上实城市开发(00563) - 2020 - 中期财报

Company Information This chapter provides fundamental company information for Shanghai Industrial Urban Development Group Co., Ltd., including board members, company secretary, registered office, principal place of business in Hong Kong, principal bankers, auditors, and listing details - Board members include Huang Haiping (Chairman), Zhou Xiong (Vice Chairman and President) as executive directors, and Du Huikai, Fan Renda, Li Jiahui, Qiao Zhigang as independent non-executive directors[8] - The company secretary is Chan Kin Chu, and the auditor is Deloitte Touche Tohmatsu[8][9] - The company's shares are listed on The Stock Exchange of Hong Kong Limited under stock code 563[8] Financial Highlights This chapter outlines key financial data for the six months ended June 30, 2020, showing a significant year-on-year decrease in revenue and profit attributable to shareholders, while presale proceeds increased, and the net gearing ratio rose with a slight decline in the current ratio Financial Highlights for the Six Months Ended June 30 (HK$ Thousand) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 3,172,823 | 4,603,326 | | Profit attributable to owners of the Company | 151,041 | 310,678 | | Earnings per share — Basic (HK cents) | 3.14 | 6.46 | | Earnings per share — Diluted (HK cents) | 3.14 | 6.46 | Financial Position Highlights (HK$ Thousand) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Presale proceeds received from property sales | 6,297,051 | 6,004,601 | | Net gearing ratio (%) | 42.5% | 29.1% | | Current ratio | 1.8 | 1.9 | - The net gearing ratio increased from 29.1% at the end of 2019 to 42.5% as of June 30, 2020, while the current ratio slightly decreased from 1.9 to 1.8[11] Chairman's Report The Chairman's Report reviews the operating performance in the first half of 2020 amidst the COVID-19 pandemic, highlighting the company's significant contract sales and high gross profit margin despite challenges, and its proactive response through online sales, land reserve expansion, and commercial project completion, while emphasizing its positioning as an urban core area operator and future plans to drive sales and explore diversified business formats for greater value creation - In the first half of 2020, the Group's total revenue reached HK$3.173 billion, contract sales recorded RMB3.706 billion, profit after tax was HK$355 million, profit attributable to shareholders was HK$151 million, and the gross profit margin was as high as 45.1%[15] - In response to the pandemic, the company adapted flexibly, offering 'online property viewing' sales services in Shanghai and other cities, which received positive market feedback[16] - Jointly with Shanghai Aerospace and Hongyi Group, the company successfully bid for the xh221–01 plot in Hongmei Street, Xuhui District, Shanghai, with a total transaction price of RMB4.628 billion, planned for scientific research land, rental housing, and underground commercial areas[17] - Awarded '18th among Top 100 Commercial Real Estate Enterprises' in the '2020 China Commercial Top 100 List', with multiple projects receiving accolades[17] - Looking ahead to the second half, the company will actively promote sales, explore diversified business formats, and vigorously develop real estate finance and commercial asset investment and operation[18] Management Discussion and Analysis This chapter provides a detailed analysis of the real estate market environment and the Group's business performance in the first half of 2020, noting that despite the pandemic, the Group achieved contract sales growth through online sales and high-end projects, made progress in property development, investment properties, and land reserves, while financially, revenue and profit declined, but gross profit margin improved, liquidity remained ample, and corporate bonds were successfully issued, with future focus on core areas of hot cities and diversified business development - The real estate market was impacted by the COVID-19 pandemic, with the central government adhering to the 'housing is for living, not for speculation' principle, local governments implementing city-specific policies, and first and second-tier city markets rapidly recovering in the second quarter[23] - The Group promoted online property viewing and sales, with strong sales for high-end flagship projects, developing around four core business segments: 'residential property development + investment property development + urban renewal services + industrial-financial capital cooperation'[24] Contract Sales Performance | Metric | H1 2020 | H1 2019 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Contract sales amount (RMB) | 3,706,390,000 | 3,414,670,000 | +8.5% | | Total contract sales area (sqm) | 64,000 | 99,000 | -35.4% | | Average selling price (RMB/sqm) | 57,900 | 34,500 | +67.8% | - During the period, approximately 110,300 square meters were delivered, mainly for Shanghai