SOHO China : Interim Report 2020

Stock Code: 410

2020

INTERIM REPORT

SOHO CHINA LIMITED

SOHO CHINA

The board (the "Board") of directors (the "Directors") of SOHO China Limited (the "Company" or "SOHO China" or "we") is pleased to announce the unaudited condensed consolidated interim results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2020 (the "Period" or "1H2020"), together with the comparative figures for the six months ended 30 June 2019.

CONTENTS

2	Business Review and Market Outlook	9	Management Discussion & Analysis
13	Other Information	19	Corporate Information	21	Unaudited Interim Financial Report

BUSINESS REVIEW AND MARKET OUTLOOK

MARKET REVIEW AND OUTLOOK

The sudden outbreak of COVID-19 in early 2020 had an unprecedented and massive global impact on all industries and sectors with many industries brought to a standstill. Many businesses have faced increased cash flow pressure and have made the difficult decision to reduce office space as a way to cut back corporate spending. Such challenging macro and micro economic circumstances have led the office leasing market to face a severe test: rental demand has weakened, vacancy rates have been on the rise, and rental rates have faced downward pressure.

As at 30 June 2020, according to Cushman & Wakefield market reports, Grade A office vacancy rates reached 16.2% in Beijing and 20.9% in Shanghai, while average rent in Beijing and Shanghai declined year over year and quarter over quarter. However, with the pandemic contained and economic activity returning to normal in the People's Republic of China (the "PRC" or "China"), net absorption improved in the second quarter of this year as compared with the first quarter, and cumulative rental demand from the end of 2019 and the first quarter of 2020 began to show positive results in the latter half of the second quarter. During the Period, the average rent of SOHO China's mature properties remained stable; although the average occupancy declined with the market during the pandemic, it has recently begun to pick up.

Despite COVID-19's negative impact on the office leasing market, office property continues to be the most sought-after type of commercial real estate asset investment. In a market environment of rising uncertainty and numerous challenges, office property has demonstrated its unparalleled advantage as its asset value remained stable throughout the pandemic period. In Mainland China, Beijing and Shanghai have been the most active markets with the highest number of highest value of deals. In the first half of 2020, the total value of office property transactions in Beijing and Shanghai accounted for over 80% of all of China's en-bloc office property transaction. SOHO China's investment portfolio of office properties at prime locations in Beijing and Shanghai are risk resistant and outstanding in terms of maintaining asset value.

As Beijing and Shanghai's largest Grade A office real estate developer and property management service provider faced with the "Big Test" of the pandemic, SOHO China managed to excel at pandemic prevention for the office by building on its mature office property management system and delivered a set of effective preventative measures for office building management, including building access management, daily disinfection, air conditioning system operation, and waste disposal management. There has not been a single confirmed or suspected case of COVID-19 in all 4.3 million sq.m. of commercial properties managed by SOHO China in Beijing and Shanghai. The Company has shared these preventative measures as best practices with industry peers from across China and around the world, and looks forward to post COVID-19 recovery in all industries around the world.

2	INTERIM REPORT 2020 SOHO CHINA LIMITED

BUSINESS REVIEW AND MARKET OUTLOOK

Imagining the future, the pandemic has already profoundly impacted the concept of a healthy work environment. During the pandemic, companies have experimented with rotating office usage, working from home, video conferencing, and other methods to continue working life. Some companies have adapted nimbly, but the majority of companies have struggled as industry needs, working habits, and corporate culture that have all been challenged. We believe that in the long-term, online tools can alleviate the temporary inconveniences to business communications brought about by pandemic, but effective people-to-people communications will continue to demand offline, face-to-face interaction. Face-to-face communication has unique advantages of provoking real-time feedback, and encouraging maximum inspiration and creativity. In the future, the way people work and collaborate in the office will not fundamentally change. What will change is the demand that people place on the office environment. Office space will need to be safer, more private, more open, healthier, and smarter. Therefore, safety management and green health will become important factors that determine competitiveness in the office market.

The more challenging the situation, the more we should see hope. The pandemic will eventually pass, and although it has brought us many difficulties, it has also brought us the opportunity to unite and forge ahead together. Looking forward, with our portfolio of high quality prime location properties, and our commitment to continuously improve operational management, SOHO China will most certainly continue to win the trust and favor of tenants.

SOHO CHINA LIMITED INTERIM REPORT 2020

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BUSINESS REVIEW AND MARKET OUTLOOK

RENTAL PORTFOLIO

The details of rental income and occupancy rates of major investment properties of the Group were as follows:

			Occupancy	Occupancy
			Rate2	Rate2
		Rental	as at	as at
	Leasable	Income	30 June	31 December
Projects	GFA1	1H2020	2020	2019
	(sq.m.)	(RMB' 000)
Beijing
Qianmen Avenue Project	34,907	36,114	87%	95%
Wangjing SOHO	149,172	148,870	73%	86%
Guanghualu SOHO II	94,279	106,283	77%	87%
Galaxy & Chaoyangmen SOHO	45,553	44,104	76%	94%
Leeza SOHO3	135,896	9,367	10%	9%
Shanghai
SOHO Fuxing Plaza	88,234	111,402	82%	95%
Bund SOHO	74,438	70,098	68%	78%
SOHO Tianshan Plaza	97,751	96,046	88%	97%
Gubei SOHO	112,176	89,044	77%	67%

Notes: 1. The leasable GFA (gross floor area) attributable to the Group as at 30 June 2020.

1. Occupancy rate for office and retail areas.
2. Leeza SOHO was completed in December 2019.

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BUSINESS REVIEW AND MARKET OUTLOOK

MAJOR PROJECTS IN BEIJING

WANGJING SOHO

Wangjing SOHO is a large-scale office and retail project in the Wangjing area of Beijing, consisting of a total GFA of approximately 510,000 sq.m.. With a height of nearly 200 meters, Wangjing SOHO is now a landmark in central Beijing. The project comprises three towers (Towers 1, 2 and 3), among which Towers 1 and 2 were mostly sold in 2014.

The Group is holding Wangjing SOHO Tower 3 and some units of Towers 1 and 2. Tower 3 was completed in September 2014, with a total GFA of approximately 157,318 sq.m.. The Group is entitled to a leasable GFA of approximately 133,766 sq.m., including approximately 123,568 sq.m. of office area and approximately 10,198 sq.m. of retail area.

Wangjing area has become the emerging hub for internet companies in the northeast of Beijing. Wangjing area is also home to the headquarters of many prestigious multinational companies in the PRC.

GUANGHUALU SOHO II

Guanghualu SOHO II is located at the heart of the central business district in Beijing, close to subway lines 1 and 10. The total GFA of the project is approximately 117,179 sq.m. and the total leasable GFA attributable to the Group is approximately 94,279 sq.m., including approximately 63,308 sq.m. of office area and approximately 30,971 sq.m. of retail area. The project was completed in November 2014.

