SRE GROUP LIMITED 上置集團有限公司 · 2019-04-30 · SRE GROUP LIMITED 2018 Annual Report 5 Financial Summary Summary of Results Year ended 31 December 2018 2017 2016 2015

Annual Report 2018上

置集

團有

限公

司

SRE Group

Limited

二零

一八

年年

報

2018 Annual Rep

ort

(Stock Code: 1207)上置集團有限公司SRE GROUP LIMITED

年報2018

上置集團有限公司SRE GROUP LIMITED

（股份代號：1207）

ContentsPages

Corporate Information 2

Introduction of the Group 4

Financial Summary 5

Chairman’s Statement 18

Management Discussion and Analysis 25

Environmental, Social and Governance Report 30

Directors and Senior Management 50

Report of the Directors 54

Corporate Governance Report 66

Independent Auditor’s Report 79

Consolidated Financial Statements

• ConsolidatedStatementofProfitorLossand 88 Other Comprehensive Income

• ConsolidatedStatementofFinancialPosition 90

• ConsolidatedStatementofChangesinEquity 92

• ConsolidatedStatementofCashFlows 94

• NotestotheConsolidatedFinancialStatements 96

2 SRE GROUP LIMITED 2018 Annual Report

Corporate Information

SRE GROUP LIMITED 2018 Annual Report

Board of Directors

PengXinkuang (Chairman)LiuFeng (Chief Executive Officer)Chen DonghuiChen ChaoZhu QiangQin WenyingJiang QiZhuo Fumin*Chan, Charles Sheung Wai*MaLishan*Han Gensheng*

* Independent Non-executive Directors

Authorized Representatives

PengXinkuangLiuFeng

Company Secretary

PangKaFaiAngus

Legal Adviser

NortonRoseFulbrightHongKong

Auditor

PricewaterhouseCoopersCertifiedPublicAccountants

Principal Bankers

HongKong: AgriculturalBankofChina ChinaCITICBankInternationalLimited

PRC: IndustrialandCommercialBankofChina AgriculturalBankofChina ChinaConstructionBank ShanghaiPudongDevelopmentBank XiamenInternationalBank ChinaMinshengBank ChinaMerchantsBank

SRE GROUP LIMITED 2018 Annual Report 3SRE GROUP LIMITED 2018 Annual Report

Corporate Information

Registered Office

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal Place of Business in Hong Kong

Suite 1001, 10th FloorOnePacificPlace88QueenswayHongKong

Principal Share Registrar and Transfer Office

MUFGFundServices(Bermuda)LimitedTheBelvedereBuilding69PittsBayRoadPembrokeHM08,Bermuda

Hong Kong Branch Share Registrar and Transfer Office

TricorTengisLimitedLevel22,HopewellCentre183 Queen’s Road EastHongKong

Stock Code

1207

Internet Web Site

www.sre.com.cn

E-mail

[email protected]


Introduction of the Group

SREGroupLimited (the “Company”) and its subsidiaries (the “Group”) is an integrated real estate developer focusing on real estate

investmentanddevelopmentbusinessinfirstandsecond-tiercitiesinthePRC,particularlyinShanghai,whichisgeographicallythebasefor

theGroup’spropertydevelopmentbusiness.TheGroupiscommittedtoactivelyexpandingtheprojectbyvirtueofintegrationdevelopment

of“RealEstate+Industry+Finance”.The Group adheres to the dual drive model of real estate development and real estate investment.

Continuous efforts will be made on the real estate development in the areas which have already been entered, mainly providing mid and

high-end products and ensuring the quality first while speeding up the turnover rate at the same time. The Group also focuses on investment

opportunitiesinthehigh-growthregionsalongthe“OneBelt,OneRoad”.

ThesharesoftheCompanyhavebeenlistedonTheStockExchangeofHongKongLimited(the“StockExchange”)since10December

1999.

