Financial Statements and Related Announcement::Half Yearly Results

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CSI PROPERTIES LIMITED

資 本 策 略 地 產 有 限 公 司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 497)

INTERIM RESULTS ANNOUNCEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

For the interim period ended 30 September 2021, the revenue of CSI Properties Limited (the "Company") and its subsidiaries (the "Group") was HK$99.7 million, compared with HK$246.6 million in the last interim period. Consolidated profit for the interim period ended

30 September 2021 was HK$172.0 million, representing a decrease of HK$145.9 million compared with HK$317.9 million in the last interim period.

Consolidated profit attributable to owners of the Company for the six months ended 30 September 2021 was HK$128.5 million, representing a decrease of HK$148.1 million compared with HK$276.6 million in the last interim period. Earnings per share attributable to shareholders for the interim period was HK1.36 cents compared with HK2.85 cents in the last interim period.

The Group has remained profitable in this challenging interim period despite the effects from the COVID-19 pandemic still hurting investment sentiment, particularly on the commercial properties front. We strive to maintain a solid financial position through steady asset disposals on both residential and commercial fronts to strengthen our liquidity. With a strong cash and cash equivalent position, we are confident our strong balance sheet will ensure the Group's stability and ability to capture opportunities in the future.

• For identification purpose only

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Commercial Properties

The Group is actively developing and upgrading a number of strategic commercial projects that will be our key revenue drivers in the upcoming years. The URA project at Gage Street/ Graham Street, Central is a joint venture commercial development project with Wing Tai Properties Limited. The project will deliver a Grade A office tower, super luxury hotel and retail shops with a combined gross floor area of approximately 432,000 square feet. It is currently undergoing the master planning process. Construction work is currently ongoing with the whole development expected to be completed by 2025. The Group and its partner, Wing Tai Properties Limited, have proven on multiple occasions the ability to curate unforgettable experiences and spaces. Therefore, we are confident that with its prime location and highly experienced team, the project will be a nexus in the area for offices, hospitality, retail, F&B and culture.

The newly named tower "FOCO" at No. 48 Cochrane Street, Central, is a commercial development project located at the heart of SOHO district, and is situated immediately across from "Tai Kwun". The SOHO district is world famous for its restaurants, bars, art galleries and comedy clubs and therefore is also highly frequented by tourists, expatriates and locals alike. The Group's plan is to make the project a Ginza-style F&B destination that offers a New York meatpacking district inspired design theme. The project is nearing construction completion and with a substantial portion of the floors already leased or preleased to a number of leading F&B outlets. The project has a gross floor area of approximately 32,000 square feet.

In Kowloon East, the Group, together with our joint venture partners, successfully rebranded our prime office tower located at No. 8 Lam Chak Street in Kowloon Bay as the "Harbourside HQ". The building had undergone substantial enhancement works to the main lobby, entrance hallway, lifts, washrooms and lift lobbies to unlock its full potential. Following the improvement works, the Group's target is actively recruiting high paying tenants from the banking, insurance, and technology, media and telecommunications sectors in order to create further value by improving rental yield.

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"Hong Kong Health Check Tower" is located at Nos. 241 and 243 Nathan Road in Jordan. The building is situated at the junction of Nathan Road and Jordan Road and directly opposite to Jordan MTR station. In addition, "Hong Kong Health Check Tower" is also a fifteen-minute walk from the high-speed railway station which provides fast and frequent access to Mainland China. The area is also well known to both the locals and mainland tourists for its high density of clinic and medical centres. Hong Kong Health Check Tower's proximity to both the MTR and highspeed railway network, the "golden mile" (Jordan Road) and the area's reputation for medical services create high consistent levels of organic foot traffic. The Group has strategically targeted to make the majority of Hong Kong Health Check Tower's tenant mix towards the medical services industry. With this new strategy, the building had undergone substantial improvement works to its façade, signage, main lobby, lifts, lift lobbies and washrooms which were completed in the first quarter of 2021. With this upgrade, we have secured a leading Hong Kong medical service provider, the Hong Kong Health Check and Medical Diagnostic Centre Limited, to be the anchor tenant to occupy most of the commercial floors. The newly refurbished building has also been renamed as the "Hong Kong Health Check Tower" to reflect this successful transformation to a dedicated medical service-oriented commercial tower. We expect the remaining floors to be rented out to other medical service operators soon to complete the repositioning work for this primely located building.

As for the Novotel Hong Kong Nathan Road Kowloon ("Novotel Hotel"), we have already begun its redevelopment plan since September 2021. Demolition of the existing hotel was commenced in later part of 2021. The current plan will be a joint commercial and residential tower at the site. Working with leading internationally renowned architectural firm, PDP London, the new tower is expected to complete its construction in 2025. The gross floor area of the new tower, amounting to over 250,000 square feet, will be evenly split between commercial and residential use. The upper residential tower will offer future residents a prime address in the heart of Kowloon peninsula, with superb school zone and extreme convenience to all areas of Hong Kong. We fully expect this iconic new tower at prime Jordan to be one of the jewels on the crown for the Group upon its completion. In September 2021, we formed a joint venture with a Canadian fund and another minority partner to undertake this project. This helps to secure a strong capital partner for the redevelopment in the future.