Wanyuancheng, Xi'an ZiranJie, and Shanghai Dangdai Yishu[26] - Total investment property area was approximately 816,000 square meters, with rental income decreasing by 22.9% year-on-year to HK$290,288,000, primarily due to rent reduction policies during the pandemic[27] Financial Performance Summary (HK$ Thousand) | Metric | H1 2020 | H1 2019 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 3,172,823 | 4,603,326 | -31.1% | | Property sales revenue | 2,829,760 | 4,085,037 | -30.7% | | Gross profit | 1,432,178 | 1,961,763 | -27.0% | | Gross profit margin | 45.1% | 42.6% | +2.5 percentage points | | Net fair value gain on investment properties | 173,682 | 201,921 | -14.0% | | Distribution and selling expenses | 99,200 | 138,506 | -28.4% | | General and administrative expenses | 187,727 | 166,938 | +12.5% | | Profit | 355,072 | 765,162 | -53.6% | | Profit attributable to shareholders | 151,041 | 310,678 | -51.4% | | Basic and diluted earnings per share (HK cents) | 3.14 | 6.46 | -51.4% | - Bank balances and cash amounted to HK$7,740,449,000, the net gearing ratio increased from 29.1% at the end of last year to 42.5%, and the current ratio slightly decreased to 1.8 times[38] - Successfully issued RMB550 million corporate bonds with a coupon rate of 3.49%, used for repaying corporate bonds[38] - Added the xh221–01 plot in Hongmei Street, Xuhui District, Shanghai, with a future saleable planned gross floor area of approximately 3.71 million square meters, supporting 3 to 5 years of future development[44] Project Information This chapter outlines the Group's 26 real estate projects across 11 major cities in China, including mid-to-high-end residential, serviced apartments, commercial, and office properties, with a total future saleable land reserve of approximately 3.71 million square meters as of June 30, 2020, and details of major investment properties - The Group owns 26 projects in 11 cities in China, including mid-to-high-end residential, serviced apartments, commercial, and office properties[47] - As of June 30, 2020, the total future saleable land reserve was approximately 3.71 million square meters[47][48] Overview of Major Projects (As of June 30, 2020) | Project | City | Site Area (sqm) | Planned GFA (sqm) | Future Saleable (sqm) | | :--- | :--- | :--- | :--- | :--- | | Wanyuancheng | Shanghai | 943,000 | 1,226,298 | 90,327 | | Binjiang Chenkai Center | Shanghai | 77,371 | 525,888 | 324,600 | | TODTOWN TIANHUI | Shanghai | 117,825 | 605,000 | 329,095 | | Dangdai Meishu (Chenkai Yunwai) | Shanghai | 120,512 | 191,636 | 42,116 | | ZiranJie | Xi'an | 2,101,967 | 3,899,867 | 745,882 | | Senlinhai | Changsha | 679,620 | 1,032,534 | 711,757 | | Total | | 5,853,038 | 13,170,320 | 3,713,063 | Major Investment Properties (As of June 30, 2020) | Project | City | Property Type | Planned GFA (sqm) | | :--- | :--- | :--- | :--- | | Shanghai Youth City | Shanghai | Commercial | 16,349 | | Shanghai Mart | Shanghai | Exhibition, trading market, office and car park | 284,651 | | Chenkai International Tower | Shanghai | Office | 45,239 | | Binjiang Chenkai Center Plot 1 | Shanghai | Office | 25,845 | | Chengshangcheng | Chongqing | Commercial, office and car park | 285,264 | | Total | | | 815,531 | Introduction to Major Projects in China This chapter provides detailed introductions to the Group's key projects across major Chinese cities, including Wanyuancheng, Binjiang Chenkai Center, TODTOWN Tianhui, Dangdai Yishu, Dangdai Meishu, Shanghai Mart, Shanghai Jingcheng, and Chengxing projects in Shanghai; Yantai projects; Youth Apartment, Xidiaoyutai Yuxi in Beijing; Laochengxiang in Tianjin; Shenyang Chenkai Center in Shenyang; Youzhan, Kuncheng Dijinyuan in Kunshan; Shanghai Central Chenkai International in Wuxi; and ZiranJie in Xi'an, showcasing the Group's diversified layout across different cities and property types with addresses, categories, and key features for each project - The Shanghai Wanyuancheng project, located in Minhang District, is a large-scale key residential base, encompassing international apartments, detached villas, garden houses, large-flat luxury residences, modern commercial properties, and green parks[54] - The Binjiang Chenkai Center, situated in the Xuhui Riverside commercial district, is planned for comprehensive commercial use, with some completed properties for sale and rental[55] - TODTOWN Tianhui is an advanced TOD project in Shanghai, an 'aerial city' integrating residential, commercial, and leisure functions, with access to multiple rail transit lines[57] - The Beijing Xidiaoyutai Yuxi project, located on West Third Ring Road adjacent to Kunyu River, enjoys rare riverside views, primarily featuring riverside luxury residences as its core product[77] - The Xi'an ZiranJie project, located in the core area of Chanba Ecological District, is the premier ecological development in Northwest China, with diverse planned plots and comprehensive supporting facilities[95] Other Information