(CREO.L) China Real Estate Opportunities PLC Buy/Sell

LONDON, March 8 (Reuters) - China Real Estate Opportunities , one of the biggest companies on London's AIM, may abandon its UK listing to be quoted in Singapore, in a quest to deepen its investor base and tap stronger capital flows in Asia.
The company -- owner of about 840 million pounds' ($1.28 billion) worth of Chinese office, retail and residential property -- is to consult investors on the move that it said may help narrow the gap between net asset value and share price.
"The company has made a non-binding submission to ... secure approval for admission to Singapore's internationally recognised main board so as to position the company closer to its asset base and potentially re-rate the shares in line with CREO's peer group listed in Asia," the company said.
If shareholders approve the move, the company could delist from AIM by June.
CREO is the latest in a series of companies to consider leaving AIM to improve liquidity and entice new shareholders, raising questions about the future of the incubator market.
Last week, Macau Property Opportunities Fund said it intended to apply for admission to London's main market to diversify its investor base.
CREO posted net asset value of 1137 pence at Dec. 31, a rise of 7 percent from June 30 and a 14 percent fall on Dec. 31, 2008. It reported 85 percent occupancy across its portfolio and an 11 percent rise in gross rental income to 29 million pounds. (Reporting by Sinead Cruise; Editing by Andrew Macdonald)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters) Keywords: CREO AIM/ (sinead.cruise@thomsonreuters.com; +44 (0)207 542 5154; Reuters Messaging: sinead.cruise.reuters.com@reuters.net)

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RNS Number : 2008I
  China Real Estate Opportunities PLC
  08 March 2010
   

CHINA REAL ESTATE OPPORTUNITIES PLC

PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED

31 DECEMBER 2009

China Real Estate Opportunities plc ("CREO" or the "Company"), is an AIM-listed company established to acquire investment and development properties in China. 

Highlights

 §  CREO's portfolio was valued at CNY9.19 billion as at 31 December 2009

(GBP£836.9 million), up 4% in CNY terms for the 6 months from 30 June 2009

and up 7% in sterling terms since 30 June 2009. 
     
 §  European Public Real Estate net asset value per share ("EPRA NAV per

share")declined by 14% in the 12 month period from 31 December 2008 largely

due to currency movements but the second half of the year saw a 7% upturn in

this measure from £10.62 as at 30 June 2009 to £11.37 as at 31 December

2009.
     
 §  Rental income was stable in local currency in the period despite lower

average occupancy across the portfolio as the Company continued to achieve

average rental uplifts of up to 5% on a square metre basis.
     
 §  Significant progress was made against the Company's strategic objectives to

refinance investment assets and strengthen its capital position through the

disposal of non-core holdings:
     

- Amulti-currency three year loan equivalent to £27.72 million on improved

terms was agreedfor the refinancing of Treasury Building
     

- The Company completed the sale of its effective 5% minority stake in the

City Center 5 Development, for £8.6 million in June 2009. This represents an

8.6% premium to the most recent published valuation in local currency as at

31 December 2008.
     

- Between November 2009 and February 2010 the Company disposed of its entire

holding in RREEF, a Hong-Kong listed REIT for HKD118.28 million (£10.18m

based on current exchange rates), a return of 36.9% on our original

investment in HKD terms.
     

- The Company disposed of its 50% stake in the Tangdao Bay Developmentbased

on a property value of RMB1.389bn representing a 10.9% premium to the most

recent independent valuation in June 2009. Net cash proceeds from the

transaction amount to £35.6 million at today's exchange rates and will be

received upon the completion of the standard regulatory procedures for the

offshore repatriation of proceeds of domestic asset sales.
     
 §  Including proceeds from the Tangdao Bay disposal, cash holdings as at 31

December 2009 were just over £80 million.
     
 §  The Company has made a non-binding submission to the Singapore Exchange

("SGX") to secure approval for admission to Singapore's internationally

recognised main board as a Business Trust so as toposition the Company

closer to its asset base and potentially re-rate the shares in line with

CREO's peer group listed in Asia.Conversion to a Singapore Business Trust,

which would be subject to shareholder approval, would result in the Company

being delisted from AIM.
     
 §  The Company has today published a circular to shareholders setting out the

details of a Tender Offer to purchase shares at £3.30 per Share. The Company

has invited all shareholders to tender shares and has committed a maximum of

£15 million from its own cash resources to repurchase tendered shares.  The

closing date for the tender is on Monday, March 22 2010. Real Estate

Opportunities plc, a 16.9% shareholder of CREO, has irrevocably undertaken

to tender its shares.
     
 §  In addition, Matrix Corporate Capital LLP has been mandated by the Company

to seek to procure third party investors to purchase tendered shares in a

placing at £3.30 per share. 
     

Ray Horney, Chairman of CREO, commented:

"2009 has been an important year as the Company successfully applied its asset management expertise to deliver strong results in a competitive market whilst also positioning the Company for the future. Important milestones were reached such as the refinancing of the Treasury Building and the sale of the non-core stake in Tangdao Bay. The financial position of the Company has been considerably strengthened and the Board remains confident about the outlook for the Company" 

 CREOplc
 Ray Horney, Chairman
 Tel: + 44 (0)1273 775 225
  
 Sarah Moriarty
 CREO Investor Relations
 Tel: +353 1 6189455 
  
 Matrix Corporate Capital LLP                    Davy
 Paul Fincham, Jonathan Becher, Robert Naylor    Des Carville
 Tel: + 44 (0)20 3206 7000                       Tel: + 353 1 679 6363
                                                  
 Citigate Dewe Rogerson(CREO PR)                 Murray Consultants(CREO PR)
 Tom Baldock                                     Ed Micheau
 Tel: + 44 (0) 20 7638 9571                      Tel: + 353 1 498 0300
                                                  

Chairman's statement

Introduction

I am pleased to report on the progress of your Company for the 12 months to 31 December 2009. Your Company has continued to perform strongly operationally during the period while also taking actions to address the capital structure of the business and narrow the wide discount at which the Company's shares continue to trade. 

For the year ended 31 December 2009, European Real Estate Association ("EPRA") net asset value per share was £11.37, representing an increase of 7% since 30 June 2009 and a 14% decrease year on year. As at 31 December 2009 exchange rates, the aggregate gross value of the portfolio increased by over 7% to £837 million (30 June 2009: £780 million) while in local currency terms, the aggregate gross value of the CREO portfolio grew by 4% since 30 June to RMB9.188 billion. These amounts exclude the 31 December 2009 transaction to dispose of the Company's interest in the Tangdao Bay property.  This growth highlights the continued strength of the portfolio, particularly in a challenging Shanghai market during the year. 

As at 31 December 2009, bank borrowings amounted to £316 million (31 December 2008: £344 million) resulting in gearing of 34% on total assets and 44% on the investment assets. Cash holdings as at 31 December 2009 were £48 million which exclude the proceeds of £35.6 million from the Tangdao Bay disposal. 

Portfolio

Whilst the Chinese economy continued to strengthen throughout the year, 2009 proved to be a challenging year on the office leasing front with market vacancy rates in Shanghai peaking at 14.2% in Q1 before reducing to 11.4% by year end. The retail sector however, continued to perform strongly, aided by the resurgence of the Chinese consumer and I refer shareholders to the Investment Manager's report for more detail on the Chinese economy. Against this backdrop, the Company delivered a strong performance.  

As previously outlined, the Company's core strategy has been to reposition its assets in response to tenant and consumer demand and maximize rental income as well as achieve capital growth. To that end, the Company has made significant progress in relation to its investment portfolio in 2009 through strong asset management, tenant mix and configuration as well as the completion of its extensive refurbishment programme of Central Plaza. The Company renewed a significant number of leases this year as well as attracting a number of new tenants including Metlife Insurance, Prudential Insurance, Johnson & Johnson and Bank of Beijing, thus enhancing CREO's overall tenant mix. As a result, the Company achieved increases in gross rental income on a per square metre basis of between 2 and 5% across the portfolio's investment assets and ended the year with occupancy of 85%. I am therefore pleased to report gross rental income of £29 million for the year to 31 December 31 2009, compared to £26 million in the prior year, representing an increase of 11%. 

Significant progress was also made on the Company's development portfolio during the period as CREO anticipates commencement in 2010 of City Center Extension, the large development site adjacent to the existing City Center asset. On completion, City Center and City Center Extension will form an integrated office and shopping centre facility (256,888sqm on completion) and will comprise 7 floors of retail and 13 floors of grade A office space constructed to LEED (Leading in Energy and Environment Design) Gold standard, one of very few commercial properties in Shanghai to recognize the emerging importance of sustainable development. The development has already attracted significant tenant interest, particularly from international retailers and the Board believes that the development of this asset will unlock significant additional value and reversionary income upon completion, scheduled for 2012. 

Refinancing

The Company also made significant progress in the first phase of its investment asset refinancing programme with the completion of a loan facility with CITIC Ka Wah Bank in December 2009. This replaced, on improved terms, the existing loan with Credit Suisse in respect of the Treasury Building in Shanghai, which had been due to expire in March 2010. Based on current discussions, the Company is confident that there is significant interest from a number of local and regional banks to fulfill the Company's City Center asset refinancing requirement in late 2010.

Disposals

CREO recently announced the disposal of its 50% interest in the Tangdao Bay joint venture development. The interest was sold for a 10.9% premium to the most recent June 2009 independent valuation and net cash proceeds from the transaction, based on current exchange rates amount to £35.6 million subject to completion of the standard regulatory procedures.  This disposal follows a consistent approach that the Company has adopted in recent months to realise shareholder value, indicate relevance of the company's net asset value and generate cash through disposal of non-strategic holdings. Other non-core disposals include the Company's interest in City Center 5 development in June 2009 at an 8.9% premium to valuation as at 31 December 2009 and the sell-down of the holding in China Commercial Trust - a HK listed REIT during the second half. 

Tender Offer

Owing to the continued wide discount at which the company's shares trade, in January 2010 the Company announced that it proposed to make up to £15 million available from its existing cash resources to fund a tender offer for its own shares once the Tangdao Bay transaction has been completed and the sale proceeds received.  Today, a tender at £3.30 per share has been announced in respect of the Company's own shares and the Company is also seeking to procure third party purchasers for tendered shares or to purchase those shares itself.  I draw shareholders' attention to that announcement for further detail.

Recognising that the Chairman and Treasury Holdings Directors are potentially conflicted, a committee of independent Directors was established in dealing with matters in relation to the Tender Offer. 

Asian Listing

With a view to further narrowing the gap between net asset value and share price, the Board has been considering for some time a number of options intended to widen the universe of potential shareholders. This review has included obtaining a listing for the Company on a recognised stock exchange in Asia, so as to position the Company closer to its asset base and potentially re-rate the shares in line with CREO's Asian peer group, which generally trade at a very low discount or slight premium to NAV. This will, in time, also enable the Company to participate in the strong capital flows experienced in Asia. 

Accordingly a non-binding submission has been made to the Singapore Exchange ("SGX") and the Monetary Authority of Singapore to secure approval for admission to Singapore's internationally recognised main board as a Business Trust. This structure provides greater operational and investment flexibility than Real Estate Investment Trusts with regard to matters such as development limits and levels of gearing. This flexibility should enable CREO to deliver stronger growth and higher accretive earnings than its peer group. Conversion to a Singapore Business Trust, which would be subject to shareholder approval, would result in the Company being delisted from AiM.

The Company continues to communicate with shareholders on the issue and subject to feedback from the SGX, the Company intends to proceed with this proposal by June 2010.

Outlook

The Board is very pleased with the portfolio's strong operational performance during the year as well as its strengthened cash position. The Board believes the Company is now well placed to address its capital structure through the tender offer and its proposed Asian listing this year. Accordingly, the Board remains optimistic about the outlook for 2010.

Ray Horney

Chairman

Investment Manager's Report
Macro economic environment 

China reported 8.7% GDP growth for the year ended 31 December 2009 and has now progressed to being the 2nd largest economy in the world behind only the US and overtaking Germany during 2009 to assume the mantle of the world's largest exporter.

This level of economic activity has been achieved during a year in which economies worldwide faced significant challenges as the effects of the global financial crisis which took hold during 2008 continued.  

The decision of the Chinese government in November 2008 to provide significant stimulus through the provision of a RMB4 trillion package of measures provided the basis for a surge in economic activity and more importantly a foundation stone for the domestic economy, spear-headed by retail sales which, as at 31 December 2009 increased 16.9% for the year nationwide. This was supported by growth in disposable income for urban and rural residents of 9.8% and 8.2% respectively.

This stimulus package was further supported by a major increase in liquidity delivered by China's banking system. The multiple effects included:

?a reduction in the central bank reserve requirement in late 2008 from its peak of 17.5% to 15.5% in early 2009;

?approval by the central and various provincial governments of major infrastructure projects; and 

?a loosening of government policy in respect to the residential sector.

China witnessed total loans for 2009 reaching RMB9.6 trillion representing a 96% increase over 2008.

Ultimately this activity spilled over into the lagging trade sector which by year end showed that:

?Whilst exports across the year fell 16.9% compared to 2008 the months of December 2009 and January 2010 reflected a turnaround with year-on-year increases of 17.7% and 21.0% respectively

?Imports followed a similar trend, down 11.2% on an annual basis compared to 2008 but a year end rebound of 55.9% occurred in December followed by a continuation of the trend in January 2010 of 85.5%.

This strong rebound in 2009 coming off the year end lows of 2008, where annualised GDP growth for the 4th quarter was 6.8% (Q4 2009 10.7%), has also given rise to concerns regarding bubble effects in various sub-markets, most notable the residential sector, which recorded a 44.9% increase in sales volume (square meters sold) over 2008. The government has been consistent in its message to adopt a prudent approach on the basis that the dangers of the global economic crisis have not passed, however the government will also be responsible for reining in those sectors it considers to be over-heating. In this regard in early 2010 the government has:

?Increased the reserve requirement by 100 basis points from 15.5% to 16.5% to remove the excess liquidity in the system; 

?Increased the minimum deposit on certain residential transactions from 20% to 40%

?Retained a neutral stance on currency appreciation despite significant pressure from both America and the EU

Therefore in respect of CREO's activities for 2010 the continuation of a rebound in Chinese economic activity is likely to positively impact the office rental market as firms seek to expand their businesses in China and the Asian region, whilst the strength of the consumer is likely to remain throughout the year, under-pinning the plans for the City Center redevelopment and the strength of the existing retail assets generally.

