First six months of 2021

During the period under review, Guangdong Land Holdings Limited (the “Company”) and its subsidiaries (together, the “Group”) was engaged in property development and investment businesses. The Group currently mainly holds the Shenzhen GDH City Project and certain investment properties in Shenzhen City, the Ruyingju Project in Panyu District, Guangzhou City, the Guangzhou Laurel House Project in Yuexiu District, Guangzhou City, the Baohuaxuan Project in Liwan District, Guangzhou City, the Chenyuan Road Project and the Jiangmen Ganhua Project in Pengjiang District, Jiangmen City, the Zhuhai Jinwan Project in Jinwan District, Zhuhai City, the Foshan Laurel House Project in Chancheng District, Foshan City, the Zhongshan GDH City Project in Tsuihang New District, Zhongshan City as well as the Huizhou Dayawan Project in Dayawan District, Huizhou City in the People's Republic of China (the “PRC” or the “Mainland China”).
 
According to the information of National Bureau of Statistics of the PRC, the preliminary gross domestic product (“GDP”) for the first half of 2021 showed an overall increase of approximately 12.7% from that of the same period last year while per capita nominal disposable income of national residents recorded a year-on-year growth of approximately 12.6%. According to the stock housing price movements of representative cities nationwide in June 2021 based on the statistics of Worldunion Electronic Valuation System (EVS) platform, as compared to June 2020, the average stock housing price of Shenzhen City, Guangzhou City, Jiangmen City, Zhuhai City, Foshan City and Huizhou City increased year-on-year by approximately 10.0%, 12.3%, 3.2%, 3.8%, 3.2% and 10.0%, respectively while that of Zhongshan City remained basically flat.
 
In the first half of this year, the world gradually entered the post-COVID-19 (the “Pandemic”) era. Against the backdrop of growing uncertainties of and acute imbalance in the global economic recovery, the economy of the PRC maintained steady recovery. The management of the Company adhered to the general principle of prudent development, closely monitored the recovery of the Pandemic and the market situation and formulated timely countermeasures. It carried out the construction of various projects held by the Group cautiously in accordance with the requirements of “safeguarding quality, ensuring speed and meeting schedule” and established an online sales system platform to increase marketing efforts in a diversified manner and reduce the impact of the Pandemic. With reference to other key peers in the real estate industry, the Group focused on promoting the operation of standardisation system establishment throughout the whole process, conducting in-depth analysis and study of the current market transactions and the mainstream market demand, optimising its product structure based on the core demands of its major customers, and strengthening brand building and brand influence. It was engaged in coordinating internal and external resources and seizing development opportunities in major cities in the Guangdong-Hong Kong-Macao Greater Bay Area (the “Greater Bay Area”) and covered by “Core, Coastal Belt and Zone Initiative” (which fosters the optimised development of the Pearl River Delta Core Area, connects Eastern Guangdong, Western Guangdong and cities within the Pearl River Delta as a coastal economic belt like a beaded bracelet, and establishes the mountainous areas of Northern Guangdong as an ecological development zone). The Group currently enjoys a healthy financial position, the support of a robust controlling shareholder and ample project and financial resources. As recommended by the Board, the payment of the first annual dividend since the business transformation of the Group has been approved at the annual general meeting held on 18 June 2021, in return for the support of the shareholders of the Company.

Results


During the period under review, the consolidated revenue of the Group amounted to approximately HK$2,284 million (six months ended 30 June 2020: HK$1,898 million), representing an increase of approximately 20.3% from the same period last year. The increase in revenue was mainly attributable to the increase in the sale of gross floor area (“GFA”) of properties held for sale. During the period under review, the Group recorded a profit attributable to owners of the Company of approximately HK$333 million (six months ended 30 June 2020: HK$1,737 million), representing a decrease of approximately 80.8% from the same period last year. During the period under review, profit attributable to owners of the Company before taking into account of the net fair value gains on investment properties and the relevant deferred tax expense was approximately HK$273 million (six months ended 30 June 2020: HK$316 million).