This chapter covers the Group's corporate governance, dividend policy, securities transactions, specific covenants in loan agreements, disclosure of interests of directors and substantial shareholders, and changes in directors' information, noting no interim dividend was declared for the first half of 2020, compliance with corporate governance code, and disclosure of controlling shareholders' holdings and board changes - The Board did not recommend the payment of any interim dividend for the six months ended June 30, 2020[97] - The company complied with the code provisions of the Corporate Governance Code in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[100] - Loan agreements stipulate that controlling shareholders Shanghai Industrial Holdings Limited and/or Shanghai Industrial (Group) Co., Ltd. must collectively directly or indirectly own not less than 51% of the total share capital of the Company and maintain management control[102][103] Directors' and Chief Executive's Interests in Shares and Underlying Shares of the Company (As of June 30, 2020) | Name of Director | Capacity | Number of underlying shares in respect of share options granted | Approximate percentage of the Company's issued share capital | | :--- | :--- | :--- | :--- | | Ye Weiqi | Beneficial owner | 6,000,000 | 0.12% | | Zhong Tao | Beneficial owner | 6,000,000 | 0.12% | | Du Huikai, JP | Beneficial owner | 1,000,000 | 0.02% | | Fan Renda | Beneficial owner | 1,000,000 | 0.02% | | Li Jiahui | Beneficial owner | 1,000,000 | 0.02% | Substantial Shareholders' Interests in Shares and Underlying Shares of the Company (As of June 30, 2020) | Name of Substantial Shareholder | Capacity | Number of shares in the Company held | Approximate percentage of the Company's issued share capital | | :--- | :--- | :--- | :--- | | SIHL | Held by controlled corporations | 2,328,671,400(L) | 48.45% | | SIIC Group | Held by controlled corporations | 3,106,296,148(L) | 64.63% | - Mr. Zeng Ming resigned as Chairman of the Board, Executive Director, and Chairman of the Nomination Committee, Mr. Fei Zuoxiang resigned as Executive Director, and Mr. Huang Haiping was appointed as Chairman of the Board, Executive Director, and Chairman of the Nomination Committee, all effective from May 18, 2020[120][121][122] Review Report on Condensed Consolidated Financial Statements Deloitte Touche Tohmatsu reviewed the condensed consolidated financial statements of Shanghai Industrial Urban Development Group Co., Ltd. for the six months ended June 30, 2020, concluding that nothing came to their attention that caused them to believe the condensed consolidated financial statements were not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 - The auditor is Deloitte Touche Tohmatsu, and the scope of review is based on Hong Kong Standard on Review Engagements 2410[127][129] - The review concluded that the condensed consolidated financial statements have been prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[128] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's profit or loss and other comprehensive income for the six months ended June 30, 2020, showing a 31.1% year-on-year decrease in total revenue and a 53.6% significant year-on-year decline in profit for the period, primarily due to reduced revenue from goods and services and exchange differences, resulting in a negative total comprehensive expense for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (HK$ Thousand) | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Total revenue | 3,172,823 | 4,603,326 | | Cost of sales | (1,740,645) | (2,641,563) | | Gross profit | 1,432,178 | 1,961,763 | | Profit before tax | 1,050,375 | 1,626,661 | | Income tax expense | (695,303) | (861,499) | | Profit for the period | 355,072 | 765,162 | | Profit for the period attributable to owners of the Company | 151,041 | 310,678 | | Profit for the period attributable to non-controlling interests | 204,031 | 454,484 | | Basic and diluted earnings per share (HK cents) | 3.14 | 6.46 | Total Other Comprehensive Income (Expense) for the Period (HK$ Thousand) | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Exchange differences on translation from functional currency to presentation currency | (453,884) | (5,359) | | Fair value gain on equity instruments at fair value through other comprehensive income (net of tax) | 17,587 | 15,693 | | Total comprehensive (expense) income for the period | (81,225) | 775,496 | | Total comprehensive (expense) income for the period attributable to owners of the Company | (87,246) | 314,564 | | Total comprehensive (expense) income for the period attributable to non-controlling interests | 6,021 | 460,932 | Condensed Consolidated Statement of Financial Position This statement presents the Group's financial position as of June 30, 2020, showing an increase in non-current assets primarily due to growth in investment properties and interests in joint ventures, a slight decrease in current