | |
Assets: 453,230) | discounted cash | ||
flow method was | |||
used to capture the | |||
present value of | |||
the expected future | |||
economic benefits | |||
to be derived from | |||
the ownership of | |||
these investees. |
N/A
Long-termpre-tax operating margin taking into account management's experience and knowledge of market conditions of the specific industries, ranging from 2.8-36.3 per cent (2019: 2.8-36.3 per cent).
062 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
25. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)
Reconciliation of Level 3 fair value measurements of financial assets
Unquoted | |
equity | |
investments | |
RMB'000 | |
At 1 January 2019 | 545,520 |
Disposals | (12,791) |
At 30 June 2019 | 532,729 |
At 1 January 2020 | 453,230 |
Purchases | 479,710 |
Total losses in other comprehensive income | (19,485) |
Disposals | (128,000) |
At 30 June 2020 | 785,455 |
Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the condensed consolidated financial statements approximate their fair values:
As at 30 June 2020 | As at 31 December 2019 | |||
Carrying | Carrying | |||
amount of | amount of | |||
liability | liability | |||
component | Fair value | component | Fair value | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Financial liabilities | ||||
Senior notes (Level 2) | 7,776,8801 | 7,794,4942 | 7,632,1191 | 7,719,2632 |
Corporate debt instruments (Level 2) | 27,297,7241 | 28,246,5832 | 25,905,3491 | 26,343,1322 |
Receipts under securitisation arrangements (Level 2) | 1,890,8991 | 1,900,0002 | 1,598,5301 | 1,600,0002 |
- The carrying amount of liability component represented the principle of the financial liability.
- Based on quoted price.
There were no transfer into or out of Level 2 during both period.
Greentown China Holdings Limited Interim Report 2020 063
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
26. SHARE-BASED PAYMENT TRANSACTIONS
Share Option Scheme
The Company has share option schemes for eligible employees of the Group. Outstanding share options of 67,750,000 are granted in prior year but not vested. Details of the share options outstanding during the current interim period are as follows:
Weighted | ||
Number of | average | |
share options | exercise price | |
HKD | ||
Outstanding as at 1 January 2020 | 67,750,000 | 9.00 |
Forfeited during the interim period | (6,100,000) | 9.10 |
Outstanding as at 30 June 2020 | 61,650,000 | 8.99 |
In the current interim period, no share options were granted or exercised.
In respect of the share options exercised for the six months ended 30 June 2019, the weighted average share price at the dates of exercise was HKD6.68.
Share Award Scheme
The Company has share award scheme for the selected employees of the Group. Outstanding shares of 7,414,000 have been purchased by the trustee from the open market out of cash contributed by the Group and granted to the selected employees and directors.
In the current interim period, 3,600,722 shares were exercised (for the six months ended 30 June 2019: nil).
064 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
27. ACQUISITION OF SUBSIDIARIES
Particulars of the subsidiaries acquired during the six months ended 30 June 2020 were as follows:
Equity | ||||
interest | ||||
Acquired company | Principal activities | Acquisition date | acquired | Consideration |
RMB'000 | ||||
大連寶融房地產開發 | Real estate development | 12 June 2020 | 88% | 354,790 |
有限公司 | ||||
Dalian Baorong Real Estate | ||||
Development Co., Ltd. | ||||
("Dalian Baorong") (Note(i)) | ||||
烏魯木齊聚岑實業有限責任 | Real estate development | 29 June 2020 | 100% | 103,573 |
公司
Urumqi Jucen Industrial
Co., Ltd.
("Urumqi Jucen") (Note(ii))
458,363
Notes:
- Beijing Greentown Investment Co., Ltd., a wholly-owned subsidiary of the Company, acquired 88% equity interests of Dalian Baorong so as to continue the expansion of the Group's property development operation.
- Chengdu Greentown Bashu Investment Co., Ltd., a wholly-owned subsidiary of the Company, acquired 100% equity interests of Urumqi Jucen so as to continue the expansion of the Group's property development operation. The Group accounted for the acquisition of 100% equity interests of Urumqi Jucen as an acquisition of asset. The major assets acquired is properties for development amounting to RMB856,522,000.
