Zall Announces 2011 Annual Results

Strong Growth in Sales of Shopping Mall Units and Average Sale Price of the North Hankou Project

Revenue Surges by 218%; Net Profit Soars by 87%

HONG KONG, March 20, 2012 /PRNewswire-Asia/ --

Financial Highlights:

Zall Development (Cayman) Holding Co., Ltd. ("Zall Development" or the "Group"; SEHK stock code: 2098), a leading developer and operator of large-scale, consumer product-focused wholesale shopping malls and commercial properties in China, announced today its annual results for the year ended 31 December 2011.

For the twelve months ended 31 December 2011, total revenue of the Group surged 218.8% to RMB 2.45 billion, driven by the increase in both total GFA sold and the average sale price of the North Hankou International Trade Center ("North Hankou"), the Group's flagship project. Gross profit soared 387.8% to RMB1.74 billion as compared to the corresponding period last year. Gross profit margin rose from 46.3% in 2010 to 70.9%, while net profit was boosted by 87.0%to RMB1.18 billion.

During the period under review, the Group's earnings per share increased 88.9%to RMB0.34. The Board has declared a final dividend of HK3 cents per share (equivalent to approximately RMB2.43 cents per share).

Mr. Yan Zhi, Chairman and CEO of Zall Development, said, "With boosting domestic demand as part of China's '12th Five Year Plan', domestic consumption has become a major economic growth driver. Riding on this favourable policy, we have adopted a business model which focuses on wholesale markets for a wide variety of consumer industries, providing a one-stop procurement platform for medium and small enterprises which encompasses logistics and administrative services, including customs clearance and tax returns with the local government. As a result, as the Group's flagship project, the North Hankou Project, has been well received by consumer industry players and we have achieved very positive sales results since our project was launched."

In 2011, the Group's revenue from sales of properties surged 224.9% to RMB2.44 billion year-on-year, mainly attributable to sales of units at the North Hankou Project's wholesale shopping mall and office and retail units at the No. 1 Enterprise Community Project. Of this, sales of wholesale shopping mall units at the North Hankou Project increased by 295.9% to RMB2.40 billion. Furthermore, the Group's revenue from rental income and property management services rose by 167.4% and 430.0%, respectively to RMB11.1 million and RMB3.61 million.

As at 31 December 2011, Zall Development has land reserves of approximately 5,700,000 sq.m., all of which have been granted land use right certificates by the government authorities. The land reserves are expected to be able to meet the Group's development needs over the coming three to five years.

North Hankou Project

The design of the North Hankou Project was inspired by the traditional wholesale trading district on Hanzheng Street in Wuhan, from which tenants have been relocated starting 2011. With the auspices of the Wuhan government and its favorable policies, the North Hankou Project will become the fourth generation of innovative wholesale markets integrating comprehensive logistic ancillaries, transport network, trading platform and amenities. Since the comprehensive relocation of Hanzheng Street began in August 2011, sales of the North Hankou Project have recorded satisfactory growth. During the year under review, the Group sold and delivered a total GFA of 267,694 sq.m. at an average selling price of RMB8,979 per sq.m. As at 31 December 2011, the Group completed construction of a total GFA of approximately 850,000 sq.m. at the North Hankou Project. Construction of its first phase is expected to be completed in 2013 as scheduled.

During the period under review, over 5,000 occupants of the North Hankou Project started their operation, of which 60% had relocated from the original Hanzheng Street. Haining Leather Mall officially opened for business at the footwear and leather products mall of the North Hankou Project in September 2011. Furthermore, to cope with the development needs of the North Hankou Project, the Integrated Development Plan of North Hankou Xincheng was released in Huangpi District, Wuhan, in October 2011. It capitalized on projects under construction such as the extension of Metro Line 1 and the extension of Jiefang Avenue, as well as the completed Wuhan Boulevard, to form an express network with three channels to access the North Hankou Project. Together with the North Hankou Passenger Terminal, the largest passenger terminal in Wuhan, which commenced construction at the end of 2011, the development of North Hankou Xincheng is expected to be boosted. After the implementation of the plan, an extensive logistics network between the North Hankou Project and the city of Wuhan will be formed and will bolster the integration of the North Hankou Project into the city so as to facilitate its promising future development.

No. 1 Enterprise Community

The No. 1 Enterprise Community located in the Panlongcheng Economic and Technology Development Zone of Wuhan, was designed for small and medium enterprises which are in need of business headquarters. It comprises low-density, low-rise, single-tenant office buildings and high-rise office towers. Located within three kilometres of the North Hankou Project, No. 1 Enterprise Community complements the North Hankou Project by offering offices in close proximity for its North Hankou occupants. No. 1 Enterprise Community, which consists of four phases, has a total site area of approximately 767,000 sq.m. and a total planned GFA of approximately 1.1 million sq.m. It is expected to be fully completed by 2015.