Investment portfolio

CREO's consistent strategy has been to use its international expertise in investment property and asset management and apply this model to its Chinese portfolio. To that end, the Company focused strongly on intense asset management of its investment portfolio, which represents over 75% of the Company's total portfolio, to strongly position the portfolio to achieve continued longer term growth. 

This included the strategic upgrading and refurbishment of some existing investment assets, as well as closely managing existing and prospective tenant relationships as over 55% of leases expired during the year. This continued intense focus has yielded positive results in relation both to rent renewals and new lettings as well as achieving consistently high occupancy rates across the portfolio. Specifically, the property portfolio witnessed 212 lease expiries in 2009, representing more than 50% of its entire tenancy base. Approximately 55% of these leases were renewed, whilst a further 15% were moved out of the Central Plaza property as part of the refurbishment and re-positioning programme. Sixty-six new tenants, amounting to 28% of lease expiries, entered into leases including Metlife Insurance, Prudential Insurance and Johnson & Johnson as highlighted in the Chairman's report. Overall, this resulted in portfolio occupancy (excluding space under refurbishment) at 31 December 2009 of 85%, (office 79%; retail 97%) representing a reduction of 6% over 31 December 2008 but translated into increases in gross rental income on a per square metre basis as follows: 

                                 Average daily rent per sqm
                                            (RMB)
 Investment Property  31 December 2009  31 December 2008  Increase over
                                                                 period
 City Center Office               5.32              5.05             5%
 City Center Retail               6.11              5.97             2%
 Central Plaza                    6.33              6.16             3%
 Treasury Building                6.18              6.18             0%

The Central Plaza refurbishment programme will be completed by April 2010 and has been well received by existing and prospective tenants and the intention to reposition the asset and deliver significant reversionary rent is being realised. 

Development portfolio 

Significant progress was also made in 2009 on the Company's main development asset, City Center Extension, the large development site adjacent to the existing asset, City Center.. The site is cleared and available for redevelopment and the master layout planning submission has been made to the Government and is awaiting approval. It is expected that all the necessary construction approvals will be received by June 2010 and construction can begin, subject to financing, during the 3rd quarter of the year. The development has already attracted significant tenant interest, particularly from international retailers looking to expand in China to anchor the scheme due to the asset's key location and lack of quality retail supply in the market. In addition, a number of local and regional banks have expressed interest in financing the project as part of the City Center refinancing requirement and the Company is confident that it will be able to fulfill the Company's City Center asset refinancing requirement later this year.

Financial review

Gross rental income amounted to £29 million in 2009, while administration expenses were £21 million for the 12 months to 31 December 2009. Net finance expenses decreased to £2 million in the period and resulted in a pre-tax profit of £20 million.

As highlighted in the Chairman's report, the total property portfolio as presented in the accounts grew to £837 million compared to £780 million as at 30 June 2009 while decreasing by 8% year on year on a like for like basis as the prior year benefited significantly from the strength of the CNY against sterling.  

As at 31 December 2009, bank borrowings amounted to £316 million (31 December 2008: £344 million) resulting in gearing of 34% on total assets and 44% on the investment assets. 

Principal risks and uncertainties

for the next 12 months

The principal risks and uncertainties that face the business for the current financial year include the following: economy, financial sector, future cash flows and political and regulatory environment.

Economy: Although the Chinese market has been one of the best performing economies over the last 24 months, delivering GDP growth of over 8% in 2009, the international macro environment continues to be difficult with only tentative recovery underway. As a direct consequence of this, lower tenant demand and defaults from international tenants could pose a risk to the Group. Failure to re-let investment properties would also have another adverse impact on property valuations. The weakness in demand may also impact CREO's development assets and agreeing new leases for current developments, including developments near completion. However, CREO has a well diversified tenant base through strong asset management, with average portfolio occupancy of over 85% as at 31 December 2009. To date, there has been no evidence of these risks materialising.

Financial sector: Many international lenders have withdrawn from the Chinese market in the past 18 months. In contrast, local and regional banks have increased lending substantially in the period and the Company has developed relationships with a number of local banks in advance of any of its facilities becoming due as, up until 2009, all of CREO's bank loans were with international lenders. A 3 year loan facility to refinance the Treasury Building was completed in December 2009 on better terms with CITIC Ka Wah Bank in Hong Kong, which has given the Company confidence about its ability to refinance its other bank loans due in 2010 and 2011. 

Liquidity: A review of the Group's business activities is set out in the Chairman's statement. In order to satisfy themselves regarding future trading, forecast cash requirements and the projected sources of cash for the business, the Directors have made enquiries about the assumptions used in making the cash flow projections for the coming [12] months. Specifically:

(a)  Rental income flow remains strong, occupancy remains high and tenant renewals continue all of which underpin the forecast income levels

(b)  Banking relationships remain strong and we are currently operating within the covenant guidelines

(c)  It would require a substantial decline in property valuations to trigger pressure points with banking covenants or financing arrangements

Political & Regulatory Environment: One of the risks to the CREO business relates to the political and regulatory environment in China. Historically the Chinese authorities have used the banking sector through loan quotas to slow economic activity and whilst the reverse is occurring currently, this could change in the future. However, we believe that the Company's low loan to value ratios provide flexibility within its financing structure.

China Real Estate Opportunities plc

Consolidated and company statement of financial position

As at 31 December 2009

                                                 31 Dec 2009                     31 Dec 2008                         1 Jan 2008
                                 Note   Group GBP'000  Company GBP'000  Group GBP'000  Company GBP'000         Group GBP'000  Company GBP'000
                                                                           (Restated)                             (Restated)

 Assets
 Non-current assets
 Investment properties            10          711,295                -        763,558                -               497,133                -
 Properties under development     11          125,615                -        149,797                -                87,280                -
 Property, plant and equipment                    670                -            731                -                   567                -
                                              837,580                -        914,086                -               584,980                -

 Other non-current assets
 Investment in subsidiaries       12                -          214,770              -          229,215                     -          216,709
 Investment in joint venture     13(a)              -                -         40,482                -                21,504                -
 Deferred tax assets              14              361                -          1,136                -                   254                -
                                                  361          214,770         41,618          229,215                21,758          216,709

 Current assets
 Financial assets                 15           11,632            4,259         22,860           14,741                 2,567                -
 available-for-sale
 Other investment                13(b)         34,250                -              -                -                     -                -
 Trade and other receivables      16            5,905               80          9,255            5,142                11,542            3,538
 Restricted cash                  17           10,273                -         18,356                -                17,786                -
 Cash and cash equivalents        17           37,753            6,018         66,640           10,450                79,210           39,828
                                               99,813           10,357        117,111           30,333               111,105           43,366
 Total assets                                 937,754          225,127      1,072,815          259,548               717,843          260,075

                                                31 Dec 2009                     31 Dec 2008                         1 Jan 2008
                                 Note  Group GBP'000  Company GBP'000  Group GBP'000  Company GBP'000         Group GBP'000  Company GBP'000
                                                                          (Restated)                             (Restated)

 Liabilities
 Non-current liabilities
 Interest-bearing loans  and      21          94,268                -        344,080                -               246,635                -
 borrowings
 Deferred tax liabilities         14         139,831                -        153,158                -                92,835                -
                                             234,099                -        497,238                -               339,470                -

 Current liabilities
 Interest-bearing loans and       21         221,557                -              -                -                     -                -
 borrowings
 Trade and other payables         22          52,813           31,888         90,102           56,120                37,564           16,841
 Tax payable                                       -                -            214                -                 9,500                -
                                             274,370           31,888         90,316           56,120                47,064           16,841
 Total liabilities                           508,469           31,888        587,554           56,120               386,534           16,841
 Net assets                                  429,285          193,239        485,261          203,428               331,309          243,234

 Equity
 Stated capital                   18         260,953          260,953        248,016          248,016               250,858          250,858
 Reserves                         18         167,450            8,141        253,766           21,054                16,295            5,407
 Retained earnings /              18                                                                                                        
 (accumulated losses)                            882         (75,855)       (16,521)         (65,642)                64,156         (13,031)

 Total equity attributable to                                                                                                               
 equity holders of the Company               429,285          193,239        485,261          203,428               331,309          243,234

 Net assets value per share:
 Basic                            20         GBP8.67          GBP3.90       GBP10.17          GBP4.26               GBP6.54          GBP4.80

 Diluted                          20         GBP8.51              N/A        GBP9.94              N/A               GBP6.46          GBP4.78

 Diluted EPRA                     20        GBP11.37              N/A       GBP13.24              N/A               GBP8.34              N/A

Consolidated and company income statement

For the year ended 31 December 2009

                                            Year ended 31 Dec 2009        Year ended 31 Dec 2008
                                  Note   GroupGBP'000  CompanyGBP'000  GroupGBP'000  CompanyGBP'000
                                                                         (Restated)

 Gross rental income               3           28,976               -        26,121               -

 Net rental and related income     3           27,630               -        25,295               -

 Valuation gains oninvestment                                                                      
 properties and properties                                                                         
 under development               10,11          4,844               -        38,134               -
 Administrative expenses           5         (20,977)        (10,627)      (66,224)        (61,274)
 Other income                      6           14,918           4,251            19              18

 Net operating profit/(loss)                                                                       
 before net financing costs                    26,415         (6,376)       (2,776)        (61,256)

 Financial income                  7           27,293           1,307        10,843           9,679
 Financial expenses                7         (29,393)         (5,144)      (83,456)         (1,034)

 Net financing                                (2,100)         (3,837)      (72,613)           8,645
 (expenses)/income

 Share of the (loss)/profit of                                                                     
 joint venture                   13(a)        (4,191)               -         6,875               -

 Profit/(loss) before tax                      20,124        (10,213)      (68,514)        (52,611)

 Income tax expense                8          (2,274)               -      (11,763)               -

 Profit/(loss) for the year                    17,850        (10,213)      (80,277)        (52,611)

 Attributable to:                                                                                  
 Equity holders of the Company                 17,850        (10,213)     (80,277)         (52,611)

 Earnings/(loss) per share:

 Basic                             9          GBP0.37                     (GBP1.58)

 Diluted                           9          GBP0.36                           N/A

Consolidated statement of comprehensive income

For the year ended 31 December 2009

                                           Year ended 31 Dec 2009        Year ended 31 Dec 2008
                                 Note   GroupGBP'000  CompanyGBP'000  GroupGBP'000  CompanyGBP'000
                                                                        (Restated)

 Profit/(loss) for the year                   17,850        (10,213)      (80,277)        (52,611)

 Other comprehensive income
 Currency translation            18(b)      (73,850)               -       221,424               -
 differences
 Revaluation of financial                                                                         
 assetsavailable-for-sale        18(e)           210             210           383             383

 Total comprehensive income for                                                                   
 the year                                   (55,790)        (10,003)       141,530        (52,228)
 Attribute to:                                                                                    
 Equity holders of the Company              (55,790)        (10,003)       141,530        (52,228)

Consolidated statement of changes in equity

For the year ended 31 December 2009

                                       Stated capital         Trans- lation          Share option           Fair  value         PRC statutory    Retained earnings/           
                                       accountGBP'000        reserveGBP'000        reserveGBP'000        reserveGBP'000        reserveGBP'000          (accumulated           
                                                                                                                                                     losses)GBP'000           
                                                                                                                                                         (Restated)           
                                                                                                                                                                         Total
                                                                                                                                                                       GBP'000
                                                                                                                                                                      
 Balance at 1 January 2008                    250,858                10,888                 5,407                     -                     -                64,156    331,309
                                                                                                                                                                      
 Total comprehensive income for                     -               221,424                     -                   383                     -              (80,277)    141,530
 the year
 Transfer                                           -                 (316)                     -                     -                   716                 (400)          -
 Issue of new shares                            3,521                     -                     -                     -                     -                     -      3,521
 Purchase of own shares                       (7,175)                     -                     -                     -                     -                     -    (7,175)
 Equity-settled share-based                         -                     -                15,986                     -                     -                     -     15,986
 transactions
 Share options exercised                          812                     -                 (722)                     -                     -                     -         90
                                                                                                                                                                              
 Balance at 31 December 2008                  248,016               231,996                20,671                   383                   716              (16,521)    485,261
 Total comprehensive income for                     -              (73,850)                     -                   210                     -                17,850   (55,790)
 the year
 Transfer                                           -                     -                     -                     -                   447                 (447)          -
 Issue of new shares                           13,792                     -              (13,792)                     -                     -                     -          -
 Purchase of own shares                         (922)                     -                     -                     -                     -                     -      (922)
 Equity-settled share-based                         -                     -                   729                     -                     -                     -        729
 transactions
  
 Share options exercised                           67                     -                  (60)                     -                     -                     -          7
 Balance at 31 December 2009                  260,953               158,146                 7,548                   593                 1,163                   882    429,285
                                                                                                                                                                              
                                                                                                                                                                      

Consolidated statement of cash flows

For the year ended 31 December 2009

                                           Year ended                 Year ended
                                          31 Dec 2009                31 Dec 2008
                                                Group                      Group
                                              GBP'000                    GBP'000
                                                                      (Restated)
 Operating activities            
 Profit /(loss) for the year                   17,850                   (80,277)
 Change in fair value of                      (4,844)                   (38,134)
 investment properties           
 Equity-settled share-based                       729                      2,194
 transactions                    
 Equity-settled performance fee                     -                     13,792
 Depreciation of properties,                       94                         89
 plant and equipment             
 Net financial expenses                         2,100                     72,613
 Changes in fair value of                           -                        329
 financial assets                
 available-for-sale              
 Cost of call option written                        -                      1,544
 off                             
 Share of loss/(profit) of                      4,191                    (6,875)
 joint venture                   
 Investment gains                            (14,904)                          -
 Income tax expense                             2,274                     11,763
                                                7,490                   (22,962)
                                 
 Income tax paid                              (2,157)                    (7,410)
                                 
 (Increase)/decrease in trade                 (1,490)                      7,136
 and other receivables           
                                 
 (Decrease)/increase in trade                (20,133)                     27,613
 and other payables              
                                 
 Cash (used)/generated in                    (16,290)                      4,377
 operating activities            
                                 
 Investment activities           
 Acquisition of other                               -                   (19,173)
 investment                      
 Increase in restricted cash                    7,051                      4,573
 Addition to tangible assets                  (2,934)                    (3,916)
 Net proceeds from disposal of                 14,932                      3,287
 investments                     
 Purchase of call option                            -                    (1,544)
 Interest received                              1,450                      2,706
                                 
 Cash flows (used)/generated in                20,499                   (14,067)
 investing activities            

                                           Year ended                 Year ended
                                          31 Dec 2009                31 Dec 2008
                                                Group                      Group
                                              GBP'000                    GBP'000
                                                                      (Restated)
 Financing activities            
 Proceeds from bank borrowings                 27,671                          -
 Repayment of bank borrowings                (25,719)                          -
 Proceeds from share options                        7                         90
 exercised                       
 Purchase of own shares                       (6,047)                    (2,050)
 Interest paid                               (25,300)                   (19,640)
                                 
 Cash flows used in financing                (29,388)                   (21,600)
 activities                      
                                 
 Net decrease in cash and cash               (25,179)                   (31,290)
 equivalents                     
 Cash and cash equivalents at                  66,640                     79,210
 the beginning of the year       
 Effect of exchange rate                      (3,708)                     18,720
 fluctuations                    
                                 
 Cash and cash equivalents at                  37,753                     66,640
 31 December                     
                                 

The effect of exchange rate fluctuations on cash held in 2009 mainly arose from cash and cash equivalents held by the Group denominated in US Dollars (USD), Chinese Yuan (RMB), Hong Kong Dollars (HKD) and Euro (EUR) as a result of the depreciation of those currencies against Pound Sterling (GBP).

