China South City Announces 2010/11 Annual Results

RemarkableGrowth and Progress with Various Projects 

Replicates Success in More Strategic Regions

HONG KONG, June 29, 2011 /PRNewswire-Asia/ --

FINANCIAL HIGHLIGHTS

China South City Holdings Limited ("China South City" or "the Group"; SEHK stock code: 1668), one of the leading developers and operators of large-scale, integrated logistics and trade centers in China, today announced its annual results for the twelve months ended 31 March 2011. During the year under review, the Group's growth momentum remained robust and recorded a remarkable financial performance. Revenue surged by 42.3% to HK$2,234.0 million (FY2010: HK$1,570.2 million) while profit attributable to the owners of its parent increased by 16.8% to HK$1,552.5 million (FY2010: HK$1,329.6 million). Basic earnings per share was HK25.95 cents (FY2010: HK25.32 cents). The Board of Directors proposed a final dividend of HK2.5 cents per share for the year ended 31 March 2011.

Ricky Cheng Chung Hing, Co-Chairman and Executive Director of China South City, said, "China South City has made great strides in both sales and leasing. Our growth was supported by China's strong economy and rising domestic spending. The increasing market recognition of our profile in the market has also boosted our performance. With our new projects in Heyuan, Nanning, Nanchang, and Xi'an making satisfactory progress and sales launch expected in the coming fiscal year, we are confident that our business will continue to grow."

BUSINESS REVIEW

China South City Shenzhen ("CSC Shenzhen")

During the year under review, CSC Shenzhen recorded outstanding results in terms of sales and leasing as well as occupancy rate. The Group has signed sales contracts or letter of intent for approximately 94,000 square meters ("sq.m.") of trade center units. Around 85,600 sq.m. (FY2010: approximately 98,000 sq.m.) of these contracts were included in the income statement for the year under review. The average selling price increased by 11.7% to approximately HK$16,750 per sq.m.. In light of revenue contribution from China South City Heyuan ("CSC Heyuan") and the limited saleable trade center units in CSC Shenzhen, the Group reduced the sales quantity of trade center units in Shenzhen during the year under review so as to keep the properties for future price appreciation.

As of 31 March 2011, total occupancy rate of the phase I trade center units and shops increased from 82% to 86%, while that of the phase II trade center units and shops, which had been launched, rose from 25% to 36%. The average effective monthly rental rate for the phase I trade center units and shops was HK$32 per sq.m., while that for the phase II trade center units and shops was HK$34 per sq.m.. The construction of the phase III trade center, with an estimated total GFA of approximately 785,000 sq.m., is expected to commence in the coming fiscal year.

During the year under review, the Group secured finance lease of approximately 24,000 sq.m. of the office tower at an average price for the finance lease arrangement of approximately HK$8,760 per sq.m.. Total occupancy rate of the office tower with a GFA of approximately 38,000 sq.m. reached 96% shortly after its completion in the fiscal year under review. Driven by the strong demand for quality office spaces at CSC Shenzhen, construction of another office tower with a GFA of approximately 52,000 sq.m. is currently underway and is expected to be completed in the first quarter of 2012.

Various industry-specific trade centers have been established at CSC Shenzhen, including Runfang China South City Mega Showroom, CSC SIUF International Branded Underwear Trade Center, Pearl River Delta Hong Kong Products Sales Center, CSC Shenzhen Timepiece Trade Center and Shenzhen Outlet Center. Other themed trade centers for different products such as tea and household products are also in the pipeline for opening at CSC Shenzhen. In addition, CSC Shenzhen has remained the venue for China (Shenzhen) International Industrial Fair.

China South City Heyuan ("CSC Heyuan")

CSC Heyuan occupies a site area of approximately 1.14 million sq.m. with an estimated total GFA of approximately 2.25 million sq.m. The construction of the phase I and part of phase II of CSC Heyuan commenced during the year under review. It is expected to yield a total GFA of approximately 223,000 sq.m..

With regard to the phase I villa apartments, the construction for a total GFA of about 80,000 sq.m. was completed during the year under review. It is expected that additional GFA of approximately 81,000 sq.m. will complete in the coming fiscal year. The project was launched for sale in mid-January 2011, with approximately 50,200 sq.m. contracted at an average selling price of approximately HK$9,990 per sq.m..

To align with China South City's business strategy, CSC Heyuan will also include large-scale integrated logistics and trade centers. A master agreement with the Government of Zijin County of Heyuan City of Guangdong Province of China was signed in December 2010. The current planned site area and GFA of the integrated logistics and trade centers is approximately 1.2 million sq.m. and 1.5 million sq.m., respectively.

China South City Nanning ("CSC Nanning")

With a site area of approximately 1.83 million sq.m., CSC Nanning is expected to have a total planned GFA of approximately 4.88 million sq.m.. The Group acquired a piece of land of approximately 890,000 sq.m. which has a planned GFA of approximately 2.40 million sq.m.. Phase I of CSC Nanning has a total GFA of approximately 1.31 million sq.m. and the construction of approximately 1.01 million sq.m. will be completed in the coming fiscal year. The completed trade center and residential units are expected to be ready for sale and lease in the coming fiscal year.

