00845.HK announced that compared with the profit attributable to the owners of the company of RMB 81 million for the year ended December 31, 2020, the company expects to record a loss of about RMB 4 billion to RMB 4.3 billion for the year ended December 31, 2021.

The losses are mainly due to: (I) during the year, only two projects located in second-tier cities of the Group had a new round of properties completed and delivered. Although the confirmed sales revenue for this year increased by about 20% over 2020, the amount of sales revenue recognized during the year was still at a very low level. On the other hand, the total area of properties with recognized sales revenue this year increased by about 80% compared with 2020, but because a larger proportion of the area came from properties in second-tier cities with lower prices, the confirmed sales unit price decreased by more than 25% to about 9500 yuan per square meter. At the same time, the promotion inventory garage also lowered the confirmed sales unit price during the year.

(ii) the group recorded a negative gross profit margin of about 30% this year, compared with a positive gross margin of 40.9% in 2020. Excluding the impact on the gross profit margin caused by the impairment provision for properties, as a larger proportion of the properties with recognized income this year are of lower value and lower gross margin, the gross profit margin recorded by the Group for that year is about minus 1%, compared with 42.4% in 2020. (iii) due to changes in a number of circumstances during the year, the Group continued to make provision for impairment of properties of approximately RMB 970 million during the year, an increase of more than 20 times compared with RMB 42.3 million in 2020. The impairment provision continues to have a significant impact on the current year's performance.

(iv) compared with the fair value gain of investment property of RMB 1.902 billion in 2020, the Group expects to record a net loss on fair value income of investment property in that year, which is much less than the amount of last year; and (v) the total financial expenses decreased but remained at a high level during the year, and most of the interest expenses could not be capitalized into property development costs. Interest expenses that cannot be capitalized during the year and are directly accounted for as current expenses have increased by more than 30% over 2020 and continue to constitute a major factor in the current year's performance loss.