The major factors that affected the aforesaid anticipated results of the Group for the six months ended 30 June 2021 include the following:

  1. during the first half of 2020, the Group recorded fair value gains on investment properties (net of the relevant deferred tax expense) of approximately HK$1,421 million, which was mainly attributable to the first-time adoption of the fair value model measurement of the investment properties under development built on the Southern Land of the Shenzhen GDH City Project as at 30 June 2020 and the fair value changes of these investment properties under development being recognised in the consolidated statement of profit or loss. After taking into account the relevant deferred tax expense, the Group recorded fair value gains on investment properties of approximately HK$59.59 million during the period under review, representing a significant decrease from the same period of 2020;

  2. the Group started to deliver the sold units in the buildings on the Northwestern Land of the Shenzhen GDH City Project to the purchasers since June 2020. During the period under review, the revenue and the profit derived from the sale of such properties increased as compared to the same period in 2020; and

  3. an increase in the selling and marketing expenses, administrative expenses and net finance cost of approximately HK$123 million, HK$65.20 million and HK$30.21 million, respectively when comparing with the same period in 2020 due to the increase in sales activities and business expansion of the Group.


As at 30 June 2021, the equity attributable to owners of the Company was approximately HK$7,190 million (31 December 2020: HK$6,836 million), representing an increase of approximately 5.2% from that as at the end of 2020. Based on the number of shares in issue as at 30 June 2021, the net asset value per share at the period end was approximately HK$4.20 (31 December 2020: HK$3.99) per share, representing an increase of approximately 5.3% from that as at the end of 2020.

The board of directors of the Company (the “Board”) resolved not to declare the payment of an interim dividend for the six months ended 30 June 2021 (six months ended 30 June 2020: Nil). The Board announced on 28 April 2021 that it had approved and adopted the revised dividend policy. At this stage, the Company will adopt a progressive dividend policy to reward the shareholders of the Company.

Business Review


Completed Properties Held for Sale

Property project

Location

Use

Interest held by the Group

Approximate GFA of
the project

Accumu-
lated
GFA
contracted

 Approximate GFA
delivered 

The proportion of accumulated GFA delivered
to GFA available for sale

 Period under review

Accumu-
lated

       

(sq. m.)

(sq. m.)

(sq. m.)

(sq. m.)

 

Northwestern Land
of Shenzhen GDH City

Shenzhen City,
the PRC

Business
apartment/
Commercial

100% 114,654 81,839 19,874 42,033 36.7%

Guangzhou Laurel House

Guangzhou City,
the PRC

Residential

100% 65,636 64,821 9,971 64,167 97.8%

Baohuaxuan

Guangzhou City,
the PRC

Residential

100% 3,884 3,884 200 3,884 100.0%

Ruyingju

Guangzhou City,
the PRC

Residential

80% 94,617 94,617 193 94,617 100.0%

Ruyingju

Guangzhou City,
the PRC

Car-parking
spaces

80% 8,052 5,254 267 5,246 65.2%

Properties Held for Sale and Investment Properties under Development

Property project

Location

Use

Interest held by the Group

Approximate total site area

Approximate GFA*

Progress

Expected completion and filing date

       

(sq. m.)

(sq. m.)

   

Northern Land of Shenzhen GDH City Project

Shenzhen City,
the PRC

Commercial/
Offices/
Mall

100% 33,802 146,551 Commercial shopping building superstructure and tower superstructure topped out, and renovation works in progress 2nd half of 2022

Southern Land of Shenzhen GDH City Project

Shenzhen City,
the PRC

Offices/
Mall

100% 16,044 199,500 Construction works of tower superstructure and commercial shopping building structure in progress 2023

Chenyuan Road Project

Jiangmen City,
the PRC

Residential/
Commercial
service

100% 59,705 164,216 Superstructure of the first and second phases topped out, and superstructure construction works of the remaining properties in progress 2nd half of 2022

Zhuhai Jinwan Project

Zhuhai City,
the PRC

Residential/
Commercial

100% 66,090 166,692 Superstructure construction works of the first phase properties in progress, and foundation piling works for other properties underway 2024

Foshan Laurel House Project

Foshan City,
the PRC

Residential/
Commercial

100% 43,284 151,493 Superstructure construction works of the first phase properties in progress, and foundation piling works for other properties underway 2023

Zhongshan GDH City Project

Zhongshan City,
the PRC

Residential

97.64% 98,811 247,028 Superstructure construction works of the first phase properties in progress, and construction works of foundation slab and piling works for other properties underway 2023

Jiangmen Ganhua Project (Jiangmen Land No. 3 - 5)

Jiangmen City,
the PRC

Residential/
Commercial

51% 174,538 396,600 Superstructure of some properties on Land No. 3 topped out, superstructure construction works of other properties in progress, and superstructure construction works of Land No. 4 in progress 2026

Huizhou Dayawan Project

Huizhou City,
the PRC

Residential/
Commercial

100% 30,698 92,094 Superstructure construction works, foundation piling and earthworks in progress 2023


*Note: Including (1) underground commercial area of the Shenzhen GDH City Project with a GFA of 30,000 sq. m.; and (2) common area and area transfer to the government of each project.


