(於開曼群島註冊成立的有限公司

Incorporated in the Cayman Islands with Limited Liability)

股份代號 STOCK CODE : 1589

2020 Interim Report 中期報告

開 啓 新 篇 章

START

A NEW

CHAPTER

Contents

Corporate Information

2

Business Overview and Outlook

4

Management Discussion and Analysis

11

Other Information

22

Report on Review of

30

Interim Financial Information

Condensed Consolidated Balance Sheet

31

Condensed Consolidated Statement of

33

Comprehensive Income

Condensed Consolidated Statement of

35

Changes in Equity

Condensed Consolidated Statement of

37

Cash Flows

Notes to the Condensed Consolidated

38

Interim Financial Information

Corporate Information

BOARD OF DIRECTORS

Executive Directors

Mr. Li Shifa (Chairman and Chief Executive Officer) Mr. Wu Guolin

Ms. Li Huifang

Mr. Chen Runfu

Mr. Cheuk Shun Wah

Ms. Shi Lianghua

Mr. Xie Xiangdong

Non-executive Directors

Mr. Huang Xufeng

Ms. Li Qing

Mr. Fu Bing

Independent Non-executive Directors

Mr. Guo Jingbin

Mr. Fung Ching Simon

Mr. Wang Tianye

Mr. Leung Chi Ching Frederick

Mr. Chen Yaomin

AUDIT COMMITTEE

Mr. Fung Ching Simon (Chairman)

Mr. Guo Jingbin

Mr. Leung Chi Ching Frederick

NOMINATION COMMITTEE

Mr. Li Shifa (Chairman)

Ms. Li Qing

Mr. Guo Jingbin

Mr. Wang Tianye

Mr. Leung Chi Ching Frederick

REMUNERATION COMMITTEE

Mr. Guo Jingbin (Chairman)

Mr. Li Shifa

Ms. Li Qing

Mr. Fung Ching Simon

Mr. Wang Tianye

COMPANY SECRETARY

Ms. So Ka Man

AUTHORIZED REPRESENTATIVES

Ms. Li Qing

Ms. So Ka Man

LEGAL ADVISORS

As to Hong Kong law: Simpson Thacher & Bartlett 35/F, ICBC Tower

3 Garden Road Central

Hong Kong

As to PRC law: Jingtian & Gongcheng

34/F, Tower 3, China Central Place 77 Jianguo Road

Beijing 100025 China

As to Cayman Islands law: Ogier

Floor 11 Central Tower

28 Queen's Road Central Central

Hong Kong

AUDITOR

PricewaterhouseCoopers

Certified Public Accountants

22/F, Prince's Building

Central

Hong Kong

2 China Logistics Property Holdings Co., Ltd

COMPANY'S WEBSITE

www.cnlpholdings.com

STOCK CODE

1589

HEADQUARTERS AND

  • PRINCIPAL PLACE OF
  • BUSINESS IN THE PRC

No. 1899 Shenkun Road

Minhang District

Shanghai

China (201106)

CAYMAN ISLANDS PRINCIPAL

  • SHARE REGISTRAR AND
  • TRANSFER AGENT

Harneys Fiduciary (Cayman) Limited 4th Floor, Harbour Place

103 South Church Street P.O. Box 10240

Grand Cayman KY1-1002 Cayman Islands

HONG KONG SHARE   REGISTRAR

Computershare Hong Kong Investor Services Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

Corporate Information

REGISTERED OFFICE IN   THE CAYMAN ISLANDS

Harneys Fiduciary (Cayman) Limited 4th Floor, Harbour Place

103 South Church Street P.O. Box 10240

Grand Cayman KY1-1002 Cayman Islands

PRINCIPAL PLACE OF

  BUSINESS IN HONG KONG

Unit 3213, Cosco Tower

183 Queen's Road Central

Sheung Wan

Hong Kong

PRINCIPAL BANKS

China Merchants Bank Co., Ltd.

Industrial and Commercial Bank of China Ltd.

Bank of Communications Co., Ltd.

Deutsche Bank (China) Co., Ltd.

Bank of China Limited

Interim Report 2020

3

Business Overview and Outlook

BUSINESS OVERVIEW

As of 30 June 2020, China Logistics Property Holdings Co., Ltd (the "Company", together with its subsidiaries, the "Group") had 164 logistics facilities in operation in 35 logistics parks located in logistics hubs in 18 provinces or centrally administered municipalities.

As demands from tenants in e-commerce and third-party logistics ("3PL") providers industries continued to increase, the Group expanded its network of logistics facilities to cope with such demands and thereby grew its revenue by 10.5% from RMB351.1 million for the six months ended 30 June 2019 to RMB388.0 million for the six months ended 30 June 2020 (the "Reporting Period"). The Group's gross profit increased from RMB274.5 million for the six months ended 30 June 2019 to RMB299.4 million for the Reporting Period.

Major Operating Data of the Group's Logistics Parks

The following table sets forth the major operating data of the Group's logistics parks:

As of

As of

30 June 2020 31 December 2019

Completed GFA:

  Stabilized logistics parks (million sq.m.)(1)

2.8

2.8

Pre-stabilized logistics parks (million sq.m.)(2)

0.4

0.6

  Total (million sq.m.)

3.2

3.4

Logistics parks under development or

  being repositioned (million sq.m.)

0.6

0.6

Land held for future development (million sq.m.)

0.6

0.6

Investments accounted for using equity method

  (million sq.m.)

0.6

0.3

Total GFA (million sq.m.)

5.0

4.9

Investment projects (million sq.m.)(3)

4.4

4.6

Occupancy rate for stabilized logistics parks (%)(1)

89.7

90.3

  1. Logistics facilities (i) for which construction have been completed for more than 12 months as of 30 June 2020 or 31 December 2019 (as the case may be) or (ii) reached an occupancy rate of 90%.
  2. Logistics facilities (i) for which construction or acquisition have been completed for less than 12 months as of 30 June 2020 or 31 December 2019 (as the case may be) or (ii) reached an occupancy rate less than 90%.
  3. Logistics park projects for which investment agreements for the acquisition of land have been entered into but land grant contracts or formal acquisition agreements have not been entered into.

4 China Logistics Property Holdings Co., Ltd

Business Overview and Outlook

The Group continues to accelerate the development of the asset-light business model. Pursuant to the cooperation framework agreement that the Company and LaSalle Investment Management Asia Pte. Ltd. ("LaSalle") entered into in August 2018 ("LaSalle Cooperation Agreement"), the Company, through its subsidiary, China Yupei Logistics Property Development Co., Ltd., entered into a series of sale and purchase agreements with LaSalle. In March 2020, the Company entered into agreements on the second phase of the fund with LaSalle, jointly investing RMB663 million to operate the Group's warehousing projects. The Company has taken on the role of an asset manager to provide project and property management services for the warehousing projects. The Company considers the cooperation model under the LaSalle Cooperation Agreement could further finance the development and operational costs of the logistics parks held by the project companies. Such a funding model enables the Group to leverage external capital resources to accelerate its expansion. For further details, please refer to the announcement of the Company dated 26 March 2020.

In June 2020, the Company and certain of its subsidiaries (as guarantors) entered into a subscription agreement with BCC Leap Holdco, L.P. ("BCC") in relation to the issuance of convertible bonds with an aggregate principal amount of US$100,000,000 at the rate of 6.95% due 2025 (the "2020 Convertible Bonds"). The bonds will not be offered to the public in Hong Kong. The Company has applied to and obtained from The Stock Exchange of Hong Kong Limited (the "Stock Exchange") for the listing of and permission to deal in the Company's shares (the "Shares") to be allotted and issued by the Company upon exercise of the conversion right attached to the convertible bonds. The net proceeds of the convertible bonds issue will be used for the repayment in full of the senior secured notes due 30 November 2020 issued by the Company, with the remainder to be applied towards the Company's general corporate purposes, such as development of new projects. For further details, please refer to the announcements of the Company dated 29 June 2020 and 7 July 2020.

INDUSTRY OVERVIEW

Since the beginning of this year, the sudden COVID-19 outbreak has brought an unprecedented hit to the global economy and resulted in the worst recession since the Great Depression in the 1930s. According to the World Economic Outlook Report issued by the International Monetary Fund (IMF) on 24 June 2020, the global economy is expected to shrink by 4.9% in 2020, and the global major economies, other than China, are expected to experience shrinkage of varying degrees.

Affected by the COVID-19 outbreak and global economic volatility, many economic indicators of China in the first half of 2020 have been affected to varying degrees. However, the resilience of development of the Chinese economy and the entire logistics industry has also been demonstrated during this epidemic. According to the National Bureau of Statistics ("NBS") of the People's Republic of China (the "PRC"), the gross domestic product ("GDP") in the first half of 2020 reached RMB45,661.4 billion, representing a slight year-on-year decrease of 0.88%. As of June 2020, the total retail sales of consumer goods for the year amounted to RMB17,225.62 billion, representing a year-on-year decrease of 11.4%. From January to June 2020, the total value of the national social logistics was RMB123.4 trillion, representing a year-on-year decrease of 0.5% on the basis of the comparable prices; and the total cost of the social logistics was RMB6.5 trillion, representing a year-on-year decrease of 4%. However, at the same time, since China has achieved positive results in promoting the prevention and control of the epidemic in the second quarter of 2020, it was obvious that the market vitality has gradually increased, and market sales have continued to improve. As compared with the first quarter, the GDP in the second quarter of 2020 increased by 3.2% year-on-year. The decline in the total retail sales of consumer goods in the second

Interim Report 2020

5

Business Overview and Outlook

quarter of 2020 narrowed by 15.1% from the first quarter. The added value of the industrial enterprises above designated size increased by 4.4% as compared to a decrease of 8.4% in the first quarter. According to the China Federation of Logistics & Purchasing, the prosperity index of China's logistics industry in June 2020 was 54.9%, up by 0.1 percentage point from May, and it has rebounded for four consecutive months. It is expected that the domestic economy and the entire logistics industry will continue to reenergize as the domestic and international epidemic condition improves in the future.

In general, the premium logistics facilities leasing market in China was affected to a certain extent at the early stage of COVID-19 outbreak, which was more reflected in the restricted business exchanges and operations due to the blockade measures, rather than the actual shrinking of demand. With the effective control of the domestic epidemic and the restart of economic activities in full swing, the market demand for high-standard logistics facilities is gradually releasing and returns to normal levels. The future demand is expected to continue a growing trend, and the demand for e-commerce, retailers and third-party logistics services will constitute the main driving force in the high-end logistics field and dominate the leasing market, while the overall demand for traditional retail and manufacturing will remain stable. According to the NBS of the PRC, in the first half of 2020, though affected by the epidemic, China's e-commerce development still maintained an overall positive growth. In the first half of 2020, the total online retail sales of goods amounted to RMB5,150.09 billion, representing a year-on-year increase of 7.3%. In particular, the total online retail sales of physical goods amounted to RMB4,348.07 billion, up by 14.3% and accounting for 84.4% of the total retail sales of consumer goods. Driven by both the promotion of consumption and the "618" shopping festival, the business volume of the national express service industry in June 2020 was RMB7.47 billion, representing a year-on-year increase of 36.8%, and business revenue increased by 23.9% year-on-year. With the further release of consumption potential in central and western regions and the vast rural areas in China, as well as the further popularization of the Internet and mobile Internet, e-commerce will continue to achieve rapid development in the future, and the COVID-19 outbreak will further change the consumption habits of the people. The leasing demand for high- standard warehouses, as driven by the development of e-commerce sector, will remain one of the major driving forces for the development of the logistics facilities sector in the future. With the official issuance of 5G commercial-use licenses by the Ministry of Industry and Information Technology in 2019, China officially entered into the opening year of 5G commercial- use. The 5G network will further empower the use of emerging technologies such as artificial intelligence ("AI"), big data, cloud computing and the Internet-of-Things in various industries to further improve logistics efficiency and accelerate the transformation towards intelligent traditional logistics real estate.

In general, the premium logistics facilities in the PRC have achieved a significant development in recent years, but compared with the United States, the general scale is still small relative to the vast-sized economy and population in China. Further, the area of logistics facilities per capita is significantly smaller than those in the developed markets, such as Europe, the United States and Japan. With increasing demand for logistics efficiency in the whole society, as well as the extensive investment in and application of the Internet, Internet-of-Things, AI, robots and big data, the elimination of low-efficiency obsolete logistics facilities will speed up to drive a continual rise of market demand for premium logistics facilities.

6 China Logistics Property Holdings Co., Ltd

Business Overview and Outlook

OUTLOOK

Business Outlook

The global COVID-19 outbreak since the beginning of the year has not been effectively controlled, but continues to spread. The global economy is still facing uncertainty. If there will be good news about vaccines and treatments as well as greater policy support, economic activity may recover more quickly.

With respect to the domestic economic situation in China, as regular prevention and control of the COVID-19 outbreak has been brought to the daily routine, the economic activities will still be impacted to a certain extent. However, the overall economic activities have been fully restarted, and the government has continued to introduce various economic recovery policies, which resulted in a significant rebound or narrower decline in a number of economic indicators since March 2020. Such operating situation indicates that the overall impact of the epidemic is controllable. In addition, the Chinese economy has demonstrated strong capabilities of self-adjustment, laying a good foundation for stability and growth of the economy for the second half of the year.

In the second half of 2020, the Group will continue its efforts to achieve its goal to develop into the largest provider of premium logistics facilities in China and maintain its leading position as a premium logistics facilities provider in China. The Group intends to continue to pursue the following:

  • Strengthen nationwide network across major logistics hubs - The Group has continued to strengthen its nationwide network of logistics facilities by developing its land held for future development and acquiring new land for investment projects, identifying new investment projects and selectively acquiring existing logistics facilities. As at 30 June 2020, the Group has approximately 0.6 million square meters ("sq.m.") of GFA of land held for future development and approximately 4.4 million sq.m. of GFA of investment projects. Going forward, the Group plans to continue its focus in regions that are more economically developed, such as the Guangdong-HongKong-Macao Greater Bay Area, Yangtze River Delta economic zone, the Bohai economic zone and the Pearl River Delta economic zone, as well as other selected provincial and logistics node cities, to continuously strengthen its nationwide network. For example, in the Greater Bay Area, in addition to our existing Zhaoqing and Huizhou projects, which have been in operation, we will use the opportunity brought by the country's promotion of the construction of the Greater Bay Area and the integration of the Yangtze River Delta to actively seek new investment opportunities in the region with an aim to continue to build a network of logistics facilities in the region.
  • Accelerate lease-upcycle and optimize tenant portfolio - In 2020, the occupancy rate for our stabilized logistics parks reached 89.7%, maintaining a relatively higher occupancy rate against the impact of the COVID-19 outbreak during the first half of the year, which represented one of our achievements attributable to our continuous efforts in promoting the strategy of accelerating lease-up cycle and optimizing tenant portfolio. In the future, the Group will continue to maintain constant dialogues with both existing and prospective tenants to manage lease renewals and fill up vacancies at its logistics facilities in a timely and efficient manner. In particular, the Group will continue to leverage the strong network

Interim Report 2020

7

Business Overview and Outlook

effect of its logistics facilities portfolio to attract existing and prospective tenants with a view to expanding the Group's national footprint in China. In the meantime, in view of the continuous growth of China's domestic consumption and e-commerce market as well as the strong growth of emerging industries such as new retail, the Group will continue to optimize its tenant portfolio and increase the proportion of such companies to better meet the market demand.

