Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purposes only and does not constitute an invitation or solicitation of an offer to acquire, purchase or subscribe for securities or an invitation to enter into an agreement to do any such things, nor is it calculated to invite any offer to acquire, purchase or subscribe for any securities.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No securities may be offered or sold in the United States absent registration unless pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of United States securities laws. Any public offering of securities to be made in the United States will be made by means of a prospectus. Such prospectus will contain detailed information about the company making the offer and its management and, financial statements. No public offer of securities is to be made by the Company in the United States.

The Company does not intend to make any public offering of securities in the United States. None of the Notes will be offered to the public in Hong Kong and none of the Notes will be placed to any connected persons of the Company.

LONGFOR GROUP HOLDINGS LIMITED

龍 湖 集 團 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 960)

PROPOSED ISSUANCE OF SENIOR NOTES

AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

The Company proposes to conduct an international offering of senior notes. The completion of the Proposed Notes Issue is subject to, among other things, market conditions and investors' interest. The pricing of the Notes, including the aggregate principal amount, the Offer Price and interest rates, will be determined through a book building exercise conducted by Citigroup, Goldman Sachs, Haitong International, HSBC and Morgan Stanley as joint global coordinators, joint bookrunners and joint lead managers and Barclays and China International Capital Corporation as joint bookrunners and joint lead managers.

Upon finalization of the terms of the Notes, Citigroup, Goldman Sachs, Haitong International, HSBC, Morgan Stanley, Barclays and China International Capital Corporation and the Company, will enter into the Purchase Agreement and other ancillary documents. The Company expects that the proceeds from this Proposed Notes Issue will be used for refinancing and corporate purposes, in accordance with the terms of registration that the Company obtained from the PRC National Development and Reform Commission on January 17, 2019.

Approval in-principle has been obtained for the listing of the Notes on the SGX-ST. Admission of the Notes to the SGX-ST is not to be taken as an indication of the merits of the Company, its subsidiaries, or the Notes. No listing of the Notes has been sought in Hong Kong.

As no binding agreement in relation to the Proposed Notes Issue has been entered into as at the date of this announcement, the Proposed Notes Issue may or may not be completed. Investors and shareholders of the Company are urged to exercise caution when dealing in the securities of the Company.

Further announcement in respect of the Proposed Notes Issue will be made by the Company should the Purchase Agreement be signed.

1

THE PROPOSED NOTES ISSUE

Introduction

The Company proposes to conduct an international offering of senior notes.

In connection with the Proposed Notes Issue, the Company will provide certain professional investors with recent financial information of the Group as extracted from the unaudited consolidated financial statements for the six months ended June 30, 2019 (the "Unaudited Financial Statements"). To ensure equal dissemination of information to the shareholders of the Company, the Unaudited Financial Statements are attached hereto.

The completion of the Proposed Notes Issue is subject to, among other things, market conditions and investors' interest. The pricing of the Notes, including the aggregate principal amount, the Offer Price and interest rates, will be determined through a book building exercise conducted by Citigroup, Goldman Sachs, Haitong International, HSBC and Morgan Stanley as joint global coordinators, joint bookrunners and joint lead managers, Barclays and China International Capital Corporation as joint bookrunners and joint lead managers. Upon the finalization of the terms of the Notes, Citigroup, Goldman Sachs, Haitong International, HSBC, Morgan Stanley, Barclays and China International Capital Corporation and the Company, will enter into the Purchase Agreement and other ancillary documents, pursuant to which, Citigroup, Goldman Sachs, Haitong International, HSBC, Morgan Stanley, Barclays and China International Capital Corporation will be the initial purchasers of the Notes.

The Proposed Notes Issue will only be offered or sold in offshore transactions to non-U.S. persons in accordance with Regulation S under the Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. None of the Notes will be offered to the public in Hong Kong and none of the Notes will be placed to any Connected Persons of the Company.

Use of Proceeds

The Company expects that the proceeds from the Proposed Notes Issue will be used for refinancing and corporate purposes, in accordance with the terms of registration that the Company obtained from the PRC National Development and Reform Commission on January 17, 2019.

Listing

Approval in-principle has been obtained for the listing of the Notes on the SGX-ST. Admission of the Notes to the SGX-ST is not to be taken as an indication of the merits of the Company, its subsidiaries, or the Notes. No listing of the Notes has been sought in Hong Kong.

GENERAL

As no binding agreement in relation to the Proposed Notes Issue has been entered into as at the date of this announcement, the Proposed Notes Issue may or may not be completed. Investors and shareholders of the Company are urged to exercise caution when dealing in the securities of the Company.

A further announcement in respect of the Proposed Notes Issue will be made by the Company should the Purchase Agreement be signed.

2

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

"Barclays"

"Board"

"China International Capital Corporation"

"China" or "PRC"

"Citigroup"

"Company"

"Connected Person"

"Goldman Sachs"

"Group"

"Haitong International"

"Hong Kong"

"HSBC"

"Listing Rules"

"Morgan Stanley"

"Notes"

"Offer Price"

Barclays Bank PLC, one of the joint bookrunners and joint lead managers in respect of the Notes Issue

the board of directors of the Company

China International Capital Corporation Hong Kong Securities Limited, one of the joint bookrunners and joint lead managers in respect of the Notes Issue

the People's Republic of China excluding except where the context otherwise requires, for the purpose of this announcement, Hong Kong, Macau Special Administrative Region of China and Taiwan

Citigroup Global Markets Limited, one of the joint global coordinators, joint bookrunners and joint lead managers in respect of the Notes Issue

Longfor Group Holdings Limited (龍湖集團控股有限公司), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange

has the meaning ascribed to it under the Listing Rules

Goldman Sachs (Asia) L.L.C., one of the joint global coordinators, joint bookrunners and joint lead managers in respect of the Notes Issue

the Company and its subsidiaries

Haitong International Securities Company Limited, one of the joint global coordinators, joint bookrunners and joint lead managers in respect of the Notes Issue

the Hong Kong Special Administrative Region of the PRC

The Hongkong and Shanghai Banking Corporation Limited, one of the joint global coordinators, joint bookrunners and joint lead managers in respect of the Notes Issue

The Rules Governing the Listing of Securities on the Stock Exchange

Morgan Stanley & Co. International plc, one of the joint global coordinators, joint bookrunners and joint lead managers in respect of the Notes Issue

the senior notes to be issued by the Company

the final price at which the Notes will be sold

3

"Proposed Notes Issue"

"Purchase Agreement"

"Securities Act"

"SGX-ST"

"Stock Exchange"

an international offering of the Notes by the Company

the agreement proposed to be entered into between the Company, Citigroup, Goldman Sachs, Haitong International, HSBC, Morgan Stanley, Barclays and China International Capital Corporation in relation to the Proposed Notes Issue

the United States Securities Act of 1933, as amended

Singapore Exchange Securities Trading Limited

The Stock Exchange of Hong Kong Limited

By order of the Board

Longfor Group Holdings Limited

Wu Yajun

Chairperson

Hong Kong, September 9, 2019

As at the date of this announcement, the Board comprises eight members: Madam Wu Yajun, Mr. Shao Mingxiao, Mr. Zhao Yi and Mr. Li Chaojiang who are executive Directors; and Mr. Frederick Peter Churchouse, Mr. Chan Chi On, Derek, Mr. Xiang Bing and Mr. Zeng Ming who are independent non-executive Directors.

4

REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OF LONGFOR GROUP HOLDINGS LIMITED 龍湖集團控股有限公司

(incorporated in the Cayman Islands with limited liability)

We have reviewed the condensed consolidated financial statements of Longfor Group Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 6 to 50, which comprise the condensed consolidated statement of financial position as of June 30, 2019 and the related condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated 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

August 26, 2019

5

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2019

Six months ended June 30,

2019

2018

NOTES

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Revenue

3

38,569,813

27,120,815

Cost of sales

(25,987,889)

(17,050,830)

Gross profit

12,581,924

10,069,985

Other income

4

617,529

604,714

Other gains and losses

5

(66,789)

(188,405)

Lease liability charges

(252,292)

-

Fair value gain upon transfer to investment properties

105,185

406,298

Change in fair value of investment properties

2,206,897

2,188,990

Change in fair value of derivative financial instruments

219,623

(62,854)

Selling and marketing expenses

(1,175,094)

(871,313)

Administrative expenses

(2,165,526)

(1,777,854)

Finance costs

6

(58,482)

(41,737)

Share of results of associates

381,058

78,211

Share of results of joint ventures

675,742

371,989

Profit before taxation

13,069,775

10,778,024

Income tax expense

7

(4,919,938)

(4,085,305)

Profit for the period

8

8,149,837

6,692,719

Other comprehensive income:

Item that will not be reclassified to profit or loss:

Fair value gain on investment in unlisted

equity instruments at fair value through other

comprehensive income

-

156,075

Item that may be reclassified subsequently to profit

or loss:

Net fair value gain on hedging instruments

287,598

185,613

Gain on hedging instruments reclassified to profit

or loss

(99,097)

(332,879)

188,501

(147,266)

Other comprehensive income for the period

188,501

8,809

Total comprehensive income for the period

8,338,338

6,701,528

6

Six months ended June 30,

2019

2018

NOTES

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Profit for the period attributable to:

Owners of the Company

6,309,981

5,429,650

Non-controlling interests

1,839,856

1,263,069

8,149,837

6,692,719

Total comprehensive income for the period

attributable to:

Owners of the Company

6,498,482

5,438,459

Non-controlling interests

1,839,856

1,263,069

8,338,338

6,701,528

Earnings per share, in RMB cents

Basic

10

107.8

92.9

Diluted

10

106.0

91.0

7

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT JUNE 30, 2019

At

At

June 30,

December 31,

2019

2018

NOTES

RMB' 000

RMB' 000

(unaudited)

(audited)

NON-CURRENT ASSETS

Investment properties

11

115,600,340

84,409,540

Property, plant and equipment

12

1,412,794

3,365,689

Prepaid lease payments

-

16,518,641

Land use rights

-

414,360

Right-of-use assets

408,246

-

Interests in associates

7,729,967

7,571,982

Interests in joint ventures

6,830,470

7,365,020

Equity instruments at fair value through other

comprehensive income

895,141

734,265

Deposits paid for acquisition of land use rights

-

9,968,487

Derivative financial instruments

18

429,021

313,611

Deferred taxation assets

5,604,128

4,192,962

138,910,107

134,854,557

CURRENT ASSETS

Inventories of properties

13

309,786,910

246,562,069

Other inventories

656,470

826,649

Deposits paid for acquisition of properties

held for development

8,716,949

-

Accounts and other receivables, deposits and

prepayments

14

27,387,769

22,573,317

Amounts due from non-controlling interests

27

41,063,597

32,888,617

Amounts due from associates

27

7,713,866

6,876,577

Amounts due from joint ventures

27

12,704,671

12,835,904

Taxation recoverable

4,928,619

4,202,728

Pledged bank deposits

133,954

180,529

Derivative financial instruments

18

67,305

-

Bank balances and cash

57,938,821

45,083,066

471,098,931

372,029,456

8

At

At

June 30,

December 31,

2019

2018

NOTES

RMB' 000

RMB' 000

(unaudited)

(audited)

CURRENT LIABILITIES

Accounts and bills payables, deposits received

and accrued charges

15

73,342,082

62,233,952

Contract liabilities

161,241,442

113,439,818

Lease liabilities

868,099

-

Amounts due to non-controlling interests

27

27,704,438

24,527,983

Amounts due to associates

27

7,751,160

8,945,018

Amounts due to joint ventures

27

8,306,651

7,173,139

Taxation payable

18,654,807

21,611,655

Bank and other borrowings - due within one year

16

13,756,326

11,743,175

Other derivative financial instruments

16

1,562

168,944

311,626,567

249,843,684

NET CURRENT ASSETS

159,472,364

122,185,772

TOTAL ASSETS LESS CURRENT LIABILITIES

298,382,471

257,040,329

CAPITAL AND RESERVES

Share capital

19

518,584

516,783

Reserves

83,478,075

81,144,649

Equity attributable to owners of the Company

83,996,659

81,661,432

Non-controlling interests

70,614,376

59,156,696

TOTAL EQUITY

154,611,035

140,818,128

NON-CURRENT LIABILITIES

Bank and other borrowings - due after one year

16

117,652,746

99,456,124

Senior notes - due after one year

17

8,641,765

8,620,623

Lease liabilities

8,197,878

-

Derivative financial instruments

18

71,882

176,765

Other derivative financial instruments

16

146,683

221,728

Deferred taxation liabilities

9,060,482

7,746,961

143,771,436

116,222,201

298,382,471

257,040,329

9

10

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2019

Attributable to owners of the Company

Shares

Statutory

held for

Share

Investment

Non-

Share

Share

Capital

Special

Other

surplus

Exchange

share

option

Share award

revaluation

Hedging

Retained

controlling

capital

premium

reserve

reserve

reserve

reserve

reserve

award

reserve

reserve

reserve

reserve

profits

Total

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

RMB'000

RMB'000

RMB'000

RMB'000

At January 1, 2018 (audited)