Projects Which Pre-sale Has Commenced

Property project

Location

Use

Interest held by the Group

Approximate GFA included in calculation of plot ratio

Approximate
GFA contracted

The proportion of accumulated GFA contracted to GFA available for sale

Date of pre-sale

Period under review

Accumulated

       

(sq. m.)

(sq. m.)

(sq. m.)

   

Chenyuan Road Project

Jiangmen City, the PRC

Residential/
Commercial
service

100% 164,216 24,922 24,922 15.2% January 2021

Jiangmen Ganhua Project (Jiangmen Land No. 3 - 5)

Jiangmen City, the PRC

Residential/
Commercial

100% 396,600 15,055 15,055 3.8% May 2021

Zhuhai Jinwan Project

Zhuhai City, the PRC

Residential/
Commercial

100% 166,692 110 110 0.1% June 2021


During the period under review, the Group's properties recorded the total GFA contracted (including completed properties held for sale and properties held for sale under development) and delivered of approximately 85,000 square metres (“sq. m.”) and 31,000 sq. m. respectively.

The Shenzhen GDH City Project
 
Located in Buxin Area (布心片區), Luohu District, Shenzhen City in the PRC, the Shenzhen GDH City Project is a multi-functional commercial complex with jewelry as the main theme. The project, which is in close proximity to the urban highways and subway stations and adjoins Weiling Park, is surrounded by several municipal parks within a radius of 1.5 kilometres and enjoys convenient transportation and superb landscape resources.
 
The Shenzhen GDH City Project is developed in two phases. The filing for completion of construction of the first phase was made in June 2020 and the Group has started to deliver properties to the purchasers. The construction of the second phase has been in full swing. As at 30 June 2021, the superstructure of the office tower and the commercial shopping building on the Northern Land development was topped out and renovation works were in progress; and the superstructure of the office tower and the basement structure of the commercial shopping building on the Southern Land were under construction. In respect of the sale of the first phase properties of the Shenzhen GDH City Project, the total GFA of properties contracted for sale amounted to approximately 42,937 sq. m., representing approximately 37.4% of the GFA available for sale during the period under review.
 
As at 30 June 2021, the accumulated development costs and direct expenses of the Shenzhen GDH City Project amounted to approximately HK$6,918 million (31 December 2020: HK$6,174 million), representing a net increase of approximately HK$744 million during the period under review.
 
The Guangzhou Laurel House Project and the Ruyingju Project
 
During the period under review, the total GFA of residential units of Guangzhou Laurel House Project which had been delivered to customers amounted to approximately 9,971 sq. m. (six months ended 30 June 2020: 9,053 sq. m.), representing an increase of approximately 10.1% as compared to the same period last year. All residential units of the Ruyingju Project had been delivered.
 
As at 30 June 2021, the occupancy rate of the commercial properties of the Guangzhou Laurel House Project was approximately 92.9%.
 
The Chenyuan Road Project
 
The Chenyuan Road Project is located at the southeast to the intersection of Chenyuan Road and Longteng Road and west to Fengxiang Road in Pengjiang District, Jiangmen City, the PRC with a site area of approximately 59,705 sq. m. and a maximum total GFA included in the calculation of the plot ratio of approximately 164,216 sq. m. The proposed types of properties, including residential units, commercial units, and car-parking spaces, will all be for sale. Jiangmen is positioned as the western gateway of the Greater Bay Area, with its value remaining at an underestimated level. Subsequent to improvements in the transportation infrastructure across the eastern and western bays, the future development of such area is expected to prosper. The project is situated in a region with high planning position and enjoys strong market prospects, as well as convenient location as a bonus. Possessing rare landscape resources and sound living amenities, the project embraces the conditions in becoming a regional benchmark project.
 