assets mainly from reduced properties under development for sale and properties held for sale, relatively stable total liabilities, and a slight decrease in total equity Condensed Consolidated Statement of Financial Position (HK$ Thousand) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Non-current assets | | | | Investment properties | 16,102,337 | 14,803,258 | | Interests in joint ventures | 2,278,710 | 615,213 | | Current assets | | | | Properties under development for sale and properties held for sale | 27,490,440 | 28,952,836 | | Bank balances and cash | 7,740,449 | 9,111,782 | | Current liabilities | | | | Presale proceeds received from property sales | 6,297,051 | 6,004,601 | | Bank and other borrowings (current) | 5,411,120 | 5,426,344 | | Non-current liabilities | | | | Bank and other borrowings (non-current) | 12,566,204 | 11,285,958 | | Equity attributable to owners of the Company | 12,964,136 | 13,249,553 | | Non-controlling interests | 10,274,375 | 10,532,073 | - Total non-current assets increased by 14.7% to HK$23,559,322 thousand, primarily due to an 8.8% increase in investment properties and a significant 270.4% growth in interests in joint ventures[136] - Total current assets decreased by 8.7% to HK$36,437,206 thousand, with properties under development for sale and properties held for sale decreasing by 5.1%, and bank balances and cash decreasing by 15.0%[136] - Equity attributable to owners of the Company and non-controlling interests both slightly decreased, leading to a 2.3% reduction in total equity to HK$23,238,511 thousand[138] Condensed Consolidated Statement of Changes in Equity This statement details the changes in the Group's equity for the six months ended June 30, 2020, showing a negative total comprehensive expense attributable to owners of the Company and a positive total comprehensive income attributable to non-controlling interests, with HK$600 million transferred from the share premium account to the contributed surplus account to increase distributable reserves Summary of Changes in Equity (HK$ Thousand) | Metric | H1 2020 | | :--- | :--- | | At January 1, 2020 (audited) | 23,781,626 | | Profit for the period | 355,072 | | Exchange differences on translation from functional currency to presentation currency | (453,884) | | Fair value gain on equity instruments at fair value through other comprehensive income | 17,587 | | Total comprehensive expense for the period | (81,225) | | Transfer to distributable reserves | — | | Dividends recognised as distribution | (197,058) | | Dividends declared to non-controlling interests | (264,832) | | At June 30, 2020 (unaudited) | 23,238,511 | - Total comprehensive expense attributable to owners of the Company was HK$(87,246) thousand, while total comprehensive income attributable to non-controlling interests was HK$6,021 thousand[142] - Pursuant to a special resolution, HK$600,000,000 was transferred from the share premium account to the contributed surplus account to increase distributable reserves[142][146] Condensed Consolidated Statement of Cash Flows This statement presents the Group's cash flows for the six months ended June 30, 2020, showing a significant increase in net cash used in operating activities and an increase in net cash used in investing activities, primarily due to investments in joint ventures, while net cash from financing activities significantly decreased, resulting in a net decrease in cash and cash equivalents for the period, negatively impacted by foreign currency exchange rate changes Condensed Consolidated Statement of Cash Flows (HK$ Thousand) | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | (218,867) | (34,100) | | Net cash used in investing activities | (1,098,450) | (927,984) | | Net cash from financing activities | 95,298 | 1,811,947 | | Net (decrease) increase in cash and cash equivalents | (1,222,019) | 849,863 | | Effect of foreign currency exchange rate changes | (149,314) | (26,963) | | Cash and cash equivalents at June 30 | 7,740,449 | 9,950,728 | - Net cash used in operating activities significantly increased from HK$(34,100) thousand in H1 2019 to HK$(218,867) thousand in H1 2020[149] - Net cash used in investing activities increased by 18.4%, primarily due to an investment of HK$1,680,104 thousand in joint ventures[149] - Net cash from financing activities significantly decreased from HK$1,811,947 thousand in H1 2019 to HK$95,298 thousand in H1 2020, despite a substantial increase in new bank and other borrowings[151] Notes to the Condensed Consolidated Financial Statements This chapter provides detailed notes to the condensed consolidated financial statements, covering the basis of preparation, significant impact of the COVID-19 pandemic, significant accounting policies, segment information, finance costs, income tax, earnings per share, movements in investment properties, amounts due from/to related companies, trade and other receivables and prepayments, trade