appendix i accountants’ report...the reporting accountants of the company, ernst & young,...

The following is the text of a report on the financial information of Shinsun Holdings

(Group) Co., Ltd., prepared for the purpose of incorporation in this Document received from

the reporting accountants of the Company, Ernst & Young, Certified Public Accountants, Hong

Kong.

22/F, CITIC Tower

1 Tim Mei Avenue

Central, Hong Kong

The Directors

Shinsun Holdings (Group) Co., Ltd.

CCB International Capital Limited

ABCI Capital Limited

Dear Sirs,

We report on the historical financial information of Shinsun Holdings (Group) Co., Ltd.

(the “Company”) and its subsidiaries (together, the “Group”) set out on pages [I-4] to [I-114],

which comprises the combined statements of profit or loss and other comprehensive income,

the combined statements of changes in equity and the combined statements of cash flows of the

Group for each of the years ended 31 December 2017, 2018 and 2019 (the “Relevant Periods”),

and the combined statements of financial position of the Group as at 31 December 2017, 2018

and 2019 and the statement of financial position of the Company as at 31 December 2019 and

a summary of significant accounting policies and other explanatory information (together, the

“Historical Financial Information”). The Historical Financial Information set out on pages I-4

to I-114 forms an integral part of this report, which has been prepared for inclusion in the

document of the Company dated [●] (the “Document”) in connection with the initial

[REDACTED] of the shares of the Company on the Main Board of The Stock Exchange of

Hong Kong Limited (the “Stock Exchange”).

DIRECTORS’ RESPONSIBILITY FOR THE HISTORICAL FINANCIALINFORMATION

The directors of the Company are responsible for the preparation of the Historical

Financial Information that gives a true and fair view in accordance with the basis of

presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial

Information, respectively, and for such internal control as the directors determine is necessary

to enable the preparation of the Historical Financial Information that is free from material

misstatement, whether due to fraud or error.

APPENDIX I ACCOUNTANTS’ REPORT

– I-1 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to express an opinion on the Historical Financial Information and to

report our opinion to you. We conducted our work in accordance with Hong Kong Standard on

Investment Circular Reporting Engagements 200 Accountants’ Reports on Historical Financial

Information in Investment Circulars issued by the Hong Kong Institute of Certified Public

Accountants (“HKICPA”). This standard requires that we comply with ethical standards and

plan and perform our work to obtain reasonable assurance about whether the Historical

Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and

disclosures in the Historical Financial Information. The procedures selected depend on the

reporting accountants’ judgement, including the assessment of risks of material misstatement

of the Historical Financial Information, whether due to fraud or error. In making those risk

assessments, the reporting accountants consider internal control relevant to the entity’s

preparation of the Historical Financial Information that gives a true and fair view in accordance

with the basis of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the

Historical Financial Information, respectively, in order to design procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. Our work also included evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates

made by the directors, as well as evaluating the overall presentation of the Historical Financial

Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion.

OPINION

In our opinion, the Historical Financial Information gives, for the purposes of the

accountants’ report, a true and fair view of the financial position of the Group as at 31

December 2017, 2018 and 2019 and of the Company as at 31 December 2019 and of the

financial performance and cash flows of the Group for each of the Relevant Periods in

accordance with the basis of presentation and the basis of preparation set out in notes 2.1 and

2.2 to the Historical Financial Information, respectively.

REPORT ON MATTERS UNDER THE RULES GOVERNING THE [REDACTED] OFSECURITIES ON THE STOCK EXCHANGE AND THE COMPANIES (WINDING UPAND MISCELLANEOUS PROVISIONS) ORDINANCE

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying

Financial Statements as defined on page I-4 have been made.


– I-2 –


Dividends

We refer to note 11 to the Historical Financial Information which states that no dividends

have been paid by the Company in respect of the Relevant Periods.

No historical financial statements for the Company

As at the date of this report, no statutory financial statements have been prepared for the

Company since its date of incorporation.

Yours faithfully,

Ernst & YoungCertified Public Accountants

Hong Kong

[REDACTED]


– I-3 –


I HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of thisaccountants’ report.

The financial statements of the Group for the Relevant Periods, on which the HistoricalFinancial Information is based, were audited by Ernst & Young in accordance with Hong KongStandards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all valuesare rounded to the nearest thousand (RMB’000) except when otherwise indicated.

COMBINED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVEINCOME

Year ended 31 DecemberNotes 2017 2018 2019

RMB’000 RMB’000 RMB’000

REVENUE 5 6,293,295 14,215,302 35,519,538Cost of sales (5,459,461) (11,216,121) (27,039,427)

GROSS PROFIT 833,834 2,999,181 8,480,111Finance income 16,892 71,376 151,883Other income and gains 5 131,031 36,789 95,375Selling and distribution expenses (502,524) (752,994) (1,073,899)Administrative expenses (521,753) (1,119,107) (1,125,445)Other expenses (46,152) (69,630) (199,371)Fair value gains on investment

properties 15 17,285 13,978 22,406Finance costs 7 (220,316) (432,110) (777,570)Share of profits and losses of:

Joint ventures 1,208 (30,492) (54,644)Associates (1,349) (30,929) 11,502

(LOSS)/PROFIT BEFORE TAX 6 (291,844) 686,062 5,530,348Income tax credit/(expense) 10 5,895 (258,122) (2,321,393)

(LOSS)/PROFIT AFTER TAX ANDOTHER COMPREHENSIVE(LOSS)/INCOME FOR THE YEAR (285,949) 427,940 3,208,955

Attributable to:Owners of the parent (300,123) 325,047 2,312,283Non-controlling interests 14,174 102,893 896,672

(285,949) 427,940 3,208,955

EARNINGS PER SHAREATTRIBUTABLE TOORDINARY EQUITYHOLDERS OF THE PARENT

Basic and diluted 12 N/A N/A N/A


– I-4 –


COMBINED STATEMENTS OF FINANCIAL POSITION

31 December

Notes 2017 2018 2019

RMB’000 RMB’000 RMB’000

NON-CURRENT ASSETSProperty, plant and equipment 13 622,093 593,613 539,236Right-of-use assets 14 13,551 56,625 113,221Investment properties 15 568,069 1,102,558 1,492,630Intangible assets 16 6,575 9,868 11,672Investments in joint ventures 17 359,334 341,201 712,680Investments in associates 18 83,086 370,813 742,052Deferred tax assets 19 921,582 1,702,789 1,960,579

Total non-current assets 2,574,290 4,177,467 5,572,070

CURRENT ASSETSProperties under development 20 51,665,579 88,598,436 92,688,528Completed properties held for

sale 21 3,872,130 3,114,046 5,393,412Inventories 5,645 8,008 8,315Trade receivables 22 35,429 226,136 195,012Contract assets 23 117,085 277,380 278,260Due from related parties 40 2,504,108 4,161,637 5,560,849Prepayments, deposits and

other receivables 24 8,641,243 12,051,553 11,388,198Tax recoverable 619,622 1,541,883 1,968,017Financial assets at fair value

through profit or loss 25 330,293 52,433 20,567Restricted cash 26 2,375,494 4,074,584 4,207,533Pledged deposits 26 195,133 670,560 342,651Cash and cash equivalents 26 3,229,359 3,113,634 2,412,297

73,591,120 117,890,290 124,463,639

Assets of a subsidiary

classified as held for sale 39 – – 591,983

Total current assets 73,591,120 117,890,290 125,055,622


– I-5 –


31 December

Notes 2017 2018 2019

RMB’000 RMB’000 RMB’000

CURRENT LIABILITIESTrade and bills payables 27 1,756,047 5,063,976 5,102,436Other payables and accruals 28 4,975,785 3,759,979 4,898,470Contract liabilities 29 36,934,913 74,573,736 77,901,721Due to related parties 40 4,491,843 5,909,143 5,956,321Interest-bearing bank

and other borrowings 30 10,325,155 12,523,827 10,288,997Senior notes 31 – 644,958 1,016,301Asset-backed securities 32 1,710,080 2,416,926 205,551Tax payable 10 467,512 566,218 1,923,178Lease liabilities 14 7,078 30,812 50,744

60,668,413 105,489,575 107,343,719

Liabilities directly associated

with the assets classified as

held for sale 39 – – 41,638

Total current liabilities 60,668,413 105,489,575 107,385,357

NET CURRENT ASSETS 12,922,707 12,400,715 17,670,265

TOTAL ASSETS LESSCURRENT LIABILITIES 15,496,997 16,578,182 23,242,335


– I-6 –


31 December

Notes 2017 2018 2019

RMB’000 RMB’000 RMB’000

NON-CURRENT LIABILITIESInterest-bearing bank and

other borrowings 30 13,839,170 13,479,396 17,016,525Lease liabilities 14 7,751 27,931 74,846Deferred tax liabilities 19 190,844 189,996 175,848

Total non-current liabilities 14,037,765 13,697,323 17,267,219

NET ASSETS 1,459,232 2,880,859 5,975,116

EQUITYEquity attributable to owners of

the parentShare capital 33 – – –Reserves 34 681,545 1,957,796 4,617,425

681,545 1,957,796 4,617,425

Non-controlling interests 777,687 923,063 1,357,691

TOTAL EQUITY 1,459,232 2,880,859 5,975,116


– I-7 –


COMBINED STATEMENTS OF CHANGES IN EQUITY

Attributable to owners of the parent

Sharecapital

Capitalreserve

Statutorysurplusreserve

(Accumulatedlosses)/retained

profits Total

Non-controlling

interestsTotal

equity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000Note 33 Note 34(a) Note 34(b)

As at 1 January 2017 – 2,104,512 97,734 (1,023,268) 1,178,978 734,380 1,913,358Loss and total comprehensive loss for

the year – – – (300,123) (300,123) 14,174 (285,949)Capital contribution by the non-controlling

shareholders of subsidiaries – – – – – 169,014 169,014Acquisition of non-controlling interests – (186,589) – – (186,589) 24,451 (162,138)Acquisition of subsidiaries – – – – – (17,199) (17,199)Acquisition of a subsidiary from the then

equity holder of the subsidiary – (3,000) – – (3,000) – (3,000)Dividends paid to non-controlling

shareholders – – – – – (147,133) (147,133)Dividend paid to the then equity holder of

a subsidiary – – – (7,721) (7,721) – (7,721)Appropriations to statutory surplus reserve – – 57,423 (57,423) – – –

As at 31 December 2017 and 1 January 2018 – 1,914,923* 155,157* (1,388,535)* 681,545 777,687 1,459,232Profit and total comprehensive income for

the year – – – 325,047 325,047 102,893 427,940Capital contribution by the then equity holder

of a subsidiary – 400,000 – – 400,000 – 400,000Capital contribution by the non-controlling

shareholders of subsidiaries – – – – – 104,000 104,000Acquisition of non-controlling interests – (54,120) – – (54,120) 6,062 (48,058)Acquisition of subsidiaries – – – – – 4,140 4,140Acquisition of subsidiaries from the then

equity holder of the subsidiaries – 583,895 – – 583,895 1,875 585,770Dividends paid to non-controlling

shareholders – – – – – (19,600) (19,600)Disposal of a subsidiary – – – – – 4,543 4,543Appropriations to statutory surplus reserve – – 95,285 (95,285) – – –Capital reduction by the non-controlling

shareholders of subsidiaries – – – – – (129,748) (129,748)Disposal of partial interests in subsidiaries

without losing control – 21,429 – – 21,429 71,211 92,640

As at 31 December 2018 and 1 January 2019 – 2,866,127* 250,442* (1,158,773)* 1,957,796 923,063 2,880,859


– I-8 –


Attributable to owners of the parent

Sharecapital

Capitalreserve

Statutorysurplusreserve

(Accumulatedlosses)/retained

profits Total

Non-controlling

interestsTotal

equity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000Note 33 Note 34(a) Note 34(b)

As at 31 December 2018 and 1 January 2019 – 2,866,127 250,442 (1,158,773) 1,957,796 923,063 2,880,859Profit and total comprehensive income for

the year – – – 2,312,283 2,312,283 896,672 3,208,955Capital contribution by the non-controlling

shareholders of subsidiaries – – – – – 24,875 24,875Acquisition of non-controlling interests – 93,508 – – 93,508 (105,508) (12,000)Acquisition of subsidiaries – – – – – 6,007 6,007Acquisition of subsidiaries from the then

equity holder of the subsidiaries – 242,175 – – 242,175 – 242,175Dividends paid to non-controlling

shareholders – – – – – (206,637) (206,637)Disposal of subsidiaries – – – – – (192,918) (192,918)Appropriations to statutory surplus reserve – – 256,115 (256,115) – – –Capital reduction by the non-controlling

shareholders of subsidiaries – – – – – (6,000) (6,000)Disposal of partial interests in subsidiaries

without losing control – 11,663 – – 11,663 18,137 29,800

As at 31 December 2019 – 3,213,473* 506,557* 897,395* 4,617,425 1,357,691 5,975,116

* These reserve accounts represent the total combined reserves of RMB681,545,000, RMB1,957,796,000 andRMB4,617,425,000 in the combined statements of financial position as at 31 December 2017, 2018 and 2019,respectively.


– I-9 –


COMBINED STATEMENTS OF CASH FLOWS


RMB’000 RMB’000 RMB’000

(Loss)/profit before tax (291,844) 686,062 5,530,348Adjustments for:

Depreciation of items of property,plant and equipment 6, 13 47,548 51,788 57,622

Depreciation of right-of-use assets 6, 14 3,525 13,633 44,767Amortisation of intangible assets 6, 16 723 937 3,649Gain on bargain purchase 5, 36 (22,437) – –Gain on disposal of subsidiaries 5, 37 – (9,969) (4,032)Gain on re-measurement of the previously held

equity interests in joint ventures andassociates (60,824) (1,558) –

Share of profit and loss of joint ventures (1,208) 30,492 54,644Share of profit and loss of associates 1,349 30,929 (11,502)Changes in fair value of investment properties 15 (17,285) (13,978) (22,406)(Gain)/loss on disposal of items of property,

plant and equipment (189) 928 (157)Gain on disposal of associates 6 (15,130) – –Investment income from financial assets at fair

value through profit or loss (2,279) (11,547) (1,938)Impairment of investments in a joint venture – – 53,000Impairment of financial assets 6 4,671 487 13,574Fair value gains on financial assets at fair value

through profit or loss (492) (521) (72)Finance costs 220,316 432,110 777,570Interest income (16,400) (70,855) (151,811)

(149,956) 1,138,938 6,343,256Increase in properties under development and

held for sale (29,093,311) (31,707,886) (1,822,213)Increase in inventories (455) (2,363) (307)Increase in land development for sale – – (20,902)Decrease/(increase) in due from related parties 296,481 508,733 (275,081)Increase in contract cost assets (74,026) (160,295) (880)Increase in restricted cash (2,338,376) (1,699,090) (134,159)(Increase)/decrease in pledged deposits (176,117) (406,530) 327,909Decrease/(increase) in trade receivables 16,342 (203,288) 17,115(Increase)/decrease in prepayments, deposits

and other receivables (5,538,787) (3,440,717) 1,104,621Increase in trade and bills payables 44,675 3,339,019 63,497(Decrease)/increase in other payables, and

accruals (1,168,778) (1,877,560) 158,714Increase in contract liabilities 26,497,224 37,866,779 3,604,704Increase in due to related parties 1,421,434 1,568,344 309,368

Cash (used in)/generated from operations (10,263,650) 4,924,084 9,675,642

Interest received 16,400 96,145 157,339Interest paid (1,284,774) (3,666,087) (4,707,333)Tax paid (800,372) (1,863,527) (1,608,878)

Net cash flows (used in)/generated fromoperating activities (12,332,396) (509,385) 3,516,770


– I-10 –



RMB’000 RMB’000 RMB’000

CASH FLOWS FROM INVESTINGACTIVITIES

Disposal of subsidiaries 37 – (1,376) (33,096)Disposal of a joint venture – 25,000 –Disposal of financial assets at fair value through

profit and loss 121,279 341,840 48,824Disposal of property, plant and equipment 16,398 21,244 10,879Dividends received from a joint venture 17,227 – –Purchases of items of property, plant

and equipment (83,668) (45,148) (14,602)Purchase of intangible assets (2,878) (4,230) (5,453)Increase in investment properties – (520,511) (367,666)Acquisition of subsidiaries 36 623,722 (211,481) (558,845)Addition of joint ventures (254,529) (52,650) (484,650)Addition of associates (12,000) (341,400) (401,888)Advances to related parties 40 (4,663,254) (6,578,991) (5,996,142)Repayment of advances to related parties 40 2,212,205 4,412,729 4,811,583Acquisition of financial assets at fair value

through profit and loss (392,911) (51,912) (14,950)Acquisition of subsidiaries by the Group from the

then equity holder of the subsidiaries (3,000) – (3,125)

Net cash flows used in investing activities (2,421,409) (3,006,886) (3,009,131)

CASH FLOWS FROM FINANCINGACTIVITIES

Deemed capital contribution from shareholders – 580,770 245,300Capital contribution by the then equity holders

of subsidiaries – 400,000 –Capital contribution by the non-controlling

share holders 169,014 104,000 24,875Capital reduction by the non-controlling

share holders – (129,748) (6,000)Dividends paid to non-controlling shareholders (62,720) (19,600) (31,727)Acquisition of non-controlling interests – (39,058) (5,000)Proceeds from partial disposal of subsidiaries

without losing control – 92,640 29,800Advances from related parties 40 12,488,344 14,446,939 8,728,616Repayment of advances from related parties 40 (9,577,421) (15,149,293) (9,610,921)Repayment of pledged deposits (4,152) (73,049) –Receipt of pledged deposits – 4,152 –Proceeds from the issuance of senior notes – 602,162 994,918Exchange effects on senior notes 31 – 42,444 3,754Repayment of senior notes 31 – – (648,360)Proceeds from interest-bearing bank borrowings 20,519,692 17,892,313 17,488,881Repayment of interest-bearing bank borrowings (8,096,683) (16,053,415) (16,186,582)Proceeds from the issuance of asset-backed

securities 1,710,080 3,783,610 1,059,550Repayment of asset-backed securities – (3,076,764) (3,270,925)Payment of lease liabilities (1,000) (7,557) (21,996)

Net cash flows generated from/(used in)financing activities 17,145,154 3,400,546 (1,205,817)


– I-11 –


Year ended 31 December

Notes 2017 2018 2019

RMB’000 RMB’000 RMB’000

NET INCREASE/(DECREASE) IN CASH ANDCASH EQUIVALENTS 2,391,349 (115,725) (698,178)

Cash and cash equivalents at beginning of year 838,010 3,229,359 3,113,634

CASH AND CASH EQUIVALENTS ATEND OF YEAR 3,229,359 3,113,634 2,415,456

ANALYSIS OF BALANCES OF CASH ANDCASH EQUIVALENTS

Cash and bank balances 26 5,799,986 7,858,778 6,962,481Less: Restricted cash 26 2,375,494 4,074,584 4,207,533

Pledged deposits 26 195,133 670,560 342,651

CASH AND CASH EQUIVALENTSAS STATED IN THE COMBINEDSTATEMENTS OF FINANCIAL POSITION 3,229,359 3,113,634 2,412,297

Cash and cash equivalents attributable to asubsidiary held for sale 39 – – 3,159

CASH AND CASH EQUIVALENTS ASSTATED IN THE COMBINEDSTATEMENTS OF CASH FLOWS 3,229,359 3,113,634 2,415,456


– I-12 –


STATEMENT OF FINANCIAL POSITION OF THE COMPANY

31 DecemberNote 2019

RMB’000

CURRENT ASSETSCash and cash equivalents –

NET ASSETS –

EQUITYShare capital 34 –Reserves –

TOTAL EQUITY –

Note: Except for the issuance of shares, the Company had no transactions during the Relevant Periods.


– I-13 –


II NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE INFORMATION

Shinsun Holdings (Group) Co., Ltd., (the “Company”) is an exempted company incorporated in the CaymanIslands on 13 December 2019. The registered office address of the Company is Suite 102, Cannon Place, P.O. Box712, North Sound Road, Grand Cayman, KY1-9006 Cayman Islands.

The Company is an investment holding company. During the Relevant Periods, the subsidiaries nowcomprising the Group were involved in property development, property leasing, and the provision of propertymanagement services (the “[REDACTED] Business”). The controlling shareholder of the Group is Mr. ChenGuoxiang (the “Controlling Shareholder”).

The Company and its subsidiaries together, now comprising the Group underwent the Reorganisation whichwas completed on [20] May 2020 as set out in the paragraph headed “Reorganisation” in the section headed “OurHistory and Reorganisation” in the Document. Apart from the Reorganisation, the Company has not commenced anybusiness or operation since its incorporation.

As at the date of this report, the Company had direct or indirect interests in more than 200 subsidiaries, allof which are private limited liability companies, the particulars of the principal subsidiaries are set out below:

Name of subsidiaries Notes

Place and date ofincorporation/establishment andplace of operations

Nominal value ofregistered/issued

share capital

Effective percentageof equity interest

attributable to theCompany

Principalactivities

(’000)

Directly held:Silver Rock Group Holdings Limited (3) British Virgin Islands/

6 February 2020US$50 100% Investment

holdingShinsun International Holdings Limited (3) British Virgin Islands/

2 January 2020US$50 100% Investment

holdingIndirectly held:Golden Stone Hong Kong Limited (3) Hong Kong/

27 February 2020HK$10 100% Investment

holdingShinsun Hong Kong Limited (3) Hong Kong/

24 February 2020HK$10 100% Investment

holding浙江祥紳商務諮詢有限公司 Zhejiang

Xiangshen Business Consulting Co.,Ltd.

(3) PRC*/Mainland China/18 March 2020

RMB10,000 100% Investmentholding

諸暨卓傑企業管理有限公司 Zhuji ZhuojieBusiness Management Co., Ltd.

(3) PRC/Mainland China/27 December 2019


祥生地產集團有限公司 Shinsun PropertyGroup Co., Ltd.

(10) PRC/Mainland China/4 January 1995

RMB1,580,000 100% Propertydevelopment

香港祥生發展有限公司 Xiang ShengDevelopment Limited

(3) Hong Kong/2 January 2018

HK$1,000 100% Investmentholding

祥生控股有限公司 Xiang Sheng HoldingLimited

(3) British Virgin Islands/28 February 2018

US$50 100% Investmentholding

浙江祥生宜悅企業管理有限公司 ZhejiangShinsun Yiyue Management Co., Ltd.



諸暨祥生祥合置業有限公司 Zhuji ShinsunXianghe Real Estate Co., Ltd.

(4) PRC/Mainland China/9 February 2017

RMB70,000 51% Propertydevelopment

諸暨祥生新合置業有限公司 Zhuji ShinsunXinhe Real Estate Co., Ltd.

(10) PRC/Mainland China/24 July 2013


諸暨祥生祥安置業有限公司 Zhuji ShinsunXiangan Real Estate Co., Ltd.



諸暨祥生宜景置業有限公司 Zhuji ShinsunYijing Real Estate Co., Ltd.




– I-14 –





share capital



Principalactivities

(’000)

杭州祥生弘景房地產開發有限公司Hangzhou Shinsun Hongjing RealEstate Development Co., Ltd.



海寧祥生房地產開發有限公司 HainingShinsun Real Estate Development Co.,Ltd.

(7) PRC/Mainland China/18 April 2016


杭州祥生弘盛房地產開發有限公司Hangzhou Shinsun Hongsheng RealEstate Development Co., Ltd.

(8) PRC/Mainland China/12 October 2016


諸暨祥生祥瑞置業有限公司 Zhuji ShinsunXiangrui Real Estate Co., Ltd.



湖州祥生置業有限公司 Huzhou ShinsunReal Estate Co., Ltd.

(2,4) PRC/Mainland China/28 October 2015


湖州祥生宜越房地產開發有限公司Huzhou Shinsun Yiyue Real EstateDevelopment Co., Ltd.



嘉興祥生房地產開發有限公司 JiaxingShinsun Real Estate Development Co.,Ltd.



嘉興祥生弘景房地產開發有限公司 JiaxingShinsun Hongjing Real EstateDevelopment Co., Ltd.

(4) PRC/Mainland China/29 August 2016


紹興祥生弘景房地產開發有限公司Shaoxing Shinsun Hongjing Real EstateDevelopment Co., Ltd.



紹興祥生弘遠房地產開發有限公司Shaoxing Shinsun Hongyuan RealEstate Development Co., Ltd.



舟山祥生置業有限公司 Zhoushan ShinsunReal Estate Co., Ltd.



舟山祥生弘遠房地產開發有限公司Zhoushan Shinsun Hongyuan RealEstate Development Co., Ltd.



上海聚博房地產開發有限公司 ShanghaiJubo Real Estate Development Co.,Ltd.

(2,4) PRC/Mainland China/5 August 2004


泰興市祥瑞置業有限公司 TaixingXiangrui Real Estate Co., Ltd.



連雲港祥生連報房地產開發有限公司Lianyungang Shinsun Lianbao RealEstate Development Co., Ltd.

(3) PRC/Mainland China/6 May 2016


滁州長城祥生置業有限公司 ChuzhouGreat Wall Shinsun Real Estate Co.,Ltd.

(6) PRC/Mainland China/7 March 2014


滁州祥生房地產開發有限公司 ChuzhouShinsun Real Estate Development Co.,Ltd.



明光祥生置業有限公司 MingguangShinsun Real Estate Co., Ltd.



定遠縣祥生置業有限公司 DingyuanShinsun Real Estate Co., Ltd.

(3) PRC/Mainland China/20 September 2016



– I-15 –





share capital



Principalactivities

(’000)

宣城民生新城鎮發展有限公司 XuanchengMinsheng New Town DevelopmentCo., Ltd.

(2,5) PRC/Mainland China/27 November 2013


諸暨祥生祥潤置業有限公司 Zhuji ShinsunXiangrun Real Estate Co., Ltd.



南平祥生房地產開發有限公司 NanpingShinsun Real Estate Development Co.,Ltd.



