Cover 1 Shanghai CIFI Ronchamp Town 3 Beijing CIFI Private Mansion 2 Shanghai CIFI Hongqiao International 4 Changsha CIFI Upward Community

Transcription

1 ANNUAL REPORT 2012

2 Cover 1 Shanghai CIFI Ronchamp Town 3 Beijing CIFI Private Mansion 2 Shanghai CIFI Hongqiao International 4 Changsha CIFI Upward Community

3 CONTENTS Company Profile Corporate Information Chairman s Statement Management Discussion and Analysis Description of Major Property Projects Biographies of Directors and Senior Management Corporate Governance Report Directors Report Independent Auditor s Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Four Years Financial Summary

4 Company Profile ABOUT CIFI Established in 2000 and headquartered in Shanghai, CIFI Holdings (Group) Co. Ltd. ( CIFI or the Company ) is engaged in the property development, property investment and property management business in the People s Republic of China ( or China ). We are a strategy-oriented and shareholder value-focused real estate enterprise. We develop our business strategies in line with government policies related to the real estate sector in China ,230,000 We have achieved a nationwide geographical coverage and a strong presence in first-tier cities, second- and third-tier cities with high growth potential in China. Our business operations are diversified in terms of geographic locations which facilitate our future expansion. As at 31 December 2012, we had 49 property projects in three geographic regions in the : the Yangtze River Delta, the Pan Bohai Rim and the Central Western Region. Our development properties are located in 11 cities including Shanghai, Beijing, Suzhou, Hefei, Tianjin, Chongqing, Changsha, Zhenjiang, Jiaxing, Langfang and Tangshan and covers various properties types like residential, office and integrated commercial complexes. As at 31 December 2012, we had a land bank with an aggregate GFA of approximately 6.23 million sq.m. For our residential property development, we principally focus on developing high quality, mass market residential properties with smallto-medium unit sizes, comfortable living environment and locations with good public transportation links. For our commercial property development, we principally focus on developing office propertiesfor-sale. Additionally, we provide property management services to our residential and commercial customers through our own property management companies. 2 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

5 Company Profile Top 10 Top 10 Nationally, we were awarded as one of the China Top 100 Real Estate Developers from 2006 to 2012 by the Enterprise Research Institute of Development Research Centre of the State Council, the Institute of Real Estate Studies of Tsinghua University and the China Index Academy. These agencies also named us as one of the Top 10 Real Estate Developers by Profitability and by Operating Efficiency in Leveraging our effective business model focused on rapid asset turnover, its strong execution capabilities, as well as business strategies developed in line with government policies on China s real estate sector, we are poised to continue our rapid growth and develop into a renowned nationwide property developer. Looking forward, under our missions of creating value for our customers and building for a better life, CIFI strives to become a leading and well-respected real estate enterprise in China. 3

6 Corporate Information DIRECTORS Executive Directors Mr. LIN Zhong (Chairman) Mr. LIN Wei (Vice-chairman) Mr. LIN Feng (Chief Executive Officer) P.O. Box 309 Ugland House Grand Cayman KY Cayman Islands Independent Non-Executive Directors Mr. GU Yunchang Mr. ZHANG Yongyue Mr. TAN Wee Seng AUDIT COMMITTEE Mr. TAN Wee Seng (Chairman) Mr. GU Yunchang Mr. ZHANG Yongyue REMUNERATION COMMITTEE Mr. ZHANG Yongyue (Chairman) Mr. LIN Zhong Mr. TAN Wee Seng NOMINATION COMMITTEE Mr. LIN Zhong (Chairman) Mr. GU Yunchang Mr. ZHANG Yongyue AUTHORIZED REPRESENTATIVES Mr. LIN Zhong Mr. LIN Feng COMPANY SECRETARY Mr. LO Tai On REGISTERED OFFICE P.O. Box 309 Ugland House Grand Cayman KY Cayman Islands HEADQUARTERS CIFI Hongqiao International 5th Floor, Block 3, Lane 288, Tongxie Road Changning District Shanghai 4 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

7 Corporate Information Maples Fund Services (Cayman) Limited P.O. Box 1093, Boundary Hall Cricket Square Grand Cayman KY Cayman Islands PRINCIPAL PLACE OF BUSINESS IN HONG KONG Suites , 20th Floor One Pacific Place 88 Queensway Hong Kong COMPANY S WEBSITE ADDRESS COMPLIANCE ADVISER First Shanghai Capital Limited PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Maples Fund Services (Cayman) Limited P.O. Box 1093, Boundary Hall Cricket Square Grand Cayman KY Cayman Islands HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited Shops , 17th Floor, Hopewell Centre 183 Queen s Road East Wanchai Hong Kong PRINCIPAL BANKERS Industrial and Commercial Bank of China Agricultural Bank of China Bank of China China Construction Bank Bank of Communications Hong Kong Standard Chartered Bank (Hong Kong) Limited AUDITOR Deloitte Touche Tomatsu LISTING INFORMATION The Company s ordinary shares have been listed on listed on the Main Board of The Stock Exchange of Hong Kong Limited since 23 November 2012 (Stock Code: 00884) 5

8 CHAIRMAN S STATEMENT Beijing CIFI Private Mansion 6 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

9 Chairman s Statement Dear shareholders: I am pleased to present to you the business review and outlook of CIFI Holdings (Group) Co. Ltd. ( CIFI or the Company, together with its subsidiaries, the Group ) for the year ended 31 December RESULTS The year 2012 was an encouraging one for the Group. 1,669,000,000 Despite weak sentiment in Hong Kong s equity fund-raising market, we completed our initial public offering ( IPO ), raising HK$1,669 million and commenced listing of our shares (the Shares ) on the Main Board of Hong Kong Stock Exchange on 23 November 2012, representing a new milestone for the Group. We were the first mainstream property developer to debut in the Hong Kong IPO market after the government s real estate-related austerity measures started to impact the market in the first quarter of ,544,000, % 8,143,900, % 1,336,900,000 1,937,100, % 920,600, ,500, % 865,000, % 18.8% The Group also achieved record highs in terms of sales and profit. In 2012, the Group achieved contracted sales of RMB9,544.0 million, representing a significant increase of 75.5% over the previous year and surpassing our initial yearly sales target set early in the year. Recognised revenue was RMB8,143.9 million, representing a significant increase of 103.2% year-on-year. The Group s net profit attributable to equity owners increased by 44.9% to RMB1,937.1 million in 2012 from RMB1,336.9 million in The Group s core net profit attributable to equity owners (excluding changes in fair value and non-controlling interests, net of deferred taxes) increased by 88.5% to RMB920.6 million in 2012 from RMB488.5 million in Our actual core net profit achieved in 2012 exceeded our forecast of RMB865 million that we promised during our IPO. Our core net profit margin was 11.3% in We delivered a core return on average equity of 18.8% in 2012, achieving our stated target. 7