SOHO CHINA LIMITED INTERIM REPORT 2020

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BUSINESS REVIEW AND MARKET OUTLOOK

QIANMEN AVENUE PROJECT

Qianmen Avenue project is located in the Qianmen area, immediate south of Tiananmen Square, within one of the largest "Hutong" (traditional Beijing courtyards) conservation areas in Beijing. The Group has the right to retail area of approximately 54,691 sq.m., of which approximately 34,907 sq.m. is currently available for lease. The Group has been working towards its goal of developing Qianmen Avenue into a premier tourist destination. Leveraging on its massive visitor traffic, the Group aims to continue to attract and retain high-quality tenants that fit the positioning of the project.

LEEZA SOHO

Leeza SOHO is located in the center of the Lize Financial Business District in Beijing. The site is to the south of Lize Road and less than one kilometer away from the West Second Ring Road, and is adjacent to the planned subway lines 11, 14 and 16 as well as the New Airport line, and the Lize Business District Financial Street connection line. Located between Beijing's West Second and Third Ring Roads, the Lize Financial Business District is expected to be developed into Beijing's next financial district, acting as an extension to Beijing's current Financial Street which we believe is one of the most expensive office markets in the world. The Lize Financial Business District is planned to provide quality offices, apartments, exhibition centers, commercial zones and leisure facilities aiming to accommodate the increasing demand arising from the continued expansion of financial companies around the current Financial Street area.

Leeza SOHO has a total GFA of approximately 150,324 sq.m., and a total leasable GFA of approximately 135,896 sq.m.. The project was completed in December 2019. The Group holds Leeza SOHO as investment property.

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BUSINESS REVIEW AND MARKET OUTLOOK

MAJOR PROJECTS IN SHANGHAI

SOHO FUXING PLAZA

SOHO Fuxing Plaza is located at Huai Hai Road Central, the most vibrant and cosmopolitan commercial street in Shanghai with direct access to subway lines 10 and 13. It is right next to Shanghai Xintiandi, the most bustling and diverse commercial area of Shanghai. SOHO Fuxing Plaza has a total GFA of approximately 124,068 sq.m. and a leasable GFA of approximately 88,234 sq.m., of which approximately 46,344 sq.m. is for office use and approximately 41,890 sq.m. is for retail use. The project was completed in September 2014.

BUND SOHO

Bund SOHO is located on the Bund in Shanghai. Bund SOHO is very close to Shanghai's famous City God Temple and next to the Bund's multi-dimensional transportation hub and yacht wharf.

The Group is entitled to a leasable GFA of approximately 74,438 sq.m., including approximately 51,977 sq.m. of office area and approximately 22,461 sq.m. of retail area. The project was completed in August 2015.

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BUSINESS REVIEW AND MARKET OUTLOOK

SOHO TIANSHAN PLAZA

SOHO Tianshan Plaza is located at a prime location in the Hongqiao Foreign Trade Center in Changning District in Shanghai. The Hongqiao Foreign Trade Center area is Shanghai's first central business district for foreign enterprises and a gathering place for Changning's office buildings, business and high-end residential apartments. In close proximity to the Tianshan Road Commercial Street, SOHO Tianshan Plaza has direct access to Loushanguan Station on subway line 2.

SOHO Tianshan Plaza has a total GFA of approximately 155,827 sq.m.. The office and retail parts of SOHO Tianshan Plaza were completed in December 2016, with a total leasable GFA of approximately 97,751 sq.m., including approximately 74,497 sq.m. of office area and approximately 23,254 sq.m. of retail area. Hyatt Place Shanghai Tianshan Plaza, which is located at SOHO Tianshan Plaza, was completed in November 2017 and has started operation since the end of February 2018.

GUBEI SOHO

The land for Gubei SOHO is located in the core area of the Hongqiao Foreign Trade Center in Shanghai's Changning District, only 1 kilometer away from SOHO Tianshan Plaza.

The land is bordered by Yili Road to the east, Hongbaoshi Road to the south, Ma'nao Road to the west and Hongqiao Road to the north. The project is accessible underground from Yili Station on subway line 10 and with close proximity to Gubei Fortuna Plaza and other Grade A office buildings.

The project has a total GFA of approximately 146,692 sq.m. and a total leasable GFA of approximately 112,176 sq.m.. The project was completed in January 2019. The Group holds Gubei SOHO as investment property.

8	INTERIM REPORT 2020 SOHO CHINA LIMITED

MANAGEMENT DISCUSSION & ANALYSIS

FINANCIAL REVIEW

Revenue

The Group achieved revenue of approximately RMB1,453 million in the Period, representing an increase of approximately 63% as compared with approximately RMB889 million in the same period of 2019, mainly due to sales of car parking spaces recognized in the Period.

The Group achieved rental income of approximately RMB782 million in the Period, representing a decrease of approximately 12% as compared with approximately RMB888 million in the same period of 2019.

SOHO CHINA LIMITED INTERIM REPORT 2020

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MANAGEMENT DISCUSSION & ANALYSIS

Profitability

Gross profit for the Period was approximately RMB799 million, representing an increase of approximately RMB88 million or approximately 12% as compared with approximately RMB711 million in the same period of 2019.

During the Period, net profit was approximately RMB205 million, as compared with approximately RMB567 million (including valuation gains on investment properties) in the same period of 2019. Excluding valuation gains on investment properties (net of tax), net profit was approximately RMB148 million in the same period of 2019, and net profit during the Period represented an increase of approximately 39% from the same period of 2019.

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MANAGEMENT DISCUSSION & ANALYSIS

Cost Control

Selling expenses for the Period were approximately RMB24 million, as compared with approximately RMB18 million in the same period of 2019. Administrative expenses for the Period were approximately RMB92 million, as compared with approximately RMB116 million in the same period of 2019.

Finance Income and Expenses

Finance income for the Period was approximately RMB38 million, representing a decrease of approximately RMB4 million as compared with approximately RMB42 million in the same period of 2019.

Finance expenses for the Period were approximately RMB470 million, representing an increase of approximately RMB137 million as compared with approximately RMB333 million in the same period of 2019, mainly because interest expenses were not capitalized as there were no projects under development during the Period.

Valuation Gains on Investment Properties

During the Period, valuation gains on investment properties were nil, mainly due to the absence of projects under development. Valuation gains on investment properties were approximately RMB553 million in the same period of 2019, mainly attributable to the construction progress of Gubei SOHO and Leeza SOHO.

Income Tax Expense

Income tax expenses for the Period was approximately RMB133 million, representing a decrease of approximately RMB165 million as compared with approximately RMB298 million in the same period of 2019, mainly due to an absence of deferred tax accrued for valuation gains during the Period.

