Year 2021

Results


The consolidated revenue of the Group for 2021 amounted to approximately HK$6,006 million (2020: HK$4,000 million), representing an increase of approximately 50.1% from the previous year. The increase in revenue was mainly attributable to the increase in the sale of GFA of properties held for sale. Please refer to the section headed “Business Review” hereof for details of the Group’s property sale in 2021. During the year under review, the Group recorded a profit attributable to owners of the Company of approximately HK$1,402 million (2020: HK$1,682 million), representing a decrease of approximately 16.6% from the previous year. During the year 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$1,098 million (2020: HK$210 million).

The major factors that affected the aforesaid anticipated results of the Group for the year ended 31 December 2021 include the following:

  1. during 2020, the Group recorded fair value gains on investment properties (net of the relevant deferred tax expense) of approximately HK$1,472 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$304 million during the year under review, representing a significant decrease from 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 year under review, the revenue and the profit derived from the sale of such properties increased as compared to 2020; and

  3. an increase in the selling and marketing expenses, administrative expenses and net finance cost of approximately HK$368 million, HK$89.99 million and HK$42.62 million, respectively when comparing with 2020 due to the increase in sales activities and business expansion of the Group.

 

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

 Year 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 99,452 71,538 93,696 81.7%

Guangzhou Laurel House

Guangzhou City,
the PRC

Residential

100% 65,636 65,636 11,440 65,636 100.0%

Guangzhou Laurel House

Guangzhou City,
the PRC

Car-parking spaces

100% 2,764 2,197 1,779 1,779 64.4%

Baohuaxuan

Guangzhou City,
the PRC

Residential

100% 3,884 3,884 199 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 5,896 917 5,896 73.2%

Properties Held for Sale under Development 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 Commercial shopping building structure topped out and the masonry works and renovation works in progress, and superstructure construction and masonry works and renovation of the office tower underway 2023

Chenyuan Road Project

Jiangmen City,
the PRC

Residential/
Commercial
service

100% 59,705 164,216 Superstructure of all phases topped out, and renovation works 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 of the properties in progress, and basement structural 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 each phase of the properties in progress 2023

Zhongshan GDH City Project

Zhongshan City,
the PRC

Residential

97.64% 98,811 247,028 Superstructure construction works of each phase of the properties in progress 2023

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

Jiangmen City,
the PRC

Residential/
Commercial

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

Huizhou Dayawan Project

Huizhou City,
the PRC

Residential/
Commercial

100% 30,698 92,094 Superstructure construction works of each phase of the properties in progress 2023

Guangzhou Yungang City Project

Guangzhou City,
the PRC

Residential/
Commercial

100% 114,463 506,000 Basement and earthwork excavation of each phase of the properties underway 2025


*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

Year under review

Accumulated

       

(sq. m.)

(sq. m.)

(sq. m.)

   

Chenyuan Road Project

Jiangmen City, the PRC

Residential/
Commercial
service

100% 164,216 30,605 30,605 18.6% January 2021

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

Jiangmen City, the PRC

Residential/
Commercial

51% 396,600 25,920 25,920 6.5% May 2021

Zhuhai Jinwan Project

Zhuhai City, the PRC

Residential/
Commercial

100% 166,692 12,945 12,945 7.8% June 2021

Zhongshan GDH City Project

Zhongshan City, the PRC

Residential

97.64% 247,028 17,376 17,376 7.0% Sep-
tember 2021

Foshan Laurel House Project

Foshan City, the PRC

Residential/
Commercial

100% 151,493 3,301 3,301 2.2% October 2021


During the year under review, the Group's properties recorded the total GFA contracted (including completed properties held for sale and proper and properties held for sale under development) and delivered of approximately 157,000 sq. m. and 86,000 sq. m. respectively.