紹興祥生暨越置業有限公司 ShaoxingShinsun Jiyue Real Estate Co., Ltd.



舟山祥生投資發展有限公司 ZhoushanShinsun Investment Development Co.,Ltd.



上海元宇置業有限公司 Shanghai YuanyuReal Estate Co., Ltd.


RMB20,000 67.8% Propertydevelopment

上海祥丹置業有限公司 ShanghaiXiangdan Real Estate Co., Ltd.



泰興祥雲置業有限公司 Taixing XiangyunReal Estate Co., Ltd.



泰州祥生置業有限公司 Taizhou ShinsunReal Estate Co., Ltd.



武漢祥生房地產開發有限公司 WuhanShinsun Real Estate Development Co.,Ltd.



仙桃祥榮房地產開發有限公司 XiantaoXiangrong Real Estate DevelopmentCo., Ltd.



洪湖市祥生置業有限公司 HonghuShinsun Real Estate Co., Ltd.



濟南祥順置業有限公司 Jinan XiangshunReal Estate Co., Ltd.



遼寧祥生越都置業有限公司 LiaoningShinsun Yuedu Real Estate Co., Ltd.



岫岩祥越房地產開發有限公司 XiuyanXiangyue Real Estate DevelopmentCo., Ltd.



浙江祥偉旅遊開發有限公司 ZhejiangXiangwei Tourism Development Co.,Ltd.


RMB50,000 65% Propertydevelopment andcultural tourism

諸暨市祥生弘源置業有限公司 ZhujiShinsun Hongyuan Real Estate Co.,Ltd.



諸暨市祥生百越置業有限公司 ZhujiShinsun Baiyue Real Estate Co., Ltd.



杭州祥迪投資管理有限公司 HangzhouXiangdi Investment Management Co.,Ltd.



寧波祥生房地產開發有限公司 NingboShinsun Real Estate Development Co.,Ltd.




– I-16 –





share capital



Principalactivities

(’000)

連雲港祥生連報弘景房地產開發有限公司Lianyungang Shinsun LianbaoHongjing Real Estate DevelopmentCo., Ltd.



宣城祥生房地產開發有限公司 XuanchengShinsun Real Estate Development Co.,Ltd.



海鹽祥生弘景房地產開發有限公司 HaiyanShinsun Hongjing Real EstateDevelopment Co., Ltd.



滁州祥生弘順置業有限公司 ChuzhouShinsun Real Estate Co., Ltd.



衢州祥生房地產開發有限公司 QuzhouShinsun Real Estate Development Co.,Ltd.



浙江祥生廣場商貿有限公司 ZhejiangShinsun Plaza Trading Co., Ltd.


RMB50,000 100% Hotelmanagement

諸暨祥生祥祺置業有限公司 Zhuji ShinsunXiangqi Real Estate Co., Ltd.



諸暨祥生祥躍置業有限公司 Zhuji ShinsunXiangyue Real Estate Co., Ltd.



溫嶺祥生房地產開發有限公司 TaizhouWenling Shinsun Real EstateDevelopment Co., Ltd.



浙江祥景旅遊產業發展有限公司 ZhejiangXiangjing Tourism Development Co.,Ltd.


RMB50,000 100% Propertymanagement andcultural tourism

蕪湖祥生房地產開發有限公司 WuhuShinsun Real Estate Development Co.,Ltd.



衢州祥生弘景房地產開發有限公司Quzhou Shinsun Hongjing Real EstateDevelopment Co., Ltd.



諸暨祥生祥鵬置業有限公司 Zhuji ShinsunXiangpeng Real Estate Co., Ltd.



杭州春園健康產業投資有限公司Hangzhou Chunyuan Health IndustryInvestment Co., Ltd.



安吉祥生置業有限公司 Anji Shinsun RealEstate Co., Ltd.

(2,20) PRC/Mainland China/4 May 2017


浙江台州祥生房地產開發有限公司Zhejiang Taizhou Shinsun Real EstateDevelopment Co., Ltd.



湖州祥生弘景房地產開發有限公司Huzhou Shinsun Hongjing Real EstateDevelopment Co., Ltd.



南通祥生弘景房地產開發有限公司Nantong Shinsun Hongjing Real EstateDevelopment Co., Ltd.

(9) PRC/Mainland China/9 June 2017


衢州祥生弘遠房地產開發有限公司Quzhou Shinsun Hongyuan Real EstateDevelopment Co., Ltd.




– I-17 –





share capital



Principalactivities

(’000)

宣城祥生弘景房地產開發有限公司Xuancheng Shinsun Hongjing RealEstate Development Co., Ltd.



鄒城市祥生房地產開發有限公司Zoucheng Shinsun Real EstateDevelopment Co., Ltd.



鄒城市祥弘房地產開發有限公司Zoucheng Xianghong Real EstateDevelopment Co., Ltd.



浙江景越置業有限公司 Zhejiang JingyueReal Estate Co., Ltd.



南通祥生弘遠房地產開發有限公司Nantong Shinsun Hongyuan RealEstate Development Co., Ltd.



龍游祥生弘盛房地產開發有限公司Longyou Shinsun Hongsheng RealEstate Development Co., Ltd.



杭州暨元企業管理有限公司 HangzhouJiyuan Management Co., Ltd.



諸暨市祥雲企業管理諮詢有限公司 JujiXiangyun Management Consulting Co.,Ltd.



諸暨市祥生企業管理諮詢有限公司 JujiShinsun Management Consulting Co.,Ltd.



諸暨市祥鵬企業管理有限公司 JujiXiangpeng Management Co., Ltd.

(3) PRC/Mainland China/10 November 2015


諸暨市祥潤企業管理有限公司 JujiXiangrun Management Co., Ltd.



溫州祥生地產集團有限公司 WenzhouShinsun Real Estate Group Co., Ltd.



宿遷祥生連報房地產開發有限公司 SuqianShinsun Lianbao Real EstateDevelopment Co., Ltd.



廣德祥遠房地產開發有限公司 GuangdeXiangyuan Real Estate DevelopmentCo., Ltd.



天臺祥生房地產開發有限公司 TiantaiShinsun Real Estate Development Co.,Ltd.



杭州兆朗投資管理有限公司 HangzhouZhaolang Investment Management Co.,Ltd.



杭州弈翔企業管理諮詢有限公司Hangzhou Yixiang ManagementConsulting Co., Ltd.



諸暨祥生祥泰置業有限公司 Zhuji ShinsunXiangtai Real Estate Co., Ltd.



杭州元博企業管理有限公司 HangzhouYuanbo Management Co., Ltd.



杭州暨成企業管理有限公司 HangzhouJicheng Management Co., Ltd.




– I-18 –





share capital



Principalactivities

(’000)

杭州暨東企業管理有限公司 HangzhouJidong Management Co., Ltd.



杭州暨聯企業管理有限公司 HangzhouJilian Management Co., Ltd.



慈溪祥生弘景房地產開發有限公司 CixiShinsun Hongjing Real EstateDevelopment Co., Ltd.



紹興祥生弘盛房地產開發有限公司Shaoxing Shinsun Hongsheng RealEstate Development Co., Ltd.



安吉三特田野牧歌旅遊開發有限公司 AnjiSante Tianye Muge TourismDevelopment Co., Ltd.



台州市路橋祥生房地產開發有限公司Taizhou Luqiao Shinsun Real EstateDevelopment Co., Ltd.



宿州祥生房地產開發有限公司 SuzhouShinsun Real Estate Development Co.,Ltd.



紹興祥生弘瑞房地產開發有限公司Shaoxing Shinsun Hongrui Real EstateDevelopment Co., Ltd.



安吉祥生弘景房地產開發有限公司 AnjiShinsun Hongjing Real EstateDevelopment Co., Ltd.



岳陽雄城置業有限公司 YueyangXiongcheng Real Estate Co., Ltd.



臨海祥生房地產開發有限公司 LinhaiShinsun Real Estate Development Co.,Ltd.



常德祥生曙光房地產開發有限公司Changde Shinsun Shuguang Real EstateDevelopment Co., Ltd.



浙江樓雲體育產業發展有限公司 ZhejiangLouyun Sports Industry DevelopmentCo., Ltd.



宣城祥生弘盛房地產開發有限公司Xuancheng Shinsun Hongsheng RealEstate Development Co., Ltd.



杭州暨山企業管理有限公司 HangzhouJishan Management Co., Ltd.

(2,3) PRC/Mainland China/27 September 2017


杭州吉景企業管理有限公司 HangzhouJijing Management Co., Ltd.



浙江風升旅遊開發有限公司 ZhejiangFengsheng Tourism Development Co.,Ltd.


RMB200,000 70% Property leasingand culturaltourism

張家港祥生弘遠房地產開發有限公司Zhangjiagang Shinsun Hongyuan RealEstate Development Co., Ltd.



溫州多弗祥生置業有限公司 WenzhouDuofu Shinsun Real Estate Co., Ltd.




– I-19 –





share capital



Principalactivities

(’000)

浙江祥景資產管理有限公司 ZhejiangXiangjing Capital Management Co.,Ltd.



龍遊祥生弘瑞房地產開發有限公司Longyou Shinsun Hongrui Real EstateDevelopment Co., Ltd.



桐鄉祥生房地產開發有限公司 TongxiangShinsun Real Estate Development Co.,Ltd.

(2,9) PRC/Mainland China/19 December 2017


杭州祥生弘達房地產開發有限公司Hangzhou Shinsun Hongda Real EstateDevelopment Co., Ltd.



定遠縣祥生弘景房地產開發有限公司Dingyuan Shinsun Hongjing RealEstate Development Co., Ltd.



包頭祥生房地產開發有限公司 BaotouShinsun Real Estate Development Co.,Ltd.



杭州暨發企業管理有限公司 HangzhouJifa Management Co., Ltd.



杭州勢通企業管理有限公司 HangzhouShitong Management Co., Ltd.



杭州朗仕企業管理有限公司 HangzhouLangshi Management Co., Ltd.



杭州宇坤企業管理有限公司 HangzhouYukun Management Co., Ltd.



江西中城祥生地產開發有限公司 JiangxiZhongcheng Shinsun Real EstateDevelopment Co., Ltd.



杭州祥生弘程房地產開發有限公司Hangzhou Shinsun Hongcheng RealEstate Development Co., Ltd.

(2,9) PRC/Mainland China/31 January 2018


泰興市泰瑞置業有限公司 Taixing TairuiReal Estate Co., Ltd.

(2,9) PRC/Mainland China/22 January 2018


撫州祥生房地產開發有限公司 FuzhouShinsun Real Estate Development Co.,Ltd.



揚州祥生弘景房地產開發有限公司Yangzhou Shinsun Hongjing RealEstate Development Co., Ltd.



杭州奧朗企業管理有限公司 HangzhouAolang Management Co., Ltd.



杭州朗亞企業管理有限公司 HangzhouLangya Management Co., Ltd.



諸暨祥生祥韻置業有限公司 Zhuji ShinsunHongyun Real Estate Co., Ltd.



諸暨祥生祥坤置業有限公司 Zhuji ShinsunXiangkun Real Estate Co., Ltd.



杭州暨達企業管理有限公司 HangzhouJida Management Co., Ltd.



諸暨祥生景輝置業有限公司 Zhuji ShinsunJinghui Real Estate Co., Ltd.




– I-20 –





share capital



Principalactivities

(’000)

諸暨祥生未來城置業有限公司 ZhujiShinsun Future City Real Estate Co.,Ltd.



東台市祥生弘景房地產開發有限公司Dongtai Shinsun Hongjing Real EstateDevelopment Co., Ltd.

(2,17) PRC/Mainland China/26 March 2018


天臺祥生弘景房地產開發有限公司 TiantaiShinsun Hongjing Real EstateDevelopment Co., Ltd.



天長市祥生房地產開發有限公司Tianchang Shinsun Real EstateDevelopment Co., Ltd.



蘇州祥生弘景房地產開發有限公司Suzhou Shinsun Hongjing Real EstateDevelopment Co., Ltd.



衢州祥生樓雲體育產業發展有限公司Quzhou Shinsun Louyun SportsIndustry Development Co., Ltd.



聊城市祥生房地產開發有限公司Liaocheng Shinsun Real EstateDevelopment Co., Ltd.



紹興祥生弘越房地產開發有限公司Shaoxing Shinsun Hongyue Real EstateDevelopment Co., Ltd.

(2,3) PRC/Mainland China/20 April 2018


濟南祥弘房地產開發有限公司 JinanXianghong Real Estate DevelopmentCo., Ltd.



廣德祥盛房地產開發有限公司 GuangdeShinsun Real Estate Development Co.,Ltd.



衢州祥生弘瑞房地產開發有限公司Quzhou Shinsun Hongrui Real EstateDevelopment Co., Ltd.



杭州伊磊企業管理有限公司 HangzhouYilei Management Co., Ltd.



杭州正全企業管理有限公司 HangzhouZhengquan Management Co., Ltd.



杭州正然企業管理有限公司 HangzhouZhengran Management Co., Ltd.



杭州祥生弘越房地產開發有限公司Hangzhou Shinsun Hongyue RealEstate Development Co., Ltd.



天長市祥瑞房地產開發有限公司Tianchang Xiangrui Real EstateDevelopment Co., Ltd.



郎溪祥盛房地產開發有限公司 LangxiShinsun Real Estate Development Co.,Ltd.



安吉祥生弘遠房地產開發有限公司 AnjiShinsun Hongyuan Real EstateDevelopment Co., Ltd.



諸暨祥生弘坤置業有限公司 Zhuji ShinsunHongkun Real Estate Co., Ltd.




– I-21 –





share capital



Principalactivities

(’000)

麗水祥生房地產開發有限公司 LishuiShinsun Real Estate Development Co.,Ltd.



麗水祥生弘景房地產開發有限公司 LishuiShinsun Hongjing Real EstateDevelopment Co., Ltd.



麗水祥生弘遠房地產開發有限公司 LishuiShinsun Hongyuan Real EstateDevelopment Co., Ltd.

(2,17) PRC/Mainland China/10 July 2018


呼和浩特祥生房地產開發有限公司Huhehaote Shinsun Real EstateDevelopment Co., Ltd.



諸暨祥生弘達置業有限公司 Zhuji ShinsunHongda Real Estate Co., Ltd.



舟山祥生弘盛房地產開發有限公司Zhoushan Shinsun Hongsheng RealEstate Development Co., Ltd.



南京祥生世紀房地產開發有限公司Nanjing Shinsun Century Real EstateDevelopment Co., Ltd.



上海立黎達企業管理有限公司 ShanghaiLilida Management Co., Ltd.



蕪湖祥駿房地產開發有限公司 WuhuXiangjun Real Estate Development Co.,Ltd.



南京暨越企業管理有限公司 Nanjing JiyueManagement Co., Ltd.



杭州暨杭企業管理有限公司 HangzhouJihang Management Co., Ltd.



杭州暨濱企業管理有限公司 HangzhouJibin Management Co., Ltd.

(2,3) PRC/Mainland China/15 June 2018


杭州暨富企業管理有限公司 HangzhouJifu Management Co., Ltd.



杭州暨潤企業管理有限公司 HangzhouJirun Management Co., Ltd.



浙江諸暨祥生旅遊文化發展有限公司Zhejiang Zhuji Shinsun TourismCultural Development Co., Ltd.


RMB100,000 100% Propertymanagement andcultural tourism

浙江諸暨祥生智慧農業有限公司 ZhejiangZhuji Shinsun Intelligence AgricultureCo., Ltd.



臨海祥生弘景房地產開發有限公司 LinhaiShinsun Hongjing Real EstateDevelopment Co., Ltd.



馬鞍山祥生房地產開發有限公司Ma’anshan Shinsun Real EstateDevelopment Co., Ltd.

(1,5) PRC/Mainland China/15 November 2018


杭州暨通企業管理有限公司 HangzhouJitong Management Co., Ltd.



天臺祥生商業管理有限公司 TiantaiShinsun Commercial Management Co.,Ltd.




– I-22 –





share capital



Principalactivities

(’000)

杭州勝安企業管理有限公司 HangzhouShengan Management Co., Ltd.



諸暨市萬裕房地產開發有限公司 ZhujiWanyu Real Estate Development Co.,Ltd.



杭州騫翔企業管理諮詢有限公司Hangzhou Qianxiang ManagementConsulting Co., Ltd.



諸暨祥生弘潤置業有限公司 Zhuji ShinsunHongrun Real Estate Co., Ltd.



德清祥生置業有限公司 Deqing ShinsunReal Estate Co., Ltd.



上海祥生聚朗企業管理有限公司 ShanghaiShinsun Julang Management Co., Ltd.



杭州暨涵企業管理有限公司 HangzhouJihan Management Co., Ltd.



諸暨祥生宜瑞置業有限公司 Zhuji ShinsunYirui Real Estate Co., Ltd.



衢州市柯城區九龍谷房地產開發有限公司Quzhou Kecheng Jiulonggu Real EstateDevelopment Co., Ltd.



北京聯祥科技發展有限公司 BeijingLianxiang Technology DevelopmentCo., Ltd.



杭州博盟企業管理諮詢有限公司Hangzhou Bomeng ManagementConsulting Co., Ltd.



杭州暨傑企業管理有限公司 HangzhouJijie Management Co., Ltd.



杭州網軒企業管理諮詢有限公司Hangzhou Wangxuan ManagementConsulting Co., Ltd.



杭州至煊企業管理諮詢有限公司Hangzhou Zhixuan ManagementConsulting Co., Ltd.



杭州潤仕企業管理諮詢有限公司Hangzhou Runshi ManagementConsulting Co., Ltd.



杭州翰仕企業管理諮詢有限公司Hangzhou Hanshi ManagementConsulting Co., Ltd.



廣德祥弘房地產開發有限公司 GuangdeXianghong Real Estate DevelopmentCo., Ltd.



濟南祥越置業有限公司 Jinan XiangyueReal Estate Co., Ltd.



宣城祥生雲境房地產開發有限公司Xuancheng Shinsun Yunjing RealEstate Development Co., Ltd.



諸暨祥生弘澤置業有限公司 Zhuji ShinsunHongze Real Estate Co., Ltd.



杭州尚盛實業有限公司 HangzhouShangsheng Industrial Co., Ltd.


RMB2,000 90% Wholesale andretail


– I-23 –





share capital



Principalactivities

(’000)

廣德祥越房地產開發有限公司 GuangdeXiangyue Real Estate DevelopmentCo., Ltd.



杭州祥生宜信房地產開發有限公司Hangzhou Shinsun Yixin Real EstateDevelopment Co., Ltd.



湖北凱祥房地產開發有限公司 HubeiKaixiang Real Estate Development Co.,Ltd.



杭州祥生弘遠房地產開發有限公司Hangzhou Shinsun Hongyuan RealEstate Development Co., Ltd.



杭州濱旺企業管理諮詢有限公司Hangzhou Binwang ManagementConsulting Co., Ltd.



撫州祥生建設發展有限公司 FuzhouShinsun Construction DevelopmentCo., Ltd.


RMB50,000 62.5% Propertydevelopment andcultural tourism

仙居祥生房地產開發有限公司 XianjuShinsun Real Estate Development Co.,Ltd.



紹興祥生弘豐房地產開發有限公司Shaoxing Shinsun Hongfeng RealEstate Development Co., Ltd.



合肥市祥生置業有限公司 Hefei ShinsunReal Estate Co., Ltd.



杭州祥生弘騰房地產開發有限公司Hangzhou Shinsun Hongteng RealEstate Development Co., Ltd.



寧波聯祥科技發展有限公司 NingboLianxiang Technology DevelopmentCo., Ltd.



杭州濱宏企業管理有限公司 HangzhouBinhong Management Co., Ltd.



鄒城市祥宜房地產開發有限公司Zoucheng Xiangyi Real EstateDevelopment Co., Ltd.



溫州祥生廣和置業有限公司 WenzhouShinsun Guanghe Real Estate Co., Ltd.



遂昌祥生房地產開發有限公司 SuichangShinsun Real Estate Development Co.,Ltd.



衡陽杉杉奧特萊斯置業有限公司Hengyang Shanshan Outlets RealEstate Co., Ltd.



諸暨市東和旅遊管理有限公司 ZhujiDonghe Tourism Management Co., Ltd.



呼和浩特祥遠房地產開發有限公司Huhehaote Xiangyuan Real EstateDevelopment Co., Ltd.




– I-24 –





share capital



Principalactivities

(’000)

呼和浩特祥信房地產開發有限公司Huhehaote Xiangxin Real EstateDevelopment Co., Ltd.



呼和浩特祥安房地產開發有限公司Hohhot Xiang’an Real EstateDevelopment Co., Ltd.



呼和浩特祥博房地產開發有限公司Huhehaote Xiangbo Real EstateDevelopment Co., Ltd.



杭州恒朔企業管理有限公司 HangzhouHengshuo Management Co., Ltd.



Notes:

* The People’s Republic of China, “PRC”.

(1) This entity is subsidiary of a non-wholly-owned subsidiary of the Company and, accordingly, is accounted foras subsidiary by virtue of the Company’s control over it.

(2) The equity interests in these entities legally held by the Group are less than the beneficiary interests which areattributable to the trust financing arrangements with the third party financing institutes. The Group legallytransferred partial equity interests of these subsidiaries as collateral as at the date of this report to the trustfinancing institutes. Under such trust financing arrangements, the Group was obliged to purchase equityinterests at a fixed amount on a future date upon repayment of the borrowings from the trust financingcompanies.

Meanwhile, the Group retains the power to operate and manage these entities in the ordinary course ofbusiness. In this regard, considering the facts that the substance of the arrangements is to collateralise someequity interests in these entities for the borrowings for project development and the Group retains the practicalability to govern the financial and operating policies of these project entities so as to obtain benefits from theoperating activities of these project entities, the directors of the Company are of the view that the financialposition and operating results of these entities should be combined into the Group’s financial statements,irrespective of the equity transfers from the legal perspective.

(3) No audited financial statements have been prepared for these entities since incorporation, as these entities werenot subject to any statutory audit requirements under the relevant rules and regulations in their jurisdictionsof incorporation.

(4) The statutory financial statements of these entities for the years ended 31 December 2017 and 2018 preparedin accordance with PRC GAAP and regulations were audited by Baker Tilly China Certified PublicAccountants (天職國際會計師事務所(特殊普通合夥)), a certified public accounting firm registered in thePRC.

(5) The statutory financial statements of these entities for the year ended 31 December 2019 prepared inaccordance with PRC GAAP and regulations were audited by Baker Tilly China Certified Public Accountants(天職國際會計師事務所(特殊普通合夥)) a certified public accounting firm registered in the PRC.

(6) The statutory financial statements of these entities for the year ended 31 December 2017 prepared inaccordance with PRC GAAP and regulations were audited by Baker Tilly China Certified Public Accountants(天職國際會計師事務所(特殊普通合夥)), a certified public accounting firm registered in the PRC.

(7) The statutory financial statements of this entity for the years ended 31 December 2017 and 2018 prepared inaccordance with PRC GAAP and regulations were audited by Zhejiang Henghui Certified Public AccountantsCo., Ltd. (浙江恒惠會計師事務所有限公司) and Baker Tilly China Certified Public Accountants (天職國際會計師事務所(特殊普通合夥)), respectively, certified public accounting firms registered in the PRC.


– I-25 –


(8) The statutory financial statements of this entity for the years ended 31 December 2017 and 2018 prepared inaccordance with PRC GAAP and regulations were audited by Zhejiang Henghui Certified Public AccountantsCo., Ltd. (浙江恒惠會計師事務所有限公司) and Zhejiang New-Zhongtian Certified Public Accountants Co.,Ltd. (浙江新中天會計師事務所有限公司), respectively, certified public accounting firms registered in thePRC.

(9) The statutory financial statements of these entities for the year ended 31 December 2018 prepared inaccordance with PRC GAAP and regulations were audited by Baker Tilly China Certified Public Accountants(天職國際會計師事務所(特殊普通合夥)), a certified public accounting firm registered in the PRC.

(10) The statutory financial statements of these entities for the years ended 31 December 2017, 2018 and 2019prepared in accordance with PRC GAAP and regulations were audited by Baker Tilly China Certified PublicAccountants (天職國際會計師事務所(特殊普通合夥)), a certified public accounting firm registered in thePRC.


(12) The statutory financial statements of this entity for the years ended 31 December 2017 and 2018 prepared inaccordance with PRC GAAP and regulations were audited by Zhuji Tianyang Certified Public Accountants Co.,Ltd. (諸暨天陽會計師事務所有限公司), a certified public accounting firm registered in the PRC.

(13) The statutory financial statements of this entity for the year ended 31 December 2018 prepared in accordancewith PRC GAAP and regulations were audited by Shanghai Zhiyuan Certified Public Accountants Co., Ltd. (上海知源會計師事務所有限公司), a certified public accounting firm registered in the PRC.

(14) The statutory financial statements of this entity for the years ended 31 December 2017 and 2018 prepared inaccordance with PRC GAAP and regulations were audited by Liaoning Yong Xin Da Certified PublicAccountants Co., Ltd. (遼寧永信達會計師事務所有限公司), a certified public accounting firm registered in thePRC.

(15) The statutory financial statements of this entity for the year ended 31 December 2018 prepared in accordancewith PRC GAAP and regulations were audited by Xiuyan Yucheng Certified Public Accountants Co., Ltd. (岫岩玉城會計師事務所有限責任公司), a certified public accounting firm registered in the PRC.

(16) The statutory financial statements of this entity for the year ended 31 December 2017 prepared in accordancewith PRC GAAP and regulations were audited by Anhui Zhonghui Certified Public Accountants Co., Ltd. (安徽中輝會計師事務所有限公司), and for the years ended 31 December 2018 and 2019 were audited by andBaker Tilly China Certified Public Accountants (天職國際會計師事務所(特殊普通合夥)), certified publicaccounting firms registered in the PRC.