Income tax of the Group is composed of PRC corporate income tax, land appreciation tax ("LAT") and deferred tax. PRC corporate tax for the Period was approximately RMB100 million, compared with approximately RMB49 million in the same period of 2019. LAT for the Period was approximately RMB6 million, compared with approximately RMB2 million in the same period of 2019. Deferred tax for the Period was approximately RMB27 million, compared with approximately RMB246 million in the same period of 2019.

SOHO CHINA LIMITED INTERIM REPORT 2020

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MANAGEMENT DISCUSSION & ANALYSIS

Bank Borrowings, Other Borrowings and Collaterals

As at 30 June 2020, total borrowings of the Group were approximately RMB18,860 million, of which approximately RMB840 million were due within one year, approximately RMB1,187 million were due after one year but within two years, approximately RMB4,018 million were due after two years but within five years, and approximately RMB12,815 million were due after five years. As at 30 June 2020, borrowings of the Group of approximately RMB18,092 million were secured by the Group's investment properties and/or shares of a subsidiary established in the PRC.

As at 30 June 2020, net gearing ratio was approximately 42% (31 December 2019: approximately 43%), calculated based on net debt (total borrowings - cash and cash equivalents - bank deposits and structured bank deposits) over equity attributable to owners of the Company.

Risks of Foreign Exchange Fluctuation and Interest Rate

As at 30 June 2020, offshore borrowings were approximately RMB768 million, accounting for approximately 4.1% of total borrowings of the Group. The Company's average funding cost remained relatively low at approximately 4.8% as at 30 June 2020. During the Period, the Group's operating cash flow and liquidity had not been subject to significant influence from fluctuations in exchange rate.

Contingent Liabilities

The Group had entered into agreements with certain banks to provide guarantees in respect of mortgage loans offered to buyers of property units. As at 30 June 2020, the total amount of the mortgage loans guaranteed by the Group relating to such agreements was approximately RMB94 million (31 December 2019: approximately RMB112 million).

Capital Commitment

As at 30 June 2020, the Group's total capital commitment was approximately RMB92 million (31 December 2019: approximately RMB106 million).

Employees and Remuneration Policy

As at 30 June 2020, the Group had 1,737 employees, including 1,530 employees for the property management company.

The remuneration package of the Group's employees mainly includes basic salary and bonuses. Bonuses are determined on a monthly basis based on performance reviews.

12	INTERIM REPORT 2020 SOHO CHINA LIMITED

OTHER INFORMATION

PRINCIPAL ACTIVITIES

The principal activities of the Group are real estate development, property leasing and property management. There were no significant changes in the nature of the Group's principal activities during the Period.

DIVIDEND

The Board resolved not to declare an interim dividend for the Period (2019 interim dividend: Nil).

SHARE CAPITAL

As at 30 June 2020, the Company had 5,199,524,031 shares (the "Shares") in issue (31 December 2019: 5,199,524,031 Shares).

INTERESTS AND SHORT POSITIONS OF THE DIRECTORS AND CHIEF EXECUTIVES OF THE COMPANY IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As at 30 June 2020, the interests and short positions of the Directors and the chief executives of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Cap. 571, the Laws of Hong Kong) (the "SFO")), which were required pursuant to section 352 of the SFO to be recorded in the register referred to therein, or pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as contained in the Rules (the "Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), to be notified to the Company and the Stock Exchange, were as follows:

(i) Interests in the ordinary shares of the Company

					Approximate
	Personal	Family/trust	Corporate	Number of	percentage of
Name	interests	interests	interests	Shares	shareholding
Pan Shiyi	-	3,324,100,000 (L)	-	3,324,100,000 (L)	63.9309%
		(Note 2)
Pan Zhang Xin Marita	-	-	3,324,100,000 (L)	3,324,100,000 (L)	63.9309%
			(Note 3)

Notes:

1. (L) represents the Directors' long position in Shares.
2. Mr. Pan had deemed interests in 3,324,100,000 Shares held by his spouse, Mrs. Pan Zhang Xin Marita as mentioned in note (3) below. According to the disclosure of interests form filed by Mr. Pan Shiyi on 1 January 2018, Mr. Pan is a beneficiary of The Little Brothers Settlement (the "Trust") that was founded by his spouse, Mrs. Pan Zhang Xin Marita.

SOHO CHINA LIMITED INTERIM REPORT 2020

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OTHER INFORMATION

1. 1. Each of Boyce Limited and Capevale Limited ("Capevale BVI"), both of which were incorporated in the British Virgin Islands, was interested in 1,662,050,000 Shares. Boyce Limited and Capevale BVI are the wholly-owned subsidiaries of Capevale Limited ("Capevale Cayman"), which was incorporated in the Cayman Islands. Cititrust Private Trust (Cayman) Limited (in its capacity as trustee) is the legal owner of 100% of the issued share capital of Capevale Cayman. Cititrust Private Trust (Cayman) Limited held these shares under the Trust, for the benefit of the beneficiaries of the Trust, including Mrs. Pan Zhang Xin Marita.
2. Interests in the ordinary shares of the Company's associated corporations

	Name of		Share	Approximate
	associated	Nature of	capital	percentage of
Name	corporation	interest	(USD)	shareholding
Pan Shiyi	Beijing Redstone	Interests of	1,275,000	4.25%
	Jianwai Real Estate	controlled	(Note)
	Development	corporation
	Co. Ltd.
	Beijing SOHO	Beneficial owner	4,950,000	5.00%
	Real Estate Co. Ltd.
	Beijing Redstone	Beneficial owner	500,000	5.00%
	Newtown Real
	Estate Co. Ltd.
	Beijing Shanshi	Beneficial owner	1,935,000	5.00%
	Real Estate
	Company Limited

Note: These interests were held by Beijing Redstone Industry Co. Ltd. which was 85% controlled by Mr. Pan.

Save as disclosed above, to the best knowledge of the Directors, as at 30 June 2020, none of the Directors or chief executives of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required pursuant to section 352 of the SFO to be recorded in the register referred to therein, or pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

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OTHER INFORMATION

INTERESTS AND SHORT POSITIONS OF THE SUBSTANTIAL SHAREHOLDERS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY

As at 30 June 2020, the register of substantial shareholders maintained by the Company pursuant to section 336 of the SFO showed that, other than the interests disclosed above in respect of certain Directors or the chief executives of the Company, the following shareholders of the Company had notified the Company of their relevant interests in the issued share capital of the Company:

			Approximate
		Number of	percentage of
Name	Nature of interest	Shares	shareholding
Cititrust Private Trust	Trustee	3,324,100,000 (L)	63.9309% (L)
(Cayman) Limited (Note 2)
Capevale Cayman (Note 2)	Interests of controlled	3,324,100,000 (L)	63.9309% (L)
	corporation
Boyce Limited (Note 3)	Interests of controlled	1,662,050,000 (L)	31.9654% (L)
	corporation
Capevale BVI (Note 4)	Interests of controlled	1,662,050,000 (L)	31.9654% (L)
	corporation

Notes:

1. (L) represents the shareholders' long position in Shares.
2. Cititrust Private Trust (Cayman) Limited (in its capacity as trustee of the Trust) is the legal owner of 100% of the issued share capital of Capevale Cayman, a company incorporated in the Cayman Islands. Capevale Cayman wholly owns Boyce Limited and Capevale BVI, each of which was interested in 1,662,050,000 Shares. Accordingly, Cititrust Private Trust (Cayman) Limited is deemed to be interested in the 3,324,100,000 Shares held by Boyce Limited and Capevale BVI via its interest in Capevale Cayman under the Trust for the benefit of the beneficiaries of the Trust, including Mrs. Pan Zhang Xin Marita.
3. Boyce Limited, incorporated in the British Virgin Islands, is a wholly-owned subsidiary of Capevale Cayman.
4. Capevale BVI, incorporated in the British Virgin Islands, is a wholly-owned subsidiary of Capevale Cayman.