The project is being developed in phases. As at 30 June 2021, the superstructure of the first and second phases was topped out, and the superstructure of the remaining properties was under construction. The pre-sale of properties of the first phase development commenced in January 2021, with the project promoted as Jiangmen One Mansion (江門粤海•壹桂府).
 
The Zhuhai Jinwan Project
 
The Zhuhai Jinwan Project is located at the west to Jinhui Road and north to Jinhe East Road in Jinwan District, Zhuhai City, the PRC with a site area of approximately 66,090 sq. m. and a maximum total GFA included in the calculation of the plot ratio of approximately 166,692 sq. m. The project is planned for commercial and residential uses. The proposed types of properties, including residential units, commercial units and car-parking spaces, will all be for sale. The high value potentials of the area where the project is located will improve the future development of the project. It is expected that there will be sound living and education amenities in the area. With the significant advantage in terms of location resources, the project enjoys promising market prospects.
 
The project is being developed in phases. As at 30 June 2021, the superstructure of the first phase properties was under construction, and foundation piling works for the other properties were underway. The filing for completion of construction of the project is expected to be made in 2024. The pre-sale of properties of the first phase development commenced in June 2021, with the project promoted as Zhuhai Laurel House (珠海粤海•拾桂府).
 
The Foshan Laurel House Project
 
The Foshan Laurel House Project is located at west to Wenhua Road, south to Liming 2nd Road, Chancheng District, Foshan City, the PRC with a site area of approximately 43,284 sq. m. and a maximum total GFA included in the calculation of the plot ratio of approximately 151,493 sq. m. The project is planned for residential use compatible with commercial use. In addition, a nursery with area of 4,860 sq. m. is entrusted to be built with the project and gratuitously transferred to the government of Chancheng District, Foshan City upon completion. This sub-district is positioned as a modern, top-notch and strong central of Foshan City, which is a place ideal for living, starting business and fostering innovation. Surrounded by two metro networks, its transportation is much convenient. Together with the well-established education, medical and commercial amenities nearby, the project has the advantages to be forged into an above-twin stations residential community featuring quality lifestyle. With the significant advantage in terms of location resources, the project enjoys promising market prospects.
 
The project is being developed in phases. As at 30 June 2021, the superstructure of the first phase properties was under construction, and foundation works for the other properties were underway. The pre-sale of properties is expected to commence in the fourth quarter of 2021. The filing for completion of construction of the project is expected to be made in 2023, with the project promoted as Foshan Laurel House (佛山粤海•拾桂府).
 
The Zhongshan GDH City Project
 
The Zhongshan GDH City Project is located at the starting area of Tsuihang New District, Zhongshan City, the PRC, with a site area of approximately 98,811 sq. m. and a maximum total GFA included in the calculation of the plot ratio of approximately 247,028 sq. m. The project is planned for town residential use. Sitting in the core centre of the Greater Bay Area, the project is the bridgehead at the west bank of the Pearl River connecting to the Shenzhen Zhongshan Bridge. It therefore undergoes a rapid development and generates increasing market demand. With a superior seaview, the project will enjoy rich environmental landscape resources. Coupled with the plan to perfecting the region by education, medical and commercial facilities, the project is suitable to be developed as a low-density, ecological and quality residential community. With the significant advantage in terms of location, industries and transportation resources, the project enjoys promising market prospects.
 
The project is being developed in phases. As at 30 June 2021, the superstructure of the first phase properties was under construction, and foundation slab and piling works for the other properties were underway. The pre-sale of properties is expected to commence in the third quarter of 2021. The filing for completion of construction of the project is expected to be made in 2023, with the project promoted as Zhongshan GDH City (中山粤海城).
 
Material Acquisitions – Jiangmen Yuehai and Huiyang Yuehai
 
On 29 October 2020, the Group acquired from the subsidiaries of 廣東粤海控股集團有限公司 (Guangdong Holdings Limited), the ultimate controlling shareholder of the Company: (i) 51% interest in 江門粤海置地有限公司 (Jiangmen Yuehai Land Co., Ltd.) (“Jiangmen Yuehai”) and its shareholder's loan at a total consideration of approximately RMB954 million (equivalent to approximately HK$1,086 million); and (ii) 100% interest in 惠陽粤海房產發展有限公司 (Huiyang Yuehai Property Development Co., Ltd.) (“Huiyang Yuehai”) at a consideration of approximately RMB274 million (equivalent to approximately HK$316 million).
 