10 Chairman s Statement 4 230,800, ,900, % DIVIDEND The Board recommended payment of a final dividend of HK$0.04 per share for the year ended 31 December The total final dividend for the year ended 31 December 2012 amounted to HK$230.8 million (approximately RMB186.9 million), representing a dividend payout ratio of approximately 20.3% on the core net profit attributable to equity owners (excluding changes in fair value and non-controlling interests, net of deferred taxes). REVIEW IN 2012 Market review and sales performance In 2012, transaction volumes and prices in China s property market stabilised. As homebuyers have already adapted to the regulatory measures in place, market sentiment has improved since Chinese New Year anchored by demand driven by first-time purchasers and first-time home upgraders, as well as a more accommodating credit environment. 9,544,000,000 1,026,200 95% During the year, the Group successfully executed its high assetturnover and high sell-through business model to capture the robust demand for mass market housing from end-users. The Group decisively realigned its operating strategies two years ago, restructuring its land bank to focus on two mainstream products: mass market residential and office-for-sale projects, and enabling the two high operating model. Benefitting from the success of the realignment of our operating strategies two years ago and the massive increase in our efficient saleable resources, our contracted sales and contracted GFA reached RMB9,544.0 million and 1,026,200 sq.m. respectively in 2012, both representing record highs for the Group. Over 95% of our contracted sales in 2012 were derived from first- and second-tier cities. 8,957,900,000 93% 47.8% The Group placed high priority on cash collection from sales proceeds. Benefitting from our proactive and effective cash recuperation measures and improved mortgage disbursements from local banks, our cash collection from property sales amounted to RMB8,957.9 million, representing a ratio of 93% of our yearly contracted sales. Our corresponding average asset turnover ratio in 2012 was 47.8%. 8 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

11 Chairman s Statement REVIEW IN 2012 (Continued) Market review and sales performance (Continued) Our contracted sales in 2012 was dispersed among 28 development projects in 10 cities, of which nine projects were new development projects which started pre-sale in 2012, including: Shanghai CIFI Private Mansion, Shanghai CIFI Pujiang International, Shanghai CIFI Luxury Courtyard, Suzhou CIFI Luxury Courtyard, Hefei CIFI Private Mansion, Beijing CIFI International Negotiate Garden, Tianjin CIFI Rosedale, Chongqing CIFI Langyuejun and Changsha CIFI Private Mansion. The remaining 19 projects were subsequent sales launches. Top We ranked 38th and 44th nationally in terms of contracted GFA and contracted sales in 2012 according to the Top 50 Real Estate Enterprise Property Developers by Sales in 2012 list jointly compiled and issued by China Real Estate Information Corporation and China Real Estate Appraisal Center. 735, , % 7,991,500,000 Properties delivered and commencing construction In 2012, we delivered completed properties with a total GFA amounting to approximately 735,000 sq.m. (2011: 354,000 sq.m.), representing a massive increase of 107.6%. Accordingly, we derived recognized revenue of RMB7,991.5 million from sales of properties in Our major completed property projects in 2012 included Shanghai CIFI Rose Bay, Beijing CIFI Private Mansion, Beijing CIFI Purple County, Suzhou CIFI Canal County, Suzhou CIFI Ronchamp Town, Hefei CIFI Central Park, and Changsha CIFI Luxury Courtyard. 1,500,000 1,100,000 In 2012, we commenced construction of new properties projects which will amount to a total planned GFA of approximately 1.5 million sq.m. (2011: 1.1 million sq.m.). 9

12 Chairman s Statement 12 1,500,000 3,431,700,000 2, ,157,000,000 REVIEW IN 2012 (Continued) Land acquisition In 2012, we adhered to our strategy-driven, disciplined and systematic land acquisition approach. During the year, we purchased 12 new projects in Shanghai, Suzhou and Tianjin with a total planned GFA of approximately 1,500,000 sq.m. for a total contracted consideration of RMB3,431.7 million. Based on the contracted land acquisition prices, the average cost of our land acquisitions in 2012 was approximately RMB2,300 per sq.m. Of the 12 newly acquired projects, nine new projects were acquired at the lowest bidding price. During the year, our cash outflow for the land acquisition and related payments amounted to RMB3,157 million. We strived to evaluate every government land auction opportunity in cities we follow, to follow disciplined investment-decision procedures, and to be cautious in bidding. We focused our land acquisition resources on two main stream products: mass market residential projects and office-for-sale projects. We placed strong emphasis on expanding our land bank in the affluent first- and second-tier cities under our existing operational coverage with the objectives of maximising our scale and strengthening our operations in these existing cities. 6,230,000 5,900,000 2,200 As at 31 December 2012, the Group s overall land bank amounted to a total GFA of approximately 6.23 million sq.m., of which attributable GFA amounted to approximately 5.90 million sq.m. The average unit cost of our overall land bank was approximately RMB2,200 per sq.m. 3,743,000,000 Cost and expense control In 2012, the Group s cash outflow of construction and related capital expenditures amounted to approximately RMB3,743 million, in line with its planned capital expenditure budget. During the year, we implemented stringent measures to control our construction costs, effectively minimizing deviations from our target construction costs. 5.6% 6.6% During the year, the Group implemented a number of initiatives to control its selling and general administrative expenses to enhance utilisation and reduce wastage. As a result, our selling, general and administrative expenses as a percentage of contracted sales in 2012 decreased to 5.6% (2011: 6.6%). 10 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

13 Chairman s Statement REVIEW IN 2012 (Continued) Financial management In 2012, we sustained our prudent financial management strategies by relying on cash-on-hand for new land acquisitions and controlling our off-balance liabilities. 62.5% 141.5% During the year, we strengthened our equity through the IPO and enjoyed good operating cash inflow from strong sales of properties. As at 31 December 2012, we dramatically reduced our net debt-to-equity ratio to 62.5% (31 December 2011: 141.5%), such net gearing ratio that is now within a comfortable range for our operations. In addition, our debt structure improved due to the longer duration and lower proportion of non-bank borrowings. 1,501,700,000 Other than balance sheet liabilities, we also paid close attention to our off-balance sheet liabilities. As at 31 December 2012, we had unpaid land premiums of approximately RMB1,501.7 million, a low level compared to our peers in the industry. Organisational and human resources development The Group made significant progress in corporate culture, recruitment and developing its leadership. During the year, we also attracted a number of mid-to-high level management personnel from leading real estate companies in China to join us. We also promoted our management trainee program at various reputable universities in China and successfully recruited highly talented university graduates. We invested significant resources in improving our internal management standards and talent development. Our investments in new talent and our staff enhancement programs provide a solid talent reserve for the Group s future growth. Brand building and customer satisfaction We strongly believe that a premium brand improves our pricing power and profitability in times of positive market sentiment and to enhance our sales rate and turnover in challenging market conditions. A premium brand also drives customer loyalty and facilitates our efforts to expand our business. 11