The Group's repositioning works to the "In-Point" shopping mall at No. 169 Wujiang Road in Shanghai have already been completed. The upgrades made to the primely located mall have created a parade of double-decker premium street-front stores to enhance the tenancy profile and rental yield. With the tenancy upgrade, the Group is achieving significant value creation with much improved rental of almost doubling previous level.

The commercial division has made great stride in driving the development and repositioning of our various commercial assets. We strongly believe that the great efforts and progress will help the Group in capitalising on these value creation works when the border with China reopens and Hong Kong economy can gradually return to normalisation.

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Couture Homes - Residential Property Development

The Group launched a number of landmark residential projects, all of which stand to generate good profitability in the forthcoming financial periods.

"Dukes Place" at No. 47 Perkins Road in Jardine's Lookout is our joint venture luxury residential apartment project. Nestled in the heart of this quiet ultra-highnet-worth neighborhood, "Dukes Place" offers a unique combination of super luxury simplexes, duplexes, garden villas and a penthouse. This mix of different units creates a wide range of options in both layouts and sizes which range from approximately 2,850 square feet to over 6,800 square feet. To fully highlight the potential this project radiates, the Group hired renowned architecture firm, PDP London, to work on the façade along with world-class interior designers from UK, France, Japan and Hong Kong. Each of these interior designers was tasked to design a distinct unit and each of them has been able to fully capture the Group's high standards in its own unique way. Up to date, the Group has entered into contracts for sale for 10 units out of a total of 16 units at superior pricing. This is a true achievement in these challenging time as the COVID-19 has virtually closed the borders of Hong Kong and limited buying interests from mainland buyers. We are confident in selling the remaining special units at top prices in the near future.

The "Infinity" at Nos. 8-12 Peak Road is a joint venture project, consisting of the refurbishment of ultra-high-end residential apartments. In addition, the Group wholly owned a detached house for redevelopment purpose at this prime Peak address. This project is blessed with full and virtually unobstructed 180-degree views of Victoria Harbour. With the final completion of the refurbishment work of the apartment units at end of 2020, it is amongst the most desired projects for connoisseurs looking for the best home that the prestigious Peak can offer. The interiors of these tailor-made units will be a combination of contemporary and classical. Local Hong Kong interior design icon Mr. Joseph Fung, who has won numerous international accolades, is responsible for two stunning units. We are confident that this immaculate ultra-luxury residential project will continue to solidify our renowned reputation for developing ultra-luxury residential projects.

Our residential project at No. 333 Fan Kam Road, the "Cadenza", in Sheung Shui comprises of 6 luxurious villas with each premium villa providing a gross floor area of more than 6,000 square feet. Each villa also benefits from an exquisite private garden and swimming pool, setting the benchmark for the true dream country houses. The project sale will be commencing soon at end of 2021 and will be unrivalled in this exclusive neighborhood which is situated under a three-minute drive from the acclaimed Hong Kong Golf Club at Fanling.

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Our Yau Tong MTR residential project in joint venture with Sino Land Company Limited is progressing well according to schedule. Currently, the master planning process is nearly completed and construction work has commenced. The Group is very excited to be working with Sino Land Company Limited on our first MTR residential project. We hope this will also serve as a good first step for the Group into the mass market residential sector.

The prime residential project at Nos. 3-6 Glenealy, Central, which we are working with Pacific Century Premium Developments Limited, is well under way with foundation work expected to begin soon after the demolition of the old structure.

"Knightsbridge" is located at Nos. 90 and 92 Jinbao Street, Beijing, and is the Group's first luxury residential joint venture project in the country's capital city. This project is very unique with its façade design of a classical European style which is not common to the locality. The renovation works including upgrading of the façade and common areas, and the fitting out of the interiors of the 2 floors of show units were completed. The Group strongly believes that the project's new design, coupled with its superb location that borders the Wangfujiang in Beijing, will capture a significant price appreciation in the future. Sales of the units were already commenced since beginning of 2021 with strong responses, and a sizeable amount of units have already been entered into sales agreements at premium pricing.

The Group joined with a consortium with New World Development Company Limited, Empire Development Hong Kong (BVI) Limited and Lai Sun Development Company Limited had successfully won the tender for the Wong Chuk Hang Station Package Five Property Development in January 2021. The prime property is located on top of the forthcoming Wong Chuk Hang MTR station mall podium and can be developed into a total gross floor area of around 636,000 square feet. The units to be built will have excellent unblocked views of the Ocean Park Hong Kong and Deep Water Bay, creating a prime haven for premium residential units at this convenient address with five-minute MTR access to prime Central. Construction work will be commenced soon for this project with target completion around 2025. The Group is confident that the project will command excellent responses and profitability in the future, in light of the recent very successful presale of the peer Wong Chuk Hang MTR station residential projects which achieved superior prices.

The Group's senior management is pleased with the performance and progress of our residential projects made to-date, especially with the sales progress of our high-end residential units which achieved good volume and superior pricings. We will strive hard to ensure a solid pipeline of residential projects in the future to continue the solid growth of the division.

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