New Project in 2021 — The Guangzhou Yungang City Project

On 26 September 2021, the Group has successfully won the bid for the land use rights of the land parcel at Baiyun New Town, Baiyun District, Guangzhou City through the public listing-for-sale process, at a consideration of RMB10.187 billion (equivalent to approximately HK$12.278 billion). Such land parcel consists of three pieces of land (namely Land Plot Nos. AB2910004, AB2909009 and AB2909011) located at the core area of Baiyun New Town, Baiyun District, Guangzhou City, the PRC, with an aggregate site area of approximately 116,471 sq. m. and a total GFA included in the calculation of the plot ratio of approximately 506,000 sq. m. The nature of the land is a state-owned construction land, of which Land Plot No. AB2909011 is planned for residential purpose, and Land Plot Nos. AB2910004 and AB2909009 are planned for business and commercial purpose.
 
The core area of Baiyun New Town, Baiyun District, Guangzhou City, the PRC, at which the land parcel is located, is positioned to be the hub for headquarters, and is planned as a cluster of corporate headquarters, aviation industry and commercial hotel service functions, focusing on the development of headquarters economy and attracting the headquarters of large corporations and small and mediumsized enterprises. Such land parcel is located to the north of Yuncheng South Fourth Road and south of Qixin Road, and on the two sides of Yuncheng West Road, and is connected to major transport networks. It is adjacent to Baiyun Park Station of Guangzhou Metro Line 2 and trunk roads such as the Airport Expressway and the Baiyun Avenue, and it is only about 30 kilometres away from the Guangzhou Baiyun International Airport. In addition, as the Airport Avenue is expected to fully open within the year of 2022 while Guangzhou Metro Line 12 is expected to open in 2023, travel between such land parcel and its surrounding areas will be more convenient in due course. The land parcel is situated in a well-developed neighborhood where commercial shopping centres, schools, hospitals, parks and the Guangzhou Gymnasium are within a three-kilometre radius, and it is close to the scenic area of Baiyun Mountain. With the significant advantage of such land parcel in terms of its location, environment, accessibility to transport network and the development of industries nearby, it has promising market prospects. The project has adopted a model of development by phases. As at 31 December 2021, the properties of each phase of the project are carrying out the construction work of basement and earthwork excavation, and the overall project is expected to be filed for completion in 2025.

The Shenzhen GDH City Project

Located in Buxin Area, 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 superblandscape 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. The construction of the second phase properties has been in full swing. As at 31 December 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 construction and masonry works and renovation of the office tower on the Southern Land development were underway; and the commercial shopping building structure was topped out and the masonry works and renovation were in progress. 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 60,553 sq. m., representing approximately 52.8% of the GFA available for sale during the year under review.
 
For the search for potential commercial occupiers of the Shenzhen GDH City Project, the Group, Luohu Government of Shenzhen and the SDE have reached an agreement, pursuant to which the SDE agreed that the Shenzhen office of its extended service platform will be located in the GDH City and it will continue to support the marketing efforts for the GDH City and encourage its members to locate their offices in the GDH City. On this basis, the Group is planned to work with the SDE to make the Shenzhen GDH City Project home to the SDE innovative business. At present, 廣東粤海置地集團有限公司 (Guangdong Yuehai Land Holdings Limited), a wholly-owned subsidiary of the Company, has formally signed the cooperation and implementation agreement with the SDE. Further, the Group has entered into a property leasing services agreement with GDH Teem, a fellow subsidiary of the Company, in respect of the shopping mall of the Shenzhen GDH City Project. Pursuant to the agreement, GDH Teem shall grant the Group the right to use the name of “天河城” for the shopping mall under the Shenzhen GDH City Project and shall provide property leasing services for the shopping mall. GDH Teem is principally engaged in the provision of property leasing services, property investment and development, department stores operation, hotel ownership and operations in the PRC, and has extensive industry experience. The agreement enables the Group to access the quality property leasing services to be provided by GDH Teem.
 
As at 31 December 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 year under review.

The Guangzhou Laurel House Project, the Ruyingju Project and the Baohuaxuan Project

The Guangzhou Laurel House Project completed the delivery of all residential units, the total GFA of residential units which had been delivered to customers during the year amounted to approximately 11,440 sq. m. (2020: 31,477 sq. m.). All residential units of the Ruyingju Project and the Baohuaxuan Project had been delivered, and car-parking spaces of these projects will be sold in the future as planned.
 