While the construction is underway, CSC Nanning has already signed a long-term lease for a block of trade centers with a professional market operator of home furnishing products in China.

During the period under review, the Group co-organised the China-ASEAN Light Industrial Products Fair with the China Chamber of International Commerce, China-ASEAN Expo Secretariat and Nanning Municipal People's Government at CSC Nanning in October 2010, which has significantly enhanced the Group's brand recognition in the region and among the ASEAN countries.

China South City Nanchang ("CSC Nanchang")

CSC Nanchang is expected to occupy a site area of approximately 1.55 million sq.m. and has a total GFA of approximately 4.28 million sq.m. upon completion. The Group acquired a plot of land with total site area of approximately 1.05 million sq.m., which has a planned GFA of approximately 2.48 million sq.m.. Phase I of CSC Nanchang is planned to provide a total GFA of approximately 1.07 million sq.m., of which around 760,000 sq.m. will be completed in the coming fiscal year. The trade center and residential units are expected to be launched for sale in the coming fiscal year.

China South City Xi'an ("CSC Xi'an")

Positioned as a major comprehensive logistics and trade center in northwest China, CSC Xi'an is expected to occupy a site area of approximately 10 square kilometers and a total GFA of around 17.5 million sq.m.. Half of the site will be used as an integrated logistics and trade center while the remainder has been earmarked for ancillary residential and commercial facilities. With the acquisition of the first plot of land of approximately 279,000 sq.m. in May 2011 and plan for acquiring more land in the coming fiscal year, construction of the trade center units has commenced. Currently, the Group plans to build trade centers and exhibition center with a GFA of approximately 630,000 sq.m. and these trade center units will be launched for sale in the coming fiscal year.

Issuance of Senior Notes

In January 2011, the Company issued senior notes due in January 2016 with a nominal value of US$250 million (equivalent to approximately HK$1,950 million) at a coupon rate of 13.5% per annum for the purpose of financing existing and new projects and for general corporate use. The successful issuance of the senior notes not only broadened the financing channel of the Group but also proved the business model of the Group has been well recognized by the capital market. Having the senior notes been issued, the cash and liquidity positions of the Group have been strengthened and the debt profile of the Group have been improved with longer debt maturity.

Prospects

Looking forward, China's strong economic growth will continue to support the demand for large-scale integrated logistics and trade center facilities. Government policies aimed at stimulating domestic demand have also provided a favorable environment for the selling and leasing of the Group's trade center units. Under these favorable conditions, with total construction planned GFA of around 4.07 million sq.m., the Group ambitiously targets to complete the construction of no less than GFA of 2.0 million sq.m. in the coming fiscal year in an effort to sell part of the completed properties to achieve its sales revenue of around HK$7 to 9 billion.

Apart from CSC Shenzhen, the Group's various new projects begin to make financial contributions. They collectively form a solid foundation for the Group's significant growth in the future and will propel substantial revenue and profit growth in the coming fiscal year.

"We believe the continuous stimulus measures implemented by the Chinese government and burgeoning consumer spending will continue to create demand for large-scale integrated logistics and trade centers. The government's emphasis on the development of the integrated logistics industry in the 'Twelfth Five-Year Plan' has provided more opportunities for the Group to expand its business. With the Group's new projects beginning to make contributions, we are considering taking steps to replicate our proven and successful business model in other strategic regions in China. We believe this will help the Group to achieve sustainable growth while creating greater value for our shareholders." Mr. Cheng concluded.

In a move that was aligned to this vision of replicating the successful business model in other cities, the Group signed a framework agreement to develop a large-scale integrated logistics and trade centers with land area of approximately 10 square kilometers in Harbin in June 2011.

The Group is confident that its ongoing projects will be as successful as CSC Shenzhen. And it is hopeful that these new projects will help create attractive financial rewards for its shareholders in the near future.

About China South City Holdings Limited (www.chinasouthcity.com)

China South City Holdings Limited along with its subsidiaries is one of the leading developers and operators of large-scale integrated logistics and trade centers in China, providing a comprehensive trading platform for domestic and international wholesale suppliers, buyers, manufacturers and distributors of raw materials and finished products. With its unique business model, the Group not only sells and leases well-designed and high quality trade center units for businesses to display and sell their products, but also provides trade center occupants and their clients with one-stop convenient supply chain solutions that include a full range of facilities and services such as offices, residential, conference and exhibition facilities, hotels and restaurants, warehousing and on-site logistics services, banking, on-site government services in a bid to offer.

This successful and proven business model was first pioneered by China South City Shenzhen and has been replicated in strategic locations across China, such as Nanchang, Nanning, Xi'an and Heyuan, to satisfy the needs of businesses and industries in the respective regions. The total GFA of these projects exceeds 31 million square meters. The Company's stock has been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 30 September 2009 under the stock code: 1668.

CONSOLIDATED INCOME STATEMENT

Year ended 31 March 2011