Franshion Properties (China) Limited Announces 2009 Annual Results

Revenue increased by 62% to HK$6.321 billion
Property sales surged by 153%
Continuous recovery of China s economy turning into a powerful driving force for the revival of the high-end office leasing and hotel markets

(Hong Kong, 25 March 2010) Franshion Properties (China) Limited ( Franshion Properties or the Company , Stock Code: 00817) today announced its annual results for the year ended 31 December 2009.

During the year, the total revenue of Franshion Properties increased sharply by 62% to HK$6,321 million (2008: HK$3,914 million). This was mainly due to the increased sales and leasing of properties. In 2009, profit attributable to shareholders amounted to HK$1,175 million, representing an increase of 30% from the previous year. Basic earnings per share were HK13.7 cents. Excluding fair value gains on investment properties, net of deferred tax, profit attributable to shareholders amounted to HK$1,048 million, representing an increase of 27% from 2008.

The board of directors has proposed a final dividend of HK2.5 cents per share. (2008: HK2.0 cents per share).

During the year, the three major business segments of Franshion Properties property development, property leasing and hotel operations reported balanced development and accounted for 56%, 14% and 25% of the Group s total revenue respectively. In 2009, property sales surged by 153% to HK$3,535 million, mainly contributed by the sales of Shanghai Port International Cruise Terminal Project.

Revenue from the Company s property leasing and hotel operations segments amounted to HK$869 million and HK$1,577 million, respectively, an increase of 11% and 13% for respective segments over 2008. Total gross floor area of the three business segments reached 2.105 million square meters. As of 31 December 2009, cash and cash equivalents held by the Company amounted to HK$3,523 million.

Mr. Luo Dongjiang, Chairman of Franshion Properties, said, The year of 2009 was a crucial year to the development of Franshion Properties. In face of the ever-changing market environment and the fierce competition, the Company had overcome the operating difficulties and achieved remarkable results amid unfavorable market conditions, recording a substantial growth as compared to that of the previous year.

Under the complicated and changing market environment in 2009, the Company swiftly refined the operating models of each business segment in the following manner: in light of the surging real estate sales market, Franshion entered into the pre-sales and sales contracts for the No.3 block and No. 9 block of Shanghai Port International Cruise decisively with an area transacted of up to 42,000 square metres, laying a foundation for lifting the targets of annual performance.

Property Development
During the period, benefiting from the heated PRC real estate market in 2009, the Company reported significant growth in the property development business. It currently has seven projects in different development stage on hand. Franshion entered into contracts for presales of substantially all buildings of the newly launched Shanghai Port International Cruise Terminal Project and part of the sales was recongised during the year, accounting for the largest profit contribution to the Company for the year. Zhuhai Every Garden Project completed most of the sales of the last batch of units during the year. Shanghai International Shipping Service Center Project, which is currently under construction, has been listed as one of the key projects in Shanghai city and has become a key integral part of the urban growth strategies in Shanghai. The preparatory design for the existing reserve projects, namely Yunnan Lijiang Project and Shanghai Chongming Island Project, was also completed. Franshion also acquired the site on No.15 Guangqu Road in Beijing, ensuring the sustainable development of the Company s property development business.

Property Leasing
Leasing properties of Franshion Properties include Central and West Towers of Beijing Chemsunny World Trade Center, Sinochem Tower and Jin Mao Tower. They are located at prime location of first-tier cities and have provided a stable income source for the Company. During the year, the investment properties owned by the Company overcame the unfavorable impacts of the financial crisis and intensified competition from the office buildings in the region. Its occupation rate was maintained at a relatively high level and its revenue reached historical high level during the year through the enhancement the quality of existing customer services and the active expansion of sales channels, thus generating stable revenue to the Company. As of 31 December 2009, occupancy rates of Jin Mao Tower, Sinochem Tower and the Central and West Towers of Beijing Chemsunny World Trade Centre were 90.0%, 99.1% and 95.0%, respectively. The total gross floor area of investment properties of the Company amounted to 364,000 square meters.

Hotel Operations
The Company owns six high-end hotels in China, including the Ritz-Carlton, Sanya, Westin Beijing, Chaoyang, Grand Hyatt Shanghai, Hilton Sanya Resort & Spa, Wangfujing Grand Hotel and JW Marriott Shenzhen, with total number of guest rooms reaching 2,872. Last year, despite the negative impacts brought by various external factors on its hotel operations, the Group endeavored to explore the market potentials and maintained a leading position in the peer competition in terms of the operating results of the hotels. During the year, the operation of two high-end luxury hotels of the Company located in the tourist resort of Sanya were stable in general as they were slightly affected by the economic downturn at home and abroad. In particular, the promulgation of the opinion on accelerating the development of Hainan into an international tourist destination further drove the growth in tourism and consumption in Sanya, Hainan. Benefiting from the effective sales initiatives and lean cost control, the hotels continued to rank top in terms of operating results among the peers in the same region.

Reserved Projects
Currently, the Company has four reserved projects, including Site No. 15 of Guangqu Road, Beijing, the Shanghai Chongming Island Project, Jin Mao World Heritage Park Redevelopment Project and Jin Mao Yulong Snowy Mountain Resort Hotel Project. Site No. 15 of Guangqu Road has an area of approximately 155,918 square metres and an estimated total gross floor area of approximately 382,120 square metres. The entire project is expected to be completed in 2013.

Chairman Luo said, We believe that the Chinese government will continue to maintain the continual and stable implementation of its macro-economic policy in 2010. Although certain appropriate economic austerity measures may be adopted to cool down the overheating property market, such measures may help justify the structural consolidation of the Chinese property market at last, which will in turn support the stable and healthy development momentum of the property market. The continuous recovery of China s economy will turn into a powerful driving force for the revival of the office leasing and hotel markets in the first-tier cities in the mainland. Furthermore, the World Expo 2010 to be held in Shanghai will serve as an accelerator for the overall rebound of the office leasing and hotel operation industries, which will benefit us as Franshion Properties owns a number of high-end commercial properties and high-end hotels. Looking forward, we are confident in the development of China s property market and optimistic about the strategic development of the Company. Franshion Properties will continue to use its best endeavor to make progress and achieve more splendid results with a view to create wealth for the shareholders and employees and exploring a more glorious future for the Company.