514,209

1,305,784

(437,448)

620,672

380,143

1,901,354

(1,654)

(853,359)

368,799

124,358

23,114

(212,407)

66,856,213

70,589,778

35,612,011

106,201,789

Profit for the period

-

-

-

-

-

-

-

-

-

-

-

-

5,429,650

5,429,650

1,263,069

6,692,719

Fair value gain on hedging instruments

-

-

-

-

-

-

-

-

-

-

-

185,613

-

185,613

-

185,613

Gain on hedging instruments reclassified to

profit and loss

-

-

-

-

-

-

-

-

-

-

-

(332,879)

-

(332,879)

-

(332,879)

Fair value gain on equity instruments through

other comprehensive income

-

-

-

-

-

-

-

-

-

-

156,075

-

-

156,075

-

156,075

Total comprehensive income for the period

-

-

-

-

-

-

-

-

-

-

156,075

(147,266)

5,429,650

5,438,459

1,263,069

6,701,528

Recognition of equity-settledshare-based payments

-

-

-

-

-

-

-

-

10,545

94,497

-

-

-

105,042

-

105,042

Dividend paid to non-controlling interests

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(212,332)

(212,332)

Capital injection from non-controlling shareholders

-

-

-

-

-

-

-

-

-

-

-

-

-

-

9,114,727

9,114,727

Additional non-controlling interest arising on

acquisition of assets and liabilities through

acquisition of subsidiaries (Note 20)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

537,209

537,209

Deemed disposal of partial interest in subsidiaries

not resulting in losing of control (Note 22)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

848,800

848,800

Shares vested under the share award scheme

-

-

-

-

-

-

-

53,365

-

(12,616)

-

-

(40,749)

-

-

-

Dividend recognised as distribution (Note 9)

-

(1,548,950)

-

-

-

-

-

-

-

-

-

-

(1,760,178)

(3,309,128)

-

(3,309,128)

Issue of shares on exercise of share options

1,857

243,166

-

-

-

-

-

-

(70,791)

-

-

-

-

174,232

-

174,232

Purchase of shares under the share award scheme

-

-

-

-

-

-

-

(153,115)

-

-

-

-

-

(153,115)

-

(153,115)

Acquisition of additional interest in subsidiaries

-

-

-

-

11,013

-

-

-

-

-

-

-

-

11,013

(2,175,691)

(2,164,678)

Disposal of partial interest in subsidiaries not

resulting in losing of control

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2,580,629

2,580,629

At June 30, 2018 (unaudited)

516,066

-

(437,448)

620,672

391,156

1,901,354

(1,654)

(953,109)

308,553

206,239

179,189

(359,673)

70,484,936

72,856,281

47,568,422

120,424,703

11

Attributable to owners of the Company

Shares

Statutory

held for

Share

Investment

Non-

Share

Share

Capital

Special

Other

surplus

Exchange

share

option Share award

revaluation

Hedging

Retained

controlling

capital

premium

reserve

reserve

reserve

reserve

reserve

award

reserve

reserve

reserve

reserve

profits

Total

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

RMB'000

RMB'000

RMB'000

RMB'000

At January 1, 2019 (audited)

516,783

-

(437,448)

620,672

391,156

1,951,251

(1,654)

(1,154,052)

286,501

384,035

304,307

(749,335)

79,549,216

81,661,432

59,156,696

140,818,128

Profit for the period

-

-

-

-

-

-

-

-

-

-

-

-

6,309,981

6,309,981

1,839,856

8,149,837

Fair value gain on hedging instruments

-

-

-

-

-

-

-

-

-

-

-

287,598

-

287,598

-

287,598

Gain on hedging instruments reclassified to

profit and loss

-

-

-

-

-

-

-

-

-

-

-

(99,097)

-

(99,097)

-

(99,097)

Total comprehensive income for the period

-

-

-

-

-

-

-

-

-

-

-

188,501

6,309,981

6,498,482

1,839,856

8,338,338

Recognition of equity-settledshare-based payments

-

-

-

-

-

-

-

-

4,748

134,255

-

-

-

139,003

-

139,003

Forfeiture of share awards

-

-

-

-

-

-

-

-

-

(2,404)

-

-

2,404

-

-

-

Dividend paid to non-controlling interests

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(296,000)

(296,000)

Capital injection from non-controlling shareholders

-

-

-

-

-

-

-

-

-

-

-

-

-

-

6,409,375

6,409,375

Additional non-controlling interest arising on

acquisition of assets and liabilities through

acquisition of subsidiaries (Note 20)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2,869,269

2,869,269

Deemed disposal of partial interest in subsidiaries

not resulting in losing of control (Note 22)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

545,230

545,230

Shares vested under the share award scheme

-

-

-

-

-

-

-

135,094

-

(90,860)

-

-

(44,234)

-

-

-

Dividend recognised as distribution (Note 9)

-

(218,825)

-

-

-

-

-

-

-

-

-

-

(3,892,906)

(4,111,731)

-

(4,111,731)

Issue of shares on exercise of share options

1,801

218,825

-

-

-

-

-

-

(60,671)

-

-

-

-

159,955

-

159,955

Purchase of shares under the share award scheme

-

-

-

-

-

-

-

(350,482)

-

-

-

-

-

(350,482)

-

(350,482)

Disposal of partial interest in subsidiaries not

resulting in losing of control (Note 21)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

89,950

89,950

At June 30, 2019 (unaudited)

518,584

-

(437,448)

620,672

391,156

1,951,251

(1,654)

(1,369,440)

230,578

425,026

304,307

(560,834)

81,924,461

83,996,659

70,614,376

154,611,035

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

OPERATING ACTIVITIES

Profit before taxation

13,069,775

10,778,024

Adjustments for:

Finance costs

58,482

41,737

Depreciation of property, plant and equipment

50,559

43,566

Fair value gain upon transfer to investment properties

(105,185)

(406,298)

Change in fair value of investment properties

(2,206,897)

(2,188,990)

Change in fair value of derivative financial instruments

(219,623)

62,854

Net exchange losses

7,758

179,270

Lease liability charges

252,292

-

Interest income

(409,849)

(153,091)

Share-based payments expenses

139,003

105,042

Other adjusting items

(1,051,071)

(324,844)

Operating cash flows before movements in working capital

9,585,244

8,137,270

Decrease (increase) in other inventories

170,179

(62,056)

Increase in properties held for development

(28,019,540)

-

Increase in properties under development for sales

(25,634,551)

(19,808,438)

Decrease in properties held for sales

22,637,588

15,826,346

Increase in deposits paid for acquisition of properties held

for development

(9,314,878)

(6,079,394)

Increase in accounts and other receivables, deposits and

prepayments

(6,629,528)

(2,244,599)

Increase (decrease) in accounts and bills payables and

accrued charges

5,994,974

(1,118,965)

Increase in contract liabilities

47,801,624

37,067,491

Cash from operations

16,591,112

31,717,655

The People's Republic of China (The "PRC") income tax paid

(8,700,322)

(6,897,446)

NET CASH FROM OPERATING ACTIVITIES

7,890,790

24,820,209

12

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

INVESTING ACTIVITIES

Additions to investment properties

(6,754,592)

(2,011,928)

Additions to prepaid lease payments

-

(32,329,266)

Acquisition of assets and liabilities through acquisition of

subsidiaries (Note 20)

(1,404,533)

(1,995,123)

Investments in joint ventures

(19,442)

(728,490)

Investments in associates

(117,782)

(220,545)

Dividend received from associates

300,600

400,000

Dividend received from a joint venture

47,089

250,000

Advances to associates

(2,085,531)

(459,052)

Repayments from joint ventures

2,779,019

997,492

Repayments from non-controlling interests

2,834,541

4,321,497

Purchase of equity instruments at fair value through other

comprehensive income

(160,876)

(177,413)

Advances to joint ventures

(2,647,786)

(1,905,835)

Repayments from associates

1,248,242

469,489

Advances to non-controlling interests

(10,659,521)

(12,431,128)

Placement of pledged bank deposits

(49,736)

(74,090)

Withdrawal of pledged bank deposits

96,311

110,304

Capital reduction from an associate

40,255

-

Purchase of property, plant and equipment

(71,250)

(1,352,012)

Interest received

409,849

153,091

Other investing cash flows

21,308

493

NET CASH USED IN INVESTING ACTIVITIES

(16,193,835)

(46,982,516)

13

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

FINANCING ACTIVITIES

Capital contribution from non-controlling shareholders

6,409,375

9,114,727

Repayment of bank and other loans

(16,518,213)

(3,931,314)

Interest paid

(3,264,359)

(2,050,287)

New bank and other loans raised

35,768,222

31,365,877

Proceeds from issue of bonds

2,200,000

3,000,000

Expenses on issue of bonds

(13,709)

(18,780)

Repurchase of senior notes

-

(35,378)

Advances from joint ventures

1,963,295

1,119,057

Advances from associates

1,714,397

2,766,294

Advances from non-controlling interests

15,843,976

11,211,521

Dividend paid

(1,781,855)

(1,179,954)

Dividend paid to non-controlling interests

(296,000)

(212,332)

Capital injection from non-controlling shareholders resulted

in deemed disposal of partial interest in subsidiaries not

resulting in losing of control

545,230

848,800

Proceeds from issue of shares

159,955

174,232

Payment for purchase of shares under the share award scheme

(350,482)

(153,115)

Acquisition of additional interests in subsidiaries

-

(2,164,678)

Proceeds from disposal of partial interest in subsidiaries not

resulting in losing of control

89,950

2,580,629

Proceed from issuance of senior notes

-

5,099,839

Redemption of senior notes

-

(5,509,451)

Redemption of bonds

(1,265,006)

-

Repayment to non-controlling interests

(15,855,141)

(9,594,134)

Repayment to associates

(2,908,255)

(3,272,850)

Repayment to joint ventures

(829,783)

(1,593,898)

Repayment for lease liabilities

(452,797)

-

NET CASH FROM FINANCING ACTIVITIES

21,158,800

37,564,805

NET INCREASE IN CASH AND CASH EQUIVALENTS

12,855,755

15,402,498

CASH AND CASH EQUIVALENTS AT THE BEGINNING

OF THE PERIOD

45,083,066

26,642,154

CASH AND CASH EQUIVALENTS AT THE END OF

THE PERIOD

57,938,821

42,044,652

ANALYSIS OF THE BALANCES OF CASH AND

CASH EQUIVALENTS

Bank balances and cash

57,938,821

42,044,652

14

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

  1. BASIS OF PREPARATION
    The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 ("IAS 34") Interim Financial Reporting issued by the International Accounting Standards Board 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 investment properties and certain financial instruments, which are measured at fair values.
    Other than changes in accounting policies resulting from application of new and 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 June 30, 2019 are the same as those followed in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2018.
    Application of new and amendments to IFRSs and an interpretation
    In the current interim period, the Group has applied, for the first time, the following new and amendments to IFRSs issued by the International Accounting Standards Board which are mandatory effective for the annual period beginning on or after January 1, 2019 for the preparation of the Group's condensed consolidated financial statements:

IFRS 16

IFRIC 23 Amendments to IFRS 9 Amendments to IAS 19 Amendments to IAS 28 Amendments to IFRSs

Leases

Uncertainty over Income Tax Treatments Prepayment Features with Negative Compensation Plan Amendment, Curtailment or Settlement Long-term Interests in Associates and Joint Ventures Annual Improvements to IFRS Standards 2015 - 2017 Cycle

Except as described below, the application of the new and amendments to IFRSs in the current period has had no material impact on the Group's financial performance and positions for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

2.1 Impacts and changes in accounting policies of application on IFRS 16 Leases

The Group has applied IFRS 16 for the first time in the current interim period. IFRS 16 superseded IAS 17 Leases ("IAS 17"), and the related interpretations.