Notes to the consolidated financial statements

For the year ended 31 December 2009

China Real Estate Opportunities plc (the Company) is domiciled in Jersey. The address of the Company's registered office is Whiteley Chambers, Don Street, St Helier, Jersey.

The Company and its subsidiaries (together referred to as "the Group" and individually as "the Group entities") are primarily involved in commercial real estate investment and development in the People's Republic of China (the PRC). The Company's principal objective is to achieve capital growth from a portfolio of properties in the PRC, focusing on large-scale development opportunities for income-producing assets such as office, logistics and retail properties. The investment portfolio concentrates on the commercial sector where the Directors believe there is greater growth potential as compared with other sectors.

1.       Significant accounting policies

The following accounting policies have been applied consistently by the Group entities and the Group's interest in a jointly controlled entity in dealing with items which are considered material in relation to the Company and its consolidated financial statements, except for a change in accounting policy discussed in Note 1(e) below and Note 2.

(a)     Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards Board (IASB).

(b)     Basis of preparation

These consolidated financial statements are presented in pounds sterling, which is the Company's functional currency. All financial information presented in pounds sterling has been rounded to the nearest thousand.

The financial statements are prepared on the historical cost basis except for the following assets and liabilities which are stated at their fair value: derivative financial instruments, financial assets available-for-sale, other investment, investment properties and properties under development.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, and the results of these estimates and assumptions form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRS that have a significant effect on the consolidated financial statements and estimates with a significant risk of material adjustment in the next year are discussed in Notes 10 and 29.

As at 31 December 2009, the Group has a net current liability of GBP174.6 million. The major items of the current liabilities are loans borrowed from commercial banks of USD236.5 million and RMB820 million, which will fall due in October 2010. The Directors are currently in negotiation with several commercial banks and are of the view that the Group will be able to secure new banking facilities to refinance the above loans when they fall due. Furthermore, Treasury Holdings China Limited (THCL), a related party of the Company (Note 27) has agreed not to request the Company immediately settle the remaining outstanding balance of the 2008 performance fee, which totalled GBP12.6 million as at 31 December 2009, and to accept settlement of the debt when the Company has the financial resources to settle. On this basis, the consolidated financial statements of the Group are prepared on a going concern basis.

As at 31 December 2009, the Company has a net current liability of GBP21.5 million. Included in the current liabilities of the Company are amounts due to its wholly-owned subsidiary of GBP14.6 million and amounts due to THCL. On the basis that THCL has given the above comfort to the Company and the Company is able to control the timing of settlement of the amounts due to its wholly-owned subsidiary, the financial statements of the Company are prepared on a going concern basis.

(c)     Basis of consolidation

(i)      Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

(ii)      Joint Ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement. The consolidated financial statements include the Group's share of the total recognised income and expenses of jointly controlled entities on an equity-accounted basis.

(iii)     Transactions eliminated on consolidation

Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(iv)     Investments by the Company

In the Company's balance sheet, an investment in subsidiary is stated at cost less impairment losses (Note 1(i)), unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale).

(d)     Investment properties

Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are stated at fair value. An external, independent valuation company, having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued, values the properties every six months. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

The valuations are prepared by considering the aggregate of the net annual rents receivable from the properties and where relevant, associated costs. A yield which reflects the risks inherent in the net cash flows is then applied to the net annual rentals to arrive at the property valuation.

Valuations reflect, where appropriate, the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting of vacant accommodation and the market's general perception of their credit-worthiness; the allocation of maintenance and insurance responsibilities between lessor and lessee; and the remaining economic life of the property. It has been assumed that whenever rent reviews or lease renewals are pending with anticipated reversionary increases, all notices and where appropriate counter notices have been served validly and within the appropriate time.

Any gain or loss arising from a change in fair value is recognised in the income statement. Rental income from investment properties is accounted for as described in accounting policy (n).

When the Group begins to redevelop an existing investment property for continued future use as an investment property, the property remains an investment property, and is measured based on the fair value model, and is not reclassified as property, plant and equipment during the redevelopment.

When the Group begins to redevelop an existing investment property with a view to resell, the property is transferred to trading properties and held as a current asset. The property is re-measured to fair value as at the date of transfer with any gain or loss taken to profit or loss. The re-measured amount becomes the deemed cost at which the property is then carried in trading properties.

(e)     Properties under development

Property that is being constructed or developed for future use as investment property is classified as properties under development. This is recognised initially at cost but is subsequently re-measured to fair value at each reporting date. Any gain or loss on re-measurement will be recognised in profit or loss, consistent with the policy adopted for all other investment properties carried at fair value. On completion, the property is transferred to investment property with any final difference on re-measurement accounted for in accordance with the foregoing policy on investment properties.

All costs directly associated with the purchase and construction of a property, and all subsequent capital expenditure for the development qualifying as acquisition costs are capitalised.

Previously, properties under development were carried at fair value, with valuation gains and losses recorded in the revaluation reserve in the equity and the profit or loss respectively. An amendment to IFRS resulted in changes in the Group's accounting policies regarding the accounting treatment for properties under development.  The financial impact of this change is described in Note 2(a).

(f)      Property, plant and equipment

(i)      Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation (see (iv) below) and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Gains and losses on the disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within "other income" in the income statement.

(ii)      Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is re-measured to fair value and reclassified as investment property. Any gain arising on re-measurement is recognised directly in equity. Any loss is recognised immediately in the income statement.

(iii)     Subsequent expenditure

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

(iv)     Depreciation

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives.

The estimated useful lives are as follows:

 Buildings situated on leasehold land  20 years
 Fixtures, fittings and equipment       5 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

(g)     Land use rights

Land use rights represent lease prepayments for acquiring rights to use land in the PRC with a period of 40-50 years. Land use rights granted with consideration are recognised initially at acquisition cost. Land use rights are classified and accounted for in accordance with the intended use of the properties erected on the related land.

For investment properties and properties under development, the corresponding land use rights are classified and accounted for as part of the investment properties and properties under development respectively, and are carried at fair value as described in Notes 10 and 11.

For properties that are developed for sale, the corresponding land use rights are classified and accounted for as part of the properties.

(h)     Foreign currency

(i)      Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of the Group's entities at the spot foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the respective functional currencies at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into the functional currency at foreign exchange rates ruling at the dates the fair value was determined.

(ii)      Financial statements of foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to pounds sterling at the foreign exchange rates ruling at the balance sheet date. The income and expenses of foreign operations are translated to pounds sterling at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in equity in the translation reserve.

(iii)     Net investment in foreign operations

Exchange differences arising from the translation of the net investment in foreign operations are taken to the translation reserve in equity. They are released into the income statement upon disposal.

Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity in the translation reserve.

(i)      Impairment

(i)      Financial assets

All financial assets are assessed at each reporting date to determine whether there is any objective evidence of impairment. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to the income statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

(ii)      Non-financial assets

The carrying amounts of the Group's non-financial assets, other than investment properties, properties under development and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use and that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss on other assets is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(j)      Share capital

(i)      Ordinary share capital

Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares are shown as a deduction, net of tax, in equity from the proceeds. Share issue costs incurred directly in connection with a business combination are included in the cost of acquisition.

(ii)      Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are cancelled and the cost of repurchase is deducted from stated capital account.

(iii)     Dividends

Ordinary dividends are recognised as a liability in the period in which they are approved by the shareholders in a general meeting and declared.

(k)     Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

(l)      Share-based payments

Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the grant date. The fair value of the equity-settled share-based payments determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Company's estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value of share options is measured using the binomial option pricing method. The expected life is adjusted, based on management's best estimate, for effects of behavioural considerations. Share-based payment arrangements in which the Company grants share options to subsidiaries' employees are accounted for as an increase in value of investment in subsidiary in the Company's balance sheet which is eliminated on consolidation.

Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions.

(m)    Provisions and contingent liabilities

(i)      Provisions and contingent liabilities

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

(ii)      Other provisions and contingent liabilities      

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of an outflow of economic benefits is remote.

(n)      Rental income from operating leases

Rental income from investment property leased out under an operating lease is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

(o)      Interest income

Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the assets.

(p)     Borrowing costs

Borrowing costs are expensed in the income statement in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete. The capitalisation rate is arrived at by reference to the actual rate payable on borrowings for development purposes or, with regard to that part of the development cost financed out of general funds, to the average rate.

(q)     Taxation

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not provided for temporary differences relating to investments in subsidiaries to the extent that they will probably not be reversed in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(r)      Related parties

For the purposes of these financial statements, a party is considered to be related to the Group if:

(i)      the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group;

(ii)      the Group and the party are subject to common control;

(iii)     the party is an associate of the Group or a joint venture in which the Group is a venturer;

(iv)     the party is a member of key management personnel of the Group or the Group's parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals;

(v)     the party is a close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or

(vi)     the party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group.

Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

(s)     Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly by the Group's most senior executive management to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available (See Note 2 (b)).

(t)      Non-derivative financial instruments

Non-derivative financial instruments comprise investments in unlisted equity securities, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Available-for-sale financial assets

The Group's investments in certain equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in equity is transferred to the income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

(u)     Derivative financial instruments

Derivative financial instruments are recognised initially at fair value. At each balance sheet date the fair value is re-measured. The gain or loss on re-measurement to fair value is recognised immediately in the income statement.

The fair value of interest rate swaps/cap and currency swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

(v)     Other receivables

Trade and other receivables are stated at their cost less impairment losses.

(w)     Operating leases

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.

(x)     New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations were not yet effective for the year ended 31 December 2009, and have not been applied in preparing these consolidated financial statements.

·      Revised IFRS 1, First-time adoption of International Financial Reporting Standards (effective date: financial year beginning 1 July 2009)
 
Basis for conclusions on revised IFRS 1, First-time adoption of International Financial Reporting Standards
 
Implementation guidance on revised IFRS 1, First-time adoption of International Financial Reporting Standards
 
·      Revised IFRS 3, Business combinations (applies to business combinations for which the acquisition date is on or after the beginning of first annual reporting period beginning on or after 1 July 2009)
 
·      Amendment to IAS 27, Consolidated and separate financial statements (effective date: financial year beginning 1 July 2009)
 
·      Amendment to IAS 39, Financial instruments: Recognition and measurement - Eligible hedged items (effective date: financial year beginning 1 July 2009)
 
·      IFRS 17, Distribution of non-cash assets to owners (effective date: financial year beginning 1 July 2009)
 
·      IFRIC 18, Transfer of assets from customers (effective date: applies to transfers of assets from customers received on or after 1 July 2009)
 
·      Amendments to IFRS 5, Non-current assets held for sale and discontinued operations as a result of Improvements to International Financial Reporting Standards 2008 (effective date: for annual financial statements covering periods beginning on or after 1 July 2009)
 
·      Improvements to IFRSs 2009 (effective date: for annual financial statements covering periods beginning on or after 1 July 2009 or 1 January 2010)
 
·      Amendments to IFRS 1, First-time adoption of International Financial Reporting Standards * Additional exemptions for first time adopters (effective date: for annual financial statements covering periods beginning on or after 1 January 2010)
 
·      Amendments to IFRS 2, Share-based payment - Group cash-settled share-based payment transactions (effective date: for annual financial statements covering periods beginning on or after 1 January 2010)
 
·      Amendment to IAS 32, Financial instruments: Presentation - Classification of rights issues (effective date: for annual financial statements covering periods beginning on or after 1 February 2010)
 
·      IFRIC 19, Extinguishing financial liabilities with equity instruments (effective date: for annual financial statements covering periods beginning on or after 1 July 2010)
 
·      Amendment to IFRS1, First time adoption of International Financial Reporting Standards-Limited exemption from comparative IFRS 7disclosure for first-time adopters (effective date: for annual financial statements covering periods beginning on or after 1 July 2010)
 
·      Revised IAS 24, Related party disclosures (effective date: for annual financial statements covering periods beginning on or after 1 January 2011)
 
·      Amendments to IFRIC 14, IAS 19 * The limit on a defined benefit asset, minimum funding requirements and their interaction * Prepayments of a minimum funding requirement (effective date: for annual financial statements covering periods beginning on or after 1 January 2011)
 
·      IFRS 9, Financial instruments, Basis for conclusions on IFRS 9 , Amendments to other IFRSs and guidance on IFRS 9 (effective date: for annual financial statements covering periods beginning on or after 1 January 2013)
      

The standards and interpretations addressed above will be applied for the purposes of the Group financial statements with effect from the dates listed.