Greentown China Holdings Limited Interim Report 2020 065
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
27. ACQUISITION OF SUBSIDIARIES (continued)
Particulars of the subsidiaries acquired during the six months ended 30 June 2019 were as follows:
Equity | ||||
interest | ||||
Acquired company | Principal activities | Acquisition date | acquired | Consideration |
RMB'000 | ||||
山東東城置業有限公司 | Real estate development | 21 February 2019 | 51% | 397,968 |
Shandong Dongcheng Real | ||||
Estate Co., Ltd. | ||||
("Shandong Dongcheng") | ||||
(Note(i)) | ||||
山東綠城青和建築設計 | Design and Decoration | 6 March 2019 | 51% | - |
有限公司 | ||||
Shandong Greentown Qinghe | ||||
Construction and Design | ||||
Co., Ltd. | ||||
("Shandong Qinghe") | ||||
(Note(ii)) | ||||
北京東部綠城置業有限公司 | Real estate development | 22 April 2019 | 51% | 45,262 |
Beijing Dongbu Greentown | ||||
Real Estate Co., Ltd. | ||||
("Beijing Dongbu") (Note(iii)) | ||||
443,230 | ||||
Notes:
- Greentown Real Estate acquired 51% equity interests of Shandong Dongcheng so as to continue the expansion of the Group's property development operation. Shandong Dongcheng was previously a 49%-owned joint venture of the Group.
- Greentown Real Estate Project Management Group Co., Ltd., a wholly-owned subsidiary of the Company, obtained 51% equity interest of Shandong Qinghe by capital injection of RMB3,120,000 so as to continue the expansion of the Group's design and decoration operation.
- Beijing Greentown Investment Co., Ltd., a wholly-owned subsidiary of the Company, acquired 51% equity interests of Beijing Dongbu so as to continue the expansion of the Group's property development operation. Beijing Dongbu was previously a 49%-owned associate of the Group.
066 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
27. ACQUISITION OF SUBSIDIARIES (continued)
A summary of the provisional effects of acquisition of these subsidiaries is as follows:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Net assets acquired: | ||
Property, plant and equipment | 134 | 483 |
Deferred tax assets | 8,567 | 70 |
Properties for development | 856,522 | - |
Properties under development | 912,743 | 2,587,629 |
Completed properties for sale | - | 93,983 |
Trade and other receivables, deposits and prepayments | 300 | 21,451 |
Amounts due from related parties | - | 781,311 |
Prepaid income taxes | 2,583 | 59 |
Prepaid other taxes | 22,394 | 1,854 |
Bank balances and cash | 15,594 | 203,524 |
Trade and other payables | (760,773) | (218,760) |
Contract liabilities | (122,687) | (10,863) |
Amounts due to related parties | (38,076) | (1,039,152) |
Income taxes payable | (221) | (168,936) |
Other taxes payable | (11,126) | (24) |
Bank and other borrowings | (294,000) | (1,320,000) |
Deferred tax liabilities | (85,211) | (60,878) |
506,743 | 871,751 | |
Non-controlling interests | (48,380) | (2,672) |
458,363 | 869,079 | |
Greentown China Holdings Limited Interim Report 2020 067
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
27. ACQUISITION OF SUBSIDIARIES (continued)
A summary of the provisional effects of acquisition of these subsidiaries is as follows: (continued)
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Less: | ||
Transferred from interests previously | ||
held and classified as associates | ||
and joint ventures | - | (382,362) |
Gain on re-measurement of an associate | ||
to acquisition date | ||
fair value in business combination | ||
achieved in stages | - | (43,487) |
458,363 | 443,230 | |
Total consideration, satisfied by: | ||
Cash | 297,172 | 45,262 |
Consideration payables | 161,191 | 397,968 |
458,363 | 443,230 | |
Net cash inflow arising on acquisition: | ||
Cash paid | (297,172) | (45,262) |
Bank balances and cash acquired | 15,594 | 203,524 |
(281,578) | 158,262 | |
The receivables acquired (which principally comprised trade and other receivables, deposits and prepayments) with a fair value of RMB300,000 at the date of acquisition had gross contractual amounts of RMB300,000, which were expected to be fully collected.
The non-controlling interest recognised at the acquisition date was measured by reference to the proportionate share of the recognised amounts of net assets of subsidiaries and amounted to RMB48,380,000.
No revenue contributed to the Group by a subsidiary acquired between the date of acquisition and the end of the interim period.
068 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
27. ACQUISITION OF SUBSIDIARIES (continued)
A summary of the provisional effects of acquisition of these subsidiaries is as follows: (continued)
The profits attributable to a subsidiary amounted to RMB1,000 have been recognised in the Group's profit for the interim period between the date of acquisition and the end of the interim period.
Had the acquisition of a subsidiary been effected at 1 January 2020, the total amount of revenue of the Group for the interim period would have been RMB23,916,001,000 and the amount of the profit for the interim period would have been RMB3,126,278,000. The proforma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed at the beginning of the interim period, nor is it intended to be a projection of future results.