(18) The statutory financial statements of this entity for the years ended 31 December 2017 and 2019 prepared inaccordance with PRC GAAP and regulations were audited by Anhui Zhonghui Certified Public AccountantsCo., Ltd. (安徽中輝會計師事務所有限公司) and Baker Tilly China Certified Public Accountants (天職國際會計師事務所(特殊普通合夥)), respectively, certified public accounting firms registered in the PRC.

(19) The statutory financial statements of this entity for the years ended 31 December 2017 and 2019 prepared inaccordance with PRC GAAP and regulations were audited by Taizhou Tianyi Certified Public Accountants Co.,Ltd. (台州天一會計師事務所有限公司) and Baker Tilly China Certified Public Accountants (天職國際會計師事務所(特殊普通合夥)), respectively, certified public accounting firms registered in the PRC.

(20) The statutory financial statements of these entities for the year ended 31 December 2017 prepared inaccordance with PRC GAAP and regulations were audited by Huzhou Zhongtianhe Certified PublicAccountants Co., Ltd. (湖州中天和會計師事務所(普通合夥)), a certified public accounting firm registered inthe PRC

The English names of the companies registered in Mainland China referred to above in this note representmanagement’s best efforts in translating the Chinese names of those companies as no English names have beenregistered or are available.


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2.1 BASIS OF PRESENTATION

Pursuant to the Reorganisation, as more fully explained in the paragraph headed Reorganisation in the sectionheaded History, Reorganisation and Corporate Structure in the Document, the Company became the holding companyof the companies now comprising the Group on 20 May 2020. The companies now comprising the Group were underthe common control of the Controlling Shareholder before and after the Reorganisation. Accordingly, for the purposeof this report, the Historical Financial Information has been prepared on a combined basis by applying the principlesof pooling of interests method as if the Reorganisation had been completed at the beginning of the Relevant Periods.

The combined statements of profit or loss and other comprehensive income, statements of changes in equityand statements of cash flows of the Group for the Relevant Periods included the results and cash flows of allcompanies now comprising the Group from the earliest date presented or since the date when the subsidiaries and/orbusinesses first came under the common control of the Controlling Shareholder, where this is a shorter period. Thecombined statements of financial position of the Group as of 31 December 2017, 2018 and 2019 have been preparedto present the assets and liabilities of the subsidiaries using the existing book values from the ControllingShareholder’s perspective. No adjustments are made to reflect fair values, or recognise any new assets or liabilitiesas a result of the Reorganisation.

Equity interests in subsidiaries held by parties other than the Controlling Shareholder, and changes therein,prior to the Reorganisation are presented as non-controlling interests in equity in applying the principles of poolingof interests method.

Profit or loss is attributed to the owners of the parent and to the non-controlling interests, even if this resultsin the non-controlling interests having a deficit balance.

All intra-group transactions and balances have been eliminated on combination in full.

2.2 BASIS OF PREPARATION

The Historical Financial Information has been prepared in accordance with International Financial ReportingStandards (“IFRSs”), which comprise all standards and interpretations approved by the International AccountingStandards Board (the “IASB”). All IFRSs effective for the accounting period commencing from 1 January 2019,together with the relevant transitional provisions, have been early adopted by the Group in the preparation of theHistorical Financial Information throughout the Relevant Periods.

The Historical Financial Information has been prepared under the historical cost convention, except forinvestment properties and financial assets at fair value through profit or loss (“FVTPL”) which have been measuredat fair value.

2.3 ISSUED BUT NOT YET EFFECTIVE IFRSs

The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective,in this Historical Financial Information. The Group intends to adopt them, if applicable, when they become effective.

Amendments to IFRS 3 Definition of a Business1

Amendments to IFRS 3 Reference to the Conceptual Framework3

Amendments to IFRS 9, IAS 39 andIFRS 7

Interest Rate Benchmark Reform1

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor andits Associate or Joint Venture4

Amendments to IAS 1 and IAS 8 Definition of Material1

Amendments to IAS 1 Classification of Liabilities as Current or Non-current3

Amendments to IAS 16 Property, Plant and Equipment: Proceeds beforeIntended Use3

Annual Improvements to IFRSs2018-2020

Minor amendments to IFRS 1, IFRS 9, IllustrativeExamples accompanying IFRS 16 and IAS 413

Amendments to IFRS 16 Covid-19-Related Rent Concessions5

1 Effective for annual periods beginning on or after 1 January 2020



4 No mandatory effective date yet determined but available for adoption

5 Effective for annual periods beginning on or after 1 June 2020


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Further information about those IFRSs that are expected to be applicable to the Group is described below.

The amendments to IFRS 3 issued in October 2018 clarify and provide additional guidance on the definitionof a business. The amendments clarify that for an integrated set of activities and assets to be considered a business,it must include, at a minimum, an input and a substantive process that together significantly contribute to the abilityto create output.

A business can exist without including all of the inputs and processes needed to create outputs. Theamendments remove the assessment of whether market participants are capable of acquiring the business and continueto produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes togethersignificantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputsto focus on goods or services provided to customers, investment income or other income from ordinary activities.Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introducean optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities andassets is not a business. The Group expects to adopt the amendments prospectively from 1 January 2020. Since theamendments apply prospectively to transactions or other events that occur on or after the date of first application,the Group will not be affected by these amendments on the date of transition.

In May 2020, the IASB issued amendments to IFRS 3 to replace a reference to the Framework for thePreparation and Presentation of Financial Statements issued in 1989 with a reference to the Conceptual Frameworkfor Financial Reporting issued in March 2018 without significantly changing its requirements. In addition, theamendments add an exemption to the recognition principle for liabilities within the scope of IAS 37 or IFRIC 21. Theamendments also clarify existing guidance for contingent assets. The Group expects to adopt the amendmentsprospectively from 1 January 2022 and does not expect any financial impact upon initial adoption of the amendments.

Amendments to IFRS 9, IAS 39 and IFRS 7 address the effects of interbank offered rate reform on financialreporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the periodof uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments requirecompanies to provide additional information to investors about their hedging relationships which are directly affectedby these uncertainties. The amendments are effective for annual periods beginning on or after 1 January 2020. Earlyapplication is permitted. The amendments are not expected to have any significant impact on the Group’s financialstatements.

Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and in IAS28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. Theamendments require a full recognition of a gain or loss when the sale or contribution of assets between an investorand its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute abusiness, a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the extentof the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively.The previous mandatory effective date of amendments to IFRS 10 and IAS 28 was removed by the IASB in December2015 and a new mandatory effective date will be determined after the completion of a broader review of accountingfor associates and joint ventures. However, the amendments are available for adoption now.

Amendments to IAS 1 and IAS 8 provide a new definition of material. The new definition states thatinformation is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions thatthe primary users of general purpose financial statements make on the basis of those financial statements. Theamendments clarify that materiality will depend on the nature or magnitude of information. A misstatement ofinformation is material if it could reasonably be expected to influence decisions made by the primary users. TheGroup expects to adopt the amendments prospectively from 1 January 2020. The amendments are not expected tohave any significant impact on the Group’s financial statements.

Amendments to IAS 1 clarify the criteria for determining whether to classify a liability as current ornon-current. The amendments specify that the conditions which exist at the end of the reporting period are thosewhich will be used to determine if a right to defer settlement of a liability exists. The amendments clarify thesituations that are considered settlement of a liability. The new guidance will be effective for annual periods startingon or after 1 January 2022. Early application is permitted. The amendments are not expected to have any significantimpact on the Group’s financial statements.

Amendments to IAS 16 prohibit a company from deducting from the cost of property, plant and equipmentamount received from selling items produced while the company is preparing the asset for its intended use. Instead,a company will recognise such sale proceeds and related cost in profit or loss. The amendments are required to be


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applied retrospectively with the cumulative effect of initially applying the amendments as an adjustment to theopening balance of retained earnings of that earliest period presented. The amendments are not expected to have anysignificant impact on the Group’s financial statements.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries

A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement withthe investee and has the ability to affect those returns through its power over the investee (i.e., existing rights thatgive the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee,the Group considers all relevant facts and circumstances in assessing whether it has power over an investee,including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

(c) the Group’s voting rights and potential voting rights.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there arechanges to one or more of the three elements of control described in the accounting policy for subsidiaries above.A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.The results of subsidiaries are included in the Company’s statements of profit or loss and other comprehensiveincome to the extent of dividends received and receivable. The Company’s investments in subsidiaries that are notclassified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operationsare stated at cost less any impairment losses.

Business combinations and goodwill

Business combinations other than those under common control are accounted for using the acquisition method.The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition datefair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquireeand the equity interests issued by the Group in exchange for control of the acquiree. For each business combination,the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interestsand entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at theproportionate share of the acquiree’s identifiable net assets. All other components of non-controlling interests aremeasured at fair value. Acquisition-related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriateclassification and designation in accordance with the contractual terms, economic circumstances and pertinentconditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of theacquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at itsacquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisitiondate. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair valuerecognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequentsettlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, theamount recognised for non-controlling interests and any fair value of the Group’s previously held equity interests inthe acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration andother items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognisedin profit or loss as a gain on bargain purchase.


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After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill istested for impairment annually or more frequently if events or changes in circumstances indicate that the carryingvalue may be impaired. The Group performs its annual impairment test of goodwill as at 31 December. For thepurpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocatedto each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit fromthe synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to thoseunits or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group ofcash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit(group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairmentloss recognised for goodwill is not reversed in a subsequent period.

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part ofthe operation within that unit is disposed of, the goodwill associated with the operation disposed of is included inthe carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in thesecircumstances is measured based on the relative value of the operation disposed of and the portion of thecash-generating unit retained.

Investments in associates and joint ventures

An associate is an entity in which the Group has a long term interest of generally not less than 20% of theequity voting rights and over which it is in a position to exercise significant influence. Significant influence is thepower to participate in the financial and operating policy decisions of the investee, but is not control or joint controlover those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangementhave rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of anarrangement, which exists only when decisions about the relevant activities require the unanimous consent of theparties sharing control.

The Group’s investments in associates and joint ventures are stated in the combined statements of financialposition at the Group’s share of net assets under the equity method of accounting, less any impairment losses.Adjustments are made to bring into line any dissimilar accounting policies that may exist. The Group’s share of thepost-acquisition results and other comprehensive income of associates and joint ventures is included in the combinedprofit or loss and combined other comprehensive income, respectively. In addition, when there has been a changerecognised directly in the equity of the associate or joint venture, respectively, the Group recognises its share of anychanges, when applicable, in the combined statements of changes in equity. Unrealised gains and losses resultingfrom transactions between the Group and its associates or joint venture are eliminated to the extent of the Group’sinvestments in the associates or joint ventures, except where unrealised losses provide evidence of an impairment ofthe assets transferred.

Goodwill arising from the acquisition of associates or joint ventures is included as part of the Group’sinvestments in associates or joint ventures.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interestis not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases,upon loss of significant influence over the associate or joint control over the joint venture, the Group measures andrecognises any retained investment at its fair value. Any difference between the carrying amount of the associate orjoint venture upon loss of significant influence or joint control and the fair value of the retained investment andproceeds from disposal is recognised in profit or loss.

When an investment in an associate or a joint venture is classified as held for sale, it is accounted for inaccordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Fair value measurement

The Group measures its investment properties and financial assets at FVTPL at fair value at the end of eachof the Relevant Periods. Fair value is the price that would be received to sell an asset or paid to transfer a liabilityin an orderly transaction between market participants at the measurement date. The fair value measurement is basedon the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal


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market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the assetor liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an assetor a liability is measured using the assumptions that market participants would use when pricing the asset or liability,assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generateeconomic benefits by using the asset in its highest and best use or by selling it to another market participant thatwould use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient dataare available to measure fair value, maximising the use of relevant observable inputs and minimising the use ofunobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Historical Information arecategorised within the fair value hierarchy, described as follows, based on the lowest level input that is significantto the fair value measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – based on valuation techniques for which the lowest level input that is significant to the fairvalue measurement is observable, either directly or indirectly

Level 3 – based on valuation techniques for which the lowest level input that is significant to the fairvalue measurement is unobservable

For assets and liabilities that are recognised in the Historical Financial Information on a recurring basis, theGroup determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each ofthe Relevant Periods.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (otherthan financial assets, contract assets, deferred tax assets, properties under development, completed properties held forsale, investment properties and a subsidiary classified as held of sale), the asset’s recoverable amount is estimated.An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value lesscosts of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that arelargely independent of those from other assets or groups of assets, in which case the recoverable amount isdetermined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. Inassessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discountrate that reflects current market assessments of the time value of money and the risks specific to the asset. Animpairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent withthe function of the impaired asset.

An assessment is made at the end of each of the Relevant Periods as to whether there is an indication thatpreviously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, therecoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversedonly if there has been a change in the estimates used to determine the recoverable amount of that asset, but not toan amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation)had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is creditedto profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case thereversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revaluedasset.


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Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

or

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellowsubsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group oran entity related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the keymanagement personnel of the entity (or of a parent of the entity); and

(viii) the entity, or any member of a group of which it is a part, provides key management personnelservices to the Group or to the parent of the Group.

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulateddepreciation and any impairment losses. When an item of property, plant and equipment is classified as held for saleor when it is part of a disposal group classified as held for sale, it is not depreciated and is accounted for inaccordance with IFRS 5, as further explained in the accounting policy for “Non-current assets and disposal groupsheld for sale”. The cost of an item of property, plant and equipment comprises its purchase price and any directlyattributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairsand maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where therecognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of theasset as a replacement. Where significant parts of property, plant and equipment are required to be replaced atintervals, the Group recognises such parts as individual assets with specific useful lives and depreciates themaccordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant andequipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are asfollows:

Buildings 3.33-5.00%Motor vehicles 25.00-33.33%Office equipment and electronic devices 20.00-33.33%Leasehold improvements Over the shorter of the lease terms and useful life


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Where parts of an item of property, plant and equipment have different useful lives, the cost of that item isallocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful livesand the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognisedupon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposalor retirement recognised in profit or loss in the year the asset derecognised is the difference between the net salesproceeds and the carrying amount of the relevant asset.

Construction in progress mainly represents equipment under installation and car campaign under construction,which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs ofconstruction. Construction in progress is reclassified to the appropriate category of property, plant and equipmentwhen completed and ready for use.

Investment properties

Investment properties are interests in land and buildings (including leasehold interest under an operating leasefor a property interests held as a right-of-use asset which would otherwise meet the definition of an investmentproperty) held to earn rental income and/or for capital appreciation, rather than for use in the production or supplyof goods or services or for administrative purposes; or for sale in the ordinary course of business. Such propertiesare measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties arestated at fair value, which reflects market conditions at the end of each of the Relevant Periods.

Gains or losses arising from changes in the fair values of investment properties are included in profit or lossin the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss inthe year of the retirement or disposal.

For a transfer from investment properties to owner-occupied properties or inventories, the deemed cost of aproperty for subsequent accounting is its fair value at the date of change in use. If a property occupied by the Groupas an owner-occupied property becomes an investment property, the Group accounts for such property in accordancewith the policy stated under “Property, plant and equipment and depreciation” for owned property and/or accountsfor such property in accordance with the policy stated under “Right-of-use assets” for property held as a right-of-useasset up to the date of change in use, and any difference at that date between the carrying amount and the fair valueof the property is accounted for as a revaluation in accordance with the policy stated under “Property, plant andequipment and depreciation” above. For a transfer from inventories to investment properties, any difference betweenthe fair value of the property at that date and its previous carrying amount is recognised in the statement of profitor loss.

Non-current assets and disposal groups held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will berecovered principally through a sales transaction rather than through continuing use. For this to be the case, the assetor disposal group must be available for immediate sale in its present condition subject only to terms that are usualand customary for the sale of such assets or disposal groups and its sale must be highly probable. All assets andliabilities of a subsidiary classified as a disposal group are reclassified as held for sale regardless of whether theGroup retains a non-controlling interest in its former subsidiary after the sale.

Non-current assets and disposal groups (other than investment properties and financial assets) classified asheld for sale are measured at the lower of their carrying amounts and fair values less costs to sell. Property, plantand equipment and intangible assets classified as held for sale are not depreciated or amortised.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in,first-out method. The cost of finished goods comprises all costs of purchase, cost of conversion and other costsincurred in bringing the inventories to their present location and condition. Net realizable value is the estimatedselling price in the ordinary course of business, less applicable variable selling expenses and related tax.


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Properties under development

Properties under development are intended to be held for sale after completion.

Properties under development are stated at the lower of cost comprising land costs, construction costs,borrowing costs, professional fees and other costs directly attributable to such properties incurred during thedevelopment period and net realisable value.

Properties under development are classified as current assets unless those will not be realised in normaloperating cycle. On completion, the properties are transferred to completed properties held for sale.

Completed properties held for sale

Completed properties held for sale are stated in the statements of financial position at the lower of cost andnet realisable value. Cost is determined by an apportionment of the total costs of land and buildings attributable tothe unsold properties. Net realisable value takes into account the price ultimately expected to be realised, lessestimated costs to be incurred in selling the properties.

Allocation of property development costs

Land costs are allocated to each unit according to their respective saleable gross floor areas (“GFA”) to thetotal saleable GFA. Construction costs relating to units were identified and allocated specifically. Commonconstruction costs have been allocated according to the saleable GFA similar to land costs.

Land development for sale

Development cost of land development for sale comprises the aggregate cost of development, materials andsupplies, capitalised borrowing costs on related borrowing funds during the period of construction and other costsdirectly attributable to such land development for sale.

Land development for sale is stated at the lower of cost and net realisable value. Net realisable value takes intoaccount the Group’s share of proceeds derived from the sale of land development for sale by government authorities,less costs to completion and the costs to be incurred in realising the revenue derived from the sale of landdevelopment for sale based on prevailing market conditions.

Any excess of cost over the net realisable value of individual items of land development for sale is recognisedas an allowance.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assetsacquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assetsare assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over theuseful economic life and assessed for impairment whenever there is an indication that the intangible asset may beimpaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life arereviewed at least at each financial year end.

Software is stated at cost less any impairment loss and is amortised on the straight-line basis over its estimateduseful life of 2 to 10 years.

Gains or losses arising from derecognition of an intangible asset are measured at the difference between thenet disposal proceeds and the carrying amount of the asset and are recognised in profit or loss in the period whenthe asset is derecognised.

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains,a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange forconsideration.


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Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leasesand leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assetsrepresenting the right to use the underlying assets.

(a) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlyingasset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and anyimpairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assetsincludes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made ator before the commencement date less any lease incentives received. Right-of-use assets are depreciated on astraight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Office buildings 2 to 6 yearsMotor vehicles 5 years

(b) Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the presentvalue of lease payments to be made over the lease term. The lease payments include fixed payments (includingin-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on anindex or a rate, and amounts expected to be paid under residual value guarantees. The lease payments alsoinclude the exercise price of a purchase option reasonably certain to be exercised by the Group and paymentsof penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. Thevariable lease payments that do not depend on an index or a rate are recognised as an expense in the periodin which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at thelease commencement date if the interest rate implicit in the lease is not readily determinable. After thecommencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reducedfor the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is amodification, a change in the lease term, a change in the in-substance fixed lease payments or a change in theassessment to purchase the underlying asset.

(c) Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of offices and cars(i.e., those leases that have a lease term of 12 months or less from the commencement date and do not containa purchase option). It also applies the recognition exemption for leases of low-value assets to leases of officeequipment that is considered to be of low value. Lease payments on short-term leases and leases of low-valueassets are recognised as an expense on a straight-line basis over the lease term.

Group as a lessor

When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) eachof its leases as either an operating lease or a finance lease.

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership ofan asset are classified as operating leases. When a contract contains lease and non-lease components, the Groupallocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rentalincome is accounted for on a straight-line basis over the lease terms and is included in revenue in profit or loss dueto its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to thecarrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingentrents are recognised as revenue in the period in which they are earned.

Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset tothe lessee are accounted for as finance leases.


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At the commencement date, the cost of the leased assets is capitalised at the present value of the leasepayments and related payments (including the initial direct costs) and presented as a receivable at an amount equalto the net investment in the lease. The finance in come of such leases is recognised in profit or loss so as to providea constant periodic rate of charge over the lease terms.

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair valuethrough other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cashflow characteristics and the Group’s business model for managing them. With the exception of trade receivables thatdo not contain a significant financing component or for which the Group has applied the practical expedient of notadjusting the effect of a significant financing component, the Group initially measures a financial asset at its fairvalue, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivablesthat do not contain a significant financing component or for which the Group has applied the practical expedient aremeasured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenuerecognition” below.

In order for a financial asset to be classified and measured at amortised cost or fair value through othercomprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”)on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measuredat fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in orderto generate cash flows. The business model determines whether cash flows will result from collecting contractualcash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are heldwithin a business model with the objective to hold financial assets in order to collect contractual cash flows, whilefinancial assets classified and measured at fair value through other comprehensive income are held within a businessmodel with the objective of both holding to collect contractual cash flows and selling. Financial assets which are notheld within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date thatthe Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financialassets that require delivery of assets within the period generally established by regulation or convention in themarketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and aresubject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised,modified or impaired.

Financial assets at FVTPL

Financial assets at FVTPL are carried in the statement of financial position at fair value with net changesin fair value recognised in profit or loss.

This category includes equity investments which the Group had not irrevocably elected to classify at fairvalue through other comprehensive income. Dividends on equity investments classified as financial assets atfair value profit or loss are also recognised as other income in the statements of profit or loss and othercomprehensive income when the right of payment has been established, it is probable that the economicbenefits associated with the dividend will flow to the Group and the amount of the dividend can be measuredreliably.


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Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)is primarily derecognised (i.e., removed from the Group’s combined statements of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligationto pay the received cash flows in full without material delay to a third party under a “pass-through”arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset,or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset,but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-througharrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. Whenit has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control ofthe asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement.In that case, the Group also recognises an associated liability. The transferred asset and the associated liability aremeasured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lowerof the original carrying amount of the asset and the maximum amount of consideration that the Group could berequired to repay.

Impairment of financial assets

The Group recognises an allowance for the expected credit losses (“ECLs”) for all debt instruments not heldat fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due inaccordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximationof the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral heldor other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increasein credit risk since initial recognition, ECLs are provided for credit losses that result from default events that arepossible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been asignificant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected overthe remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increasedsignificantly since initial recognition. When making the assessment, the Group compares the risk of a defaultoccurring on the financial instrument as at the reporting date with the risk of a default occurring on the financialinstrument as at the date of initial recognition and considers reasonable and supportable information that is availablewithout undue cost or effort, including historical and forward-looking information.

In certain cases, the Group may also consider a financial asset to be in default when internal or externalinformation indicates that the Group is unlikely to receive the outstanding contractual amounts in full before takinginto account any credit enhancements held by the Group. A financial asset is written off when there is no reasonableexpectation of recovering the contractual cash flows.

Financial assets at amortised cost are subject to impairment under the general approach and they are classifiedwithin the following stages for measurement of ECLs except for trade receivables which apply the simplifiedapproach as detailed below.

Stage 1 – Financial instruments for which credit risk has not increased significantly since initialrecognition and for which the loss allowance is measured at an amount equal to 12-monthECLs


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Stage 2 – Financial instruments for which credit risk has increased significantly since initialrecognition but that are not credit-impaired financial assets and for which the lossallowance is measured at an amount equal to lifetime ECLs

Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased ororiginated credit-impaired) and for which the loss allowance is measured at an amountequal to lifetime ECLs

Simplified approach

For trade receivables and contract assets that do not contain a significant financing component or when theGroup applies the practical expedient of not adjusting the effect of a significant financing component, the Groupapplies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changesin credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group hasestablished a provision matrix that is based on its historical credit loss experience, adjusted for forward-lookingfactors specific to the debtors and the economic environment.

For trade receivables and contract assets that contain a significant financing component and lease receivables,the Group chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies asdescribe above.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans andborrowings, or payables, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings andpayables, net of directly attributable transaction costs.

The Group’s financial liabilities include lease liabilities, interest-bearing bank and other borrowings, seniornotes, asset-backed securities, trade and bills payables, other payables, and amounts due to related parties.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, loans and borrowings are subsequently measured at amortised cost, using theeffective interest rate method unless the effect of discounting would be immaterial, in which case they arestated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as wellas through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees orcosts that are an integral part of the effective interest rate. The effective interest rate amortisation is includedin finance costs in profit or loss.

Financial guarantee contracts

The fair value of financial guarantee is determined based on the present value of the difference in cashflows between the contractual payments required under the debt instrument and the payments that would berequired without the guarantee, or the estimated amount that would be payable to a third party for assumingthe obligations.

Where guarantees in relation to loans or other payables of joint ventures and associates are provided forno compensation, the fair values are accounted for as contributions and recognised as part of the cost of theinvestment.


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Loans and borrowings

After initial recognition, interest-bearing bank and other borrowings are subsequently measured atamortised cost, using the effective interest rate method unless the effect of discounting would be immaterial,in which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities arederecognised as well as through the effective interest rate amortisation process. Amortised cost is calculatedby taking into account any discount or premium on acquisition and fees or costs that are an integral part ofthe effective interest rate. The effective interest rate amortisation is included in finance costs in profit or loss.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, orexpires.

When an existing financial liability is replaced by another from the same lender on substantially differentterms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated asa derecognition of the original liability and a recognition of a new liability, and the difference between the respectivecarrying amounts is recognised in profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statements of financialposition if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is anintention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Cash and cash equivalents

For the purpose of the combined statements of cash flows, cash and cash equivalents comprise cash on handand demand deposits, and short term highly liquid investments that are readily convertible into known amounts ofcash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within threemonths when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’scash management.

For the purpose of the combined statements of financial position, cash and cash equivalents comprise cash onhand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past eventand it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliableestimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at theend of the reporting period of the future expenditures expected to be required to settle the obligation. The increasein the discounted present value amount arising from the passage of time is included in profit or loss.