The Directors have confirmed that the above IFRSs and interpretations do not have a significant impact on how the results of operations and financial position of the Group for the year ended 31 December 2009 are prepared and presented. These IFRSs and interpretations may result in changes in the future as to how the results and financial position of the Group are prepared and presented.

2.       Changes in accounting policies

The IASB has issued one new IFRS, a number of amendments to IFRS and new interpretations that are first effective for the current accounting period of the Group and the Company. Of these, the following are relevant to the Group's financial statements:

·      IFRS 8, Operating segments
·      IAS 1 (revised 2007), Presentation of financial statements
·      Improvements to IFRSs (2008)
·      Amendments to IFRS 27, Consolidation and separate financial statements-cost of an investment in a subsidiary, jointly controlled entity or associate
·      Amendments to IFRS 7, Financial instruments: Disclosures-improving disclosures about financial instruments
·      IAS 23 (revised 2007), Borrowing costs
·      Amendments to IFRS 2, Share-based payments-vesting conditions and cancellations
·      IFRIC 15, Agreements for the construction of real estate
·      IFRIC 16, Hedges of a net investment in a foreign operation

The amendments to IAS 23 and IFRS 2 and interpretations IFRIC 15 and IFRIC 16 have had no material impact on the Group's financial statements as the amendments and interpretations were consistent with policies already adopted by the Group. The impact of the remainder of these developments is as follows:

(a)     Accounting for properties under development

"Improvements to IFRSs (2008)" amends IAS 40 "Investment Property". According to the amendment, investment property which is under construction will be carried at fair value at the earlier of when the fair value first becomes reliably measurable and the date of the property's completion. Any gain or loss will be recognised in profit or loss, consistent with the policy adopted for all other investment properties carried at fair value. This amendment resulted in changes in the Group's accounting policies regarding the accounting treatment for properties under development. Previously, such properties were carried at fair value, with valuation gains and losses recorded in the revaluation reserve in the equity and the profit or loss respectively. The changes in accounting policy are applied when the fair value of the properties under development first becomes reliably measurable, which is from the first period they are presented in the financial statements. The corresponding figures for the previous year or year-end have been restated. The change in accounting policy had the following impact on the financial statements:

                                                 Year ended           Year ended
                                       31 Dec 2009  GBP'000  31 Dec 2008 GBP'000
 Consolidated income statement
 (Decrease)/increase in valuation                  (12,768)               15,193
 gains on investment properties
 (Decrease)/increase in share of                    (2,962)                7,897
 profit from joint venture
 Decrease/(increase) in income tax                    3,192              (3,798)
 expenses
                                                   (12,538)               19,292

 Consolidated statement of
 comprehensive income
 Increase/(decrease) in revaluation                  12,768             (15,193)
 reserve of properties under
 development
 Increase/(decrease) in revaluation                                             
 reserve in property in joint venture                 2,962              (7,897)
 net of tax
 (Decrease)/increase in revaluation                                             
 reservefor tax effect arising from                 (3,192)                3,798
 revaluation of properties under
 development
                                                     12,538             (19,292)
 Consolidated statement of financial                          
 position
 Decrease in reserve                               (30,127)             (42,665)
 Increase in retained earnings                       30,127               42,665
                                                          -                    -
 (Decrease)/increase in basic                        (0.26)                 0.38
 earnings per share
 Decrease in dilutive earnings per                   (0.25)                  N/A
 share
 Increase in EPRA earnings per share                      -                    -
                                                              
                                                              

(b)     Determination and presentation of operating segments          

IFRS 8 " Operating Segments" requires segment disclosure to be based on the way that the Group's chief operating decision maker regards and manages the Group, with the amounts reported for each reportable segment being the measures reported to the Group's chief operating decision maker for the purposes of assessing segment performance and making decisions about operating matters. This contrasts with the presentation of segment information in prior years, which was based on a disaggregation of the Group's financial statements into segments based on related services and geographical areas. The adoption of IFRS 8 has resulted in the presentation of segment information in a manner that is more consistent with internal reporting provided to the Group's most senior executive management, and has resulted in additional reportable segments being identified and segment information being presented in accordance with IFRS 8 (Note 4). Corresponding amounts have also been provided on a basis consistent with the revised segment information. Since the adoption of IFRS 8 impacts aspects of presentation and disclosure, there is no impact on earnings per share.

(c)     Presentation of financial statements

As a result of the adoption of IAS 1 "Presentation of Financial Statements" (2007), details of changes in equity during the period arising from transactions with equity shareholders in their capacity as such have been presented separately from all other income and expenses in a revised consolidated statement of changes in equity. All other items of income and expenses are presented in the consolidated income statement if they are recognised as part of profit or loss for the period, or otherwise in a new primary statement, the consolidated statement of comprehensive income. The new format for the consolidated statement of comprehensive income and consolidated statement of changes in equity has been adopted in this financial statement, and corresponding amounts have been restated to conform to the new presentation. This change in presentation has no effect on reported profit or loss, total income and expenses or net assets for any period presented.

(d)     Disclosure of financial instruments

As a result of the adoption of the amendments to IFRS 7, the financial statements include expanded disclosures in Note 26(e) about the fair value measurement of the Group's financial instruments, categorising these fair value measurements into a three-level fair value hierarchy according to the extent to which they are based on observable market data. The Group has taken advantage of the transitional provisions set out in the amendments to IFRS 7, under which comparative information for the newly required disclosures about the fair value measurements of financial instruments has not been provided.

(e)     Accounting for dividends from subsidiaries, associates and jointly controlled entities

The amendments to IAS 27 have removed the requirement that dividends out of pre-acquisition profits should be recognised as a reduction in the carrying amount of the investment in the investee, rather than as income. As a result, from 1 January 2009 all dividends receivable from subsidiaries, associates and jointly controlled entities, whether from pre- or post-acquisition profits, will be recognised in the Company's profit or loss and the carrying amount of the investment in the investee will not be reduced unless that carrying amount is assessed to be impaired as a result of the investee declaring the dividend. In such cases, in addition to recognising dividend income in profit or loss, the Company recognises an impairment loss. In accordance with the transitional provisions in the amendment, this new policy will be applied prospectively to any dividends receivable in the current or future periods and previous periods that have not been restated.

3.      Gross and net rental income

                                                 Year ended           Year ended
                                       31 Dec 2009  GBP'000  31 Dec 2008 GBP'000

 Gross rental income                                 28,976               26,121
 Service charge income on principal                   5,213                4,888
 basis
 Service charge expenses on principal               (5,008)              (4,293)
 basis
 Property operating expenses                        (1,551)              (1,421)

 Net rental and related income                       27,630               25,295

4.      Segment reporting

The Group's portfolio consists of high-quality, strategically located properties in the PRC. On first-time adoption of IFRS 8, operating segments, and in conformity with the way information is reported internally to the Group's most senior executive management for the purpose of resource allocation and performance assessment, the Group has identified the following two reportable segments:

1)      Investment properties: This segment owns office and retail properties that generate recurring rental income and are able to gain capital appreciation in the long term. Currently, the Group's investment property portfolio is located entirely in Shanghai.

2)      Properties under development: This segment includes mixed-use office and retail facilities, which upon completion will strengthen the current stabilised portfolio with future rental income as well as capital appreciation. Currently, the Group's properties under development are located in Shanghai and Beijing.

(a)     Segment results, assets and liabilities

                                 Investment properties  Properties under development        Total
 GBP '000                             2009        2008           2009           2008      2009      2008
 Net rental and related income                                                                          
 from external customers            27,630      25,295              -              -    27,630    25,295
 Valuation gain/(loss)              16,904      23,650       (12,060)         14,484     4,844    38,134
 Interest income                       172         188              7             38       179       226
 Interest expenses                (15,218)    (11,957)              -              -  (15,218)  (11,957)
 Depreciation and amortisation        (94)        (89)              -              -      (94)      (89)

 Reportable segment profit          23,411      37,458       (19,425)         14,397     3,986    51,855
 Reportable segment assets         755,005     816,850        128,773        154,115   883,778   970,965
 Reportable segment liabilities    324,056     357,653         16,182         29,182   340,238   386,835
 Capital expenditure                 1,443       1,508          1,390          2,155     2,833     3,663

The Group's senior executive management monitors the results, assets and liabilities attributable to each reportable segment on the following basis:

Segment assets include all tangible, intangible and current assets. Segment liabilities include trade and other payables, tax payables, loans and borrowings and deferred tax liabilities.

Revenue and expenses are allocated to the reportable segments with reference to sales generated by segments and the expenses incurred by those segments. Segment profit is profit before tax of those segments.

(b)     Reconciliation of reportable segment revenues, profit or loss, assets and liabilities

                                        31 Dec 2009 GBP'000  31 Dec 2008 GBP'000
 Revenue

 Reportable segment net revenue                      27,630               25,295
 Consolidation net revenue                           27,630               25,295

                                        31 Dec 2009 GBP'000  31 Dec 2008 GBP'000
 Profit

 Reportable segment profit                            3,986               51,855
 Share of (loss)/profit of joint                    (4,191)                6,875
 ventures
 Performance and management fees                    (7,800)             (52,094)
 Exchange gains/(losses)                             25,067             (55,432)
 Elimination of intercompany loan                     7,260                4,121
 interests
 Other income                                        14,904                   14
 Unallocated head office and corporate             (19,102)             (23,853)
 expenses
 Consolidated profit/(loss) before                   20,124             (68,514)
 taxation

                                        31 Dec 2009 GBP'000  31 Dec 2008 GBP'000
 Assets

 Reportable segment assets                          883,778              970,965
 Elimination of inter-company loans                 (4,878)              (2,596)
 Other investment                                    34,250                    -
 Investment in joint ventures                             -               40,482
 Financial assets available-for-sale                  4,259               14,741
 Financial derivatives                                  293                5,133
 Unallocated head office and corporate               20,052               44,090
 assets
 Consolidated total assets                          937,754            1,072,815

 Liabilities                            31 Dec 2009 GBP'000  31 Dec 2008 GBP'000

 Reportable segment liabilities                     340,238              386,835
 Elimination of inter-company loans                (75,346)             (81,027)
 Offshore bank loans                                215,117              228,443
 Financial derivatives                                8,455               15,539
 Unallocated head office and corporate               20,005               37,764
 liabilities
 Consolidated total liabilities                     508,469              587,554

5.       Administration expenses

                                 Year ended 31 Dec 2009 GBP'000  Year ended 31 Dec 2008 GBP'000

 Management fees (Note 27)                              (9,201)                         (8,524)
 Performance fees (Note 27)                                   -                        (43,773)
 Depreciation of property,                                 (94)                            (89)
 plant and equipment
 Directors' fees (see below)                              (140)                           (140)
 Auditors' remuneration
 -               for audit                                (254)                           (200)
 services
 -               for tax                                   (12)                            (29)
 advisory services
 -               other services                               -                            (81)
 Share-based payments expenses                            (729)                         (2,194)
 Call option write-off                                        -                         (1,544)
 Other administration expenses                         (10,547)                         (9,650)
                                                       (20,977)                        (66,224)

Management fees of GBP9.2 million are incurred for various services provided to the Group by THCL and Treasury Holdings (Shanghai) Property Management Company Limited, the nature of which is set out in Note 27.

The fees of the Directors of the Company for the year were as follows:

                Year ended 31 Dec 2009 GBP'000  Year ended 31 Dec 2008 GBP'000

 Non-executive
 R Horney                                   50                              50
 I Ling                                     30                              30
 S Leckie                                   30                              30
 R Pirouet                                  30                              30
                                           140                             140

Annual Directors' fees are an aggregate of GBP140,000 per annum.

6.       Other income

                                                   Year ended         Year ended
                                                  31 Dec 2009        31 Dec 2008
                                                      GBP'000            GBP'000

 Gains arising from cease of control on                10,653                  -
 joint venture
 Gains on disposal of financial assets                  3,362                  -
 available-for-sale
 Dividend income from financial assets                    889                  -
 available-for-sale
 Others                                                    14                 19

 Total other income                                    14,918                 19

Included in the gains arising from cease of control on joint venture is a translation gain of GBP9.2 million (Note 18(b)) arising in previous years.  This gain was recorded as part of the translation reserve in previous years.  During the year, as the Group ceased to have joint control over the joint venture, this translation gain was reclassified to the consolidated income statement of the Group.  The balance of GBP1.5 million is the fair value gain calculated based on the agreed selling price of the 50% equity interest in the joint venture (Note 13).  

7.       Net financing expenses

                                                   Year ended         Year ended
                                                  31 Dec 2009        31 Dec 2008
                                                      GBP'000            GBP'000

 Interest income                                        1,447              2,627
 Net foreign exchange gains                            17,818                  -
 Gain on sale of foreign currency options                   -              6,644
 realised
 Changes in fair value of financial                     8,028              1,572
 derivatives

 Financial income                                      27,293             10,843

 Gross interest expenses                             (24,260)           (22,951)
 Net foreign exchange losses                                -           (49,847)
 Changes in fair value of financial                   (5,133)           (10,658)
 derivatives

 Financial expenses                                  (29,393)           (83,456)

 Net financing expenses                               (2,100)           (72,613)

The Group has not capitalised any interest in the year.

Net foreign exchange gains in 2009 mainly arose from interest-bearing loans denominated in USD held by the Group's subsidiaries incorporated in Jersey as a result of the appreciation of the GBP against the USD.