  • Innovate product portfolio in response to the market demand - In recent years, in addition to the efforts we have made to facilitate the traditional and high standard of warehousing services and the development of its ancillary facilities, we have also strived to satisfy the warehousing needs of difference types of customers, such as fresh food e-commerce companies, cold chain operators, etc., through continuous adjustments to our products. The cold chain market has experienced rapid expansion due to the upgrade of the consumption industry in the PRC and gradual standardization of the logistics industry. According to the relevant data regarding the cold chain logistics network in the PRC, the market size of the fresh food e-commerce in the PRC has grown at a compound growth rate of over 50% to more than RMB350 billion between 2016 and 2019. However, there are still some issues facing the cold chain ancillary warehousing facilities currently in the PRC, such as supply shortage, high construction cost and poor warehousing facilities. Aiming to optimize the Group's own product structure and better serve our customers, we plan to join hands with relevant quality cold chain facilities providers in the future to commence renovation and construction of certain warehousing facilities and build cold room facilities equipped with a precise temperature control system, with a view to satisfying regional warehousing needs of various fresh food e-commerce companies and other customers. In the beginning, we will focus our efforts on domestic core markets to provide our customers with corresponding high- standard cold room facilities.
  • Diversify sources of capital and lower cost of capital - The Group will strive to expand our own financing platform by leveraging the advantages of Hong Kong being an international financial center. The Group will absorb domestic and foreign capital to reduce financing costs through bonds, loans and other diversified financing channels. The Group will also develop its own fund investment management platform to achieve a more flexible capital operation and to gain better control over the Group's asset-liability ratio.
  • Attract, motivate and cultivate management talent and personnel - The Group will continue to recruit both domestic and international talent in order to create a well-roundedwork force with a diversity of backgrounds. The Group will also continue to provide training programs and essential learning tools with a view to cultivating top tier management talent in the logistics facilities industry. Similarly, the Group will also seek to diversify and enhance its incentive mechanisms to better align the interests of management, employees and the Group.
  • Reduce the environmental impact of operations - The Group is committed to reducing the environmental impact of its operations and promoting environmental sustainability. The Group will continue to increase its efforts to expand its business with minimal environmental impact going forward by designing and developing its projects based on long-term energy savings and efficiencies. In particular, it plans to increase the use of clean and renewable energy and reduce the Group's carbon footprint by installing solar panel on top of its logistics facilities. Besides, the Group will experimentally install water recycling system in some logistics parks, and will promote it to all logistics parks across the country after achieving favorable results.

8 China Logistics Property Holdings Co., Ltd

Business Overview and Outlook

Industry Outlook

The Group believes that China's premium logistics facilities market will be affected by the following growth drivers:

  • Greater disposable income and increasing urbanization - A substantial supply shortage of logistics facilities has emerged and continues to increase as the economic growth in China is expected to be driven by increasing consumption in the future, exceeding the PRC government and private sector investments in the past. Greater disposable income, urbanization and e-commerce have emerged as dominant economic growth drivers. Greater disposable income drives increased contribution of consumption to the overall economy.
  • Growing e-commercemarket in China - China's e-commerce industry will continue to experience strong growth in the second half of 2020. Key drivers for this growth include, among others, the unmet demand for many products in smaller cities and towns and the growing rate of internet usage in China. China's rural e-commerce market will maintain its rapid development, and its growth rate will be far higher than the national average level.
  • Growing 3PL market - The 3PL industry will continue to experience steady growth in the second half of 2020. Key drivers for this growth include the demand for more efficient logistics services, rapid development in transportation infrastructure, and the trend for an increasing number of retailers, manufacturers and others choosing to outsource logistics for cost saving and efficiency. The Chinese government aims to further lower the ratio of the total social logistics cost to GDP, targeting to lower the ratio to about 12% by 2025. To achieve this goal, more investments in high- standard logistics facilities are required to improve logistics efficiency.
  • Favorable government policy - Numerous government publications have highlighted the importance of logistics to China's economic growth. For example, "Layout and Construction Plan of National Logistics Hubs" 《( 國家物流樞紐 佈局和建設規劃》) released by the National Development and Reform Commission and Ministry of Transport of China proposes that China will further optimize its industrial structure and spatial layout. It is estimated that about 150 national logistics hubs will be deployed and constructed by 2025, enabling the overall logistics industry to achieve the goal of reducing costs and improving efficiency in a continuous way.

Moreover, a total of 24 ministries and commissions, including the National Development and Reform Commission, jointly issued "Opinions on Promoting High-quality Development of Logistics Industry to Form a Strong Domestic Market" 《( 關於 推動物流高質量發展促進形成強大國內市場的意見》) in 2019, emphasizing once again the goals of consolidating the achievements of reducing costs and improving efficiency in logistics, enhancing the vitality of logistics enterprises, increasing the cost efficiency of the industry and supporting the smooth operation of full-chain logistics.

Interim Report 2020

9

Business Overview and Outlook

On 30 April 2020, the China Securities Regulatory Commission and the National Development and Reform Commission jointly issued the "Notice on the Promotion of the Pilot Program for Real Estate Investment Trusts (REITs) in the Infrastructure Sector" 《( 關於推進基礎設施領域不動產投資信託基金(REITs)試點相關工作的通知》). This notice marks the official commencement of the pilot program of REITs in China's infrastructure sector. It is foreseeable that this innovative measure will be able to strengthen the deep connection between the capital market and the real economy in the Chinese market, innovate the existing investment and financing mechanisms, effectively revitalize the stock assets, and push the high-quality development of the infrastructure. The logistics real estate infrastructure involved in this REITs pilot will certainly be benefited by this policy. Logistics real estate facility development enterprises will have access to diversified and high-quality financing channels, reduce capital occupation of their own operations, and reduce asset turnover, which is conducive for achieving their efficient, stable and continuous expansion.

Overall, consumption is a major driver of demand for modern logistics facilities, which is a long-term trend driven by population growth, urbanization and the growing middle class.

With an expected growth of the global e-commerce sales at a rate of 20% per annum, e-commerce is becoming more and more important to consumers, which surpasses the traditional retail sector. Consumers continuously move towards organized retail channels, including e-commerce and chain stores. The demand for modern logistics solutions has been propelled due to this large-scale and highly-efficient transportation of goods.

In the long run, although the supply levels of modern logistics facilities are far from enough compared with that of developed countries throughout the world, China is still the core market for the development of logistics. As supply is evolving in the coming year, enterprises need more high-quality modern warehouse facilities to improve operational efficiency so as to satisfy consumers' growing logistics demands.

In addition, an obvious industry trend shows that more high-quality 3PL enterprises are constantly emerging, which integrates the traditional fragmented logistics business of small and medium-sized retail manufacturers, as a result, assisting the logistics network in achieving economies of scale and enhanced efficiency. 3PL enterprises and large-scalee-commerce enterprises constantly leverage on big data, cloud computing, smart logistics and other technologies to fuse the entire industry with new technologies, with an aim to promote the continuous optimization and progress of China's logistics industry.

10 China Logistics Property Holdings Co., Ltd

Management Discussion and Analysis

FINANCIAL OVERVIEW

The following table is a summary of the Group's unaudited condensed consolidated statement of comprehensive income with line items in absolute amounts and as percentages of the Group's total revenue for the periods indicated, together with the change (expressed in percentages) from the six months ended 30 June 2019 to the Reporting Period:

Six months ended 30 June

Year-on-Year

2020

2019

Change

RMB

%

RMB

%

%

Unaudited

Unaudited

(In thousands, except for percentages and per share data)

Condensed Consolidated Statement

of Comprehensive Income

Revenue

388,031

100

351,122

100

10.5

Cost of sales

(88,650)

(22.8)

(76,591)

(21.8)

15.7

Gross profit

299,381

77.2

274,531

78.2

9.1

Selling and marketing expenses

(14,518)

(3.7)

(14,154)

(4.0)

2.6

Administrative expenses

(39,501)

(10.2)

(48,548)

(13.8)

(18.6)

Net impairment losses on financial assets

(972)

(0.3)

(219)

(0.1)

343.8

Other income

4,449

1.1

14,737

4.2

(69.8)

Fair value gains on investment properties - net

269,067

69.3

275,015

78.3

(2.2)

Fair value losses on convertible bonds - net

(185,458)

(47.8)

-

-

-

Other gains - net

72,707

18.7

3,584

1.0

1,928.7

Operating profit

405,155

104.4

504,946

143.8

(19.8)

Finance income

12,029

3.1

10,739

3.1

12.0

Finance costs

(279,731)

(72.1)

(262,046)

(74.6)

6.7

Finance expenses - net

(267,702)

(69.0)

(251,307)

(71.6)

6.5

Share of profit of investments accounted

  for using the equity method

3,870

1.0

85,265

24.3

(95.5)

Profit before income tax

141,323

36.4

338,904

96.5

(58.3)

Income tax expense

(139,422)

(35.9)

(124,995)

(35.6)

11.5

Profit for the period

1,901

0.5

213,909

60.9

(99.1)

Profit/(Loss) for the period attributable to:

Owners of the Company

(25,575)

(6.6)

191,827

54.6

(113.3)

Non-controlling interests

27,476

7.1

22,082

6.3

24.4

1,901

0.5

213,909

60.9

(99.1)

Interim Report 2020

11

Management Discussion and Analysis

Six months ended 30 June

Year-on-Year

2020

2019

Change

RMB

%

RMB

%

%

Unaudited

Unaudited

(In thousands, except for percentages and per share data)

Other comprehensive income for the period,

net of tax

-

-

-

-

-

Total comprehensive income for the period

1,901

0.5

213,909

60.9

(99.1)

Total comprehensive income/(loss)

  for the period attributable to:

Owners of the Company

(25,575)

(6.6)

191,827

54.6

(113.3)

Non-controlling interests

27,476

7.1

22,082

6.3

24.4

1,901

0.5

213,909

60.9

(99.1)

(Loss)/Earnings per share

(expressed in RMB)

Basic

(0.0079)

0.0593

Diluted

(0.0079)

0.0591

Revenue

The Group's revenue increased by 10.5% from RMB351.1 million for the six months ended 30 June 2019 to RMB388.0 million for the same period of 2020, primarily attributable to (i) an increase in the number of the Group's logistics parks in operation and therefore the total GFA in operation, which is part of the Group's nationwide expansion plan; and (ii) an increase in the average unit rental.

Cost of Sales

The Group's cost of sales increased by 15.7% from RMB76.6 million for the six months ended 30 June 2019 to RMB88.7 million for the same period of 2020, primarily as a result of an increase in the scale of the Group's operation. As a percentage of the Group's revenue, the Group's cost of sales increased from 21.8% in the first half of 2019 to 22.8% for the same period of 2020. The increase was primarily attributable to an increase in property tax as a result of the establishment of new operating project companies and the relatively lower profitability of those new operating logistics parks in short term.

Gross Profit and Gross Profit Margin

As a result of the foregoing, the Group's gross profit increased by 9.1% from RMB274.5 million for the six months ended 30 June 2019 to RMB299.4 million for the same period of 2020. The Group's gross profit margin decreased from 78.2% for the six months ended 30 June 2019 to 77.2% for the same period of 2020.

12 China Logistics Property Holdings Co., Ltd

Management Discussion and Analysis

Selling and Marketing Expenses

The Group's selling and marketing expenses increased by 2.6% from RMB14.2 million for the six months ended 30 June 2019 to RMB14.5 million for the same period of 2020, primarily due to the expansion of the Group's in-house sales and marketing team to promote the Group's logistics parks. As a percentage of the Group's revenue, selling and marketing expenses decreased from 4.0% in the first half of 2019 to 3.7% for the same period of 2020.

Administrative Expenses

The Group's administrative expenses decreased by 18.6% from RMB48.5 million for the six months ended 30 June 2019 to RMB39.5 million for the same period of 2020, primarily attributable to the decrease in legal consultation fees, travelling expenses and business entertainment expenses. As a percentage of the Group's revenue, administrative expenses decreased from 13.8% in the first half of 2019 to 10.2% in the first half of 2020. The decrease was primarily due to an increase in economies of scale from the Group's growing operation scale.

Net Impairment Losses on Financial Assets

The Group recorded net impairment losses on financial assets of RMB1.0 million for the Reporting Period. The Group recognized net impairment loss of RMB0.2 million on financial assets for the same period in 2019.

Other Income

The Group's other income decreased by 69.8% from RMB14.7 million for the six months ended 30 June 2019 to RMB4.4 million for the same period of 2020, primarily attributable to asset related government grants received in the corresponding period of last year which was not received in the current period.

Fair Value Gains on Investment Properties - Net

The Group's net fair value gains on investment properties decreased by 2.2% from RMB275.0 million for the six months ended 30 June 2019 to RMB269.1 million for the same period of 2020. The main reasons are (i) as a result of the Group's asset-light strategy, the disposal of 90% equity interest of two subsidiaries which values were not included in the fair value gains on investment properties of the Group for the Reporting Period; and (ii) the slowdown of project development progress, resulting in the overall decrease in the fair value gains on the projects under development during the Reporting Period.

Fair Value Losses on Convertible Bonds - Net

The Group recorded fair value losses on convertible bonds of RMB185.5 million for the Reporting Period. The Group recognized no fair value losses on convertible bonds for the same period in 2019. The change was primarily attributable to the Group's share price continued to rise as of June 30, 2020, which increased the value of the convertible bonds. The fair value losses on convertible bonds is a non-cash charge, it does not affect the Group's liquidity.

Other Gains - Net

The Group recorded net other gains of RMB72.7 million for the Reporting Period as compared to the net other gains of RMB3.6 million recorded for the same period of 2019. The increase in net other gains was primarily attributable to the investment gains on disposal of 90% equity interest in two subsidiaries in the current period.

Interim Report 2020

13

Management Discussion and Analysis

Operating Profit

As a result of the foregoing, the Group's operating profit decreased by 19.8% from RMB504.9 million for the six months ended 30 June 2019 to RMB405.2 million for the same period of 2020. Excluding the impact of fair value losses on convertible bonds, the operating profit for the Reporting Period was RMB590.6 million which increased by 17.0% when compared to the operating profit for the same period of 2019. As a percentage of the Group's revenue, the Group's operating profit decreased from 143.8% for the six months ended 30 June 2019 to 104.4% for the same period of 2020.

Finance Income

The Group's finance income increased by 12.0% from RMB10.7 million for the six months ended 30 June 2019 to RMB12.0 million for the same period of 2020, primarily as a result of an increase in interest income on bank deposits.

Finance Costs

The Group's finance costs increased by 6.7% from RMB262.0 million for the six months ended 30 June 2019 to RMB279.7 million for the same period of 2020, primarily due to (i) an increase in interest expense on borrowings because of the rapid business development of the Group; and (ii) more exchange loss resulting from greater exchange fluctuation with significant increase in U.S. dollar exchange rate compared with that of the same period of last year.

Income Tax Expense

The Group's income tax expense increased by 11.5% from RMB125.0 million for the six months ended 30 June 2019 to RMB139.4 million for the same period of 2020. The Group's effective tax rate, calculated by dividing the Group's income tax expense by the Group's profit before tax, increased from 36.9% in the first half of 2019 to 98.7% for the same period in 2020, primarily due to (i) the increased finance costs of debt financing recognized by overseas companies, while such losses were not deductible for tax purposes; (ii) the increase in overseas capital gains tax paid as a result of the disposal of equity interests in subsidiaries in the current period as compared with the capital gains tax in the corresponding period of last year; and (iii) the fair value losses on convertible bonds incurred for the Reporting Period while no such losses for the same period of 2019.

Profit for the Period

As a result of the foregoing, the Group's profit for the period decreased by 99.1% from RMB213.9 million for the six months ended 30 June 2019 to RMB1.9 million for the same period of 2020.

Non-IFRSs Measure

To supplement the Group's condensed consolidated interim financial information which is presented in accordance with IFRSs, the Group also uses core net profit as an additional financial measure. The Group presents such financial measure because it is used by the Group's management to evaluate its operating performance.