Income tax

Income tax comprises current and deferred taxes. Income tax relating to items recognised outside profit or lossis recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to thetaxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end ofthe reporting period, taking into consideration interpretations and practices prevailing in the countries in which theGroup operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reportingperiod between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.


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Deferred tax liabilities are recognised for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability ina transaction that is not a business combination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates andjoint ventures, when the timing of the reversal of the temporary differences can be controlled and it isprobable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carryforward of unused taxcredits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profitwill be available against which the deductible temporary differences, the carryforward of unused tax credits andunused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at the timeof the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associatesand joint ventures, deferred tax assets are only recognised to the extent that it is probable that thetemporary differences will reverse in the foreseeable future and taxable profit will be available againstwhich the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each the Relevant Periods and reducedto the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of thedeferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each the RelevantPeriods and are recognised to the extent that it has become probable that sufficient taxable profit will be availableto allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period whenthe asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantivelyenacted by the end of each of the Relevant Periods.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable rightto set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate toincome taxes levied by the same taxation authority on either the same taxable entity or different taxable entities whichintend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilitiessimultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expectedto be settled or recovered.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will bereceived and all attaching conditions will be complied with. When the grant relates to an expense item, it isrecognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, areexpensed.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released toprofit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from thecarrying amount of the asset and released to profit or loss by way of a reduced depreciation charge.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to thecustomers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for thosegoods or services.


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When the consideration in a contract includes a variable amount, the amount of consideration is estimated towhich the Group will be entitled in exchange for transferring the goods or services to the customer. The variableconsideration is estimated at contract inception and constrained until it is highly probable that a significant revenuereversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with thevariable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit offinancing the transfer of goods or services to the customer for more than one year, revenue is measured at the presentvalue of the amount receivable, discounted using the discount rate that would be reflected in a separate financingtransaction between the Group and the customer at contract inception. When the contract contains a financingcomponent which provides the Group a significant financial benefit for more than one year, revenue recognised underthe contract includes the interest expense accreted on the contract liability under the effective interest method. Fora contract where the period between the payment by the customer and the transfer of the promised goods or servicesis one year or less, the transaction price is not adjusted for the effects of a significant financing component, usingthe practical expedient in IFRS 15.

a. Sale of properties

Revenue is recognised when or as the control of the asset is transferred to the customer.

In determining the transaction price, the Group adjusts the promised amount of consideration for theeffect of a financing component if it is significant.

For a property development and sales contract for which the control of the property is transferred at apoint in time, revenue is recognised when the customer obtains the physical possession, or the legal title ofthe completed property and the Group has the present right to payment and the collection of the considerationis probable.

b. Property management services

Property management service income derived from the provision of property maintenance andmanagement services is recognised when the relevant services are rendered, and the customer simultaneouslyreceives and consumes the benefits provided by the Group’s performance as the Group performs.

c. Management consulting services

Consulting service income derived from the provision of support services in connection with thedevelopment of property projects is recognised when the relevant services are rendered, and the customersimultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.

d. Hotel services

Hotel revenue is recognised when the services have been rendered.

Revenue from other sources

Rental income

Rental income is recognised on a time proportion basis over the lease terms. Variable lease paymentsthat do not depend on an index or a rate are recognised as income in the accounting period in which they areincurred.

Other income

Interest income is recognised on an accrual basis using the effective interest method by applying the ratethat discounts the estimated future cash receipts over the expected life of the financial instrument of the netcarrying amount of the financial asset.

Dividend income is recognized when the shareholders’ right to receive payment has been established,it is probable that the economic benefits associated with the dividend will flow to Group and the amount ofthe dividend can be measured reliably.


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Contract liabilities

A contract liability is recognised when a payment is received, or a payment is due (whichever is earlier) froma customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenuewhen the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

Contract assets

Other than the costs which are capitalised as inventories, property, plant and equipment and intangible assets,costs incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are met:

(a) The costs relate directly to a contract or to an anticipated contract that the entity can specificallyidentify.

(b) The costs generate or enhance resources of the entity that will be used in satisfying (or in continuingto satisfy) performance obligations in the future.

(c) The costs are expected to be recovered.

The capitalised contract costs are amortised and charged to profit or loss on a systematic basis that is consistentwith the pattern of the revenue to which the asset related is recognised. Other contract costs are expensed as incurred.

Employee retirement benefits

Pension scheme

The employees of the Company and its subsidiaries which operate in Mainland China are required toparticipate in a central pension scheme operated by the local municipal government. These subsidiaries are requiredto contribute a certain proportion of these payroll costs to the central pension scheme. The contributions are chargedto profit or loss as they become payable in accordance with the rules of the central pension scheme.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e.assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised aspart of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantiallyready for their intended use or sale. Investment income earned on the temporary investment of specific borrowingspending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowingcosts are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs thatan entity incurs in connection with the borrowing of funds.

Dividends

Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting.Proposed final dividends are disclosed in the notes to the financial statements.

Interim dividends are recognised immediately as a liability when they are proposed and declared.

Foreign currencies

Items included in the financial information of each of the Group’s entities are measured using the currency ofthe primary economic environment in which the entity operates (the “functional currency”). The Historical FinancialInformation is presented in RMB, which is the Company’s functional currency, because the Group’s principaloperations are carried out in the PRC. Foreign currency transactions recorded by the entities in the Group are initiallyrecorded using their respective functional currency rates prevailing at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency ratesof exchange ruling at the end of each of the Relevant Periods. Differences arising on settlement or translation ofmonetary items are recognised in profit or loss.


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Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using theexchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currencyare translated using the exchange rates at the date when the fair value was measured. The gain or loss arising ontranslation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or losson change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognisedin other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss,respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on thederecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date ofinitial transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liabilityarising from the advance consideration. If there are multiple payments or receipts in advance, the Group determinesthe transaction date for each payment or receipt of the advance consideration.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s Historical Financial Information requires management to make judgements,estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and theiraccompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions andestimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets orliabilities affected in the future.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements,apart from those involving estimations, which have the most significant effect on the amounts recognised in theHistorical Financial Information:

Classification between investment properties and completed properties held for sale

The Group determines whether a property qualifies as an investment property, and has developed criteria inmaking that judgement. Investment property is a property held to earn rentals or for capital appreciation or both.Therefore, the Group considers whether a property generates cash flows largely independently of the other assets heldby the Group.

Classification of subsidiaries, joint ventures and associates

The classification of an investment as a subsidiary, a joint venture or an associate is based on whether theGroup is determined to have control, joint control or significant influence over the investee, which involvesjudgements through the analysis of various factors, including the Group’s representation on the chief decision-makingauthorities of an investee, such as the board of directors’ meetings and shareholders’ meetings, as well as other factsand circumstances.

Subsidiaries are combined, which means that each of their assets, liabilities and transactions are includedline-by-line in the Group’s combined financial statements, whereas he interests in joint ventures and associates areequity accounted for as investments on the combined statements of financial position.

Significant financing component

In determining the transaction price, the Group adjusts the promised amount of consideration for the effectsof the timing value of money if the timing of payments agreed by the parties to the contract provides the Group witha significant benefit of financing.

Certain advance payments received from customers provide a significant financing benefit to the Group.Although the Group is required by the government to place all deposits and periodic payments received from thepre-completion sales in a stakeholder account, the Group is able to benefit from those advance payments as it canwithdraw money from that account to pay for construction costs on the project. The advance payments received ineffect reduce the Group’s need to rely on other sources of financing.


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The amount of the financing component is estimated at the inception of the contract. After contract inception,the discount rate is not updated for changes in interest rates or other circumstances, such as a change in credit risk.The period of financing is from the time that the payment is received until the transfer of goods to the customers iscompleted.

Classification of subsidiaries, joint ventures and associates

The classification of an investment as a subsidiary, a joint venture or an associate is based on whether theGroup is determined to have control, joint control or significant influence over the investee, which involvesjudgements through the analysis of various factors, including the Group’s representation on the chief decision-makingauthorities of an investee, such as board of directors’ meetings and shareholders’ meetings, as well as other facts andcircumstances. The Group entered into voting right entrustment agreement or articles of associations with the equityholders of some entities, pursuant to which the equity holders agreed to entrust its voting rights attached to certainequity interest in these entities to the Group. Consequently, the Group considers that it controls these entities,notwithstanding the fact that it does not hold majority equity interest. Accordingly, these entities have been accountedfor as subsidiaries during the Relevant Periods. The Group legally transferred partial interests of some entities ascollateral to independent trust financing institutes under financing arrangements, pursuant to which, the Group wasobliged to repurchase the equity interests held by trust companies at a fixed amount upon repayment of theborrowings. The Group is exposed to variable returns from its involvement and has the ability to affect those returnsthrough its power over the relevant activities of these entities in the ordinary course of business. The trust financinginstitutes earn fixed return from their investments and their rights in these entities are considered protective in nature.In this regard, the investments from trust financing institutes are treated as liabilities of the Group and these entitiesare considered as subsidiaries.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of eachof the Relevant Periods, that have a significant risk of causing a material adjustment to the carrying amounts of assetsand liabilities within the next financial year, are disclosed below:

Provision for properties under development and completed properties held for sale

The Group’s properties under development and completed properties held for sale are stated at the lower ofcost and net realisable value. Based on the Group’s historical experience and the nature of the subject properties, theGroup makes estimates of the selling prices, the costs of completion of properties under development, and the coststo be incurred in selling the properties based on prevailing market conditions.

If there is an increase in costs to completion or a decrease in net sales value, the net realisable value willdecrease and this may result in a provision for properties under development and completed properties held for sale.Such provision requires the use of judgement and estimates. Where the expectation is different from the originalestimate, the carrying value and provision for properties in the periods in which such estimate is changed will beadjusted accordingly.

PRC corporate income tax (“CIT”)

The Group is subject to corporate income taxes in the PRC. As a result of the fact that certain matters relatingto the income taxes have not been confirmed by the local tax bureau, objective estimate and judgement based oncurrently enacted tax laws, regulations and other related policies are required in determining the provision for incometaxes to be made. Where the final tax outcome of these matters is different from the amounts originally recorded, thedifferences will impact on the income tax and tax provisions in the period in which the differences realise.

PRC land appreciation tax (“LAT”)

The Group is subject to LAT in the PRC. The provision for LAT is based on management’s best estimatesaccording to the understanding of the requirements set forth in the relevant PRC tax laws and regulations. The actualLAT liabilities are subject to the determination by the tax authorities upon the completion of the propertydevelopment projects. The Group has not finalised its LAT calculation and payments with the tax authorities forcertain of its property development projects. The final outcome could be different from the amounts that were initiallyrecorded, and any differences will impact on the LAT expenses and the related provision in the period in which thedifferences realise.


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Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets (including theright-of-use assets) at the end of each of the Relevant Periods. Other non-financial assets are tested for impairmentwhen there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carryingvalue of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value lesscosts of disposal and its value in use. The calculation of the fair value less costs of disposal is based on availabledata from binding sales transactions in an arm’s length transaction of similar assets or observable market prices lessincremental costs for disposing of the asset. When value-in-use calculations are undertaken, management mustestimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate inorder to calculate the present value of those cash flows.

Estimate of fair value of investment properties

Investment properties carried at fair value were revalued at each reporting date based on the appraised marketvalue provided by independent professional valuers. Such valuations were based on certain assumptions, which aresubject to uncertainty and might materially differ from the actual results. In making the estimation, the Groupconsiders information from current prices in an active market for similar properties and uses assumptions that aremainly based on market conditions existing at the end of each of the Relevant Periods.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, and carryforward of unused taxcredits and unused tax losses, to the extent that it is probable that taxable profit will be available against which thedeductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised.Significant management judgement is required to determine the amount of deferred tax assets that can be recognised,based upon the likely timing and level of future taxable profits together with future tax planning strategies. Furtherdetails are included in note 19 to the Historical Financial Information.

4. OPERATING SEGMENT INFORMATION

For management purposes, the Group has four reportable operating segments which are property development,property leasing, hotel operations and the provision of property management services. The property leasing segment,hotel operations and the provision of property management services segment have no significant contribution to therevenue and net assets. The Group’s chief operating decision maker, for the purpose of resource allocation andperformance assessment, focus on the operating results of the Group as a whole, and accordingly no further operatingsegment analysis thereof is presented.

Geographical information

No geographical information is presented as the Group’s revenue from the external customers is derived solelyfrom its operation in Mainland China and no non-current assets of the Group are located outside Mainland China.

Information about major customers

No revenue from sales to a single customer or a group of customers under common control accounted for 10%or more of the Group’s revenue for each of the Relevant Periods.


– I-45 –


5. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue and other income and gains is as follows:


2017 2018 2019

RMB’000 RMB’000 RMB’000

Revenue from contracts with customers 6,279,253 14,200,739 35,506,919

Revenue from other sourcesProperty lease income 14,042 14,563 12,619

6,293,295 14,215,302 35,519,538

Revenue from contracts with customers

(a) Disaggregated revenue information


2017 2018 2019

RMB’000 RMB’000 RMB’000

Type of goods or services:Sale of properties 6,165,676 14,077,218 35,372,157Property management services 3,502 2,696 3,781Hotel operation 110,075 111,853 107,088Management consulting services – 8,972 23,893

Total revenue from contracts with customers 6,279,253 14,200,739 35,506,919


2017 2018 2019

RMB’000 RMB’000 RMB’000

Timing of revenue recognition:Properties transferred at a point in time 6,165,676 14,077,218 35,372,157Services transferred over time 113,577 123,521 134,762

Total revenue from contracts with customers 6,279,253 14,200,739 35,506,919

Information relating to the amounts of revenue recognised in each of the Relevant Periods that were includedin the contract liabilities at the beginning of each of the Relevant Periods is included in note 29 to the HistoricalFinancial Information.

(b) Performance obligations

Information about the Group’s performance obligations is summarised below:

Sale of properties

The performance obligation is satisfied upon delivery of the properties and the Group has alreadyreceived the payment or have the right to receive the payment properly.


– I-46 –


Property management services

For property management services, the Group recognises revenue when the services are provided onmonthly basis and the Group has a right to invoice which corresponds directly with the value of performancecompleted. The Group has elected the practical expedient not to disclose the remaining performanceobligations for these types of contracts. The majority of the property management service contracts do not havea fixed term. The term of the contracts for pre-delivery and property management services is generally set toexpire when the counterparties notify the Group that the services are no longer required.

Management consulting services

For management consulting services, the Group recognises revenue in the amount that equals to the rightto invoice which corresponds directly with the value to the customer of the Group’s performance to date. TheGroup has elected the practical expedient not to disclose the remaining performance obligations for these typesof contracts. The majority of the management consulting service contracts do not have a fixed term. The termof the contracts for pre-delivery and consulting services is generally set to expire when the counterpartiesnotify the Group that the services are no longer required.

Hotel operation

For hotel services, the Group recognises revenue in the amount that equals to the right to invoice whichcorresponds directly with the value to the customer of the Group’s performance to date. The Group has electedthe practical expedient not to disclose the remaining performance obligations for these types of contracts. Themajority of the hotel service contracts do not have a fixed term. The terms of the contracts for pre-deliveryand hotel services are generally set to expire when the counterparties notify the Group that the services are nolonger required.

An analysis of other income and gains is as follows:


2017 2018 2019

RMB’000 RMB’000 RMB’000

Other income and gainsGain on bargain purchase (note 36) 22,437 – –Gain on disposal of associates 15,130 – –Gain on disposal of subsidiaries (note 37) – 9,969 4,032Subsidy income 22,725 4,019 70,756Deposit forfeiture 1,445 2,168 2,593Investment income from financial assets at

fair value through profit or loss 2,279 11,547 1,938Gain on disposal of items of property,

plant and equipment 388 485 1,438Gain on remeasurement of previously held

equity interests in joint ventures andassociates 60,824 1,558 –

Others 5,803 7,043 14,618

131,031 36,789 95,375


– I-47 –


6. (LOSS)/PROFIT BEFORE TAX

The Group’s (loss)/profit before tax is arrived at after charging:


2017 2018 2019

RMB’000 RMB’000 RMB’000

Cost of inventories sold (note 21) 5,399,693 11,154,733 26,975,106Cost of services provided 59,768 61,388 64,321Impairment of financial assets (note 22, 24) 4,671 487 13,574Depreciation of property, plant and equipment

(note 13) 47,548 51,788 57,622Depreciation of right-of-use assets (note 14) 3,525 13,633 44,767Amortisation of intangible assets (note 16) 723 937 3,649Lease payments not included in the measurement

of lease liabilities (note 14/d) 4,267 18,360 16,288Auditor’s remuneration 959 2,680 3,200Employee benefit expense (including directors’

and chief executive’s remuneration in note 8):Wages and salaries 235,191 604,813 777,907Pension scheme contributions 41,115 103,492 125,086

7. FINANCE COSTS

An analysis of finance costs is as follows:


2017 2018 2019

RMB’000 RMB’000 RMB’000

Interest on bank and other borrowings 1,374,575 2,559,191 3,223,183Interest on senior notes (note 31) – 34,942 62,359Interest on asset-backed securities 22,099 203,549 255,634Interest on lease liabilities (note 14) 1,358 1,561 7,340Interest expense arising from revenue contracts 481,717 672,109 928,918

1,879,749 3,471,352 4,477,434Less: Interest capitalised (1,659,433) (3,039,242) (3,699,864)

220,316 432,110 777,570

8. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION

The Company did not have any chief executive, executive directors, non-executive directors and independentnon-executive directors before 18 December 2019, the date of incorporation of the Company.

Mr. Chen Guoxiang, Mr. Chen Hongni, Ms. Yao Xiaozhen and Mr. Zhao Leiyi were appointed as executivedirectors of the Company on [21] May 2020. Mr. Wong Kon Man, Ms. Ma Hongman and Mr. Ding Jiangang wereappointed as independent non-executive directors of the Company on [●] 2020.


– I-48 –


Certain of the Company’s directors received remuneration from the subsidiaries now comprising the Group fortheir appointment as directors of these subsidiaries. The remuneration of each of these directors as recorded in thefinancial statements of the subsidiaries is set out below:


2017 2018 2019

RMB’000 RMB’000 RMB’000

Salaries, allowances and benefits in kind 1,390 16,490 12,871Pension scheme contributions 183 312 378

Total 1,573 16,802 13,249

(a) Independent non-executive directors

Salaries,allowances and

benefits inkind

Pensionscheme

contributionsTotal

remuneration

RMB’000 RMB’000 RMB’000

Year ended 31 December 2017Independent non-executive directors:– Mr. Wong Kon Man – – –– Ms. Ma Hongman – – –– Mr. Ding Jiangang – – –

– – –


– – –


– – –


– I-49 –


(b) Executive directors

Salaries,allowances and

benefits inkind

Pensionscheme

contributionsTotal

remuneration

RMB’000 RMB’000 RMB’000

Year ended 31 December 2017Executive directors:– Mr. Chen Guoxiang 400 7 407– Mr. Chen Hongni – – –– Ms. Yao Xiaozhen 542 88 630– Mr. Zhao Leiyi 448 88 536

1,390 183 1,573

Year ended 31 December 2018Executive directors:– Mr. Chen Guoxiang 1,350 – 1,350– Mr. Chen Hongni 4,342 108 4,450– Ms. Yao Xiaozhen 6,103 124 6,227– Mr. Zhao Leiyi 4,695 80 4,775

16,490 312 16,802

Year ended 31 December 2019Executive directors:– Mr. Chen Guoxiang 1,350 – 1,350– Mr. Chen Hongni 4,683 87 4,770– Ms. Yao Xiaozhen 3,771 142 3,913– Mr. Zhao Leiyi 3,067 149 3,216

12,871 378 13,249

Mr. Chen Guoxiang is the chief executive and an executive director of the Company. There was no arrangementunder which a director or the chief executive waived or agreed to waive any remuneration during the RelevantPeriods.


– I-50 –


9. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees for the years ended 31 December 2017, 2018 and 2019 included 3, 3 and 2directors, respectively, details of whose remuneration are set out in note 8 above. Details of the remuneration for theyears ended 31 December 2017, 2018 and 2019 of the remaining 2, 2, and 3 highest paid employees who are neithera director nor chief executive of the Company, respectively, are as follows:


2017 2018 2019

RMB’000 RMB’000 RMB’000

Salaries, allowances and benefits in kind 1,095 5,715 11,667Pension scheme contributions 168 107 398

Total 1,263 5,822 12,065

The number of non-director and non-chief executive highest paid employees whose remuneration fell withinthe following bands is as follows:


2017 2018 2019

HK$500,001 to HK$1,000,000 2 – –HK$1,000,001 to HK$1,500,000 – – –HK$1,500,001 to HK$2,000,000 – – –HK$2,000,001 to HK$2,500,000 – – –HK$2,500,001 to HK$3,000,000 – – –HK$3,000,001 to HK$3,500,000 – 2 –HK$3,500,001 to HK$4,000,000 – – –HK$4,000,001 to HK$4,500,000 – – 1HK$4,500,001 to HK$5,000,000 – – 2

Total 2 2 3

10. INCOME TAX

The Group is subject to income tax on an entity basis on profits arising in or derived from the tax jurisdictionsin which members of the Group are domiciled and operate. Pursuant to the rules and regulations of the CaymanIslands and British Virgin Islands, the Company and the Group’s subsidiaries incorporated in the Cayman Islands andBritish Virgin Islands are not subject to any income tax. The Group’s subsidiaries incorporated in Hong Kong are notliable for income tax as it did not have any assessable profits arising in Hong Kong during the Relevant Periods.

Subsidiaries of the Group operating in Mainland China are subject to the PRC corporate income tax with a taxrate of 25% for the Relevant Periods.

LAT is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being theproceeds from the sale of properties less deductible expenditures, including land costs, borrowing costs and otherproperty development expenditures. The Group has estimated, made and included in taxation a provision for LATaccording to the requirements set forth in the relevant PRC tax laws and regulations. The LAT provision is subjectto the final review and approval by the local tax bureau.


2017 2018 2019

RMB’000 RMB’000 RMB’000

Current tax:PRC corporate income tax 500,293 901,296 1,596,364PRC LAT 118,397 138,881 995,483

Deferred tax (note 19) (624,585) (782,055) (270,454)

Total tax(credit)/charge for the year (5,895) 258,122 2,321,393


– I-51 –


A reconciliation of income tax expense applicable to (loss)/profit before tax at the statutory rate for thejurisdictions in which the Company and the majority of its subsidiaries are domiciled to the income tax expense atthe effective income tax rate for each of the Relevant Periods is as follows:

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

(Loss)/profit before tax (291,844) 686,062 5,530,348

At the statutory income tax rate (25%) (72,961) 171,516 1,382,587Expenses not deductible for tax 13,517 37,243 89,166Income not subject to tax (18,808) (60,351) (247)Profits and losses attributable to joint ventures

and associates 35 15,355 10,786Deductible temporary differences and

tax losses utilized from previous years (40,148) (38,116) (28,979)Tax losses not recognised 20,518 14,120 78,046Unrecognized deductible temporary differences 3,154 14,194 43,422Provision for LAT 118,397 138,881 995,483Tax effect on LAT (29,599) (34,720) (248,871)

Tax charge at the Group’s effective rate (5,895) 258,122 2,321,393

The share of tax charges attributable to joint ventures and associates amounted to RMB1,454,000,RMB913,000 and RMB13,785,000 for the years ended 31 December 2017, 2018 and 2019, respectively. The shareof tax credit attributable to joint ventures and associates amounted to RMB1,501,000, RMB21,387,000 andRMB28,166,000 for the years ended 31 December 2017, 2018 and 2019, respectively. These amounts are includedin “Share of profits and losses of joint ventures and associates” in the combined statements of profit or loss and othercomprehensive income.

Tax payables in the combined statements of financial position represents the following:

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Tax payables:PRC corporate income tax 365,010 540,148 1,435,996PRC LAT 102,502 26,070 487,182

467,512 566,218 1,923,178

11. DIVIDENDS

No dividends have been paid or declared by the Company since its date of incorporation.

12. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

Earnings per share information is not presented as its inclusion, for the purpose of this report, is not consideredmeaningful due to the Reorganisation and the basis of presentation of the results of the Group for the RelevantPeriods as disclosed in note 2.1 to the Historical Financial Information.