8.       Income tax expense

i)       Income tax in the consolidated income statement represents:

                                                   Year ended         Year ended
                                                  31 Dec 2009        31 Dec 2008
                                                      GBP'000            GBP'000

 Current tax
 Provision for PRC enterprise income tax                 (19)              (746)
 Provision for PRC withholding income tax               (887)              (451)

                                                        (906)            (1,197)

 Deferred tax
 Tax losses                                             (302)                252
 Fair value change of financial                         (161)                158
 derivatives
 Revaluation of investment properties                     197           (12,609)
 Fair value change of other investment                (1,148)                  -
 (Note 14)
 Foreign exchange differences                              58              1,004
 Others                                                  (12)                  6

                                                      (1,368)           (11,189)

 Reversal of land appreciation tax                          -                623

 Total                                                (2,274)           (11,763)

In accordance with a change in the Income Tax (Jersey) Law 1961, the income tax rate for companies in Jersey was reduced from 20% to 0% with effect from 3 June 2008. Exempt company status for all new companies was abolished. The Company's 2008 exempt company status remained in place until 31 December 2008. On 1 January 2009 the Company moved to an income tax rate of 0% and accordingly income, other than Jersey source income (excluding bank deposit interest), is taxed at 0%.

With effect from 6 May 2008, a 3% Goods and Services Tax (GST) was introduced under the Goods and Services Tax (Jersey) Law 2007. The Company may apply for an exemption under the Goods and Services Tax (International Service Entities) (Jersey) Regulations 2008 on payment of an annual fee of GBP100. The Company has been granted international service entity status for 2009.

Pursuant to the PRC tax rules and regulations, the Group's PRC subsidiaries are subject to PRC income tax at a rate of 25%.

ii)      Reconciliation between tax expense and accounting profit at applicable tax rate:

                                                   Year ended         Year ended
                                                  31 Dec 2009        31 Dec 2008
                                                      GBP'000            GBP'000

 Profit/(loss) before taxation                         20,124           (68,514)
 Less: Land appreciation tax                                -                623

                                                       20,124           (67,891)

 Notional tax on profit /(loss) before                (5,031)             16,973
 tax, calculated at 25% (2008: 25%)
 Non-deductible expenses net of                         6,457           (28,851)
 non-taxable income
 Deferred tax assets not recognised for               (1,271)              (138)
 tax losses of current year
 Deferred tax liabilities not recognised              (1,542)                 81
 in previous years
                                                      (1,387)           (11,935)

 Land appreciation tax                                      -                623
 Withholding income tax                                 (887)              (451)

 Income tax                                           (2,274)           (11,763)

Taxable income of the Group for the year ended 31 December 2009 was mainly generated by Shanghai Huatian Property Development Company Limited, Shanghai Central Land Estate Company Limited and Shanghai Vision Honest Real Estate Development Company Limited, which are subject to PRC income tax at a rate of 25%.

9.       Earnings per share

(a)     Basic earnings per share

The calculation of the basic earnings per share is based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding during the year ended 31 December 2009.  

(b)     Diluted earnings per share

The diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding and, when dilutive, adjusted for the effect of all potentially dilutive share options.

(c)     EPRA diluted earnings per share

The EPRA diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding and is adjusted for the effect of all potentially dilutive share options and other performance adjusting factors recommended by the European Public Real Estate Association (EPRA). The EPRA earnings exclude investment properties and properties under development revaluations, movements in the fair value of financial instruments and their related tax consequences.

The detailed calculation of the earnings per share is listed below:

                                                   Year ended         Year ended
                                                  31 Dec 2009        31 Dec 2008
                                                      GBP'000            GBP'000

 Profit/(loss) attributable to ordinary                17,850           (80,277)
 shareholders

 i) Basic earnings per share

 Weighted average number of shares for the         48,899,825         50,915,682
 year (Basic)
 Basic earnings/(loss) per share                      GBP0.37          (GBP1.58)

 ii) Diluted earnings per share

 Weighted average number of ordinary               48,899,825                N/A
 shares (Basic)
 Effect of share options in issue                     646,268                N/A

 Weighted average number of ordinary               49,546,093                N/A
 shares (Diluted)
 Diluted earnings per share                           GBP0.36                N/A

 iii) Diluted EPRA earnings/(loss) per
 share

 Profit/(loss) attributable to ordinary                17,850                N/A
 shareholders (Diluted)
 Revaluation movement on investment                   (4,844)                N/A
 properties and properties under
 development
 Revaluation of properties held in joint                2,962                N/A
 ventures, net of tax
 Movement in fair value of financial                  (2,895)                N/A
 instruments
 Deferred tax                                            (36)                N/A
                                                       13,037                N/A

 Weighted average number of ordinary               49,546,093                N/A
 shares (Diluted)

 Diluted EPRA earnings/ (loss) per share              GBP0.26                N/A

Amounts of diluted loss per share and diluted EPRA loss for the year ended 31 December 2008 have not been disclosed because the share options outstanding did not have a dilutive effect on the Group's loss for the year.

10.     Investment properties

                                   2009     2008
 Group                          GBP'000  GBP'000

 Balance at 1 January           763,558  497,133
 Additions                        1,443    1,508
 Foreign currency adjustments  (70,610)  241,267
 Fair value adjustments          16,904   23,650

 Balance at 31 December         711,295  763,558

Accounting judgements

The most significant judgements made in preparing these financial statements relate to the carrying value of properties stated at open market value at the balance sheet date. The Group uses external independent professional valuers in calculating these valuations.

The values of the properties are dependent on a variety of factors applying in the market in which the Group operates including: local economic conditions, legislation, economic growth prospects, interest rates, inflation, customer demand and levels of investment yield. Furthermore, the values of individual properties are determined by their specific usage and locations, the quality of their tenants and the rents paid by them and their potential for alternative usage or development.

The board of Directors mitigates these risks by employing an expert professional management team and by adopting appropriate strategic objectives and by incentivising management to meet these objectives through appropriate performance-based remuneration packages.

At 31 December 2009, the investment properties and properties under development (Note 11) were revalued at fair value. The valuations were undertaken by independent international valuation firm DTZ Debenham Tie Leung Limited (DTZ) and were carried out in compliance with the Royal Institute of Chartered Surveyors Practice Standards. The rental yields applied in the valuations for office and retail properties in the PRC were estimated to be in the range of 6.00%-6.25% p.a.

Revaluation gains of GBP16.9 million (2008: GBP23.7 million) have been taken to the consolidated income statement for the year. All the investment properties are held by the Group's subsidiaries incorporated in the PRC. The foreign currency adjustments arose as a result of the appreciation of the GBP against the RMB.

All the investment properties are rented out under operating leases.

As at 31 December 2009 investment properties with a total carrying value of GBP711.3 million were pledged as collateral for the Group's borrowings (Note 21).

11.     Properties under development

                                   2009     2008
                                GBP'000  GBP'000

 Group

 Balance at 1 January           149,797   87,280
 Additions                        1,390    2,156
 Foreign currency adjustments  (13,512)   45,877
 Fair value adjustments        (12,060)   14,484

 Balance at 31 December         125,615  149,797

At 31 December 2009 the properties under development were revalued at fair value. The valuations were undertaken by the independent international valuation firm DTZ (Note 10).

With the adoption of the amendment to IAS 40 "Investment Property" described in Note 2 (a), the changes in the fair value of the properties under development were taken to the consolidated income statement.

The Group has not capitalised any interest in the year.

12.     Investment in subsidiaries - Company

                                         2009     2008
                                      GBP'000  GBP'000

 Balance at 1 January                 229,215  216,709
 (Reductions)/additions in the year  (14,445)   12,506

 Balance at 31 December               214,770  229,215

All of the Company's subsidiaries are wholly owned. A list of subsidiaries is set out in Note 28. The principal subsidiaries in the PRC which hold properties are as follows:

                                                          Ownership  Ownership
                                                               2009       2008

 Shanghai Vision Honest Real     People's Republic of           100        100
 Estate Development Company      China
 Limited
 Shanghai Central Land Estate    People's Republic of           100        100
 Company Limited                 China
 Shanghai Huatian Property       People's Republic of           100        100
 Development Company Limited     China
 Beijing Dream Land Industrial   People's Republic of           100        100
 Development Company Limited     China

The principal subsidiaries that have entered into borrowing facilities on behalf of the Company and/or its property holding subsidiaries are:

                                                          Ownership  Ownership
                                                               2009       2008

 Shanghai Vision Honest Real     People's Republic of           100        100
 Estate Development Company      China
 Limited
 Shanghai Central Land Estate    People's Republic of           100        100
 Company Limited                 China
 Shanghai Huatian Property       People's Republic of           100        100
 Development Company Limited     China
 CREO (Shanghai Central Plaza)                Jersey            100        100
 Limited
 CREO (Shanghai City Centre)                      Jersey        100        100
 Limited
 Grand Eastern Limited           British Virgin Islands         100        100

13.     Investment in joint venture /Other investment

(a)     Investment in joint venture

                                               2009     2008
                                            GBP'000  GBP'000

 Balance at 1 January                        40,482   21,504
 Share of (loss)/ profit of joint venture   (4,191)    6,875
 Share of translation reserve               (3,535)   12,103
 Derecognition                             (32,756)        -

 Balance at 31 December                           -   40,482

(b)     Other investment

                      2009     2008
                   GBP'000  GBP'000

 Other investment   34,250        -

As at 31 December 2008, the Group had 50% of the equity interest in a joint venture, Qingdao Shangshi CREO Real Estate Co., Ltd (CREO Qingdao), which was established in Qingdao, Shandong Province, on 25 April 2007. 

CREO Qingdao is jointly owned by CREO (Pudong) Limited (CREO Pudong), a wholly-owned subsidiary of the Company, SIIC Shanghai (Holdings) Co., Ltd. (SIIC), a state-owned enterprise and SIIC's subsidiary Shanghai Shangshi City Development & Investment Co., Ltd. (Shanghai Shangshi). CREO Pudong holds a 50% stake while SIIC and Shanghai Shangshi own 45% and 5% respectively. 

In 2009, the Group reached an agreement with Shanghai Shangshi to sell its 50% equity interest in CREO Qingdao at a price of RMB376.0 million (GBP34.3 million).  The parties agreed that any risks and rewards arising from CREO Qingdao after 30 November 2009 to the date of the change of shareholder will be the full responsibility of Shanghai Shangshi. Furthermore, on 31 December 2009, those Directors of CREO Qingdao, who were appointed by CREO Pudong, resigned from the board of Directors of CREO Qingdao. As at 31 December 2009, the transaction remained subject to approval from the relevant government bodies' approval.

The Directors of the Company are of the view that as of 31 December 2009, the Group ceased to have joint control on CREO Qingdao, and therefore derecognised its investment of GBP32.8 million in the joint venture and recognised its investment in CREO Qingdao as other investment at its fair value of GBP34.3 million. There is a fair value gain of GBP1.5 million (Note 6).

14.     Deferred tax assets and liabilities

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following items:

 Group                                                       Assets  Liabilities
                                                               2009         2009
                                                            GBP'000      GBP'000

 Fair value change in investment properties and properties        -    (138,683)
 under development
 Fair value change in financial derivatives                     232            -
 Equity investment                                                -      (1,148)
 Others                                                         129            -

 Deferred tax assets/(liabilities)                              361    (139,831)

The PRC income tax at a rate of 25% would be charged if the Group decided to realise its investment properties and properties under development at the year-end valuations through the sale of the underlying assets after the year end.

 Deferred tax liabilities

                                              2009     2008
                                           GBP'000  GBP'000

 Balance at 1 January                      153,158   92,835
 Recognition of deferred tax liabilities       737   12,786
 Foreign currency adjustments             (14,064)   47,537

 Balance at 31 December                    139,831  153,158

 Deferred tax assets

                                              2009     2008
                                           GBP'000  GBP'000

 Balance at 1 January                        1,136      254
 Recognition of deferred tax assets             83      707
 Foreign currency adjustments                 (86)      290
 Reversal for the year                       (772)    (115)

 Balance at 31 December                        361    1,136

Unrecognised deferred tax liability

Pursuant to the PRC Corporate Income Tax Law, which took effect from 1 January 2008, a 10% withholding tax is levied on dividends declared to foreign enterprise investors. A lower withholding tax rate may be applied if there is a tax treaty arrangement between the PRC and the jurisdiction of the foreign enterprise investors.

As at 31 December 2009, except for its investment in CREO Qingdao, no deferred withholding tax in respect of the Group's investment in the PRC was accrued for, because in the opinion of the Directors of the Company, the Group does not expect to pay dividends out of the recognised but undistributed profits of the Group's PRC subsidiaries for the year 2009 within the next 12 months.

Upon the Group ceased to have joint control over CREO Qingdao, a deferred withholding tax liability of GBP1.15 million was accrued for at 10% of the difference between the fair value of the other investment and the Group's investment cost in CREO Qingdao.

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following item:

                2009     2008
             GBP'000  GBP'000

 Tax losses    1,240      217

Deferred tax assets have not been recognised in respect of this item because it is not probable that future taxable profits will be available against which the Group could utilise the benefits in the future. These tax losses mainly arose from the operating losses of the Company's subsidiaries in the PRC in prior and current years and will expire in 2013 and 2014.

15.     Financial assets available-for-sale

                                                    2009              2008
                                                Group  Company    Group  Company
                                              GBP'000  GBP'000  GBP'000  GBP'000

 LuxChina Property Development Company          7,373        -   14,117    5,998
 Limited
 Investment in RREEF China Commercial Trust     4,259    4,259    7,803    7,803
 Investment in SJM Investments                      -        -      940      940
                                               11,632    4,259   22,860   14,741

LuxChina Property Development Company Limited

At 31 December 2009 the Group holds a 5% equity interest in LuxChina Property Development Company Limited, a property investment company located in the PRC. This balance decreased because the Group disposed of 4.75% of its equity interest in 2009.

RREEF China Commercial Trust

In November 2008 the Company acquired 33.5 million units (7.21%) in RREEF China Commercial Trust (RREEF CCT), a Hong Kong-listed Real Estate Investment Trust (REIT), at an average price of HKD2.58 per unit, through on-market purchases.

RREEF CCT was listed on the Main Board of the Stock Exchange of Hong Kong Limited (HKSE) on 22 June 2007 and currently owns an international grade A office and retail complex in the Chaoyang District, Beijing. The property, Beijing Gateway Plaza, is a commercial real estate asset of approximately 130,000 square metres. RREEF CCT is managed by RREEF China REIT Management Limited, which is owned by RREEF Alternative Investments through Deutsche Bank Asia Pacific.