14 China Logistics Property Holdings Co., Ltd

Management Discussion and Analysis

Core Net Profit

The Group defines its core net profit as its adjusted EBITDA, which consists of profit for the period, adding back fair value losses on convertible bonds - net, net interest expenses, transaction cost of convertible bonds, net exchange losses, income tax expense, amortization expense, depreciation charge and other one-off transaction expenses, further adjusted to deduct other income, fair value gains on investment properties - net and other gains - net, interest income on bank deposits, net exchange gains and share of profit of investments accounted for using the equity method.

The Group's core net profit increased from RMB236.2 million for the six months ended 30 June 2019 to RMB270.1 million for the same period in 2020. The increase was primarily due to strong revenue growth as a result of the Group's nationwide expansion as well as economies of scale it achieved through the expansion process. As a percentage of the Group's revenue, the Group's core net profit for the first half of 2020 was 69.6%.

(Loss)/Earnings per Share

The Group's basic earnings per share and diluted earnings per share were RMB0.0593 and RMB0.0591 for the six months ended 30 June 2019, while the basic loss per share and diluted loss per share were RMB0.0079 and RMB0.0079 for the Reporting Period, respectively, primarily as a result of the change from the profit for the period attributable to owners of the Company of RMB191.8 million for the six months ended 30 June 2019 to RMB25.6 million of loss for the Reporting Period.

Liquidity and Capital Resources

For the Reporting Period, the Group financed its operations primarily through cash from the Group's operations, borrowings from banks and other financial institutions, senior notes, asset-backed notes and convertible bonds issuance. The Group intends to finance its expansion and business operations with internal resources, which it will obtain through organic and sustainable growth, and borrowings.

Cash and Cash Equivalents

As of 30 June 2020, the Group had cash and cash equivalents of RMB1,230.0 million (31 December 2019: RMB1,166.3 million), which primarily consisted of cash at bank and on hand that were denominated in Renminbi, U.S. dollars and Hong Kong dollars.

The Group currently does not use any derivative contracts to hedge against the Group's exposure to currency risk. The Group's management manages the currency risk by closely monitoring the movement at the foreign currency rates and considering hedging significant foreign currency exposure should such need arises.

Interim Report 2020

15

Management Discussion and Analysis

Indebtedness

  1. Borrowings
    As of 30 June 2020, the Group's total outstanding borrowings amounted to RMB7,622.6 million. The Group's borrowings were denominated in Renminbi (as to 64.4%) and U.S. dollars (as to 35.6%). The following table sets forth a breakdown of the Group's current and non-current borrowings as of the dates indicated:

As of

As of

30 June

31 December

2020

2019

Unaudited

Audited

(in RMB thousands)

Non-current

Long-term bank borrowings

  - secured by assets

3,697,901

4,075,632

  - secured by equity interest of certain subsidiary

29,500

50,000

  - secured by assets and equity interest of certain subsidiaries

423,567

-

Long-term borrowings from other financial institutions

  - secured by assets and equity interests of certain subsidiaries

244,341

-

Senior notes

  - secured by guarantees and pledges provided by certain

subsidiaries

2,710,520

2,790,063

Asset-backedmedium-term notes ("ABN")

  - secured by assets

446,803

448,272

7,552,632

7,363,967

Less: Long-term bank borrowings due within one year

(354,488)

(446,404)

Long-term borrowings from other financial institutions

  due within one year

(51,515)

-

  Senior notes due within one year

(1,572,594)

(1,673,447)

  ABN due within one year

(554)

(554)

5,573,481

5,243,562

16 China Logistics Property Holdings Co., Ltd

Management Discussion and Analysis

As of

As of

30 June

31 December

2020

2019

Unaudited

Audited

(in RMB thousands)

Current

Short-term bank borrowings

  - secured by equity interest of certain subsidiary

20,000

-

  - unsecured

50,000

20,000

Current portion of senior notes

  - secured by guarantees and pledges provided

      by certain subsidiaries

1,572,594

1,673,447

Current portion of ABN

  - secured by assets

554

554

Current portion of long-term bank borrowings

  - secured by assets

351,338

446,404

  - secured by assets and equity interest of certain

      subsidiaries

2,150

-

  - secured by equity interest of certain subsidiary

1,000

-

Current portion of long-term borrowings from

  other financial institutions

  - secured by assets and equity interests of

      certain subsidiaries

51,515

-

2,049,151

2,140,405

Total borrowings

7,622,632

7,383,967

Interim Report 2020

17

Management Discussion and Analysis

As of 30 June 2020, the Group's borrowings of RMB4,897.0 million (31 December 2019: RMB4,741.9 million) bore fixed interest rates and the remaining borrowings of RMB2,725.6 million bore floating interest rates. The weighted average effective interest rates of the Group's borrowings, which represent actual borrowing cost incurred during the period divided by weighted average borrowings that were outstanding during the period, for the year ended 31 December

2019 and the Reporting Period were as follows:

As of

As of

30 June

31 December

2020

2019

Unaudited

Audited

RMB

6.3%

6.0%

US$

11.0%

10.1%

The following table sets forth summaries of the Group's current and non-current total borrowings by maturity, as of the dates indicated:

As of

As of

30 June

31 December

2020

2019

Unaudited

Audited

(in RMB thousands)

Within one year

2,049,151

2,140,405

Between one and two years

1,847,852

1,820,148

Between two and five years

1,681,333

1,684,444

Over five years

2,044,296

1,738,970

Total Borrowings

7,622,632

7,383,967

18 China Logistics Property Holdings Co., Ltd

Management Discussion and Analysis

The Group has the following undrawn borrowing facilities:

As of

As of

30 June

31 December

2020

2019

Unaudited

Audited

(in RMB thousands)

Floating rate:

- expiring beyond one year

648,820

376,500

Fixed rate:

- expiring beyond one year

9,500

-

658,320

376,500

GEARING RATIO

The Group's gearing ratio is calculated by dividing (i) the Group's interest-bearing borrowings, the convertible bonds, lease liabilities less cash and cash equivalents and restricted cash, being the Group's net debt, by (ii) the sum of net debt and the Group's total equity, being the Group's total capital. As of 31 December 2019 and 30 June 2020, the Group's gearing ratio was 38.0% and 39.1%, respectively.

CAPITAL EXPENDITURES

The Group made capital expenditures of RMB893.8 million for Reporting Period, which represent the spending on the development of its logistics park projects, the acquisition of land and the acquisition of property, plant and equipment during the Reporting Period. For the six months ended 30 June 2019, the Group made capital expenditures of RMB727.7 million. The Group's capital expenditures in the first half of 2020 were funded primarily by cash generated from its operating activities, bank borrowings and senior notes.

CONTINGENT LIABILITIES AND GUARANTEES

As of 30 June 2020, there were no significant unrecorded contingent liabilities, guarantees or litigation against the Group.

Interim Report 2020

19

Management Discussion and Analysis

CHARGE ON THE GROUP'S ASSETS

For the details of charges on the Group's assets as at 30 June 2020, please refer to Note 16 set out in "Notes to the Condensed Consolidated Interim Financial Information" in this report.

FUNDING AND TREASURY POLICY

The Group adopts a stable, conservative approach on its finance and treasury policy, aiming to maintain an optimal financial position, the most economical finance costs, and minimal financial risks. The Group regularly reviews its funding requirements to maintain adequate financial resources in order to support its current business operations as well as its future investments and expansion plans.

MATERIAL ACQUISITIONS AND FUTURE PLANS FOR MAJOR INVESTMENT

During the Reporting Period, save for the agreements on the second phase of the fund with LaSalle entered in March 2020, details of which are set out in "Business Overview and Outlook - Business Overview" above, the Group did not conduct any material investments, acquisitions or disposals. In addition, save for the expansion plans as disclosed in the sections headed "Business" and "Future Plans and Use of Proceeds" in the Company's prospectus, the Group has no specific plan for major investment or acquisition for major capital assets or other businesses. However, the Group will continue to identify new opportunities for business development.

EVENTS AFTER THE REPORTING PERIOD

On 14 August 2020, the shareholders of the Company approved the subscription agreement entered into among the Company, certain of its subsidiaries (as guarantors) and BCC on 29 June 2020 in relation to the issue of the 2020 Convertible Bonds. Pursuant to the subscription agreement, subject to fulfilment of certain conditions, the Company agreed to issue, and BCC agreed to subscribe the 2020 Convertible Bonds. The net proceeds of the issue of the 2020 Convertible Bonds will be used for the repayment in full of the senior secured notes due 30 November 2020 issued by the Company, with the remainder to be applied towards the Company's general corporate purposes, such as development of new projects.

On 7 August 2020, the Company's subsidiary - Shanghai Yupei (Group) Company Limited issued commercial mortgage backed securities (the "CMBS") in the principal amount of RMB530,000,000. The borrowers of the CMBS are two project subsidiaries of the Group. The CMBS bear interest at a rate of 4.15% per annum and will mature on 4 May 2038 unless earlier redeemed in accordance with the terms thereof.

20 China Logistics Property Holdings Co., Ltd

Management Discussion and Analysis

HUMAN RESOURCES

As of 30 June 2020, the Group had a total of 195 employees. The Group has established comprehensive training programs to support and encourage its employees and continued to organize on-the-job training on a regular basis to employees from members of its management team to newly hired employees to improve their relevant skills at work. The Group offers competitive remuneration package which includes salary, bonuses and other cash subsidies. In general, the Group determines employees' salaries based on each employee's qualifications, experience, position and seniority. The Group has designed an annual review system to assess the performance of its employees, which forms the basis of its determinations on salary raises, bonuses and promotion. The Group's employee benefit expenses include salaries, benefits and other compensations paid to all of its employees.

For the Reporting Period, the total employee benefit expenses of the Group (including salaries, wages, bonuses, employees share option expenses, pension, housing, medical insurance and other social insurance) amounted to RMB23.3 million, representing approximately 6.0% of the total revenue of the Group.

Pursuant to the pre-IPO share option scheme, options to subscribe for an aggregate amount of 15,824,000 shares (representing approximately 0.49% of the total issued share capital of the Company as of the date of this report) have been granted by the Company and 6,470,200 shares (representing approximately 0.20% of the total issued share capital of the Company as of the date of this report) remained outstanding as of 30 June 2020.

DIVIDENDS

The Company did not declare or distribute any dividend to the Company's shareholders for the six months ended 30 June 2019 and for the same period of 2020.

OBSERVANCE OF UNDERTAKING RELATING TO LEASE REGISTRATION

Historically, certain leases of the Group for its logistics facilities, offices and registered addresses had not been registered and filed with relevant land and real estate administration bureaus in the PRC and prior to the listing of the Company, the Group had enhanced its internal control measures by, among others, (i) establishing a team to communicate and coordinate with tenants and lessors to obtain lease registration, (ii) reporting the status of lease registration to the Group's compliance committee on a quarterly basis, (iii) revising lease templates to include cooperation of tenants for lease registration as a contractual obligation to the Group's tenants, and (iv) ensuring that existing tenants sign future leases with such cooperation term upon renewal. As a result of the Group's dedication in the rectification of non-registration of leases, as of 30 June 2020, 15 leases out of the 349 leases for the Group's logistics facilities (covering GFA of approximately 3,422,365 sq.m.) had been registered. The Group is in the process of registering the remaining 334 leases and will take all practicable steps to ensure that such leases are registered.

Interim Report 2020

21

Other Information

DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As of 30 June 2020, the interests of the directors (the "Director(s)") or the chief executive of the Company in the Shares or underlying Shares of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")), as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO or as notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") were as follows:

  1. Interests in the ordinary Shares/underlying Shares of the Company

Number of Shares/

Approximate

underlying Shares

percentage of

Name of Director

Capacity/nature of interest

interested(1)

shareholding(2)

Li Shifa

Interest of controlled corporation(3)

916,488,000

28.33%

Wu Guolin(4)

Beneficial owner

1,872,000

0.06%

Li Huifang(5)

Beneficial owner

504,000

0.02%

Shi Lianghua(6)

Beneficial owner

1,648,000

0.05%

Xie Xiangdong(7)

Beneficial owner

544,000

0.02%

Li Qing(8)

Beneficial owner

1,872,000

0.06%

Notes:

  1. All interests stated are long positions.
  2. As of 30 June 2020, the Company had 3,235,264,999 issued ordinary Shares.
  3. Mr. Li Shifa holds the entire issued share capital of Lee International Investment Management Co., Ltd, which in turn holds 90% interest in Yupei International Investment Management Co., Ltd. Accordingly, Mr. Li Shifa is deemed to be interested in the 916,488,000 Shares held by Yupei International Investment Management Co., Ltd.
  4. Mr. Wu Guolin is interested in 1,872,000 options granted to him under the pre-IPO share option scheme of the Company, representing 1,872,000 underlying Shares.
  5. Ms. Li Huifang is interested in 504,000 options granted to her under the pre-IPO share option scheme of the Company, representing 504,000 underlying Shares.
  6. Ms. Shi Lianghua is interested in 1,648,000 options granted to her under the pre-IPO share option scheme of the Company, representing 1,648,000 underlying Shares.
  7. Mr. Xie Xiangdong is interested in 544,000 options granted to him under the pre-IPO share option scheme of the Company, representing 544,000 underlying Shares.
  8. Ms. Li Qing is interested in 1,872,000 options granted to her under the pre-IPO share option scheme of the Company, representing 1,872,000 underlying Shares.

22 China Logistics Property Holdings Co., Ltd

Other Information

  1. Interests in ordinary shares of associated corporations

Number

Approximate

Name of

Capacity/

of shares

percentage of

Name of Director

associated corporation

nature of interest

interested(1)

shareholding

Li Shifa

Lee International Investment

Beneficial owner

50,000

100%

  Management Co., Ltd(2)

Yupei International Investment

Interest of controlled

50,000

100%

  Management Co., Ltd(2)

corporation and

Interest of spouse

Notes:

  1. All interests stated are long positions.
  2. Mr. Li Shifa holds the entire issued share capital of Lee International Investment Management Co., Ltd, which in turn holds 45,000 shares in Yupei International Investment Management Co., Ltd. The remaining 5,000 shares in Yupei International Investment Management Co., Ltd are held by Ms. Ma Xiaocui, the wife of Mr. Li Shifa. Accordingly, Mr. Li Shifa is deemed to be interested in the 50,000 shares in Yupei International Investment Management Co., Ltd.

Save as disclosed above, as of 30 June 2020, none of the Directors nor the chief executive of the Company had any interests or short positions in any of the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO or as notified to the Company and the Stock Exchange pursuant to the Model Code.

Interim Report 2020

23

Other Information

SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As of 30 June 2020, the following persons (other than the Directors or the chief executive of the Company) have interests or short positions in the Shares or underlying Shares as recorded in the register required to be kept by the Company under section 336 of the SFO, or as the Directors are aware:

Number

of Shares/

underlying

Approximate

Shares

percentage of

Name of shareholder

Capacity/nature of interest

interested

shareholding(3)

Lee International Investment

Interest of controlled corporation(4)

916,488,000(1)

28.33%

  Management Co., Ltd

Yupei International Investment

Beneficial owner

916,488,000(1)

28.33%

  Management Co., Ltd(4)

Ma Xiaocui

Interest of spouse(5)

916,488,000(1)

28.33%

RRJ Capital Master Fund II, L.P.

Interest of controlled corporation(6)

937,772,498(1)

28.99%

208,749,000(2)

6.45%

Warburg Pincus & Co.

Interest of controlled corporation(7)

443,148,000(1)

13.70%

WP X Investment VI Ltd.

