Forte Announces 2004 Interim Results

Sales Target in 1H Accomplished
More Projects to be Launched in 2H to Meet Market Demand
An interim dividend of RMB 6 cents per share declared
(10 August 2004 Shanghai) Shanghai Forte Land Co., Ltd. ( Forte or the Group ; HKEx stock code: 2337), one of the largest property developers in Shanghai, announced today its interim results for the six months ended 30 June 2004. Due to a further increase in gross profit margin, gross profit during the period under review was up by 5.4%, amounting to RMB 361,953,000. Profit from operations increased by 1.7% to reach RMB 306,509,000. Since more projects are scheduled for sales in the second half of the year, turnover decreased by 19.9%, amounting to RMB 918,082,000. Due to an increase in minority interests, net profit attributable to shareholders dropped by 8.4% to RMB 220,150,000, basic earnings per share was RMB 0.107. The Board of Directors declared the payment of RMB 0.06 per share as interim dividend for the period ended 30 June, 2004.
Mr. Fan Wei, Forte s President, said, During the first half of 2004, the PRC government implemented a series of tightening policies, hoping to achieve long-term sustainable economic growth. Despite the challenging environment, the Group, thanks to our dedicated staff and management team, achieved impressive results with gross profit margin and net profit margin maintaining remarkable levels at 39.42% and 23.98% respectively. Moreover, we also managed to achieve satisfactory progress in project developments, property sales and obtaining land use rights certificate.
During the period under review, 14 projects were under development. Total gross floor area ( GFA ) amounted to approximately 867,000 sq.m. The construction work of two projects, namely Yi He Hua Cheng (Phase 2) and Forte Aroma Riverside Garden, with a total GFA of approximately 192,700 sq.m., has commenced. Three projects, namely Forte Sunny City (Phase 3), Domo City (Phase 2) and Forte Cui Wei New City (Phase 1A), with a total GFA of approximately 153,800 sq.m., were completed and available for occupation.
As for project sales, total GFA available for sales decreased in the first half of 2004 as compared to the corresponding period last year. This was in line with the Group s original development plan which offered more projects for sales in 2H of 2004; on the contrary, sales activities were more active in 1H of 2003. Nonetheless, satisfactory sales rate was achieved in 1H 2004, with total GFA sold amounting to approximately 200,691 sq.m. In Shanghai, the major projects, namely Chun Shen Forte City (Phase2) (also known as Spring in Berlin ), Forte Elegant Garden (Phase 1), Yi He Hua Cheng (Phase 1) and Graceful Oasis received good response from the market and sales target was completed. In respect of the development in other regions, sales of Forte Cui Wei New City (Phase 1B) in Wuhan and Forte Ronchamp Villa (Phase 1) in Nanjing proceeded smoothly.
In the first half of 2004, the Company obtained land use rights for four pieces of land, including Songjiang Lot No.11 , Songjiang Jiu Ting , Qu Yang Xin Guang and Qingpu Lot No. 18 (Phase 1), with a total planned GFA of approximately 483,094 sq.m. (in which approximately 428,554 sq.m. was attributable to the Group according to the equity interests). As at 30 June 2004, a total GFA of approximately 1,676,617sq.m attributable to the Group according to the equity interests were granted land use rights certificate.
Looking ahead, it is expected that under the current macro-economic tightening measures, land supply will be further tightened and bank credit to property developers will be clamped. However, market demand will remain robust. Enterprises with sufficient land bank and strong financial resources like Forte will be the beneficiary.
- Mr. Fan Wei, concluded, In the second half of this year, the Group will launch more projects for sale. With Forte s precise product positioning, loyal customers, excellent brand name and outstanding sales team, we are confident in achieving better results to further boost the Group s profit during this financial year. In the current industry environment, the Group will leverage on our existing land reserve and carefully proceed to the development of each project according to the plan. Moreover, the Group will adopt prudent approach to seek suitable acquisition opportunities and thereby achieving stable development and maximizing returns to our shareholders.