14 Chairman s Statement REVIEW IN 2012 (Continued) Brand building and customer satisfaction (Continued) Since 2011, we have engaged a third-party consultancy firm to research and track our customers satisfaction ratings for the purpose of internal evaluation and improving customer satisfaction. In 2012, we made significant improvements in customer satisfaction according to the third-party surveys, showing a sign that our brand recognition has continued to strengthen. Social responsibilities In line with our corporate growth, we strive to fulfill our corporate social responsibilities. In 2012, we actively participated in various charitable activities, including funding our own charitable foundation, sponsoring various primary and secondary schools across the country, rewarding outstanding teachers, and subsidising underprivileged students to complete their studies and to fulfill their life-time goals. OUTLOOK Driven by three major forces (urbanization, sustainable economic growth and population growth in first-tier and key second-tier cities), we believe that the real estate industry in China is still in a long term growth phase. Despite the market volatility due to government control measures, high quality properties catering to end-users demand will remain strong for some time. We expect government administrative policies in the real estate sector to remain in place for the foreseeable future. Product reversion to livable housing and end-users demand as a result of the current series of government control measures will lead to a healthier path of development for the industry over the long term. Looking forward, the Group will strive to achieve sustainable, stable and high quality growth for the sake of developing our core business. The Group will concentrate on development projects characterized by fast turnaround, high sell-through and improving prospects. We will continue to emphasise and strengthen our asset turnover, return-onequity and cash flow management. 12 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

15 Chairman s Statement OUTLOOK (Continued) Regarding our land reserves, we will follow our disciplined investment criteria and selectively acquire quality sites as and when investment opportunities arise so as to ensure growth in saleable resources. The Group will focus on expanding in China s first- and secondtier cities with large populations, are of substantial market size, and with sustainable inflow of residents and investment capital. We will prioritize our resources to fully cover our existing three operating regions and will enlarge the scale and strengthen our existing cities in which we have entered with the aim of enhancing our economies of scale and operational efficiency. APPRECIATION On behalf of the Board, I would like to express my sincere appreciation to all employees for their hard work and to shareholders for their support in the challenging but yet rewarding year last year. CIFI Holdings (Group) Co. Ltd. LIN Zhong Chairman 13

16 MANAGEMENT DISCUSSION AND ANALYSIS Hefei CIFI Private Mansion 14 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

17 15

18 Management Discussion and Analysis PERFORMANCE HIGHLIGHTS Year-on-Year Growth Contracted sales Contracted sales (RMB million) 9,544 5, % Contracted GFA (sq.m.) 1,026, , % Contracted ASP (RMB/sq.m.) 9,300 10,050 Selected financial information Recognised revenue (RMB million) 8,144 4, % Gross profit (RMB million) 1,926 1, % Profit for the year (including fair value gains) (RMB million) Including non-controlling interest 2,021 1, % Attributable to equity owners 1,937 1, % Core net profit (excluding fair value gains) (RMB million) Including non-controlling interest % Attributable to equity owners % Total assets (RMB million) 26,857 19, % Bank balances and cash (including restricted cash) (RMB million) 4,613 2, % Total bank and other borrowings (RMB million) 8,865 7, % Total equity (RMB million) 6,941 3, % Equity attributable to equity owners (RMB million) 6,550 3, % Shanghai CIFI Private Mansion Beijing CIFI Purple County 16 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

19 Management Discussion and Analysis PERFORMANCE HIGHLIGHTS (continued) Notes Selected financial ratios Gross profit margin 23.7% 34.2% Core net profit margin % 12.2% Average asset turnover ratio % 39.1% Return on average equity % 19.2% Net debt-to-equity ratio % 141.5% Average cost of borrowings 5 8.5% 9.8% Selected operating data Land bank (GFA, sq.m.), end of year Total 6,234,400 5,516,900 Attributable 5,898,200 5,258,000 Delivered GFA (sq.m.), during the year Total 734, ,100 Attributable 734, ,100 New land acquisition (GFA, sq.m.), during the year Total 1,487,800 2,184,000 Attributable 1,335,100 2,114, Notes: 1. The calculation of core net profit margin is based on core net profit attributable to equity owners (excluding fair value gains) over total recognised revenue. 2. The calculation of average asset turnover ratio is based on contracted sales divided by (average total asset less investment properties) during each financial year. 3. The calculation of return on average equity is based on our core net profit attributable to equity owners (excluding fair value gains) divided by average equity attributable to equity owners for each financial year. 4. Net debt-to-equity ratio is calculated by our total bank and other borrowings under IFRS less bank balances, cash and restricted cash as a percentage of total equity at the end of each financial year. 5. Average cost of borrowings is calculated by total interest expenses (expensed and capitalised) divided by average bank and other borrowings under IFRS during each financial year. Chongqing CIFI Ronchamp Town Tianjin CIFI Rosedale 17

20 Management Discussion and Analysis 9,544,000, % 1,026, % 5,627,000,000 2,207,000,000 1,710,000,000 59% 23% 18% PROPERTY DEVELOPMENT Contracted sales In 2012, the Group achieved contracted sales of approximately RMB9,544 million (all from the Group s operating subsidiaries) representing a significant growth of 75.5% as compared to The significant growth in the Group s contracted sales was mainly attributable to the corresponding increase in the Group s saleable resources as a result of the Group s reinforced operating strategies since two years ago. In 2012, the Group contracted sales of approximately 1,026,200 sq.m. in GFA, representing an increase of 89.7% over the previous year. The contracted sales in Yangtze River Delta, Pan Bohai Rim and Central Western Region were approximately RMB5,627 million, RMB2,207 million and RMB1,710 million, contributing to 59%, 23% and 18% of the Group s total contracted sales respectively. 47.8% 39.1% During the year, the Group s average asset turnover ratio (contracted sales as a percentage of average total assets less investment properties) improved to 47.8% in 2012, versus 39.1% in The improved asset turnover ratio was an evidence of the Group s successful implementation of high asset turnover and high sellthrough strategies. Changsha CIFI Luxury Courtyard Jiaxing CIFI Square 18 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

21 Management Discussion and Analysis PROPERTY DEVELOPMENT (Continued) Contracted sales (Continued) Table 1: Details of contracted sales in 2012 By project Project Primary intended use of the project Contracted sales % of Total contracted sales (RMB 000) (%) Contracted GFA (sq.m.) Contracted ASP (RMB/sq.m.) Shanghai CIFI Rose Bay Residential projects Shanghai CIFI Private Mansion Residential projects Shanghai CIFI Comfortable Joyous Bay Residential projects Shanghai CIFI Pleasant Garden Residential projects Shanghai CIFI Luxury Courtyard Residential projects Shanghai CIFI Hongqiao International Office-for-sale projects Shanghai CIFI Pujiang International Office-for-sale projects Shanghai CIFI Century Square Office-for-sale projects Shanghai CIFI La Baie D Evian Residential projects Shanghai CIFI Pebble Beach Residential projects Shanghai CIFI Ronchamp Town Residential projects Suzhou CIFI Canal County Residential projects Suzhou CIFI Ronchamp Town Residential projects Suzhou CIFI Luxury Courtyard Residential projects Hefei CIFI Central Park (Phase I) Residential projects Hefei CIFI Central Park (Phase II) Residential projects Hefei CIFI Private Mansion (Phase I) Residential projects Hefei CIFI Private Mansion (Phase II) Residential projects Zhenjiang CIFI Times Residential projects 941, ,200 14, , ,500 13, , ,800 9,909 26, ,000 8, , ,100 15, , ,900 25, , ,500 18,419 3,154 * 700 4,506 17, ,500 11,587 2,009 * 2, , ,400 6, , ,400 9, , ,400 7, , ,000 8,124 3,701 * 600 6, , ,200 7, , ,200 6, , ,000 7, , ,300 9,071 19