Interest of controlled corporation(7)

443,148,000(1)

13.70%

ESR Cayman Limited(7)

Beneficial owner;

443,148,000(1)

13.70%

  Interest of controlled corporation(7)

ESR HK Management Limited(7)

Beneficial owner

390,151,000(1)

12.06%

劉強東

Beneficiary of a trust (other than a

321,068,999(1)

9.92%

  discretionary interest)(8)

Max Smart Limited

Interest of controlled corporation(8)

321,068,999(1)

9.92%

JD.com, Inc.

Interest of controlled corporation(8)

321,068,999(1)

9.92%

Jingdong Logistics Group Corporation(8)

Beneficial owner

321,068,999(1)

9.92%

Sino-Ocean Group Holding Limited

Interest of controlled corporation(9)

287,741,000(1)

8.89%

24 China Logistics Property Holdings Co., Ltd

Other Information

Notes:

  1. Interests in long positions.
  2. Interests in short position.
  3. As at 30 June 2020, the Company had 3,235,264,999 issued ordinary Shares.
  4. Mr. Li Shifa holds the entire issued share capital of Lee International Investment Management Co., Ltd, which in turn holds 90% interest in Yupei International Investment Management Co., Ltd. Such interests are also disclosed as the interests of Mr. Li in the section headed "Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures" above.
  5. Ms. Ma Xiaocui is the wife of Mr. Li Shifa and is deemed to be interested in the Shares which are interested by Mr. Li under the SFO.
  6. RRJ Capital Master Fund II, L.P. holds the entire issued share capital of Berkeley Asset Holding Ltd, which holds 740,173,000 Shares and 184,639,498 Shares underlying the Company's convertible bonds listed on the Stock Exchange in long position and 208,749,000 Shares underlying the Company's unlisted physically settled derivatives in short position. RRJ Capital Master Fund II, L.P. also holds the entire issued share capital of Travis Asset Holding Ltd, which in turn holds the entire issued share capital of Sherlock Asset Holding Ltd, which holds 12,960,000 Shares in long position. Accordingly, RRJ Capital Master Fund II, L.P. is deemed to be interested in the 740,173,000 Shares and 184,639,498 underlying Shares in long position and 208,749,000 underlying Shares in short position held by Berkeley Asset Holding Ltd, and each of RRJ Capital Master Fund II, L.P. and Travis Asset Holding Ltd is deemed to be interested in the 12,960,000 Shares in long position held by Sherlock Asset Holding Ltd.
  7. ESR Cayman Limited holds the entire issued share capital of ESR HK Management Limited, which holds 390,151,000 Shares. ESR Cayman Limited holds 52,997,000 Shares. As a result, ESR Cayman Limited is a beneficial owner as to 52,997,000 Shares and is deemed to be interested in 390,151,000 Shares held by ESR HK Management Limited. ESR Cayman Limited is indirectly owned as to 38.35% by WP X Investment VI Ltd, which is in turn indirectly owned as to 96.90% by Warburg Pincus & Co. Accordingly, each of Warburg Pincus & Co. and WP X Investment VI Ltd is deemed to be interested in 443,148,000 Shares.
  8. 劉強東 (Mr. Richard Qiangdong Liu) controls 100% of issued share capital of Max Smart Limited, which in turn controls 72.63% of issued share capital of JD.com, Inc.. JD.com, Inc. holds the entire issued share capital of Jingdong Logistics Group Corporation. Accordingly, each of 劉強東, Max Smart Limited and JD.com, Inc. is deemed to be interested in the 321,068,999 Shares held by Jingdong Logistics Group Corporation.
  9. Sino-OceanGroup Holding Limited is deemed to be interested in the 287,741,000 Shares through a series of controlled corporations, including, among others, Shine Wind Development Limited, Faith Ocean International Limited, Sino-Ocean Land (Hong Kong) Limited and Joy Orient Investments Limited.

Save as disclosed above, as of 30 June 2020, the Directors or chief executive are not aware of any other person, not being a Director or chief executive of the Company, who has an interest or short position in the Shares or the underlying Shares as recorded in the register required to be kept by the Company under section 336 of the SFO.

Interim Report 2020

25

Other Information

PRE-IPO SHARE OPTION SCHEME

On 10 March 2016, a pre-IPO share option scheme of the Company (the "Pre-IPO Share Option Scheme") was approved and conditionally adopted by the board of Directors of the Company (the "Board"). The purpose of the Pre-IPO Share Option Scheme is a share incentive scheme and is established, amongst other things, to recognize and acknowledge the contributions that certain of the Group's employees have made to the Company's listing and development, and to motivate, retain and attract outstanding personnel who will help promote the Company's growth. Further details of the principal terms of the Pre-IPO Share Option Scheme are set out in the prospectus of the Company.

As at the date of this report, options to subscribe for an aggregate of 15,824,000 Shares (representing approximately 0.49% of the total issued share capital of the Company) have been granted by the Company under the Pre-IPO Share Option Scheme. No further options have been granted under the Pre-IPO Share Option Scheme after the listing of the Company on 15 July 2016 (the "Listing Date").

The holders of the options granted under the Pre-IPO Share Option Scheme are not required to pay for the grant of any option under the Pre-IPO Share Option Scheme.

Subject to the satisfactory performance of certain obligations of the grantees, the options granted to each of the grantees (the "Pre-IPO Options") shall be vested in accordance with the vesting schedule as follows:

  1. as to 30% of the aggregate number of Shares underlying the Pre-IPO Options on the first anniversary date of the Listing Date;
  2. as to 30% of the aggregate number of Shares underlying the Pre-IPO Options on the second anniversary date of the Listing Date; and
  3. as to the remaining 40% of the aggregate number of Shares underlying the Pre-IPO Options on the third anniversary date of the Listing Date.

Each option granted under the Pre-IPO Share Option Scheme is valid for five years from the grant date. During the Reporting Period, Pre-IPO Options representing 1,072,000 Shares have been exercised by the holders, and no Pre-IPO Options have been lapsed or cancelled. The weighted average closing price of the Shares immediately before the dates on which the Pre- IPO Options were exercised is HK$3.18.

26 China Logistics Property Holdings Co., Ltd

Other Information

Details of the outstanding options granted under the Pre-IPO Share Option Scheme during the Reporting Period are set out below:

Number

of Shares

Exercise

represented

Number

price of

by the

of Shares

share

outstanding

represented by

options

share options

Exercised

Cancelled

Lapsed

the outstanding

(HK$

as at

during

during

during

share options as

Name or category of

Date of grant of

per

Exercise period of

1 January

the

the

the

at

grantee

share options

share)

share options(Note)

2020

period

period

period

30 June 2020

Directors

Wu Guolin

21 March 2016

1.625

From 15 July 2017 to 21 March 2021

561,600

-

-

-

561,600

21 March 2016

1.625

From 15 July 2018 to 21 March 2021

561,600

-

-

-

561,600

21 March 2016

1.625

From 15 July 2019 to 21 March 2021

748,800

-

-

-

748,800

1,872,000

-

-

-

1,872,000

Li Huifang

28 March 2016

1.625

From 15 July 2017 to 28 March 2021

11,200

-

-

-

11,200

28 March 2016

1.625

From 15 July 2018 to 28 March 2021

211,200

-

-

-

211,200

28 March 2016

1.625

From 15 July 2019 to 28 March 2021

281,600

-

-

-

281,600

504,000

-

-

-

504,000

Shi Lianghua

21 March 2016

1.625

From 15 July 2017 to 21 March 2021

494,400

-

-

-

494,400

21 March 2016

1.625

From 15 July 2018 to 21 March 2021

494,400

-

-

-

494,400

21 March 2016

1.625

From 15 July 2019 to 21 March 2021

659,200

-

-

-

659,200

1,648,000

-

-

-

1,648,000

Xie Xiangdong

21 March 2016

1.625

From 15 July 2017 to 21 March 2021

163,200

-

-

-

163,200

21 March 2016

1.625

From 15 July 2018 to 21 March 2021

163,200

-

-

-

163,200

21 March 2016

1.625

From 15 July 2019 to 21 March 2021

217,600

-

-

-

217,600

544,000

-

-

-

544,000

Interim Report 2020

27

Other Information

Number

of Shares

Exercise

represented

Number

price of

by the

of Shares

share

outstanding

represented by

options

share options

Exercised

Cancelled

Lapsed

the outstanding

(HK$

as at

during

during

during

share options as

Name or category of

Date of grant of

per

Exercise period of

1 January

the

the

the

at

grantee

share options

share)

share options(Note)

2020

period

period

period

30 June 2020

Li Qing

28 March 2016

1.625

From 15 July 2017 to 28 March 2021

561,600

-

-

-

561,600

28 March 2016

1.625

From 15 July 2018 to 28 March 2021

561,600

-

-

-

561,600

28 March 2016

1.625

From 15 July 2019 to 28 March 2021

748,800

-

-

-

748,800

1,872,000

-

-

-

1,872,000

6,440,000

-

-

-

6,440,000

Members of senior

management & other

employees of the Group

In aggregate

21 March 2016

1.625

From 15 July 2017 to 21 March 2021

163,200

(163,200)

-

-

-

21 March 2016

1.625

From 15 July 2018 to 21 March 2021

163,200

(163,200)

-

-

-

21 March 2016

1.625

From 15 July 2019 to 21 March 2021

556,800

(526,600)

-

-

30,200

28 March 2016

1.625

From 15 July 2018 to 28 March 2021

52,600

(52,600)

-

-

-

28 March 2016

1.625

From 15 July 2019 to 28 March 2021

166,400

(166,400)

-

-

-

1,102,200

(1,072,000)

-

-

30,200

Total

7,542,200

(1,072,000)

-

-

6,470,200

Note:

Such Pre-IPO Options are subject to lapse and/or expiry on an earlier date in accordance with the rules of the Pre-IPO Share Option Scheme upon a change in status of employment or cessation of employment.

PURCHASE, SALE AND REDEMPTION OF LISTED SECURITIES

There was no purchase, sale or redemption of any listed securities of the Company by the Company or any of its subsidiaries during the Reporting Period. During the first half of 2020, the trustee of the Company's share award scheme purchased an aggregate of 33,503,000 Shares at a total cash consideration of approximately HK$96.2 million on-market to hold in trust for the benefit of the participants of the 2020 share award scheme of the Company (the "Share Awards Participants") pursuant to the rules of the share award scheme and the trust deed entered into between the Company and the trustee. Such shares will be used as awards for relevant Share Awards Participants upon the grant and vesting of restricted share units. As of 30 June 2020, no share has been granted by the Company under the 2020 share award scheme.

INTERIM DIVIDEND

The Board does not recommend the payment of interim dividend to shareholders of the Company for the Reporting Period.

28 China Logistics Property Holdings Co., Ltd

Other Information

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

For the Reporting Period, the Company has complied with the applicable code provisions of the Corporate Governance Code (the "Code") as set out in Appendix 14 to the Listing Rules, except for a deviation from code provision A.2.1 of the Code which stipulates that the roles of the chairman and chief executive should be separate and should not be performed by the same individual.

Mr. Li Shifa ("Mr. Li") is currently the chairman of the Board, the chief executive officer and the president of the Group. With extensive experience in the logistics facilities industry, Mr. Li is responsible for formulating and leading the implementation of the overall development strategies and business plans of the Group and overseeing the management and strategic development of the Group and is instrumental to the growth and business expansion of the Group since its establishment in 2000. The Board considers that vesting the roles of chairman, chief executive officer and president in the same person is beneficial to the management of the Group. The balance of power and authority is ensured by the operation of the senior management and the Board, which comprises experienced and high-caliber individuals. The Board currently comprises seven executive Directors (including Mr. Li), three non-executive Directors and five independent non-executive Directors and therefore has a fairly strong independence element in its composition.

The Board will continue to review and monitor the practices of the Company for the purpose of complying with the Code and maintaining a high standard of corporate governance practices of the Company.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS AND RELEVANT EMPLOYEES

The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its code of conduct regarding directors' dealings in the Company's securities. Specific enquiry has been made of all the Directors and the Directors have confirmed that they have complied with the Model Code throughout the Reporting Period.

The Company has also adopted the Model Code as the standard of dealings in the Company's securities by the relevant employees who are likely to possess inside information of the Company and/or its securities. No incident of non-compliance of the Model Code by the employees was noted by the Company during the Reporting Period.

AUDIT COMMITTEE

The Company established the audit committee (the "Audit Committee") with written terms of reference in compliance with the Code. The principal duties of the Audit Committee include the review of the Group's financial controls, risk management and internal control systems, and financial and accounting policies and practices. As of the date of this report, the Audit Committee comprises three independent non-executive Directors, namely Mr. Fung Ching Simon, Mr. Guo Jingbin and Mr. Leung Chi Ching Frederick. Mr. Fung Ching Simon is the chairman of the Audit Committee.

The Audit Committee has reviewed the unaudited interim financial results of the Group for the Reporting Period.

CHANGE IN DIRECTORS' BIOGRAPHICAL DETAILS UNDER RULE 13.51B(1) OF THE LISTING RULES

There is no change in the Directors' biographical details which is required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules since the date of the 2019 annual report of the Company.

Interim Report 2020

29

Report on Review of

Interim Financial Information

TO THE BOARD OF DIRECTORS OF CHINA LOGISTICS PROPERTY HOLDINGS CO., LTD (incorporated in the Cayman Islands with limited liability)

Introduction

We have reviewed the interim financial information set out on pages 31 to 78, which comprises the interim condensed consolidated balance sheet of China Logistics Property Holdings Co., Ltd (the "Company") and its subsidiaries (together, the "Group") as at 30 June 2020 and the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of changes in equity and the interim condensed consolidated statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and International Accounting Standard 34 "Interim Financial Reporting". The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with International Accounting Standard 34 "Interim Financial Reporting". Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of the Group is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting".

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 27 August 2020

30 China Logistics Property Holdings Co., Ltd

Condensed Consolidated Balance Sheet

As at 30 June 2020

(All amounts in RMB unless otherwise stated)

30 June 2020 31 December 2019

Unaudited

Audited

Note

RMB'000

RMB'000

ASSETS

Non-current assets

Property, plant and equipment

7

124,151

129,266

Investment properties

7

19,287,000

19,399,000

Intangible assets

7

878

861

Right-of-use assets

7

220,235

239,051

Investments accounted for using the equity method

8

858,029

787,374

Financial assets at fair value through profit or loss ("FVPL")

11

-

111,973

Long-term trade receivables

12,133

17,166

Other long-term prepayments

9

508,138

451,331

Restricted cash

12

357,128

318,056

21,367,692

21,454,078

Current assets

Trade and other receivables

10(a)

462,038

91,311

Prepayments

10(b)

62,361

91,022

Financial assets at FVPL

11

-

146,975

Cash and cash equivalents

12

1,230,043

1,166,331

Restricted cash

12

12,920

12,043

1,767,362

1,507,682

Total assets

23,135,054

22,961,760

EQUITY AND LIABILITIES

Equity attributable to owners of the Company

Share capital and share premium

13(b)

6,445,890

6,442,389

Other reserves

14

187,569

189,481

Treasury shares

13(b)

(88,530)

-

Retained earnings

4,256,982

4,282,557

10,801,911

10,914,427

Interim Report 2020

31

Condensed Consolidated Balance Sheet

As at 30 June 2020

(All amounts in RMB unless otherwise stated)

30 June 2020 31 December 2019

Unaudited

Audited

Note

RMB'000

RMB'000

Non-controlling interests

852,228

824,752

Total equity

11,654,139

11,739,179

LIABILITIES

Non-current liabilities

Borrowings

16

5,573,481

5,243,562

Long-term payables

90,479

77,656

Deferred income tax liabilities

18

1,947,809

1,998,186

Lease liabilities

27(f)

277,654

294,259

Convertible bonds

17

1,146,267

996,259

9,035,690

8,609,922

Current liabilities

Trade and other payables

19

318,503

428,867

Current income tax liabilities

45,590

28,572

Borrowings

16

2,049,151

2,140,405

Lease liabilities

27(f)

31,981

14,815

2,445,225

2,612,659

Total liabilities

11,480,915

11,222,581

Total equity and liabilities

23,135,054

22,961,760

The notes on pages 38 to 78 form an integral part of this condensed consolidated interim financial information.