2.1.1 Key changes in accounting policies resulting from application of IFRS 16

The Group applied the following accounting policies in accordance with the transition provisions of IFRS 16.

Definition of a lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

For contracts entered into or modified on or after the date of initial application, the Group assesses whether a contract is or contains a lease based on the definition under IFRS 16 at inception or modification date. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.

15

As a lessee

Leases of low-value assets

The Group applies the recognition exemption for lease of low-value assets. Lease payments on leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Right-of-use assets

Except for leases of low value assets, the Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Except for those that are classified as investment properties and measured under fair value model, right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

The cost of right-of-use asset includes:

  • the amount of the initial measurement of the lease liability; and
  • any lease payments made at or before the commencement date, less any lease incentives received.

Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

The Group presents right-of-use assets that do not meet the definition of investment property as

  1. separate line item on the condensed consolidated statement of financial position. Right-of-use assets that meet the definition of investment property are presented within "investment properties".

Refundable rental deposits

Refundable rental deposits paid are accounted under IFRS 9 Financial Instruments ("IFRS 9") and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets. Before the application of IFRS 16, the Group considered refundable rental deposits paid as rights and obligations under leases to which IAS 17 applied. Based on the definition of lease payments under IFRS 16, such deposits are not payments relating to the right to use of the underlying assets and were adjusted to reflect the discounting effect at transaction. At the date of initial application, the Group assessed and considered the impact of these refundable rental deposits paid as insignificant at January 1, 2019.

Lease liabilities

At the commencement date of a lease, the Group recognises and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever the lease term has changed in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment.

16

Taxation

For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions are attributable to the right-of-use assets or the lease liabilities.

For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group applies IAS 12 Income Taxes requirements to the leasing transaction as a whole. Temporary differences relating to right-of-use assets and lease liabilities are assessed on a net basis. Excess of depreciation on right-of-use assets over the lease payments for the principal portion of lease liabilities resulting in net deductible temporary differences.

As a lessor

Refundable rental deposits

Refundable rental deposits received are accounted under IFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments from lessees.

Sublease

When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.

2.1.2 Transition and summary of effects arising from initial application of IFRS 16 Definition of a lease

The Group has elected the practical expedient to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease and not apply these standards to contracts that were not previously identified as containing a lease. Therefore, the Group has not reassessed contracts which already existed prior to the date of initial application.

For contracts entered into or modified on or after January 1, 2019, the Group applies the definition of a lease in accordance with the requirements set out in IFRS 16 in assessing whether a contract contains a lease.

As a lessee

The Group has applied IFRS 16 retrospectively with the cumulative effect recognised at the date of initial application, January 1, 2019. Any difference at the date of initial application is recognised in the opening retained profits and comparative information has not been restated.

As at January 1, 2019, the Group recognise additional lease liabilities and right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments by applying IFRS 16C 8(b)(ii) transition.

When recognising the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average incremental borrowing rate applied by the Group is 5.89%.

17

At January 1,

2019

RMB' 000

Operating lease commitments disclosed as at December 31, 2018

11,479,336

Less: Discounting at relevant incremental borrowing rates

(2,746,511)

Less: Recognition exemption of low-value assets

(275,966)

Lease liabilities as at January 1, 2019

8,456,859

Analysed as

Current

703,059

Non-current

7,753,800

8,456,859

The carrying amount of investment property as at January 1, 2019 comprises the following:

At January 1,

2019

RMB' 000

Carrying amount as at December 31, 2018

84,409,540

Reclassification from prepaid lease payment

7,811,956

Right-of-use assets relating to operating leases recognised upon

application of IFRS 16

8,456,859

Reclassification from properties, plant and equipment

(Structure and leasehold improvement for subleasing)

1,955,781

Investment properties

102,634,136

The carrying amount of right-of-use assets as at January 1, 2019 comprises of following:

At January 1,

2019

RMB' 000

Carrying amount as at December 31, 2018

-

Reclassification from land use rights

414,360

Right-of-use assets as at January 1, 2019

414,360

As a lessor

In accordance with the transitional provisions in IFRS 16, except for sub-leases in which the Group acts as an intermediate lessor, the Group is not required to make any adjustment on transition for leases in which the Group is a lessor but account for these leases in accordance with IFRS 16 from the date of initial application and comparative information has not been restated.

Before application of IFRS 16, refundable rental deposits received were considered as rights and obligations under leases to which IAS 17 applied. Based on the definition of lease payments under IFRS 16, such deposits are not payments relating to the right-of-use assets and were adjusted to reflect the discounting effect at transition. At the date of initial application, the Group assessed and considered the impact of refundable rental deposits received these as insignificant at January 1, 2019.

18

At the date of initial application and current period, the Group assessed and considered that the impact of IFRS 16 as a lessor is insignificant.

The following adjustments were made to the amounts recognised in the condensed consolidated statement of financial position at January 1, 2019. Line items that were not affected by the changes have not been included.

Carrying

Carrying

amounts

amounts

previously

under

reported at

IFRS 16 at

December 31,

January 1,

2018

Adjustments

2019

RMB' 000

RMB' 000

RMB' 000

Non-current Assets

Property, plant and equipment

3,365,689

(1,955,781)

1,409,908

Prepaid lease payments (Note i)

16,518,641

(16,518,641)

-

Land use rights

414,360

(414,360)

-

Right-of-use assets

-

414,360

414,360

Investment properties (Note i)

84,409,540

18,224,596

102,634,136

Current Assets

Inventories of properties (Note i)

246,562,069

8,706,685

255,268,754

Current Liabilities

Lease liabilities

-

(703,059)

(703,059)

Non-current Liabilities

Lease liabilities

-

(7,753,800)

(7,753,800)

Notes:

  1. As a result of adopting IFRS 16, the directors of the Company assessed the development plan for these prepaid lease payments, and considered that prepaid lease payments with undetermined use would be classified as investment properties while prepaid lease payments with development for sales purpose would be classified as properties held for development as at January 1, 2019.
  2. For the purpose of reporting cash flows from operating activities under indirect method for the six months ended June 30, 2019, movements in working capital have been computed based on opening condensed consolidated statement of financial position as at January 1, 2019 as disclosed above.

2.2 Impacts and changes in accounting policies of application of other new and amendments to IFRSs

Impacts and changes in accounting policies of application on Amendments to IFRSs Annual Improvements to IFRS Standards 2015 - 2017 Cycle

The annual improvement packages amended the following four standards.

IAS 12 Income Taxes

The Group recognises the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the Group originally recognised the transactions that generated the distributable profits. This is the case irrespective of whether different tax rates apply to distributed and undistributed profits.

19

IAS 23 Borrowing Costs

For any specific borrowing that remains outstanding after the related qualifying asset is ready for its intended use or sale, that borrowing becomes part of the funds that the Group borrows generally when calculating the capitalisation rate on general borrowings.

3. SEGMENT INFORMATION

The Group determines its operating segments based on internal reports about components of the Group that are regularly reviewed by the chief operating decision maker ("CODM") (i.e., the executive directors of the Company) in order to allocate resources to the segment and to assess its performance.

The Group is organised into business units based on their types of activities, based on which information is prepared and reported to the Group's CODM for the purposes of resource allocation and assessment of performance. The Group's operating segments under IFRS 8 Operating Segments are identified as the following three main operations:

  • Property development: this segment represents the development and sales of office premises, commercial and residential properties. All the Group's activities in this regard are carried out in the PRC.
  • Property investment: this segment represents the lease of investment properties, which are developed by the Group to generate rental income and to gain from the appreciation in the properties' values in the long term. Currently the Group's investment property portfolio mainly comprises shopping malls and long-term rental apartments and are all located in the PRC.
  • Property management and related services and others: this segment mainly represents the income generated from property management and related services, hotel operation and others. Currently the Group's activities in this regard are carried out in the PRC.
  1. Segment results
    For the purposes of assessing segment performance and allocating resources between segments, the Company's executive directors monitor the revenue and results attributable to each operating segment on the following bases:
    Segment assets include all tangible assets and current assets directly attributable to each segment with the exception of properties held for development, deposits paid for acquisition of for acquisition of properties held for development, interests in associates and joint ventures, equity instruments at fair value through other comprehensive income, deferred taxation assets, taxation recoverable, derivative financial instruments and other corporate assets. Other corporate assets are not allocated to the operating segments because they are head office assets or assets which are managed centrally by the Group. The investment properties included in segment assets are stated at cost when assessed by the chief operating decision maker.
    Revenue and expenses are allocated to the operating segments with reference to sales generated by those segments and the expenses incurred by those segments. Segment profit does not include the Group's share of results arising from the activities of the Group's associates and joint ventures.
    The measure used for reporting segment profit is adjusted earnings before interest, other gains and losses, lease liability charges, taxes, depreciation, share of results of associates and joint ventures, change in fair value of investment properties and upon transfer to investment properties, change in fair value of derivative financial instruments and finance costs ("Adjusted Earnings"), where "interest" is regarded as including investment income and "depreciation" is regarded as including impairment losses on non-current assets. To arrive at Adjusted Earnings, the Group's earnings are further adjusted for items not specifically attributed to individual segments, such as directors' and auditor's remuneration and other head office or corporate administration costs.
    In addition to receiving segment information concerning segment profit, management is provided with segment information concerning revenue (including inter-segment sales). Inter-segment sales are priced with reference to prices charged to external parties for similar service.

20

Information regarding the Group's operating segments is set out below.

Six months ended June 30, 2019 (unaudited)

Property

management

and related

Property

Property

services

development

investment

and others

Total

RMB' 000

RMB' 000

RMB' 000

RMB' 000

Revenue from external customers

Recognised at a point in time

30,351,766

-

-

30,351,766

Recognised over time

3,813,351

2,577,135

1,827,561

8,218,047

Inter-segment revenue

-

-

123,293

123,293

Segment revenue

34,165,117

2,577,135

1,950,854

38,693,106

Segment profit (Adjusted Earnings)

8,905,632

2,055,386

445,812

11,406,830

Six months ended June 30, 2018 (unaudited)

Property

management

and related

Property

Property

services

development

investment

and others

Total

RMB' 000

RMB' 000

RMB' 000

RMB' 000

Revenue from external customers

Recognised at a point in time

21,938,053

-

-

21,938,053

Recognised over time

2,099,238

1,851,424

1,232,100

5,182,762

Inter-segment revenue

-

-

60,578

60,578

Segment revenue

24,037,291

1,851,424

1,292,678

27,181,393

Segment profit (Adjusted Earnings)

7,498,093

1,387,264

313,315

9,198,672

In addition to receiving segment information concerning segment profit, the CODM is provided with information concerning the Group's consolidated amount of interests in associates and related share of results, interests in joint ventures and related share of results, changes in fair value of investment properties and upon transfer to investment properties, change in fair value of derivative financial instruments, other income, other gains and losses, lease liability charges, finance costs from borrowings, depreciation, and amortisation and impairment losses (if any) which are not allocated to operating segments.