In 2009, the Company disposed of 16.9 million units in RREEF CCT. As at 31 December 2009, the Company held 16.6 million unites (3.56%) in RREEF CCT. The investment units were carried at fair value at 31 December 2009, which was assessed as the bid price of the units (HKD3.24) at the 31 December 2009 market close.

SJM Holdings Limited

In July 2008 the Company purchased 6.3 million shares at HKD 3.08 each in SJM Holdings Limited (SJM) as part of SJM's initial public offering on the HKSE. SJM is a holding company whose principal asset is the controlling interest in Sociedade de Jogos de Macau SA. The Company disposed of all of the investment in SJM in 2009.

16.     Trade and other receivables

                                                   2009              2008
                                               Group  Company    Group  Company
                                             GBP'000  GBP'000  GBP'000  GBP'000

 Trade receivables due from third parties      1,110        -      463        -
 Trade receivables due from related parties        -        -       42        -
 Prepayments                                   1,136        -    1,784        -
 Non-trade receivables                         3,366       80    1,832        9
 Bank deposit interest receivable                  -        -        1        -
 Derivative financial instruments                293        -    5,133    5,133

                                               5,905       80    9,255    5,142

At 31 December 2009, the carrying amount of derivative financial instruments is the fair value of an interest rate cap held by the Group.

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

17.     Total cash balances

                                  2009              2008
                              Group  Company    Group  Company
                            GBP'000  GBP'000  GBP'000  GBP'000

 Bank balances               37,753    6,018   42,820   10,097
 Call deposits                    -        -   23,820      353

 Cash and cash equivalents   37,753    6,018   66,640   10,450
 Restricted cash             10,273        -   18,356        -

 Total cash                  48,026    6,018   84,996   10,450

The cash balance of GBP48 million at 31 December 2009 includes restricted cash of GBP10.3 million. The restricted cash relates to funds deposited in interest reserve accounts to repay borrowings as they fall due.

The RMB is not a freely convertible currency and the remittance of funds out of the PRC is subject to exchange restrictions imposed by the PRC government.

18.     Capital and Reserves

The reconciliation between the opening and closing balances of each component of the Group's consolidated equity is set out in the consolidated statement of changes in equity.  Details of changes in the Company's individual components of equity between the beginning and the end of the year are set out below:

                                         Stated          Share          Fair              Retained     Total
                                        capital         option         value             earnings/   GBP'000
                                        account        reserve       reserve         (accumulated)
                                        GBP'000        GBP'000       GBP'000               losses)
                                                                                           GBP'000

 Balance at 1 January 2008              250,858          5,407             -              (13,031)   243,234
 Total comprehensive income for               -              -           383              (52,611)  (52,228)
 the year
 Issue of new shares                      3,521              -             -                     -     3,521
 Purchase of own shares                 (7,175)              -             -                     -   (7,175)
 Equity-settled share-based                   -         15,986             -                     -    15,986
 transactions
 Share options exercised                    812          (722)             -                     -        90

 Balance at 31 December 2008            248,016         20,671           383              (65,642)   203,428

 Total comprehensive income for               -              -           210              (10,213)  (10,003)
 the year
 Issue of new shares                     13,792       (13,792)             -                     -         -
 Purchase of own shares                   (922)              -             -                     -     (922)
 Equity-settled share-based                   -            729             -                     -       729
 transactions
 Share options exercised                     67           (60)             -                     -         7

 Balance at 31 December 2009            260,953          7,548           593              (75,855)   193,239

(a)     Stated capital account

The authorised share capital of the Company is unlimited. The issued share capital of the Company at 31 December 2009 was 49,536,004 ordinary shares of no par value (number of shares at 31 December 2008: 47,703,038 shares).

 Ordinary share capital in thousands of shares

 Shares as at 1 January 2008- fully paid         50,676
 Options exercised                                  106
 Issue of new shares                                421
 Share buyback                                  (3,500)

 On issue at 31 December 2008 - fully paid       47,703

 Options exercised (i)                                9
 Issue of new shares (ii)                         2,264
 Share buyback (iii)                              (440)

 On issue at 31 December 2009 - fully paid       49,536

i)       Options exercised

There were 8,800 options exercised in 2009 at an exercise price of GBP0.85.

ii)       Issue of new shares

In April 2009, 2,264,166 new ordinary shares of no par value were issued to THCL, being the equity component of the performance fee for the year ended 31 December 2008.

iii)      Purchase of own shares

During the year, the Company repurchased its own shares on The Alternative Investment Market of the London Stock Exchange as follows:

 Month/year    Number of shares  Price paid per  Aggregated price
                                          share              paid
                                            GBP           GBP'000

 January 2009           100,000            2.05               205
 January 2009           340,000            2.11               717

                                                              922

(b)     Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. A substantial part of the translation reserve in 2009 arose as a result of translating the financial statements of the Company's PRC subsidiaries. The functional currency of these subsidiaries is RMB, which depreciated by 10% against the GBP during the year.

                                                         Year ended   Year ended
                                                        31 Dec 2009  31 Dec 2008
                                                            GBP'000      GBP'000

 Change in translation reserve during the year             (54,914)      221,424
 Reclassification adjustments for amounts transferred
 to profit or loss
      - liquidation of subsidiaries                         (9,777)            -
      - cease of joint control                              (9,159)            -

 Net movement in translation reserve during the year       (73,850)      221,424
 recognised in other comprehensive income

(c)     Share option reserve

The share option reserve represents the fair value amount in respect of the outstanding options that have been charged through the income statement and the fair value of the performance fee that is required to be settled in equity to the investment manager in accordance with the investment advisory agreement. There were 8,800 options exercised during the year at an exercise price of GBP0.85.

(d)     PRC statutory reserve

Transfers from retained earnings to PRC statutory reserves were made in accordance with the relevant PRC rules and regulations and the articles of association of the Company's subsidiaries incorporated in the PRC and were approved by the respective boards of Directors. These PRC entities are required to transfer at least 10% of their profit after taxation, as determined under accounting principles generally accepted in the PRC to the reserve fund until the balance of such reserve fund is equal to 50% of the registered capital. This fund is non-distributable other than upon liquidation. Transfers to this fund must be made before distribution of dividends to the equity holders.

(e)     Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets.

                                                         Year ended   Year ended
                                                        31 Dec 2009  31 Dec 2008
                                                            GBP'000      GBP'000

 Change in fair value recognised during the year                636          383
 Reclassification adjustments for amounts transferred         (426)            -
 to profit or loss

- gain on disposal

 Net movement in fair value reserve during the year             210          383
 recognised  in other comprehensive income

(f)      Dividends

Dividends have not been provided for and there are no income tax consequences.

(g)     Tax effects relating to each component of other comprehensive income

There is no income tax effect relating to each component of other comprehensive income for 2009.

(h)     Capital management

The Group's objectives when managing capital are:

(i)      to safeguard the entity's ability to continue as a going concern

(ii)     to grow the assets of the Group and create value for investors

(iii)     to maintain significant financial resources to mitigate against financial risk and ensure any liquidity risk is minimised.

The Group sets the amount of capital in proportion to risk. The Group manages its capital structure and adjusted it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The Group's capital that it manages is made up of stated capital and reserves as set out in the consolidated statement of changes in equity along with the movements in the period. There are no externally imposed capital requirements for the Group. The liquidity risk to the Group is set out in Note 26(b).

19.     Share options

There were no share options granted in 2009 pursuant to the terms of the Share Option Scheme.

In 2009, 8,800 options at an exercise price of GBP0.85 were exercised, while  27,000 options at GBP7.56 and 65,000 options at GBP6.35 lapsed.

The fair values of the options were calculated using the binomial option pricing model.  The inputs into the model were as follows:

 Tranche                                 One         Two       Three        Four

 Options granted by strike price     GBP0.85     GBP7.56    GBP8.065     GBP6.35
 Number of Options                 1,100,000   1,002,000      30,000     500,000
 Expected volatility                  22.02%      22.21%      21.87%      53.89%
 Expected life                           4.5         4.5         4.5           6
 Risk free rate                        5.16%       5.50%       4.33%       4.47%
 Earliest exercise date           01.02.2008  11.07.2009  25.01.2010  10.09.2013
 Expiry date                      31.01.2013  10.07.2014  24.01.2015  09.09.2015

The share option reserve represents the Directors' best estimate of the fair value of the share options conditionally granted at 31 December 2009.

The total share options outstanding at 31 December 2009 are summarised as follows:

 Tranche                                      One       Two   Three      Four

 Outstanding at 31 December 2008          783,800   864,000  30,000   500,000
 Expired during 2009                            -  (27,000)       -  (65,000)
 Exercised during 2009                    (8,800)         -       -         -
 Outstanding at 31 December 2009          775,000   837,000  30,000   435,000
 Exercisable balance at 31 December 2009  775,000   837,000       -         -

During 2009 the Company recognised compensation expenses of GBP0.73 million relating to the equity settled share-based awards. The fair value of share-based payment awards is expensed over the requisite service period, together with a corresponding increase in equity.

The estimated grant date fair value of the four tranches of options granted was as follows:

                                      Number of            Estimated  Expensed in
                                        Options           Grant Date         2009
                                        Granted           Fair Value      GBP'000
                                                             GBP'000

 Options granted 25 April 2007        1,100,000                7,480            -
 Options granted 11 July 2007         1,002,000                2,164          408
 Options granted 24 January              30,000                   63           29
 2008
 Options granted 10 September           500,000                1,765          292
 2008
   
                                      2,632,000               11,472          729

The options outstanding at 31 December 2009 have a weighted average maximum contractual life of 4.22 years.

The weighted average share price at the date of exercise for share options exercised in 2009 was GBP2.04 (2008: GBP7.67).

20.     Net asset value per share

The net asset value (NAV) per share as at 31 December 2009 was as follows:

 Group                                               2009        2008
                                                  GBP'000     GBP'000

 Net assets attributable to shareholders          429,285     485,261
 Proceeds from exercise of share options            9,991      10,615

 Adjusted net assets                              439,276     495,876

 i) Basic net asset value per share
 Number of ordinary shares in issue            49,536,004  47,703,038
 Basic net asset value per share                  GBP8.67    GBP10.17

 ii) Diluted net asset value per share
 Number of ordinary shares in issue            49,536,004  47,703,038
 Effect of share options in issue               2,077,000   2,177,800

 Number of ordinary shares in issue (diluted)  51,613,004  49,880,838

 Diluted net asset value per share                GBP8.51     GBP9.94

 iii) Diluted EPRA net asset value per share
 Adjusted diluted net assets

per above (diluted)                           439,276     495,876
 Fair value of financial instruments                9,091      12,120
 Deferred tax                                     138,451     152,501

 Diluted EPRA net assets                          586,818     660,497

 Number of ordinary shares in issue (diluted)  51,613,004  49,880,838

 Diluted EPRA Net asset value per share          GBP11.37    GBP13.24

The dilutive effect for December 2009 above assumes 775,000 options at a strike price of GBP0.85, 837,000 options at a strike price of GBP7.56, 30,000 options at a strike price of GBP8.065 and 435,000 options at a strike price of GBP6.35 are exercised.

The diluted EPRA NAV per share excludes the mark-to-market of financial instruments which are economically effective hedges and deferred taxation on revaluations on investment properties and properties under development and financial instruments, and is calculated on a fully diluted basis.

 Company                                        2009        2008
                                             GBP'000     GBP'000

 Net assets attributable to shareholders     193,239     203,428
 Proceeds from exercise of share options         N/A         N/A

 Adjusted net assets                             N/A         N/A

 Number of shares in issue:                     2009        2008
 Ordinary shares - basic                  49,536,004  47,703,038
 Ordinary shares - diluted                       N/A         N/A

 Net asset value per ordinary share

 - basic                                     GBP3.90     GBP4.26
 - diluted                                       N/A         N/A

Diluted net asset value per ordinary share for the year ended 31 December 2009 has not been disclosed, as the share options outstanding during the year do not have a dilutive effect on the net asset of the Company for the year.

21.     Interest-bearing loans and borrowings

The carrying amount of Group loans is set out below. For more information about the Group's exposure to interest rate and currency risk, see Note 26.

                                              2009     2008
                                           GBP'000  GBP'000

 Bank borrowings - secured (Note 26(b))    316,437  345,356
 Less: loan issue costs                      (612)  (1,276)

                                           315,825  344,080

 Long-term loans

 Principal
 Balance at 1 January                      345,356  248,574
 Reclassification to current portion     (272,096)        -
 Additions                                  27,536        -
 Foreign currency adjustments              (6,312)   96,782

 Balance at 31 December                     94,484  345,356

 Issue costs
 Balance at 1 January                        1,276    1,939
 Reclassification to current portion         (923)        -
 Amortisation                                (137)    (663)

 Balance at 31 December                        216    1,276

 Net Balance                                94,268  344,080

                                           2009     2008
                                        GBP'000  GBP'000

 Long-term loans within one year

 Principal
 Balance at 1 January                         -        -
 Reclassification from long-term loan   272,096        -
 Additions                                  135        -
 Repayments                            (25,719)        -
 Foreign currency adjustments          (24,559)        -

 Balance at 31 December                 221,953        -

 Issue costs
 Balance at 1 January                         -        -
 Additions                                    -        -
 Reclassification from long-term loan       923        -
 Amortisation                             (527)        -

 Balance at 31 December                     396        -

 Net Balance                            221,557        -

The secured bank loans borrowed within the PRC as at 31 December 2009 were secured by the Group's investment properties with a total carrying amount of GBP711.3 million. The secured bank loans borrowed outside of the PRC as at 31 December 2009 were secured by the equity interests of certain subsidiaries of the Company.

In 2009, the Group repaid its borrowings of EUR18.8 million and RMB97 million. At the same time, the Group borrowed multi-currency three-year loans equivalent to GBP27.7 million (USD37.8 million plus RMB50 million).

