China SCE Group Announces 2022 Interim Results Maintains Prudent Capital Structure and Maturity

2022 Interim Results Highlights:

For the six months ended 30 June (RMB million)
Revenue	15,385
Gross profit	3,418
Gross profit margin	22.2%
Profit	1,543
Profit attributable to owners of the parent	1,274
Cash and bank balances	18,138
Net gearing ratio	79.8%
Weighted average financing cost	7.0%

HONG KONG SAR - Media OutReach - 31 August 2022 - China SCE Group Holdings Limited ("China SCE" or the "Company", together with its subsidiaries, the "Group", HKEX Stock Code: 1966), an integrated property developer in China, is pleased to announce its unaudited interim results for the six months ended 30th June 2022 (the "Period").

In the first half of 2022, the real estate industry has experienced unprecedented challenges. Overall contracted sales were affected due to the market downtrend. The Group, together with its joint ventures and associates, achieved a contracted sales amount of approximately RMB32.6 billion and a contracted sales area of approximately 2.6 million sq.m during the Period. The average selling price during the Period was RMB12,600 per sq.m.

As a result of delays in the construction of projects due to the implementation of pandemic control measures in number of cities in Mainland China, and an accompanying decrease in the area of properties delivered during the Period, the Group recorded a recognised property sales income of approximately RMB14.2 billion and revenue of approximately RMB15,385 million. The gross profit margin was 22.2% while gross profit amounted to RMB3,418 million. Owing to the loss in joint venture projects and an increase in finance costs during the Period, profit attributable to owners of the parent was approximately RMB1,274 million, while basic earnings per share was RMB30.2 cents.

Prudent Land Investment and Expansion to Maintain Liquidity

In view of the difficult operating environment, the Group suspended land investment during first half of the year to maintain liquidity. However, as of 30th June 2022, the Group, together with its joint ventures and associates, had a land bank with an aggregate planned GFA of approximately 36.7 million sq.m, which worth a total sellable resources of RMB390 billion, the existing land bank is expected to support the Group's sales performance in the next two to three years.

The Group maintains the principle of prudent financial management. It constantly optimises its debt structure and fulfils obligations of debt repayment on time. In January 2022, the Group successfully issued an additional senior notes in the aggregate principal amount of USD150 million in offshore market, which demonstrated the confidence of bond investors in the Group. In addition, the Group remitted funds in February 2022 to trustees in advance to repay the US$500 million senior note due 10th March 2022. As of 30th June 2022, the net gearing ratio of the Group was 79.8%, the coverage ratio of unrestricted cash to short-term debt was 1.1 times, and the liability to asset ratio (excluding contract liabilities) was 68.3%. The Group successfully remained in "Green Camp" under the "Three-Red-Line" regulation.

As the COVID-19 pandemic gradually comes under control and the government continues to implement policies to boost the economy, the Group expects that the confidence of property buyers will gradually recover, and the transaction volume of commodity house is expected to increase steadily. Mr. Wong Chiu Yeung, Chairman and CEO of China SCE Group, said, "Looking ahead, China SCE will continue to uphold the 'Dual-track' strategy at its core. For the residential development business, the Group will build its presence around first-tier and core second-tier cities, focusing on guaranteed delivery at the heart of its operation to maintain operational sustainability. For the investment property business, the Group will continue to be dedicated to running the 'SCE Funworld' and 'Funlive' brands, optimising the operations of shopping malls and increasing the asset and market value of apartments to further strengthen the differentiated competitiveness of the Group. The Group will keep maintaining and enhancing its organisation stability and resilience, and work in the direction of curbing leverage reduction, debt control, financing structure adjustment, and liquidity enhancement, in order to enhance its operating efficiency and ensure its financial stability."