21

  1. Reconciliations of segment revenue and profit or loss

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Revenue

Segment revenue

38,693,106

27,181,393

Elimination of inter-segment revenue

(123,293)

(60,578)

Consolidated revenue

38,569,813

27,120,815

Profit

Segment profit

11,406,830

9,198,672

Other income

617,529

604,714

Other gains and losses

(66,789)

(188,405)

Lease liability charges

(252,292)

-

Fair value gain upon transfer to investment properties

105,185

406,298

Change in fair value of investment properties

2,206,897

2,188,990

Change in fair value of derivative financial instruments

219,623

(62,854)

Finance costs

(58,482)

(41,737)

Share of results of associates

381,058

78,211

Share of results of joint ventures

675,742

371,989

Depreciation and amortisation

(56,673)

(54,059)

Unallocated expenses

(2,108,853)

(1,723,795)

Consolidated profit before taxation

13,069,775

10,778,024

  1. Revenue from major product and services
    The following is an analysis of the Group's revenue from its properties sold, properties invested and services provided:

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

Sales of properties

Recognised at a point in time

30,351,766

21,938,053

Recognised over time

3,813,351

2,099,238

Property development segment

34,165,117

24,037,291

Revenue from property management and related services and

others/property management and related services and others

segment - recognised over time

1,827,561

1,232,100

Revenue from contract with customers

35,992,678

25,269,391

Rental income under property investment segment

2,577,135

1,851,424

Total revenue

38,569,813

27,120,815

Add: inter-segment revenue under property management and

related services and other segment

123,293

60,578

Total segment revenue

38,693,106

27,181,393

22

  1. Geographical information
    The following table sets out information about the Group's revenue from external customers by cities in the PRC, based on the location at which the properties are sold, properties are invested and services are provided

Revenue from

external customers

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

Beijing

1,524,419

1,660,533

Chengdu

2,507,173

3,175,313

Chongqing

10,938,779

4,022,386

Hangzhou

919,777

4,862,172

Jinan

9,507,172

1,393,552

Nanjing

1,534,120

123,455

Ningbo

363,678

2,479,566

Qingdao

1,092,447

2,127,255

Shanghai

1,552,783

488,495

Shenyang

1,147,821

795,732

Sunan

1,395,290

407,407

Xiamen

1,178,646

1,717,858

Other cities in the PRC

4,907,708

3,867,091

38,569,813

27,120,815

No revenue from transaction with a single external customer amounts to 10% or more of the Group's revenue.

  1. Segment assets
    The following is an analysis of the Group's assets by operating segment:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Property development

316,809,690

269,553,969

Property investment (Note)

85,122,172

57,071,210

Property management and related services and others

755,332

1,460,156

Total segment assets

402,687,194

328,085,335

Note: The above amount of segment assets relating to leasing of properties represents the cost of investment properties and upon initial recognition cost of right-of-use assets classified under investment properties.

23

4.

OTHER INCOME

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Interest income

409,849

153,091

Government subsidies (Note a)

27,427

29,829

Penalty income (Note b)

80,908

44,273

Consultancy income (Note c)

82,155

347,607

Sundry income

17,190

29,914

Total

617,529

604,714

Notes:

  1. The amount represents the grants received from the relevant PRC government to encourage the investments in specific regions. The subsidies are unconditional and granted on a discretionary basis to the Group during the period.
  2. It represents penalty received from property buyers who do not execute sales and purchase agreements on property sales or from tenants who early terminate tenancy agreements.
  3. The amount represents the consultancy services provided to the Group's joint ventures and associates in relation to the property development projects.

5. OTHER GAINS AND LOSSES

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Gain on disposal of property, plant and equipment

385

313

Net exchange losses (Note)

(164,780)

(410,806)

Reclassification of fair value gain of hedging instruments from hedging reserve

99,097

332,879

Loss on early redemption of senior notes

-

(110,791)

Others

(1,491)

-

(66,789)

(188,405)

Note: It represents exchange difference arising from translation of bank balances, bank borrowings and senior notes, original currencies of which are either denominated in Hong Kong Dollar ("HKD") or United States Dollar ("USD").

24

6.

FINANCE COSTS

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Interest on bank and other borrowings

Wholly repayable within five years

(2,418,624)

(1,418,392)

Not wholly repayable within five years

(593,930)

(579,398)

Interest expense on senior notes

(160,165)

(202,130)

(3,172,719)

(2,199,920)

Less: Amount capitalised to properties under development for sales and

investment properties under development

3,114,237

2,158,183

(58,482)

(41,737)

Borrowing costs capitalised arose on the general borrowing pool of the Group and were calculated by applying a capitalisation rate of 4.70% (six months ended June 30, 2018: 4.81%) per annum for the six months ended June 30, 2019 to expenditure on the qualifying assets.

7.

INCOME TAX EXPENSE

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Current tax

PRC Enterprise Income Tax ("EIT")

(2,720,777)

(2,238,823)

Withholding Tax on distributed earnings

(108,049)

-

Land Appreciation Tax ("LAT")

(2,383,502)

(1,917,953)

(5,212,328)

(4,156,776)

Overprovision in prior periods

LAT*

194,745

174,963

(5,017,583)

(3,981,813)

Deferred taxation

Current period

97,645

(103,492)

(4,919,938)

(4,085,305)

  • The development plan for several property projects had been revised in which the revised estimated appreciation value was different with the appreciation value made in prior periods, resulting in an overprovision of LAT in respect of prior periods.

No provision for Hong Kong Profits Tax has been made as the Group does not have income which arises in, or is derived from, Hong Kong.

Under the Law of the PRC on EIT (the "EIT Law") and Implementation Regulations of the EIT Law, the tax rate of the PRC subsidiaries is 25% for both periods.

Certain of the Company's subsidiaries operating in the PRC are eligible for exemption from PRC EIT for both periods.

25

8.

PROFIT FOR THE PERIOD

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Profit for the period has been arrived at after charging (crediting):

Depreciation of property, plant and equipment

50,559

43,566

Amortisation of land use rights

-

10,493

Depreciation of right-of-use assets

6,114

-

Gain on disposal of property, plant and equipment

(385)

(313)

Operating lease rentals

-

62,165

9.

DIVIDENDS

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Dividends recognised as distribution during the period:

Final dividend recognised in respect of 2018 of RMB0.69

(six months ended June 30, 2018: Final dividend recognised

in respect of 2017 of RMB0.473) per share

4,111,731

2,802,418

Special dividend recognised in respect of 2017 of RMB0.085 per share

-

506,710

4,111,731

3,309,128

Subsequent to the end of the reporting period, the Board declared the payment of an interim dividend of RMB2,145,338,000, representing RMB0.36 per share, based on the number of shares in issue as at June 30, 2019, in respect of the six months ended June 30, 2019 (six months ended June 30, 2018: RMB1,779,101,000).

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:

Six months ended June 30,

2019 2018

RMB' 000 RMB' 000

(unaudited) (unaudited)

Earnings attributable to the owners of the Company for the

purposes of calculation of basic and diluted earnings per share

6,309,981

5,429,650

26

2019

2018

' 000

' 000

(unaudited)

(unaudited)

Number of shares

Weighted average number of ordinary shares for the

purpose of calculation of basic earnings per share

5,853,064

5,842,758

Effect of dilutive potential ordinary shares in respect of

- Share options

58,855

86,803

- Share awards

42,733

36,556

Weighted average number of ordinary shares for the

purpose of calculation of diluted earnings per share

5,954,652

5,966,117

The weighted average number of ordinary shares adopted in the calculation of basic and diluted earnings per share for both periods have been arrived at after deducting the shares held in trust for the Company by an independent trustee under the share award scheme of the Company.

11. INVESTMENT PROPERTIES

Completed

investment

Investment

properties

properties

and right-of-

under

use assets

development

Total

RMB' 000

RMB' 000

RMB' 000

At December 31, 2018 (audited)

61,986,740

22,422,800

84,409,540

Adjustments arising from initial application of IFRS 16

10,412,640

7,811,956

18,224,596

At January 1, 2019 (restated)

72,399,380

30,234,756

102,634,136

Additions

1,489,457

6,074,757

7,564,214

Acquisition of assets through acquisition

of subsidiaries (Note 20)

-

2,751,777

2,751,777

Transfer from properties held for sales (Note)

443,316

-

443,316

Net increase in fair value recognised in profit or loss

601,860

1,605,037

2,206,897

At June 30, 2019 (unaudited)

74,934,013

40,666,327

115,600,340

Unrealised gain on property revaluation included

in profit or loss

707,045

1,605,037

2,312,082

Note: The transfer from properties held for sales to investment properties were made since there was a change in use as evidenced by the inception of operating leases to third parties.

Included in the above, there are right-of-use assets amounting to RMB11,368,942,000 (December 31, 2018: nil) as at June 30, 2019. There are additions to right-of-use assets amounting to RMB1,401,484,000 (six months ended June 30, 2018: nil).

The investment properties are all situated in the PRC.

27

The fair values of the Group's investment properties at dates of transfer and June 30, 2019 have been arrived at on the basis of valuations carried out on those dates by Savills Valuation and Professional Services Limited, a firm of independent qualified professional valuer not connected with the Group, who has appropriate qualifications and recent experience in the valuation of similar properties in the relevant locations.

In estimating the fair value of the properties, the highest and best use of the properties is their current use.

The fair values of the investment properties were determined by the valuer on the following basis:

Completed properties

-

arrived at by capitalising the net rental income derived from the existing

and right-of-use assets

tenancies with due allowance for reversionary incoming potential of the

respective properties.

Properties under

-

valued on the basis that they will be developed and completed in

development

accordance with the latest development proposals and taken into account

the construction costs that will be expended to complete the development

as well as developer's profit margin to reflect the quality of the completed

development. For the investment properties that the fair value are not

reliably measureable but expect the fair value of the properties to be reliably

measureable in future, the investment properties shall be measured at cost

until the fair value become reliably measureable or construction is completed

(whichever is earlier).

All of the Group's property interests in leasehold land and buildings to earn rentals or for capital appreciation purposes are measured using the fair value model and classified and accounted for as investment properties.

  1. PROPERTY, PLANT AND EQUIPMENT
    During the six months ended June 30, 2019, additions to property, plant and equipment amounted to RMB71,250,000 (six months ended June 30, 2018: RMB1,407,001,000), consisting of construction in progress for hotel properties, motor vehicles and equipment and furniture.
  2. INVENTORIES OF PROPERTIES

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Properties held for development

13,763,534

-

Properties under development for sales

279,399,700

232,015,490

Properties held for sales

16,623,676

14,546,579

309,786,910

246,562,069

The inventories of properties were located in the PRC. Inventories of properties which are expected to be recovered in more than twelve months after the end of the reporting period are classified under current assets as it is expected to be realised in the Group's normal operating cycle.

28

14. ACCOUNTS AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Trade receivables are mainly arisen from sales of property development and property investment. Considerations in respect of sales of properties are paid by purchasers in accordance with the terms of the related sales and purchase agreements. For lease of properties, rental income is paid by tenants within two months in accordance with the terms in the tenancy agreement.

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Trade receivables (Note a)

700,806

2,560,699

Other receivables, net of allowance for doubtful debts (Note b)

7,193,976

5,682,971

Advances to contractors

2,200,991

2,074,294

Prepaid value added tax and other taxes

13,578,858

9,360,560

Prepayments and utilities deposits (Note c)

3,713,138

2,894,793

27,387,769

22,573,317

Notes:

  1. The following is an aged analysis of trade receivables at the end of the reporting period based on the dates of delivery of goods and rendering of services:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Within 60 days

301,598

2,178,339

61 - 180 days

255,048

325,067

181 - 365 days

142,085

47,456

1 - 2 years

2,075

9,837

700,806

2,560,699

  1. Other receivables mainly comprise rental deposits, receivables of refund of the deposits for land auctions, deposits for construction work, temporary payments and miscellaneous project-related deposits paid which are refundable within one year.
  2. Included in the prepayments and utilities deposits, there are mainly properties held for development amounting to RMB3,708,500,000 (2018: RMB2,892,098,000) which are paid on behalf of certain entities which the Group potentially invests in them ("potential investees"). In the opinion of the directors, such payments are prepayment for property development projects for those potential investees.

29

15. ACCOUNTS AND BILLS PAYABLES, DEPOSITS RECEIVED AND ACCRUED CHARGES

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Trade payables and accrued expenditure on construction (Note a)

56,356,803

44,768,028

Bills payables (Note a)

665,523

968,013

Dividend payables

4,111,731

1,781,855

Other payables and accrued charges (Note b)

8,634,944

9,683,746

Value added tax and other tax payables

3,573,081

3,822,238

Consideration payable for acquisition of assets and liabilities through

acquisition of subsidiaries

-

1,210,072

73,342,082

62,233,952

Notes:

  1. Trade and bills payables and accrued expenditure on construction comprise construction costs and other project-related expenses which are payable based on project progress certified by the Group.
    The following is an aged analysis of trade and bills payables, based on the invoice date and issuance date of each bill, at the end of the reporting period:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Within 60 days

23,658,185

20,868,583

61 - 180 days

10,980,974

8,966,617

181 - 365 days

10,285,924

6,333,705

1 - 2 years

2,829,205

2,147,504

2 - 3 years

697,060

460,323

Over 3 years

89,606

185,130

48,540,954

38,961,862

  1. Other payables and accrued charges comprise mainly tax received and payable to the government on behalf of customers, receipt on behalf of certain entities from potential investment partners, accrued salaries and accrued staff welfare.

