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TESTAMENT TO THE STRONG BUYER SUPPORT FOR YANLORD’S HIGH-QUALITY DEVELOPMENTS IN THE PRC, THE TOTAL PROPERTY CONTRACTED PRE-SALES OF THE GROUP TOGETHER WITH ITS JOINT VENTURES AND ASSOCIATES ROSE 40.8% TO RMB78.455 BILLION IN FY 2020 COMPARED TO RMB55.704 BILLION IN FY 2019.
It is with great pleasure that I present to you Yanlord Land Group Limited’s (“Yanlord” or “Company” and together with its subsidiaries, “Group”) annual report for the financial year ended 31 December 2020 (“FY 2020”).
The year of COVID-19 pandemic has badly hit the global economy. Yanlord’s key market, the People’s Republic of China (“PRC”), is one of the few major economies to post growth. Notably, our focus of building premium developments in the high-growth economic regions and cities within the PRC has served us well. This is especially the case when the PRC pivot towards domestic driven growth.
Yanlord has long established presence in the Yangtze River Delta, the Greater Bay Area as well as Chengdu, Tianjin and various other cities, in the PRC, where there are strong industrial base and positive economic outlook that attract talents to sustain the market growth. These have become the engine of economic recovery from COVID-19 pandemic. Having long established ourselves in the leading high-growth cities of the PRC, the Yanlord branded premium developments and well-run residential apartments are highly sought after by home buyers looking to upgrade their properties.
Demand for Yanlord’s high-quality developments continues to be supported by a healthy home buyer base amidst the COVID-19 pandemic. Testament to the strong buyer support for Yanlord’s high-quality developments in the PRC, the total property contracted pre-sales of the Group together with its joint ventures and associates rose 40.8% to RMB78.455 billion in FY 2020 compared to RMB55.704 billion for the financial year ended 31 December 2019 (“FY 2019”). In FY 2020, a total gross floor area (“GFA”) of 2.14 million square metres (“sqm”) was sold with an increase of 14.0% over FY 2019. Average selling price (“ASP”) achieved for FY 2020 was RMB36,638 per sqm, representing an increase of 23.6% compared to FY 2019. With our strategic planning in penetrating into Yangtze River Delta and Greater Bay Area over the years, property sales in these two regions contributed 69.7% and 16.3%, respectively of the total property contracted pre-sales of the Group together with its joint ventures and associates in FY 2020.
In terms of revenue, the Group recorded an increase of 28.1% to have reached RMB23.918 billion in FY 2020 over last year, of which, RMB20.960 billion was contributed from property development, RMB1.139 billion from property investment and hotel operations, RMB813 million from property management and the remaining from others.
FY 2020 profit attributable to owners of the Company was RMB2.592 billion, a decrease of 22.6% compared to FY 2019, mainly due to net effect from absence of gain on bargain purchase and loss on remeasurement of retained interests in associates and joint venture, and lower fair value gain on investment properties.
Over the past few years, the Group has been enhancing its business performance and operation efficiency, steadily expanding development scale and accelerating development pace. For FY 2020, the Group together with its joint ventures and associates delivered residential and commercial units with a total GFA of 857,299 sqm and 4,922 units of car parks to the customers, an increase of 7.1% and 9.6% respectively compared to FY 2019.
The total revenue from property sales recognised in FY 2020 amounted to RMB24.775 billion, of which, RMB20.842 billion was recognised as revenue of the Group and RMB3.933 billion was recognised as revenue of joint ventures and associates.
In FY 2020, the total rental and hotel income of the Group generated from the property investment and hotel operations segment rose 24.6% year-on-year to RMB1.139 billion, with the Singapore portfolio accounted for over 40%. The increase was mainly attributed to the acquisition of United Engineers Limited (“UEL”). The growth was partly offset by the commencement of an asset enhancement initiative at Tianjin Yanlord Riverside Plaza’s commercial and retail component, which had led to lower rental income contributions from the PRC market, together with the impact of COVID-19 pandemic on hotel operations.
The overall occupancy rate of commercial and office properties held by the Group in the PRC was 88% throughout the financial year under review. In late 2020, Yanlord Landmark in Nanjing held its soft opening with the occupancy rate of the shopping center reached 80%. Cangjie Commercial Plaza in Suzhou and Yanlord Reverie Plaza’s retail component in Shenzhen are under construction and have been entering pre-leasing stage with leasing centers opened in 2020. In 2021, retail area of Yanlord Riverside Plaza in Tianjin is planned to be opened progressively for operation.