Jiangmen Yuehai mainly holds three adjourning parcels of land located at the east of Ganbei Road, Pengjiang District, Jiangmen City, Guangdong Province, the PRC with a total GFA of approximately 396,600 sq. m. (the “Jiangmen Land No. 3 - 5”). The land has been approved for city and town residential and other commercial and service uses. In addition, there is a parcel of land adjacent to the Jiangmen Land No. 3 - 5 with a GFA of approximately 41,597 sq. m. (the “Jiangmen Land No. 6”), which has been approved for medical and health, and commercial service uses; and subject to the approval of the relevant government authorities in accordance with the policy of “Three Olds” Renovation (「三舊」改造) in relation to, among others, the resettlement of the residents. Jiangmen Yuehai shall be entitled to acquire the relevant land use right in respect of Jiangmen Land No. 6 without paying any land premium. The Jiangmen Ganhua Project is located in a traditional old town district in Jiangmen City with high density population and a convenient transportation network. It is also adjacent to Xi River, connects to the Chaolian Talent Island and is accessible to five parks nearby, providing a quality living environment with an excellent river scenery. The project is being developed in three phases. As at 30 June 2021, the superstructure of some properties on Land No. 3 was topped out; construction works of the superstructure of other properties were in progress; and construction works of the superstructure of other properties on Land No. 4 were in progress. The filing for completion of construction of the project is expected to be made in December 2026. The pre-sale of properties of the first phase development commenced in May 2021, with the project promoted as Jiangmen GDH City (江門粤海城).
 
Huiyang Yuehai mainly holds the Huizhou Dayawan Project through its wholly-owned subsidiary, 惠州市粤海房地產開發有限公司 (Huizhou City Yuehai Property Development Co., Ltd.). The project is located at Mamiao, Aotou, Dayawan District, Huizhou City, Guangdong Province, the PRC with a GFA of approximately 92,094 sq. m. It is close to Xin'ao Avenue, a trunk road connecting Huiyang District and Dayawan District, and is only seven kilometres away from the Huizhou Highspeed Railway South Station. The project is positioned to be a quality urban residential community with natural slope land garden view. The project is being developed in one phase. As at 30 June 2021, the superstructure construction works, foundation piling works and earthworks were in progress. The pre-sale of properties is expected to commence in March 2022. The filing for completion of construction of the project is expected to be made in 2023, with the project promoted as Huizhou One Mansion (惠州粤海•壹桂府).
 
The Group's acquisitions of Jiangmen Yuehai and Huiyang Yuehai constituted a connected transaction and a major transaction of the Company under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), and were approved by the shareholders of the Company by way of poll at the special general meeting of the Company held on 15 December 2020. For details of the acquisitions, please refer to the circular of the Company dated 25 November 2020. The acquisition of Jiangmen Yuehai was completed on 13 January 2021. The acquisition of Huiyang Yuehai was completed on 18 January 2021. From the above dates of completion, the assets, liabilities, results and cash flows of these companies are included in the consolidated financial statements of the Company.

Financial Review


Key Financial Indicators

   

 

 Six months ended 30 June 

 
 

Note

2021

2020

Change

Profit attributable to owners of the Company (HK$'000)

 

333,355

1,736,811

-80.8%

Return on equity (%)

1

4.8%

31.1%

-26.3 ppt

   

30 June
2021

31 December 2020

Change

Net assets value (HK$ million)

 

8,080

6,955

+16.2%


Note:
1.   Return on equity = Profit attributable to owners of the Company ÷ average equity attributable to owners of the Company

During the first half of 2021, the Group recorded a significant decrease in profit attributable to owners of the Company as compared to the same period last year, which was mainly attributable to the first-time adoption of the fair value model measurement of the investment properties under development built on the Southern Land of the Shenzhen GDH City Project as at 30 June 2020 and the fair value changes of these investment properties under development being recognised in the consolidated statement of profit or loss, resulting in the significant fair value gains on investment properties. For details, please refer to the “Results” section in this Management Discussion and Analysis.
 