16. BANK AND OTHER BORROWINGS

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Bank loans, secured

48,154,512

41,105,408

Bank loans, unsecured

47,452,185

35,394,192

Bonds, unsecured

35,802,375

34,699,699

131,409,072

111,199,299

30

The carrying amounts of the above borrowings are repayable based on the scheduled repayment dates set out in the loan agreements, as follows:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Within one year

13,756,326

11,743,175

More than one year but not exceeding two years

23,459,419

22,813,096

More than two years but not exceeding three years

31,561,037

20,800,932

More than three years but not exceeding four years

20,441,082

10,626,929

More than four years but not exceeding five years

24,289,018

24,998,929

Exceeding five years

17,902,190

20,216,238

131,409,072

111,199,299

Less: Amount due within one year shown under current liabilities

(13,756,326)

(11,743,175)

Amount due after one year

117,652,746

99,456,124

The Group's bank and other borrowings are denominated in the following currencies set out below:

An analysis of borrowings by currency:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Denominated in RMB

110,399,841

94,713,971

Denominated in HKD

20,270,204

15,747,535

Denominated in USD

739,027

737,793

131,409,072

111,199,299

  1. During the current period, the Group obtained new bank loans amounting to RMB35,768,222,000 (six months ended June 30, 2018: RMB31,365,877,000) and repaid bank loans of RMB16,518,213,000 (six months ended June 30, 2018: RMB3,931,314,000).
    The fixed rate bank borrowings at June 30, 2019 with carrying amount of RMB2,171,090,000 (at December 31, 2018: RMB3,411,442,000) carry interest ranging from 3.06% to 5.60% (at December 31, 2018: 3.06% to 5.60%) per annum. The remaining bank borrowings with carrying amount of RMB93,435,607,000 (at December 31, 2018: RMB73,088,158,000) carry interest at variable rates based on the interest rates quoted by the People's Bank of China, Hong Kong Interbank Offered Rate and London Interbank Offered Rate, the effective interest rate is ranging from 2.70% to 5.23% (at December 31, 2018: 2.63% to 5.23%) per annum at June 30, 2019, and exposing the Group to cash flow interest rate risk.
    The above secured bank loans at the end of the reporting period were secured by the pledge of assets as set out in note 23.

31

  1. The Group's other borrowings comprised the followings as at June 30, 2019:

Term of

Effective

Name of bond

Par value

Coupon rate

Issue date

the bond

interest rate

RMB' 000

Domestic Corporate Bonds

RMB domestic corporate bonds

2,000,000

4.60%

July 7, 2015

5 years

4.71%

of Chongqing Longhu

Development

("2015 First Tranche Bonds")

RMB domestic corporate bonds

346,701

3.93%

July 27, 2015

5 years

4.02%

(Note a)

of Chongqing Longhu

Development

("(i) form of 2015 Second

Tranche Bonds")

RMB domestic corporate bonds

2,000,000

4.20%

July 27, 2015

7 years

4.25%

(Note b)

of Chongqing Longhu

Development

("(ii) form of 2015 Second

Tranche Bonds")

RMB domestic corporate bonds

2,000,000

4.08%

November 2,

7 years

4.13%

(Note c)

of Chongqing Longhu

2015

Development

("2015 Third Tranche Bonds")

RMB domestic corporate bonds

2,051,996

3.30%

January 25,

5 years

3.41%

(Note d)

of Chongqing Longhu

2016

Development

("(i) form of 2016 First

Tranche Bonds")

RMB domestic corporate bonds

1,800,000

3.68%

January 25,

8 years

3.73%

(Note e)

of Chongqing Longhu

2016

Development

("(ii) form of 2016 First

Tranche Bonds")

RMB domestic corporate bonds

1,482,998

3.19%

March 4, 2016

6 years

3.28%

(Note f)

of Chongqing Longhu

Development

("(i) form of 2016 Second

Tranche Bonds")

RMB domestic corporate bonds

1,500,000

3.75%

March 4, 2016

10 years

3.78%

(Note g)

of Chongqing Longhu

Development

("(ii) form of 2016 Second Tranche Bonds")

32

Term of

Effective

Name of bond

Par value

Coupon rate

Issue date

the bond

interest rate

RMB' 000

RMB domestic corporate bonds

700,000

3.06%

July 14, 2016

5 years

3.17%

(Note h)

of Chongqing Longhu

Development

("(i) form of 2016 Third

Tranche Bonds")

RMB domestic corporate bonds

3,000,000

3.68%

July 14, 2016

7 years

3.75%

(Note i)

of Chongqing Longhu

Development

("(ii) form of 2016 Third

Tranche Bonds")

RMB domestic corporate bonds

3,000,000

4.96%

August 2, 2018

5 years

5.03%

(Note j)

of Chongqing Longhu

Development

("2018 First Tranche Bonds")

RMB domestic corporate bonds

2,000,000

4.80%

November 6,

5 years

4.87%

(Note k)

of Chongqing Longhu

2018

Development

("2018 Second Tranche

Bonds")

RMB domestic corporate bonds

1,700,000

3.99%

February 21,

5 years

4.08%

(Note l)

of Chongqing Longhu

2019

Development

("(i) form of 2019

First Tranche Bonds")

RMB domestic corporate bonds

500,000

4.70%

February 21,

7 years

4.77%

(Note m)

of Chongqing Longhu

2019

Development

("(ii) form of 2019

First Tranche Bonds")

Green Bonds

RMB green bonds of Chongqing

1,600,000

4.40%

February 16,

5 years

4.49%

(Note n)

Longhu Development

2017

("(i) form of 2017 First

Tranche Green Bonds")

RMB green bonds of Chongqing

1,440,000

4.67%

February 16,

7 years

4.72%

(Note o)

Longhu Development

2017

("(ii) form of 2017 First

Tranche Green Bonds")

RMB green bonds of Chongqing

1,000,000

4.75%

March 6, 2017

7 years

4.79%

(Note p)

Longhu Development

("2017 Second Tranche

Green Bonds")

33

Term of

Effective

Name of bond

Par value

Coupon rate

Issue date

the bond

interest rate

RMB' 000

Medium-term Notes

RMB medium-term notes

1,700,000

4.80%

July 21, 2017

3 years

5.01%

of the Company

("(i) form of 2017 First

Medium-term Notes")

RMB medium-term notes

300,000

5.00%

July 21, 2017

5 years

5.10%

of the Company

("(ii) form of 2017 First

Medium-term Notes")

Rental Apartments Special

Bonds

RMB rental apartments special

3,000,000

5.60%

March 21, 2018

5 years

5.64%

(Note q)

bonds of Chongqing

Longhu Development

("2018 First Tranche Rental

Apartments Bonds")

RMB rental apartments special

2,000,000

4.98%

August 17, 2018

5 years

5.04%

(Note r)

bonds of Chongqing

Longhu Development

("2018 Second Tranche Rental

Apartments Bonds")

Notes:

  1. Chongqing Longhu Development is entitled to adjust the coupon rate on June 27, 2018 and, the investors have the option to sell back the bonds on July 27, 2018 at par or hold until maturity. On July 27, 2018, the investors have sold back (i) form of 2015 second Tranche Bonds with principal amount of RMB1,653,299,000 at a redemption price equal to 100% of the principal amount to Chongqing Longhu Development.
  2. Chongqing Longhu Development is entitled to adjust the coupon rate on June 27, 2020 and, the investors have the option to sell back the bonds on July 27, 2020 at par or hold until maturity.
  3. Chongqing Longhu Development is entitled to adjust the coupon rate on October 2, 2020 and, the investors have the option to sell back the bonds on November 2, 2020 at par or hold until maturity.
  4. Chongqing Longhu Development is entitled to adjust the coupon rate on December 25, 2018 and, the investors have the option to sell back the bonds on January 25, 2019 at par or hold until maturity. On January 25, 2019, the investors have sold back (i) form of 2016 First Tranche Bonds with principal amount of RMB248,004,000 at a redemption price equal to 100% of the principal amount to Chongqing Longhu Development.
  5. Chongqing Longhu Development is entitled to adjust the coupon rate on December 25, 2020 and, the investors have the option to sell back the bonds on January 25, 2021 at par or hold until maturity.
  6. Chongqing Longhu Development is entitled to adjust the coupon rate on February 4, 2019 and, the investors have the option to sell back the bonds on March 4, 2019 at par or hold until maturity. The investors have sold back (i) form of 2016 Second Tranche Bonds with principal amount of RMB1,017,002,000 at a redemption price equal to 100% of the principal amount to Chongqing Longhu Development.

34

  1. Chongqing Longhu Development is entitled to adjust the coupon rate on February 4, 2021 and, the investors have the option to sell back the bonds on March 4, 2021 at par or hold until maturity.
  2. Chongqing Longhu Development is entitled to adjust the coupon rate on June 14, 2019 and, the investors have the option to sell back the bonds on July 14, 2019 at par or hold until maturity. On July 14, 2019, the investors have sold back (ii) form of 2016 Second Tranche Bonds with principal amount of RMB230,000,000 at a redemption price equal to 100.00% of the principal amount to Chongqing Longhu Development.
  3. Chongqing Longhu Development is entitled to adjust the coupon rate on June 14, 2021 and, the investors have the option to sell back the bonds on July 14, 2021 at par or hold until maturity.
  4. Chongqing Longhu Developments is entitled to adjust the coupon rate on July 2, 2021 and, the investors have the option to sell back the bonds on August 2, 2021 at par or hold until maturity.
  5. Chongqing Longhu Developments is entitled to adjust the coupon rate on October 6, 2021 and, the investors have the option to sell back the bonds on November 6, 2021 at par or hold until maturity.
  6. Chongqing Longhu Development is entitled to adjust the coupon rate on January 21, 2022 and, the investors have the opinion to sell back the bonds on February 21, 2022 at par or hold until maturity.
  7. Chongqing Longhu Development is entitled to adjust the coupon rate on January 21, 2024 and, the investors have the option to sell back the bonds on February 21, 2024 at par or hold until maturity.
  8. Chongqing Longhu Development is entitled to adjust the coupon rate on January 16, 2020 and, the investors have the option to sell back the bonds February 16, 2020 at par or hold until maturity.
  9. Chongqing Longhu Development is entitled to adjust the coupon rate on January 16, 2022 and, the investors have the option to sell back the bonds on February 16, 2022 at par or hold until maturity.
  10. Chongqing Longhu Development is entitled to adjust the coupon rate on February 6, 2022 and, the investors have the option to sell back the bonds on March 6, 2022 at par or hold until maturity.
  11. Chongqing Longhu Developments is entitled to adjust the coupon rate on February 21, 2021 and, the investors have the option to sell back the bonds on March 21, 2021 at par or hold until maturity.
  12. Chongqing Longhu Developments is entitled to adjust the coupon rate on July 17, 2021 and, the investors have the option to sell back the bonds on August 17, 2021 at par or hold until maturity.

The 2015 Second Tranche Bonds, 2015 Third Tranche Bonds, 2016 First Tranche Bonds, 2016 Second Tranche Bonds, 2016 Third Tranche Bonds, 2017 First Tranche Green Bonds, 2017 Second Tranche Green Bonds, 2018 First Tranche Bonds, 2018 Second Tranche Bonds, 2018 First Tranche Rental Apartments Bonds, 2018 Second Tranche Rental Apartments Bonds and 2019 First Tranche Bonds contain a liability component and early redemption options:

  1. Liability component represents the contractually determined stream of future cash flows discounted at the rate of interest determined by the market instruments of comparable credit status taken into account the business risk and financial risk of the Company.
  2. As at June 30, 2019, the fair value of put options of RMB148,245,000 (at December 31, 2018: RMB390,672,000) have been recognised in the condensed statement of financial position, of which, fair value gain of RMB219,623,000 (at December 31, 2018: loss of RMB310,350,000) was recognised for the six months ended June 30, 2019.

35

Fair Value as at

June 30, December 31,

2019 2018

RMB' 000 RMB' 000

(unaudited) (audited)

Non-current liabilities

146,683

221,728

Current liabilities

1,562

168,944

148,245

390,672

The Domestic Corporate Bonds and the Rental Apartments Special Bonds are non-guaranteed and listed on the Shanghai Stock Exchange.