Save as disclosed above, to the best knowledge of the Directors, as at 30 June 2020, none of any person who had interests or short positions in the Shares and underlying Shares which were required, pursuant to section 336 of the SFO, to be recorded in the register referred to therein.

SOHO CHINA LIMITED INTERIM REPORT 2020

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OTHER INFORMATION

DIRECTORS' RIGHTS TO ACQUIRE SHARES OF THE COMPANY

At no time during the Period were any rights to acquire benefits by means of acquisition of Shares in or debentures of the Company granted to any Directors or their respective spouse or minor children under 18, nor were any such rights exercised by them, nor was the Company or any of its subsidiaries a party to any arrangement which would enable any Directors to acquire such rights in any other body corporate.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

Following the expiry of the vesting period of the employees' share awards granted under the employees' share award scheme of the Company (the "Employees' Share Award Scheme") in November 2019 and the termination of the Employees' Share Award Scheme in December 2019, the trustee of the Employees' Share Award Scheme sold on the Stock Exchange all remaining 2,366,063 unvested shares under the Employees' Share Award Scheme at a total consideration of approximately HKD7,094,853 during the Period.

Other than the aforesaid, neither the Company nor any of its subsidiaries had purchased, sold, or redeemed any of the Company's listed securities during the Period.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

In the opinion of the Directors, the Company had been in compliance with the code provisions of the Corporate Governance Code contained in Appendix 14 to the Listing Rules during the Period.

COMPLIANCE WITH THE MODEL CODE

The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as the code of conduct for securities transactions carried out by the Directors. The Company has made specific enquiry to all Directors and all Directors have confirmed that they had complied with the required standard set out in the Model Code throughout the Period.

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OTHER INFORMATION

BOARD OF DIRECTORS

The Board is responsible for the leadership and control of the Company and is collectively responsible for promoting the success of the Company by directing and supervising the Company's affairs. Under the leadership of the Chairman, the Board is also responsible for approving and overseeing the overall strategies and policies of the Company, approving the annual budget and business plans, assessing the Company's performance and supervising the work of the senior management.

The running of the day-to-day businesses of the Company is delegated by the Board to the management who is working under the leadership and supervision of the Board committees except that authority is reserved for the Board to approve interim and annual financial statements, dividend policy, annual budget, business plan and significant operational matters.

Regular Board meetings are held at least four times a year (at quarterly intervals) and any ad hoc meeting will be held when necessary. At least fourteen days' notice will be given to all the Directors prior to any regular Board meeting and any relevant materials to be presented to a Board meeting will be provided to Directors at least three days before such Board meeting. The Directors are appointed by shareholders of the Company through ordinary resolutions or appointed by the Board to fill any existing vacancies on the Board or for new additions to the Board. At each annual general meeting, one-third (or, if the number is not a multiple of three, the number nearest to but not less than one-third) of the Directors for the time being shall retire from office by rotation but are eligible for re-election and re-appointment.

The Chairman of the Board, Mr. Pan Shiyi, is the husband of Mrs. Pan Zhang Xin Marita, an executive Director and the Chief Executive Officer. Save as disclosed above, the Board members have no financial, business, family or other material/relevant relationships with each other.

The Board is established in accordance with the provisions of Rules 3.10 and 3.10A of the Listing Rules. Among the three independent non-executive Directors appointed, at least one or more are equipped with financial expertise. The number of independent non-executive Directors also represents at least one-third of the Board.

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OTHER INFORMATION

The Board's composition demonstrates a balance of core competence with regard to the business of the Company, so as to provide effective leadership and the required expertise to the Company.

Liability insurance for Directors and senior management officers of the Company was maintained by the Company with coverage for any legal liabilities which may arise in the course of performing their duties.

As at 30 June 2020, the Board comprised two executive Directors, namely, Mr. Pan Shiyi (Chairman) and Mrs. Pan Zhang Xin Marita (Chief Executive Officer), and three independent non-executive Directors, namely, Mr. Sun Qiang Chang, Mr. Xiong Ming Hua and Mr. Huang Jingsheng. Details of the composition of the Audit Committee, the Remuneration Committee and the Nomination Committee as at 30 June 2020 are set out in the section headed "Corporation Information" of this report.

REVIEW OF INTERIM RESULTS

The condensed consolidated interim results for the six months ended 30 June 2020 are unaudited, but had been reviewed by the Company's auditor, PricewaterhouseCoopers.

The audit committee of the Company had reviewed the unaudited condensed consolidated interim results for the six months ended 30 June 2020 of the Company and considered that the Company had complied with all applicable accounting standards and requirements and had made adequate disclosure.

The unaudited condensed consolidated interim results for the six months ended 30 June 2020 was approved by the Board on 21 August 2020.

On behalf of the Board

Pan Shiyi

Chairman

Hong Kong

21 August 2020

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CORPORATE INFORMATION

Executive Directors	Pan Shiyi (Chairman)
	Pan Zhang Xin Marita (Chief Executive Officer)
Independent non-executive Directors	Sun Qiang Chang
	Xiong Ming Hua
	Huang Jingsheng
Company Secretary	Wong Sau Ping
Members of the Audit Committee	Sun Qiang Chang (Chairman)
	Xiong Ming Hua
	Huang Jingsheng
Members of the Remuneration	Huang Jingsheng (Chairman)
Committee	Sun Qiang Chang
	Xiong Ming Hua
Members of the Nomination Committee	Pan Shiyi (Chairman)
	Xiong Ming Hua
	Huang Jingsheng
Authorised Representatives	Pan Zhang Xin Marita
	Wong Sau Ping
Registered Office	Cricket Square
	Hutchins Drive
	P.O. Box 2681
	Grand Cayman
	KY1-1111
	Cayman Islands
Corporate Headquarters	11F, Section A
	Chaowai SOHO
	No. 6B Chaowai Street
	Chaoyang District
	Beijing 100020
	China

