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China SCE in the red with RMB103mn loss

But the group’s seven month contract sales income surged 116% to RMB3.22bn.

China SCE Property Holdings Limited (“China SCE”), a leading developer of high-end residential properties in Fujian Province, announced its interim results for the six months ended 30 June 2011 (“the period under review”).

According to the development plan, most of the property projects expected to be completed this year would be completed and delivered to customers in the second half of the year. As a result, for the six months ended 30 June 2011, the Group’s revenue was RMB105 million, with a loss attributable to owners of the parent of RMB103 million. On 14 January 2011, the Group successfully issued the US$-settled RMB denominated five-year senior notes whereby it raised RMB2 billion, significantly increasing financing cost to RMB133 million during the period under review which had an immediate effect on the interim balance sheet. The fundraising, however, provides positive cash flow to support the Group’s land acquisition and property development, thereby maintaining a healthy financial position. As at 30 June 2011, cash and bank balances of the Group increased 126% over the last corresponding period to RMB3.45 billion. Net debt ratio was also maintained at a very healthy level of 36.6%.

Although there was a loss recorded during the first half of the year, the Group’s business performance was still satisfactory. During the seven months ended 31 July 2011, contract sales income increased by 116% over that of the same period last year to RMB3.22 billion. The Group achieved 64.4% of its contract sales target for the entire year of 2011, and contract sales area increased by 69% over that of the same period last year to approximately 370,000 sq.m.

In respect of land bank, as at 31 July 2011, the Group, together with its jointly-controlled entities and associates, owned a land bank with a planned GFA of approximately 8.97 million sq.m. The total planned GFA of the newly acquired land during the period under review is approximately 550,000 sq.m.
During the seven months ended 31 July 2011, the Group rolled out five new projects, namely Sapphire Boomtown Phase 1, Sunshine Mansion, Provence Town, Fortune Plaza.Royal Terrace and Sapphire Peninsula. In respect of project development, as at 31 July 2011, the Group has 12 projects under construction with a total planned GFA of 1.90 million sq.m. The Group is rolling out two more new projects during the second half of the year. Total saleable GFA in 2011 is to reach 1 million sq.m. In particular, 85% of the Group’s projects available for pre-sale during the year are located in cities which are not subject to the home purchase restrictions and face strong demand from owner-occupiers. The Group is confident to achieve its full year contract sales target of RMB5 billion. On the other hand, the Group is accelerating the development of commercial properties in the second half of 2011, which the management believes would provide rental income representing a reliable cash flow in the future.
The Chairman of the Board and President of China SCE, Mr. Wong Chiu Yeung concluded,“

The Group continues to proactively cope with the macroeconomic measures to control the property market through prudent and sound operation strategies. More importantly, China SCE possesses a quick recovery of funds, a stable financial position and ability to cope with the influence of macroeconomic measures. On the other hand, we are confident about the prospects of China’s economy and with the continued increase in disposable domestic incomes, the demand of high quality residential products should see significant growth, therefore sustaining a strong growth momentum to fuel the Group’s development.”

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