22 Management Discussion and Analysis PROPERTY DEVELOPMENT (Continued) Contracted sales (Continued) Table 1: Details of contracted sales in 2012 (Continued) By project (Continued) Project Primary intended use of the project Contracted sales % of Total contracted sales (RMB 000) (%) Contracted GFA (sq.m.) Contracted ASP (RMB/sq.m.) Jiaxing CIFI Square Residential projects Beijing CIFI Private Mansion Residential projects Beijing CIFI Purple County Residential projects Beijing CIFI International Negotiate Garden Office-for-sale projects Langfang CIFI Path Walf (Phase II) Residential projects Langfang CIFI Path Walf (Phase III) Residential projects Tianjin CIFI Rosedale Residential projects Chongqing CIFI Ronchamp Town (Phase I) Chongqing CIFI Ronchamp Town (Phase II) Chongqing CIFI Ronchamp Town (Phase III) Chongqing CIFI Ronchamp Town (Phase IV) Chongqing CIFI Ronchamp Town (Phase V) Residential projects Residential projects Residential projects Residential projects Residential projects Chongqing CIFI Langyuejun Residential projects Changsha CIFI Upward Community Residential projects Changsha CIFI Luxury Courtyard Residential projects Changsha CIFI Private Mansion Residential projects 180, ,000 10,030 1,534, ,000 18,719 8, , , ,600 11,632 41, ,900 7,087 46, ,600 10, , ,800 7, * 30 6, * 80 7,525 33, ,790 5,724 92, ,200 6, , ,700 5, , ,100 6,362 4, , , ,300 4, , ,000 5,571 Total 9,543, ,026,200 9,300 * 0.1% * less than 0.1% 20 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

23 Management Discussion and Analysis PROPERTY DEVELOPMENT (Continued) Contracted sales (Continued) By type of project Contracted sales % of Total contracted sales (RMB 000) (%) Contracted GFA (sq.m.) Contracted ASP (RMB/sq.m.) Residential projects 8,770, ,510 8,972 Office-for-sale projects 773, ,700 15,882 Total 9,543, ,026,210 9,300 By city Contracted sales % of Total contracted sales (RMB 000) (%) Contracted GFA (sq.m.) Contracted ASP (RMB/sq.m.) Shanghai 3,076, ,100 13,086 Beijing 1,840, ,100 15,855 Suzhou 1,255, ,800 8,608 Hefei 894, ,000 6,774 Tianjin 278, ,800 7,557 Chongqing 906, ,900 5,926 Changsha 804, ,700 5,199 Zhenjiang 220, ,300 9,071 Jiaxing 180, ,000 10,030 Langfang 88, ,500 8,398 Total 9,543, ,026,200 9,300 21

24 Management Discussion and Analysis PROPERTY DEVELOPMENT (Continued) Contracted sales (Continued) By region Contracted sales % of Total contracted sales (RMB 000) (%) Contracted GFA (sq.m.) Contracted ASP (RMB/sq.m.) Yangtze River Delta 5,626, ,200 10,134 Pan Bohai Rim 2,207, ,400 13,507 Central Western Region 1,710, ,600 5,560 Total 9,543, ,026,200 9,300 By first-, second- and third-tier cities Contracted sales % of Total contracted sales (RMB 000) (%) Contracted GFA (sq.m.) Contracted ASP (RMB/sq.m.) First-tier cities 4,917, ,200 14,001 Second-tier cities 4,137, ,200 6,650 Third-tier cities 489, ,800 9,264 Total 9,543, ,026,200 9, ,400,000,000 7,991,500, % 98.1% 734, % Notes: 1. The above contracted sales data includes sales of carparks. 2. First-tier cities refer to Shanghai and Beijing. 3. Second-tier cities refer to Suzhou, Hefei, Tianjin, Chongqing and Changsha. 4. Third-tier cities refer to Zhenjiang, Jiaxing, Langfang and Tangshan. As of 31 December 2012, the Group had approximately RMB7.4 billion contracted but unrecognized sales which formed a solid basis for Group s future growth in recognised revenue. Revenue recognised from sales of properties Revenue recognised from sales of properties in 2012 was approximately RMB7,991.5 million up by 104.2% year-on-year, accounted for 98.1% of total recognised revenue. In 2012, the Group delivered approximately 734,700 sq.m. of properties in GFA (all from its operating subsidiaries), up by 107.5% year-on-year. The increase in Group s revenue recognised from sales of properties was in line with the increase in GFA delivered. 22 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

25 Management Discussion and Analysis PROPERTY DEVELOPMENT (Continued) Revenue recognised from sales of properties (Continued) Table 2: Breakdown of recognised revenue from property sales in 2012 By project Primary intended use % of Total Project of the project Recognised revenue recognised revenue Total GFA delivered Recognised ASP (RMB 000) (%) (sq.m.) (RMB/sq.m.) Shanghai CIFI Rose Bay Residential projects Shanghai CIFI Hongqiao International Office-for-sale projects Shanghai CIFI Century Square Office-for-sale projects Shanghai CIFI La Baie D Evian Residential projects Shanghai CIFI Ronchamp Town Residential projects Shanghai CIFI New Dream Residential projects Suzhou CIFI Canal County Residential projects Suzhou CIFI Ronchamp Town Residential projects Suzhou CIFI California Bay Residential projects Hefei CIFI Central Park Residential projects Zhenjiang CIFI Ronchamp Town Residential projects Jiaxing CIFI Square Residential projects Beijing CIFI Private Mansion Residential projects Beijing CIFI Purple County Residential projects Beijing CIFI Olympic City Office-for-sale projects Langfang CIFI Path Walf Residential projects Chongqing CIFI Ronchamp Town Residential projects Changsha CIFI Upward Community Residential projects Changsha CIFI Luxury Courtyard Residential projects 1,574, ,400 14, , , ,000 31,900 33,586 25,918 2,794 2,742 * ,657 5,484 17, , ,500 15,100 11,587 12,929 21, , ,000 21,300 5,493 29,786 4,058 3,086 * 0.1 1,500 1,300 2,705 2, , ,800 9, , ,100 8,323 4,500 * , , , ,200 45,700 7,587 7,402 6, ,100 2, , , ,600 53,800 9,869 11,977 2,153, ,300 18, , ,900 16,531 5, ,100 2, , , ,700 56,000 8,998 8, , , , ,200 6,989 6,551 4, , ,100 9,040 4, , ,600 4,831 Total 7,991,465 3,914, , ,100 10,877 11,054 * 0.1% * less than 0.1% 23