– I-52 –


13. PROPERTY, PLANT AND EQUIPMENT

BuildingsMotor

vehicles

Officeequipment

andelectronic

devicesConstruction

in progressLeasehold

improvements Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

31 December 2017

At 1 January 2017:Cost 276,898 58,296 58,940 – 91,962 486,096Accumulated

depreciation (40,799) (42,751) (35,647) – (42,085) (161,282)

Net carrying amount 236,099 15,545 23,293 – 49,877 324,814

At 1 January 2017,net of accumulateddepreciation 236,099 15,545 23,293 – 49,877 324,814Additions 22,906 23,137 11,631 136 25,858 83,668Acquisition of

subsidiaries (note 36) 249,700 1,446 25,474 – 748 277,368Disposals (3,995) (449) (85) – (11,680) (16,209)Depreciation provided

during the year(note 6) (16,359) (9,968) (12,134) – (9,087) (47,548)

At 31 December 2017,net of accumulateddepreciation 488,351 29,711 48,179 136 55,716 622,093

At 31 December 2017:Cost 544,950 81,399 103,128 136 89,568 819,181Accumulated

depreciation (56,599) (51,688) (54,949) – (33,852) (197,088)

Net carrying amount 488,351 29,711 48,179 136 55,716 622,093

31 December 2018

At 1 January 2018:Cost 544,950 81,399 103,128 136 89,568 819,181Accumulated

depreciation (56,599) (51,688) (54,949) – (33,852) (197,088)



– I-53 –


BuildingsMotor

vehicles

Officeequipment

andelectronic

devicesConstruction


improvements Total


At 1 January 2018,net of accumulateddepreciation 488,351 29,711 48,179 136 55,716 622,093Additions 49 20,288 15,937 417 8,457 45,148Acquisition of

subsidiaries (note 36) – – 335 – – 335Transfers – – 136 (136) – –Disposals (6,020) (624) (3,392) – (12,136) (22,172)Disposal of subsidiaries

(note 37) – – (3) – – (3)Depreciation provided


At 31 December 2018,net of accumulateddepreciation 464,218 37,388 44,584 417 47,006 593,613

At 31 December 2018:Cost 535,980 83,780 112,671 417 80,893 813,741Accumulated

depreciation (71,762) (46,392) (68,087) – (33,887) (220,128)


31 December 2019

At 1 January 2019:Cost 535,980 83,780 112,671 417 80,893 813,741Accumulated

depreciation (71,762) (46,392) (68,087) – (33,887) (220,128)



– I-54 –


BuildingsMotor

vehicles

Officeequipment

andelectronic

devicesConstruction


improvements Total


At 1 January 2019,net of accumulateddepreciation 464,218 37,388 44,584 417 47,006 593,613Additions 734 2,596 3,998 2,748 4,526 14,602Acquisition of

subsidiaries (note 36) – 60 345 – – 405Transfers – – 417 (417) – –Disposals – (2,078) (1,391) – (7,253) (10,722)Disposal of subsidiaries

(note 37) – (521) (80) – (395) (996)Transfer to a subsidiary

held for sale – (44) – – – (44)Depreciation provided


At 31 December 2019,net of accumulateddepreciation 447,085 25,509 34,472 2,748 29,422 539,236

At 31 December 2019:Cost 536,714 75,113 113,220 2,748 77,431 805,226Accumulated

depreciation (89,629) (49,604) (78,748) – (48,009) (265,990)

Net carrying amount 447,085 25,509 34,472 2,748 29,422 539,236

Certain of the Group’s property, plant and equipment with amounts of approximately RMB286,922,000,RMB249,442,000 and RMB250,130,000 as at 31 December 2017, 2018 and 2019, respectively, have been pledgedto secure bank and other borrowings granted to the Group (note 30).


– I-55 –


14. LEASES

The Group as a lessee

The Group has lease contracts for office buildings and motor vehicles. Leases of office buildings generallyhave lease terms between 2 and 6 years, and leases of motor vehicles generally have lease terms of 5 years. Officeequipment generally has lease terms of 12 months or less and/or is individually of low value. Generally, the Groupis restricted from assigning and subleasing the leased assets outside the Group.

(a) Right-of-use assets – Office building

2017 2018 2019

RMB’000 RMB’000 RMB’000

Carrying amount at beginning of the year 4,920 13,131 56,300Additions 10,948 56,707 101,363Acquisition of a subsidiary (note 36) 733 – –Amortisation provided

during the year (note 6) (3,470) (13,538) (44,672)

Carrying amount at end of the year 13,131 56,300 112,991

(b) Other right-of-use assets

The carrying amounts of the Group’s other right-of-use assets and the movements during the RelevantPeriods are as follows:

2017 2018 2019

RMB’000 RMB’000 RMB’000

Motor vehiclesCarrying amount at beginning of the year – 420 325Additions 475 – –Amortisation provided

during the year (note 6) (55) (95) (95)

Carrying amount at end of the year 420 325 230

(c) Lease liabilities

The carrying amount of lease liabilities and the movements during the Relevant Periods are as follows:

2017 2018 2019

RMB’000 RMB’000 RMB’000

Carrying amount at beginning of the year 5,272 14,829 58,743New leases 9,824 51,471 88,843Acquisition of a subsidiary (note 36) 733 – –Accretion of interest recognised

during the year 1,358 1,561 7,340Payments (2,358) (9,118) (29,336)

Carrying amount at end of the year 14,829 58,743 125,590Analysed into:Current portion 7,078 30,812 50,744Non-current portion 7,751 27,931 74,846


– I-56 –


(d) The amounts recognised in profit or loss in relation to leases are as follows:


2017 2018 2019

RMB’000 RMB’000 RMB’000

Interest on lease liabilities 1,358 1,561 7,340Depreciation charge of right-of-use assets 3,525 13,633 44,767Rental expense for short-term leases 4,201 18,093 15,936Rental expense for leases of

low-value assets 66 267 352

Total amount recognised in profit or loss 9,150 33,554 68,395

(e) The total cash outflow for leases is disclosed in note 35 to the Historical Financial Information.

The Group as a lessor

The Group leases its investment properties (note 15) under operating lease arrangements. The terms of theleases generally require the tenants to pay security deposits and provide for periodic rent adjustments according tothe then prevailing market conditions. Rental income recognised by the Group during the Relevant Periods wasRMB14,042,000, RMB14,563,000 and RMB12,619,000 for the years ended 31 December 2017, 2018 and 2019,respectively, details of which are included in note 5 to the Historical Financial Information.

At the end of each of the Relevant Periods, the undiscounted lease payments receivable by the Group in futureperiods under non-cancellable operating leases with its tenants are as follows:

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Within one year 14,400 15,397 16,462After one year but within two years 13,886 14,751 12,502After two years but within three years 13,717 11,335 10,908After three years but within four years 10,356 9,789 10,908After four years but within five years 9,789 9,789 9,825After five years 51,707 41,918 32,092

113,855 102,979 92,697


– I-57 –


15. INVESTMENT PROPERTIES

CompletedUnder

construction Total

RMB’000 RMB’000 RMB’000

Carrying amount at 1 January 2017 502,114 – 502,114Acquisition of subsidiaries (note 36) 48,670 – 48,670Net gain from a fair value adjustment 17,285 – 17,285

Carrying amount at 31 December 2017and 1 January 2018 568,069 – 568,069

Additions – 520,511 520,511Net gain from a fair value adjustment 13,489 489 13,978

Carrying amount at 31 December 2018and 1 January 2019 581,558 521,000 1,102,558

Additions – 367,666 367,666Transferred from investment properties

under construction 888,666 (888,666) –Net gain from a fair value adjustment 22,406 – 22,406

Carrying amount at 31 December 2019 1,492,630 – 1,492,630

The Group’s investment properties are situated in Mainland China. The Group’s investment properties wererevalued on 31 December 2017, 2018 and 2019 based on valuations performed by Jones Lang LaSalle (JLL), anindependent professionally qualified valuer, at RMB568,069,000, RMB1,102,558,000 and RMB1,492,630,000,respectively. The Group appoints an external valuer to be responsible for the external valuations of the Group’sproperties. Selection criteria include market knowledge, reputation, independence and whether professional standardsare maintained. The Group’s chief financial officer has discussions with the valuer on the valuation assumptions andvaluation results when the valuation is performed for financial reporting.

Certain of the Group’s investment properties with carrying amounts of approximately RMB196,040,000,RMB200,818,000 and RMB203,081,000 as at 31 December 2017, 2018 and 2019, respectively, have been pledgedto secure bank and other borrowings granted to the Group (note 30).

Fair value hierarchy

The following table illustrates the fair value measurement hierarchy of the Group’s investment properties:

Fair value measurement as at 31 December 2017 using

Quotedprices in

activemarkets

(Level 1)

Significantobservable

inputs(Level 2)

Significantunobservable

inputs(Level 3) Total

RMB’000 RMB’000 RMB’000 RMB’000

Recurring fair valuemeasurement for:

Commercial propertiesCompleted – – 568,069 568,069

– – 568,069 568,069


– I-58 –



Quotedprices in

activemarkets

(Level 1)


inputs(Level 2)



RMB’000 RMB’000 RMB’000 RMB’000


Commercial propertiesUnder construction – – 521,000 521,000Completed – – 581,558 581,558

– – 1,102,558 1,102,558


Quotedprices in

activemarkets

(Level 1)


inputs(Level 2)



RMB’000 RMB’000 RMB’000 RMB’000


Commercial propertiesCompleted – – 1,492,630 1,492,630

– – 1,492,630 1,492,630

During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level2 and no transfers into or out of Level 3.


– I-59 –


Below is a summary of the valuation techniques used and the key inputs to the valuation of investmentproperties:

Valuationtechnique

Significantunobservableinputs Range or weighted average 31 December

2017 2018 2019

Commercialpropertiescompleted

Incomeapproach

Expected rentalvalue (persquare metreand permonth)

RMB14-132 RMB15-134 RMB15-138

Capitalisationrate

3.0%-6.0% 3.0%-6.0% 3.0%-6.0%

Commercialproperties underconstruction

Comparisonmethod

Expected rentalvalue (persquare metreand permonth)

– RMB60-138 –

Capitalisationrate

– 3.0%-5.0% –

Expected profitmargin

– 4% –

The fair value of completed commercial properties is determined using the income approach by taking intoaccount the rental income of the properties derived from the existing leases and/or achievable in the existing marketwith due allowance for the reversionary income potential of the leases, which have been then capitalised to determinethe fair value at an appropriate capitalisation rate. Where appropriate, reference to the comparable sales transactionsas available in the relevant market has also been considered.

A significant increase (decrease) in the estimated rental value would result in a significant increase (decrease)in the fair value of the investment properties. A significant increase (decrease) in the capitalisation rate would resultin a significant decrease (increase) in the fair value of the investment properties.

The fair value of most of the commercial properties under construction is determined using the comparisonmethod, with reference to comparable sales evidence as available in the relevant market to derive the fair value ofthe properties assuming they were completed and, where appropriate, after deducting the following items:

• Estimated construction cost, marketing cost, management fees, finance costs and professional fees to beexpensed to complete the properties that would be incurred by a market participant;

• Estimated profit margin that a market participant would require to hold and develop the properties tocompletion.

A higher expected profit margin would result in a lower fair value of the investment properties underconstruction.


– I-60 –


16. INTANGIBLE ASSETS

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

SoftwareCarrying amount at beginning of the yearCost 4,504 7,631 11,861Accumulated amortisation (333) (1,056) (1,993)

Net carrying amount 4,171 6,575 9,868

Carrying amount at beginning of the year 4,171 6,575 9,868Additions 2,878 4,230 5,453Acquisition of subsidiaries (note 36) 249 – –Amortisation provided during the year (note 6) (723) (937) (3,649)

Carrying amount at end of the year 6,575 9,868 11,672

At end of the year:Cost 7,631 11,861 17,306Accumulated amortisation (1,056) (1,993) (5,634)

Net carrying amount 6,575 9,868 11,672

17. INVESTMENTS IN JOINT VENTURES

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Share of net assets 123,470 105,337 529,816Goodwill on acquisition 235,864 235,864 235,864Impairment – – (53,000)

Carrying amount of the investment 359,334 341,201 712,680

The Group’s receivable and payable balances with joint ventures are disclosed in note 40 to the HistoricalFinancial Information.


– I-61 –


(a) Particulars of the Group’s principal joint ventures, all of which principally operated in Mainland China:

Name of companiesPlace and yearof registration

Nominalvalue of

registeredshare capital

Percentage ofownership

interestattributable

to the Group Principal activities

(’000)

洪湖市祥生置業有限公司*Honghu Shinsun RealEstate Co., Ltd. (“HonghuShinsun Real Estate”)

Hubei, PRC 2004 30,000 50% Property development

溫州祥生多弗置業有限公司(note 7) Wenzhou ShinsunDuofu Real Estate Co.,Ltd. (“Wenzhou ShinsunDuofu”)

Zhejiang, PRC2017

50,000 50% Property development

仙桃祥榮房地產開發有限公司* Xiantao XiangrongReal Estate DevelopmentCo., Ltd. (“XiantaoXiangrong”)


湖北祥生仙苑國際大酒店管理有限公司* HubeiXiangsheng XianyuanInternational HotelManagement Co., Ltd.(“Shinsun Fairyland HotelManagement”)


湖州交投祥生房地產開發有限公司 Huzhou JiaotouShinsun Real EstateDevelopment Co., Ltd.(“Huzhou JiaotouShinsun”)

Zhejiang, PRC2017


湖州吳興交投祥生置業有限公司 Huzhou WuxingJiaotou Shinsun RealEstate Co., Ltd. (“HuzhouWuxing Jiaotou”)

Zhejiang, PRC2017


浙江發現島文化旅遊有限公司 (note 1) Zhejiang FaXian Dao Cultural TourismCo., Ltd. (“Zhejiang FaXian Dao CulturalTourism”)

Zhejiang, PRC2014

100,000 60% Cultural tourism

杭州祥生宜景房地產開發有限公司 Hangzhou ShinsunYijing Real EstateDevelopment Co., Ltd.(“Hangzhou ShinsunYijing”)

Zhejiang, PRC2017


揚州祥生可宇置業有限公司(note 1) Yangzhou ShinsunKeyu Real Estate Co., Ltd.(“Yangzhou ShinsunKeyu”)

Jiangsu, PRC 2007 50,000 61% Property development


– I-62 –



Nominalvalue of





(’000)

杭州仁遠房地產開發有限公司 (note 2) HangzhouRenyuan Real EstateDevelopment Co., Ltd.(“Hangzhou Renyuan”)

Zhejiang, PRC2018


南京市頤輝置業有限公司(note 4) Nanjing YihuiReal Estate Co., Ltd.(“Nanjing Yihui”)


寧波祥生弘盛房地產開發有限公司 Ningbo ShinsunHongsheng Real EstateDevelopment Co., Ltd.(“Ningbo ShinsunHongsheng”)

Zhejiang, PRC2019


宿遷祥宿房地產開發有限公司 Suqian Xiangsu RealEstate Development Co.,Ltd. (“Suqian Xiangsu”)


諸暨祥生弘瑞置業有限公司(note 1) Zhuji ShinsunHongrui Real Estate Co.,Ltd. (“Zhuji ShinsunHongrui”)

Zhejiang, PRC2018


諸暨祥生祥駿置業有限公司(note 3) Zhuji ShinsunXiangjun Real Estate Co.,Ltd. (“Zhuji ShinsunXiangjun”)

Zhejiang, PRC2019


諸暨市萬祥房地產開發有限公司 (note 5) ZhujiWanxiang Real EstateDevelopment Co., Ltd.(“Zhuji Wanxiang”)

Zhejiang, PRC2018


江西福田益壽投資開發有限公司 Jiangxi Futian YishouInvestment DevelopmentCo., Ltd. (“Jiangxi FutianYishou InvestmentDevelopment”)

Jiangxi, PRC 2015 50,000 50% Property development

安慶金世祥房地產開發有限公司 (note 6) Anqingjinshixiang Real EstateDevelopment Co., Ltd.(“Anqing Jinshixiang RealEstate”)

Anhui, PRC 2019 100,000 33% Property development

諸暨祥生弘鵬置業有限公司(note 1) Zhuji ShinsunHongpeng Real Estate Co.,Ltd. (“Zhuji ShinsunHongpeng Real Estate”)

Zhejiang, PRC2019

300,000 50.1% Property development


– I-63 –



Nominalvalue of





(’000)

杭州鴻煊企業管理諮詢有限公司 (note 8) HangzhouHongxuan EnterpriseManagement ConsultingCo., Ltd. (“HangzhouHongxuan”)

Zhejiang, PRC2017

65,000 33% Investment holding

寧波融輝置業有限公司 (note8) Ningbo Ronghui RealEstate Co., Ltd. (“NingboRonghui Real Estate”)

Zhejiang, PRC2019


* Honghu Shinsun Real Estate, Xiantao Xiangrong and Shinsun Fairyland Hotel Management had beenjoint ventures of the Group and became the subsidiaries of the Group since May 2017. Details pleaserefer to note 36.

Note 1: Pursuant to the investment framework agreement and the articles of association of these companies,all shareholder resolutions of these companies shall be resolved by all shareholders on a unanimousbasis. Therefore, these were accounted for as joint ventures of the Group during the RelevantPeriods.

Note 2: During the Relevant Periods, Hangzhou Renyuan had four shareholders holding 29%, 50%, 20% and1% equity interests, respectively. Pursuant to the articles of association of Hangzhou Renyuan, allshareholder resolutions of Hangzhou Renyuan shall be resolved by the three shareholders on aunanimous basis. Therefore, Hangzhou Renyuan was accounted for as a joint venture of the Groupnotwithstanding that the Group only held a 29% equity interest during the Relevant Periods.

Note 3: During the Relevant Periods, Zhuji Shinsun Xiangjun had four shareholders holding 31%, 49%,10.5% and 9.5% equity interests, respectively. Pursuant to the articles of association of ZhujiShinsun Xiangjun, all shareholder resolutions of Zhuji Shinsun Xiangjun shall be resolved by thefour shareholders on a unanimous basis. Therefore, Zhuji Shinsun Xiangjun was accounted for as ajoint venture of the Group notwithstanding that the Group only held a 31% equity interest during theRelevant Periods.

Note 4: During the Relevant Periods, Nanjing Yihui had three shareholders holding 30%, 35% and 35%equity interests, respectively. Pursuant to the articles of association of Nanjing Yihui, all shareholderresolutions of Nanjing Yihui shall be resolved by the three shareholders on a unanimous basis.Therefore, Nanjing Yihui was accounted for as a joint venture of the Group notwithstanding that theGroup only held a 30% equity interest during the Relevant Periods.

Note 5: During the Relevant Periods, Zhuji Wanxiang had two shareholders holding 35% and 65% equityinterests, respectively. Pursuant to the articles of association of Zhuji Wanxiang, all shareholderresolutions of Zhuji Wanxiang shall be resolved by the two shareholders on a unanimous basis.Therefore, Zhuji Wanxiang was accounted for as a joint venture of the Group notwithstanding thatthe Group only held a 35% equity interest during the Relevant Periods.

Note 6: During the Relevant Periods, Anqing Jinshixiang Real Estate had three shareholders holding 33%,33% and 34% equity interests, respectively. Pursuant to the articles of association of AnqingJinshixiang Real Estate, all shareholder resolutions of Anqing Jinshixiang Real Estate shall beresolved by the three shareholders on a unanimous basis. Therefore, Anqing Jinshixiang Real Estatewas accounted for as a joint venture of the Group notwithstanding that the Group only held a 33%equity interest during the Relevant Periods.


– I-64 –


Note 7: Wenzhou Shinsun Duofu had been joint venture of the Group in 2017. Pursuant to the share transferagreement dated 18 June 2018, the Group disposed of its 50% equity interest in Wenzhou ShinsunDuofu to 溫州多弗地產集團有限公司 (“Wenzhou Duofu Real Estate Group Co., Ltd.”).

Note 8: During the Relevant Periods, Hangzhou Hongxuan had three shareholders holding 33%, 33% and34% equity interests, respectively. Pursuant to the articles of association of Hangzhou Hongxuan, allshareholder resolutions of Hangzhou Hongxuan shall be resolved by the three shareholders on aunanimous basis. Ningbo Ronghui Real Estate was the wholly-owned subsidiary of HangzhouHongxuan. Therefore, Hangzhou Hongxuan and Ningbo Ronghui Real Estate were accounted for asjoint ventures of the Group notwithstanding that the Group only held a 33% equity interest duringthe Relevant Periods.

(b) Zhejiang Fa Xian Dao Cultural Tourism is considered as material joint venture of the Group during theRelevant Periods, co-develop a property development project with the other joint venture partner in MainlandChina and the joint ventures are accounted for using the equity method.

The following table illustrates the summarised financial information of Zhejiang Fa Xian Dao CulturalTourism:

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Cash and cash equivalents 675 510 447Other current assets 496,911 403,249 424,423

Current assets 497,586 403,759 424,870

Non-current assets 20,256 15,660 15,758

Current liabilities (404,861) (308,712) (336,648)

Non-current liabilities (13,256) (8,823) (4,293)

Net assets 99,725 101,884 99,687

Net assets, excluding goodwill 99,725 101,884 99,687

Reconciliation to the Group’s interests in thejoint venture:

Proportion of the Group’s ownership 60% 60% 60%Group’s share of net assets of the joint venture,

excluding goodwill 59,835 61,130 59,812

Goodwill on acquisition (less cumulativeimpairment) 235,864 235,864 182,864

Carrying amount of the investment 295,699 296,994 242,676

Revenue 17,635 5,841 –Expenses (10,687) (3,682) (2,197)Tax – – –

Profit/(loss) for the year 6,948 2,159 (2,197)

Total comprehensive Income/(loss) for the year 6,948 2,159 (2,197)


– I-65 –


The Group entered into an agreement with浙江博地旅游有限公司 (Zhejiang Bodi Tourism Co., Ltd.) to jointlydevelop a tourism complex beside Tai Lake in May 2017. In 2019, due to the change of land planning of the localgovernment, the development was suspended. The directors of the Company assessed the recoverable amount as at31 December 2019 based on the land price of the neighbouring regions and provided impairment provision ofRMB53,000,000.

(c) The following table illustrates the aggregate financial information of the Group’s joint ventures that are notindividually material:

2017 2018 2019

RMB’000 RMB’000 RMB’000

Share of the joint ventures’ profits and lossesfor the year (2,961) (31,787) (53,326)

Share of the joint ventures’ totalcomprehensive loss for the year (2,961) (31,787) (53,326)

Aggregate carrying amount of the Group’sinvestments in the joint venturesat 31 December 63,635 44,207 470,004

The joint ventures have been accounted for using the equity method in this Historical Financial Information.

Except for the impairment of investment in Zhejiang Fa Xian Dao Cultural Tourism as disclosed above in 17b), the directors of the Company are of the opinion that no provision for impairment for other investments in jointventures was necessary as at 31 December 2017, 2018 and 2019.

18. INVESTMENTS IN ASSOCIATES

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Share of net assets 83,086 370,813 742,052

The Group’s receivable and payable balances with associates are disclosed in note 40 to the HistoricalFinancial Information.

(a) Particulars of the Group’s principal associates, all of which principally operate in Mainland China:


Nominalvalue of


Statutorypercentage of

ownershipinterest

attributableto the Group Principal activities

(’000)

溫州多弗祥生置業有限公司*Wenzhou Duofu Shinsun RealEstate Co., Ltd. (“WenzhouDuofu Shinsun Real Estate”)

Zhejiang, PRC2017



– I-66 –



Nominalvalue of



ownershipinterest


(’000)

杭州祥生弘瑞房地產開發有限公司 Hangzhou ShinsunHongrui Real EstateDevelopment Co., Ltd.(“Hangzhou Shinsun HongruiReal Estate”)

Zhejiang, PRC2017


諸暨鴻迪祥生房地產開發有限公司** Zhuji Hongdi ShinsunReal Estate Development Co.,Ltd. (“Zhuji Hongdi ShinsunReal Estate”)

Zhejiang, PRC2010


寧波中城聯合物產有限公司Ningbo Zhongcheng UnitedProperty Co., Ltd. (“NingboZhongcheng UnitedProperty”)

Zhejiang, PRC2016

125,000 20% Wholesale/retail

泰興祥生置業有限公司 TaixingShinsun Real Estate Co., Ltd.(“Taixing Shinsun RealEstate”)

Jiangsu, PRC2007


諸暨溪園文旅小鎮投資有限公司Zhuji Xiyuan CulturalTourism Investment Co., Ltd.(“Zhuji Xiyuan CulturalTourism Investment”)

Zhejiang, PRC2017

100,000 30% Cultural tourism

定遠縣遠碧房地產開發有限公司Dingyuan Yuanbi Real EstateDevelopment Co., Ltd.(“Dingyuan Yuanbi RealEstate”)

Anhui, PRC2017


如東新碧房地產開發有限公司Rudong Xinbi Real EstateDevelopment Co., Ltd.(“Rudong Xinbi Real Estate”)

Jiangsu, PRC2017


天長市新碧房地產開發有限公司Tianchang Xinbi Real EstateDevelopment Co., Ltd.(“Tianchang Xinbi RealEstate”)

Anhui, PRC2017


寧波祥生弘遠房地產開發有限公司 Ningbo Shinsun HongyuanReal Estate Development Co.,Ltd. (“Ningbo ShinsunHongyuan”)

Zhejiang, PRC2018


寧波圓盛企業管理諮詢有限公司Ningbo Yuansheng EnterpriseManagement Consulting Co.,Ltd. (“Ningbo YuanshengEnterprise Management”)

Zhejiang, PRC2019

612,000 49% Investment holding


– I-67 –



Nominalvalue of



ownershipinterest


(’000)

鎮江科生房地產開發有限公司Zhenjiang Kesheng RealEstate Development Co., Ltd.(“Zhenjiang Kesheng RealEstate”)

Jiangsu, PRC2019


* On 19 June 2018, the Group acquired 51% of equity interests of Wenzhou Duofu Shinsun Real Estatefrom Wenzhou Duofu Real Estate Group Co., Ltd. and thereafter accounted for Wenzhou Duofu ShinsunReal Estate as a wholly-owned subsidiary. Details please refer to note 36.

** During the Relevant Periods, 浙江諸暨祥生宏宇房地產開發有限公司 (Zhejiang Zhuji Shinsun HongyuReal Estate Development Co., Ltd., “Zhuji Hongyu”) held 20% equity interests of Zhuji Hongdi ShinsunReal Estate. Pursuant to the share transfer agreement dated December 2019, the Group disposed of its51% equity interest in Zhuji Hongyu to 諸暨國躍企業管理諮詢有限公司 (Zhuji Guoyue ManagementConsulting Co., Ltd).

(b) The following table illustrates the aggregate financial information of the Group’s associates that are notindividually material:

2017 2018 2019

RMB’000 RMB’000 RMB’000

Share of the associates’ (loss)/income forthe year (1,349) (30,929) 11,502

Share of the associates’ total comprehensive(loss)/income for the year (1,349) (30,929) 11,502

Aggregate carrying amount of the Group’sinvestments in the associates 31 December 83,086 370,813 742,052

The associates have been accounted for using the equity method in this Historical Financial Information.