22.     Trade and other payables

                                         2009              2008
                                     Group  Company    Group  Company
                                   GBP'000  GBP'000  GBP'000  GBP'000

 Payables due to related parties    16,446   16,446   34,846   34,846
 Trade payables                      1,365        -    1,839       15
 Advance from customers                709        -      480        -
 Other taxes payable                 4,663        -    5,426        -
 Non-trade payables                 16,289        -   19,194      304
 Accrued expenses                    3,957      856    5,939    1,136
 Derivative financial instruments    9,384        -   17,253        -
 Payable on share buybacks               -        -    5,125    5,125
 Due to subsidiary                       -   14,586        -   14,694

                                    52,813   31,888   90,102   56,120

Payables due to related parties at the year end totalled GBP16.4 million, including cash components of 2008's performance fees of GBP12.6 million and 2009's management fees of GBP3.8 million due to THCL and accounting services fees of GBP50,000 due to Treasury Holdings (Note 27).

Trade payables are interest free and are due within one year. The Directors consider that the carrying amount of trade and other payables approximate their fair value.

Derivative financial instrument relates to the fair value of floating to fixed rate swaps on onshore and offshore floating rate debts. The fair value represents the net present value of the difference between the cash flows at the contracted rates and the interest rates prevailing at the reporting date as at 31 December 2009.

23.     Operating leases - Leases as lessor

The Group leases out its investment properties under operating leases. The future minimum lease payments receivable under non-cancellable leases are as follows:

                                   2009              2008
                               Group  Company    Group  Company
                             GBP'000  GBP'000  GBP'000  GBP'000

 Less than one year           20,585        -   24,518        -
 Between one and five years   29,336        -   15,750        -
 More than five years          1,614        -      641        -

                              51,535        -   40,909        -

24.     Capital commitments

Construction and refurbishment

In 2009, the Group entered into contracts to develop or refurbish the properties under development and the investment properties respectively. At 31 December 2009, the commitment under those contracts amounted to GBP3.4 million (2008: GBP3.0 million).

25.     Contingent liabilities
             
              On 3 August 2009, a main contractor filed an arbitration case to China International Economic & Trade Arbitration Committee in Beijing against Beijing Dreamland Industrial Development Co., Ltd (Beijing Dreamland), one of the Company's subsidiaries, alleging that Beijing Dreamland materially breached and illegally terminated the main construction contract signed by both parties in August 2008 and on that basis, asking for a payment of GBP1.4 million as its fee for construction already undertaken and a compensation of its loss of profits.  The Directors of the Company is of the view that it is not probable that such allegation will result in an outflow of resources of the Group in the future and therefore do not consider it necessary to make any provision in this respect.

26.     Financial Instruments

(a)     Credit risk

Credit risk is the risk of financial loss to the Group if a customer, or counterparty to a financial instrument, fails to meet its contractual obligations. The majority of the Group's financial assets consist primarily of its cash and cash equivalents and trade and other receivables.

Cash and cash equivalents

The Group limits its exposure to credit risk on its investments by only investing surplus funds with approved financial institutions with credit ratings of "A" or equivalent. The treasury management policy of the Group is to hold no more than 10% of cash on deposit with any one bank not covered by a National Government bank guarantee scheme.

Trade and other receivables

Trade receivables relate mainly to the Group's tenants. The Group's exposure to credit risk is influenced by the individual characteristics of each tenant. Customers are grouped according to their trade/business e.g. retail, office, mixed use, residential. Receivables are reviewed monthly. There are no significant concentrations of credit risk with a single customer as the Group has a large number of quality tenants who pay their rentals in advance and some properties are rented subject to deposits, so that in the event of non-payment the Group has recourse to this deposit.

Included in other receivables are derivative financial instruments of GBP0.3 million (2008: GBP5.1million). The credit exposure from these derivative financial instruments is combined with cash and cash equivalents in determining gross credit exposure to a single counterparty.

The maximum exposure to credit risk at 31 December 2009 was:

                                     
                               2009       2008
                            GBP'000    GBP'000
                                     
 Cash and cash equivalents   37,753     66,640
 Restricted cash             10,273     18,356
 Short term receivables       4,476      2,338
                                     
 Total financial assets      52,502     87,334
                                     

Impairment losses

No impairment losses were recognised in the year ended 31 December 2009.

Guarantees

At 31 December 2009 no guarantees were outstanding.

(b)     Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach is to ensure as far as possible that it will always have sufficient liquidity (cash and liquid resources) to meet its liabilities. As at 31 December 2009, the Group maintained cash balances of approximately GBP48.0 million, including restricted cash balance of GBP10.3 million, at the year end which were mainly held on current deposits and which earned interest at the prevailing variable market rates.

As at 31 December 2009, the Group has a bank loan balance of GBP equivalents 222.0 million, which will fall due in October 2010. To manage the liquidity risk, the Directors of the Company is currently in negotiation with several commercial banks to refinance the above loans to the best benefits of the Group. 

 Maturity profile of liabilities                    
                                              2009       2008
                                           GBP'000    GBP'000
 In one year or less, or on demand         277,950     92,326
 In more than one                                   

but not more than two years             70,590    290,706
 In more than two                                   

but not more than five years            29,302     75,314
 In more than five years                         -          -
                                           377,842    458,346
                                                    
                                                    
                                                    

At 31 December 2009

                        Carrying    Contractual                                                       
 Non-derivative           amount     cash flows     2010       2011       2012       2013       2014    >5 Years
 financial liabilities   GBP'000     GBP'000     GBP'000    GBP'000    GBP'000    GBP'000    GBP'000     GBP'000
                                                                                                      
 USD loans with variable                                                                              

interest             237,188     245,197     152,160     68,128     24,909          -          -           -
 RMB loans with variable                                                                              

interest              79,249      84,074      79,132        549      4,393          -          -           -
 Trade and other                                                                                      

payable              38,057      38,057      38,057          -          -          -          -           -
                                                                                                      
                         354,494     367,328     269,349     68,677     29,302          -          -           -
                                                                                                      
 Derivative                                                                                           
 financial liabilities                                                                                
                                                                                                      
 Interest rate                                                                                        

swaps                 9,384      10,514       8,601      1,913          -          -          -           -
                                                                                                      
                         363,878     377,842     277,950     70,590     29,302          -          -           -

At 31 December 2008
                                                                                                          
                            Carrying    Contractual                                                       
 Non-derivative               amount     cash flows     2009       2010       2011       2012       2013    >5 Years
 financial liabilities       GBP'000     GBP'000     GBP'000    GBP'000    GBP'000    GBP'000    GBP'000     GBP'000
                                                                                                          
 RMB loans fixed at 7.5%       9,730      10,643         730      9,913          -          -          -           -
 USD loans with variable                                                                                  

interest                 235,465     251,364       8,471    168,762     74,131          -          -           -
 EUR loans fixed at 6.6%      17,906      19,388       1,185     18,203          -          -          -           -
 RMB loan with variable                                                                                   

interest                  82,255      92,560       5,889     86,671          -          -          -           -
 Trade and other                                                                                          

payable                  67,423      67,423      67,423          -          -          -          -           -
                                                                                                          
                             412,779     441,378      83,698    283,549     74,131          -          -           -
                                                                                                          
 Derivative                                                                                               
  financial liabilities                                                                                   
                                                                                                          
 Interest rate                                                                                            

swaps                    17,253      16,968       8,628      7,157      1,183          -          -           -
                                                                                                          
                             430,032     458,346      92,326    290,706     75,314          -          -           -

(c)     Currency risk

Currency translation exposure results when the Group translates a foreign currency subsidiary's financial data to its functional currency for consolidated financial reporting.

The Group has five significant overseas subsidiary and joint venture undertakings in the PRC and four holding companies in Hong Kong. The assets, liabilities, revenues and expenses of the PRC subsidiaries are denominated in RMB and the Hong Kong subsidiaries in HKD. The investments in the PRC subsidiaries are financed, predominantly in USD and EUR as the RMB is a controlled currency. The Group's balance sheet can be significantly affected by movements in the RMB/USD and RMB/EUR exchange rates on the net assets of the PRC subsidiaries.

The RMB is not an openly traded currency so much of the Group's cash exposure is to the USD. The Group has therefore entered into a USD call/ RMB put warrant to hedge against a potential weakening of the USD against the RMB.

The Group is also exposed to movements in the RMB denominated foreign currency subsidiary balances against the GBP, which is the presentation currency adopted by the Group. A weakening of the GBP against the RMB would have a positive effect on balance sheet positions in GBP terms as experienced in 2008, with the RMB balances translated at closing exchange rates. Conversely, a strengthening GBP against the RMB would have a negative impact on balance sheet positions.

The Group's exposure to foreign currency risk was as follows based on notional amounts:

 GBP '000                  RMB          USD         HKD         EUR
                                                         
 31 December 2009                                        
 Cash and                                                

cash equivalents         -       11,363       3,250       1,777
 Restricted cash             -        7,060           -           -
 Trade and                                               

other receivables        -       45,943     199,399      14,658
 Foreign currency                                        

derivatives              -            -           -           -
 Financial assets                                        

available-for-sale       -            -       4,259           -
 Other investment       34,250            -           -           -
 Interest-bearing loans                                  

and borrowings           -    (213,676)           -           -
 Trade and                                               

other payables           -     (31,286)    (31,255)    (14,658)
 Net exposure           34,250    (180,596)     175,653       1,777

 GBP '000                          RMB                USD               HKD             EUR

 31 December 2008
  
 Cash and

cash equivalents                 -             28,305             3,387           8,456
 Restricted cash                     -             11,903                 -             800
 Trade and

other receivables                -             39,039           210,189          14,947
 Foreign currency

derivative                   5,133              5,133                 -               -
 Financial assets

available-for-sale               -                  -             8,744               -
 Interest -bearing loans

and borrowings                   -          (235,156)                 -        (17,906)
 Trade and

other payables                   -           (43,785)          (37,892)        (14,694)

 Net exposure                    5,133          (194,561)           184,428         (8,397)

 The following significant exchange rates against the GBP applied during the
 year:

                                     Average rate            Reporting date mid spot rate
                                  2009               2008              2009            2008

 RMB                             10.72              12.84             10.98            9.97
 HKD                             12.16              14.38             12.47           11.32
 USD                              1.57               1.85              1.61            1.46
 EUR                              1.13               1.26              1.12            1.05

Sensitivity analysis

The following table indicates the instantaneous increase/ (decrease) in the Group's loss after tax (and accumulated losses) and other components of consolidated equity that would have arisen if foreign exchange rates to which the Group has significant exposure at the balance sheet date had changed at that date, assuming all other risk variables remained constant.

 Group                               2009                                                            2008
                 Increase/             Effect on             Effect on           Increase/        Effect on loss             Effect on
                (decrease)                profit                 other          (decrease)         after tax and                 other
                        in         after tax and            components                  in           accumulated            components
                  exchange           accumulated                    of            exchange                losses                    of
                      rate                losses                equity                rate        Debit/(credit)                equity
                                  Debit/(credit)        Debit/(credit)                                  GBP '000        Debit/(credit)
                                        GBP '000              GBP '000                                                        GBP '000

 GBP                   10%              (14,101)                15,771                 10%              (18,937)                20,330
                     (10%)                14,101              (15,771)               (10%)                18,937              (20,330)

 RMB                   10%               (4,549)               (4,691)                 10%                 1,288               (6,078)
                     (10%)                 4,549                 4,691               (10%)               (1,288)                 6,078

 USD                   10%                19,151                   684                 10%                15,231                   827
                     (10%)              (19,151)                 (684)               (10%)              (15,231)                 (827)

 HKD                   10%                 (323)              (11,765)                 10%                   241              (15,053)
                     (10%)                   323                11,765               (10%)                 (241)                15,053

 EUR                   10%                 (178)                     -                 10%                   840                     -
                     (10%)                   178                     -               (10%)                 (840)                     -

Results of the analysis as presented in the above table represent an aggregation of the instantaneous effects on each of the Group entities' loss/profit after tax and equity measured in the respective functional currencies, translated into GBP at the exchange rate ruling at the balance sheet date for presentation purposes.

The sensitivity analysis assumes that the change in foreign exchange rates had been applied to re-measure those financial instruments held by the Group which expose the Group to foreign currency risk at the balance sheet date, including inter-company payables and receivables within the Group which are denominated in a currency other than the functional currencies of the lender or the borrower. The analysis excludes differences that would result from the translation of the financial statements of foreign operations into the Group's presentation currency.

(d)     Interest risk

The Group finances its operations through a mixture of retained earnings, interest bearing loans and borrowings and stated capital. The Group borrows in the desired currencies at both fixed and floating rates and uses interest rate instruments to generate the desired interest rate profile and to manage the Group's exposure to interest rate fluctuations. At the year end 68% of the Group's financial liabilities were at effective fixed rates as a result of certain interest rate swap arrangements and the remainder were at floating rates of interest. The Group's cash balances are primarily at floating rates based on the appropriate Euro Interbank Offered rates (EURIBOR) or London Interbank Offered rates (LIBOR).