and other payables and deferred income, bank and other borrowings, share capital, capital commitments, contingent liabilities, related party transactions, fair value measurement of financial instruments, and dividend information 1. Basis of Preparation The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and Appendix 16 of the Listing Rules[153] - The COVID-19 pandemic negatively impacted the global economy and the Group's operations, leading to reduced property sales, hotel operations, and rental income, but the Chinese government introduced fiscal measures and corporate support[153] - During the period, RMB1.5275 billion (approximately HK$1.6801 billion) was injected into a joint venture for the acquisition of a plot of land in Xuhui District, Shanghai[154] 2. Significant Accounting Policies The accounting policies used in these condensed consolidated financial statements for the interim period are consistent with those of the previous year, except for the application of amendments to Hong Kong Financial Reporting Standards, which include 'Definition of Materiality', 'Definition of a Business', and 'Interest Rate Benchmark Reform', but had no significant impact on the Group's financial position and performance - The accounting policies used in the preparation of the condensed consolidated financial statements are consistent with those applied in the annual financial statements for the year ended December 31, 2019, except for the application of amendments to Hong Kong Financial Reporting Standards[154] - Amendments to HKAS 1 and HKAS 8 'Definition of Materiality', HKFRS 3 'Definition of a Business', and HKFRS 9, HKAS 39 and HKFRS 7 'Interest Rate Benchmark Reform' were applied[155] - The application of these amendments had no significant impact on the condensed consolidated financial statements[159] 3A. Revenue from Contracts with Customers This chapter details the Group's revenue composition from contracts with customers, primarily from property sales, followed by hotel operations and property management, with revenue recognized mainly at a point in time, reflecting the characteristics of property sales Revenue from Contracts with Customers (HK$ Thousand) | Type of goods or services | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Property sales | 2,829,760 | 4,085,037 | | Hotel operations | 50,260 | 138,242 | | Property management | 2,515 | 3,377 | | Total | 2,882,535 | 4,226,656 | Timing of Revenue Recognition (HK$ Thousand) | Timing of revenue recognition | H1 2020 | H1 2019 | | :--- | :--- | :--- | | At a point in time | 2,829,760 | 4,085,037 | | Over time | 52,775 | 141,619 | | Total | 2,882,535 | 4,226,656 | - All revenue generated by the Group from contracts with customers originated from its operations in China[161] 3B. Segment Information This chapter presents the Group's business segment information, indicating that all operations are located in China, and all revenue and non-current assets (excluding certain property and equipment) are derived from and located in China, with no single customer contributing 10% or more to the Group's revenue during the reporting period - All of the Group's operations are located in China, and all revenue and non-current assets (excluding certain property and equipment) are derived from and located in China[163] - For the six months ended June 30, 2020 and 2019, no single customer contributed 10% or more to the Group's revenue[163] 4. Finance Costs This chapter presents the Group's finance costs, including interest on bank and other borrowings and lease liabilities, noting a slight decrease in total finance costs for the period, but also a reduction in amounts capitalized to properties under development for sale, leading to a slight increase in finance costs charged to profit or loss Finance Costs (HK$ Thousand) | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Interest on bank and other borrowings | 529,215 | 541,632 | | Interest on lease liabilities | 2,103 | 2,518 | | Total finance costs | 531,318 | 544,150 | | Less: Amount capitalized to properties under development for sale | (208,059) | (229,649) | | Finance costs charged to profit or loss | 323,259 | 314,501 | - For the six months ended June 30, 2020, borrowing costs arising from general pooled borrowings were capitalized to qualifying assets at an annual capitalization rate of 3.33% (H1 2019: 5.18%)[165] 5. Income Tax This chapter details the Group's income tax composition, including PRC Enterprise Income Tax, PRC Land Appreciation Tax, and PRC withholding tax on dividend income, noting a year-on-year decrease in total income tax for the period, mainly due to reductions in Enterprise Income Tax and Land Appreciation Tax, and clarifies relevant tax rates and exemptions Income Tax (HK$ Thousand) | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | PRC Enterprise Income Tax | 318,653 | 499,848 | | PRC Land Appreciation Tax | 393,717 | 668,705 | | PRC withholding tax on dividend