– I-68 –


19. DEFERRED TAX ASSETS AND LIABILITIES

The movements in deferred tax assets and liabilities during the Relevant Periods are as follows:

Deferred tax assets

Lossesavailable for

offsettingagainst future

taxableprofits

Expenses foroffsetting

against futuretaxableprofits

Impairmentof assets

Unrealisedrevenue in

contractliabilities Accrued LAT Total


At 1 January 2017 77,912 550 978 188,969 – 268,409Acquisition of subsidiaries

(note 36) 3,212 – 1,048 46,368 271 50,899Deferred tax

credited/(charged) to profitor loss during the year(note 10) 19,396 9,879 (1,541) 596,784 1,332 625,850

At 31 December 2017and 1 January 2018 100,520 10,429 485 832,121 1,603 945,158

Deferred tax credited toprofit or loss duringthe year (note 10) 8,192 50,151 1,498 712,011 4,321 776,173

At 31 December 2018and 1 January 2019 108,712 60,580 1,983 1,544,132 5,924 1,721,331

Acquisition of subsidiaries(note 36) – – – 4,154 – 4,154

Deferred tax credited toprofit or loss duringthe year (note 10) 62,707 17,497 603 93,422 94,251 268,480

At 31 December 2019 171,419 78,077 2,586 1,641,708 100,175 1,993,965


– I-69 –


Deferred tax liabilities

Fair valueadjustmentsarising from

financialassets atFVTPL


investmentproperties


businesscombinations Total

RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2017 – 77,929 – 77,929Deferred tax charged/(credited) to

profit or loss during the year(note 10) 123 7,698 (6,556) 1,265

Acquisition of subsidiaries (note 36) – – 135,226 135,226

At 31 December 2017 and1 January 2018 123 85,627 128,670 214,420

Deferred tax charged/(credited) toprofit or loss during the year(note 10) 7 6,118 (12,007) (5,882)

At 31 December 2018 and1 January 2019 130 91,745 116,663 208,538

Acquisition of subsidiaries (note 36) – – 2,670 2,670Deferred tax (charged)/credited to

profit or loss during the year(note 10) (112) 11,426 (13,288) (1,974)

At 31 December 2019 18 103,171 106,045 209,234

No certain deferred tax assets and liabilities have been offset in the combined statements of financial position.The following is an analysis of the deferred tax balances for financial reporting purposes:

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Net deferred tax assets recognised in thecombined statements of financial position 921,582 1,702,789 1,960,579

Net deferred tax liabilities recognised in thecombined statements of financial position (190,844) (189,996) (175,848)

730,738 1,512,793 1,784,731

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared toforeign investors from the foreign investment enterprises established in Mainland China. The requirement is effectivefrom 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be appliedif there is a tax treaty between Mainland China and the jurisdiction of the foreign investors. For the Group, theapplicable rate is 10%. The Group is therefore liable for withholding taxes on dividends distributed by thosesubsidiaries established in Mainland China in respect of earnings generated from 1 January 2008.

At 31 December 2017,2018 and 2019 no deferred tax has been recognised for withholding taxes that wouldbe payable on the unremitted earnings that are subject to withholding taxes of the Company and the Group’ssubsidiaries established in Mainland China. In the opinion of the directors of the Company, the Group’s fund will be


– I-70 –


retained in Mainland China for the expansion of the Group’s operation, so it is not probable that these subsidiarieswill distribute such earnings in the foreseeable future. The aggregate amounts of temporary differences associatedwith investments in subsidiaries in Mainland China for which deferred tax liabilities have not been recognisedtotalled approximately RMB69,885,000, RMB157,619,000, RMB413,833,000 as at 31 December, 2017, 2018 and2019.

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

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Tax losses 206,040 150,840 458,723Deductible temporary differences 686,995 702,986 765,455

893,035 853,826 1,224,178

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the relatedtax benefits through future taxable profits is probable. As at 31 December 2017, 2018 and 2019, the Group did notrecognise deferred tax assets of approximately RMB51,510,000, RMB37,710,000 and RMB114,681,000 in respect oflosses amounting to approximately RMB206,040,000, RMB150,840,000 and RMB458,723,000, respectively, that canbe carried forward to offset against future taxable income. These tax losses will expire up to and including years2020, 2021, 2022, 2023 and 2024, respectively.

20. PROPERTIES UNDER DEVELOPMENT

2017 2018 2019

RMB’000 RMB’000 RMB’000

Carrying amount at 1 January 18,663,658 51,665,579 88,598,436Additions 36,218,777 45,901,768 33,470,993Acquisition of subsidiaries (note 36) 2,177,550 1,427,738 2,060,470Disposal of subsidiaries (note 37) – – (214,298)Returned to the government – – (786,385)Sale of properties under development – – (187,425)Transferred to completed properties held for sale

(note 21) (5,640,999) (10,437,372) (30,343,921)Impairment losses transferred to completed

properties held for sale (note 21) 246,593 40,723 90,658

Carrying amount at 31 December 51,665,579 88,598,436 92,688,528

The movements in provision for impairment of properties under development are as follows:

2017 2018 2019

RMB’000 RMB’000 RMB’000

At beginning of the year 647,995 401,402 360,679Impairment losses transferred to completed

properties held for sale (note 21) (246,593) (40,723) (90,658)

At end of the year 401,402 360,679 270,021

The Group’s properties under development are situated on leasehold land in Mainland China.


– I-71 –


Certain of the Group’s properties under development with aggregate carrying amounts of approximatelyRMB32,493,650,000, RMB36,365,857,000 and RMB52,312,465,000 as at 31 December 2017, 2018 and 2019,respectively, have been pledged to secure bank and other borrowings granted to the Group (note 30).

21. COMPLETED PROPERTIES HELD FOR SALE

2017 2018 2019

RMB’000 RMB’000 RMB’000

Carrying amount at 1 January 3,700,937 3,872,130 3,114,046Acquisition of subsidiaries (note 36) 176,480 – –Transferred from properties under

development (note 20) 5,394,406 10,396,649 30,253,263Disposal of subsidiaries (note 37) – – (998,791)Transferred to cost of inventories sold (note 6) (5,399,693) (11,154,733) (26,975,106)

Carrying amount at 31 December 3,872,130 3,114,046 5,393,412

The movements in provision for impairment of completed properties held for sale are as follows:

2017 2018 2019

RMB’000 RMB’000 RMB’000

At beginning of the year 96,646 191,214 168,772Impairment losses transferred from properties

under development (note 20) 246,593 40,723 90,658Impairment losses transferred to cost of sales (152,025) (63,165) (100,079)

At end of the year 191,214 168,772 159,351

The value of completed properties held for sale was assessed at the end of each of the Relevant Periods. Animpairment exists when the carrying value exceeds its net realisable value. The net realisable value is determined byreference to the selling price based on prevailing market price less applicable selling expenses.

22. TRADE RECEIVABLES

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Trade receivables 36,611 227,469 196,410Impairment (1,182) (1,333) (1,398)

At end of the year 35,429 226,136 195,012

The Group’s trade receivables primarily consist of receivables from its property management services,management consulting services provided to its customers, property leasing and sale of properties.


– I-72 –


An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date andnet of loss allowance, is as follows:

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Within 1 year 35,129 226,136 177,6181 to 3 years – – 17,394Over 3 years 300 – –

35,429 226,136 195,012

The following table sets out the information about the credit risk exposure on the Group’s trade receivablesusing a provision matrix as at 31 December 2017:

Less than1 year 1 to 3 years Over 3 years Total

Expected credit loss rate 0.5% 0.0% 76.9% 3.2%Gross carrying amount (RMB’000) 35,311 – 1,300 36,611Expected credit losses (RMB’000) 182 – 1,000 1,182



Expected credit loss rate 0.0% 0.0% 100.0% 0.6%Gross carrying amount (RMB’000) 226,169 – 1,300 227,469Expected credit losses (RMB’000) 33 – 1,300 1,333



Expected credit loss rate 0.1% 0.0% 100.0% 0.7%Gross carrying amount (RMB’000) 177,716 17,394 1,300 196,410Expected credit losses (RMB’000) 98 – 1,300 1,398

An impairment analysis is performed at each reporting date using a provision matrix to measure expectedcredit losses. The expected credit losses are calculated based on the migration rate, which is based on the historicaldata of payments of trade receivables and management’s expectation of bad debt.


– I-73 –


The movements in the loss allowance for impairment of trade receivables are as follows:

2017 2018 2019

RMB’000 RMB’000 RMB’000

At beginning of year 214 1,182 1,333Impairment losses (note 6) 968 151 65Amount written off as uncollectible – – –

At end of year 1,182 1,333 1,398

23. CONTRACT ASSETS

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Contract costs arising from sale of properties 117,085 277,380 278,260

Management expected that the contract costs, which represented primarily sales commission for obtainingproperty sale contracts, are recoverable. The Group has deferred the amounts paid and will charge them to profit orloss when the related revenue is recognised. For year ended 31 December 2017, 2018 and 2019, the amountsamortised and charged to profit or loss were RMB28,734,000, RMB107,039,000 and RMB230,666,000, respectively,and there was no impairment loss in relation to the remaining balance.

24. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Prepaid taxes and other tax recoverables 1,350,378 3,546,459 4,177,935Due from non-controlling shareholders and

predecessor shareholders of the subsidiaries 1,148,766 2,299,142 1,631,657Progress prepayments for acquisition

of land use rights for development 2,612,383 4,077,956 2,479,557Other deposits 2,346,342 1,406,972 1,176,898Deposits for land auction 347,600 106,824 1,051,830Prepayments for construction cost 239,298 128,697 173,017Outstanding receivables arising from

the sale of equity interests – – 202,450Advance to third parties related to land auction 215,199 140,427 73,489Other receivables 396,007 360,142 449,940

8,655,973 12,066,619 11,416,773

Less: Impairment (14,730) (15,066) (28,575)

8,641,243 12,051,553 11,388,198

Other receivables are unsecured, non-interest-bearing and have no fixed terms of repayment.


– I-74 –


The movements in provision for impairment of receivables are as follows:

2017 2018 2019

RMB’000 RMB’000 RMB’000

At beginning of the year 6,835 14,730 15,066Acquisition of subsidiaries (note 36) 4,192 – –Impairment losses recognised (note 6) 3,703 336 13,509

At end of the year 14,730 15,066 28,575

The internal credit rating of amounts due from non-controlling shareholders and predecessor shareholders ofsubsidiaries and other receivables was regarded as the grade of performing. The Group has assessed that the creditrisk of these receivables has not increased significantly since initial recognition. The expected loss rate of thesereceivables is assessed to be 0.1%. The Group has evaluated the expected loss rate and gross carrying amount,measured the impairment based on the 12-month expected credit losses, and assessed that there were no expectedcredit losses.

25. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Unlisted equity investments, at fair value – 3,036 3,038Other unlisted investments, at fair value 330,293 49,397 17,529

At the end of the year 330,293 52,433 20,567

The above unlisted equity investments at the end of each of the Relevant Periods were classified as financialassets at fair value through profit or loss as they were held for trading.

The above other unlisted investments were wealth management products issued by financial institutions inMainland China. They were mandatorily classified as financial assets at fair value through profit or loss as theircontractual cash flows are not solely payments of principal and interest.

26. CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND PLEDGED DEPOSITS

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Cash and bank balances 5,799,986 7,858,778 6,962,481Less: Restricted cash 2,375,494 4,074,584 4,207,533Pledged deposits 195,133 670,560 342,651

Cash and cash equivalents 3,229,359 3,113,634 2,412,297

Pursuant to relevant regulations in the PRC, certain property development companies of the Group are requiredto place certain amounts of cash in designated bank accounts for specified use. As at 31 December 2017, 2018 and2019, such restricted cash amounted to RMB2,110,264,000, RMB3,588,741,000 and RMB4,047,572,000,respectively. As at 31 December 2017, 2018 and 2019, the restricted cash included construction loan mortgagesamounting to RMB113,545,000, RMB292,353,000 and RMB21,695,000, respectively. As at 31 December 2017, 2018and 2019, the time deposits amounting to nil, RMB100,100,000 and RMB122,053,000, respectively. As at 31


– I-75 –


December 2017, 2018 and 2019, bank deposits of RMB60,000,000, nil and nil were pledged as collateral for issuanceof bank acceptance notes. As at 31 December 2017, 2018 and 2019, bank deposits of RMB91,685,000,RMB93,390,000 and RMB16,213,000 were blocked due to legal actions.

Bank deposits of RMB4,152,000, RMB73,049,000 and RMB73,049,000 were pledged as security for bank andother borrowings as at 31 December 2017, 2018 and 2019 (note 30), respectively. Bank deposits of RMB190,981,000,RMB597,511,000 and RMB269,602,000 were pledged as security for purchasers’ mortgage loans, construction ofprojects and notes payable as at 31 December 2017, 2018 and 2019, respectively.

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Cash and cash equivalentsDenominated in RMB 3,229,359 3,075,980 2,384,887Denominated in US$ – 37,654 27,410

3,229,359 3,113,634 2,412,297

The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign ExchangeControl Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, theGroup is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchangebusiness.

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances are depositedwith creditworthy banks with no recent history of default. The carrying amounts of the cash and cash equivalentsapproximated to their fair values.

The internal credit rating of restricted cash, pledged deposits and cash and cash equivalents was regarded asthe grade of performing. The Group has assessed that the credit risk of restricted cash, pledged deposits and cash andcash equivalents has not increased significantly since initial recognition and it has measured the impairment basedon 12-month expected credit losses, and has assessed that the expected credit losses are immaterial.

27. TRADE AND BILLS PAYABLES

An ageing analysis of the trade and bills payables as at the end of each of the Relevant Periods, based on theinvoice date, is as follows:

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Less than 1 year 1,629,415 4,791,302 4,741,903Over 1 year 126,632 272,674 360,533

1,756,047 5,063,976 5,102,436

Trade and bills payables are unsecured and interest-free and are normally settled based on the progress ofconstruction.

The fair values of trade and bills payables as at the end of each of the Relevant Periods approximated to theircorresponding carrying amounts due to their relatively short maturity terms.


– I-76 –


28. OTHER PAYABLES AND ACCRUALS

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Due to non-controlling shareholders andpredecessor shareholders of the subsidiaries 1,965,541 1,382,358 1,133,698

Deposits related to sales of properties 356,344 298,535 179,222Outstanding payables arising from the acquisition

of equity interests 298,644 219,644 1,251,623Retention deposits related to construction 316,013 370,041 566,398Interest payable 158,724 188,209 316,752Payroll and welfare payable 111,523 357,622 338,136Advances from third parties related to

land auction 1,274,075 195,150 332,321Other tax and surcharges 78,380 322,182 470,039Others 416,541 426,238 310,281

4,975,785 3,759,979 4,898,470

Other payables and advances from non-controlling shareholders and predecessor shareholders of subsidiariesare unsecured and repayable on demand. The fair values of other payables at the end of each of the Relevant Periodsapproximated to their corresponding carrying amounts.

29. CONTRACT LIABILITIES

The Group recognised the following revenue-related contract liabilities:

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Contract liabilities 36,934,913 74,573,736 77,901,721

The Group receives payments from customers based on billing schedules as established in the property salescontracts. Payments are usually received in advance of the performance under the contracts which are mainly fromproperty development and sales.


– I-77 –


The following table shows the revenue recognised during the Relevant Periods related to contract liabilitieswhich are carried forward.


2017 2018 2019

RMB’000 RMB’000 RMB’000

Revenue recognised that was included inthe contract liability balance atthe beginning of the year

Sale of properties 4,569,393 12,860,021 34,305,603

The following table includes the transaction price allocated to the remaining performance obligations(unsatisfied or partially unsatisfied) related to the sale of properties as at the end of each of the Relevant Periods.

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Expected to be satisfiedwithin 1 year 13,170,100 34,773,988 47,454,009over 1 year 28,780,775 44,381,426 34,037,979

41,950,875 79,155,414 81,491,988


– I-78 –


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– I-79 –


Bank and other borrowings

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Analysed into:Bank loans repayable:

Within one year 372,500 288,000 656,383In the second year 1,220,000 1,275,000 1,899,500In the third to fifth years, inclusive 5,327,734 7,207,914 6,446,155

6,920,234 8,770,914 9,002,038

Other borrowings repayable:Within one year 9,952,655 12,235,827 9,632,614In the second year 5,501,500 2,441,100 7,413,670In the third to fifth years 1,004,936 1,410,382 462,200In the fifth years, inclusive 785,000 1,145,000 795,000

17,244,091 17,232,309 18,303,484

24,164,325 26,003,223 27,305,522

The Group’s borrowings are denominated in RMB.

Certain of the Group’s bank and other borrowings are secured by the pledges of the following assets withcarrying values at the end of each of the Relevant Periods as follows:

31 December

Notes 2017 2018 2019

RMB’000 RMB’000 RMB’000

Property, plant and equipment 13 286,922 249,442 250,130

Investment properties 15 196,040 200,818 203,081

Properties under development 20 32,493,650 36,365,857 52,312,465

Pledged deposits 26 4,152 73,049 73,049

The management of the Company has assessed that the fair values of interest-bearing bank and otherborrowings approximate to their carrying amounts largely due to the fact that such borrowings were made betweenthe Group and independent third party financial institutions based on prevailing market interest rates.

The Controlling Shareholder, Mr. Chen Guoxiang, has guaranteed certain of the bank and other borrowings ofup to RMB15,062,339,000, RMB15,175,340,000 and RMB16,797,859,000 as at 31 December 2017, 2018 and 2019,respectively.


– I-80 –


A family member of the Controlling Shareholder, Ms. Zhu Guoling, has guaranteed certain of the bank andother borrowings of up to RMB12,670,739,000, RMB13,968,687,000 and RMB11,447,515,000 as at 31 December2017, 2018 and 2019, respectively.

A family member of the Controlling Shareholder, Mr. Chen Hongni, has guaranteed certain of the bank andother borrowings of up to RMB280,000,000 at 31 December 2017.

祥生實業集團有限公司 (“Shinsun Industrial Group Co., Ltd.”) has guaranteed certain of the bank and otherborrowings of up to RMB3,080,005,000, RMB1,613,100,000 and RMB349,740,000 as at 31 December 2017, 2018and 2019, respectively.

諸暨祥紳實業有限公司 (“Zhuji Xiangshen Industrial Co., Ltd.”) (formerly known as 上海祥紳實業有限公司,Shanghai Xiangshen Industrial Co., Ltd.) has guaranteed certain of the bank and other borrowings of up toRMB333,982,000 and RMB1,099,700,000 at 31 December 2018 and 2019, respectively.

上海聚聯投資有限公司 (“Shanghai Julian Investment Co., Ltd.”) has guaranteed certain of the bank and otherborrowings of up to RMB785,000,000 and RMB795,000,000 as at 31 December 2018 and 2019, respectively.

31. SENIOR NOTES

Name of notes

1 January2018

Openingbalance

Issued in2018

Exchangelosses

Interestexpense Payment

31 December2018

Closingbalance


2018 Notes – 602,162 42,444 34,942 (34,590) 644,958

Name of notes

1 January2019

Openingbalance

Issued in2019

Exchangelosses

Interestexpense Payment

31 December2019

Closingbalance


2018 Notes 644,958 – 3,754 40,976 (689,688) –2019 Notes – 994,918 – 21,383 – 1,016,301

On 11 June 2018, Xiang Sheng Holding Limited, a subsidiary of and a special purpose vehicle set up forfinancing purpose by the Group, has completed to issue senior notes due on 23 May 2019 (the “2018 Notes”). The2018 Notes are denominated in US$amounting to US$95,000,000 and bear interest at a rate of the higher of LIBORrate plus 9% per annum and 11% per annum, are payable every three months beginning on (and including) the issuedate which is 11 June 2018.

On 23 May 2019, Xiang Sheng Holding Limited privately issued senior notes with a principal amount ofRMB700,000,000 (the “2019 Notes”). The 2019 Notes are denominated in RMB and bear interest at a rate of 9.5%per annum, and repayable on 21 May 2020. On 20 December 2019, Xiang Sheng Holding Limited reached anagreement to issue additional senior notes based on the revised contract conditions, with a principal amount ofRMB294,918,000 at the rate of 9.5% per annum, and repayable on 12 February 2020.


– I-81 –


32. ASSET-BACKED SECURITIES (“ABS”)

Name of ABSs Principal

Contractualinterest rate

per annum Maturity

31 December2017 Closing

balance

RMB’000 (%) RMB’000

Shinsun Group Housing ResidualPayment 01 1,710,080 8.00-9.00 2018 1,710,080



per annum Maturity


balance

RMB’000 (%) RMB’000

Shinsun Group Housing ResidualPayment 01 1,268,250 8.00-10.00 2018-2019 402,026

Shinsun Group Housing ResidualPayment 02 977,250 8.00-10.30 2018-2019 650,839



2,416,926



per annum Maturity


balance

RMB’000 (%) RMB’000



Shinsun Group Housing ResidualPayment 05 50,000 8.89 2020 50,000

205,551

The balance represented proceeds received from issuance of asset-backed securities, to which the Group hascollateralised certain future trade receivables for the remaining receipts from the provision of the sale of properties.Under an assignment arrangement between the Group and the institute issuing the assets-backed securities, as andwhen the Group receives the sales proceeds from customers, the Group would remit any cash flows it collects to theseinstitutes.


– I-82 –


33. SHARE CAPITAL

At 31 December2019

RMBIssued and fully paid:1 ordinary share of US$1 each –

The Company was incorporated in the Cayman Islands on 13 December 2019 with authorised share capital ofUS$50,000 divided into 50,000 shares of US$1 at par value each. On the date of incorporation, 1 ordinary share ofUS$1 was allotted by the Company to a subscriber, and was transferred to Shinlight Limited, a company controlledby Chen Guoxiang. On 11 May 2020, each of issued and unissued shares of US$1.00 each was subdivided into 100Shares of US$0.01 each. On 20 May 2020, Golden Stone Development Limited (“Golden Stone”), a companyincorporated in the BVI and wholly owned by the [REDACTED] Investor, transferred one share of Silver RockGroup Holdings Limited, a wholly-owned subsidiary of the Company, in consideration of the issue and allotment of10 shares of US$0.01 each to Golden Stone. On the same date, the Company issued and allotted 890 shares ofUS$0.01 each to Shinlight Limited.

34. RESERVES

The amounts of the Group’s reserves and the movements therein for the years ended 31 December 2017, 2018and 2019 are presented in the combined statements of changes in equity.

(a) Capital reserve

The capital reserve represents any difference between the amount by which the non-controlling interests areadjusted and the fair value of the consideration paid for acquisition of non-controlling interests in subsidiaries, andthe issued capital of the then holding company of the companies now comprising the Group and the capitalcontributions from the equity holders of certain subsidiaries now comprising the Group before the completion of thecorporate restructuring and the Reorganisation. Details of the movements in the capital reserve are set out in thecombined statements of changes in equity.

(b) Statutory surplus reserve

In accordance with the PRC Company Law and the articles of association of the subsidiaries established in thePRC, the Group is required to appropriate 10% of its net profits after tax, as determined under PRC GAAP, to thestatutory surplus reserve until the reserve balance reaches 50% of its registered capital. Subject to certain restrictionsset out in the relevant PRC regulations and in the articles of association of the Group, the statutory surplus reservemay be used either to offset losses, or to be converted to increase share capital, provided that the balance after suchconversion is not less than 25% of the registered capital of the Group. The reserve cannot be used for purposes otherthan those for which it is created and is not distributable as cash dividends.

35. NOTES TO THE COMBINED STATEMENTS OF CASH FLOWS

(a) Major non-cash transactions

During the Relevant Periods, the Group had non-cash additions to right-of-use assets and lease liabilities ofRMB11,423,000, RMB56,707,000 and RMB101,363,000 for the years ended 31 December 2017, 2018 and 2019,respectively, in respect of lease arrangements for office buildings.


– I-83 –


(b) Changes in liabilities arising from financing activities

Assets-based

securities

Interest-bearing

bank andother

borrowingsSenior

notes

Due torelatedparties

Leaseliabilities

Totalliabilities

fromfinancingactivities


At 1 January 2017 – 11,384,316 – 235,193 5,272 11,624,781Cash flows (used in)/from

financing activities 1,710,080 12,423,009 – 2,910,922 (1,000) 17,043,011New lease – – – – 9,824 9,824Accrual of interest – – – – 1,358 1,358Cash flows from

non-financing activities – 357,000 – 1,345,728 (625) 1,702,103

At 31 December 2017 1,710,080 24,164,325 – 4,491,843 14,829 30,381,077Cash flows (used in)/from

financing activities 706,846 1,838,898 644,606 (702,354) (7,557) 2,480,439New lease – – – – 51,471 51,471Accrual of interest – – 34,942 – 1,561 36,503Cash flows from

non-financing activities – – (34,590) 2,119,654 (1,561) 2,083,503

At 31 December 2018 2,416,926 26,003,223 644,958 5,909,143 58,743 35,032,993Cash flows (used in)/from

financing activities (2,211,375) 1,302,299 350,312 (882,305) (21,996) (1,463,065)New lease – – – – 88,843 88,843Accrual of interest – – 62,359 – 7,340 69,699Cash flows from

non-financing activities – – (41,328) 929,483 (7,340) 880,815

At 31 December 2019 205,551 27,305,522 1,016,301 5,956,321 125,590 34,609,285

(c) Total cash outflow for leases

The total cash outflow for leases included in the statement of cash flows is as follows:

2017 2018 2019

RMB’000 RMB’000 RMB’000

Within operating activities 4,267 18,360 16,288Within financing activities 2,358 9,158 29,376

6,625 27,518 45,664


– I-84 –


36. ACQUISITION OF SUBSIDIARIES

(A) Business combination

(a) Acquisition of Xiantao Xiangrong Real Estate Development Co., Ltd. (“Xiantao Xiangrong”),Honghu Shinsun Real Estate Co., Ltd. (“Honghu Shinsun”) and Hubei Shinsun FairylandInternational Hotel (“Hubei Fairyland”)

The Group held 45%, 50% and 45% of the total equity interests in Xiantao Xiangrong, Honghu Shinsunand Hubei Fairyland (“the three companies”) which are engaged in property development and hotel servicesand were accounted for as joint ventures of the Group previously. On 9 May 2017, the Group entered into ashare transfer agreement with 榮懷集團有限公司 (Ronghuai Group Co., Ltd., “Ronghuai Group”), who waspreviously another shareholder of the three companies. Pursuant to the share transfer agreement, 榮懷集團transferred its entire voting power at any general meeting of Xiantao Xiangrong to the Group at a considerationof RMB1 for each, totally RMB3, so that the Group exercises 90%, 100% and 90% of Xiantao Xiangrong,Honghu Shinsun and Hubei Fairyland, respectively. Hence, the Group has had control over the three companiessince the date of the agreement. In addition, Ronghuai Group transferred RMB144,067,000 due from XiantaoXiangrong, one of the acquired companies to Zhejiang Shinsun Plaza Trading Co., Ltd., a subsidiary of theGroup. Ronghuai Group entered into the share transfer agreement to deleverage as to finance his own capitalstructure and adjusted his own development strategy. Since the acquisition, the three companies contributedRMB94,080,000 to the Group revenue and a loss of RMB738,000 to the combined statement of profit or lossand other comprehensive income for the year ended 31 December 2017. Had the combination taken place at1 January 2017, the revenue and loss of the Group would have RMB110,169,000 and RMB3,960,000respectively.