Analysis of the summary of effects of acquisition of subsidiaries for the six months ended 30 June 2019 are set out in the Group's condensed consolidated financial statements for the six months ended 30 June 2019. During the year ended 31 December 2019, the Group completed the initial accounting of the business combination and no adjustments were made to the fair value of assets and liabilities acquired.
28. DISPOSAL OF SUBSIDIARIES
In April 2020, the Group disposed of its 100% equity interests in Hangzhou Chengling Business Consulting, LLP. ("Hangzhou Chengling") to an independent third party and one of the Group's joint venture for a zero consideration. After the disposal, Hangzhou Chengling was an independent third party of the Group.
In June 2020, the Group disposed of its 1% equity interests from 51% to 50% in Hangzhou Zhaoqian Investment Co., Ltd. ("Hangzhou Zhaoqian") to an independent third party for a cash consideration of RMB10,000,000. Fuzhou Lvmin Real Estate Co., Ltd. ("Fuzhou Lvmin") is a wholly-owned subsidiary of Hangzhou Zhaoqian, therefore was also disposed by the Group. After the disposal, Hangzhou Zhaoqian and Fuzhou Lvmin were accounted for as joint ventures of the Group.
Greentown China Holdings Limited Interim Report 2020 069
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
28. DISPOSAL OF SUBSIDIARIES (continued)
A summary of the effects of the disposal of these subsidiaries is as follows:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Net assets disposed of: | ||
Property, plant and equipment | 910 | 3,131 |
Right-of-use assets | - | 8,553 |
Properties for development | - | 2,889,488 |
Properties under development | 3,625,518 | 5,227,990 |
Inventories | - | 80,247 |
Trade and other receivables, deposits and prepayments | 656 | 225,788 |
Amounts due from related parties | 250 | 459,830 |
Contract assets | 7,084 | 80,216 |
Prepaid income taxes | 12,204 | 34,993 |
Prepaid other taxes | 51,146 | 118,200 |
Bank balances and cash | 481,388 | 848,635 |
Deferred tax assets | 18,275 | 18,744 |
Contract liabilities | (496,036) | (1,451,799) |
Trade and other payables | (114,462) | (1,893,785) |
Amounts due to related parties | (827,023) | (3,970,846) |
Lease liability | - | (8,553) |
Income taxes payables | - | (32,357) |
Other taxes payables | (44,728) | (10,097) |
Bank borrowings | (1,770,000) | (2,503,000) |
Deferred tax liabilities | - | (860) |
945,182 | 124,518 | |
Transferred to interests held and classified as associates and joint ventures | (500,000) | (14,162) |
Net gain on disposal of subsidiaries | 27,957 | 42,371 |
Non-controlling interests | (463,139) | (26,988) |
Total consideration | 10,000 | 125,739 |
Total consideration, satisfied by: | ||
Cash received | 10,000 | 93,220 |
Consideration receivable | - | 32,519 |
10,000 | 125,739 | |
Net cash inflow arising on disposal: | ||
Cash received | 10,000 | 93,220 |
Bank balances and cash disposed of | (481,388) | (848,635) |
(471,388) | (755,415) | |
070 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
29. COMMITMENTS
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Commitments contracted for but not provided in the | ||
condensed consolidated financial statements in respect of: | ||
Properties for development, properties under development and construction in progress | 38,731,558 | 30,768,717 |
In addition to the above, the Group's share of the commitments of its joint ventures is as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Contracted for but not provided in respect of properties for | ||
development and properties under development and construction in progress | 4,519,667 | 2,923,622 |
30. PLEDGE OF ASSETS
At the end of the interim period, the following assets were pledged to banks and other parties to secure credit facilities granted to the Group:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Property, plant and equipment | 6,521,300 | 3,063,257 |
Right-of-use assets | 546,419 | 360,381 |
Properties for development | 2,628,710 | 2,504,272 |
Properties under development | 75,162,242 | 81,984,914 |
Completed properties for sale | 188,667 | 76,563 |
Investment properties | 2,355,701 | 2,355,701 |
Trade and other receivables, deposits and prepayments | 16,479 | 123,642 |
Pledged bank deposits | 6,276,370 | 5,326,761 |
Interests in an associate | 55,790 | 72,355 |
93,751,678 | 95,867,846 | |
Greentown China Holdings Limited Interim Report 2020 071
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
31. CONTINGENT LIABILITIES
Guarantees
The Group provided guarantees of RMB33,287,696,000 as at 30 June 2020 (as at 31 December 2019: RMB35,651,192,000) to banks in favour of its customers in respect of the mortgage loans provided by the banks to those customers for the purchase of the Group's developed properties. These guarantees provided by the Group to the banks will be released upon receiving the building ownership certificate of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.
