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46
Glorious Property
Annual Report 2011
Management Discussion and Analysis -
Financial Review
(Continued)
Financial Review (Continued)
OTHER GAINS, NET
Other gains, net for the year ended 31 December 2011 were RMB724.4 million (2010: RMB2,410.6 million), which
were primarily due to a fair value gain on the Group’s investment properties of RMB677.1 million (2010: RMB2,452.4
million).
SELLING AND MARKETING EXPENSES
Selling and marketing expenses for the year ended 31 December 2011 were RMB241.0 million, representing a growth
of 22.3% as compared to RMB197.1 million in 2010. The higher selling and marketing expenses in 2011 was due to
more marketing activities conducted for the promotion of the Group’s business and an increased number of projects
entering into pre-sales stages which requires more project launching activities.
ADMINISTRATIVE EXPENSES
Administrative expenses for the year ended 31 December 2011 were RMB436.0 million, representing an increase of
3.5% compared to RMB421.1 million for 2010. Despite the increased level of business activities as a result of increased
number of property development projects and expanded management team size in the current year, the cost-saving
initiatives taken place in the current year has been effective and thus the Group’s administrative expenses increased to a
lesser extent as compared to the growth in the Group’s business activities.
FINANCE COSTS
Gross finance costs for the year ended 31 December 2011 were RMB1,831.0 million, representing an increase of 55.6%
from RMB1,176.4 million for 2010 as a result of higher level of the Group’s total borrowings in 2011 as well as the
higher costs of borrowing in 2011. For the year ended 31 December 2011, finance costs of RMB1,828.5 million (2010:
RMB1,172.6 million) have been capitalised, leaving RMB2.5 million (2010: RMB3.8 million) charged directly to the
consolidated statement of comprehensive income.
PROFIT BEFORE INCOME TAX
The Group’s profit before income tax for the year ended 31 December 2011 was RMB4,021.0 million, representing
a decrease of 32.6% compared to RMB5,962.2 million for 2010. The lower profit before income tax for 2011 was
primarily due to decrease in fair value gain from investment properties and other income in 2011.
INCOME TAX EXPENSES
Income tax expenses for the year ended 31 December 2011 was RMB1,811.9 million, representing a decrease of 23.0%
as compared to RMB2,353.5 million for 2010. The decrease in income tax expenses was primarily due to the decrease
in pre-tax income in current year as a result of the lower gross profit margin and the lower fair value gain on the Group’s
investment properties. The effective income tax rate, excluding fair value gain of investment properties and the related
tax effect, was 49.1% for the year ended 31 December 2011, which is comparable to 49.6% for 2010.