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CORPORATE INFORMATION

Principal Place of Business	31/F
in Hong Kong	Tower Two
	Times Square
	1 Matheson Street
	Causeway Bay
	Hong Kong
Principal Share Registrar and	Royal Bank of Canada Trust Company (Cayman) Limited
Transfer Office in the Cayman Islands	4th Floor, Royal Bank House
	24 Shedden Road, George Town
	Grand Cayman KY1-1110
	Cayman Islands
Share Registrar and	Computershare Hong Kong Investor Services Limited
Transfer Office in Hong Kong	Shops 1712-1716
	17th Floor
	Hopewell Centre
	183 Queen's Road East
	Wanchai
	Hong Kong
Hong Kong Legal Advisor	Stephenson Harwood
	18th Floor, United Centre
	95 Queensway
	Hong Kong
Auditor	PricewaterhouseCoopers
	22/F, Prince's Building
	10 Chater Road
	Central, Hong Kong
Principal Bankers	Agricultural Bank of China Limited
	Bank of China Limited
	Bank of Communications Co., Ltd.
	China Everbright Bank Company Limited
	China Merchants Bank Co., Ltd.
	Industrial and Commercial Bank of China Limited
	Standard Chartered Bank (Hong Kong) Limited
	The Hongkong and Shanghai Banking Corporation Limited
Website address	www.sohochina.com
Stock Code	410

20	INTERIM REPORT 2020 SOHO CHINA LIMITED

REPORT ON REVIEW OF INTERIM

FINANCIAL INFORMATION

TO THE BOARD OF DIRECTORS OF SOHO CHINA LIMITED (incorporated in the Cayman Islands with limited liability)

INTRODUCTION

We have reviewed the interim financial information set out on pages 22 to 44, which comprises the interim condensed consolidated statement of financial position of SOHO China Limited (the "Company") and its subsidiaries (together, the "Group") as at 30 June 2020 and the interim condensed consolidated income statement, 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 Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with Hong Kong 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 Hong Kong Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants. 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 Hong Kong 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 Hong Kong Accounting Standard 34 "Interim Financial Reporting".

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 21 August 2020

SOHO CHINA LIMITED INTERIM REPORT 2020

21

INTERIMCONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2020 (Expressed in Renminbi)

		Unaudited
		Six months ended 30 June
	Notes			2019
	2020
		RMB' 000		RMB' 000
Revenue	6	1,452,719		888,687
Cost of sales		(653,568)		(177,230)
Gross profit		799,151		711,457
Valuation gains on investment properties	11	-		552,827
Other income and gains	7	212,121		176,939
Selling expenses		(24,315)		(18,078)
Administrative expenses		(92,217)		(115,747)
Other operating expenses		(125,645)		(150,698)
Operating profit		769,095		1,156,700
Finance income	8	38,183		41,780
Finance expenses	8	(469,604)		(333,296)
Profit before income tax		337,674		865,184
Income tax expenses	9	(133,164)		(297,685)
Profit for the period		204,510		567,499
Profit attributable to:
- Owners of the Company		203,872		564,675
- Non-controlling interests		638		2,824
Profit for the period		204,510		567,499
Earnings per share (RMB per share)	10
Basic earnings per share		0.04		0.11
Diluted earnings per share		0.04		0.11

The notes on pages 29 to 44 form an integral part of these interim condensed consolidated financial information.

22	INTERIM REPORT 2020 SOHO CHINA LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2020 (Expressed in Renminbi)

		Unaudited
		Six months ended 30 June
				2019
		2020
		RMB' 000		RMB' 000
Profit for the period	204,510		567,499
Other comprehensive income:
Items that may be reclassified to profit or loss
Currency translation differences	(6,443)		3,163
Items that will not be reclassified to profit or loss
Changes in the fair value of equity investments at
fair value through other comprehensive income	1,726		2,230
Other comprehensive income for the period, net of tax	(4,717)		5,393
Total comprehensive income for the period	199,793		572,892
Total comprehensive income for the period attributable to:
- Owners of the Company	199,155		570,068
- Non-controlling interests	638		2,824
		199,793		572,892

The notes on pages 29 to 44 form an integral part of these interim condensed consolidated financial information.

SOHO CHINA LIMITED INTERIM REPORT 2020

23

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

(Expressed in Renminbi)

		Unaudited	Audited
		30 June	31 December
	Notes	2020	2019
		RMB' 000	RMB' 000
ASSETS
Non-current assets
Investment properties	11	61,595,806	61,833,246
Property and equipment		1,228,279	1,306,505
Intangible assets		1,566	2,491
Deferred income tax assets		767,555	637,035
Trade and other receivables	12	368,084	365,900
Prepayments		178,926	169,133
Financial assets at fair value through
other comprehensive income		48,169	32,319
Total non-current assets		64,188,385	64,346,629
Current assets
Completed properties held for sale		1,787,872	2,224,075
Prepayments		222,141	203,998
Trade and other receivables	12	495,297	454,803
Bank deposits and structured bank deposits		2,825,469	1,223,048
Cash and cash equivalents		746,422	1,206,837
Assets classified as held for sale		1,822	69,626
Total current assets		6,079,023	5,382,387
Total assets		70,267,408	69,729,016
EQUITY AND LIABILITIES
Equity attributable to owners of the Company	13
Share capital		106,112	106,112
Reserves		36,170,037	35,964,422
		36,276,149	36,070,534
Non-controlling interests		1,046,243	1,045,605
Total equity		37,322,392	37,116,139

The notes on pages 29 to 44 form an integral part of these interim condensed consolidated financial information.

24	INTERIM REPORT 2020 SOHO CHINA LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		Unaudited	Audited
		30 June	31 December
	Notes	2020	2019
		RMB' 000	RMB' 000
LIABILITIES
Non-current liabilities
Bank and other borrowings	14	18,020,173	16,366,214
Lease liabilities		-	227,167
Contract retention payables		383,791	467,154
Deferred income tax liabilities		8,862,105	8,704,737
Total non-current liabilities		27,266,069	25,765,272
Current liabilities
Bank and other borrowings	14	840,044	1,632,440
Lease liabilities		-	30,980
Receipts in advance from customers		56,714	72,082
Contract liabilities		96,128	241,112
Trade and other payables	15	2,911,367	3,138,383
Current income tax liabilities		1,774,694	1,732,608
Total current liabilities		5,678,947	6,847,605
Total liabilities		32,945,016	32,612,877
Total equity and liabilities		70,267,408	69,729,016

The notes on pages 29 to 44 form an integral part of these interim condensed consolidated financial information.

