Yuzhou : Antecede Firmly on the Road of Ingenuity Yuzhou Group (01628.HK) Achieved Profit-Oriented and Quality Growth

【For Immediate Release】

Antecede Firmly on the Road of Ingenuity

Yuzhou Group (01628.HK) Achieved Profit-Oriented and Quality Growth

FINANCIAL HIGHLIGHTS

For the period ended 30 June 2021：

• • Contracted sales achieved RMB52,714.07 million for the six-month period ended 30 June.2021, increased by 23.02% year on year, achieved 47.92% of the full year target.
  • Revenue reached RMB12,008.10 million with a year-on-year increase of 494.86%, and the gross profit margin was around 22%, achieving profit-oriented and quality growth.
  • Profit for the period increased to RMB1,201.81 million.
  • Core profit amounted to RMB1,136.28 million in the first half of 2021. Core profit attributable to owners of the parent* amounted to RMB791.26 million in the first half of 2021.
  • Declared an interim dividend of HK5.3 cents per share, representing 35% of core profit attributable to owners of the parent.
  • The cash over short-term debt ratio was 1.85 and net gearing ratio was 80.42%, which was down by 5.38 percentage points as compared to that as at 31 December 2020, both of which were steady in the green position. The asset-liability ratio after excluding advance receipts was about 73.98%, which was down by 3.94 percentage points compared with that of 31 December 2020, and the "three red lines" are expected to be fully met.
  • Weighted average funding cost was 7.13%, decreased by 0.09 percentage points year-over-year.
• excluding non-recurring profit and loss items and their related tax expenses, comprising fair value gain on investment properties, net exchange difference, etc.

(12 August 2021, Hong Kong) Yuzhou Group Holdings Company Limited ("Yuzhou Group" or the "Company", together with its subsidiaries, the "Group", stock code: 01628.HK), one of China's top 40 real estate enterprises, announced the interim results for the six-month period ended 30 June 2021 (the "Period").

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Looking back at the first half of 2021, as the negative impact of the COVID-19 epidemic gradually faded away, and coupled with a series of proactive fiscal policies and prudent monetary policies adopted by the state and governments at all levels, the post-pandemic real estate market continued to be recovered, and the scale of commodity housing sales increased significantly. In the first half of 2021, Yuzhou Group, guided by the policy of "stabilizing housing price, land premium and expectation", adhered to move forward steadily, pursuing profit-oriented and quality growth. During the period, the Yangtze River Delta Region (including Suzhou, Hefei, Nanjing, Shanghai, Ningbo and other deep-cultivated cities), which is the focus of the Group, showed a steady trend after a fast recovery. The sales volume in these cities remained at a higher growth rate, which reflects relatively sustained and strong market demand in the major core tier-1 and tier-2 cities.

Strong Debt Control and Internal Management - "Three Red Lines" Are Expected to Be Fully Met

As at June 30, 2021, the Group had total bank and other borrowings, corporate bonds and senior notes balance of RMB60,185.60 million, representing a decrease of 5.81% as compared to RMB63,899.71 million as at December 31, 2020.

In addition, net gearing ratio was also effectively controlled, decreasing by 5.38 percentage points to 80.42% when compared to that as of 31 December 2020. During the Period, weighted average funding cost was 7.13%, representing a decrease of 0.09 percentage points from 7.22% for the same period of previous year, continuing steadily declining at a reasonable level.

In terms of cash flow, as at June 30, 2021, the Group had cash of RMB28,071.52 million, which was sufficient for covering short-term debts. Cash to short-term debts ratio was 1.85 times, reflecting a strong liquidity position.

The Group has been adopting a prudent financial policy for proactively conducting debt management and optimizing debt structure to balance financial risks and control the finance costs. In addition, since "three red lines" proposed, Yuzhou Group's net gearing ratio and cash to short-term debt ratio have been significantly reached regulatory requirements. As the Group continues to resolutely control the total debt and deleverage, the "three red lines" are expected to be fully met.