The Green Bonds are non-guaranteed and listed on the China Central Depository & Clearing Co., Ltd..

The Medium-term notes are non-guaranteed and listed on the National Association of Financial Market Institutional Investors.

The fair value of the Domestic Corporate Bonds, the Green Bonds, the Medium-term Notes and the Rental Apartment Special Bonds, with reference to the quoted market price available on the Shanghai Stock Exchange, China Central Depository & Clearing Co., Ltd. and the National Association of Financial Market Institutional Investors, are as follows:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

2015 First Tranche Bonds

2,018,000

2,001,660

(i)

form of 2015 Second Tranche Bonds

351,520

357,349

(ii) form of 2015 Second Tranche Bonds

2,087,700

2,027,933

2015 Third Tranche Bonds

2,058,946

2,001,373

(i)

form of 2016 First Tranche Bonds

2,069,438

2,370,840

(ii) form of 2016 First Tranche Bonds

1,823,120

1,825,824

(i)

form of 2016 Second Tranche Bonds

1,492,786

2,558,294

(ii)

form of 2016 Second Tranche Bonds

1,480,625

1,508,906

(i)

form of 2016 Third Tranche Bonds

721,637

688,937

(ii)

form of 2016 Third Tranche Bonds

3,088,106

2,034,667

2018 First Tranche Bonds

3,178,473

3,105,087

2018 Second Tranche Bonds

2,098,800

2,067,073

(i)

form of 2019 First Tranche Bonds

1,718,865

-

(ii)

from of 2019 First Tranche Bonds

505,170

-

(i)

form of 2017 First Tranche Green Bonds

1,626,204

1,661,600

(ii) form of 2017 First Tranche Green Bonds

1,465,031

1,498,842

2018 Second Tranche Green Bonds

1,020,041

1,042,724

(i)

form of 2017 First Medium-term Notes

1,719,142

1,707,548

(ii) form of 2017 First Medium-term Notes

306,408

307,686

2018 First Tranche of Rental Apartments Special Bonds

3,124,505

3,197,867

2018 Second Tranche of Rental Apartments Special Bonds

2,116,596

2,067,073

36

17. SENIOR NOTES

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Senior notes

- 2022

USD senior notes issued in 2017 (Note a)

3,119,141

3,109,900

- 2023

USD senior notes issued in 2018 (Note b)

2,081,873

2,076,578

- 2028

USD senior notes issued in 2018 (Note c)

3,440,751

3,434,145

8,641,765

8,620,623

Analysis

Non-current liabilities

8,641,765

8,620,623

  1. On July 13, 2017, the Company issued senior fixed rate notes to the public at 99.425% of the aggregate principal amount of USD450,000,000 (approximately RMB3,048,000,000) (the "2022 USD Notes") which carry fixed interest of 3.875% per annum (interest payable semi-annually in arrears) and will be fully repayable by July 13, 2022.
    The 2022 USD Notes are listed on the Singapore Exchange Securities Trading Limited. They are senior obligations of the Company.
    At any time, the Company may at its option redeem the 2022 USD Notes, in whole or in part, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2022 USD Notes to be redeemed plus accrued and unpaid interest on the 2022 USD Notes to be redeemed, if any, to the date of redemption and (2) the Make Whole Price.
    At any time on or after the date when the 2022 USD Notes of no more than 10% of the aggregate principal amount (1) originally issued on July 13, 2017 and (2) issued on July 13, 2017 of any Additional Notes permitted under "Further Issues" remain outstanding, the Company may at its option redeem the remaining outstanding 2022 USD Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of such 2022 USD Notes plus accrued and unpaid interest, if any, to (but not including) the redemption date.
    "Make Whole Price" means with respect to 2022 USD Notes at any redemption date, the sum of (1) the present value of the principal amount of such 2022 USD Notes, assuming a scheduled repayment thereof on the maturity date, plus (2) the present value of the remaining scheduled payments of interest to and including the maturity date, in each case discounted to the redemption date at the Treasury Rate plus 50 basis points.
    In the opinion of the directors, the fair value of the early redemption options is insignificant at initial recognition and the end of the reporting period.
    Upon the occurrence of a change of control triggering event, the Company must make an offer to repurchase all outstanding 2022 USD Notes at a price in cash equal to 101% of their principal amount plus accrued and unpaid interest, if any, to (but excluding) the repurchase date.
    The net carrying amount of the 2022 USD Notes is stated net of unamortised issue expenses totalling USD4,198,000 (approximately RMB28,859,000) as at June 30, 2019 (2018: USD4,897,000 (approximately RMB32,685,000)) and the effective interest rate of the 2022 USD Notes is 4.21% per annum.

37

  1. On January 16, 2018, the Company issued senior fixed rate notes to the public at 99.699% of the aggregate principal amount of USD300,000,000 (approximately RMB1,932,831,000) (the "2023 USD Notes") which carry fixed interest of 3.90% per annum (interest payable semi-annually in arrears) and will be fully repayable by April 16, 2023.

  2. The 2023 USD Notes are listed on the Singapore Exchange Securities Trading Limited. They are senior obligations of the Company.
    At any time, the Company may at its option redeem each series of the 2023 USD Notes, in whole or in part, at a redemption price equal to the greater of (1) 100% of the principal amount of such series of the 2023 USD Notes to be redeemed plus accrued and unpaid interest on such series of the 2023 USD Notes to be redeemed, if any, to the date of redemption and (2) the Make Whole Price.
    At any time on or after the date when 2023 USD Notes of no more than 10% of the aggregate principal amount (1) originally issued on January 16, 2018 and (2) issued on January 18, 2018 of any Additional Notes permitted under "Further Issues" remain outstanding, the Company may as its opinion redeem the remaining outstanding 2023 USD Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of 2023 USD Notes plus accrued and unpaid interest, if any, to (but not including) the redemption date.
    "Make Whole Price" means, with respect to the 2023 USD Notes at any redemption date, the sum of (1) the present value of the principal amount of such 2023 USD Notes, assuming a scheduled repayment thereof on the maturity date, plus (2) the present value of the remaining scheduled payments of interest to and including the maturity date, in each case discounted to the redemption date at the Treasury Rate plus 50 basis points.
    In the opinion of the directors, the fair value of the early redemption options is insignificant at initial recognition and the end of the reporting period.
    Upon the occurrence of a change of control triggering event, the Company must make an offer to repurchase all outstanding 2023 USD Notes at a price in cash equal to 101% of their principal amount plus accrued and unpaid interest, if any, to (but excluding) the repurchase date.
    The net carrying amount of the 2023 USD Notes is stated net of unamortised issue expenses totalling USD2,540,000 (approximately RMB17,461,000) (2018: USD2,870,000 (approximately RMB19,698,000)) as at June 30, 2019 and the effective interest rate of the 2023 USD Notes is 4.14% per annum.
  3. On January 16, 2018, the Company issued senior fixed rate notes to the public at 99.793% of the aggregate principal amount of USD500,000,000 (approximately RMB3,221,385,000) (the "2028 USD Notes") which carry fixed interest of 4.50% per annum (interest payable semi-annually in arrears) and will be fully repayable by January 16, 2028.

    1. The 2028 USD Notes are listed on the Singapore Exchange Securities Trading Limited. They are senior obligations of the Company.
      At any time, the Company may at its option redeem each series of the 2028 USD Notes, in whole or in part, at a redemption price equal to the greater of (1) 100% of the principal amount of such series of the 2028 USD Notes to be redeemed plus accrued and unpaid interest on such series of the 2028 USD Notes to be redeemed, if any, to the date of redemption and (2) the Make Whole Price.
      At any time on or after the date when 2028 USD Notes of no more than 10% of the aggregate principal amount (1) originally issued on January 16, 2018 and (2) issued on January 18, 2018 of any Additional Notes permitted under "Further Issues" remain outstanding, the Company may as its opinion redeem the remaining outstanding 2028 USD updated Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of 2028 USD Notes plus accrued and unpaid interest, if any, to (but not including) the redemption date.
      "Make Whole Price" means, with respect to the 2028 USD Notes at any redemption date, the sum of
    2. the present value of the principal amount 2028 USD Note, assuming a scheduled repayment thereof on the maturity date, plus (2) the present value of the remaining scheduled payments of interest to and including the maturity date, in each case discounted to the redemption date at the Treasury Rate plus 50 basis points.

38

In the opinion of the directors, the fair value of the early redemption options is insignificant at initial recognition and the end of the reporting period.

Upon the occurrence of a change of control triggering event, the Company must make an offer to repurchase all outstanding 2028 USD Notes at a price in cash equal to 101% of their principal amount plus accrued and unpaid interest, if any, to (but excluding) the repurchase date.

The net carrying amount of the 2028 USD Notes is stated net of unamortised issue expenses totalling USD4,362,000 (approximately RMB29,987,000) (2018: USD4,614,000 (approximately RMB31,661,000)) as at June 30, 2019 and the effective interest rate of the 2028 USD Notes is 4.62% per annum.

The fair value of the 2022 USD senior notes issued in 2017, 2023 USD senior notes issued in 2018, and 2028 USD senior notes issued in 2018 with reference to the quoted market price available on the Singapore Exchange Securities Trading Limited are as follows:

Fair Value as at

June 30,

December 31,

Senior Notes

2019

2018

RMB' 000

RMB' 000

2022 USD senior notes issued in 2017

3,145,619

2,949,090

2023 USD senior notes issued in 2018

2,101,988

1,956,012

2028 USD senior notes issued in 2018

3,488,945

2,984,874

18. DERIVATIVE FINANCIAL INSTRUMENTS

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Derivative financial assets (under hedge accounting)

Cash flow hedges

- Cross currency interest rate swaps

483,480

313,611

- Foreign currency forward contracts

12,846

-

496,326

313,611

Analysis as:

Non-current assets

429,021

313,611

Current assets

67,305

-

496,326

313,611

Derivative financial liabilities (under hedge accounting)

Cash flow hedges

- Cross currency interest rate swaps

13,300

62,568

- Foreign currency forward contracts

58,582

114,197

71,882

176,765

Analysis as:

Non-current liabilities

71,882

176,765

39

Cross currency interest rate swaps and foreign currency forward contracts

At the end of the reporting period, the Group had cross currency interest rate swaps designated as highly effective hedging instruments in order to minimise its exposures to foreign currency and cash flow interest rate risk on its floating-rate HKD bank borrowings and fixed rate USD senior notes and corresponding interest payment by swapping a portion of those borrowings and senior notes and corresponding interest payment from HKD and USD to RMB and floating-rate interest payments to fixed rate interest payments.

At the end of the reporting period, the Group had foreign currency forward contracts designated as effective hedging instruments in order to minimise its exposures to foreign currency risk on its HKD bank borrowings by selling RMB in exchange for HKD at the borrowings maturity date.