SOHO CHINA LIMITED INTERIM REPORT 2020

25

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020 (Expressed in Renminbi)

						Unaudited
				Attributable to owners of the Company
									Non-
			Share	Share	Exchange	Other	Retained		controlling	Total
	Notes	capital	premium	reserve	reserves	earnings	Total	interests	equity
			RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Balance at 1 January 2020			106,112	1,596	(1,638,116)	977,106	36,623,836	36,070,534	1,045,605	37,116,139
Profit for the period			-	-	-	-	203,872	203,872	638	204,510
Other comprehensive income			-	-	(6,443)	1,726	-	(4,717)	-	(4,717)
Total comprehensive income for
the period			-	-	(6,443)	1,726	203,872	199,155	638	199,793
Shares held for share award scheme	13(b)	-	-	-	6,460	-	6,460	-	6,460
Balance at 30 June 2020			106,112	1,596	(1,644,559)	985,292	36,827,708	36,276,149	1,046,243	37,322,392
Balance at 1 January 2019			106,112	17,407	(1,685,899)	859,568	35,449,622	34,746,810	1,046,627	35,793,437
Profit for the period			-	-	-	-	564,675	564,675	2,824	567,499
Other comprehensive income			-	-	3,163	2,230	-	5,393	-	5,393
Total comprehensive income for
the period			-	-	3,163	2,230	564,675	570,068	2,824	572,892
Shares held for share award scheme	13(b)	-	-	-	(223)	-	(223)	-	(223)
Dividends approved in respect of
the previous year	13(a)	-	-	-	-	(155,772)	(155,772)	-	(155,772)
Employees' share award scheme			-	-	-	4,975	-	4,975	-	4,975
Transfer to general reserve fund			-	-	-	154	(154)	-	-	-
Balance at 30 June 2019			106,112	17,407	(1,682,736)	866,704	35,858,371	35,165,858	1,049,451	36,215,309

The notes on pages 29 to 44 form an integral part of these interim condensed consolidated financial information.

26	INTERIM REPORT 2020 SOHO CHINA LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020 (Expressed in Renminbi)

		Unaudited
		Six months ended 30 June
				2019
		2020
		RMB' 000		RMB' 000
Cash flows from operating activities
Net cash generated from operations	924,046		714,958
Interest received	53,276		35,050
Interest paid	(476,791)		(565,313)
Income tax paid	(73,247)		(112,527)
Net cash inflow from operating activities	427,284		72,168
Cash flows from investing activities
Payment for development costs and purchase of investment
properties	(231,413)		(328,687)
Purchases of property and equipment	(6,250)		(65,642)
Decrease in bank deposits	7,673		39,932
(Increase)/decrease in structured bank deposits	(1,782,650)		1,819,050
Gain received on financial assets at fair value through
profit or loss	7,295		-
Proceeds from disposal of investment properties	81,600		-
Payment for purchase of intangible assets	-		(260)
Purchase of financial assets at fair value through
other comprehensive income	(14,124)		-
Proceeds from disposal of property and equipment	-		76
Net cash (outflow)/inflow from investing activities	(1,937,869)		1,464,469
Cash flows from financing activities
Proceeds from bank and other borrowings	2,304,588		502,913
Repayment of bank and other borrowings	(1,459,622)		(437,929)
Decrease in restricted bank deposits	190,367		2,010,000
Proceeds from sale/payment for purchase of shares held
for share award scheme	6,460		(223)
Dividends paid to owners of the Company	-		(155,772)
Principal elements of lease payments	-		(31,917)
Repayment of corporate bonds	-		(3,000,000)
Net cash inflow/(outflow) from financing activities	1,041,793		(1,112,928)

The notes on pages 29 to 44 form an integral part of these interim condensed consolidated financial information.

SOHO CHINA LIMITED INTERIM REPORT 2020

27

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Unaudited
	Six months ended 30 June
			2019
	2020
	RMB' 000		RMB' 000
Net (decrease)/increase in cash and cash equivalents	(468,792)		423,709
Cash and cash equivalents at the beginning of the period	1,206,837		721,924
Effects of foreign exchange rate changes on cash and
cash equivalents	8,377		8,009
Cash and cash equivalents at end of the period	746,422		1,153,642

The notes on pages 29 to 44 form an integral part of these interim condensed consolidated financial information.

28	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

• General information

SOHO China Limited (the "Company") and its subsidiaries (hereinafter collectively referred to as the "Group") are principally engaged in real estate development, property leasing and property management. The Group has operations mainly in the People's Republic of China (the "PRC" or "China").

The Company is a limited liability company incorporated in Cayman Islands. The address of its registered office is at the offices of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.

The Company has its primary listing on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").

The interim condensed consolidated financial information is presented in Renminbi ("RMB"), unless otherwise stated. The interim condensed consolidated financial information was approved for issue by the Board on 21 August 2020. The interim condensed consolidated financial information has been reviewed, not audited.

The outbreak of the 2019 Novel Coronavirus ("COVID-19") had brought unprecedented challenges and added uncertainties to the economy. COVID-19 may affect the financial performance and position of the property leasing industry including rental revenue, allowance for expected credit losses on trade and other receivables, fair value of investment properties and so on. Since the outbreak of COVID-19, the Group kept continuous attention on the situation of the COVID-19 and reacted actively to its impact on the financial position and operating results of the Group. As at the date that the interim condensed consolidated financial information is authoriz for issue, COVID-19 doesn't have any material adverse impact on the financial position and operating result of the Group.

• Basis of preparation

The interim condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 Interim Financial Reporting. The interim condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs"), and any public announcements made by the Company during the interim reporting period.

SOHO CHINA LIMITED INTERIM REPORT 2020

29

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

• Accounting policies

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new and amended standards as set out below.

New and amended standards adopted by the Group

Below new and amended standards and interpretations became effective for annual reporting periods commencing on or after 1 January 2020 and adopted by the Group for the first time in 2020 interim condensed consolidated financial information:

• Definition of Material - amendments to HKAS 1 and HKAS 8,
• Definition of a Business - amendments to HKFRS 3,
• Revised Conceptual Framework for Financial Reporting, and
• Interest Rate Benchmark Reform - amendments to HKFRS 9, HKAS 39 and HKFRS 7.

The amended standards listed above did not have any significant impact on the Group's accounting policies and did not require retrospective adjustments. The Group has not early adopted any other new or amended standards and interpretations that are not yet effective for the current accounting period.

• Estimates

The preparation of the interim condensed consolidated 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 expenses. Actual results may differ from these estimates.

In preparing this interim condensed consolidated financial information, the significant judgements and estimations made by management were the same as those that applied to the consolidated financial statements for the year ended 31 December 2019.

30	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

• Financial risk management and financial instruments

5(a) Financial risk factors

Exposure to market risk (including foreign exchange risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk arises in the normal course of the Group's business.

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

There have been no significant changes in the risk management department or in any risk management policies since 31 December 2019.

5(b) Fair value of financial assets and liabilities measured at amortized cost

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

• Trade and other receivables excluding prepayments
• Bank deposits
• Bank and other borrowings
• Trade and other payables excluding tax payables
• Contract retention payables
• Lease liabilities

SOHO CHINA LIMITED INTERIM REPORT 2020

31

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

• Financial risk management and financial instruments (continued)

5(c) Fair value estimation

The table below analyzes financial instruments carried at fair value, by valuation method. The different levels have been defined 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).