income | 8,775 | — | | Deferred tax | (25,842) | (307,054) | | Income tax expense for the period | 695,303 | 861,499 | - The Enterprise Income Tax rate for PRC subsidiaries is 25%[167] - PRC Land Appreciation Tax is levied at progressive rates ranging from 30% to 60%, with sales of ordinary standard residential properties exempt under specific conditions[168] - The Group did not generate or derive any income in Hong Kong, thus no provision for Hong Kong Profits Tax was made[169] 6. Profit for the Period This chapter lists various expenses and income items deducted or included in calculating profit for the period, including depreciation of property, plant and equipment, depreciation of right-of-use assets, interest income from bank deposits, and net exchange losses Items Deducted from (Included in) Profit for the Period (HK$ Thousand) | Item | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 98,123 | 62,054 | | Depreciation of right-of-use assets | 19,591 | 18,018 | | Interest income from bank deposits (included in other income) | (46,492) | (40,575) | | Net exchange losses (gains) (included in net other expenses, gains and losses) | 10,952 | (3,221) | 7. Earnings Per Share This chapter explains the calculation of basic and diluted earnings per share, which were both 3.14 HK cents for the six months ended June 30, 2020, a decrease from the prior period, and no exercise of share options was assumed in calculating diluted earnings due to their exercise price being higher than the average market price Earnings Per Share Calculation Data | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company (HK$ Thousand) | 151,041 | 310,678 | | Weighted average number of ordinary shares (thousand shares) | 4,806,323 | 4,810,973 | | Basic and diluted earnings per share (HK cents) | 3.14 | 6.46 | - The calculation of diluted earnings per share for the current and comparative interim periods did not assume the exercise of the Company's share options, as their exercise price was higher than the average market price for both interim periods[172] 8. Movements in Investment Properties This chapter describes movements in the Group's investment properties, whose fair value as of June 30, 2020, was determined by independent valuer Cushman & Wakefield, with a net fair value gain of approximately HK$173.7 million recorded for the period, and the Group also transferred some properties held for sale to investment properties, generating a fair value gain of approximately HK$253.1 million - The fair value of investment properties was determined by independent valuer Cushman & Wakefield Limited, with a net fair value gain on investment properties of approximately HK$173,682,000 recorded for the period[173] - Subsequent expenditures of approximately HK$85,673,000 were incurred during the period[173] - Properties held for sale with a carrying amount of approximately HK$1,336,003,000 were transferred to investment properties, and a fair value gain of approximately HK$253,146,000 was recognized[174] 9. Amounts Due from (to) Related Companies This chapter details the Group's balances of amounts due from and to related parties, including joint ventures, entities controlled by Xuhui SASAC, non-controlling shareholders, and SIHL, with these amounts being diverse in nature, including trade and non-trade, some interest-bearing loans, and some interest-free and repayable on demand Amounts Due from (to) Related Companies (HK$ Thousand) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Amounts due from related companies recognized as current assets | | | | — Joint ventures | 11 | 336,499 | | — Entities controlled by Xuhui SASAC | 1,536 | — | | Amounts due to related companies recognized as current liabilities | | | | — Xuhui SASAC and entities controlled by Xuhui SASAC | 436,963 | 220,605 | | — Non-controlling shareholders | 188,617 | 386,224 | | — SIHL | 25,990 | 26,505 | | Amounts due to related companies recognized as non-current liabilities | | | | — A non-controlling shareholder | 61,305 | 61,794 | - Amounts due from joint ventures are non-trade in nature, interest-free, and unsecured, with RMB300.82 million (approximately HK$336.5 million) repaid to the Group during the period[179] - Amounts due to Xuhui SASAC and entities controlled by Xuhui SASAC include a trust loan of RMB200 million (approximately HK$219.4 million), bearing fixed annual interest rates ranging from 7.5% to 9.0%, repayable in June 2021[179] 10. Trade and Other Receivables and Prepayments This chapter provides a detailed breakdown of the Group's trade and other receivables and prepayments, with non-current portions primarily including loans receivable and prepayments for land acquisition, and current portions covering trade receivables, other receivables, advances to contractors, prepaid other taxes, and deposits and prepayments, also presenting an aging analysis of trade receivables Trade and Other Receivables and Prepayments (HK$ Thousand) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Recognized as non-current assets | | | | Loans receivable | 9,060 | 9,239 | | Prepayments for land acquisition | 711,967 | 726,063 | | Recognized as current assets | | | | Trade receivables (net of loss allowance) | 20,725 | 15,984 | | Other receivables | 330,473 | 226,832 | | Advances to contractors | 33,713 | 26,173 | | Prepaid other taxes | 327,323 | 364,719 | | Deposits and prepayments | 38,066 | 41,225 | - Non-current loans receivable of RMB8,260,000 (approximately HK$9,060,000) are repayable by December 31, 2021, bear a fixed annual interest rate of 5%, and are secured by the borrower's equity and guarantee[184] - Prepayments for land acquisition of RMB649,100,000 (approximately HK$711,967,000) have been fully paid for the development of a residential property in Shanghai[185] Aging Analysis of Trade Receivables (Net of Loss Allowance) (HK$ Thousand) | Aging | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | 0 to 90 days | 13,557 | 1,348 | | 91 to 180 days | 76 | 1,138 | | Over 180 days | 7,092 | 13,498 | | Total | 20,725 | 15,984 | 11. Trade and Other Payables and Deferred Income This chapter details the Group's trade and other payables and deferred income, with current liabilities including trade payables, bills payable, accrued expenses for properties under development for sale, interest payable, and other taxes payable, while non-current liabilities primarily consist of deferred income, and also discloses the progress of legal proceedings and settlement agreements related to the disposal of subsidiary Hunan Qian Shui Wan Trade and Other Payables and Deferred Income (HK$ Thousand) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Recognized as current liabilities | | | | Trade payables | 1,342,121 | 1,236,195 | | Bills payable | 92,043 | 632,627 | | Accrued expenses for properties under development for sale | 2,435,916 | 2,595,930 | | Interest payable | 154,271 | 90,924 | | Other taxes payable | 343,413 | 76,804 | | Recognized as non-current liabilities | | | | Deferred income | 4,423 | 4,853 | - Deposits of RMB191,100,000 (approximately HK$209,608,000) were received for the disposal of Hunan Qian Shui Wan[194] - A settlement was reached with Evergrande Changsha regarding the legal proceedings for the disposal of Hunan Qian Shui Wan, with Evergrande Changsha committing to continue fulfilling the agreement on or before October 30, 2020, and Evergrande Group providing payment guarantee[195][196] Aging Analysis of Trade Payables and Bills Payable (HK$ Thousand) | Aging | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | 0 to 30 days | 355,705 | 805,946 | | 31 to 180 days | 358,215 | 631,708 | | 181 to 365 days | 483,568 | 276,219 | | Over 365 days | 236,676 | 154,949 | | Total | 1,434,164 | 1,868,822 | 12. Bank and Other Borrowings This chapter outlines the Group's bank and other borrowings, noting that for the six months ended June 30, 2020, the Group obtained approximately HK$6.6179 billion in new borrowings and repaid approximately HK$5.0443 billion, with borrowings bearing floating annual interest rates ranging from 3.80% to 6.51%, used for property development projects and general working capital - For the six months ended June 30, 2020, new bank and other borrowings of approximately HK$6,617,943,000 were obtained[200] - Bank and other borrowings of approximately HK$5,044,313,000 were repaid[200] - Bank and other borrowings bear floating annual interest rates ranging from 3.80% to 6.51% and are repayable within one year to over five years[200] 13. Share Capital This chapter presents the Group's share capital information, showing that as of June 30, 2020, the issued and fully paid share capital comprised 4,806,323 thousand shares with a par value of HK$0.04 per share, totaling HK$192,253 thousand Share Capital (HK$ Thousand) | Metric | Number of shares (thousand shares) | Share capital (HK$ Thousand) | | :--- | :--- | :--- | | At June 30, 2020 | 4,806,323 | 192,253 | 14. Capital Commitments This chapter discloses the Group's capital commitments, with capital expenditure contracted but not provided for in the condensed consolidated financial statements relating to properties under development for sale amounting to HK$6,976,682 thousand as of June 30, 2020 Capital Commitments (HK$ Thousand) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Contracted but not provided for in the condensed consolidated financial statements — Additions to properties under development for sale | 6,976,682 | 8,826,760 | | — Contributions to joint ventures | — | 1,708,613 | | Total | 6,976,682 | 10,535,373 | 15. Contingent Liabilities This chapter details the Group's contingent liabilities, including corporate guarantees and litigation, noting that the Group provides guarantees for bank financing to property purchasers and an associate, and discloses the latest developments in the land development agreement litigation related to Hunan Qian Shui Wan, where