During the year under review, the commercial property “GD•Delin (粤海‧得鄰)” of the Guangzhou Laurel House Project has ushered in several leading businesses and brands with distinctive characters that perfectly fit the position and theme of the project, i.e. its core positioning “high-end educationoriented community”. As at 31 December 2021, the total GFA of lease contracts signed in respect of the commercial shopping building of the Guangzhou Laurel House Project were approximately 16,855 sq. m. with an occupancy rate of approximately 91.8%.
 
The Group acquired the interests in the Guangzhou Laurel House Project, the Ruyingju Project and the Baohuaxuan Project in previous years, respectively. As the considerations paid for the acquisition of these projects were determined with reference to the then market values of these projects (but acquired at a discount), the carrying values (and future costs of sales) of properties of such projects included their development costs and fair value appreciation as of the completion dates of the acquisitions.

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 31 December 2021, the superstructure of all phases was topped out, and the renovation works were in progress. 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 31 December 2021, the superstructure of the first phase properties was under construction, and basement structure 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. The project 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 31 December 2021, the superstructure of each phase of the properties was under construction. The filing for completion of construction of the whole project is expected to be made in 2023. The pre-sale of properties of the first phase development commenced in October 2021, 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 31 December 2021, the superstructure of each phase of the properties was under construction. The filing for completion of construction of the whole project is expected to be made in 2023. The pre-sale of properties of the first phase development commenced in September 2021, with the project promoted as Zhongshan GDH City (中山粤海城).

The Jiangmen Ganhua Project

The acquisition of 江門粤海置地有限公司 (Jiangmen Yuehai Land Co., Ltd.) (“Jiangmen Yuehai”) was completed on 13 January 2021. For details of the acquisition, please refer to the circular of the Company dated 25 November 2020. 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 31 December 2021, the superstructure of all properties on Land No. 3 was topped out and the renovation works were in progress; and the superstructure of some properties on Land No. 4 was topped out and the construction works of the superstructure of other properties were in progress. The filing for completion of construction of the whole 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).

The Huizhou Dayawan Project

The acquisition of 惠陽粤海房產發展有限公司 (Huiyang Yuehai Property Development Co., Ltd.) (“Huiyang Yuehai”) was completed on 18 January 2021. For details of the acquisition, please refer to the circular of the Company dated 25 November 2020. 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 Huizhou Dayawan 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 31 December 2021, the superstructure construction works of the development properties of the project were in progress. The pre-sale of properties is expected to commence in the second quarter of 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).

Financial Review


Key Financial Indicators

 

Note

2021

2020

Change

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

 

1,402,249

1,681,922

-16.6%

Return on equity (%)

1

18.3%

29.0%

-36.9%

   

31 December 2021

31 December 2020

Change

Net assets (HK$ million)

 

9,318

6,955

+34.0%


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


During the year under review, the Group recorded a 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 section headed "Results" in this Management Discussion and Analysis.

Operating Income, Expenses and Finance Costs


In 2021, the Group recorded selling and marketing expenses of approximately HK$577 million (2020: HK$209 million), representing an increase of approximately 176.1% from the previous 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 five new projects which pre-sale commenced during the year. The Group’s administrative expenses for 2021 amounted to approximately HK$282 million (2020: HK$192 million), representing an increase of approximately 46.9% from the previous year. The increase of administrative expenses during the year under review 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$49.19 million (2020: HK$35.18 million) due to an increase in revenue.
 
During the year under review, the Group borrowed loans to support its business development and recorded finance costs of approximately HK$693 million (2020: HK$225 million), of which approximately HK$571 million was capitalised while the remaining portion of approximately HK$122 million was charged to the statement of profit or loss.

Capital Expenditure


The amount of capital expenditure paid by the Group during 2021 was approximately HK$969 million (2020: HK$776 million). The capital expenditure was mainly used for the investment properties under development of the Shenzhen GDH City Project.