Robust Results and Sufficient Saleable Value - Deeply Cultivate the Layout of Six Metropolitan Areas

During the Period, the revenue of the Group was mainly derived from four business categories, including property sales revenue, rental income from investment properties, property management fee income and hotel operation income. For the six-month period

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ended June 30, 2021, the total revenue of the Group was RMB12,008.10 million, up by 494.86% year-on-year, and the gross profit margin was around 22%, achieving profit- oriented and quality growth. Profit for the period increased to RMB1,201.81 million. Property sales revenue was RMB11,677.05 million, up by 618.20% compared to the corresponding period last year, accounting for 97.24% of the total revenue and the Group delivered total GFA of approximately 904,804 sq.m., representing a year-on-year increase of 702.74%. In addition, the Group has always been keeping the high payout ratio for years and declared the interim dividend of HK5.3 cents with the dividend payout ratio reached 35%.

In the first half of 2021, under the development strategy of "Leading with locality development", the Group continuously developed in the six major metropolitan areas namely Yangtze River Delta Region, Bohai Rim Region, West Strait Economic Zone, Central China Region, Greater Bay Area, and Southwest Region. As of June 30, 2021, the Group's accumulated GFA of contracted sales amounted to 2,845,342 sq.m. and the contracted average selling price was approximately RMB18,526 per sq.m.. The Group's accumulated contracted sales amounted to RMB52,714.07 million, increased by 23.02% year on year, achieved 47.92% of the full-year target, the Group is very confident to achieve the 110 billion leap.

The Group continued to pursue the strategic policy of deep cultivation in the market, further consolidated the geographical advantages, strengthened the intensity of development, realized the scale effect by product quality and enhanced our brand profile and word of mouth through accumulated scale advantages over the years, thereby achieving virtuous cycle of locality development. In the first half of 2021, following the principle of "In-depth Cultivation", in view of the land auction market, the Group, after thorough research and analysis, obtained 4 high-quality land parcels at attractive prices in Suzhou, Zhengzhou and Jiangmen with a total GFA of approximately 547,871 sq.m.. The average land cost was RMB7,847 per sq.m.. All the above new projects were located in the core areas of these cities. As of June 30, 2021, the Group had land reserves amounting to approximately 22.00 million sq.m. of aggregate saleable GFA, with 179 projects located in 39 cities in the six metropolitan areas. The average land cost was approximately RMB6,854 per sq.m.. The Group believes that its land reserves currently held and managed are sufficient for its development over the next three to four years.

Bolster Commercial Sector, Service Oriented - Diversified Business Help Value Return

The Group's revenue from property investment was around RMB96.93 million. The Group's property investment segment with a variety of commercial offerings covers shopping centers, shopping streets and office buildings, to shape two product lines as the "Yu Yue" brand for shopping centers and "Yuzhou Plaza" brand for office buildings. Yuzhou Commercial has operated in metropolitan areas such as the West Strait Economic Zone, the Yangtze River

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Delta Region and the Greater Bay Area, currently cover areas such as Shenzhen, Shanghai, Hangzhou, Xiamen, Suzhou, Nanjing, Hefei, Wuhan and Quanzhou. There were 28 projects under operation and 11 projects in preparation period, 39 projects in total with a commercial area of over 1.52 million sq.m., where shopping mall, office building and community business accounted for 61%, 23% and 16% respectively. Operational projects covered over 1,000 cooperative brands and approximately 1,600 strategic alliance brands.

At present, Yuzhou Commercial has begun to innovate in the four major areas of business format, model, design, and capital. Relying on the powerful membership platform of Yuzhou Group, it integrates the data of various sections of the Group in an open and modular way to promote big data innovation, with user needs as the core, striving to build Yujia Wisdom based on WeChat mini programs for consumers, BI systems for merchants and ERP management systems for operations. In the future, Yuzhou Commercial Company will be committed to promoting the development of diversified value-added services such as market research and positioning, tenant solicitation and opening preparation services, enhancing brand value and customer satisfaction, and promoting the rapid and quality growth of this business line through a series service upgrades in both software and hardware, to create a distinctive "new commercial name card".