32 China Logistics Property Holdings Co., Ltd

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

Six months ended 30 June

2020

2019

Unaudited

Unaudited

Note

RMB'000

RMB'000

Revenue

6

388,031

351,122

Cost of sales

20

(88,650)

(76,591)

Gross profit

299,381

274,531

Selling and marketing expenses

20

(14,518)

(14,154)

Administrative expenses

20

(39,501)

(48,548)

Net impairment losses on financial assets

(972)

(219)

Other income

4,449

14,737

Fair value gains on investment properties - net

7

269,067

275,015

Fair value losses on convertible bonds - net

17

(185,458)

-

Other gains - net

21

72,707

3,584

Operating profit

405,155

504,946

Finance income

22

12,029

10,739

Finance costs

22

(279,731)

(262,046)

Finance expenses - net

22

(267,702)

(251,307)

Share of profit of investments accounted for using the equity method

8

3,870

85,265

Profit before income tax

141,323

338,904

Income tax expense

23

(139,422)

(124,995)

Profit for the period

1,901

213,909

Profit/(Loss) for the period attributable to:

Owners of the Company

(25,575)

191,827

Non-controlling interests

27,476

22,082

1,901

213,909

Other comprehensive income for the period, net of tax

-

-

Total comprehensive income for the period

1,901

213,909

Interim Report 2020

33

Condensed Consolidated Statement of Comprehensive Income For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

Six months ended 30 June

2020

2019

Unaudited

Unaudited

Note

RMB'000

RMB'000

Total comprehensive income/(loss) for the period attributable to:

Owners of the Company

(25,575)

191,827

Non-controlling interests

27,476

22,082

1,901

213,909

(Loss)/Earnings per share for profit/(loss) attributable

to owners of the Company (expressed in RMB)

- Basic

24

(0.0079)

0.0593

- Diluted

24

(0.0079)

0.0591

The notes on pages 38 to 78 form an integral part of this condensed consolidated interim financial information.

34 China Logistics Property Holdings Co., Ltd

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

Equity attributable to owners of the Company

Share

capital

Non-

and share

Treasury

Other

Retained

controlling

Total

premium

shares

reserves

earnings

Total

interests

equity

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Note

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Balance at 31 December 2019

6,442,389

-

189,481

4,282,557

10,914,427

824,752

11,739,179

Comprehensive income

(Loss)/Profit for the period

-

-

-

(25,575)

(25,575)

27,476

1,901

Total comprehensive income

-

-

-

(25,575)

(25,575)

27,476

1,901

Transactions with equity

  • owners in its capacity as
  • equity owners

Repurchase of shares

13(b)

-

(88,530)

-

-

(88,530)

-

(88,530)

Employees share option scheme

- Exercise of share options

13(b), 14

3,501

-

(1,912)

-

1,589

-

1,589

Total transactions with equity

owners in their capacity as

equity owners

3,501

(88,530)

(1,912)

-

(86,941)

-

(86,941)

Balance at 30 June 2020

6,445,890

(88,530)

187,569

4,256,982

10,801,911

852,228

11,654,139

Interim Report 2020

35

Condensed Consolidated Statement of Changes in Equity For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

Equity attributable to owners of the Company

Share

capital

Non-

and share

Treasury

Other

Retained

controlling

Total

premium

shares

reserves

earnings

Total

interests

equity

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Note

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Balance at 31 December 2018

6,460,307

-

174,774

3,980,187

10,615,268

798,621

11,413,889

Change in accounting policy -

IFRS 16

-

-

-

(26,431)

(26,431)

-

(26,431)

Balance at 1 January 2019,

restated

6,460,307

-

174,774

3,953,756

10,588,837

798,621

11,387,458

Comprehensive income

Profit for the period

-

-

-

191,827

191,827

22,082

213,909

Total comprehensive income

-

-

-

191,827

191,827

22,082

213,909

Transactions with equity

owners in its capacity as

equity owners

Repurchase of shares

13(b)

-

(25,183)

-

-

(25,183)

-

(25,183)

Cancellation of shares

13(b)

(25,183)

25,183

-

-

-

-

-

Employees share option scheme

- Value of employee services

14

-

-

(578)

-

(578)

-

(578)

- Exercise of share options

13(b), 14

2,651

-

(1,298)

-

1,353

-

1,353

Total transactions with

equity owners in their

  capacity as equity owners

(22,532)

-

(1,876)

-

(24,408)

-

(24,408)

Balance at 30 June 2019

6,437,775

-

172,898

4,145,583

10,756,256

820,703

11,576,959

The notes on pages 38 to 78 form an integral part of this condensed consolidated interim financial information.

36 China Logistics Property Holdings Co., Ltd

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

Six months ended 30 June

2020

2019

Unaudited

Unaudited

Note

RMB'000

RMB'000

Cash flows from operating activities

Cash generated from operations

243,279

169,355

Interest received

11,909

10,533

Income tax paid

(953)

(6,340)

Net cash generated from operating activities

254,235

173,548

Cash flows used in investing activities

Acquisition of property, plant and equipment

(3,541)

(1,736)

Prepayment for land use rights

9

(37,117)

-

Proceeds from disposal of property, plant and equipment

423

-

Acquisition of financial assets at FVPL

11

-

(90,724)

Disposal of financial assets at FVPL

11

259,191

-

Addition of investment properties

(853,112)

(725,976)

Addition of intangible assets

(259)

(85)

Payment of capital gain tax of disposal of subsidiaries

(34,858)

(5,312)

Proceeds from disposal of subsidiaries

21

330,913

291,339

Receipt of government grants

-

10,000

Receipt/(Payment) of advances to related parties

27(c)

78,543

(13,883)

Net cash used in investing activities

(259,817)

(536,377)

Cash flows from financing activities

(Increase)/decrease in restricted cash

(39,949)

69,074

Proceeds from exercise of share options

1,589

1,353

Proceeds from borrowings

1,091,180

1,442,045

Repayments of borrowings

(591,145)

(1,976,787)

Payment of interest expenses

(296,692)

(311,981)

Payment of commission fees and other expenses related to

  issuance of senior notes

(114)

-

Principle element of lease payments

(5,505)

(9,167)

Proceeds from issuance of convertible bonds

17

-

975,034

Payment of interest of convertible bonds

17

(35,450)

-

Repurchase of ordinary shares

13(b)

(88,530)

(25,183)

Advances from a related party

27(c)

31,232

-

Net cash generated from financing activities

66,616

164,388

Net increase/(decrease) in cash and cash equivalents

61,034

(198,441)

Cash and cash equivalents at the beginning of the period

12

1,166,331

2,000,429

Cash classified as assets held for sale

-

11,900

Exchange gains/(losses) on cash and cash equivalents

2,678

(15,092)

Cash and cash equivalents at end of the period

1,230,043

1,798,796

The notes on pages 38 to 78 form an integral part of this condensed consolidated interim financial information.

Interim Report 2020

37

Notes to the Condensed Consolidated Interim Financial Information

For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

1 General information

China Logistics Property Holdings Co., Ltd (the "Company") was incorporated on 12 November 2013 in the Cayman Islands as an exempted company with limited liability under the Companies Law, Cap. 22 (2013 Revision) of the Cayman Islands, as amended or re-enacted from time to time. The address of its registered office is Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, George Town, P.O. box 10240, Grand Cayman KY1-1002, Cayman Islands.

The Company is an investment holding company. The Company and its subsidiaries (together, the "Group") are principally engaged in the leasing of logistics facilities and the provision of related management services in the People's Republic of China (the "PRC").

The Company has its primary listing on The Stock Exchange of Hong Kong Limited on 15 July 2016.

This condensed consolidated interim financial information is presented in Renminbi ("RMB"), unless otherwise stated. This condensed consolidated interim financial information was approved for issue by the board of directors (the "Board") of the Company on 27 August 2020.

This condensed consolidated interim financial information has not been audited.

2 Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 June 2020 has been prepared in accordance with IAS 34, "Interim financial reporting". The condensed consolidated interim financial information should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2019, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs").

38 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

2 Basis of preparation (continued)

The Group meets its day-to-day working capital requirements through its bank borrowing facilities and issuance of senior notes, convertible bonds and asset-backed securities. As at 30 June 2020, the current liabilities exceeded the current assets by RMB677,863,000. In preparing the condensed consolidated interim financial information, the directors of the Company have considered the Group's available sources of funds as follows:

  • The net cash inflows from operating activities.
  • The unutilized bank borrowing facilities as at 30 June 2020 as well as those to be newly obtained during the next twelve months given the Group's credit history and the Group's unpledged investment properties. The available unutilized bank borrowing facilities as at 30 June 2020 was RMB658,320,000 (Note 16). Subsequent to 30 June 2020, additional bank borrowing facilities amounting to RMB110,700,000 were obtained with borrowing contracts signed. The total available unutilized bank borrowing facilities thus increased to RMB769,020,000, among which around RMB179,773,000 was successfully drawn down subsequent to 30 June 2020.
  • Other available sources of financing from co-investors through establishing joint investment programs of operating a portfolio of logistics warehousing projects located in PRC as well as financing from issuing senior notes, convertible bonds and assets-backed securities when necessary.

Having considered the above, the directors of the Company believe that the Group has adequate resources to continue operation for the foreseeable future of not less than twelve months from period end date of the condensed consolidated interim financial information. The directors, therefore, are of the opinion that it is appropriate to adopt the going concern basis in preparing the condensed consolidated interim financial information.

3 Significant accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual consolidated financial statements for the year ended 31 December 2019, as described in the annual consolidated financial statements.

  1. Income tax

Income tax expense is recognized based on management's estimation of the weighted average effective annual income tax rate expected for the full financial year.

Interim Report 2020

39

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

3 Significant accounting policies (continued)

  1. New and amended standards and interpretations adopted by the Group

A number of new or amended standards or interpretations became applicable for the current reporting period and the Group had to change its accounting policies accordingly. The impact of adopting IFRS 16 (Amendments) are disclosed below. Other amended standards or interpretations that are effective for the first time for this interim period did not have any impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods.

Effective for annual periods

Standards

beginning on or after

IAS 1 and IAS 8 (Amendments)

Definition of material

1

January 2020

IFRS 3 (Amendments)

Definition of a business

1

January 2020

Revised Conceptual Framework

Revised conceptual framework for

1

January 2020

  financial reporting

IFRS 9, IAS 39 and IFRS 7

Interest rate benchmark reform

1

January 2020

  (Amendments)

IFRS 16 (Amendments)

Covid-19-related rent concessions

1

June 2020

(i)

  1. The Group leases an office building from its associate - Shanghai Hongyu Logistics Co., Ltd. ("Shanghai Hongyu"). As a direct consequence of the COVID-19 pandemic, 2 months lease payments in the first quarter of 2020 have been waived by Shanghai Hongyu.
    On application of the practical expedient in accordance with the amendments to IFRS 16, amounting to RMB2,785,000 (Note 20) of a reduction in lease payment have been recognized in the condensed consolidated statement of comprehensive income for six months ended 30 June 2020 to reflect the changes in lease payments that arise from the rent concession.

40 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

3 Significant accounting policies (continued)

  1. New standards, new amendments and interpretations to existing standards issued and relevant to the Group but not yet effective

The following new standards, new amendments and interpretations to existing standards have been issued and are relevant to the Group's operations but are not yet effective for the financial year beginning on 1 January 2020 and have not been early adopted by the Group:

Standards

IAS 1 (Amendments)

Classification of liabilities as

  current or non-current

IAS 16 (Amendments)

Property, plant and equipment:

  proceeds before intended use

IAS 37 (Amendments)

Onerous contracts - cost of

  fulfilling a contract

IFRS 3 (Amendments)

Reference to the conceptual

  framework

Annual Improvements to

IFRS 9, IFRS 16, IFRS 1, IAS 41

  IFRS Standards 2018-2020

IFRS 17

Insurance contracts

IFRS 10 and IAS 28 (Amendments)

Sale or contribution of assets

  between an investor and its

  associate or joint venture

Effective for annual periods beginning on or after

1 January 2022 (likely to be extended

  • to 1 January 2023)
    1 January 2022

1 January 2022

1 January 2022

1 January 2022

Originally 1 January 2021, but

  • extended to 1 January 2023 To be determined

The Group will apply the new standards, new amendments and interpretations described above when they become effective. The Group is in the process of making an assessment on the impact of these new standards, new amendments and interpretations and does not anticipate that the adoption will result in any material impact on the Group's results of operations and financial position.

Interim Report 2020

41

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

4 Estimates

The preparation of this condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2019.

5 Financial risk management and financial instruments

5.1 Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk), credit risk and liquidity risk.

The interim condensed consolidated financial information do not include all financial risk management information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group's annual consolidated financial statements as at 31 December 2019.

There have been no changes in the risk management policies since year 2019.

5.2 Liquidity risk

Compared to 2019 year end, there was no material change in the contractual undiscounted cash outflows for financial liabilities.

5.3 Fair value estimation

The table below analyses the Group's financial instruments and investment properties carried at fair value as at 30 June 2020 by level of the inputs to valuation techniques used to measure fair value. Such inputs are categorized into three levels within a fair value hierarchy as follows:

  • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
  • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
  • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

42 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

5 Financial risk management and financial instruments (continued)

5.3 Fair value estimation (continued)

The following table presents the Group's assets and liabilities that are measured at fair value at 30 June 2020 and at

31 December 2019:

Level 1

Level 2

Level 3

Total

Unaudited

Unaudited

Unaudited

Unaudited

As at 30 June 2020

RMB'000

RMB'000

RMB'000

RMB'000

Assets

Investment properties

-

-

19,287,000

19,287,000

Liabilities

Convertible bonds

-

-

1,146,267

1,146,267

Level 1

Level 2

Level 3

Total

Audited

Audited

Audited

Audited

As at 31 December 2019

RMB'000

RMB'000

RMB'000

RMB'000

Assets

Financial assets at FVPL

-

-

258,948

258,948

Investment properties

-

-

19,399,000

19,399,000

-

-

19,657,948

19,657,948

Liabilities

Convertible bonds

-

-

996,259

996,259

There were no transfers among levels of the fair value hierarchy during the period.

Interim Report 2020

43

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

5 Financial risk management and financial instruments (continued)

5.4 Fair value measurements using significant unobservable inputs (Level 3)

Investment properties

See Note 7 for disclosures of the investment properties that are measured at fair value.

Convertible bonds

See Note 17 for disclosures of the convertible bonds that are measured at fair value.

Financial assets at FVPL

See Note 11 for disclosure of the financial assets that are measured at fair value.

5.5 Fair value of financial assets and liabilities measured at amortized cost

The fair values of current, non-current borrowings and lease liabilities equal their carrying amounts, as the impact of discounting is not significant. The fair values are based on cash flows discounted using a rate based on the borrowing rate of borrowing with similar credit risk and are within level 3 of the fair value hierarchy.