With the resumption of economy in the PRC, domestic business travel and tourism demand recovered strongly in the second half of financial year ended 31 December 2020 (“2H 2020”), which enabled the occupancy rate of the Group’s hotels and serviced apartments to rebound significantly in 2H 2020. The Group’s hotels in Sanya and Zhuhai and serviced apartments in Chengdu, the PRC saw occupancy rates near doubled in 2H 2020 compared to first half of the financial year under review. Of the above, boosted by domestic holiday demand after the stabilised condition of COVID-19 pandemic in the PRC, the Crowne Plaza Sanya Haitang Bay Resort’s performance rebounded strongly in 2H 2020 with the total annual income of RMB194 million, rebounded to comparative level of 2019 of RMB209 million. The shopping mall of Chengdu Yanlord Landmark has done well amid the COVID-19 pandemic. After a very challenging 4 months in the beginning of year 2020, retail sales of tenants have grown 11% year-on-year. Uncertainties remain, but our dedicated management team over the year, coupled with our quality property portfolio will rise up to the challenges and seize every opportunity to add value.
The portfolio of high-quality assets and international exposure attained through the acquisition of UEL will also facilitate our long-term sustainable development and growth. With the completion of the acquisition of UEL, the asset value of the investment properties and hotels accounted for 22.1% of the Group’s total asset as at 31 December 2020. Commercial and integrated investment property development remains one of the important business segments of the Group. Yanlord plans to prudently pursue for growing the Group’s recurring income and achieve synergy among commercial and residential developments. As the COVID-19 pandemic is gradually under control and business activities resume, we remain optimistic about the growth of long-term recurring income of the Group.
The Group continues to maintain a healthy financial position. Benefiting from the strong property contracted pre-sales for FY 2020 with high collection ratio achieved, cash and cash equivalents of the Group increased by 24.5% to RMB17.200 billion as at 31 December 2020 with net gearing ratio of the Group decreased by 16.9 percentage points to 63.2%, compared to end of year 2019.
As discussed above, Yanlord focuses on cities and regions with high-growth potential in the PRC. While Yanlord management believes this is the way for growth, such strategy also facilitates the deployment of management resources. This is to ensure Yanlord continues to develop products that are the best in class.
For FY 2020, the Group together with its joint ventures and associates actively deployed capital to replenish a total GFA of approximately 2.32 million sqm of new landbank in the PRC. A total GFA of approximately 1.65 million sqm acquired through public land auctions, collaborations and acquisitions in Shanghai, Nanjing, Suzhou, Taicang, Yancheng, Jinan, Haikou and Wuhan, the PRC; and another total GFA of approximately 0.67 million sqm acquired through two urban renewal projects in Zhuhai and Zhongshan, the PRC. The total investments amounted to approximately RMB25.900 billion, of which, approximately RMB11.000 billion was attributable to the Group.
As of 31 December 2020, the Group together with its joint venture and associates held a total GFA of approximately 10.903 million sqm of landbank in the prime location in 18 high-growth cities in six major economic regions in the PRC and Singapore. Approximately 49% of total landbank is located in Yangtze River Delta and 21% in Greater Bay Area. Tier 1, New Tier 1 and Tier 2 cities of the PRC and Singapore accounted for over 90% of the total landbank.
Our strategic commitment in premium product positioning and long-term penetration in high-growth cities are sound foundations of sustainable growth, contributing to Yanlord’s continuous sales growth over the years.
The Group is confident with its professional development capabilities and a prudent investment approach; Yanlord will be able to sustain its competitive advantage and excellent reputation under the backdrop of urbanisation and a growing middle class.
The Group together with its joint ventures and associates recorded an accumulated property contracted pre-sales of RMB106.452 billion as at 31 December 2020, which represents a total GFA of approximately 3.1 million sqm pending recognition in the first half of 2021 and beyond.
Barring any significant deterioration in the global economy and any other unforeseen circumstances, the board of directors of the Company (“Board”) is cautiously confident of the Group’s performance relative to the industry trend for the next reporting period and the next 12 months based on the contracted pre-sale numbers to-date, expected delivery schedules and on-schedule construction works in progress.
I would like to thank our customers, business associates and employees for their support and dedication, whose commitment have been and will continue to be instrumental to the Group’s success. My gratitude also goes to fellow Directors for their contribution and guidance to steer the Group through this challenging year. Last but not least, on behalf of the Board, I would also like to express our sincere gratitude to our shareholders for their trust and support. In appreciation, the Board proposed the payment of a final tax-exempt dividend for FY 2020 of 6.80 Singapore cents (equivalent to approximately 34.19 Renminbi cents) per ordinary share representing a dividend payout ratio of 25.5% of FY 2020 profit attributable to owners of the Company. Looking ahead, Yanlord will continue to build on its proven business strategies and endeavor to increase shareholder value through better operational and financial performance.