During the year, construction of phases I and II and the No. 1 high-rise office tower has been completed, with a total GFA of approximately 170,000 sq.m.. For the year ended 31 December 2011, the total GFA sold and delivered was 7,253 sq.m., accounted for total sales revenue of RMB35.5 million with an average sale price of RMB4,890 per sq.m., represented an increase of 68.7% as compared with the corresponding period last year.

Construction of phase III is expected to be completed by end of 2012 whereas the construction of No. 2 and No. 3 high-rise office towers of No.1 Enterprise Community commenced in March 2011 and is expected to be completed by December 2013.

Zall Yulong International Finance Center

In August 2011, the Group acquired a 51% equity interest in Zhen An Wuhan Company Limited ("Zhen An") at a total consideration of RMB523,680,000. Zhen An owns the land use rights of a parcel of land with a total site area of approximately 10,000 sq.m. in the city center of Wuhan with a total planned GFA of over 97,000 sq.m.

Zall Development intends to develop the parcel of land into Zall Yulong International Finance Center, which will be positioned as a premier commercial center and Grade A office building. The project is strategically located in the financial center of Wuhan, surrounded by China Construction Bank Building to the North, Bank of China Building to the South, New World Trade Centre and New World Department Store to the West and China Minsheng Bank Building to the East. Construction of the project is expected to be fully completed in 2014.

Prospects

Since the start of the relocation of the traditional market on Hanzheng Street, more effort has been made by the local government to expedite the relocation of Hanzheng Street to the North Hankou Project. The development of the transportation infrastructure is also in full swing to facilitate the development of the North Hankou Project. Capitalizing on these substantial opportunities, the North Hankou Project will complete construction in accordance with its development plan and will continue to be the major growth driver of the Group. In order to increase the popularity, traffic and transaction volumes of the North Hankou Project, the Group launched various promotion activities during the year in the traditional prime wholesale market locations of different sectors all over China.

Apart from developing the North Hankou Project, the Group will also commit effort to developing other projects in the Wuhan area, namely No. 1 Enterprise Community, Wuhan Salon, Zall Yulong International Finance Center, North Hankou - Zall Life City-Hupan Haoting Residences, North Hankou - Zall Life City-Zhujinyuan Residences and Central China Logistics Enterprise Community. Through these projects, Zall Development may provide customers not only a high-end commercial center and a first-grade office building, but also offers a variety of properties in the form of hotels and residential properties to cope with the growing demand for high-quality commercial properties in Wuhan.

Looking forward, the Group will continue to identify projects with strong development potential. By negotiating and entering into master agreements, cooperation or investment agreements with local government authorities, the Group will carry out new development projects in Xiangyang, Shenyang, Changsha and Tianjin in the near future. These projects will contribute to the significant and sustainable growth of the Group.

Mr. Yan Zhi, Chairman and CEO of Zall Development, said, "Looking forward, the overall economic growth of the PRC will be impacted by uncertainties brought by the sovereign debt crisis in Europe and the US, as well as the adjustment of the property market. However, the domestic consumption market and economic development is expected to maintain its growth momentum with strong government support. Leveraging its competitive advantages, the Group will consolidate its leading position in the wholesale markets of Wuhan. Moreover, we will replicate our successful business model in Wuhan to other regions in China at an appropriate time and at ideal locations with the objective to further enhancing the Group's leading position in the overall consumer product wholesale market position in the PRC."

About Zall Development

Zall Development is a leading developer and operator of large-scale, consumer product-focused wholesale shopping malls, as well as commercial space provider, in China. Headquartered in Wuhan, Hubei province, Zall Development primarily engages in selling and leasing consumer product-focused wholesale market properties and other commercial spaces. The Company's major clients include suppliers, manufacturers, dealers and other small to medium sized local wholesale enterprises. Besides developing and operating wholesale market properties, Zall Development offers a comprehensive range of integrated logistics and trading facilities and services.

Zall Development's major projects and land bank are mainly located in Wuhan, Xiangyang, Shenyang, Changsha and Tianjin. Its property portfolio comprises wholesale market properties and commercial properties. The Company's flagship project, the North Hankou International Trade Center ("North Hankou"), is the largest consumer products interstate-trading platform in China. According to Savills, North Hankou is the largest consumer product focused wholesale market in terms of planned GFA with land use rights obtained in Central China, comprising more than twenty wholesale shopping malls that respectively focus on leather footwear, small household items, hotel products and supplies, cotton knitwear, apparel, home textiles and home appliances, international brands, general products, gift and accessories, and automobiles, just to name a few.