The fair values of the following financial assets and liabilities approximate their carrying amounts:

  • Long-termtrade receivables
  • Trade and other receivables
  • Cash and cash equivalents
  • Restricted cash
  • Long-termpayables
  • Trade and other payables

44 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

6 Segment and revenue information

The Board is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. The Group's project subsidiaries (the "Project Companies") established in different locations in the PRC engages in business activities from which it earns revenues and incurs expenses, and have discrete financial information. Therefore these Project Companies are identified as different operating segments of the Group. Nevertheless, these Project Companies have been aggregated into one operating segment, taking into consideration the below factors: the Project Companies have similar economic characteristics and regulatory environment, with all revenue and operating profits from the same business of leasing logistics facilities and providing related management services derived within the PRC; the Group as a whole, has unified internal organizational structure, management system and internal report system; and the Board allocates resources and evaluates performance of the operating segments in aggregation from Group consolidated level. Therefore all Project Companies have been aggregated into one operating segment.

The Group derives its revenue primarily from the rental income generated from lease of logistics facilities and provision of related management services.

No geographical segment information is presented as all the revenue and operating profits of the Group are derived within PRC and all the operating assets of the Group are located in the PRC, which is considered as one geographic location with similar risks and returns.

Revenue from customer A represents 29.49% of the Group's total revenue for the six months ended 30 June 2020 (30 June 2019: customer A represented 29.56%).

The revenue of the Group for the six months ended 30 June 2020 and 2019 are set out as follows:

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Rental income

276,674

268,969

Revenue from providing management services

111,357

82,153

388,031

351,122

Interim Report 2020

45

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

7 Property, plant and equipment, investment properties, intangible assets and right-of-use assets

Property,

plant and

Investment

Intangible

Right-of-

equipment

properties

assets

use assets

Unaudited

Unaudited

Unaudited

Unaudited

RMB'000

RMB'000

RMB'000

RMB'000

Six months ended 30 June 2020

Net book value or valuation

Opening amount as at 1 January 2020

129,266

19,399,000

861

239,051

Additions

3,541

758,933

238

-

Disposal of subsidiaries

(96)

(1,140,000)

-

-

Other disposals

(69)

-

-

-

Fair value gains on investment properties

-

269,067

-

-

Depreciation and amortization (Note 20)

(8,491)

-

(221)

(18,816)

Closing amount as at 30 June 2020

124,151

19,287,000

878

220,235

Six months ended 30 June 2019

Net book value or valuation

Opening amount as at 1 January 2019

128,232

17,039,000

653

307,681

Additions

136

615,459

73

-

Disposal of subsidiaries

-

(343,474)

-

-

Other disposals

(9)

-

-

-

Fair value gains on investment properties

-

275,015

-

-

Depreciation and amortization (Note 20)

(7,880)

-

(83)

(16,631)

Closing amount as at 30 June 2019

120,479

17,586,000

643

291,050

Valuations of the Group's investment properties were performed by an independent professional valuer, Colliers International (Hong Kong) Limited ("Colliers"), to determine the fair values of the investment properties as at 30 June 2020 and 31 December 2019. The revaluation gains or losses are included in "Fair value gains on investment properties - net" in the condensed consolidated statement of comprehensive income.

46 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

7 Property, plant and equipment, investment properties, intangible assets and right-of-use assets (continued)

The valuations were derived primarily using the discounted cashflow method ("DCF") method with projections based on significant unobservable inputs including market rents, rental growth rates, capitalization rates and discount rates, etc.; and the Term and Reversion ("T&R") analysis by capitalising the net rental income derived from the existing tenancies with allowance onto the reversionary interests of the properties (by making reference to comparable market rental transactions), with significant unobservable inputs including term/reversionary yields. In addition, for investment properties under construction or leasehold land held for future development as at the measurement dates, the outstanding costs to complete the properties in accordance with the underlying design scheme have been considered. The unobservable inputs include those for DCF method and/or the T&R analysis, plus the outstanding costs to complete, expected completion dates and the developer's profit margin.

There were no changes in the valuation techniques adopted during the period.

The below table analyzes the investment properties carried at fair value, by different valuation methods.

Fair value measurements at

30 June 2020 using

Quoted prices

Significant

in active markets

Significant other

Unobservable

for identical assets

Observable inputs

inputs

Description

(Level 1)

(Level 2)

(Level 3)

Unaudited

Unaudited

Unaudited

RMB'000

RMB'000

RMB'000

Recurring fair value measurements

Investment properties

-

-

19,287,000

Fair value measurements at

31 December 2019 using

Quoted prices

Significant

in active markets

Significant other

Unobservable

for identical assets

Observable inputs

inputs

Description

(Level 1)

(Level 2)

(Level 3)

Audited

Audited

Audited

RMB'000

RMB'000

RMB'000

Recurring fair value measurements

Investment properties

-

-

19,399,000

Interim Report 2020

47

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

7 Property, plant and equipment, investment properties, intangible assets and right-of-use assets (continued)

The Group's policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.

There were no transfers between Levels 1, 2 and 3 during the period.

Fair value measurements using significant unobservable inputs (Level 3)

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Opening balance

19,399,000

17,039,000

Additions

758,933

615,459

Disposal

(1,140,000)

(343,474)

Net gains from fair value adjustment

269,067

275,015

Closing balance

19,287,000

17,586,000

Valuation processes of the Group

The fair value of the Group's investment properties at 30 June 2020 and 2019 were valued by independent professional valuer - Colliers, who holds recognized relevant professional qualifications and has recent experience in the locations and segments of the investment properties valued.

The Group's finance department includes a team that review the valuations performed by the independent valuer for financial reporting purposes. This team reports directly to Senior Vice President of finance department. Discussions of valuation processes and results are held between Senior Vice President of finance department, the valuation team and the valuer at least once every six months, in line with the Group's interim and annual reporting dates.

At each interim period and financial year end, the finance department:

  • Verifies all major inputs to the independent valuation report;
  • Assesses property valuations movements when compared to the prior year valuation report; and
  • Holds discussions with the independent valuer.

48 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

7 Property, plant and equipment, investment properties, intangible assets and right-of-use assets (continued)

Valuation techniques

For completed logistics facilities, the valuation was determined primarily using DCF method and T&R analysis, with projections based on significant unobservable inputs. These input include:

Future rental cash inflows

Based on the actual location, type and quality of the properties and supported by the

terms of any existing leases, other contracts and external evidences such as current

market rents for similar properties.

Discount rates

Reflecting current market assessments of the uncertainty in the amount and timing of cash

flows.

Capitalization rates

Based on actual location, size and quality of the properties and taking into account market

data at the valuation date.

Term/reversionary yields

Based on actual location, size and quality of the properties and taking into account market

data and the status of the existing tenancies at the valuation date.

For logistics facilities which are still under construction or leasehold land held for future development, the valuation was based on the same valuation methods but would take into account additionally the following estimates (in addition to the inputs noted above):

Costs to complete

Completion dates

These are largely consistent with internal budgets developed by the Group's finance department, based on management's experience and knowledge of market conditions.

Properties under construction or leasehold land held for future development require approvals or permits from oversight bodies at various points in the development process, including approvals or permits in respect of initial design, zoning, commissioning, and compliance with environmental regulations. Based on management's experience with similar developments, all relevant permits and approvals are expected to be obtained. However, the completion date of the development may vary depending on, among other factors, the timeliness of obtaining approvals and any remedial action required by the Group.

The developer's profit margin Based on actual location, size and quality of the properties and taking into account market data and the completion status of the properties at the valuation date.

There were no major changes to the valuation techniques during the period.

Interim Report 2020

49

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

8 Investments accounted for using the equity method

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

550,556

Beginning of the period

787,374

Fair value of the retained interest of the associates

66,785

148,243

Share of post-tax profits of associates

3,870

85,265

End of the period

858,029

784,064

Investments in associates

The associates as listed below have share capital consisting solely of ordinary shares, which are held directly by the Group.

Nature of investments in associates as at 30 June 2020:

Place of

business/country

% of ownership

Nature of the

Measurement

Name of entity

of incorporation

interest

relationship

method

Shanghai Hongyu (a)

Shanghai/PRC

41%

Associate

Equity

Yupei Logistics Property

BVI

30%

Associate

Equity

  • Management 10 Co., Ltd
  • ("Management 10") (b)

Yupei Logistics Property

BVI

30%

Associate

Equity

  • Management 15 Co., Ltd
  • ("Management 15") (c)

Yupei Logistics Property

BVI

10%*

Associate

Equity

  • Management 12 Co., Ltd
  • ("Management 12") (d)

Yupei Tianjin Logistics Property

BVI

10%*

Associate

Equity

    • Management Co., Ltd
    • ("Tianjin Management") (e)
  • Although the percentage of the voting rights held by the Group is less than 20%, one of the three directors of the board of directors of Management 12 and Tianjin Management are nominated by the Group; thereby the Group is able to exercise significant influence over Management 12 and Tianjin Management, and accordingly they are accounted for as associates of the Group.

50 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

8 Investments accounted for using the equity method (continued)

Investments in associates (continued)

  1. Shanghai Hongyu was jointly established by Yupei Anhui Logistics Property Development Co., Ltd., a subsidiary of the Group, and external third parties, Shanghai Xingchao Investment Management Co., Ltd. and Shanghai Tianzhuo Investment Management Co., Ltd. in March 2015. Its major operation is leasing and provision of related management services.
  2. The Group sold 70% shares in Management 10 in June 2019. After the disposal transaction, Management 10 became an associate of the Group. The major operation of Management 10 is leasing and provision of related management services through its 100% holding subsidiary, Kunshan Yuzai Warehousing Co., Ltd. ("Kunshan Yuzai").
  3. The Group sold 70% shares in Management 15 in June 2019. After the disposal transaction, Management 15 became an associate of the Group. The major operation of Management 15 is leasing and provision of related management services through its 100% holding subsidiary, Nanjing Yupei Warehousing Co., Ltd. ("Nanjing Yupei").
  4. The Group sold 90% shares in Management 12 in May 2020. After the disposal transaction, Management 12 became an associate of the Group. The major operation of Management 12 is leasing and provision of related management services through its 100% holding subsidiary, Huizhou Yuanwang Technology Park Development Co., Ltd. ("Huizhou Yuanwang").
  5. The Group sold 90% shares in Tianjin Management in June 2020. After the disposal transaction, Tianjin Management became an associate of the Group. The major operation of Tianjin Management is leasing and provision of related management services through its 100% holding subsidiary, Tianjin Yupei Logistics Co., Ltd. ("Tianjin Yupei Logistics").

There are no contingent liabilities relating to the Group's interest in its associates as at 30 June 2020 and 31 December 2019.

Interim Report 2020

51

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

8 Investments accounted for using the equity method (continued)

Investments in associates (continued)

Reconciliation of summarized financial information

Period from disposal dates

Six months ended 30 June 2020

to 30 June 2020

Shanghai

Management

Management

Management

Tianjin

Hongyu

10

15

12

Management

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Net assets at beginning of

  the period

1,454,532

288,260

348,459

-

-

Fair values of the net assets

  on the dates becoming

  associates of the Group

-

-

-

354,119

313,738

Profit/(loss) for the period

13,397

(3,776)

(20,274)

21,275

34,637

Net assets at end of the

  period

1,467,929

284,484

328,185

375,394

348,375

Percentage held

41%

30%

30%

10%

10%

Interest in associates

601,851

85,345

98,456

37,539

34,838

Carrying value

601,851

85,345

98,456

37,539

34,838

52 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

8 Investments accounted for using the equity method (continued)

Investments in associates (continued)

Reconciliation of summarized financial information (continued)

Six months ended 30 June 2019

Shanghai Hongyu

Management 10

Management 15

Unaudited

Unaudited

Unaudited

RMB'000

RMB'000

RMB'000

Net assets at beginning of the period

1,342,819

-

-

Fair values of the net assets on the dates

  becoming associates of the Group

-

222,974

271,169

Profit for the period

153,252

58,308

16,465

Net assets at end of the period

1,496,071

281,282

287,634

Percentage held

41%

30%

30%

Interest in associates

613,389

84,385

86,290

Carrying value

613,389

84,385

86,290

9 Other long-term prepayments

As at 30 June 2020 and 31 December 2019, the balance of other long-term prepayments is as follows:

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Prepaid taxes other than income tax

219,134

206,571

Prepayment for construction costs

239,337

230,093

Prepayment for land use rights

37,117

-

Long-term prepaid expenses

12,550

14,667

508,138

451,331

Interim Report 2020

53

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

10 Trade and other receivables and prepayments

  1. Trade and other receivables

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Trade receivables (i)

Rental and management service receivables from

  third parties

24,856

8,638

Rental and management service receivables from

  related parties (Note 27(f))

32,020

1,890

56,876

10,528

Other receivables

Other receivables for land use rights and other deposits

40,825

38,304

Other receivables for unpaid consideration

266,280

12,217

Other receivables due from other third parties

3,128

3,024

Other receivables due from related parties (Note 27(f))

103,112

34,449

413,345

87,994

Less: Loss allowance for trade receivables

(1,561)

(589)

       Loss allowance for other receivables

(6,622)

(6,622)

(8,183)

(7,211)

462,038

91,311

  1. As at 30 June 2020, trade receivables of RMB5,848,000 (31 December 2019: RMB670,000) and
    RMB1,472,000 (31 December 2019: RMB182,000) were pledged as collaterals for the bank borrowings and asset-backedmedium-term notes, respectively (Note 16).

54 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

10 Trade and other receivables and prepayments (continued)

  1. Trade and other receivables (continued)

As at 30 June 2020 and 31 December 2019, the fair values of the current portion of trade and other receivables of the Group approximated their carrying amounts. As at 30 June 2020 and 31 December 2019, all carrying amounts of trade and other receivables were denominated in RMB.

As at 30 June 2020 and 31 December 2019, the aging analysis of the trade receivables based on the dates that the Group was entitled to collect the rental income, was as follows:

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Up to 30 days

19,931

8,171

31 to 90 days

15,150

1,224

91 to 365 days

20,923

685

Over 365 days

872

448

56,876

10,528

(b) Prepayments

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Current portion of prepaid taxes other than income tax

49,825

73,455

Prepayments for utilities

7,340

10,641

Prepayments for financing cost of bank borrowings

5,000

5,000

Prepaid income taxes

196

1,926

62,361

91,022

Interim Report 2020

55

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

11 Financial Assets at FVPL

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Current

-

146,975

Non-current

-

111,973

-

258,948

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

At beginning of the period

258,948

347,513

Additions

-

90,724

Net fair value changes recognized in profit or loss (Note 21)

243

6,465

Redemptions

(259,191)

-

At end of the period

-

444,702

As at 31 December 2019, financial assets at FVPL are HK$ denominated promissory notes issued by a third party with principal amount of HK$145,000,000 and US$ denominated promissory notes issued by a third party with principal amount of US$18,500,000. As at 31 December 2019, the maturity dates of US$18,500,000 and HK$20,000,000 are within 1 year, while the maturity date of HK$125,000,000 is beyond 1 year.

As at 30 June 2020, the Group early redeemed all these promissory notes with a gain of RMB243,000 (Note 21).

56 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

12 Cash and cash equivalents and restricted cash

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Cash at bank and on hand

1,553,940

1,496,430

Cash in transit

46,151

-

Less: Restricted cash

- Current (i)

(12,920)

(12,043)

- Non-current (ii)

(357,128)

(318,056)

Cash and cash equivalents

1,230,043

1,166,331

  1. As at 30 June 2020, restricted deposits of RMB5,920,000 (31 December 2019: RMB5,043,000) were held at bank
    for construction deposits and restricted deposits of RMB7,000,000 (31 December 2019: RMB7,000,000) were held at bank as collateral for the current portion of long-term bank borrowing (Note 16).
  1. As at 30 June 2020, restricted deposits of RMB5,008,000 (31 December 2019: RMB10,016,000) were held at
    bank for construction deposits, restricted deposits of RMB350,000,000 (31 December 2019: RMB300,000,000) were held at bank as collateral for the long-term bank borrowings and restricted deposits of RMB2,120,000 (31 December 2019: RMB8,040,000) were held at bank for construction worker labor fee.