26 Management Discussion and Analysis PROPERTY DEVELOPMENT (Continued) Revenue recognised from sales of properties (Continued) By type of project % of Total Recognised revenue recognised revenue (RMB 000) (%) Total GFA delivered (sq.m.) Recognised ASP (RMB/sq.m.) Residential projects 7,854,326 3,079, , ,600 10,758 9,635 Office-for-sale projects 137, , ,600 34,500 29,813 24,197 Total 7,991,465 3,914, , ,100 10,877 11,054 By city % of Total Recognised revenue recognised revenue (RMB 000) (%) Total GFA delivered (sq.m.) Recognised ASP (RMB/sq.m.) Shanghai 1,755,124 1,662, ,000 70,100 15,001 23,713 Beijing 2,928,346 5, ,200 2,100 18,054 2,506 Suzhou 1,264, ,200 9,086 Hefei 691, , ,200 45,700 7,587 7,402 Chongqing 319, , , ,200 6,989 6,551 Changsha 693, , ,100 23,100 4,845 4,947 Zhenjiang 6, ,100 2,127 Jiaxing 134, , ,600 53,800 9,869 11,977 Langfang 204, , ,700 56,000 8,998 8,693 Total 7,991,465 3,914, , ,100 10,877 11,054 Shanghai CIFI La Baie D Evian Suzhou CIFI Ronchamp Town 24 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

27 Management Discussion and Analysis PROPERTY DEVELOPMENT (Continued) Revenue recognised from sales of properties (Continued) By region Recognised revenue % of Total recognised revenue (RMB 000) (%) Total GFA delivered (sq.m.) Recognised ASP (RMB/sq.m.) Yangtze River Delta 3,846,083 2,651, , ,700 10,654 15,353 Pan Bohai Rim 3,132, , ,900 58,100 16,942 8,469 Central Western Region 1,012, , , ,300 5,364 6,250 Total 7,991,465 3,914, , ,100 10,877 11,054 By first-, second- and third-tier cities Recognised revenue % of Total recognised revenue (RMB 000) (%) Total GFA delivered (sq.m.) Recognised ASP (RMB/sq.m.) First-tier cities 4,683,470 1,667, ,200 72,200 16,775 23,096 Second-tier cities 2,969,517 1,108, , ,000 7,084 6,562 Third-tier cities 338,478 1,137, , ,900 9,324 10,078 Total 7,991,465 3,914, , ,100 10,877 11, ,200, , ,000 1,500,000 1,100, ,800,000 Notes: 1. The above contracted sales data includes sales of carparks. 2. First-tier cities refer to Shanghai and Beijing. 3. Second-tier cities refer to Suzhou, Hefei, Tianjin, Chongqing and Changsha. 4. Third-tier cities refer to Zhenjiang, Jiaxing, Langfang and Tangshan. Completed properties held for sale During the year 2012, the GFA of newly completed projects of the Group amounted to approximately 1.2 million sq.m. (2011: 0.6 million sq.m.). As at 31 December 2012, the Group had 16 completed properties projects with a total unsold or undelivered GFA of approximately 0.4 million sq.m.. Properties under development/held for future development During the year 2012, the GFA of properties newly commenced construction by the Group was approximately 1.5 million sq.m. (2011: 1.1 million sq.m.). As at 31 December 2012, the Group had 33 property projects under development or held for future development with a total GFA of approximately 5.8 million sq.m.. 25

28 Management Discussion and Analysis 44,400, % PROPERTY INVESTMENT Rental income The Group s rental income in 2012 was RMB44.4 million, up by 257.7% year-on-year. The increase was primarily due to an increase in rental income from Jiaxing CIFI Square resulting from the commencement of leasing of its department store and shopping mall portion. Table 3: Breakdown of rental income in 2012 Rental income 2012 % of Rental income RMB 000 % Rental income 2011 % of Rental income Rental income Growth rate RMB 000 % % Investment properties Jiaxing CIFI Square 42, , Other investment properties , (61.4) Other non-investment properties 1, , (38.3) Total 44, , , ,300 Investment properties As at 31 December 2012, the Group had 5 investment properties with a total GFA of approximately 174,400 sq.m. Out of such investment properties portfolio of the Group, 3 investment properties with a total GFA of approximately 89,300 sq.m. had commenced leasing, while the remaining were under development. Shanghai CIFI Pebble Beach Langfang CIFI Path Walf 26 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

29 Management Discussion and Analysis 8,143,900, % (i) 104.2% 7,991,500,000 (ii) 257.7% (iii) 48.5% FINANCIAL REVIEW Revenue In 2012, the Group s recognised revenue was approximately RMB8,143.9 million, up 103.2% year-on-year. Out of the Group s total recognised revenue in 2012, (i) sales of property increased by 104.2% from the previous year to approximately RMB7,991.5 million, which was in line with the increase in delivered GFA; (ii) rental income increased by 257.7% from the previous year, which was primarily due to an increase in rental income from Jiaxing CIFI Square resulting from the commencement of leasing of its department store and shopping mall portion; and (iii) property management income increased by 48.5% from the previous year, as additional new property projects were completed by us and included in our property management portfolio during the year. Table 4: Breakdown of recognised revenue in 2012 Recognised revenue % of Total recognised revenue RMB 000 % Recognised revenue % of Total recognised revenue Year-on-year change RMB 000 % % Sales of properties 7,991, ,914, Rental income 44, , Property management income 89, , Other property related service income 18, , (12.4) Total 8,143, ,008, ,217,900, % Cost of sales The Group s cost of sales in 2012 was approximately RMB6,217.9 million, up 135.6% from the previous year. This increase was primarily due to an increase in cost of property sales as a result of an increase in total GFA delivered compared to the previous year. 27