The fair values of the identifiable assets and liabilities of the acquired three companies as at the dateof acquisition were as follows:

Fair valueRecognized on

acquisition

RMB’000

Property, plant and equipment (note 13) 275,326Investment properties (note 15) 48,670Intangible assets (note 16) 151Deferred tax assets (note 19) 1,623Properties under development (note 20) 169,900Completed properties held for sale (note 21) 134,510Inventories 1,828Trade and bills receivables 1,792Prepayments and other receivables 333,991Tax recoverable 7,349Restricted cash 17,176Pledged deposits 4,381Cash and cash equivalents 12,789Trade and bills payables (154,699)Other payables and accruals (437,320)Amount due to the then-shareholder (144,067)Contract liabilities (50,497)Interest-bearing bank loans and other borrowings (355,000)Deferred tax liabilities (note 19) (8,337)

Total identifiable net assets at fair value (140,434)Less: non-controlling interests (18,804)

Net liabilities acquired (121,630)


– I-85 –



acquisition

RMB’000

Add: amount due from the acquired company assigned by the then-shareholder to the Group 144,067

Satisfied by fair value of investments in the joint ventures heldbefore acquisition –

Satisfied by cash –

Gains on bargain purchase recognised in other income and gainsfor the year ended 31 December 2017 22,437

An analysis of the cash flows in respect of the acquisition of subsidiaries is as follows:

RMB’000

Cash considerations –Add: cash and cash equivalents acquired 12,789

Net inflow of cash and cash equivalents included incash flows from investing activities 12,789

(b) Acquisition of Hangzhou Yixiang Management Consulting Co., Ltd. (“Hangzhou Yixiang”) and itssubsidiary Xuancheng Minsheng New Town Development Co., Ltd. (“Xuancheng Minsheng”)

On 23 October 2017, the Group and 杭州工商信託股份有限公司 (Hangzhou Industrial & CommercialTrust Co., Ltd.), an independent third party to the Group, entered into a share transfer agreement, pursuant towhich the Group acquired 100% equity interests in Hangzhou Yixiang and its subsidiary Xuancheng Minshengfor a total consideration of RMB3,000,000. Hangzhou Yixiang is engaged in business service in the PRC. Sincethe acquisition, Hangzhou Yixiang contributed RMB217,226,000 to the Group revenue and a loss ofRMB7,506,000 to the combined statement of profit or loss and other comprehensive income for the year ended31 December 2017. Had the combination taken place at 1 January 2017, the revenue and loss of the Groupwould have RMB221,095,000 and RMB3,960,000 respectively.


– I-86 –


The fair values of the identifiable assets and liabilities of the acquired company as at the date ofacquisition were as follows:


acquisition

RMB’000

Property, plant and equipment (note 13) 1,548Right-of-use assets (note 14) 733Properties under development (note 20) 1,531,398Completed properties held for sale (note 21) 41,970Prepayments, deposits and other receivables 234,062Tax recoverable 25,865Cash and cash equivalents 718,369Deferred tax assets (note 19) 44,231Trade and bills payables (34,268)Other payables and accruals (1,018,600)Contract liabilities (1,488,545)Interest-bearing bank loans and other borrowings (2,000)Lease liabilities within one year (note 14) (377)Lease liabilities (note 14) (356)Deferred tax liabilities (note 19) (51,030)

Total identifiable net assets at fair value 3,000

Net assets acquired 3,000

Satisfied by cash 3,000

An analysis of the cash flows in respect of the acquisition of subsidiary is as follows:

RMB’000

Cash considerations (3,000)Add: Cash and cash equivalents acquired 718,369

Net inflow of cash and cash equivalents included incash flows from investing activities 715,369

(c) Acquisition of Yueyang Xiongcheng Real Estate Co., Ltd. (“Yueyang Xiongcheng”)

On 5 September 2017, the Group,浙江雄城商貿股份有限公司 (Zhejiang Xiongcheng Trading Co., Ltd.)and諸暨雄城物資配送有限公司 (Zhejiang Xiongcheng Material Distribution Co., Ltd.), two independent thirdparties to the Group, entered into a share transfer agreement, pursuant to which the Group acquired 100%equity interests in Yueyang Xiongcheng for a total consideration of RMB244,644,000. Yueyang Xiongchengis engaged in property investment in the PRC. Since the acquisition, Yueyang Xiongcheng contributed anamount of nil to the Group revenue and a loss of RMB633,000 to the combined statement of profit or loss andother comprehensive income for the year ended 31 December 2017. Had the combination taken place at 1January 2017, the revenue and loss of the Group would have an amount of nil and RMB3,208,000 respectively.


– I-87 –




acquisition

RMB’000

Property, plant and equipment (note 13) 67Deferred tax assets (note 19) 5,045Properties under development (note 20) 476,252Prepayments, deposits and other receivables 43,507Cash and cash equivalents 5,925Trade and bills payables (4,724)Other payables and accruals (143,164)Contract liabilities (62,405)Deferred tax liabilities (note 19) (75,859)

Total identifiable net assets at fair value 244,644




RMB’000

Cash considerations (244,644)Less: other payables and accruals (194,644)Add: cash and cash equivalents acquired 5,925

Net outflow of cash and cash equivalents included incash flows from investing activities (44,075)

(d) Acquisition of Hubei Kaixiang Real Estate Development Co., Ltd. (“Hubei Kaixiang”)

On 20 September 2019, the Group and Bian Weisong and Bian Kailong, two independent individuals tothe Group, entered into a share transfer agreement, pursuant to which the Group acquired 80% equity interestsin Hubei Kaixiang for a total consideration of RMB24,000,000. Hubei Kaixiang is engaged in propertyinvestment in the PRC. Since the acquisition, Hubei Kaixiang contributed an amount of nil to the Grouprevenue and a loss of RMB1,340,000 to the combined statement of profit or loss and other comprehensiveincome for the year ended 31 December 2019. Had the combination taken place at 1 January 2019, the revenueand loss of the Group would have an amount of nil and RMB11,949,000 respectively.


– I-88 –



Fair valueRecognized

on acquisition

RMB’000

Property, plant and equipment (note 13) 345Deferred tax assets (note 19) 4,154Properties under development (note 20) 269,971Prepayments, deposits and other receivables 22,524Tax recoverable 659Cash and cash equivalents 23,416Other payables and accruals (133,554)Contract liabilities (154,838)Deferred tax liabilities (note 19) (2,670)

Total identifiable net assets at fair value 30,007Less: non-controlling interests 6,007




RMB’000

Cash considerations (24,000)Add: cash and cash equivalents acquired 23,416

Net outflow of cash and cash equivalents included in cash flows frominvesting activities (584)

(B) Acquisition of assets and liabilities through acquisition of subsidiaries

(a) Acquisition of Hangzhou Chunyuan Health Industry Investment Co., Ltd. (“Chunyuan Health”)

On 22 March 2017, the Group and 杭州合著健康管理有限公司 (Zhejiang Hezhu Health ManagementCo., Ltd.), an independent third party to the Group, entered into a share transfer agreement, pursuant to whichthe Group acquired 55% equity interests in Chunyuan Health for a total consideration of RMB1,650,000.

(b) Acquisition of Zhejiang Fengsheng Tourism Development Co., Ltd. (“Zhejiang Fengsheng Tourism”)

On 10 May 2017, the Group and 德清華瀚資產管理有限公司 (Deqing Huahan Asset Management Co.,Ltd.), an independent third party to the Group, entered into a share transfer agreement, pursuant to which theGroup acquired 70% equity interests in Zhejiang Fengsheng Tourism for a total consideration ofRMB4,459,000.


– I-89 –


(c) Acquisition of Anji Sante Tianye Muge Tourism Development Co., Ltd. (“Anji Sante”)

On 18 September 2017, the Group and 武漢三特田野牧歌旅遊開發有限公司 (Wuhan Sante TianyeMuge Tourism Development Co., Ltd.,) and 武漢三特索道集團股份有限公司 (Wuhan Sante Cableway GroupCo., Ltd.), independent third parties to the Group, entered into a share transfer agreement, pursuant to whichthe Group acquired 100% equity interests in Anji Sante for a total consideration of RMB63,750,000.

(d) Acquisition of 諸暨祥生中翔置業有限公司 (Zhuji Shinsun Zhongxiang Real Estate Co., Ltd., “ZhujiShinsun Zhongxiang”, formerly known as 諸暨市中翔豐球置業有限公司, Zhuji Zhongxiang FengqiuReal Estate Co., Ltd.)

On 16 March 2018, the Group and 浙江豐球光伏科技股份有限公司 (Zhejiang Fengqiu SolarTechnology Co., Ltd.,) and 浙江豐球泵業股份有限公司 (Zhejiang Fengqiu Pump Industry Co., Ltd.),independent third parties to the Group, entered into a share transfer agreement, pursuant to which the Groupacquired 70% equity interests in Zhuji Shinsun Zhongxiang for a total consideration of RMB100,912,000.

(e) Acquisition of Wenzhou Duofu Shinsun Real Estate Co., Ltd. (“Wenzhou Duofu Shinsun”)

The Group held 49% of the total equity interests in Wenzhou Duofu Shinsun, which is engaged inproperty development and was accounted for as an associate of the Group previously. The remaining equityinterest is held by 溫州多弗地產集團有限公司 (Wenzhou Duofu Property Group Co., Ltd., “Wenzhou DuofuGroup”). On 19 June 2018, the Group entered into a share transfer agreement with Wenzhou Duofu Group,pursuant to which Wenzhou Duofu Group vested its entire voting power at any general meeting of WenzhouDuofu Shinsun to the Group at a total consideration of RMB25,500,000, so that the Group exercises 100% ofthe total voting rights of Wenzhou Duofu Shinsun.

(f) Acquisition of Zhuji Shinsun Hongrun Real Estate Co., Ltd. (“Zhuji Shinsun Hongrun”, formerlyknown as 浙江晟高房地產開發有限公司, Zhejiang Shenggao Real Estate Development Co., Ltd.)

On 17 January 2019, the Group and 浙江晟高控股有限公司 (Zhejiang Shenggao Holding Limited), anindependent third party to the Group, entered into a share transfer agreement, pursuant to which the Groupacquired 100% equity interests in Zhuji Shinsun Hongrun for a total consideration of RMB878,800,000.

(g) Acquisition of Quzhou Kecheng Jiulonggu Real Estate Development Co., Ltd. (“Quzhou Jiulonggu”)

On 18 May 2019, the Group and 衢州市柯城區國有資產經營有限責任公司 (Quzhou Kecheng State-Owned Assets Management Co., Ltd.), an independent third party to the Group, entered into a share transferagreement, pursuant to which the Group acquired 100% equity interests in Quzhou Jiulonggu for a totalconsideration of RMB8,416,000.

(h) Acquisition of Hangzhou Shangsheng Industrial Co., Ltd. (“Hangzhou Shangsheng”) and itssubsidiary Hengyang ShanShan Outlets Real Estate Co., Ltd. (“ShanShan Outlets”)

On 2 July 2019, the Group and 湖州沓博企業管理諮詢合夥企業(有限合夥) (Huzhou Tabo ManagementConsulting Partnership (Limited Partnership)) and 湖州創閣企業管理諮詢合夥企業(有限合夥) (HuzhouChuangge Management Consulting Partnership (Limited Partnership)), independent third parties to the Group,entered into a share transfer agreement, pursuant to which the Group acquired 90% equity interests inHangzhou Shangsheng and its subsidiary ShanShan Outlets for a total consideration of RMB250,000,000.

(i) Acquisition of Linhai Ziyuan Yintong Real Estate Co., Ltd. (“Linhai Ziyuan”)

On 30 September 2019, the Group and杭州紫元置業有限公司 (Hangzhou Ziyuan Real Estate Co., Ltd.,)and 浙江銀通房地產集團有限公司 (Zhejiang Yintong Property Group Co., Ltd.), independent third parties tothe Group, entered into a share transfer agreement, pursuant to which the Group acquired 100% equity interestsin Linhai Ziyuan for a total consideration of RMB464,178,000.


– I-90 –


In the opinion of the directors, the acquisition of these companies does not constitute a business.Therefore, the transactions were determined by the directors of the Group to be acquisition of assets andliabilities through acquisition of subsidiaries rather than a business combination as defined in IFRS 3 (Revised)Business Combinations.

The identifiable assets and liabilities of the acquired companies as at the dates of acquisition were asfollows:

2017 2018 2019Amounts

recognized onacquisition

Amountsrecognized on

acquisition

Amountsrecognized on

acquisition

RMB’000 RMB’000 RMB’000

Property, plant and equipment (note 13) 427 335 60Intangible assets (note 16) 98 – –Land development for sale – – 552,703Properties under development (note 20) 66,342 1,427,738 1,790,499Prepayments, deposits and other

receivables 10,790 11,599 85,399Cash and cash equivalents 7,498 2,931 6,154Trade and bills payables – (739) –Other payables and accruals (13,691) (1,287,009) (833,421)

Total identifiable net assets 71,464 154,855 1,601,394Less: non-controlling interests 1,605 4,140 –

Net assets acquired 68,859 150,715 1,601,394

Consideration transferred, satisfied by:Cash consideration 69,859 126,412 1,601,394Satisfied by fair value of investments in

associates held before acquisition – 24,303 –

69,859 150,715 1,601,394


RMB’000 RMB’000 RMB’000

Cash consideration (69,859) (126,412) (1,601,394)Less: other payables and accruals (2,000) – (1,101,979)Add: cash and cash equivalentsAcquired 7,498 2,931 6,154

(60,361) (123,481) (493,261)


– I-91 –


37. DISPOSAL OF SUBSIDIARIES

(a) 浙江祥磊澤義貿易有限公司 (Zhejiang Xianglei Zeyi Trading Co., Ltd., “Zhejiang Xianglei Zeyi”)

Pursuant to the share transfer agreement dated December 2018, the Group disposed of its 100% equity interestin Zhejiang Xianglei Zeyi to Wang Hongzhen for a consideration of nil.

(b) 諸暨市祥生宏宇置業有限公司 (“Zhuji Shinsun Hongyu Real Estate Co., Ltd., “Shinsun Hongyu”)

Pursuant to the share transfer agreement dated December 2019, the Group disposed of its 51% equity interestin Zhuji Shinsun Hongyu to Zhuji Guoyue Management Consulting Co., Ltd. for a consideration ofRMB81,600,000.

(c) Zhejiang Zhuji Shinsun Hongyu Real Estate Development Co., Ltd., (“Zhuji Hongyu”)

Pursuant to the share transfer agreement dated December 2019, the Group disposed of its 51% equity interestin Zhuji Hongyu to Zhuji Guoyue Management Consulting Co., Ltd. for a consideration of RMB68,850,000.00.

(d) 浙江諸暨祥生宏紳置業有限公司 (Zhejiang Zhuji Shinsun Hongshen Real Estate Co., Ltd., “Zhuji ShinsunHongshen”)

Pursuant to the share transfer agreement dated December 2019, the Group disposed of its 51% equity interestin Zhuji Shinsun Hongshen to Zhuji Guoyue Management Consulting Co., Ltd. for a consideration ofRMB51,000,000.00.

(e) 杭州駿輝企業管理有限公司 (Hangzhou Junhui Management Co., Ltd., “Hangzhou Junhui”)

Pursuant to the share transfer agreement dated May 2019, the Group disposed of its 100% equity interest inHangzhou Junhui to 溫州市中梁祥置業有限公司 (Wenzhou Zhongliangxiang Real Estate Co., Ltd.) and 紹興科榮企業管理有限責任公司 (Shaoxing Kerong Management Co., Ltd.) for a consideration of nil.

(f) 湖州漢樾房地產開發有限公司 (Huzhou Hanyue Real Estate Development Co., Ltd., “Huzhou Hanyue”)

Pursuant to the share transfer agreement dated December 2019, the Group disposed of its 75% equity interestin Huzhou Hanyue to 諸暨市中碩建設有限公司 (Zhuji Zhongshuo Construction Co., Ltd.) for a considerationof nil.

(g) Pursuant to the resolutions of the shareholders, the Group deregistered 慈溪祥生置業有限公司 (Cixi ShinsunReal Estate Co., Ltd.) and 諸暨祥生房地產銷售代理有限公司 (Zhuji Shinsun Real Estate Agency Co., Ltd.) in2018.

(h) Pursuant to the resolutions of the shareholders, the Group deregistered杭州祥生安廈實業有限公司 (HangzhouShinsun Anxia Industrial Co., Ltd.), 香河祥生房地產開發有限公司 (Xianghe Shinsun Real EstateDevelopment Co., Ltd.), 諸暨祥生中翔置業有限公司 (Zhuji Shinsun Real Estate Co., Ltd.), 杭州澄墾投資發展有限公司 (Hangzhou Chengken Investment Development Co., Ltd.) and 陝西祥生旅遊文化發展有限公司(Shaanxi Shinsun Tourism Cultural Development Co., Ltd.) in 2019.


– I-92 –


The carrying values of the assets and liabilities on the dates of disposal were as follows:

31 December

2018 2019

RMB’000 RMB’000

Net assets disposed of:Property, plant and equipment (note 13) 3 996Investment in an associate – 20,000Properties under development (note 20) – 214,298Completed properties held for sale (note 21) – 998,791Trade and bills receivables 12,430 500Due from related companies – 60,428Prepayments, deposits and other receivables 36,446 450,655Tax recoverable – 838Financial assets at fair value through profit or loss – 2Restricted cash – 1,210Cash and cash equivalents 1,376 33,096Trade and bills payables (31,829) (25,037)Other payables, deposits received and accruals (29,492) (1,094,785)Contract liabilities (3,384) (52,084)Due to related parties – (10,652)Tax payable (62) (52,322)

(14,512) 545,934Less: non-controlling interests (4,543) 348,516

The carrying values attributable to the Group (9,969) 197,418

Gain on disposal of subsidiaries 9,969 4,032

Satisfied by cash – 201,450

An analysis of the cash flows of cash and cash equivalents in respect of disposal of subsidiaries is as follows:

31 December

2018 2019

RMB’000 RMB’000

Cash consideration – 202,450Less: prepayments, deposits and other receivables

(unsettled consideration) – 202,450Less: cash and cash equivalents disposed of 1,376 33,096

Net outflow of cash and cash equivalents inrespect of the disposal of subsidiaries (1,376) (33,096)


– I-93 –


38. CONTINGENT LIABILITIES

At the end of each of the Relevant Periods, contingent liabilities not provided for in the Historical FinancialInformation were as follows:

At 31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Guarantees given to banks in connectionwith facilities granted to purchasers ofthe Group’s properties (1) 13,642,478 17,930,409 37,028,811

Guarantees given to banks in connectionwith facilities granted to related partiesand a third party (2) 27,450 736,744 4,137,450

(1) The Group provided guarantees in respect of mortgage facilities granted by certain banks to thepurchasers of the Group’s completed properties held for sale. Pursuant to the terms of the guaranteearrangements, in the case of default on mortgage payments by the purchasers, the Group is responsiblefor repaying the outstanding mortgage principals together with any accrued interest and penalties owedby the defaulted purchasers to those banks.

Under the above arrangement, the related properties were pledged to the banks as collateral for themortgage loans, and upon default on mortgage repayments by these purchasers, the banks are entitledto take over the legal titles and will realise the pledged properties through open auction.

The Group’s guarantee period starts from the dates of grant of the relevant mortgage loans and endsupon the issuance and registration of property ownership certificates to the purchasers, which willgenerally be available within half a year to two years after the purchasers take possession of the relevantproperties.

The Group did not incur any material losses during the Relevant Periods in respect of the guaranteesprovided for mortgage facilities granted to purchasers of the Group’s completed properties held for sale.The directors of the Company considered that in the case of default on payments, the net realisable valueof the related properties would be sufficient to repay the outstanding mortgage loans together with anyaccrued interest and penalty, and therefore, no provision has been made in connection with theguarantees.

(2) The Group provided guarantees to banks and other institutions in connection with borrowings made tothe related parties. The directors of the Company consider that no provision is needed in respect of theguarantees provided to the related parties as of 31 December 2017, 31 December 2018 and 31 December2019 since the fair value is immaterial.


– I-94 –


39. A SUBSIDIARY HELD FOR SALE

In 2019 the Group had been having negotiation with 杭州二建建設有限公司 (Hangzhou The SecondConstruction Co., Ltd.) and 臨海市中晟房地產開發有限公司 (Linhai Zhongsheng Property Development Co., Ltd.)on the sale of equity interests of 臨海紫元銀通置業有限公司 (Linhai Ziyuan Yintong Real Estate Co., Ltd., “LinhaiZiyuan”). On 9 April 2020, the Group entered into two share transfer agreements with Hangzhou The SecondConstruction Co., Ltd. and Linhai Zhongsheng Property Development Co., Ltd., pursuant to which the Groupdisposed 10% and 31.5% equity interest in Linhai Ziyuan respectively and the Group retained 58.5% equity interestin Linhai Ziyuan. According to the updated articles of association of Linhai Ziyuan, all shareholder resolutions shallbe passed by shareholders representing two thirds of the voting rights. Therefore, Linhai Ziyuan was accounted forinvestment in joint venture after the share transfer. As at 31 December 2019, Linhai Ziyuan was classified as asubsidiary held for sale.

31 December2019

RMB’000

AssetsProperty, plant and equipment 44Land development for sale 573,605Prepayments, deposits and other receivables 15,175Cash and cash equivalents 3,159

Assets of a disposal group classified as held for sale 591,983

LiabilitiesOther payables and accruals (41,638)

Liabilities directly associated with the assets classified as held for sale (41,638)

Net assets directly associated with the subsidiary classified as held for sale 550,345

40. RELATED PARTY TRANSACTIONS

(1) Name and relationship

Name of related party Relationship with the Group

Chen Guoxiang Controlling ShareholderZhu Guoling A family member of the Controlling ShareholderChen Guanqun A family member of the Controlling ShareholderChen Guoqing A family member of the Controlling ShareholderChen Hongni A family member of the Controlling ShareholderChen Xueyi A family member of the Controlling ShareholderChen Zhihua A family member of the Controlling ShareholderChen Zhiping A family member of the Controlling ShareholderMao Weili A family member of the Controlling Shareholder


– I-95 –



Wang Hongzhen A family member of the Controlling ShareholderChen Jianxi Key management personnelGu Jianjun Key management personnelHan Bo Key management personnelYao Xiaozhen Key management personnelZhong Chao Key management personnel浙江祥磊澤義貿易有限公司

Zhejiang Xiangleizeyi Trading Co., Ltd.Company controlled by a family member of the

Controlling Shareholder諸暨市祥生園林綠化工程有限公司

Zhuji Shinsun Landscape Engineering Co., Ltd.Company controlled by a family member of the

Controlling Shareholder江蘇潛龍投資管理有限公司

Jiangsu Qianlong Investment DevelopmentCo., Ltd.

Company controlled by the Controlling Shareholder

洪湖市祥生物業管理有限公司Honghu Shinsun Property ManagementCo., Ltd.


諸暨祥紳實業有限公司Zhuji Xiangshen Industrial Co., Ltd.


祥生實業集團有限公司Shinsun Industrial Group Co., Ltd.


岳陽祥生物業服務有限公司Yueyang Shinsun Property Services Co., Ltd.


杭州德抱投資有限公司Hangzhou Debao Investment Co., Ltd.


浙江聚屋霸信息技術有限公司Zhejiang Juwuba Information TechnologyCo., Ltd.


浙江祥生房地產銷售代理有限公司Zhejiang Shinsun Real Estate Sales AgencyCo., Ltd.


浙江祥生建設工程有限公司Zhejiang Shinsun Construction EngineeringCo., Ltd.


浙江祥生酒店管理有限公司Zhejiang Shinsun Hotel Management Co., Ltd.


浙江祥生物業服務有限公司Zhejiang Shinsun Property Services Co., Ltd.


諸暨市祥生花園酒店有限公司Zhuji Shinsun Garden Hotel Co., Ltd.


諸暨市祥生物業管理有限公司Zhuji Shinsun Property Management Co., Ltd.


諸暨市祥生新世紀綜合市場有限公司Zhuji Shinsun New century integrated marketCo., Ltd.


諸暨市祥生物資有限公司Zhuji Shinsun Materials Co., Ltd.


Anqing Jinshixiang Real Estate DevelopmentCo., Ltd.

Joint venture

Hangzhou Hongxuan Enterprise ManagementConsulting Co., Ltd.

Joint venture

Ningbo Ronghui Real Estate Co., Ltd. Joint ventureHangzhou Renyuan Real Estate Development

Co., Ltd.Joint venture

Hangzhou Shinsun Yijing Real EstateDevelopment Co., Ltd.

Joint venture


– I-96 –



Huzhou Jiaotou Shinsun Real EstateDevelopment Co., Ltd. (“Huzhou JiaotouShinsun”)

Joint venture

Huzhou Wuxing Jiaotou Shinsun Real EstateCo., Ltd.