13 Share capital and share premium, and treasury shares

  1. Authorized shares

Number of authorized shares Unaudited

At 1 January 2020 and 30 June 2020

8,000,000,000

At 1 January 2019 and 30 June 2019

8,000,000,000

Interim Report 2020

57

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

13 Share capital and share premium, and treasury shares (continued)

  1. Issued shares

Number of

Ordinary

Treasury

Share

issued shares

shares

shares

premium

Total

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

RMB'000

RMB'000

RMB'000

RMB'000

At 1 January 2020

3,234,192,999

1,317

-

6,441,072

6,442,389

Employee share option scheme

  - Exercise of share

      options (Note 15)

1,072,000

-

-

3,501

3,501

Repurchase of shares (i)

-

-

(88,530)

-

(88,530)

At 30 June 2020

3,235,264,999

1,317

(88,530)

6,444,573

6,357,360

At 1 January 2019

3,245,277,999

1,323

-

6,458,984

6,460,307

Employee share option scheme

  - Exercise of share

      options (Note 15)

962,000

-

-

2,651

2,651

Repurchase of shares (ii)

-

-

(25,183)

-

(25,183)

Cancellation of shares (ii)

(13,576,000)

(6)

25,183

(25,177)

-

At 30 June 2019

3,232,663,999

1,317

-

6,436,458

6,437,775

  1. Pursuant to the 2020 share award scheme approved by the Board on 31 March 2020, the Company may, from time to time, at its absolute discretion, select and grant share awards to selected participant which are to be satisfied by the new shares to be subscribed or the existing shares purchased by the Core Trust Company Ltd. (the "Trustee") under the agreement that the Company and the Trustee entered into on 31 March 2020. As of 30 June 2020, The Trustee, on behalf of the Company, has repurchased 33,503,000 ordinary shares with total amount of RMB88,530,000.
  2. The Company repurchased 13,576,000 ordinary shares of its own through The Stock Exchange of Hong Kong Limited from 17 January 2019 to 25 January 2019. The total amount paid to repurchase the shares was RMB25,183,000 and has been deducted from shareholders' equity. The Company cancelled the shares on 8 February 2019. The amount of share capital and share premium was deducted accordingly.

58 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

14 Other reserves

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Balance at 1 January

189,481

174,774

Employee share option scheme

  - Value of employee services

-

(578)

  - Exercise of share options

(1,912)

(1,298)

Balance at 30 June

187,569

172,898

15 Share-based payments

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

For the six months period ended 30 June

2020

2019

Average exercise

Average exercise

price in HK$

price in HK$

per share

Number of options

per share

Number of options

Unaudited

Unaudited

Unaudited

Unaudited

As at 1 January

1.625

7,542,200

1.625

11,096,200

Exercised (Note 13)

1.625

(1,072,000)

1.625

(962,000)

Forfeited

1.625

-

1.625

(1,062,400)

As at 30 June

1.625

6,470,200

1.625

9,071,800

Share options outstanding at 30 June 2020 have the following expiry dates and exercise prices:

Exercise price

Grant date

Expiry date

in HK$ per share

Number of options

21 March 2016

21 March 2021

1.625

4,094,200

28 March 2016

28 March 2021

1.625

2,376,000

6,470,200

Interim Report 2020

59

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

16 Borrowings

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Non-current

Long-term bank borrowings

  - secured by assets (a)

3,697,901

4,075,632

  - secured by equity interest of certain subsidiary (c)

29,500

50,000

  - secured by assets and equity interests of certain subsidiaries (b)

423,567

---

Long-term borrowings from other financial institutions

  - secured by assets and equity interests of certain subsidiaries (f)

244,341

-

Senior notes

  - secured by guarantees and pledges provided by certain subsidiaries (g)

2,710,520

2,790,063

Asset-backedmedium-term notes ("ABN")

  - secured by assets (h)

446,803

448,272

7,552,632

7,363,967

Less: Long-term bank borrowings due within one year

(354,488)

(446,404)

Long-term borrowings from other financial institutions due

  within one year

(51,515)

-

Senior notes due within one year

(1,572,594)

(1,673,447)

  ABN due within one year

(554)

(554)

5,573,481

5,243,562

Current

Short-term bank borrowings

  - secured by equity interest of certain subsidiary (e)

20,000

-

- unsecured (d)

50,000

20,000

Current portion of long-term bank borrowings

  - secured by assets (a)

351,338

446,404

  - secured by assets and equity interests of certain subsidiaries (b)

2,150

-

  - secured by equity interest of certain subsidiary (c)

1,000

-

Current portion of long-term borrowings from other financial institutions

  - secured by assets and equity interests of certain subsidiaries (f)

51,515

-

Current portion of senior notes

  - secured by guarantees and pledges provided by certain subsidiaries (g)

1,572,594

1,673,447

Current portion of ABN

  - secured by assets (h)

554

554

2,049,151

2,140,405

Total borrowings

7,622,632

7,383,967

60 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

16 Borrowings (continued)

  1. As at 30 June 2020, bank borrowings of RMB2,840,618,000 (31 December 2019: RMB3,514,085,000) with
    undrawn borrowing amounting to RMB517,320,000 (31 December 2019: RMB376,500,000) were secured by the
    investment properties of the Group amounting to RMB11,265,000,000 (31 December 2019: RMB13,029,000,000).
    As at 30 June 2020, bank borrowings of RMB298,470,000 (31 December 2019: RMB298,620,000) were secured by
    restricted deposit of the Group amounting to RMB300,000,000 (31 December 2019: RMB300,000,000) (Note 12).
    As at 30 June 2020, bank borrowings of RMB353,492,000 (31 December 2019: RMB190,661,000) with undrawn
    borrowing amounting to RMB11,500,000 (31 December 2019: Nil) were secured by the investment properties of
    the Group amounting to RMB1,197,000,000 (31 December 2019: RMB684,000,000), trade receivables amounting
    to RMB4,642,000 (31 December 2019: RMB370,000) (Note 10), and the rental income generated from the lease of
    the investment properties during the terms of the borrowings (31 December 2019: secured by the rental income).
    As at 30 June 2020, bank borrowings of RMB205,321,000 (31 December 2019: RMB72,266,000) with undrawn
    borrowing of RMB120,000,000 (31 December 2019: Nil) were secured by the investment properties of the
    Group amounting to RMB1,049,000,000 (31 December 2019: RMB341,000,000), trade receivables amounting
    to RMB6,000 (31 December 2019: RMB300,000) (Note 10), the rental income generated from the lease of the
    investment properties during the terms of the borrowings (31 December 2019: secured by the rental income), and
    restricted deposits of the Group amounting to RMB27,000,000 (31 December 2019: RMB7,000,000) (Note 12).
  2. As at 30 June 2020, bank borrowings of RMB423,567,000 (31 December 2019: Nil) were secured by the
    investment properties of the Group amounting to RMB1,125,000,000 (31 December 2019: Nil), trade receivables
    amounting to RMB1,200,000 (31 December 2019: Nil) (Note 10), the rental income generated from the lease of the investment properties during the terms of the borrowings, restricted deposits of the Group amounting to RMB30,000,000 (31 December 2019: Nil) (Note 12), and the Group's equity interests in certain subsidiaries.
  3. As at 30 June 2020, bank borrowing of RMB29,500,000 (31 December 2019: RMB50,000,000) was secured by the Group's equity interest in certain subsidiary.
  4. As at 30 June 2020, bank borrowings of RMB50,000,000 (31 December 2019: RMB20,000,000) with undrawn
    borrowings of RMB9,500,000 (31 December 2019: Nil) were unsecured.
  5. As at 30 June 2020, bank borrowing of RMB20,000,000 (31 December 2019: Nil) were secured by the Group's equity interest in certain subsidiary.
  6. As at 30 June 2020, borrowings from other financial institution of RMB244,341,000 (31 December 2019: Nil) were
    secured by the investment properties of the Group amounting to RMB488,000,000 (31 December 2019: Nil), the rental income generated from the lease of the investment properties during the terms of the borrowings and the Group's equity interests in certain subsidiaries.

Interim Report 2020

61

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

16 Borrowings (continued)

  1. On 8 August 2017, 14 September 2017 and 28 December 2017, the Company issued US$ denominated senior fixed rate notes (the "2017 Notes") in the principal amount of US$100,000,000 respectively, and the aggregate amount of which was US$300,000,000 in total. The 2017 Notes are secured by guarantees and pledges provided by certain subsidiaries of the Group. The 2017 Notes will mature on 8 August 2020, unless earlier redeemed in accordance with the terms thereof. The 2017 Notes bear interest from and including 8 August 2017 at a rate of 8% per annum payable semi-annually in arrears on 8 February and 8 August of each year, commencing on 8 February 2018. The Company has utilised the net proceeds of the issuance of the 2017 Notes for repaying existing offshore indebtedness and general corporate purposes.
    On 30 November 2018, the Company issued US$ denominated senior fixed rate notes (the "2018 November Notes") in the principal amount of US$104,000,000. The 2018 November Notes are secured by guarantees and pledges provided by certain subsidiaries of the Group. The 2018 November Notes will mature on 30 November 2020, unless earlier redeemed in accordance with the terms thereof. The 2018 November Notes bear interest at a rate of 10.5% per annum payable semi-annually in arrears on 30 May and 30 November of each year, commencing on 30 May 2019. The Company has utilised the net proceeds of the issuance of the 2018 November Notes for repaying existing offshore indebtedness.
    On 5 September 2019, the Company announced to offer to exchange the 2017 Notes for the new notes issued by the Company upon the terms and subject to the conditions set forth in the exchange offer and consent solicitation memorandum (the "Exchange Offer"). The Exchange Offer was completed on 25 September 2019, with an aggregate principal amount of US$162,475,000 of new exchange notes (the "2019 New Exchange Notes") issued by the Company. The 2019 New Exchange Notes is secured by guarantees provided by certain subsidiaries of the Group. The 2019 New Exchange Notes will mature on 25 September 2021, unless earlier redeemed in accordance with the terms thereof. The 2019 New Exchange Notes bear interest at a rate of 8.75% per annum payable semi-annually in arrears on 25 March and 25 September of each year, commencing on 25 March 2020.
  2. On 24 June 2019, the Company's subsidiary - Shanghai Yupei Group Co., Ltd. ("Shanghai Yupei") issued ABN in the principal amount of RMB650,000,000, among which RMB200,000,000 were repurchased by Shanghai Yupei. The borrowers of the ABN are 2 project subsidiaries of the Group with their investment properties amounting to RMB1,494,000,000 (31 December 2019: RMB1,463,000,000), trade receivables amounting to RMB1,472,000 (31 December 2019: RMB182,000) (Note 10), as well as the rental income generated from the lease of the investment properties during the terms of ABN (31 December 2019: secured by the rental income) pledged as collaterals for the ABN. Shanghai Yupei and the Company also provided guarantees for the ABN. The ABN will mature on 24 June 2037, unless earlier redeemed in accordance with the terms thereof. The ABN bear interest from and including 24 June 2019 at a rate of 7.3% per annum, and both principal and interest are payable quarterly in arrears on 24 September, 24 December, 24 March and 24 June of each year, commencing on 24 September 2019.
    The fair values of current and non-current borrowings equal their carrying amounts, as the impact of discounting is not significant. The fair values are based on cash flows discounted using a rate based on the borrowing rate of borrowings with similar credit risk within level 3 of the fair value hierarchy.

62 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

16 Borrowings (continued)

The Group has the following undrawn borrowing facilities:

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Floating rate:

  - expiring beyond 1 year

648,820

376,500

Fixed rate:

  - expiring beyond 1 year

9,500

-

These undrawn borrowing facilities are secured by the Group's investment properties as disclosed above.

These facilities have been arranged to help finance the construction of investment properties.

17 Convertible bonds

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

At 1 January

996,259

-

Issuance

-

975,034

Payment of interest

(35,450)

-

Fair value change

185,458

-

At 30 June

1,146,267

975,034

On 26 June 2019 (the "Issue Date"), the Company issued the 2019 Convertible Bonds in the principal amount of HK$1,109,000,000. The 2019 Convertible Bonds are secured by guarantees and pledges provided by certain subsidiaries of the Group. The 2019 Convertible Bonds will mature on 26 June 2024 (the "Maturity Date"), unless earlier redeemed, converted or purchased and cancelled in accordance with the terms thereof. The 2019 Convertible Bonds bear interest at a rate of 6.95% per annum payable semi-annually in arrears on 26 June and 26 December of each year, commencing on 26 December 2019. Berkeley Asset Holding Ltd ("Berkeley Asset"), a substantial shareholder of the Company and wholly- owned by RRJ Capital Master Fund II, L.P., subscribed HK$589,000,000 of principal amount of the 2019 Convertible Bonds on the Issue Date (Note 27(d)).

Interim Report 2020

63

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

17 Convertible bonds (continued)

The Group has designated the 2019 Convertible Bonds as financial liabilities at fair value through profit or loss. The 2019 Convertible Bonds are initially and subsequently measured at fair value, with changes in fair value recognized in the condensed consolidated statement of comprehensive income in the period in which they arise.

The valuations for the fair values of the 2019 Convertible Bonds at Issue date were carried out by an independent external valuer.

The valuer adopted the Black-Scholes model framework and Multi-Assets Monte Carlo Simulation to determine the fair values of the 2019 Convertible Bonds. The key inputs used in the valuation methods are listed as below:

Conversion price

HK$3.19

Stock price

HK$3.32

Stock price volatility

36.15%

VWAP

HK$3.32

VWAP volatility

33.26%

Coupon rate

6.95%

Effective interest rate

35.44%

Expected dividend yield

0.00%

Risk free rate

0.75%

The fair values of the 2019 Convertible Bonds at 30 June 2020 is HK$1,254,890,183 (equivalent to RMB1,146,266,889).

Were the Effective interest rate used in valuation model to be 5% higher/lower based on management estimates, the carrying value of the 2019 Convertible Bonds at 30 June 2020 would be approximately RMB6,458,650 lower or RMB6,706,259 higher. Were the volatility and VWAP volatility used in valuation model to be 5% higher/lower based on management estimates, the carrying value of the 2019 Convertible Bonds at 30 June 2020 would be approximately RMB7,119,280 higher or RMB7,267,693 lower.