The Group also provided guarantees to banks and other parties in respect of credit facilities utilised by the following companies:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Credit guarantees provided to: | ||
Associates | 9,378,647 | 8,199,419 |
Joint ventures | 12,819,000 | 12,879,126 |
22,197,647 | 21,078,545 | |
Mortgage and charge guarantees provided to: | ||
Associates | 5,225,000 | 4,275,000 |
Total | 27,422,647 | 25,353,545 |
Contingent liabilities arising from interests in associates at the end of the interim period: | ||
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Share of mortgage loan guarantees provided | ||
by associates to banks in favour of its customers | 3,282,978 | 2,170,782 |
Contingent liabilities arising from interests in joint ventures at the end of the interim period: | ||
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Share of mortgage loan guarantees provided | ||
by joint ventures to banks in favour of its customers | 1,770,527 | 1,445,244 |
The directors consider that the fair value of the above guarantees is insignificant on initial recognition and there was no loss allowance recognised for expected credit losses during the interim period (2019: nil).
072 Greentown China Holdings Limited Interim Report 2020
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
32. RELATED PARTY DISCLOSURES
- During the six months ended 30 June 2020, in addition to those disclosed in other notes to the condensed consolidated financial statements, the Group had the following significant transactions with related parties:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Construction service income from joint ventures and associates (note) | 9,876 | 13,845 |
Rental expenses paid/payable to Shareholders' companies | - | 3,329 |
Purchases from associates (note) | 163,574 | 75,500 |
Interest income arising from amounts due from: | ||
- associates (note) | 516,195 | 130,884 |
- joint ventures (note) | 526,759 | 167,844 |
- non-controlling shareholders | 140,319 | 99,947 |
Interest expense arising from amounts due to: | ||
- associates (note) | 330,322 | 50,827 |
- joint ventures (note) | 222,536 | 50,143 |
- non-controlling shareholders | 50,323 | 64,533 |
- Shareholders' companies | 13,654 | 5,280 |
Advertising expenses paid/payable to joint ventures (note) | 57,075 | 51,887 |
Comprehensive service income from joint ventures and associates (note) | 79,000 | 3,489 |
Hotel management fees paid/payable to Shareholders' companies | - | 1,313 |
Interior decoration service income from: | ||
- associates (note) | 164,630 | 105,670 |
- joint ventures (note) | 111,961 | 56,186 |
Landscape construction fee to Shareholders' companies | 11,691 | 195 |
Educational services framework fee to Shareholders' companies | 1,042 | 2,476 |
Construction design fees paid to: | ||
- associates (note) | 58,486 | 9,091 |
- joint ventures (note) | 235,938 | 248,331 |
- Shareholders' companies | 175,679 | 16,253 |
Note: The transactions with joint ventures and associates are presented gross before elimination of unrealised profits or losses attributable to the Group. The transactions above are presented net of taxes.
The directors considered that the transactions above were carried out in accordance with the terms agreed with the counterparties.
Before May 2020, CCCG was a "Shareholder" of the Company. After May 2020, CCCG and Xinhu Zhongbao Co., Ltd. are each a "Shareholder", and collectively the "Shareholders", of the Company. Shareholders' Companies represent companies owned by the Shareholders and affiliates.
Greentown China Holdings Limited Interim Report 2020 073
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
32. RELATED PARTY DISCLOSURES (continued)
- During the six months ended 30 June 2020, in addition to those disclosed in note 27, the Group made the following acquisitions from related parties:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Acquisitions of additional interests in subsidiaries | ||
from non-controlling shareholders | 95,134 | 97,567 |
- Compensation of key management personnel
The remuneration of directors and other members of key management during the six months ended 30 June 2020 was as follows:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Short-term benefits | 17,296 | 12,983 |
Post-employment benefits | 213 | 154 |
Share-based payment (note) | 5,148 | 20,998 |
Share award | 3,206 | 849 |
25,863 | 34,984 | |
Note: | The Group recognised the expense in the profit or loss in relation to shares granted but not vested under share option schemes. |
33. EVENTS AFTER THE REPORTING PERIOD
Since 10 July 2020, Greentown Management Holdings Company Limited ("Greentown Management"), a subsidiary of the Company, has listed its shares on the Main Board of The Stock Exchange of Hong Kong Limited. The total of 477,560,000 ordinary shares before any exercise of the over-allotment option were allotted and issued to the shareholders on the register of members of Greentown Management in proportion to their respective shareholdings in Greentown Management of HKD0.01 each at the price of HKD2.50 per share. On 6 August 2020, Greentown Management issued a total of 47,756,000 ordinary shares of HKD0.01 each at the price of HKD2.50 per share by means of full exercise of the over-allotment option. Net proceeds from the Hong Kong public offering and international offering after full exercise of the over-allotment option which were approximately HKD1,258.8 million (after deducting the underwriting fees, commissions and sponsors expenses).