Interest rate profile as at 31 December 2009

                                                              Non-interest           
                                 Floating rate  Fixed rate         bearing      Total
                                       GBP'000     GBP'000         GBP'000    GBP'000

 Assets
  
 Cash and cash equivalents                                                           
                                        37,753           -               -     37,753
 Restricted cash                        10,273           -               -     10,273
 Short term receivables                      -           -           4,476      4,476
                                        48,026           -           4,476     52,502

 Liabilities
  
 RMB loans with variable              (79,249)           -               -   (79,249)
 interest
 USD loans with variable              (23,512)           -               -   (23,512)
 interest
 USD loans effectively fixed at                                                      
 between 5.9% to 7.6%                        -   (213,676)               -  (213,676)
 Trade and other payables                    -           -        (38,057)   (38,057)
                                     (102,761)   (213,676)        (38,057)  (354,494)

 Net liabilities                      (54,735)   (213,676)        (33,581)  (301,992)

Interest rate profile as at 31 December 2008

                                                              Non-interest           
                                 Floating rate  Fixed rate         Bearing      Total
                                       GBP'000     GBP'000         GBP'000    GBP'000

 Assets
  
 Cash and cash equivalents              66,640           -               -     66,640
 Restricted cash                        18,356           -               -     18,356
 Short term receivables                      -           -           2,338      2,338
                                        84,996           -           2,338     87,334

 Liabilities
 RMB loans with variable              (82,255)           -               -   (82,255)
 interest
 RMB loans fixed at 7.5%                     -     (9,730)               -    (9,730)
 USD loans effectively fixed at              -   (235,465)               -  (235,465)
 between 5.9% to 7.6%
 EUR loans fixed at 6.6%                     -    (17,906)               -   (17,906)
 Trade and other payables                    -           -        (67,423)   (67,423)
                                      (82,255)   (263,101)        (67,423)  (412,779)

 Net assets/(liabilities)                2,741   (263,101)        (65,085)  (325,445)

(e)     Fair value

Fair values versus carrying amounts

Set out below is a comparison by category of book values and fair values of the Group's financial assets and liabilities:

                                          2009                   2008
                                   Carrying               Carrying            
                                     amount  Fair Value     amount  Fair Value
 GBP '000
 Assets carried at fair value
 Financial assets                    11,632      11,632     22,860      22,860
 available-for-sale
 Other investment                    34,250      34,250          -           -
 Derivative financial assets            293         293      5,133       5,133

 Assets carried at amortised
 cost
 Short term receivables               4,476       4,476      2,338       2,338
 Restricted cash                     10,273      10,273     18,356      18,356
 Cash and cash equivalents           37,753      37,753     66,640      66,640

 Liabilities carried at fair
 value
 Derivative financial               (9,384)     (9,384)   (17,253)    (17,253)
 liabilities

 Liabilities carried at
 amortised cost
 Variable rate debts fixed with   (213,676)   (213,676)  (235,465)   (235,465)
 interest rate swaps
 Variable rate debts              (102,761)   (102,761)   (82,255)    (82,255)
 Fixed rate debts                         -           -   (27,636)    (28,040)
 Trade and other payables          (38,057)    (38,057)   (67,423)    (67,423)
                                  (265,201)   (265,201)  (314,705)   (315,109)

Cash and liquid resources and other financial assets have fair values that approximate to their carrying amounts because of their short-term nature. The fair values of bank and other loans are based on the net present value of the anticipated future cash flows associated with these instruments. Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The following methods and assumptions were used to estimate the fair value for each class of financial instruments:

(i)      Cash and cash equivalents, trade and other receivables and trade and other payables. The carrying values approximate to their fair values because of the short maturities of these instruments.

(ii)     Interest-bearing loans

The carrying amount of bank loans approximate to their fair value based on the borrowing rate currently available for bank loans with similar terms and maturity.

(iii)     Financial derivatives

The Group selects appropriate valuation methods and makes assumptions with reference to market conditions existing at each balance sheet date to determine the fair value of those financial derivatives.

Fair value hierarchy

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

*   Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

*   Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

*   Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 GBP'000                              Level 1   Level 2  Level 3    Total
 31 December 2009
 Available-for-sale financial assets    4,259         -    7,373   11,632
 Other investment                           -         -   34,250   34,250
 Derivative financial assets                -       293        -      293
                                        4,259       293   41,623   46,175

 Derivative financial liabilities           -   (9,384)        -  (9,384)
                                        4,259   (9,091)   41,623   36,791

During the year there were no significant transfers between instruments in Level 1 and Level 2.

27.     Related parties

Treasury Holdings, the ultimate parent of THCL, through its direct and indirect holdings in the Company and that of its concert parties, had an equity interest of not less than 50% of the stated capital of the Company at the year end. Treasury Holdings had common control over both the Company and THCL at the year end.

In accordance with the agreements with THCL and Treasury Holdings the Company incurred/ accrued the following fees in the 12 months to 31 December 2009:

(a)     Investment advisory agreement with THCL

The Company and THCL entered into an investment advisory agreement dated 25 June 2007 pursuant to which THCL is responsible for the provision of investment advisory services for the Company's property assets and, at the discretion of the Company, development management and project management services. The agreement is for an initial period of three years from its July 2007 admission to AIM and will continue thereafter until terminated by the Company on 12 months' written notice provided that the agreement may be terminated by either party on shorter notice in the event of, inter alia, breach of contract or insolvency.

In accordance with the investment advisory agreement, THCL shall receive 50% (or a higher percentage decided by the investment manager) of the value of the performance fee in the form of allotted and issued ordinary shares in the Company ("Performance Fee Shares"). The number of Performance Fee Shares to be issued shall be calculated by dividing the amount of the performance fee to be satisfied by the Performance Fee Shares by the net asset value per share of the Group at the year end.

At 31 December 2007 the calculation of the 2007 performance fee was based on the movement in the adjusted NAV. Since 2008, all calculations have been benchmarked against the Group's performance as assessed on an EPRA NAV basis.

In June 2009, the following amendments to the terms of the investment advisory agreement have been agreed. These changes eliminate from any future performance fee calculation (i) any increase or decrease in the value of RMB against GBP; and (ii) any increase in net asset value per share arising from the Company repurchasing its shares. For the purposes of calculating any future entitlement to performance fees:

i)   EPRA net asset value at the end of each financial period will be expressed in RMB. The payment of a performance fee remains subject to a high water mark which will initially be determined by reference to the Company's net assets as at 31 December 2008 expressed in RMB at the exchange rate prevailing on that date; and

ii)  if the Company repurchases its own shares during any relevant period, the EPRA net asset value per share at the end of that period will be adjusted to eliminate the impact of the share repurchases on net asset value per share.

At the same time as agreeing the above, the board of Directors engaged THCL as investment manager for a further two years so that, except in certain specified circumstances, the earliest date on which notice may be given will be July 2012.

According to the revised investment advisory agreement, THCL was entitled to receive the following fees in 2009:

i)       Investment management fees of GBP1.57 million (2008: GBP5.29 million).

ii)       Development management fees of GBP1.82 million (2008:GBP2.46 million).

iii)      Performance fee accrual for the year of nil (2008: GBP43.77 million).

No performance fee was accrued for the year ended 31 December 2009 as the conditions described in the agreement were not satisfied.

(b)     Property management agreement with Treasury Holdings (Shanghai) Property Management Company Limited

The Company originally entered into a property management agreement with Treasury (Shanghai) Real Estate Consulting Co. Limited (TSREC) dated 25 June 2007 pursuant to which TSREC was appointed to be responsible for the provision of property management services for the Company's property assets. In December 2008 this agreement was novated from TSREC to Treasury Holdings (Shanghai) Property Management Company Limited (THPM). The agreement was renewed on 10 June 2009 by the Company and THPM. Under this agreement, THPM is entitled to receive a property management fee equal to 110% per annum of certain defined expenses it incurs in providing the property management services during each period of 12 months. The fees incurred for under this agreement were GBP5.68 million in 2009 (2008: GBP0.77 million).

(c)     Accounting services agreement with Treasury Holdings

The Company entered an accounting services agreement with Treasury Holdings dated 25 June 2007 pursuant to which Treasury Holdings provides certain accounting administrative services to the Group. The annual fee was subsequently revised to GBP200,000 according to the board resolution of the Company dated 21 April 2009.  An accounting fee of GBP200,000 has been accrued for  during the year.

(d)     Rental income from Treasury Holdings (Shanghai) Property Management Company Limited

Rental income of GBP0.39 million was accrued during the year and is receivable from THPM in accordance with the rental services agreement.

28.     Group entities

A listing of all group entities as at 31 December is set out below:

 Significant subsidiaries and joint ventures
                                                 Country of              2009              2008
                                              incorporation  Direct  Indirect  Direct  Indirect
                                                                  %         %       %         %

 Grand Eastern Limited               British Virgin Islands     100               100
 CREO (Shanghai Central Plaza)                       Jersey     100               100
 Limited
 CREO (Shanghai City Centre)                         Jersey     100               100
 Limited
 CREO (Pudong) Limited                               Jersey     100               100
 Dream Land Properties Limited                       Jersey     100               100
 CREO (Qingdao) Warehousing                          Jersey     100               100
 Limited
 CREO NJ (I) Limited                                 Jersey     100               100
 CREO Finance I Limited                              Jersey       -               100
 CREO XIDAN (NO.1) Limited                           Jersey       -               100
 CREO Sliver Tower Limited                           Jersey                 -               100
 CREO (Securities) Limited                           Jersey     100                 -
 Central Land Estate Limited                      Hong Kong               100               100
 Brightime Limited                                Hong Kong               100               100
 State Properties Limited                         Hong Kong               100               100
 Oakman Dean Limited                              Hong Kong               100               100
 CREO NJ (I) Limited                              Hong Kong               100               100
 Glory Achieve Limited                            Hong Kong               100               100
 Fine Run Holdings Limited                        Hong Kong               100               100
 Image Lead Group Limited                         Hong Kong               100               100
 Will Win Holdings Limited                        Hong Kong               100               100
 Shanghai Vision Honest Real                                                                100
 Estate                          People's Republic of China               100        

Development Company Limited
 Shanghai Central Land Estate                                                               100

Company Limited              People's Republic of China               100
 Shanghai Huatian Property                                                                     

Development Company Limited  People's Republic of China               100               100
 Beijing Dream Land Industrial                                                                 

Development Company Limited  People's Republic of China               100               100
 Beijing Treasury Industrial                                                                   

Development Company Limited  People's Republic of China                 -               100
 Qingdao CREO Logistics                                                                        

Park Company Limited         People's Republic of China                 -               100
 Nanjing CREO Investment                                                                       

Consulting Company Limited   People's Republic of China               100                 -
 Qingdao Shangshi CREO Real                                                                    
 Estate                          People's Republic of China                 -                50

Company Limited

29.     Accounting estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in applying the Group's accounting policies.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Property valuations

The fair value of each investment property and property under development is individually determined at each balance sheet date by independent valuers based on the market value on an existing use basis using a combination of methodologies, namely Direct Comparison, Discounted Cash Flow and Residual Approach. These methodologies are based upon estimates of future results and a set of assumptions regarding the property's income and expenses and future economic conditions. The fair value of each investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in light of current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.

Income taxes and deferred taxes

Determining income tax provision, deferred tax liabilities and assets involves judgement on the future tax treatment of certain transactions. The Group carefully evaluates the tax implications of transactions, and tax provisions, deferred tax liabilities and assets are set accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislation.  Deferred tax assets are recognised for tax losses not yet used and temporary deductible differences. Management's assessment is constantly reviewed and additional deferred tax assets are recognised if it becomes probable that future taxable profits will allow the deferred tax assets to be recovered.

Share-based payments

As the Company was admitted to trading on the AIM in July 2007, it was not possible to ascertain the volatility of the Company shares in order to fair value the share-based payments granted to employees. Management therefore used a basket of peer companies with a similar asset and investor base in order to estimate the volatility of the share price of the Company for use in the binomial option pricing model (Note 19).

30.     Post balance sheet events

On 18 January 2010, the Company announced that it proposed to commit up to GBP15 million from its cash resources to fund a tender offer to purchase its own shares once the CREO Qingdao transaction (Note 13) has been completed and the sale proceeds received. 

On 26 February 2010, the Company has made a non-binding submission to the Singapore Exchange to apply for an approval for admission to the Exchange.

31.     Approval of financial statements

These financial statements were approved by the Directors on 4 March 2010.

This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
FR ZMGGFRKKGGZM

RNS Number : 2161I China Real Estate Opportunities PLC 08 March 2010

China Real Estate Opportunities Plc

Circular re Tender Offer

The Company has today published a circular to Shareholders setting out details of a Tender Offer to purchase shares at £3.30 per Share ("Circular"). The Tender Offer is available to Shareholders (other than certain Overseas Shareholders) on the register as at 5.00 pm on 11 March 2010.
The Company will invite all Shareholders to tender Shares and has committed a maximum of £15 million from its own cash resources to repurchase tendered Shares. In addition, Matrix Corporate Capital LLP has been mandated by the Company to seek to procure third party investors to purchase tendered Shares in a placing at £3.30 per Share.
If the aggregate number of Shares tendered exceeds the amount available taking account of both the Company's participation and any amounts raised in the related placing, applications in excess of each Shareholder's basic entitlement will be scaled back pro rata.
Real Estate Opportunities plc, which holds 8,387,940 shares in the Company, representing 16.9 per cent. of the issued shares, has undertaken to tender all of those Shares. The Directors of the Company, Treasury Holdings and John Ronan (a director of Treasury Holdings) have agreed not to participate in the Tender Offer in respect of the 18,083,917 Shares in the Company held by them in aggregate, representing 36.5 per cent. of the issued shares.
Expected Timetable 2010
Record Date for participation in the Tender Offer 5.00pm on 11 March
Latest time for receipt of Tender Forms and TTE 1.00pm on 22 March

Instructions
Announcement of results of Tender Offer and 23 March

Placing
Settlement - crediting of CREST accounts and despatch of from 25 March

cheques for Tender Offer consideration and despatch of balance certificates in respect of any unsold certificated Shares

Terms used and not defined in this announcement bear the same meaning given to them in the Circular dated 8 March 2010. A copy of the Circular is available on the Company's website www.china-reo.com.

Enquiries:

Matrix Corporate Capital LLP Paul Fincham Tel: + 44 (0)20 3206 7000

This information is provided by RNS The company news service from the London Stock Exchange

CIRKKFDNABKKFNK

RNS Number : 3650H
  China Real Estate Opportunities PLC
  19 February 2010
   

China Real Estate Opportunities plc

Block Listing 6 monthly review. 

 (a) name of the company;        China Real Estate
                                 Opportunities plc
                                  
 (b) name of the scheme;         Share option scheme
                                  
 (c) period of return            1 July 2009 to 31
 (from/to);                      December 2009
                                  
 (d) number and class of         1,971,200ordinary
 securities not issued under     shares of no par value
 the scheme;                      
 (e) number of securities                          none
 issued under the scheme during
 the period;
  
 (f) balance under the scheme    1,971,200ordinary
 of securities not yet issued    shares of no par value
 at the end of the period;
  
 (g) number and class of         2,000,000ordinary
 securities                      shares of no par
 originallyadmittedand the date  value,3 July 2008
 ofadmission;
  
 (h) a contact name and          Sarah Moriarty
 telephone number.               CREO - Investor
                                 relations
                                 + 353 1 618 9455

This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
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