Operating Income, Expenses and Finance Costs

During the first half of 2021, the Group recorded selling and marketing expenses of approximately HK$200 million (six months ended 30 June 2020: HK$76.53 million), representing an increase of approximately 161.3% from that for the same period last year. The increase in selling and marketing expenses was mainly due to the increase in related sales activities and sales commissions in relation to the first phase development of the Shenzhen GDH City Project and the Guangzhou Laurel House Project as well as the increase in expenses of the related marketing and sales activities of three new projects which pre-sale commenced during the period. The Group's administrative expenses for the first half of 2021 amounted to approximately HK$128 million (six months ended 30 June 2020: HK$62.34 million), representing an increase of approximately 105.3% from that for the same period last year, which was mainly attributable to an increase in wages and related expenditures, an increase in professional fees due to business development and acquisition activities and an increase in the business taxes and surcharges of approximately HK$27.80 million (six months ended 30 June 2020: HK$11.29 million) due to an increase in revenue.
 
During the period under review, the Group borrowed loans to support its business development and recorded finance costs of approximately HK$320 million (six months ended 30 June 2020: HK$81.87 million), of which approximately HK$262 million was capitalised while the remaining portion of approximately HK$57.42 million was charged to the statement of profit or loss.
 
Capital Expenditure
 
The amount of capital expenditure paid by the Group during the first half of 2021 was approximately HK$367 million (six months ended 30 June 2020: HK$195 million). The capital expenditure for the period was mainly used for the investment properties under development of the Shenzhen GDH City Project.
 
Financial Resources and Liquidity
 
As at 30 June 2021, the Group had cash and cash equivalents of approximately HK$3,637 million (31 December 2020: HK$2,647 million), representing an increase of approximately 37.4% from that as at the end of last year. The increase in cash and cash equivalents was mainly due to more proceeds from property sales and new bank and other loans during the period under review. The main purpose for such new interest-bearing loans is to satisfy the funding needs for the Group's business development.
 
Of the Group's cash and bank balances (including restricted bank balances and cash and cash equivalents) as at 30 June 2021, approximately 98.1% was in RMB, approximately 0.4% was in USD and approximately 1.5% was in HKD. Net cash outflows from operating activities for the first half of 2021 amounted to approximately HK$4,129 million (six months ended 30 June 2020: net cash inflows of HK$255 million).
 
As most of the transactions in the Group's daily operations in Mainland China are denominated in RMB, currency exposure from these transactions is low. During the period under review, the Group did not take the initiative to perform currency hedge for such transactions.
 
As at 30 June 2021, the Group had interest-bearing borrowings from certain banks and related parties of the Company amounting to approximately HK$14,367 million (31 December 2020: HK$7,762 million) in aggregate, with a gearing ratio1 of approximately 132.9% (31 December 2020: 73.7%). According to the relevant loan agreements, approximately HK$1,737 million of the interest-bearing loans are repayable within one year; approximately HK$2,775 million are repayable within one to two years; and the remaining approximately HK$9,855 million are repayable within two to five years. The Group obtained funds for business development through different financing channels and effectively controlled its finance costs. As at 30 June 2021, the weighted average effective interest rate of the Group's bank and other borrowings was 4.50% (31 December 2020: 4.66%) per annum. As at 30 June 2021, the banking facilities available to the Group were approximately RMB2,385 million (equivalent to approximately HK$2,866 million). The Group reviews its funding needs from time to time according to the existing projects and other new investment businesses and considers obtaining funds through various financing means and channels so as to secure adequate financial resources for business development.
 
1  Gearing ratio = (Interest-bearing loans + Lease liabilities - Cash and cash equivalents) ÷ Net assets
 
Asset Pledged and Contingent Liabilities
 
As at 30 June 2021, the Group's certain properties amounting to approximately HK$9,101 million (31 December 2020: HK$5,748 million) and the 100% equity interests of 廣東粤海房地產開發有限公司 (Guangdong Yuehai Property Development Co., Ltd.) and 珠海粤海置地有限公司 (Zhuhai Yuehai Land Co., Ltd.) were pledged to secure certain bank loans.
 
In addition, as at 30 June 2021, the Group provided guarantees of approximately HK$1,073 million (31 December 2020: HK$1,087 million) to certain banks in relation to the mortgage loans on properties sold (please refer to note 17 to the interim financial information of the 2021 interim report for details). Save for the above, the Group did not have any other material contingent liabilities as at 30 June 2021.