The terms of the cross currency interest rate contracts and foreign currency forward contracts have been negotiated to match the terms of the respective designated hedged items and the directors consider that the cross currency interest rate swaps and foreign currency forward contracts are effective hedging instruments. The major terms of these contracts are as follows:

Cross currency interest rate swaps:

Notional amount

Maturity

Exchange rates

Interest rate swap

Buy HKD310,000,000

28/04/2020

RMB1: HKD1.1997 From HIBOR + 3.1% to fixed rate

(2018: Buy HKD310,000,000)

of 6.47%

Buy HKD310,000,000

28/04/2020

RMB1: HKD1.1998 From HIBOR + 3.1% to fixed rate

(2018: Buy HKD310,000,000)

of 6.47%

Buy HKD387,500,000

28/04/2020

RMB1: HKD1.2081 From HIBOR + 3.1% to fixed rate

(2018: Buy HKD387,500,000)

of 6.33%

Buy HKD500,000,000

28/04/2020

RMB1: HKD1.2065 From HIBOR + 3.1% to fixed rate

(2018: Buy HKD500,000,000)

of 6.25%

Buy USD70,000,000

29/01/2023

RMB1: USD0.1595

From fixed rate of 3.9% to fixed

(2018: Buy USD70,000,000)

rate of 4.17%

Buy USD175,000,000

16/04/2023

RMB1: USD0.1582

From fixed rate of 3.9% to fixed

(2018: Buy USD175,000,000)

rate of 3.65%

Buy USD30,000,000

16/01/2028

RMB1: USD0.1583

From fixed rate of 4.5% to fixed

(2018: Buy USD30,000,000)

rate of 5.5%

Buy USD20,000,000

16/01/2028

RMB1: USD0.1593

From fixed rate of 4.5% to fixed

(2018: Buy USD20,000,000)

rate of 5.5%

Buy USD50,000,000

16/01/2028

RMB1: USD0.1596

From fixed rate of 4.5% to fixed

(2018: Buy USD50,000,000)

rate of 5.5%

Buy USD30,000,000

16/01/2028

RMB1: USD0.1516

From fixed rate of 4.5% to fixed

(2018: Buy USD30,000,000)

rate of 5.5%

Buy USD55,000,000

16/04/2023

RMB1: USD0.1512

From fixed rate of 3.9% to fixed

(2018: Buy USD55,000,000)

rate of 4.9%

Buy USD50,000,000

13/07/2022

RMB1: USD0.1511

From fixed rate of 3.875% to fixed

(2018: Buy USD50,000,000)

rate of 4.875%

Buy USD30,000,000

16/01/2028

RMB1: USD0.1511

From fixed rate of 4.5% to fixed

(2018: Buy USD30,000,000)

rate of 5.5%

Buy USD50,000,000

13/07/2022

RMB1: USD0.1502

From fixed rate of 3.875% to fixed

(2018: Buy USD50,000,000)

rate of 4.8%

Buy USD50,000,000

13/07/2022

RMB1: USD0.1507

From fixed rate of 3.875% to fixed

(2018: Buy USD50,000,000)

rate of 4.8%

Buy USD20,000,000

16/01/2028

RMB1: USD0.1471

From fixed rate of 4.5% to fixed

(2018: Buy USD20,000,000)

rate of 5.44%

Buy USD20,000,000

16/01/2028

RMB1: USD0.1478

From fixed rate of 4.5% to fixed

(2018: Buy USD20,000,000)

rate of 5.44%

Buy USD20,000,000

16/01/2028

RMB1: USD0.147

From fixed rate of 4.5% to fixed

(2018: Buy USD20,000,000)

rate of 5.37%

Buy USD50,000,000

13/07/2022

RMB1: USD0.1594

From fixed rate of 3.875% to fixed

(2018: Buy USD50,000,000)

rate of 4.875%

40

Notional amount

Maturity

Exchange rates

Interest rate swap

Buy USD50,000,000

13/07/2022

RMB1: USD0.1511

From fixed rate of 3.875% to fixed

(2018: Buy USD50,000,000)

rate of 4.875%

Buy USD50,000,000

13/07/2022

RMB1: USD0.1511

From fixed rate of 3.875% to fixed

(2018: Buy USD50,000,000)

rate of 4.875%

Buy USD50,000,000

13/07/2022

RMB1: USD0.1512

From fixed rate of 3.875% to fixed

(2018: Buy USD50,000,000)

rate of 4.85%

Buy USD20,000,000

16/01/2028

RMB1: USD0.1474

From fixed rate of 4.5% to fixed

(2018: Buy USD20,000,000)

rate of 5.48%

Buy USD20,000,000

16/01/2028

RMB1: USD0.147

From fixed rate of 4.5% to fixed

(2018: Buy USD20,000,000)

rate of 5.48%

Buy USD20,000,000

16/01/2028

RMB1: USD0.1467

From fixed rate of 4.5% to fixed

(2018: Buy USD20,000,000)

rate of 5.38%

Buy USD30,000,000

16/01/2028

RMB1: USD0.144

From fixed rate of 4.5% to fixed

(2018: Buy USD30,000,000)

rate of 5.55%

Buy USD30,000,000

16/01/2028

RMB1: USD0.145

From fixed rate of 4.5% to fixed

(2018: Buy USD30,000,000)

rate of 5.55%

Buy USD30,000,000

13/01/2022

RMB1: USD0.1506

From fixed rate of 3.875% to fixed

(2018: Buy USD30,000,000)

rate of 4.805%

Buy USD30,000,000

13/01/2022

RMB1: USD0.1505

From fixed rate of 3.875% to fixed

(2018: Buy USD30,000,000)

rate of 4.805%

Buy USD40,000,000

13/07/2022

RMB1: USD0.1461

From fixed rate of 3.875% to fixed

(2018: Buy USD40,000,000)

rate of 4.55%

Buy USD20,000,000

16/01/2028

RMB1: USD0.1489

From fixed rate of 4.5% to fixed

(2018: nil)

rate of 5.37%

Buy USD20,000,000

16/01/2028

RMB1: USD0.1476

From fixed rate of 4.5% to fixed

(2018: nil)

rate of 5.35%

Foreign currency forward contracts:

Buy

Sell

Maturity

HKD500,000,000

RMB458,150,000

25/01/2023

HKD500,000,000

RMB456,500,000

25/01/2023

HKD500,000,000

RMB457,899,987

25/01/2023

HKD300,000,000

RMB277,770,000

25/01/2023

HKD300,000,000

RMB275,730,000

25/01/2023

HKD300,000,000

RMB277,500,000

25/01/2023

HKD300,000,000

RMB279,090,000

25/01/2023

HKD200,000,000

RMB185,400,000

25/01/2023

HKD300,000,000

RMB277,740,000

25/01/2023

HKD150,000,000

RMB137,475,000

25/01/2023

HKD200,000,000

RMB177,460,000

25/01/2023

HKD100,000,000

RMB92,150,000

25/01/2023

HKD300,000,000

RMB280,140,000

25/01/2023

HKD300,000,000

RMB278,940,000

25/01/2023

HKD300,000,000

RMB278,040,000

25/01/2023

HKD100,000,000

RMB91,220,000

25/01/2023

HKD200,000,000

RMB181,800,000

25/01/2023

HKD100,000,000

RMB91,500,000

25/01/2023

HKD300,000,000

RMB276,750,000

26/01/2023

HKD300,000,000

RMB280,350,000

26/01/2023

HKD300,000,000

RMB280,350,000

26/01/2023

HKD200,000,000

RMB186,940,000

26/01/2023

HKD100,000,000

RMB91,800,000

26/01/2023

HKD100,000,000

RMB92,400,000

26/01/2023

HKD100,000,000

RMB92,200,000

26/01/2023

HKD100,000,000

RMB91,800,000

26/01/2023

HKD100,000,000

RMB91,500,000

26/01/2023

41

Buy

Sell

Maturity

HKD100,000,000

RMB92,250,000

02/01/2024

HKD300,000,000

RMB278,100,000

25/01/2023

HKD150,000,000

RMB137,775,000

25/01/2023

HKD200,000,000

RMB182,440,000

25/01/2023

HKD100,000,000

RMB91,800,000

25/01/2023

HKD100,000,000

RMB92,400,000

25/01/2023

HKD500,000,000

RMB458,800,000

25/01/2023

HKD100,000,000

RMB89,500,000

25/01/2023

HKD200,000,000

RMB179,000,000

25/01/2023

HKD300,000,000

RMB275,130,000

25/01/2023

HKD300,000,000

RMB276,300,000

25/01/2023

All of the above cross currency interest rate swaps and foreign currency forward contract are designated and effective as cash flow hedges. The fair values gain of the above cross currency interest rate swap contracts totalling RMB287,598,000 during the period ended June 30, 2019 (for the year ended December 31, 2018: gain of RMB136,846,000) have been recognised in other comprehensive income and accumulated in equity. The fair value gain of the hedging instruments amounting to RMB99,097,000 during the period ended June 30, 2019 (for the year ended December 31, 2018: gain of RMB648,760,000) were reclassified from hedging reserve to profit and loss in the same period.

19. SHARE CAPITAL

Number of ordinary

shares of par value

Nominal value

HK$0.10 each

HK$' 000

Authorised

At January 1, 2018 and June 30, 2018

10,000,000,000

1,000,000

Issued and fully paid

At January 1, 2018

5,907,604,605

590,760

Issue of shares upon exercise of share options

22,732,500

2,273

At June 30, 2018

5,930,337,105

593,033

Shown in the condensed consolidated financial statements

At June 30, 2018

RMB' 000 equivalent

516,066

Authorised

At January 1, 2019 and June 30, 2019

10,000,000,000

1,000,000

Issued and fully paid

At January 1, 2019

5,938,471,605

593,847

Issue of shares upon exercise of share options (Note)

20,799,500

2,080

At June 30, 2019

5,959,271,105

595,927

Shown in the condensed consolidated financial statements

At June 30, 2019

RMB' 000 equivalent

518,584

RMB' 000 equivalent

At December 31, 2018

516,783

42

Note:

During the six months ended June 30, 2019, the Company issued 20,799,500 (2018: 22,732,500) ordinary shares of HK$0.10 each upon exercise of share options. The exercise price of the share options during the period range from HK$8.28 to HK$12.528 (equivalent to RMB7.27 to RMB11.00) (2018: HK$8.28 to HK$12.528 (equivalent to RMB6.98 to RMB10.56)). The new ordinary shares rank pari passu with the then existing shares in all respects.

20. ACQUISITION OF ASSETS AND LIABILITIES THROUGH ACQUISITION OF SUBSIDIARIES During the six months ended June 30, 2019, the Group acquired the interests in the following entities:

Equity

Place of

interests

incorporation/

acquired by

Total

Name of subsidiary

establishment

the Group

consideration

RMB' 000

Wuhan Yuanboyuan Real Estate Co. Ltd.

("Wuhan Yuanboyuan")

PRC

60% (Note a)

NIL

Fuzhou Shengjia Properties Development Co. Ltd.

PRC

37% (Note b)

18,500

Wuhan Chenmingzhongli Real Estate Co. Ltd.

PRC

60%

6,000

Hangzhou Binzhe Management Co. Ltd.

PRC

34% (Note b)

286,200

Shenzhen Chuangzhen Management Co. Ltd.

PRC

30% (Note c)

621,718

Beijing Kaiyuanhean Investment Co. Ltd.

PRC

51%

598,158

Notes:

  1. During the six months ended June 30, 2019, pursuant to a revised shareholders' agreement of Wuhan Yuanboyuan, which was previously accounted for as a joint venture of the Group, entered into between the Group and its joint venture partner, the Group has obtained control of voting power to govern the relevant activities of the entity. Unanimous consent from the shareholders of this entity was required for relevant activities before signing of revised shareholders' agreement. After signing of the revised shareholders' agreement, relevant activities of the entity are decided by the shareholders' meeting and consent with simple majority is required from the shareholders' meeting. The Group has 60% voting power in the shareholders' meeting, the Group is able to exercise control of the entity and thus it is regarded as a subsidiary of the Group.
  2. The relevant activities of the entity require consent with more than half of the directors in the board of directors of the entity. The Group has the power to appoint three out of five directors in the board of directors of the entity and as such, the Group is able to exercise control of the entity and thus it is regarded as a subsidiary of the Group.
  3. The relevant activities of the entity require consent with more than half of the directors in the board of directors of the entity. The Group has the power to appoint two out of three directors in the board of directors of the entity and as such, the Group is able to exercise control of the entity and thus it is regarded as a subsidiary of the Group.

43

Assets acquired and liabilities recognised in these transactions at the date of acquisition are as follows:

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

Investment property

2,751,777

-

Property, plant and equipment

3,118

40,970

Properties held for development

1,619,154

4,019,553

Properties under development for sales

6,394,663

3,366,593

Amounts due from the Group

158,235

-

Amounts due from non-controlling interests

350,000

-

Accounts and other receivables, deposits and prepayments

247,867

580,092

Taxation recoverable

-

6,400

Deferred taxation assets

-

34

Bank balances and cash

126,043

79,874

Accounts and bills payables, deposits received and accrued charges

(1,367,508)

(740,485)

Amounts due to ex-shareholders assigned to the Group

-

(3,551,985)

Amounts due to the Group

(1,538,078)

(6,180)

Amounts due to non-controlling interests

(3,187,620)

(1,235,747)

5,557,651

2,559,119

Less: Non-controlling interests

(2,869,269)

(537,209)

2,688,382

2,021,910

Consideration satisfied by:

Cash

1,530,576

2,074,997

Consideration payable

-

493,650

Consideration payable to non-controlling interests

-

2,995,341

Interest in joint venture

1,157,806

9,907

2,688,382

5,573,895

Less: Loans assignment

-

(3,551,985)

Consideration for acquiring the equity interest in the subsidiaries

2,688,382

2,021,910

Net cash outflow:

Cash paid

(1,530,576)

(2,074,997)

Less: Cash and cash equivalent balances acquired

126,043

79,874

(1,404,533)

(1,995,123)

In the opinion of directors, the acquisition of these entities do not constitute businesses. Therefore, the transactions were determined by the directors of the Company to be acquisition of assets and liabilities rather than a business combination as defined in IFRS 3 (Revised) Business Combinations.