During the period, the scale of property management business of the Group continued to expand, with revenue from the property management business of RMB227.27 million. As of June 30, 2021, the total GFA of the managed projects of the Group was more than 20 million sq.m. and the total contracted area was more than 27 million sq.m.. In particular, the proportion of GFA under management from third parties was more than 14%. The managed projects (in terms of GFA) accounted for more than 55% in the Yangtze River Delta Region, and more than 26% in the West Strait Economic Zone.

2021 is vital for U Life Services to achieve "Ingenuity". Yuzhou Property Management upholds the spirit of craftsmanship and executes the service concept of "paying for your life's trust". Starting from the three levels of property, community, and owner, it has formulated 41 service operations, 168 quality management requirements, 349 service standards, and 645 on-site management standards, based on the four major systems of safety, environment, maintenance and service, forging ultimate service capabilities from the dimensions of property process, standardization, and intelligence.

The Company also launched a family service system - nine ingenious services, with the core concept of invisible intelligent service and visible family-like service, to create a "satisfaction

• surprise" experience to pay tribute to a better life. At the same time, in conjunction with various proprietor activities such as Women's Day, Ao-Jiu Festival, Laba Festival, Lantern Festival, Yu Neighbor Light Festival, and innovative actions such as the old community rejuvenation plan, Yuzhou Property Management truly makes the owners genuinely feel the

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warmth of the community. Every year, various city companies carry out activities such as renewal cleaning, fire drills, holiday parties, respect and love for the elderly activities, etc., which are well received by the owners. Actively responding to the requirement of "accelerating the digitalization of the service industry" in the national "14th Five-Year Plan", the Company increased investment in technology, and successfully built four platforms: smart operation platform, smart service platform, smart IoT platform, and smart home platform. For example, the company's self-developed WeChat mini program "Online Service from Yu Housekeeper" can provide convenient functions such as reporting repair, online payment, online invoicing, consultation and advice, so that owners can easily enjoy a technologically intelligent life without leaving home.

Sustainable and Ingenious, Product Upgrades to Execute Green Economy

In the current era, the green economy and the low carbon economy with the business philosophy of "carbon neutrality" have attracted more and more attention from the market. Green buildings, as one of the Group's future development priorities, are increasing in size. As of 30 June 2021, the Group has 145 property projects with approximately 20 million sq.m. that have achieved green building standards, of which over 5 million sq.m. have been granted two-star or above green building certification, either nationally or internationally. In the future, the Group will continue to fully integrate green technologies and green financial instruments to promote low-carbon transformation and create greater value for the community. In addition, MSCI (Morgan Stanley Capital International) released the ESG (Environmental, Social and Governance) rating analysis report in June 2021, and the Group was rated as BBB again, ranking first among all domestic real estate enterprises.

In 2021, we have proposed a new theme, "Ingenuity", with a comprehensive focus on products and services. In the first half of the year, the Group has not only comprehensively updated its three residential product series, namely "Royale", "Langham" and "Honor", but also launched "Future Community Building Plan" and "Wisdom Ingenuity" project improvement plan. Relying on the value concept of "civilization for the years and temperature for the space", through the structure reconstruction of the ternary space theory of "physics, information and society", the Group brings the property owner a warm, emotional and intelligent living experience. Starting from the various elements of product quality, focusing on every detail from the selection of suppliers and materials to construction techniques and process management, the Group has developed a strict, systematic and complete quality control system to achieve the overall improvement of the Group's engineering quality and offer exquisite products with sincerity and integrity, which also indicates a direction for the Group's future featured products. In addition, the improvement of product recognition is also the focus of product upgrades. In addition to the differentiated research, development and design of product appearance, combined with the release of the Little Yu（小禹兒）IP, Yuzhou's designers utilized its background story to blend the outdoor activity needs of different ages, and interpret them in activity area with three themes, which

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