30 Management Discussion and Analysis FINANCIAL REVIEW (Continued) Cost of sales (Continued) Table 5: Breakdown of cost of sales in 2012 RMB % of Total cost of sales RMB 000 % of Total cost of sales Year-on-year change Cost of property sales Construction and related costs 3,115, ,394, % Land acquisition and related costs 2,093, , % Capitalised borrowing costs 435, , % Sub-Total: Cost of property sales 5,644, ,328, % Cost of property rental 2,590 * 852 * 204.0% Cost of property management 94, , % Cost of other property related services 2, , (45.4)% Sales related taxes 472, , % Total: Cost of sales 6,217, ,638, % Total GFA delivered (sq.m.) 735, , % Average construction costs (RMB/sq.m.) 4,234 3, % Average land acquisition and related costs (RMB/sq.m.) 2,845 2, % Average capitalised borrowing costs (RMB/sq.m.) % * 0.1% * less than 0.1% 1,926,100, % 34.2% 23.7% 1.7% 21.3% Gross profit and gross profit margin The Group s gross profit in 2012 was RMB1,926.1 million, up 40.6% year-on-year. Our gross profit margin decreased to 23.7% in 2012 from 34.2% in The decrease was primarily due to the Group s lower proportion of recognised revenue from sales of office projects in 2012 (1.7% of total recognised revenue) compared to 2011 (21.3% of total recognised revenue). The Group s office-for-sale projects generally have higher gross profit margins compared to mass market residential projects. 28 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

31 Management Discussion and Analysis 25,800 1,205,900,000 38,500 1,025,400,000 FINANCIAL REVIEW (Continued) Fair value changes Fair value gain upon transfer to investment properties In 2012, the Group recognised a fair value gain upon transfer to investment properties in the amount of approximately RMB1,205.9 million as a result of the shopping mall portion of Jiaxing CIFI Square, with an aggregate GFA of around 25,800 sq.m., being leased out and transferred to investment properties during the year. In 2011, the Group recognised a fair value gain upon transfer to investment properties in the amount of approximately RMB1,025.4 million in connection with the basement supermarket and the department store portion of Jiaxing CIFI Square, with an aggregate GFA of around 38,500 sq.m., being leased out and transferred to investment properties during that year. Initially at the time of construction, the commercial podium of Jiaxing CIFI Square comprising the basement supermarket, department store and the shopping mall portions were accounted for as properties under development. Upon completion, they were accounted for as properties for sale. Under IFRS, these commercial properties accounted for as properties for sale could be transferred into investment properties when it is evidenced by the commencement of an operating lease to another party. The substantial gains upon transfer to investment properties relating to the commercial podium of Jiaxing CIFI Square in 2011 and 2012 represent the difference between the fair value of the relevant properties after substantial appreciation and their original book costs. As at 31 December 2012, the entire commercial podium of Jiaxing CIFI Square were fully leased out and were fully transferred into investment properties. As the Group does not have other properties completed or under construction which are expected to be transferred to investment properties in the near future, the Group does not expect the substantial fair value gain upon transfer to investment properties recorded in 2012 will be repeated in Without such fair value gain upon transfer to investment properties, the Group expects its profits including fair value gains in 2013 may be negatively affected, but it will have no impact on its core net profits excluding fair value gains. 29

32 Management Discussion and Analysis 233,500, ,500,000 FINANCIAL REVIEW (Continued) Fair value changes (Continued) Change in fair value of investment properties In 2012, the Group recognised a fair value gain on investment properties in 2012 of approximately RMB233.5 million as compared to a fair value gain on investment properties in 2011 of approximately RMB123.5 million. The increase in fair value gain on investment properties was due to the appreciation of the overall capital value and/or rental values of the Group s investment properties portfolio including completed and under development projects. 26,500,000 15,000,000 Change in fair value of trust loans related derivatives In 2012, the Group recognised a fair value gain on trust loans related derivatives of approximately RMB26.5 million as compared to a fair value loss on trust loans related derivatives in 2011 of approximately RMB15.0 million. Such fair value gain reflected the change in fair value of the embedded financial derivatives relating to certain trust financing arrangements of the Group s properties projects during the year. 140,900, % 245,800, % 2.6% Selling and marketing expenses The Group s selling and marketing expenses increased by 74.4% to approximately RMB245.8 million in 2012 from RMB140.9 million in This increase was primarily due to the Group s new launch of more property projects for pre-sale in The Group placed great emphasis on the effectiveness and appropriateness of sales strategies and successfully controlled its selling expenses at 2.6% of total contracted sales in 2012, compared to 2.6% in ,700, % 285,200, % 4.0% Administrative and other expenses The Group s administrative expenses increased by 31.6% to approximately RMB285.2 million in 2012 from RMB216.7 million in This increase was primarily attributable to increase in staff costs and other administrative expenses resulting from the Group s business expansion. Due to implementation of stringent cost control, the Group successfully controlled its administrative expenses at 3.0% of total contracted sales in 2012, compared to 4.0% in ,300,000 4,600,000 In addition, the Group incurred other expenses of approximately RMB18.3 million in 2012, compared to RMB4.6 million in Other expenses in 2012 and 2011 were professional fees and expenses related to our IPO. 30 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

33 Management Discussion and Analysis 35,500, % 43,300, ,600, % 704,100, % 9.8% FINANCIAL REVIEW (Continued) Finance costs The Group s finance costs expensed increased by 22.0% to approximately RMB43.3 million in 2012 from RMB35.5 million in This increase in finance costs expensed was primarily attributable to an increase in the total finance costs incurred, net of the portion being capitalised in properties under development during the year. Total finance costs expensed and capitalised increased by 22.1% to approximately RMB704.1 million in 2012 from RMB576.6 million in Total finance costs expensed and capitalised represented 8.5% of our average bank and other borrowings under IFRS during 2012, compared to 9.8% during The Group s total finance costs as a percentage of financial indebtedness decreased during the year. The decrease in total finance costs expensed and capitalised in 2012 was primarily attributable to decrease in the average proportion of nonbank borrowings (mainly trust financings) to total borrowings during the year. These non-bank borrowings generally had higher interest costs during the year. 742,400, % 818,800, % 28.8% Income tax expenses The Group s income tax expenses increased by 10.3% to approximately RMB818.8 million in 2012 from RMB742.4 million in The Group s income tax expense included payments and provisions made for enterprise income tax ( EIT ) and land appreciation tax ( LAT ) during the year. The Group s effective income tax rate decreased to 28.8% in 2012 from 33.7% in 2011, as a higher proportion of the Group s profit before taxation was derived from the increase in fair value gains relating to investment properties in 2012, for which no provision for LAT was required. 164,500, ,000, ,700, ,500, ,200,000 The Group made LAT provisions of approximately RMB164.5 million in 2012, versus RMB195.0 million in The Group made actual LAT payments of RMB181.7 million in 2012, versus RMB138.5 million in As at 31 December 2012, the Group had accumulated unpaid LAT provisions of RMB288.2 million. 31

