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Annual Summary

l   Projects (including joint ventures) with GFA of about 10.77 million sq m were completed;

l   Turnover amounted to HK$116.25 billion, comprising the value of sales amounting to HK$99.43 billion from projects completed in 2014 and HK$16.82 billion from projects completed in previous years;

l   A total of 9.40 million sq m of property (including joint ventures and associates) was sold, raising HK$140.81 billion;

l   Gross profit margin for property development projects of PRC property development remained at a satisfactory level; operating profit was increased by 56.1% to HK$34.37 billion;

l   Turnover of Hong Kong and Macau property development was HK$3.79 billion; operating profit was increased by 13.8% to HK$1.73 billion; and

l   Increased effort towards collecting sales proceeds resulted in collecting HK$117.70 billion from buyers (including joint ventures) during the year. As at the end of 2014, pre-sales deposits received (including joint ventures) amounted to HK$51.32 billion.


Domestic demand for property remains robust as a result of China’s sound economic development, rising personal incomes and the ongoing urbanisation process, which underscores the Group’s confidence in the long-term development prospects for the domestic property market. Overall sentiment regarding the property market has improved, with the unleashing of end-user demand in the market since the previous year, following the gradual relaxation of the government’s regulatory control policy in favour of a more market-oriented approach to property market regulation. On the other hand, it is perfectly normal that the domestic property market experienced a slowdown in tandem with the general slowdown of the economy, after sustained high growth for more than a decade without major corrections, except in 2008, and the market will be poised for healthier development after undergoing market consolidation. The property market atmosphere became tense in the first half of the year, as the domestic economic slowdown and financial market reforms resulted in tight liquidity in the market, and property developers in unfavourable financial situations - with excessive borrowing and high inventory levels, and who were therefore eager to secure cash flow - resorted to drastic price cuts. Fortunately, conditions gradually improved in the second half of the year. Except for the four tier-1 cities, tightening measures were generally relaxed as the decline in prices slowed and trading increased. Notably, the collection of sales amounts increased substantially before the end of the year, relieving cash flow pressure for property developers.

As an industry leader and when its annual sales exceed HK$100 billion, the Group must be able to sustain relatively balanced sales for each month, regardless of market sentiment. Amid a somewhat lacklustre market in the first half of the year, while certain property developers sought to secure cash inflow by slashing prices, the Group completed half of its annual sales target by exercising moderate control over the speed of sales. As market sentiment continued to improve during the second half of the year, contracted property sales (including sales by joint ventures and associates) for the year just exceeded the annual target of HK$140.0 billion, with a final sales amount of HK$140.81 billion. Properties with aggregate GFA of 9.40 million sq m were sold. In mainland China, properties with aggregate GFA of 9.37 million sq m were sold for a total of HK$135.75 billion, accounting for 96.4% of the total sales. Sales in Hong Kong and Macau for the year increased substantially to HK$5.06 billion, following improved market sentiment. For the year as a whole, the Group reported record-high sales with satisfactory selling prices, which were attributable to the management’s shrewd judgement regarding market changes and flexible marketing strategies, as well as the significant brand name effect of “China Overseas Property” in driving sales and alleviating the downward pressure on prices.

In response to market changes, the Group accelerated construction of its property projects, completing a total GFA (including joint ventures) of about 10.77 million sq m. The value of sales recognised as the Group’s turnover in 2014 was HK$99.43 billion. Furthermore, the level of the Group’s sales of properties completed as at the end of 2013 was satisfactory, with about 720,000 sq m sold for approximately HK$16.82 billion. Hence, turnover for property development increased by 47.9% to HK$116.25 billion. The operating profit reached HK$36.10 billion. In pursuit of greater operating scale, the Group must accelerate the pace of its development and sales in all its projects. This will result in improved cash inflow, asset turnover and return on shareholders’ funds, but the gross profit margin of projects will inevitably be squeezed. Setting aside the effects of the affordable housing and the three projects repurchased from the real estate fund, the gross profit margin for property development projects of the Group remained at a satisfactory and industry-leading level.

At the end of the year, the Group had approximately 2.26 million sq m of properties held for sale, with book cost of approximately HK$29.39 billion. To a certain extent, the increase in properties held for sale reflected more difficult market conditions in 2014. Given its sound financial conditions, however, the Group did not need to lower the prices of its properties to drive sales as other developers had. Sales of properties on hand are expected to increase substantially next year and will help to increase the amount of sales recognised as turnover. In line with the Group’s emphasis on the collection of sales proceeds, cash inflow from sales for the Group and the joint ventures amounted to over HK$117.70 billion. Presales deposits amounted to HK$51.32 billion as at the end of the year.

In 2015, sentiment in the mainland China property market is expected to be stable. Hence, 2015 will be a challenging year for most developers. As an operationally and financially sound developer with a strong brand name, the Group is in a relatively advantageous position. The Group is confident of its performance in 2015, and sees sound opportunities to expand its market share, acquire prime sites and consolidate its market leadership. Prospects for the property markets in Hong Kong and Macau remain stable in 2015. The Group will dedicate its effort to marketing activities for projects on hand, and continue to expand its business in Hong Kong and Macau when appropriate.

The Group strives to expedite its development through joint ventures and mergers and acquisitions. Nevertheless, with the growth in its financial strength, the Group has been engaged in fewer joint venture projects in recent years. As at the end of December 2014, the Group’s investment interest in 16 joint ventures plus amounts due from and deducted amounts due to joint ventures decreased significantly to HK$8.98 billion. Sales from joint ventures reached HK$13.08 billion, and turnover amounting to HK$15.25 billion was recognised. Cash inflow from sales for the year amounted to approximately HK$15.61 billion. Pre-sales deposits amounted to HK$4.47 billion at the year end. All the joint ventures were financially sound. As at the end of the year, three projects owed outstanding loans of approximately HK$3.33 billion, while cash held by the joint ventures totalled HK$6.83 billion. As most major joint venture projects had entered into peak investment returns in the previous year, their profit contributions for the full year of 2014 decreased significantly, to approximately HK$1.10 billion. Furthermore, COGO, the Company’s major associate, is expected to effectively complement the business of China Overseas Property. COGO reported fair performance for the year, with net profit of approximately HK$1.45 billion. The Group recorded a net profit contribution of approximately HK$480 million from COGO.

On 5 August 2013, the Company announced the intention of the controlling shareholder, China State Construction Engineering Corporation Limited (“SCECL”), to inject certain China property businesses into the Group. Subsequently, on 28 January 2014, the Company announced the transitional arrangements for the operation and management of the businesses to be injected would be entrusted to the Company. The Board is pleased to announce that negotiation with CSCECL on the implementation of the asset injection has been completed.Please refer to the announcement dated 24 March 2015 on the acquisition by the Group of property portfolio from CSCECL and its subsidiaries and issue of the Company’s shares to China Overseas Holdings Limited, a wholly owned subsidiary of CSCECL and the immediate holding company of the Company.