The following table presents the Group's financial assets and liabilities measured and recognized at fair value at 30 June 2020.

		30 June 2020
	Level 1	Level 2	Level 3	Total
	RMB' 000	RMB' 000	RMB' 000	RMB' 000
Assets
Financial assets at fair value
through profit or loss
- structured bank deposits	434,600	2,327,811	-	2,762,411
Financial assets at fair value
through other
comprehensive income
- equity investments in
a private fund	-	-	48,169	48,169
Total financial assets	434,600	2,327,811	48,169	2,810,580

32	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

• Financial risk management and financial instruments (continued)

5(c) Fair value estimation (continued)

The following table presents the Group's financial assets and liabilities measured and recognized at fair value at 31 December 2019.

		31 December 2019
	Level 1	Level 2	Level 3	Total
	RMB' 000	RMB' 000	RMB' 000	RMB' 000
Assets
Financial assets at fair value
through profit or loss
- structured bank deposits	241,950	720,000	-	961,950
Financial assets at fair value
through other
comprehensive income
- equity investments in
a private fund	-	-	32,319	32,319
Total financial assets	241,950	720,000	32,319	994,269

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 six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

Specific valuation techniques used to value financial instruments include:

• the use of quoted market prices or dealer quotes for similar instruments;
• discounted cash flow model and unobservable inputs mainly including assumptions of expected future cash flows and discount rate;
• equity allocation model and price/booking multiple method with observable and unobservable inputs, including risk-free rate, expected volatility, discount rate for lack of marketability and etc.;

There were no changes in valuation techniques during the period.

SOHO CHINA LIMITED INTERIM REPORT 2020

33

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

• Financial risk management and financial instruments (continued)
  5(d) Fair value measurements using significant unobservable inputs (Level 3)

Financial assets at fair value through other comprehensive income RMB' 000

Opening balance at 1 January 2020	32,319
Additions	14,124
Gains recognized in other comprehensive income	1,726
Closing balance at 30 June 2020	48,169

The components of the Level 3 instrument are investments in a private fund. As this instrument is not traded in an active market, major assumptions used in the valuation include historical financial results, assumptions about future growth rates, estimate of discount rate etc. The fair value of this instrument determined by the Group requires significant judgement, including the financial performance of the investee company, discount rate, and etc.

5(e) Group's valuation processes

The finance department of the Group includes a team that performs the valuations of financial assets required for financial reporting purposes, including level 3 fair values. This team reports directly to the chief financial officer ("CFO") and the audit committee (the "Audit Committee"). Discussions of valuation processes and results are held among the CFO, the Audit Committee and the valuation team at least once every six months.

34	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

• Revenue and segment reporting

6(a) Revenue

The principal activities of the Group are real estate development, property leasing and property management. Revenue represents revenue from rental income and sale of property units and is analyzed as follows:

		Unaudited
		Six months ended 30 June
				2019
		2020
		RMB' 000		RMB' 000
Rental income	781,568		887,529
Sale of property units	671,151		1,158
		1,452,719		888,687

6(b) Segment reporting

Management has determined the operating segments based on the information reviewed by the chief operating decision-maker ("CODM"). The CODM, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the executive directors of the Company.

The CODM reviews the operating results of the Group's real estate development, property leasing and property management business as an integrate part, and allocates resources on the same basis. As such, the Group has only one operating segment.

SOHO CHINA LIMITED INTERIM REPORT 2020

35

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

7	Other income and gains
		Unaudited
		Six months ended 30 June
				2019
		2020
		RMB' 000		RMB' 000
	Property management service income on lump sum basis	72,828		65,555
	Property management service income on
	commission basis	28,884		28,384
	Gains on early termination of lease agreement	9,658		-
	Gains on financial assets at fair value through
	profit or loss	17,811		-
	Gains on disposal of investment properties	15,970		-
	Hotel operations income	12,601		39,383
	Government grants	9,264		3,704
	Others	45,105		39,913
		212,121		176,939

8	Finance income and finance expenses
		Unaudited
		Six months ended 30 June
				2019
		2020
		RMB' 000		RMB' 000
	Finance income
	Interest income	38,183		41,780
		38,183		41,780
	Finance expenses
	Interest expenses on bank and other borrowings	475,849		461,630
	Interest expenses on corporate bonds	-		7,886
	Less: interest expenses capitalized into
	investment properties under development	-		(133,064)
		475,849		336,452
	Net foreign exchange gains	(6,533)		(3,655)
	Bank charges and others	288		499
		469,604		333,296

36	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

9	Income tax expenses
				Unaudited
				Six months ended 30 June
						2019
				2020
				RMB' 000		RMB' 000
		Provision for the period
		PRC corporate income tax	100,405		49,094
		PRC land appreciation tax ("LAT")	5,911		2,146
		Deferred tax	26,848		246,445
				133,164		297,685

Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands ("BVI"), the Company and the Company's subsidiaries incorporated in the Cayman Islands and the BVI are not subject to any corporate income tax.

In accordance with the Corporate Income Tax Law of the PRC, the corporate income tax rate applicable to the Company's subsidiaries in the PRC is 25% (six months ended 30 June 2019: 25%).

LAT is levied at the properties developed and sold in the PRC by the Group. LAT is charged on the appreciated amount at progressive rates ranged from 30% to 60%.

According to the Implementation Rules of the Corporate Income Tax Law of the PRC, the Company's subsidiaries in the PRC are levied a 10% withholding tax on dividends declared to their foreign investment holding companies arising from profit earned subsequent to 1 January 2008. In respect of dividends that are subject to the withholding tax, provision for withholding tax is recognized for the dividends that have been declared, and deferred tax liabilities are recognized for those to be declared in the foreseeable future.

SOHO CHINA LIMITED INTERIM REPORT 2020

37

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

10 Earnings per share

10(a) Basic earnings per share

The calculation of basic earnings per share is based on the profit attributable to owners of the Company for the six months ended 30 June 2020 of RMB203,872,000 (six months ended 30 June 2019: RMB564,675,000) and the weighted average number of 5,198,240,000 ordinary shares (six months ended 30 June 2019: 5,192,408,000) in issue during the period.

10(b) Diluted earnings per share

The calculation of diluted earnings per share is based on the profit attributable to owners of the Company for the six months ended 30 June 2020 of RMB203,872,000 (six months ended 30 June 2019: RMB564,675,000), and the weighted average number of 5,198,240,000 ordinary shares (six months ended 30 June 2019: 5,192,408,000) after adjusting for the effect of share award scheme.