64 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

18 Deferred income tax liabilities

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

1,759,911

Balance at 31 December

1,998,186

Deferred income tax assets recognized under IFRS 16

-

(8,811)

Balance at 1 January

1,998,186

1,751,100

Charged to the condensed consolidated statement of comprehensive

  income (Note 23)

86,551

97,562

Disposal of subsidiaries (Note 21)

(136,928)

(12,663)

Balance at 30 June

1,947,809

1,835,999

19 Trade and other payables

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Interest payable

76,315

78,820

Payables for construction costs (a)

44,292

166,896

Rental deposits and other deposits payable to third parties

35,864

26,194

Advances from a related party (Note 27(f))

31,232

-

Rental deposits payable to related parties (Note 27(f))

25,197

29,057

Prepaid rents from third parties

25,186

24,945

Prepaid rents from related parties (Note 27(f))

22,708

25,633

Other taxes payable

22,435

24,343

Accrued operating expenses

19,201

20,542

Payables for commission fees and other expenses related to

  issuance of senior notes

9,577

9,699

Payables for land use rights commission fee

3,573

11,342

Employee benefit payables

2,923

11,396

318,503

428,867

Interim Report 2020

65

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

19 Trade and other payables (continued)

  1. At 30 June 2020 and 31 December 2019, the ageing analysis of payables for construction costs based on the dates that the Group had the payment obligation for the construction costs, was as follows:

As at

30 June 2020 31 December 2019

Unaudited

Audited

RMB'000

RMB'000

Up to 1 year

34,874

142,108

1 year to 2 years

8,127

23,474

Over 2 years

1,291

1,314

44,292

166,896

20 Expenses by nature

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Property tax, land tax and other tax charges

54,266

50,016

Depreciation and amortization expenses (Note 7)

27,528

24,594

Employee benefit expenses - including directors' emoluments

23,348

23,179

Maintenance and repairing costs

20,367

16,283

Leasing commission

4,581

5,142

Utilities and office expenses

3,770

4,318

Professional fees

3,100

5,976

Travelling expenses

1,640

2,294

Auditors' remuneration

- Audit services

1,500

1,500

- Non-audit services

1,000

1,000

Leasing fees of short-term leases

843

922

Entertainment expenses

506

1,283

Bank charges

450

412

Covid-19-related rent concessions (Note 3)

(2,785)

-

Other expenses

2,555

2,374

142,669

139,293

66 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

21 Other gains - net

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Fair value gains on financial assets at FVPL (Note 11)

6,465

243

Gains/(losses) from disposal of subsidiaries (a)

72,448

(2,778)

Net gains from disposal of property, plant and equipment

354

-

Donations

(110)

-

Others

(228)

(103)

72,707

3,584

a) Disposal of subsidiaries

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Consideration received or receivable:

Total disposal consideration

601,072

340,201

Fair values of remaining shares in associates

66,785

148,243

Less: carrying amount of net assets disposed

(595,409)

(491,222)

Gains/(losses) on disposal before income tax

72,448

(2,778)

Capital gain tax

(35,335)

(10,999)

Gains/(losses) on disposal after income tax

37,113

(13,777)

Pursuant to the cooperation framework agreement that the Company and LaSalle Investment Management Asia Pte. Ltd. ("LaSalle") entered into in August 2018, the Company, through its subsidiary (as the "Seller"), entered into sale and purchase agreements (the "SPAs") with Lao V CN Holding III Pte. Ltd, an affiliated entity of LaSalle (as the "Purchaser") on 9 November 2018 and 29 May 2019, respectively. Pursuant to the SPAs, the Seller has agreed to sell, and the Purchaser has agreed to purchase about 70% of total issued shares in Management 10 and Management 15 at the consideration of RMB122,251,000 and RMB217,950,000 in cash, respectively. The completion date of the disposals of Management 10 and Management 15 were 5 June 2019 and 14 June 2019, respectively.

Interim Report 2020

67

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

21 Other gains - net (continued)

  1. Disposal of subsidiaries (continued)

On 26 March 2020, the Company and China Yupei (as the "Transferors") and Lao V (as the "Transferee") entered into the share purchase agreement, pursuant to which the Transferors have agreed to sell, and the "Transferee" has agreed to purchase 90% shares in Management 12 and Management Tianjin at the consideration of RMB318,707,000 and RMB282,364,000 in cash, respectively. The Transferee has further agreed to render to Huizhou Yuanwang, the wholly- owned subsidiary of Management 12, which owns the land use right and the existing industrial buildings located in Huizhou, PRC and Tianjin Yupei Logistics, the wholly-owned subsidiary of Management Tianjin, which owns the land use right and the existing industrial buildings located in Tianjin, PRC. The completion date of this disposal was on 27 May 2020 and 2 June 2020 respectively. As of 30 June 2020, RMB196,074,000 and RMB158,396,000 of this disposal transaction were paid according to the agreement, respectively.

The carrying amounts of assets and liabilities of subsidiaries disposed of as at the dates of disposals were:

As at the dates of disposals in

20202019

UnauditedUnaudited

RMB'000RMB'000

Total assets

1,193,925

926,809

Total liabilities

(598,516)

(435,587)

Net assets

595,409

491,222

Cash flows related to the disposal of subsidiaries were:

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Consideration received or receivable

Total disposal consideration

601,071

340,201

Less: unpaid consideration

(262,080)

(35,162)

Total consideration received

338,991

305,039

Less: cash and cash equivalents of the disposed

  subsidiaries as at disposal dates

(8,078)

(13,700)

Net proceeds from disposal of subsidiaries

330,913

291,339

68 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

22 Finance expenses - net

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Finance expenses

Interest on bank borrowings

(127,876)

(113,788)

Interest on borrowings from other financial institutions

(4,546)

(35,274)

Interest on senior notes

(153,186)

(143,450)

Interest on ABN

(16,826)

(564)

Interest on lease liabilities (Note 27(b))

(8,917)

(9,790)

(311,351)

(302,866)

Less: capitalization of interest

75,139

70,560

Net interest expenses

(236,212)

(232,306)

Transaction cost of convertible bonds

-

(11,535)

Exchange losses

(44,178)

(18,205)

Less: capitalization of exchange losses

659

-

Net exchange losses

(43,519)

(18,205)

(279,731)

(262,046)

Finance income

Interest income on bank deposits

12,029

10,739

Net finance expenses

(267,702)

(251,307)

Interim Report 2020

69

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

23 Income tax expense

PRC income tax has been provided at the rate of 25% on the estimated assessable profit for the period.

Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Current income tax

52,871

27,433

Deferred income tax (Note 18)

86,551

97,562

139,422

124,995

(i) Cayman Islands profits tax

The Company has not been subject to any taxation in the Cayman Islands.

  1. Hong Kong profits tax

No Hong Kong profits tax has been provided as the Group has no taxable profit earned or derived in Hong Kong. The applicable Hong Kong profits tax rate is 16.5% for the period.

(iii) PRC corporate income tax ("CIT")

CIT is provided on the assessable income of entities at the rate of 25% within the Group incorporated in the PRC.

(iv) PRC withholding income tax

According to the new CIT Law, a 10% withholding income tax will be levied on the dividend paid to the immediate holding companies established outside the PRC. A lower withholding income tax rate may be applied if there is a tax treaty arrangement between the PRC and the jurisdiction of the foreign immediate holding companies.

The Group did not recognize deferred tax liability on accumulated undistributed profit of its PRC subsidiaries as at 30 June 2020 and 31 December 2019, because the subsidiaries do not intend to distribute dividend in foreseeable future.

70 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

24 (Loss)/earnings per share

  1. Basic

Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity owners of the Company by the weighted average number of ordinary shares in issue during the period.

Six months ended 30 June

20202019

UnauditedUnaudited

(Loss)/Profit attributable to owners of the Company (RMB'000)

(25,575)

191,827

Weighted average number of ordinary shares in issue

3,234,486,336

3,233,255,616

Basic (loss)/earnings per share (RMB per share)

(0.0079)

0.0593

  1. Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

Six months ended

30 June

2019

Unaudited

Profit attributable to owners of the Company (RMB'000)

191,827

Add: fair value changes of the convertible note (Note 17)

-

191,827

Weighted average number of ordinary shares in issue

3,233,255,616

Adjustment for shares granted under share option scheme

3,537,335

Adjustment for shares granted under the convertible bonds

7,725,531

Weighted average number of ordinary shares for diluted earnings per share

3,244,518,482

Diluted earnings per share (RMB per share)

0.0591

During the period ended 30 June 2020, the Group's convertible bonds were anti-dilutive and, accordingly, were excluded from the computation of diluted earnings per share.

Interim Report 2020

71

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

25 Dividends

The Company did not declare or distribute any dividend to the Company's shareholders for the six months ended 30 June 2020 and 2019.

26 Contingencies

The Group did not have significant contingent liabilities as at 30 June 2020 and 31 December 2019.

27 Related party transactions

Mr. Li Shifa ("Mr. Li") and Ms. Ma Xiaocui ("Ms. Ma") are the substantial shareholders of the Group and their subsidiaries are regarded as the related parties.

Jingdong Logistics Group Corporation ("JD Subscriber") subscribed for 321,068,999 newly issued shares of the Company on 11 May 2018. After the completion of the subscription, JD Subscriber holds 9.9% of the total issued shares of the Company, and also by representation in the Company's Board, JD Subscriber is regarded as a related party since 11 May 2018. As JD Subscriber is ultimately controlled by JD.com, Inc., JD.com, Inc. and all its subsidiaries (together "JD Subsidiaries") are regarded as the related parties since 11 May 2018.

Names and relationships with related parties are as follows:

Company name

Shanghai Yupei Industrial (Group) Co., Ltd.   ("Shanghai Yupei Industrial")

Shanghai Yupei Express Logistics Co., Ltd.   ("Yupei Express Logistics")

Yupei Supply Chain Management Co., Ltd.   ("Yupei Supply Chain")

Yupei Logistics Property Development 15 Co., Ltd   ("Development 15")

Yupei Logistics Property Development 10 Co., Ltd

  • ("Development 10") Shanghai Hongyu Management 10 Management 15 Kunshan Yuzai
    JD Subsidiaries Berkeley Asset Huizhou Yuanwang Tianjin Yupei Logistics Management 12

Relationships

Controlled by Mr. Li and Ms. Ma

Controlled by Mr. Li and Ms. Ma

Controlled by Mr. Li and Ms. Ma

Subsidiary of the associate of the Group

Subsidiary of the associate of the Group

Associate of the Company Associate of the Group Associate of the Group

Subsidiary of the associate of the Group Ultimately controlled by JD.com, Inc. Substantial shareholder of the Group Subsidiary of the associate of the Group Subsidiary of the associate of the Group Associate of the Group

72 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

27 Related party transactions (continued)

In the opinion of the Company's directors, the related party transactions were conducted in the ordinary course of business and based on terms mutually agreed by the underlying parties. The significant transactions carried out between the Group and its related parties during the six months ended 30 June 2020 and 2019, and balances arising from related party transactions as at 30 June 2020 and 31 December 2019 are summarised below.

  1. Services provided to related parties

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Rental income and revenue from providing property

management services to

- Yupei Supply Chain

19,498

24,038

- Yupei Express Logistics

3,550

3,355

- Shanghai Yupei Industrial

3,165

3,054

26,213

30,447

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Rental income and revenue from providing property management

services to

- JD Subsidiaries

119,359

106,499

Interim Report 2020

73

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

27 Related party transactions (continued)

  1. Lease transactions with a related party

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Acquisition of right-of-use assets from

  - Shanghai Hongyu

-

307,681

Interest expense on lease liabilities (Note 22)

  - Shanghai Hongyu

8,917

9,790

Lease fee payment to

  - Shanghai Hongyu

5,571

9,749

  1. Advances to and from related parties

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Advances to

- Shanghai Hongyu

-

14,030

Receipt of advances to

- Shanghai Hongyu

32,392

-

- Huizhou Yuanwang

46,151

-

78,543

-

Advances from

- Shanghai Hongyu

31,232

-

74 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

27 Related party transactions (continued)

  1. Convertible bonds subscribed by a related party

Six months ended 30 June

20202019

UnauditedUnaudited

HK$'000HK$'000

Principal amount of convertible bonds subscribed by

  - Berkeley Asset (Note 17)

-

589,000

  1. Key management personnel compensation

Key management includes directors (executive and non-executive) and senior management. The compensation paid or payable to key management for employee services is summarised below:

Six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Salaries and allowance

4,879

4,957

Other social security cost, housing benefits and other

  employee benefits

149

345

Employee share option expenses

-

985

5,028

6,287

Interim Report 2020

75

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

27 Related party transactions (continued)

  1. Period-endbalances arising from transactions with related parties

As at 30 June As at 31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Prepayment to

- JD Subsidiaries

169

181

Trade receivables from (Note 10(a))

- Yupei Supply Chain

21,992

419

- Yupei Express Logistics

5,967

-

- Shanghai Yupei Industrial

3,497

33

- JD Subsidiaries

564

1,438

32,020

1,890

Rental deposits and other receivables from (Note 10(a))

- Shanghai Hongyu

- Advances

-

32,392

- Rental deposits

2,000

2,000

- Tianjin Yupei Logistics

88,368

-

- Kunshan Yuzai

10,364

-

- Huizhou Yuanwang

2,303

-

- Management 15

32

32

- Management 12

20

-

- Management 10

12

12

- Development 15

9

9

- Development 10

4

4

103,112

34,449

Long-term rental deposits payable to

- JD Subsidiaries

26,100

16,728

- Yupei Express Logistics

1,180

-

- Yupei Supply Chain

848

-

28,128

16,728

76 China Logistics Property Holdings Co., Ltd

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

27 Related party transactions (continued)

  1. Period-endbalances arising from transactions with related parties (continued)

As at 30 June As at 31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Prepaid rents from (Note 19)

- JD Subsidiaries

22,708

25,577

- Yupei Supply Chain

-

56

22,708

25,633

Rental deposits payable to (Note 19)

- JD Subsidiaries

23,797

27,395

- Yupei Express Logistics

1,400

1,400

- Yupei Supply Chain

-

262

25,197

29,057

Advances from

- Shanghai Hongyu

31,232

-

Leasing liabilities

- Shanghai Hongyu

- Current

31,981

14,815

- Non-current

277,654

294,259

309,635

309,074

The receivables from and payables to related parties as at 30 June 2020 and 31 December 2019 arise mainly from ordinary course of businesses. The receivables are unsecured in nature and bear no interest. There are no provisions made against receivables from related parties.

Interim Report 2020

77

Notes to the Condensed Consolidated Interim Financial Information For the six months ended 30 June 2020

(All amounts in RMB unless otherwise stated)

28 Events occurring after the balance sheet date

  1. Proposed issue of 6.95% convertible bonds

On 29 June 2020, the Company and its subsidiary guarantors entered into a subscription agreement with BCC Leap Holdco, L.P. (the "Purchaser") in relation to the issue of 6.95% convertible bonds due 2025 (the "2020 Convertible Bonds"). Pursuant to the subscription agreement, subject to fulfilment of certain conditions, the Company agreed to issue, the Purchaser agreed to subscribe the 2020 Convertible Bonds, in the principal amount of US$100,000,000. The 2020 Convertible Bonds will be secured by guarantees and pledges provided by certain subsidiaries of the Group. The 2020 Convertible Bonds will mature 5 years after the issue date unless earlier redeemed, converted or purchased and cancelled in accordance with the terms thereof, and will bear interest at 6.95% per annum payable semi-annually. The net proceeds of the 2020 Convertible Bonds will be used for the repayment in full of the outstanding principal amount and accrued interests of the 2018 November Notes, and for general corporate purposes.

The ordinary resolution in relation to the proposed issue of 2020 Convertible Bonds was duly passed at the extraordinary general meeting of the Company held on 14 August 2020.

  1. Issue of commercial mortgage backed securities

On 7 August 2020, the Company's subsidiary - Shanghai Yupei issued commercial mortgage backed securities (the "CMBS") in the principal amount of RMB530,000,000, among which RMB30,000,000 were repurchased by Shanghai Yupei. The borrowers of the CMBS are 2 project subsidiaries of the Group with their investment properties, trade receivables, rental income generated from the lease of the investment properties during the terms of CMBS, as well as guarantees provided by Shanghai Yupei and the Company pledged as collaterals for the CMBS. The CMBS will mature on 4 May 2038 unless earlier redeemed in accordance with the terms thereof. The CMBS bear interest at a rate of 4.15% per annum, and both principal and interest are payable quarterly in arrears on 4 August, 4 November, 4 February and 4 May of each year, commencing on 4 September 2020.

Save as disclosed above, there are no other material subsequent events undertaken by the Company or by the Group after 30 June 2020.

78 China Logistics Property Holdings Co., Ltd

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CLPH - China Logistics Property Holdings Co. Ltd. published this content on 22 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 September 2020 08:39:07 UTC