Joint venture

Jiangxi Futian Yishou Investment DevelopmentCo., Ltd.

Joint venture

Nanjing Yihui Real Estate Co., Ltd. Joint ventureHangzhou Hongxuan Enterprise Management

Consulting Co., Ltd.Joint venture

Zhejiang Fa Xian Dao Cultural tourism Co., Ltd. Joint ventureNingbo Shinsun Hongsheng Real Estate

Development Co., Ltd.Joint venture

Wenzhou Shinsun Duofu Real Estate Co., Ltd. Joint ventureSuqian Xiangsu Real Estate Development


Yangzhou Shinsun Keyu Real Estate Co., Ltd. Joint ventureZhuji Wanxiang Real Estate Development


Zhuji Shinsun Hongpeng Real Estate Co., Ltd. Joint ventureZhuji Shinsun Hongrui Real Estate Co., Ltd. Joint ventureZhuji Shinsun Xiangjun Real Estate Co., Ltd. Joint ventureDingyuan Yuanbi Real Estate Development

Co., Ltd.Associate

Hangzhou Shinsun Hongrui Real EstateDevelopment Co., Ltd.

Associate

Ningbo Shinsun Hongyuan Real EstateDevelopment Co., Ltd.

Associate

Ningbo Yuansheng Enterprise ManagementConsulting Co., Ltd.

Associate

Ningbo Zhongcheng United Property Co., Ltd. AssociateTaixing Shinsun Real Estate Co., Ltd. AssociateZhenjiang Kesheng Real Estate Development

Co., Ltd.Associate

Zhuji Hongdi Shinsun Real Estate DevelopmentCo., Ltd.

Associate

Rudong Xinbi Real Estate Development Co., Ltd. AssociateZhuji Xiyuan Cultural tourism investment

Co., Ltd.Associate

Tianchang Xinbi Real Estate DevelopmentCo., Ltd.

Associate


– I-97 –


(2) Significant related party transactions

The following transactions were carried out with related parties during the Relevant Periods:

2017 2018 2019

RMB’000 RMB’000 RMB’000

Advances from related parties:Joint ventures – 163,077 502,434Associates 18,250 862,078 539,489Companies controlled by the Controlling

Shareholder 12,309,201 13,337,404 7,512,798Companies controlled by a key management

personnel – – 139,200Controlling Shareholder 6,006 – –A family member of the Controlling

Shareholder 154,887 84,380 34,695

Repayment of advances from related parties:Joint ventures – – 305,018Associates – 687,352 383,840Companies controlled by the Controlling

Shareholder 9,475,678 14,239,933 8,919,696Controlling shareholder 1,632 6,000 –A family member of the Controlling

Shareholder 100,111 216,008 2,367

Management consulting services provided by:Companies controlled by the Controlling

Shareholder 5,992 4,998 5,897

Property management services provided by:Companies controlled by the Controlling

Shareholder 34,838 99,809 156,292

Construction services provided by:Company controlled by the Controlling

Shareholder 4,386,254 9,610,131 9,832,415Companies controlled by a family member of

the Controlling Shareholder 77,500 209,800 699,432A family member of the Controlling

Shareholder – 3,620 –

Interest income from Joint ventures – 36,472 65,195

Management consulting services provided to:Joint ventures – 5,889 3,260Associate – 3,083 16,083


– I-98 –


2017 2018 2019

RMB’000 RMB’000 RMB’000

Advances to related parties:Joint ventures 2,137,756 3,399,645 3,541,490Associates 278,810 2,314,566 784,394Companies controlled by the Controlling

Shareholder 2,220,556 182,943 1,472,599Companies controlled by a family member of

the Controlling Shareholder – 579,759 197,659A family member of the Controlling

Shareholder 16,132 92,078 –Key management personnel 10,000 10,000 –

Receipt of advances to related parties:Joint ventures 102,300 2,440,561 3,935,883Associates – 1,875,215 649,011Companies controlled by the Controlling

Shareholder 2,107,128 69,500 193,962A family member of the Controlling

Shareholder 2,227 17,453 22,727Key management personnel – 10,000 10,000

These transactions were carried out in accordance with the terms and conditions mutually agreed by the partiesinvolved.

(3) Other transactions with related parties

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Guarantees provided to related parties:Companies controlled by the Controlling

Shareholder 27,450 27,450 152,450Joint ventures – 709,294 3,604,000

Guarantees provided by related parties:Controlling shareholder 15,062,339 15,175,340 16,797,859A family member of the Controlling

Shareholder 12,950,739 13,968,687 11,447,515Companies controlled by the Controlling

Shareholder 3,080,005 1,947,082 1,449,440


– I-99 –


(4) Outstanding balances with related parties

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Due from related parties:Trade-related:

Joint ventures 5,726 52,740 41,578Associates 5,576 – –Company controlled by the Controlling

Shareholder 13,289 14,437 253,889A family member of the Controlling

Shareholder 10 10 9,373Key management personnel 10 – –

Due from related parties:Non-trade-related:

Joint ventures 2,035,456 2,994,541 2,600,148Associates 301,810 189,851 302,234Companies controlled by the Controlling

Shareholder 113,428 226,872 1,505,508Company controlled by a family member of

the Controlling Shareholder – 579,759 777,418A family member of the Controlling

Shareholder 18,803 93,427 70,701Key management personnel 10,000 10,000 –

Due to related parties:Trade-related:

Associates – – 9,805Companies controlled by the Controlling

Shareholder 1,271,677 3,329,741 4,458,991Companies controlled by family members of

the Controlling Shareholder 30,247 95,467 495,830A family member of the Controlling

Shareholder 4,070 440 –Key management personnel – – 812

Due to related parties:Non-trade-related:

Joint ventures 11,000 174,077 371,493Associates 41,120 215,846 371,495Companies controlled by the Controlling

Shareholder 2,988,004 2,085,475 68,270Companies controlled by a family member

of the Controlling Shareholder – – 139,200Controlling Shareholder 12,183 6,183 6,183A family member of the Controlling

Shareholder 133,542 1,914 34,242

Balances with the above related parties were unsecured, non-interest bearing and repayable on demand.


– I-100 –


(5) Compensation of key management personnel of the Group

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Short-term employee benefits 2,484 27,999 30,472Pension scheme contributions 350 690 1,127

Total compensation paid to key managementpersonnel 2,834 28,689 31,599

Further details of directors’ emoluments are included in note 8 to the Historical Financial Information.

41. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of each of the RelevantPeriods are as follows:

31 December 2017

Financial assets

Financialassets at

amortised costFinancial

assets at FVPL Total

RMB’000 RMB’000 RMB’000

Trade receivables (note 22) 35,429 – 35,429Financial assets included in prepayments deposits

and other receivables (note 24) 3,891,115 – 3,891,115Financial assets at fair value through profit or

loss (note 25) – 330,293 330,293Due from related parties (note 40) 2,504,108 – 2,504,108Restricted cash (note 26) 2,375,494 – 2,375,494Pledged deposits (note 26) 195,133 – 195,133Cash and cash equivalents (note 26) 3,229,359 – 3,229,359

12,230,638 330,293 12,560,931


– I-101 –



FinancialLiabilities at

amortised cost

RMB’000

Trade and bills payables (note 27) 1,756,047Financial liabilities included in other payables and accruals (note 28) 4,429,538Due to related parties (note 40) 4,491,843Interest-bearing bank and other borrowings (note 30) 24,164,325Asset-backed securities (note 32) 1,710,080Lease liabilities (note 14) 14,829

36,566,662

31 December 2018

Financial assets

Financialassets at



RMB’000 RMB’000 RMB’000


and other receivables (note 24) 4,066,256 – 4,066,256Financial assets at fair value through profit

or loss (note 25) – 52,433 52,433Due from related parties (note 40) 4,161,637 – 4,161,637Restricted cash (note 26) 4,074,584 – 4,074,584Pledged deposits (note 26) 670,560 – 670,560Cash and cash equivalents (note 26) 3,113,634 – 3,113,634

16,312,807 52,433 16,365,240



amortised cost

RMB’000

Trade and bills payables (note 27) 5,063,976Financial liabilities included in other payables and accruals (note 28) 2,781,640Due to related parties (note 40) 5,909,143Interest-bearing bank and other borrowings (note 30) 26,003,223Senior notes (note 31) 644,958Asset-backed securities (note 32) 2,416,926Lease liabilities (note 14) 58,743

42,878,609


– I-102 –


31 December 2019

Financial assets

Financialassets at



RMB’000 RMB’000 RMB’000


and other receivables (note 24) 3,460,945 – 3,460,945Financial assets at fair value through profit or

loss (note 25) – 20,567 20,567Due from related parties (note 40) 5,560,849 – 5,560,849Restricted cash (note 26) 4,207,533 – 4,207,533Pledged deposits (note 26) 342,651 – 342,651Cash and cash equivalents (note 26) 2,412,297 – 2,412,297

16,179,287 20,567 16,199,854



amortised cost

RMB’000

Trade and bills payables (note 27) 5,102,436Financial liabilities included in other payables and accruals (note 28) 3,911,073Due to related parties (note 40) 5,956,321Interest-bearing bank and other borrowings (note 30) 27,305,522Asset-backed securities (note 32) 205,551Lease liabilities (note 14) 125,590Senior notes (note 31) 1,016,301

43,622,794


– I-103 –


42. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Group’s financial instruments as at the end of each of the RelevantPeriods, other than those with carrying amounts that reasonably approximate to fair values, are as follows:

Carrying amounts Fair values

31 December2017

31 December2018

31 December2019

31 December2017

31 December2018

31 December2019

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000Financial assetsFinancial assets at FVPL

(note 25) 330,293 52,433 20,567 330,293 52,433 20,567

Financial liabilitiesInterest-bearing bank and

other borrowings(note 30) 24,164,325 26,003,223 27,305,522 23,999,363 26,111,572 27,522,347

Management has assessed that the fair values of cash and cash equivalents, pledged deposits, restricted cash,trade receivables, amounts due from related parties, financial assets included in prepayments and other receivables,trade and bills payables, financial liabilities included in other payables and accruals, amounts due to related parties,lease liabilities, senior notes and asset-backed securities are approximate to their carrying amounts largely due to theshort term maturities of these instruments.

Management has estimated the fair values of the financial assets at FVPL by discounting the expected futurecash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. Thefair value measurement of the financial assets at FVPL is categorised within level 2 and level 3 of the fair valuehierarchy.

The fair values of interest-bearing bank and other borrowings have been calculated by discounting the expectedfuture cash flows using rates currently available for instruments with similar terms, credit risk and remainingmaturities. The Group’s own non-performance risk for interest-bearing bank and other borrowings as at 31 December2017, 2018 and 2019 was assessed to be insignificant.

For the fair values of other financial liabilities, management has estimated by discounting the expected futurecash flows using expected return rates for the underlying assets in order to estimate the cash outflow amounts to settlethe liability. The fair value measurement of the financial liability is categorized within level 3 of the fair valuehierarchy.

The Group’s corporate finance team headed by the group financial controller is responsible for determining thepolicies and procedures for the fair value measurement of financial instruments. The corporate finance team reportsdirectly to the group financial controller and the board of directors. At each reporting date, the corporate finance teamanalyses the movements in the values of financial instruments and determines the major inputs applied in thevaluation. The valuation is reviewed and approved by the group financial controller. The valuation process and resultsare discussed with the board of directors twice a year for annual financial reporting.

During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level2 and no transfers into or out of Level 3 for both financial assets and liabilities.


– I-104 –


Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Assets measured at fair value:

Financial assets at FVTPL

Fair value measurement using

Quotedprices in

activemarkets

(Level 1)


inputs(Level 2)



RMB’000 RMB’000 RMB’000 RMB’000

As at 31 December 2017 – 330,293 – 330,293

As at 31 December 2018 – 49,397 3,036 52,433

As at 31 December 2019 – 17,529 3,038 20,567

Liabilities for which fair values are disclosed:

Interest-bearing bank and other borrowings

Fair value measurement using

Quotedprices in

activemarkets

(Level 1)


inputs(Level 2)



RMB’000 RMB’000 RMB’000 RMB’000

As at 31 December 2017 – 23,999,363 – 23,999,363

As at 31 December 2018 – 26,111,572 – 26,111,572

As at 31 December 2019 – 27,522,347 – 27,522,347


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43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments mainly include cash and bank equivalents, restricted cash, pledgeddeposits, trade receivables, other receivables, trade and bills payables and other payables, which arise directly fromits operations. The Group has other financial assets and liabilities such as interest-bearing bank and other borrowings,financial assets at fair value through profit or loss, other financial liabilities, amounts due to related parties andamounts due from related parties. The main purpose of these financial instruments is to raise finance for the Group’soperations.

The main risks arising from the Group’s financial instruments are interest rate risk, credit risk, foreigncurrency risk and liquidity risk. Generally, the Group introduces conservative strategies on its risk management. Tokeep the Group’s exposure to these risks to a minimum, the Group has not used any derivatives and other instrumentsfor hedging purposes. The Group does not hold or issue derivative financial instruments for trading purposes. Theboard of directors reviews and agrees policies for managing each of these risks and they are summarised below:

(a) Interest rate risk

The Group’s exposure to risk for changes in market interest rates relates primarily to the Group’sinterest-bearing bank and other borrowings set out in note 30. The Group does not use derivative financialinstruments to hedge interest rate risk. The Group manages its interest cost using variable rate bank borrowings andother borrowings.

If the interest rate of bank and other borrowings had increased/decreased by 1% and all other variables wereheld constant, the profit before tax of the Group, through the impact on floating rate borrowings, would havedecreased/increased by approximately RMB3,189,000 RMB5,328,000 and RMB5,221,000 for the years ended 31December 2017, 2018 and 2019, respectively.

(b) Credit risk

The Group divides financial instruments on the basis of shared credit risk characteristics, such as instrumenttype and credit risk ratings for the purpose of determining significant increases in credit risk and calculation ofimpairment. To manage risk arising from trade receivables, the Group has policies in place to ensure that credit termsare made only to counterparties with an appropriate credit history and management performs ongoing creditevaluations of the Group’s counterparties. The credit period granted to the customers is generally six months and thecredit quality of these customers is assessed, taking into account their financial position, past experience and otherfactors. The Group also has other monitoring procedures to ensure that follow-up action is taken to recover overduereceivables. In addition, the Group reviews regularly the recoverable amount of trade receivables to ensure thatadequate impairment losses are made for irrecoverable amounts. The Group has no significant concentrations ofcredit risk, with exposure spread over a large number of counterparties and customers.

Management makes periodic collective assessments for financial assets included in prepayments and otherreceivables and amounts due from related parties as well as individual assessments on the recoverability of otherreceivables and amounts due from related parties based on historical settlement records and past experience. TheGroup classified financial assets included in prepayments and other receivables and amounts due from related partiesin Stage 1 and continuously monitored their credit risk. The directors of the Company believe that there is no materialcredit risk inherent in the Group’s outstanding balance of financial assets included in prepayments and otherreceivables and amounts due from related parties.

Maximum exposure and year-end staging as at 31 December 2017, 2018 and 2019

The table below shows the credit quality and the maximum exposure to credit risk based on the Group’scredit policy, which is mainly based on past due information unless other information is available withoutundue cost or effort, and year-end staging classification as at 31 December 2017, 2018 and 2019. The amountspresented are gross carrying amounts for financial assets and the exposure to credit risk for the financialguarantee contracts.


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As at 31 December 2017

12-monthECLs Lifetime ECLs

Stage 1 Stage 2 Stage 3Simplifiedapproach Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Trade receivables* – – – 35,429 35,429Financial assets included in

prepayments, deposits and otherreceivables

– Normal** 3,891,115 – – – 3,891,115Financial assets at fair value

through profit or loss 330,293 – – – 330,293Due from related parties 2,504,108 – – – 2,504,108Restricted cash– Not yet past due 2,375,494 – – – 2,375,494Pledged deposits– Not yet past due 195,133 – – – 195,133Cash and cash equivalents– Not yet past due 3,229,359 – – – 3,229,359

12,525,502 – – 35,429 12,560,931









16,139,104 – – 226,136 16,365,240


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16,004,842 – – 195,012 16,199,854

* For trade receivables to which the Group applies the simplified approach for impairment, informationbased on the expected credit losses is disclosed in note 22 to the Historical Financial Information. Thereis no significant concentration of credit risk.

** The credit quality of amounts due from related parties and the financial assets included in prepayments,deposits and other receivables is considered to be “normal” when they are not past due and there is noinformation indicating that the financial assets had a significant increase in credit risk since initialrecognition.

(c) Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the useof interest-bearing bank and other borrowings. Cash flows are closely monitored on an ongoing basis.

The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods, basedon contractual undiscounted payments, is as follows:

On demandLess than3 months

3 to 12months

Over1 year Total


31 December 2017Trade and bills payables 1,756,047 – – – 1,756,047Other payables 4,975,785 – – – 4,975,785Due to related parties 4,491,843 – – – 4,491,843Lease liabilities – 1,732 5,560 10,336 17,628Asset-backed securities – 431,299 1,413,344 – 1,844,643Interest-bearing bank and

other borrowings – 2,733,107 8,083,401 16,754,471 27,570,979

11,223,675 3,166,138 9,502,305 16,764,807 40,656,925


– I-108 –


On demandLess than3 months

3 to 12months

Over1 year Total


31 December 2018Trade and bills payables 5,063,976 – – – 5,063,976Other payables 3,759,979 – – – 3,759,979Due to related parties 5,909,143 – – – 5,909,143Lease liabilities – 7,630 22,889 41,666 72,185Asset-backed securities – 2,492,443 1,471,452 – 3,963,895Interest-bearing bank and

other borrowings – 4,108,184 10,411,217 17,318,793 31,838,194Senior notes – – 685,934 – 685,934

14,733,098 6,608,257 12,591,492 17,360,459 51,293,306

31 December 2019Trade and bills payables 5,102,436 – – – 5,102,436Other payables 4,898,470 – – – 4,898,470Due to related parties 5,956,321 – – – 5,956,321Lease liabilities – 12,592 37,775 94,742 145,109Asset-backed securities – 216,286 – – 216,286Interest-bearing bank and

other borrowings – 2,707,854 8,199,509 20,147,122 31,054,485Senior notes – 307,771 758,413 – 1,066,184

15,957,227 3,244,503 8,995,697 20,241,864 48,439,291

(d) Capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue asa going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’value.

The Group manages its capital structure and makes adjustments to it in light of changes in economicconditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders,return capital to shareholders or issue new shares.


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The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. TheGroup includes, within net debt, trade and bills payables, other payables and accruals, amounts due to related parties,interest-bearing bank and other borrowings and other financial liabilities, less cash and cash equivalents. Capitalrepresents equity attributable to owners of the parent. The gearing ratio as at the end of each of the Relevant Periodswas as follows:

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Trade and bills payables 1,756,047 5,063,976 5,102,436Other payables and accruals 4,975,785 3,759,979 4,898,470Due to related parties 4,491,843 5,909,143 5,956,321Senior notes – 644,958 1,016,301Interest-bearing bank and other borrowings 24,164,325 26,003,223 27,305,522Asset-backed securities 1,710,080 2,416,926 205,551Less: Cash and cash equivalents (3,229,359) (3,113,634) (2,412,297)

Pledged deposits (195,133) (670,560) (342,651)Restricted cash (2,375,494) (4,074,584) (4,207,533)

Net debt 31,298,094 35,939,427 37,522,120

Equity attributable to owners of the parent 681,545 1,957,796 4,617,425

Capital and net debt 31,979,639 37,897,223 42,139,545

Gearing ratio 98% 95% 89%

44. PARTLY-OWNED SUBSIDIARY WITH MATERIAL NON-CONTROLLING INTERESTS

Details of the Group’s subsidiaries that have material non-controlling interests are set out below:


2017 2018 2019

Percentage of equity interest held bynon-controlling interests

Taixing Xiangrui Real Estate Co., Ltd.(“Taixing Shinsun Xiangrui”) 30% 30% 30%

Zhuji Shinsun Hongyuan Real Estate Co., Ltd.(“Zhuji Shinsun Hongyuan”) 49% 49% 49%

Zhuji Shinsun Xiangqi Real Estate Co., Ltd.(“Zhuji Shinsun Xiangqi”) 47% 47% 47%

Profit for the year allocated tonon-controlling interests:

Taixing Shinsun Xiangrui (5,585) 30,689 68,959Zhuji Shinsun Hongyuan 5,401 1,724 (2,190)Zhuji Shinsun Xiangqi 357 (6,053) 141,892


– I-110 –



2017 2018 2019RMB’000 RMB’000 RMB’000

Accumulated balances ofnon-controlling interests:

Taixing Shinsun Xiangrui 33,596 64,285 133,244Zhuji Shinsun Hongyuan 83,047 84,770 82,580Zhuji Shinsun Xiangqi 35,607 29,554 171,446

The following table illustrates the summarised financial information of the above subsidiaries. The amountsdisclosed are before any inter-company eliminations:

For the year ended 31 December 2017

TaixingShinsun

Xiangrui

ZhujiShinsun

Hongyuan

ZhujiShinsunXiangqi

Revenue 1,293,067 190,317 –Total expenses (1,311,683) (179,295) 759(Loss)/profit for the year (18,616) 11,022 759Total comprehensive (loss)/income for the year (18,616) 11,022 759

Attributable to:Owners of the parent (13,031) 5,621 402Non-controlling interests (5,585) 5,401 357

(18,616) 11,022 759

Current assets 3,976,925 199,065 315,215Non-current assets 49,502 1,378 4,600Current liabilities (3,647,940) (30,945) (243,945)Non-current liabilities (266,500) (16) (111)

111,987 169,482 75,759

Attributable to:Owners of the parent 78,391 86,436 40,152Non-controlling interests 33,596 83,046 35,607

111,987 169,482 75,759

Net cash flows generated from/(used in)operating activities 375,019 136,254 (17,394)

Net cash flows used in investing activities (338,120) (83,793) (92)Net cash flows (used in)/generated from

financing activities (3,959) (40,200) 89,900

Net increase in cash and cash equivalents 32,940 12,261 72,414


– I-111 –



TaixingShinsun

Xiangrui

ZhujiShinsun

Hongyuan

ZhujiShinsunXiangqi

Revenue 843,989 15,921 –Total expenses (741,693) (12,403) (12,879)Profit/(loss) for the year 102,296 3,518 (12,879)Total comprehensive income/(loss)

for the year 102,296 3,518 (12,879)

Attributable to:Owners of the parent 71,607 1,794 (6,826)Non-controlling interests 30,689 1,724 (6,053)

102,296 3,518 (12,879)

Current assets 5,186,903 185,296 1,218,037Non-current assets 67,895 733 19,264Current liabilities (4,506,376) (13,022) (1,174,024)Non-current liabilities (534,140) (7) (397)

214,282 173,000 62,880


214,282 173,000 62,880

Net cash flows generated from operatingactivities 423,696 37,947 680,604

Net cash flows used in investing activities (886,305) (39,000) (795,282)Net cash flows generated from financing

activities 557,046 – 59,100

Net increase/(decrease) in cash and cashequivalents 94,437 (1,053) (55,578)


– I-112 –



TaixingShinsun

Xiangrui

ZhujiShinsun

Hongyuan

ZhujiShinsunXiangqi

Revenue 1,971,262 34,417 1,104,816Total expenses (1,741,397) (38,886) (802,918)Profit/(loss) for the year 229,865 (4,469) 301,898Total comprehensive income/(loss) for the year 229,865 (4,469) 301,898

Attributable to:Owners of the parent 160,906 (2,279) 160,006Non-controlling interests 68,959 (2,190) 141,892

229,865 (4,469) 301,898

Current assets 4,343,867 174,187 695,200Non-current assets 53,286 1,108 21Current liabilities (3,693,193) (6,764) (330,443)Non-current liabilities (259,813) – –

444,147 168,531 364,778


444,147 168,531 364,778

Net cash flows generated from/(used in)operating activities 226,300 (7,726) (100,479)

Net cash flows (used in)/generated frominvesting activities (148,170) – 163,038

Net cash flows used in financing activities (198,038) – (74,000)

Net decrease in cash and cash equivalents (119,908) (7,726) (11,441)

45. COMMITMENTS

The Group had the following capital commitments at the end of each of the Relevant Periods:

31 December

2017 2018 2019

RMB’000 RMB’000 RMB’000

Contracted, but not provided for:Property development activities 27,209,976 31,974,383 24,806,046Acquisition of land use right 5,416,306 531,558 2,388,549

32,626,282 32,505,941 27,194,595


– I-113 –


46. EVENTS AFTER THE RELEVANT PERIODS

On 23 January 2020, 16 March 2020 and 20 May 2020, Xiang Sheng Holding Limited issued US$300.0 millionaggregate principal amount of 12.5% senior notes due 2022 (“the Notes”). The Notes bear interest at the rate of 12.5%per annum, and are guaranteed by Shinsun Property Group Co., Ltd. and Mr. Chen Guoxiang, the ControllingShareholder.

The outbreak of novel coronavirus (COVID-19) in early January 2020 continued to spread throughoutMainland China and beyond. The Group expects to experience an approximately one-to-three month delay in propertydelivery of our two properties in Xiantao, Hubei Province, and an approximately one-to-two month delay in propertydelivery for 11 projects outside Hubei Province. The Group also implemented rent exemption measures for some ofthe commercial properties during the operation suspension period. The Directors are of the view that COVID-19pandemic will not have a significant adverse impact in general. The property construction and sales activities havebeen gradually resumed as the COVID-19 pandemic had been largely contained.

As at the date of approval of the Historical Financial Information, apart from the events detailed elsewhere inthis report, the Group did not have any other significant event subsequent to 31 December 2019.

47. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company or any of the companies now comprisingthe Group in respect of any period subsequent to 31 December 2019.


– I-114 –


appendix i accountants’ report...the reporting accountants of the company, ernst & young,...

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