Shui On Land : ANNOUNCEMENT OF 2021 ANNUAL RESULTS

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Shui On Land Limited

瑞安房地產有限公司*

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 272)

Announcement of 2021 Annual Results

HIGHLIGHTS

• Strong rebound from FY2020: Group revenue amounted to RMB17,555 million, representing a 282% increase compared to last year, mainly due to a significant increase in property sales. Together with the strong recovery in the commercial portfolio, the Group has returned to profitability compared to a net loss in 2020 due to the COVID- 19 outbreak. Profit attributable to shareholders totalled RMB1,636 million in FY2021.
• Property sales increased 8.4x Y/Y: Property sales revenue for FY2021 increased significantly by 8.4x to RMB13,638 million, backed by the contributions from Shanghai Taipingqiao Ville V (Lot 118), Wuhan Tiandi La Riva II (Lot B10) and Shanghai Panlong Tiandi.
• Commercial portfolio demonstrated strong performance: Total rental & related income (including joint ventures and associates) was RMB2,915 million, representing a robust growth of 29% Y/Y. Occupancy rates of both our retail and office as of 31 December 2021 were above 90%.
• Solid balance sheet enables Company to capture new market opportunities: The net gearing ratio further
  lowered to a very healthy level at 30% (31 December 2020: 45%), reflecting our prudent approach in managing our balance sheet. This solid financial enable us to expand our footprint in Nanjing, Shanghai and Wuhan in 2021.
• Dividend and Share Repurchase declared: In light of the Group's strong financials, the Board has recommended
  a final dividend for the year of HKD0.084 per share (2020: nil). In addition, the Board has approved a Share Repurchase Plan of up to HKD500 million, with a view to enhance earnings per share and overall shareholders' return. Together with an interim dividend of HKD0.036 per share, the full year dividend for 2021 amounted to HKD0.12 per share (2020: nil).
• Key achievements in sustainability strategy: In March 2021, the Group became the first China-based developer to commit to the Science-Based Targets initiatives ("SBTi"), targeting to limit global warming to below 2°C above pre-industrial temperatures. In June 2021, the Group also successfully issued our inaugural 5 Year, USD400 million Sustainability-Linked Bond. This transaction marked another milestone in the Group's journey in green and sustainable finance. The Group has also become one of only three companies in China being included in 2022 Bloomberg Gender-Equality Index, a testimony to our workplace equality achievement.

Website: www.shuionland.com

PERFORMANCE HIGHLIGHTS

			Year-on-Year
	2021	2020	Growth/ (Decline)
Grand total rental and related income (RMB'million)	2,9151	2,2611	29%
Contracted sales (RMB'million)	30,270	21,184	43%
Subscribed sales (RMB'million)	5,505	4,914	12%
Selected Financial Information (RMB'million)
Revenue	17,555	4,597	282%
Property sales recognised as revenue	13,638	1,448	842%
Consolidated rental and related income	2,259	1,874	21%
Gross profit	7,173	2,350	205%
Profit/(Loss) for the year	2,208	(233)	(1,048%)
Profit/(Loss) attributable to shareholders of the Company	1,636	(740)	(321%)
Selected Financial Ratios
Gross profit margin	41%	51%	(10ppt)
Net profit/(loss) margin	13%	(5%)	18ppt
Earnings/(Loss) per share (basic), RMB cents	20.3	(9.2)	(321%)
	31 December	31 December	Changes
	2021	2020
Selected Balance Sheet Data (RMB'million)
Total assets	113,896	115,475	(1%)
Cash and bank deposits	17,284	15,796	9%
Total indebtedness	31,863	36,859	(14%)
Net debt	14,579	21,063	(31%)
Total equity	49,178	46,733	5%
Net gearing (Net debt-to-equity ratio), at the end of year	30%	45%	(15ppt)
Average cost of indebtedness, at the end of year	4.6%	4.8%	(20bps)
Landbank (GFA, million sq.m.)
Total leasable and saleable landbank	7.0	6.4	9%
Attributable leasable and saleable landbank	4.3	4.1	5%

1 Including rental income from Shanghai RHXC commercial partnership portfolio, 5 Corporate Avenue and Hubindao, and Nanjing IFC, in which, the Group has 49.5%, 44.55% and 50% effective interests, respectively. We acquired Nanjing IFC in February 2021.

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BUSINESS REVIEW

Shui On Land is a leading commercial property focused developer, owner and asset manager in China, anchored by a prime city center portfolio in Shanghai. We believe in the creation of long-term value through the design, development and management of unique office and retail products. Our "Asset Light Strategy" enables us to enhance our financial strength, diversify our capital base and invest in new opportunities, and it has proven to greatly facilitate our strategic transformation.

The Group is undergoing a strategic restructuring of all its operations and business segments relating to commercial real estate to be managed in the future by wholly-owned subsidiary Shui On Xintiandi ("SXTD"). Positioned to be a leading investor and manager of premium and sustainable commercial properties in China, SXTD will own one of the largest portfolios of commercial properties in prime locations in Shanghai and it will have a strong presence in other high-growth cities in the country. This strategic restructuring will help unlock the value of our commercial property portfolio, allow a more efficient deployment of management resources, and increase flexibility in operational and financial management.

Our motto is "to be a pioneer in developing and operating sustainable premium urban communities". Since the inception of Shui On Land, sustainable development has been part of our DNA and we have always been committed to caring for the environment, to preserving and rejuvenating China's cultural heritage, and to building and sustaining vibrant communities. Sustainability is our business strategy, not a separate initiative. We employ a people-centric, sustainable approach to design and build master-planned communities, and we have a widely-recognised record of accomplishment in sustainable development.