despite an unfavorable court ruling, the Group is seeking a retrial and has reached a settlement guarantee agreement with relevant parties Corporate Guarantees (HK$ Thousand) | Guaranteed party | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Property purchasers | 2,570,188 | 3,055,182 | | An associate | 391,576 | 399,329 | | Total | 2,961,764 | 3,454,511 | - The Group provided bank guarantees for mortgage loans granted to property purchasers, and management believes the likelihood of purchasers defaulting on repayments is remote[204] - In the land development agreement litigation related to Hunan Qian Shui Wan, the Higher People's Court ruled unfavorably against the Group, demanding compensation of RMB122 million, and the Group has filed a civil procuratorial protest with the People's Procuratorate, requesting a retrial[208][209][210] - An enforcement settlement guarantee agreement was reached with Evergrande Changsha, where Evergrande Changsha committed to providing an irrevocable guarantee for Hunan Qian Shui Wan's responsibility to pay the judgment sum[210] 16. Related Party Transactions This chapter discloses significant transactions between the Group and related parties, including management fees, property agency fees, rental income, and interest expenses with entities controlled by SIHL, associates, non-controlling shareholders of subsidiaries, and entities controlled by Xuhui SASAC, also detailing key management compensation and noting the Group's ordinary course of business with other PRC government-related entities as a PRC government-controlled enterprise Related Party Transactions (HK$ Thousand) | Related party | Nature of transaction | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | | Entities controlled by SIHL | Management fees | (941) | — | | Associates | Property agency fees | (10,956) | (10,224) | | Associates | Rental income | 463 | — | | A non-controlling shareholder of a subsidiary | Management fees | (3,132) | (3,462) | | An entity controlled by Xuhui SASAC | Interest expense | (10,097) | (10,866) | Key Management Compensation (HK$ Thousand) | Item | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Short-term employee benefits | 3,836 | 6,299 | | Post-employment benefits | 36 | — | | Total | 3,872 | 6,299 | - The Group is part of the larger SIIC Group, which is controlled by the PRC government, and conducts ordinary course of business with other PRC government-related entities[215] 17. Fair Value Measurement of Financial Instruments This chapter provides information on the Group's fair value determination methods for financial instruments, with financial assets measured at fair value on a recurring basis including PRC listed equity securities (Level 1) and PRC unlisted equity securities (Level 3), where unlisted equity securities are valued using the adjusted net asset method under the cost approach, and reconciliations for Level 3 fair value measurements are disclosed Fair Value of Financial Assets Measured at Fair Value on a Recurring Basis (HK$ Thousand) | Financial assets | June 30, 2020 | December 31, 2019 | Fair value hierarchy | Valuation techniques and key inputs | | :--- | :--- | :--- | :--- | :--- | | PRC listed equity securities at fair value through profit or loss | 3,118 | 3,342 | Level 1 | Quoted bid prices in active markets | | PRC listed equity securities at fair value through other comprehensive income | 122,922 | 101,588 | Level 1 | Quoted bid prices in active markets | | PRC unlisted equity securities at fair value through other comprehensive income | 55,666 | 58,620 | Level 3 | Adjusted net asset method under cost approach (discount factor 9%) | Reconciliation of Level 3 Fair Value Measurements (HK$ Thousand) | Item | Unlisted equity securities classified as equity instruments at fair value through other comprehensive income | | :--- | :--- | | At January 1, 2020 | 58,620 | | Exchange adjustments | (2,954) | | At June 30, 2020 (unaudited) | 55,666 | - The Group's management believes there were no significant changes in the fair value of unlisted equity instruments at fair value through other comprehensive income for the six months ended June 30, 2020[220] 18. Dividends This chapter discloses the Group's dividend policy and dividends recognized as distribution, noting that for the six months ended June 30, 2020, the Group declared and paid 2019 final and special dividends totaling approximately HK$197.1 million, with no interim dividend proposed for 2020 during the reporting period Dividends Recognized as Distribution During the Period (HK$ Thousand) | Type of dividend | H1 2020 | H1 2019 | | :--- | :--- | :--- | | 2019 final dividend declared of 1.8 HK cents | 86,514 | 86,598 | | 2019 special dividend declared of 2.3 HK cents | 110,544 | 110,652 | | Total | 197,058 | 197,250 | - Approximately HK$187,777,000 was paid for the six months ended June 30, 2020[224] - No interim dividend was proposed for the six months ended June 30, 2020[225]