Risks and Uncertainties


As the Group is engaged in property development and investment businesses in the Mainland China, the risks and uncertainties of its business are principally associated with the property market and property prices in the Mainland China, and the Group's income in the future will be directly affected accordingly. The property market in the Mainland China is affected by a number of factors which include, among others, economic environment, property supply and demand, the PRC government's fiscal and monetary policies, taxation policies and austerity measures on the real estate sector, etc. At present, property projects held by the Group are all located in first-tier cities or the Greater Bay Area and comprise different property types and uses, thereby effectively diversifies the operating risks of the Group.
 
As property projects have a relatively long development period, the Company may need to seek external funding to partially finance the development of such projects. As such, financing channels and finance costs are subject to the prevailing market conditions, loan interest rates and the financial position of the Group. As at 30 June 2021, the Group had total outstanding interest-bearing loans of approximately HK$14,367 million (31 December 2020: HK$7,762 million).
 
According to the applicable accounting standards, investment properties of the Group were carried at fair value. The fair values of these investment properties are subject to the prices in the property markets in which they are located as at the end of each reporting periods. The fair value changes of such investment properties are recognised in the statement of profit or loss and affect the profit of the Group.
 
As the property development business has a relatively long product life cycle, the Group's future results and cash flows will be relatively volatile. To reduce the volatility of its revenue and profit, the commercial properties of the Guangzhou Laurel House Project and investment properties under development of the Shenzhen GDH City Project are held by the Group for lease in order to generate stable rental income for the Group in the future.

Policy and Performance on Environmental, Social and Governance


The Group strictly complies with the regulations enacted by the Mainland China and Hong Kong governments, including those in relation to environmental protection, social and governance. The Company's internal management for environmental, social and governance (“ESG”) takes into consideration the views of various stakeholders, especially for important ESG issues, and is supported by staff members from all levels and departments of the Group. Staff members jointly implement and execute relevant internal policies and promptly respond to the expectations of stakeholders.
 
To further refine its ESG policies, the Group has been actively communicating with stakeholders such as employees, customers, business partners and suppliers, shareholders and investors, government authorities and regulators through various channels in order to gather comments and suggestions from them. Coupled with the management's expectations on development, the Group identifies and analyses important topics at two dimensions, namely “Significance to our Stakeholders” and “Importance to Guangdong Land's Development”, by conducting proactive and comprehensive stakeholder communication from multiple perspectives in various ways, such as face-to-face communication, email correspondence, telephone interviews and on-site visits, with the assistance of an independent third-party professional consultant, thereby allowing the Group to envisage changes in the operating environment and consequently achieving the goals of sustainability and proper risk management.
 
The Group operates in the real estate industry and it is very important to strictly comply with environmental laws and regulations on construction works. Any failure to observe the relevant environmental laws and regulations may result in the relevant authorities' rejection of the applications for construction projects. The Group ensures that all newly constructed buildings comply with the environmental protection and energy conservation requirements set by the central and local governments. It also spares no efforts in contributing to environmental protection by actively collaborating with the main contractors of its development projects.
 
The Company prepared its 2020 ESG report and published it in May 2021. The report summarises the Group's initiatives and achievements in respect of corporate social responsibility, covering various aspects including corporate governance, environmental protection, care for employees, quality management, care for the community and other aspects in 2020. To redouble its ESG efforts and uphold the corporate philosophy of sustainability, the Group has reviewed its ESG management structure during the period under review. In April 2021, the Company established the ESG Committee with the ESG Working Group under it. Authorised by the Board, the ESG Committee is responsible for determining the ESG management objectives, approaches and implementation paths, monitoring the implementation and effectiveness of the relevant policies and practices adopted, and leading and overseeing the work of the ESG Working Group, with the aim of improving its ESG performance.

Human Resources


As at 30 June 2021, the Group had 501 (31 December 2020: 401) employees. Various basic benefits were provided to the Group's employees. As to the staff incentive policy, it is designed to reward employees by reference to and integrating factors including the Group's operating results and the performance of the individual employees. There was no share option scheme of the Company in operation during the period under review. The Group offers different training courses to its employees.