074 Greentown China Holdings Limited Interim Report 2020
D e f i n i t i o n
In this interim report, unless the context otherwise requires, the following expressions have the following meanings:
2006 Share Option Scheme | The share option scheme adopted by a resolution of the shareholders of the Company on 22 June |
2006 | |
Board | The Board of Directors of the Company |
CCCC | China Communications Construction Company Limited, a joint stock limited company incorporated |
in the PRC with limited liability, whose H shares and A shares are listed on the Stock Exchange and | |
the Shanghai Stock Exchange respectively | |
CCCG | China Communications Construction Group (Limited) (中國交通建設集團有限公司), a wholly state- |
owned company established in the PRC and a substantial Shareholder of the Company | |
Company/Greentown/ | Greentown China Holdings Limited, a company incorporated in the Cayman Islands with limited |
Greentown China | liability, the shares of which are listed on the Main Board of the Stock Exchange |
Directors | The directors of the Company |
GFA | Gross floor area |
Greentown Group | Greentown China Holdings Limited and its subsidiaries together with its joint ventures and associates |
Greentown Management | Greentown Management Holdings Company Limited (綠城管理控股有限公司), a corporation |
incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main | |
Board of the Stock Exchange (stock code: 09979) | |
Greentown Real Estate | Greentown Real Estate Group Co., Ltd.* (綠城房地產集團有限公司), a company established in the |
PRC and a wholly owned subsidiary of the Company | |
Greentown Service | Greentown Service Group Co. Ltd. (綠城服務集團有限公司), a corporation incorporated in the |
Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock | |
Exchange (stock code: 02869) | |
Group | Greentown China Holdings Limited and its subsidiaries |
Listing Rules | The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited |
Model Code | Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to |
the Listing Rules | |
Period/Reporting Period | The six months ended 30 June 2020 |
PRC/China | The People's Republic of China |
Greentown China Holdings Limited Interim Report 2020 075
Definition
SFO | Securities and Futures Ordinance, Chapter 571 of the laws of Hong Kong |
Share Option Scheme | The share option scheme adopted by a resolution of the shareholders of the Company on 17 June |
2016 | |
Shares | The shares of the Company |
Sqm | Square metres |
Stock Exchange/HKEx | The Stock Exchange of Hong Kong Limited |
Wharf | The Wharf (Holdings) Limited, a company incorporated in Hong Kong with limited liability, the shares |
of which are listed on the Main Board of the Stock Exchange (stock code: 00004) | |
Xinhu Zhongbao | Xinhu Zhongbao Co., Ltd. (新湖中寶股份有限公司), a company established in the PRC with limited |
liability, being a company listed on Shanghai Stock Exchange (Stock Code: 600208) | |
* For identification purposes only |
076 Greentown China Holdings Limited Interim Report 2020
GREENTOWN CHINA HOLDINGS LIMITED | 綠城中國控股有限公司 |
HANGZHOU HEADQUARTERS | 杭州總部 |
10/F, Block A, Century Plaza, No.1 Hangda Road, | 中國浙江省杭州市杭大路 1 號 , |
Hangzhou, Zhejiang, PRC (Postcode: 310007) | 黃龍世紀廣場 A 座 10 樓 (郵編 : 310007) |
Tel: (86-571) 8898 8888 Fax: (86-571) 8790 1717 | 電話 : (86-571) 8898 8888 傳真 : (86-571) 8790 1717 |
HONG KONG OFFICE | 香港辦事處 |
Rm 1406-1408, New World Tower 1, | 香港中環皇后大道中 16-18 號 , |
16-18 Queen's Road Central, Hong Kong | 新世界大廈 1 期 14 樓 1406-1408室 |
Tel: (852) 2523 3138 Fax: (852) 2523 6608 | 電話 : (852) 2523 3138 傳真 : (852) 2523 6608 |
www.chinagreentown.com | www.chinagreentown.com |
For more information,
please follow Greentown's official WeChat page
敬請關注綠城官方微信公眾號
獲取公司更多資料
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Greentown China Holdings Limited published this content on 21 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2020 09:34:08 UTC