34 Management Discussion and Analysis 2,204,500, % 2,839,600,000 1,462,100, % 2,020,800,000 1,336,900, % 1,937,100,000 FINANCIAL REVIEW (Continued) Profit for the year As a result of the factors described above, the Group s profit before taxation increased by 28.8% to approximately RMB2,839.6 million in 2012 from RMB2,204.5 million in The Group s profit and total comprehensive income for the year increased by 38.2% to approximately RMB2,020.8 million in 2012 from RMB1,462.1 million in The Group s net profit attributable to equity owners increased by 44.9% to approximately RMB1,937.1 million in 2012 from RMB1,336.9 million in ,500, % 920,600, % 12.2% The Group s core net profit attributable to equity owners (excluding change in fair value changes and non-controlling interests, net of deferred taxes) increased by 88.5% to approximately RMB920.6 million in 2012 from RMB488.5 million in The corresponding core net profit margin was 11.3% in 2012 and 12.2% in The change in core net profit margin in 2012 was primarily due to the Group s lower proportion of recognised revenue from sales of office projects (which generally had higher profit margin compared to mass market residential project) which in 2012 compared to %19.2% Benefited from the implementation of the Group s stated high asset turnover and high sell-through business strategies, the Group achieved a return on average equity ( ROE ) of 18.8% in 2012 versus 19.2% in Shanghai CIFI Comfortable Joyous Bay Suzhou CIFI Canal County 32 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

35 Management Discussion and Analysis 6,200,000 5,900,000 2,200 LAND BANK As at 31 December 2012, the total GFA of the Group s land bank was approximately 6.2 million sq.m., and the attributable GFA of the Group s land bank was approximately 5.9 million sq.m. As at 31 December 2012, average acquisition cost of the Group s overall land bank was approximately RMB2,200 per sq.m. Table 6: Breakdown of the Group s land bank as at 31 December 2012 By project Primary Saleable/Rentable Interest intended use GFA remaining attributable Project of the project unsold to us (sq.m.) (%) Completed properties Yangtze River Delta Shanghai CIFI Rose Bay Residential 24, Shanghai CIFI Hongqiao International Office-for-sale 15, Shanghai CIFI Century Square Office-for-sale 14, Shanghai CIFI La Baie D Evian Residential 1, Shanghai CIFI Ronchamp Town Residential 1, Suzhou CIFI Canal County Residential 19, Suzhou CIFI Ronchamp Town Residential 31, Suzhou CIFI California Bay Residential Hefei CIFI Central Park Phase I & II Residential 36, Jiaxing CIFI Square (Residential) Residential 45, Jiaxing CIFI Square (Commercial) Investment properties 82,

36 Management Discussion and Analysis LAND BANK (Continued) Table 6: Breakdown of the Group s land bank as at 31 December 2012 (Continued) By project (Continued) Primary Saleable/Rentable Interest intended use GFA remaining attributable Project of the project unsold to us (sq.m.) (%) Pan Bohai Rim Beijing CIFI Private Mansion Residential 27, Beijing CIFI Purple County Residential 1, Beijing CIFI Wangxin Commercial 7, Centre Office-for-sale/Investment properties Beijing CIFI Olympic City Office-for-sale 7, Beijing CIFI Shanghai Salon Residential 9, Langfang CIFI Path Walf Phase I, II & III Residential 53, Central Western Region Chongqing CIFI Ronchamp Town Residential 37, Phase I, II, III & IV Changsha CIFI Upward Community Residential 5, Changsha CIFI Luxury Courtyard Residential 17, Other Fuzhou CIFI Riverside Residential 3, , CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

37 Management Discussion and Analysis LAND BANK (Continued) Table 6: Breakdown of the Group s land bank as at 31 December 2012 (Continued) By project (Continued) Project Primary intended use of the project Actual/ Estimated Completion date Site Area Total GFA under development and held for future development Pre-sold Interest attributable to us (sq.m.) (sq.m.) (sq.m.) (%) Properties under development and held for future development Yangtze River Delta Shanghai CIFI Private Mansion Residential Shanghai CIFI Comfortable Joyous Bay Residential Shanghai CIFI Pleasant Garden Residential Shanghai CIFI Luxury Courtyard Residential Shanghai Baoshan District Panjing Road Project Residential Shanghai Jiading Liu Jiahe Site Project Residential Shanghai Jiading District Nanxiang Site Project Shanghai Jiading District Nanxiang Site Project Shanghai Hongqiao Xianfeng Village No.4 Site Project Office-for-sale Office-for-sale Residential Shanghai Zhabei Site Project Office-for-sale Shanghai CIFI Pujiang International Office-for-sale Shanghai CIFI Yangpu Commercial Square Office-for-sale Shanghai CIFI Yangpu Commercial Square Investment properties Shanghai Jiading New Town Yumin Road Project Investment properties Shanghai CIFI La Baie D Evian Residential Shanghai CIFI Jiangwan Mansion Residential 4Q Q 2013/4Q Q Q Q Q Q Q Q Q Q Q Q Q 2014 By phases from 2013 to 2014 } 18,300 40,000 69,500 26, , , , ,500 73,600 3, ,400 66,000 21, , , , , ,600 32, ,800 33, ,200 7, , , , ,400 13, , , ,900 39, ,800 24, ,000 42,

38 Management Discussion and Analysis LAND BANK (Continued) Table 6: Breakdown of the Group s land bank as at 31 December 2012 (Continued) By project (Continued) Project Primary intended use of the project Actual/ Estimated Completion date Site Area Total GFA under development and held for future development Pre-sold Interest attributable to us (sq.m.) (sq.m.) (sq.m.) (%) Shanghai CIFI Pebble Beach Residential Suzhou CIFI Canal County Residential Suzhou CIFI Luxury Courtyard Residential G84 Suzhou G84 Site Project Residential G88 Suzhou G88 Site Project Residential G104 Suzhou G104 Site Project Residential Hefei CIFI Private Mansion Phase I, II & III Residential Zhenjiang CIFI Times Residential By phases from 2013 to Q Q Q Q /2016 4Q 2013/4Q Q , ,300 1, ,900 58,700 11, , ,400 25, , , , , , , , , , , ,200 37, Pan Bohai Rim Beijing CIFI Private Villa Riverside Garden Residential Beijing CIFI International Negotiate Garden Office-for-sale Langfang CIFI Path Walf Phase II & III Residential Tangshan CIFI English Village Residential Tianjin CIFI Rosedale Phase I & II Residential 4Q Q Q 2013/4Q Q Q 2014/4Q , , , ,500 25, , ,600 5, , , , ,200 36, CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

39 Management Discussion and Analysis LAND BANK (Continued) Table 6: Breakdown of the Group s land bank as at 31 December 2012 (Continued) By project (Continued) Project Primary intended use of the project Tianjin CIFI Century Waterside Residential Tianjin Binhai Industrial Office Project Phase I Industrial office park Tianjin Binhai Industrial Office Project Phase II Industrial office park Central Western Region Chongqing CIFI Ronchamp Town Phase V & VI Residential Chongqing CIFI Langyuejun Residential Chongqing CIFI Purple City Office-for-sale Changsha CIFI Private Mansion Residential Actual/ Estimated Completion date 4Q Q 2013/4Q Q Q Q 2013/4Q 2014 Site Area Total GFA under development and held for future development Pre-sold Interest attributable to us (sq.m.) (sq.m.) (sq.m.) (%) 65, , , , , , , , , , ,700 50, , , , ,200 76, ,927,100 5,791, ,500 37