11	Investment properties
		Unaudited
		Six months ended 30 June
				2019
		2020
		RMB' 000		RMB' 000
	Opening balance	61,833,246		58,338,000
	Additions	11,088		914,942
	Fair value gains	-		552,827
	Transferred from completed properties held for sale	-		408,231
	Right-of-use assets	(248,528)		841,934
	Closing balance	61,595,806		61,055,934

The Group's investment properties were valued at 30 June 2020 and 2019, by the independent professionally qualified valuer, Jones Lang LaSalle Corporate Appraisal and Advisory Limited, 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 reviews the valuations performed by the independent valuer for financial reporting purposes. This team reports directly to the CFO and the Audit Committee.

38	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

11 Investment properties (continued)

At the end of each financial reporting period the finance department:

• verifies all major inputs to the independent valuation report,
• analyzes property valuation movements and changes in fair values when compared to the prior period valuation report, and
• holds discussions with the independent valuer and reports to the CFO and the Audit
  Committee.

There have been no changes in the valuation techniques since the previous financial year end.

12	Trade and other receivables
					Audited
				Unaudited
				30 June	31 December
				2020	2019
			Note	RMB' 000	RMB' 000
		Non-current -
		Other receivables		368,084	365,900
		Current -
		Trade receivables		257,124	222,812
		Less: allowance for impairment of
		trade receivables		(32,028)	(32,028)
		Trade receivables - net	(a)	225,096	190,784
		Other receivables		297,978	291,902
		Less: allowance for impairment of
		other receivables		(27,777)	(27,883)
		Other receivables - net		270,201	264,019
		Total of current portion		495,297	454,803

SOHO CHINA LIMITED INTERIM REPORT 2020

39

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

12 Trade and other receivables (continued)

1. Ageing analysis
   The ageing analysis of trade receivables based on due date is as follows:

	Unaudited	Audited
	30 June	31 December
	2020	2019
	RMB' 000	RMB' 000
Current	168,921	150,107
Less than 1 month past due	27,698	19,589
1 to 6 months past due	26,333	18,649
6 months to 1 year past due	-	-
More than 1 year past due	2,144	2,439
Amounts past due	56,175	40,677
	225,096	190,784

13 Capital, reserves and dividends

13(a) Dividends

The Board resolved not to declare an interim dividend for the period (2019 interim dividend: Nil).

13(b) Share capital and shares held for share award scheme

1. Share capital

Unaudited

Six months ended 30 June

	2020		2019
	No. of shares	Share capital	No. of shares	Share capital
	Share'000	RMB'000	Share'000	RMB'000
Authorized:
Ordinary shares of
HKD0.02 each	7,500,000	-	7,500,000	-
Issued and fully paid:
At 1 January	5,199,524	106,112	5,199,524	106,112
At 30 June	5,199,524	106,112	5,199,524	106,112

40	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

13 Capital, reserves and dividends (continued)

13(b) Share capital and shares held for share award scheme (continued)

1. Shares held for share award scheme

Unaudited

Six months ended 30 June

	2020	2019
		Shares held for		Shares held for
		share award		share award
	No. of shares	scheme	No. of shares	scheme
	Share'000	RMB'000	Share'000	RMB'000
At 1 January	2,366	11,739	7,115	31,026
Shares (sold)/purchased
for employees' share
award scheme	(2,366)	(11,739)	97	223
At 30 June	-	-	7,212	31,249

14 Bank and other borrowings

	Unaudited	Audited
	30 June	31 December
	2020	2019
	RMB' 000	RMB' 000
Current	840,044	1,632,440
Non-current	18,020,173	16,366,214
	18,860,217	17,998,654

SOHO CHINA LIMITED INTERIM REPORT 2020

41

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

14	Bank and other borrowings (continued)
	Movements in borrowings are analyzed as follows:
			Unaudited
			Six months ended 30 June
					2019
			2020
			RMB' 000		RMB' 000
	At beginning of the period	17,998,654		17,694,384
	Proceeds of new borrowings	2,304,588		502,913
	Repayment of borrowings	(1,459,622)		(437,929)
	Effective interest adjustment	1,779		312
	Exchange rate effect	14,818		1,191
	At end of the period	18,860,217		17,760,871

As at 30 June 2020, borrowings amounting to RMB18,091,949,000 (31 December 2019: 17,246,983,000) were secured by the Group's investment properties and/or shares of a subsidiary established in the PRC.

15	Trade and other payables
				Audited
			Unaudited
			30 June	31 December
			2020	2019
		Notes	RMB' 000	RMB' 000
	Trade payables	(i)	1,193,028	1,397,866
	Amounts due to related parties	17(a)	812,732	812,732
	Rental deposits		281,687	273,575
	Others		556,465	563,862
	Financial liabilities measured at
	amortized costs		2,843,912	3,048,035
	Other taxes payable		67,455	90,348
			2,911,367	3,138,383

The carrying amounts of trade and other payables approximate their fair value.

1. These trade payables are expected to be settled within 1 year or on demand.

42	INTERIM REPORT 2020 SOHO CHINA LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

16 Commitments and contingent guarantees

16(a) Commitments

Commitments outstanding as at the end of the reporting periods but are not provided for are as follows:

	Unaudited	Audited
	30 June	31 December
	2020	2019
	RMB' 000	RMB' 000
Commitments of investments	91,825	105,949
	91,825	105,949

16(b) Guarantees

The Group has entered into agreements with certain banks with respect to mortgage loans provided to buyers of property units. The Group has given guarantees on mortgage loans provided to the buyers by these banks. For most mortgage loans, the guarantees will be released when the property title deeds are pledged to banks as security for the respective mortgages, which generally take place within one year after the property units are delivered to the buyers. The total amounts of mortgage loans outstanding which are guaranteed by the Company's subsidiaries as at 30 June 2020 was RMB93,775,000 (31 December 2019: RMB111,971,000).

SOHO CHINA LIMITED INTERIM REPORT 2020

43

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

17 Material related party transactions

17(a) Amounts due to related parties

Amounts due to related parties comprise:

		Unaudited	Audited
		30 June	31 December
		2020	2019
	Note	RMB' 000	RMB' 000
China Fortune Properties (Group)
Co., Ltd.	(i)	406,366	406,366
Shanghai Rural Commercial Bank	(i)	406,366	406,366
		812,732	812,732

1. The balances as at 30 June 2020 mainly represented the advances of RMB812,732,000 (31 December 2019: RMB812,732,000) from China Fortune Properties (Group) Co., Ltd. and Shanghai Rural Commercial Bank, the non-controlling equity holders of Shanghai Ding Ding Real Estate Development Co., Ltd., a subsidiary of the Company. The advances are interest-free, unsecured and have no fixed term of repayment.

17(b) Key management personnel remuneration

	Unaudited
	Six months ended 30 June
			2019
	2020
	RMB' 000		RMB' 000
Short-term employee benefits	9,383		7,856
Post-employment benefits	54		118
Share-based payments	-		4,975
	9,437		12,949

44	INTERIM REPORT 2020 SOHO CHINA LIMITED