KEY ACHIEVEMENTS IN 2021

• We recorded contracted sales of RMB30.3 billion, representing a 43% Y/Y increase. This includes the launch of Shanghai Taipingqiao Ville V (Lot 118), Shanghai RHXC Ocean One (Lot 7) and Shanghai Panlong Tiandi. Our RMB5.5 billion of subscribed sales as of 31 December 2021 is expected to convert into contracted property sales in coming months.
• Our commercial property portfolio has also seen strong rental income growth. Including properties held by joint ventures and associates, total rental and related income increased by 29% Y/Y to RMB2,915 million in 2021, of which 75% was contributed by our portfolio located in Shanghai.
• In February 2021, the Group successfully acquired a mixed-useGrade-A landmark property in Nanjing with Grosvenor on a 50/50 basis. The property consists of a 45-storeyGrade-A office tower, a 7-storey retail podium, as well as 181 underground parking lots with a total GFA of 118,000 sq.m.. The investment is a milestone for Shui On Land in growing our presence in Nanjing beyond the Nanjing INNO project, and it aligns with our Asset Light Strategy of collaborating with strategic partners to invest in prime commercial property assets and expand assets under management.
• In March 2021, the Group became the first China-based developer to commit to the SBTi, targeting to limit global warming to below 2°C above pre-industrial temperatures. On 29 June 2021, the Group successfully issued its inaugural USD400 million Sustainability-Linked Bond ("SLB") under the Sustainability-Linked Bond Framework. The SLB has a target of reducing our Scope 1 and 2 GHG emissions intensity (per sq.m.) by 25% by 2024 from a 2019 baseline.
• In June 2021, the Group formed a joint venture with Shanghai Yongye Enterprise (Group) Co., Ltd. on a 50/50 basis to carry out the property development in Huangpu District, Shanghai. The total site area of approximately 24,000 sq.m. will enable the Group to further expand its footprint in the world-renowned Shanghai Xintiandi area.
• In September 2021, Shanghai RHXC Hall of the Sun was completed and saw strong shopper traffic at its soft opening. With a retail GFA of 185,000 sq.m. and office GFA of 145,000 sq.m., the project has attracted and introduced a number of brands to open their "first-in-China/Shanghai" stores in the shopping center.

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• In December 2021, the Group established a 50/50 joint venture with the subsidiaries of Wuhan Urban Construction Group and won a bid for lands located in the Wuchang district of Wuhan at a total consideration of RMB17.0 billion for residential and mixed-use property development.
• The Group is undergoing the restructuring of all its operations and business segments relating to commercial real estate to be managed under a major wholly-owned subsidiary, SXTD.

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PROPERTY SALES PERFORMANCE

Recognised Property Sales

For 2021, total recognised property sales were RMB22,022 million (after deduction of applicable taxes). The significant increase of 112% was mainly due to the contributions from Shanghai Taipingqiao Ville V (Lot 118), Wuhan Tiandi La Riva II (Lot B10) and Shanghai Panlong Tiandi. The average selling price ("ASP") (including carparks) decreased by 6% to RMB46,900 per sq.m. compared to 2020, as most of the sales this year were recorded from Panlong Tiandi and Wuhan Tiandi with lower ASP.

The table below summarises by project the recognised property sales (stated after the deduction of applicable taxes) for

2021 and 2020:

			2021				2020
		Sales	GFA			Sales	GFA
	Project	revenue	sold	ASP1		revenue	sold	ASP1
		RMB'		RMB		RMB'		RMB
		million	sq.m.	per sq.m.		million	sq.m.	per sq.m.
	Shanghai Taipingqiao
	Residential (Lot 118)	5,936	39,500	164,500	-	-	-
	Shanghai RHXC
	Residential (Lot 2)	-	-	-	262	2,300	120,400
	Residential (Lot 1)	3,391	33,900	109,100	7,125	73,100	107,200
	Retail	-	-	-	69	900	81,100
	Shanghai Panlong Tiandi	3,227	57,200	61,700	-	-	-
	Wuhan Tiandi
	Residential	4,115	104,800	43,000	-	-	-
	Wuhan Optics Valley
	Innovation Tiandi
	Residential	2,124	112,600	20,600	261	18,700	15,000
	Foshan Lingnan Tiandi
	Residential	205	8,800	25,600	944	41,600	24,900
	Retail	12	1,500	8,700	62	4,700	14,000
	Chongqing Tiandi
	Residential2	2,491	152,500	21,700	1,450	83,900	23,000
	Retail	45	2,200	22,300	70	3,600	20,800
		───────────	───────────			───────────	───────────
	Subtotal	21,546	513,000	45,900	10,243	228,800	49,000
		───────────	───────────			───────────	───────────
	Carparks	476	-	-	160	-	-
		───────────	───────────			───────────	───────────
	Grand Total	22,022	513,000	46,900	10,403	228,800	49,800
		───────────	───────────			───────────	───────────
	Recognised as:
	- property sales in revenue
	of the Group3	13,638			1,448
	- revenue of associates	6,260			8,694
	- revenue of joint ventures	2,124			261
		───────────				───────────
	Grand Total	22,022			10,403
		==========			==========
Notes:

1

2

3

The calculation of ASP per sq.m. is based on gross sales revenue before the deduction of applicable taxes.

ASP of Chongqing residential sales is based on net floor area, a common market practice in the region. Residential sales of RMB2,491 million, ancillary retail space of RMB41 million and carparks sales of RMB61 million were contributed by Chongqing Tiandi partnership portfolio and were recognised as revenue of associates in 2021. The Group holds 19.8% interests in the partnership portfolio.

Sales of commercial properties are recognised as "revenue" if the properties concerned are designated for sale prior to the commencement of development. Sales of commercial properties previously designated as held for capital appreciation or rental income are recognised as "disposal of investment properties".

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