40 Management Discussion and Analysis LAND BANK (Continued) Table 6: Breakdown of the Group s land bank as at 31 December 2012 (Continued) By region % of Land Bank (%) Yangtze River Delta 51 Pan Bohai Rim 33 Central Western Region By type of project % of Land Bank (%) 120 Residential projects with typical unit size <120 sq.m. 58 Office-for-sale projects Residential projects with typical unit size >120 sq.m. 20 Investment properties and others During the year 2012, the Group purchased a total of 12 new projects, out of which 11 projects were acquired through government-held public tenders, auctions or listing-for-sale and another 1 property project was acquired through acquisition of equity interest. 1,500,000 3,431,700,000 2,300 Total planned GFA of the Group s newly acquired land projects amounted to approximately 1.5 million sq.m. and total consideration involved amounted to approximately RMB3,431.7 million. Based on the contracted land acquisition prices, the Group s average land acquisition cost in 2012 was approximately RMB2,300 per sq.m.. 38 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

41 Management Discussion and Analysis LAND BANK (Continued) Table 7: The Group s land acquisition in 2012 City Project Primary intended use Group s equity interest Site area Planned GFA excluding carpark Attributable GFA Consideration Average land cost (%) (sq.m.) (sq.m.) (sq.m.) (RMB) (RMB/sq.m.) Land acquisition in 2012 Shanghai Shanghai Shanghai Shanghai Shanghai Shanghai Suzhou Suzhou Suzhou Tianjin Tianjin Tianjin Baoshan District Panjing Road Project Jiading Liu Jiahe Site Project Jiading District Nanxiang Site Project Jiading District Nanxiang Site Project 4 Hongqiao Xianfeng Village No.4 Site Project Zhabei Site Project G84 G84 Site Project G88 G88 Site Project G104 G104 Site Project Binhai Industrial Office Project Phase I Binhai Industrial Office Project Phase II Tianjin CIFI Century Waterside Residential Residential Office-for-sale Office-for-sale Residential Office-for-sale Residential Residential Residential Industrial office park Industrial office park Residential , , , ,100,000 2, ,600 88,100 88, ,520,000 3, ,600 26,700 26,700 99,000,000 3, ,800 27,200 27,200 73,070,000 2, ,200 5,200 5,200 67,400,000 12, ,400 90,600 18, ,800,000 7, ,900 94,300 94, ,000,000 4, ,600 94,300 94, ,000,000 2, , , , ,000,000 3, , , ,700 85,600, , , ,500 55,000, , ,700 83, ,224,510 1,296 Land acquisition subsequent to 31 December 2012 (and up to the date of the results announcement) Shanghai Tianjin Chongqing Minxing District Huacao Site Project 06 Xiqing District Zhongbei Zhen No.6 Site Project G53 Yubei District G53 Site Project Office-for-sale Residential Office-for-sale ,800 29,600 14, ,200,000 6, , , ,100 1,340,000,000 4, ,200 60,400 60, ,000,000 1,672 39

42 Management Discussion and Analysis 4,590,700,000 2,573,900,000 21,800,000 21,800,000 8,865,400,000 7,751,600,000 85,000,000 82,000,000 1,472,200,000 1,256,900,000 LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES Cash position The Group had cash and bank balances of approximately RMB4,590.7 million (2011: RMB2,573.9 million) and restricted cash of RMB21.8 million (2011: RMB21.8 million) as at 31 December Bank and other borrowings The Group had outstanding bank and other borrowings of approximately RMB8,865.4 million as at 31 December 2012 (2011: RMB7,751.6 million). The Group also had trust loans related derivatives of RMB85.0 million as at 31 December 2012 (2011: RMB82.0 million). As at 31 December 2012, the Group had un-utilised banking facilities of RMB1,472.2 million (2011: RMB1,256.9 million). Table 8: Breakdown of bank and other borrowings By type of borrowings RMB 000 RMB 000 Bank loans, secured 5,788,391 4,859,856 Bank loans, unsecured 31,500 Trust loans, secured Conventional loans 930,000 1,716,000 Loans with obligation to repurchase equity interest 959,721 1,076,266 Other trust loans, unsecured 246,300 99,430 Other loans, secured 909,496 8,865,408 7,751, CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012

43 Management Discussion and Analysis LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES (Continued) Bank and other borrowings (Continued) Table 8: Breakdown of bank and other borrowings (Continued) By maturity RMB 000 RMB 000 Within one year or on demand 3,372,220 1,922,656 More than one year, but not exceeding two years 3,356,287 2,763,390 More than two years, but not exceeding three years 1,229,878 2,536,506 More than three years, but not exceeding four years 262, ,000 More than four years, but not exceeding five years 12, ,000 More than five years 633,023 36,000 8,865,408 7,751,552 Less: Amount due within one year shown under current liabilities (3,372,220) (1,922,656) Amount due after one year 5,493,188 5,828,896 By currency denomination RMB 000 RMB 000 Analysis of borrowings by currency Denominated in RMB 8,489,568 7,281,752 Denominated in HKD 375, ,800 8,865,408 7,751,552 By fixed or variable interest rates RMB 000 RMB 000 Fixed interest rates 2,785,670 2,268,047 Variable interest rates 6,079,738 5,483,505 8,865,408 7,751,552 41

44 Management Discussion and Analysis 8.5% 9.8% LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES (Continued) Cost of borrowings The Group s average cost of borrowings (calculated by dividing total interest expenses expensed and capitalised by average bank and other borrowings under IFRS during the relevant period) was 8.5% in 2012, versus 9.8% in ,000,000 Foreign exchange rate risk The Group conducts its business primarily in Renminbi. The Group is exposed to foreign exchange rate risk on the portion of our bank deposits that it maintains in Hong Kong dollars and US dollars as well as on its outstanding principal loan balance of HK$464.0 million as at 31 December The Group does not have a foreign currency hedging policy. However, the Group monitors its foreign exchange exposure closely and may, depending on the circumstances and trend of foreign currencies, consider adopting a significant foreign currency hedging policy in the future. (i) (ii) 1,667,300, ,800,000 Financial guarantees The Group has provided mortgage guarantees to banks in respect of the mortgage loans provided by the banks to the Group s customers. The Group s mortgage guarantees are issued from the dates of grant of the relevant mortgage loans and released upon the earlier of (i) the relevant property ownership certificates being obtained and the certificates of other interests with respect to the relevant properties being delivered to the mortgagee banks, or (ii) the settlement of mortgage loans between the mortgagee banks and the Group s customers. As at 31 December 2012, the Group provided mortgage guarantees in respect of mortgage loans provided by the banks to the Group s customers amounting to RMB1,667.3 million (versus 31 December 2011: RMB496.8 million). Zhenjiang CIFI Times Hefei CIFI Central Park 42 CIFI HOLDINGS (GROUP) CO. LTD. ANNUAL REPORT 2012