Financial Resources and Liquidity


As at 31 December 2021, the equity attributable to owners of the Company was approximately HK$8,486 million (2020: HK$6,836 million), representing an increase of approximately 24.1% over 2020. Based on the number of shares in issue as at 31 December 2021, the net asset value per share at the end of the year was approximately HK$4.96 (2020: HK$3.99) per share, representing an increase of approximately 24.3% over 2020.
 
As at 31 December 2021, the Group had cash and cash equivalents of approximately HK$2,588 million (2020: HK$2,647 million), representing a decrease of approximately 2.2% from the previous year. The decrease in cash and cash equivalents was mainly due to higher funding needs for the Group’s business development during the year under review.
 
Of the Group’s cash and bank balances (including restricted bank balances and cash and cash equivalents) as at 31 December 2021, approximately 99.5% was in RMB and approximately 0.5% was in HKD. Net cash outflows from operating activities for the year amounted to approximately HK$9,643 million (2020: HK$2,011 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 year under review, the Group did not take the initiative to perform currency hedge for such transactions.
 
As at 31 December 2021, the Group had interest-bearing borrowings from certain banks and related parties of the Company amounting to approximately HK$19,664 million (31 December 2020: HK$7,762 million) in aggregate, with a gearing ratio1 of approximately 183.3% (31 December 2020: 73.7%). According to the relevant loan agreements, approximately HK$2,080 million of the interest-bearing loans are repayable within one year; approximately HK$6,618 million are repayable within one to two years; the remaining approximately HK$10,255 million are repayable within two to five years; and the remaining approximately HK$711 million are repayable after five years. The Group obtained funds for business development through different financing channels and effectively controlled its finance costs. As at 31 December 2021, the weighted average effective interest rate of the Group’s bank borrowings was 4.00% (31 December 2020: 4.59%) per annum. As at 31 December 2021, the banking facilities available to the Group were approximately RMB1,562 million (equivalent to approximately HK$1,911 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 31 December 2021, the Group’s certain properties amounting to approximately HK$11,506 million (31 December 2020: HK$6,646 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 31 December 2021, the Group provided guarantees of approximately HK$800 million (31 December 2020: HK$1,087 million) to certain banks in relation to the mortgage loans on properties sold (please refer to note 28 to the financial statements of the 2021 Annual Report for details). Save for the above, the Group did not have any other material contingent liabilities as at 31 December 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 development 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 development 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 31 December 2021, the Group had total outstanding interest-bearing loans of approximately HK$19,664 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.

Relationship with Customers and Suppliers


Holding the interest of every customer in high regard, the Group provides training to its sales staff on a regular basis. The Group also provides its customers with adequate information about its products and responds to any issue and question raised by customers or potential customers regarding the products offered with the aim of building customers’ confidence in the Company’s products.
 
The Group’s properties in relation to the property business were largely designed or constructed by a variety of suppliers and contractors. The Group selects appropriate suppliers for its major projects through an open, fair and impartial tendering process, maintains databases of supplier information and brand information, and have proper procedures in place to assess and evaluate suppliers. Besides, the Group attaches great importance to anti-graft and anti-corruption measures, meets with suppliers regularly, and conveys such information to them.

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.
 
To redouble its ESG efforts and uphold the corporate philosophy of sustainability, the Group has reviewed its ESG management structure during the year 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.
 
The Company is in the process of preparing its ESG report for the year ended 31 December 2021. The information contained in this annual report is based solely on the Company’s ESG policies, performance, along with information of internal management. As at the date of this annual report, the ESG information of the Group for the year ended 31 December 2021 has yet to be finalised and may be subject to necessary adjustments. Such information, which may differ from the information contained in this annual report, is expected to be published in May 2022.

Human Resources


The Group had 577 (31 December 2020: 401) employees as at 31 December 2021. The total employee remuneration and provident fund contributions (excluding directors’ remuneration) in 2021 amounted to approximately HK$283 million (2020: HK$181 million).
 
The Group provides a range of basic benefits to its employees, and its incentive policy is designed to reward employees by reference to and integrating factors including the operating results of the Group and performance of individual employees. There was no share option scheme of the Company in operation during the year under review. The Group provides different training courses for its employees.