21. DISPOSAL OF PARTIAL INTEREST IN SUBSIDIARIES NOT RESULTING IN LOSING OF CONTROL

During the six months ended June 30, 2019, the Group disposed of its 35% equity interest in Ningbo Jinjun Properties Information Consulting Co. Ltd. ("Ningbo Jinjun"), which is wholly-owned subsidiary of the Company, to independent third party at considerations of RMB89,950,000, respectively. The difference between the consideration received and the net asset values disposed of are considered insignificant.

44

Subsequent to the disposal, the remaining 65% equity interest of Ningbo Jinjun is still held by the Group. In the opinion of the directors, the Group has sufficiently dominant voting interest to direct the relevant activities of the Company and therefore the Group has control over it. Accordingly, the entity remained as subsidiary of the Group and the disposal have been accounted for as equity transactions.

22. DEEMED DISPOSAL OF PARTIAL INTERESTS IN SUBSIDIARIES NOT RESULTING IN LOSING OF CONTROL

During the period ended June 30, 2019, the Group deemed partial disposed the interest in the following entities:

Equity interest

Equity interest

held by

held by

Capital

the Group

the Group

Increased

injection from

Place of

before deemed

after deemed

in paid up

independent

Name of subsidiary

incorporation

disposal

disposal

capital

third parties

RMB' 000

RMB' 000

Jiaxing Zhenyue Real Estate

Consultancy Co., Ltd.

PRC

100%

51%

700,000

343,000

Guangzhou Xuanliang

25.1%

Development Ltd.

PRC

100%

(Note a)

270,000

202,230

During the period ended June 30, 2018, the Group deemed partial disposed the interest in the following entities:

Equity interest

Equity interest

held by

held by

Capital

the Group

the Group

Increased

injection from

Place of

before deemed

after deemed

in paid up

independent

Name of subsidiary

incorporation

disposal

disposal

capital

third parties

RMB' 000

RMB' 000

Fuzhou Chenrui Investment

Co., Ltd.

PRC

100%

60%

10,000

4,000

Jinan Taihui Real Estate

34%

Development Co., Ltd.

PRC

100%

(Note b)

1,280,000

844,800

Note:

  1. The relevant activities of the entity require consent with more than half of the directors in the board of directors of the entity. The Group has the power to appoint four out of seven directors in the board of directors of the entity and as such, the Group is able to exercise control of the entity and thus it is regarded as a subsidiary of the Group.
  2. The relevant activities of the entity require consent with more than half of the directors in the board of directors of the entity. The Group has the power to appoint three out of five directors in the board of directors of the entity and as such, the Group is able to exercise control of the entity and thus it is regarded as a subsidiary of the Group.

In the opinion of the directors, the difference between the consideration received and the attributable net asset values deemed disposed of are considered insignificant for each of the deemed disposals above.

45

23. PLEDGE OF ASSETS

The following assets were pledged to secure certain banking facilities granted to the Group at the end of the reporting period:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Investment properties

29,406,362

26,768,840

Prepaid lease payment

-

329,657

Inventories of properties

97,644,055

83,591,945

Pledged bank deposits

133,954

180,529

127,184,371

110,870,971

24. COMMITMENTS

At the end of the reporting period, the Group had the following commitments:

At

At

June 30,

December 31,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(audited)

Contracted but not provided for in the condensed consolidated

financial statements:

- Expenditure in respect of projects classified as properties under

development for sales and investment properties under development

56,430,186

46,873,439

- Expenditure in respect of acquisition of properties held for development

6,118,964

8,092,178

62,549,150

54,965,617

25. CONTINGENT LIABILITIES

The Group provided guarantees amounting to RMB9,534,882,000 (at December 31, 2018: RMB8,543,177,000) as at June 30, 2019 in respect of mortgage bank loans granted to purchasers of the Group's properties. In the opinion of the directors of the Company, the fair values of these financial guarantee contracts of the Group are insignificant at initial recognition and the directors of the Company consider that the possibility of the default of the parties involved is remote, accordingly, no value has been recognised at the inception of the guarantee contracts and at the end of the reporting period as at June 30, 2019 and December 31, 2018.

Guarantees are given to banks with respect to loans procured by the purchasers of the Group's properties. Such guarantees will be released by banks upon delivery of the properties to the purchasers and completion of the relevant mortgage properties registration.

46

26. SHARE-BASED PAYMENT TRANSACTIONS

The Company's restricted share award scheme (the "Restricted Share Award Scheme") and Post-IPO share option scheme (the "Post-IPO Share Option Scheme") were adopted pursuant to resolutions passed on October 28, 2014 and December 23, 2009 respectively. The objective of the Restricted Share Award Scheme is to recognise and motivate the contribution of directors and employees of the Group, to provide incentives, to help the Group in retaining its existing employees and recruiting additional employees and to provide them with economic interests in attaining the long-term business objectives of the Group. The share award scheme allows the Group to make bonus payments to eligible persons by way of the Company's shares acquired by and held through an independent trustee until fulfillment of specified conditions before vesting.

On March 31, 2019, 26,790,000 shares of the Company were awarded to the directors and employees of the Group respectively under the Restricted Share Award Scheme. The share awards granted to directors and employees are to be vested in equal entitlement during each year of the vesting period, from 4 to 10 years. The first vesting date is April 1, 2020 respectively. The estimated fair value of the awards granted are RMB633,030,578 based on the market prices of the relevant shares at the grant dates.

The primary purpose of Pre-IPO Share Option Scheme and Post-IPO Share Option Scheme is to provide incentives to directors and eligible employees. The Pre-IPO Share Option Scheme and Post-IPO Share Option Scheme will expire in 10 years from the date of adoption.

The table below discloses movements of the Company's share awards and share options outstanding:

Number of

Number

share awards

of share

under Restricted

options under

Share Award

Post-IPO Share

Scheme

Option Scheme

Outstanding as at January 1, 2019

71,486,500

110,901,500

Granted during the period

26,790,000

-

Exercised during the period

-

(20,799,500)

Vested during the period

(8,731,250)

-

Forfeiture during the period

(525,375)

-

Outstanding as at June 30, 2019

89,019,875

90,102,000

The weighted average closing price of the Company's shares immediately before the dates on which the options were exercised was HK$26.33.

The Group recognised expenses of RMB134,255,000 and RMB4,748,000 for the six months ended June 30, 2019 (six months ended June 30, 2018: RMB94,497,000 and RMB10,545,000) respectively in relation to share awards and share options granted to the directors and employees of the Group. The shares awarded by the Company will be settled with the existing shares held by the trust. Accordingly, the respective amounts were credited to share award reserve. The expenses in relation to share options were credited to share option reserve.

47

27. RELATED PARTY TRANSACTIONS/BALANCES Related Party Transactions

During the period, the Group entered into the following significant transactions with its related parties:

  1. Joint ventures

Six months ended June 30,

2019 2018

RMB' 000 RMB' 000

(unaudited) (unaudited)

Consultancy income

71,096

182,959

  1. Associates

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Consultancy income

11,059

164,648

(c)

Key management

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Sales of properties

51,225

66,905

(d)

Related companies

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Property management income (Note)

1,643

4,181

Administrative expenses (Note)

13,733

3,509

Note: The related companies are controlled by Madam Wu Yujun, a director of the Company.

  1. The remuneration of directors and other members of key management during the period was as follows:

Six months ended June 30,

2019

2018

RMB' 000

RMB' 000

(unaudited)

(unaudited)

Short-term benefits

56,850

51,200

Post-employment benefits

259

239

Share-based payment

22,068

16,577

79,177

68,016

48

Related Party Balances

  1. Amounts due from non-controlling interests/associates/joint ventures

The amounts are denominated in RMB, except for an amount due from a joint venture of RMB2,072,548,000 is denominated in HKD, all of which are unsecured and interest-free. The amounts due from associates and joint ventures mainly represented the land costs paid on their behalf for properties held under development. In the opinion of the directors of the Group, the amounts are expected to be repaid within 12 months after the end of the reporting period and therefore classified as current asset.

  1. Amounts due to non-controlling interests/associates/joint ventures

The amounts are denominated in RMB which are unsecured, interest-free and repayable on demand.

28. 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 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 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 those derived from 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).

Fair value as at

June 30,

December 31,

Fair value

Financial assets/(liabilities)

2019

2018

hierarchy

Valuation techniques and key inputs

RMB'000

RMB'000

Cross currency interest rate swaps and

Assets: 496,326

Assets: 313,611

Level 2

Discounted cash flows. Future cash flows

foreign currency forward contracts classified

Liabilities: (71,882)

Liabilities: (176,765)

are estimated based on forward exchange

as derivative financial instruments in the

rates and interest rates (from observable

condensed consolidated statement of financial

forward exchange rates and yield curves

position

at the end of the reporting period) and

contracted forward rates and interest rates,

discounted at a rate that reflects the credit

risk of the Group or the counterparties, as

appropriate.

Early redemption option derivatives in relation

148,245

390,672

Level 2

The fair value of early redemption options

to the Domestic Corporate Bonds, Green Bonds

are determined by assessing the difference

and Rental Apartments Special Bonds issued by

between the fair values of the bonds by

the Group

quoted price and the pure bond value.

Equity instruments designated as at FVTOCI

895,141

734,265

Level 3

The fair value of equity instruments

designated as at FVTOCI are determined

by recent transaction of the entity's own

securities.

49

Except as detailed in the following table, the directors of the Company consider that the carrying amounts of financial liabilities recorded at amortised cost in the condensed consolidated financial statements approximate their fair values:

At June 30, 2019

At December 31, 2018

Carrying

Carrying

amount

Fair value

amount

Fair value

RMB' 000

RMB' 000

RMB' 000

RMB' 000

Financial liabilities

Bonds, unsecured

35,802,375

36,071,113

34,699,699

34,955,422

2022 USD Notes issued in 2017

3,119,141

3,145,619

3,109,900

2,949,090

2023 USD Notes issued in 2018

2,081,873

2,101,988

2,076,578

1,956,012

2028 USD Notes issued in 2018

3,440,751

3,488,945

3,434,145

2,984,874

29. EVENTS AFTER THE REPORTING PERIOD

  1. On July 18, 2019, the Group through Chongqing Longhu Development, an indirectly wholly-owned subsidiary, issued the (i) form of 2019 first tranche of Rental Apartments Special Bonds of RMB500,000,000 with a coupon rate of 3.90% repayable in full by July 19, 2024. Chongqing Longhu Development is entitled to adjust the coupon rate on June 19, 2022, and after that, the investors have the option to sell back the bonds on July 19, 2022.
    The proceeds from issuance of the Rental Apartment Special Bonds will be used for refinancing and in accordance with the approval obtained by Chongqing Longhu Development from the China Securities Regulatory Commission of the PRC on March 5, 2019.
  2. On July 18, 2019, the Group through Chongqing Longhu Development, an indirectly wholly-owned subsidiary, issued the (ii) form of 2019 first tranche of Rental Apartments Special Bonds of RMB1,500,000,000 with a coupon rate of 4.67% repayable in full by July 19, 2026. Chongqing Longhu Development is entitled to adjust the coupon rate on June 19, 2024 and after that, the investors have the option to sell back the bonds on July 19, 2024.
    The proceeds from issuance of Rental Apartments Special Bonds will be used for refinancing and in accordance with the approval that obtained by Chongqing Longhu Development from the China Securities Regulatory Commission of the PRC on March 5, 2019.
  3. On July 14, 2019, the investors have sold back (ii) form of 2016 Second Tranche Bonds with principal amount of RMB230,000,000 at a redemption price equal to 100.00% of the principal amount to Chongqing Longhu Development.

50

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Longfor Properties Co. Ltd. published this content on 09 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 September 2019 00:01:04 UTC