5SRE GROUP LIMITED 2018 Annual Report

Financial Summary

Summary of Results

Year ended 31 December2018 2017 2016 2015 2014

RMB’M RMB’M RMB’M RMB’M RMB’M

Revenue 1,551 1,620 3,403 1,419 1,141Grossprofit/(loss) 474 384 612 (1,093) 243Profit/(loss)beforeincometax 207 878 684 (2,168) 450Incometax(expense)/credit (108) (158) (341) 185 (336)

Profit/(loss)fortheyear 99 720 343 (1,983) 114Non-controllinginterests 15 (30) (111) 83 (198)

Profit/(loss)attributabletoownersofthe Company 114 691 232 (1,900) (84)Proposeddividends – – – – –Earnings/(loss)pershare –Basic(RMB) 0.01 0.03 0.01 (0.28) (0.01) –Diluted(RMB) 0.01 0.03 0.01 (0.28) (0.01)

As at 31 December2018 2017 2016 2015 2014


Total assets 20,890 22,385 22,711 29,155 29,447Totalliabilities 13,072 14,571 15,659 22,420 21,871Netassets 7,818 7,814 7,052 6,735 7,576Cashandbankbalances (includingrestrictedcash) 701 1,453 1,513 2,555 1,664Shareholders’ funds 7,445 7,380 6,674 6,403 7,129

Year ended 31 December2018 2017 2016 2015 2014


Returnonequity(%) 2% 9% 3% (31%) (1%)Currentratio(times) 0.96x 1.28x 1.17x 1.24x 2.10xTotalliabilitiestonetassetsratio(times) 1.67x 1.86x 2.22x 3.33x 2.89xNetdebttoshareholders’fundsratio(times)* 1.66x 1.78x 2.12x 3.10x 2.83x

* Netdebttoshareholders’fundsratio=(Totalliabilities–Cashandbankbalances)/Shareholders’funds

Note: Thedataforyears2014to2016setoutaboveareextractedfromtheauditedconsolidatedfinancialstatementsoftheGroupfortherelevantyearsafter

adjustingretrospectivelyfortheeffectsofchangeinpresentationalcurrencyfromHongKongdollartoRenminbiadoptedinyear2016,whileforyear

2016,adjustmentsarealsomadetoreflecttheresultsofdiscontinuedoperationinthoseyearsonalinebylinebasisinsteadofasasinglelineitem.The

adjustmentsmadeontheresultsofdiscontinuedoperationisnotastandardpresentationmethodunderHongKongFinancialReportingStandards.

ShanghaiProject

ChengduProject

ShenyangProject

ChangshaProject

JiaxingProject

OverseasProject


Chairman’s Statement


Dear Shareholders,

On behalf of the board of directors, I would like to present the annual report of SRE Group Limited for the year ended 31 December 2018 to you.




Business Review

In2018,therealestateregulationandcontrolwasnormalized;localrealestateregulatorypolicieswereextensivelyintroducedwithequalstressesonenhancementandcoverageexpansion;domesticstructuralde-leveragewassteadilyadvanced;thepropertymarketfundingwastight;channelswerenarrowed;andfinancingcostsweresignificantlyimproved.In2018,thegrowthofcommercialhousingsalesintheindustrydeclinedascomparedwithlastyear.Thesalesareaandamountincreasedslightlyascomparedwithlastyear,andthereturnfromhousingenterpriseswasgenerallyfacinggreaterpressure.Facingthepressureoftheexternalenvironment,theGroupmaintaineditsstrategicstrength,adheringtothedualdrivemodelofrealestatedevelopmentandrealestateinvestment.Intermsofsales,theGroupseizedthefavorableopportunityofthemarket,continuedtotakeadvantageofitshigh-qualitybrandedprojects,andincreasedmarketingefforts.Asforoperations,theGrouphasstrengtheneditscostcontrol,optimizedprocedures,keptupwiththeprogressofprojects,andpursuedastablestreamofprofitandcashflow.Intermsofinvestment,theGroupwasmorecautiousinmakingnewinvestmentsandmanagedtocatchtherightmomenttoexitthenon-strategicprojects.In2018,theCambodianResidentialProjectwaslaunched,whiletheGroupgraspedthemarketopportunitytorealizereturnincashbydisposingofsomeassetsatahigherprice;theShanghaiprojectintheBeijing,ShanghaiandShenzhenAssetPackagewastransferredatahighpremium;theChangshaProjectattractedadditionalinvestmentatapremium;saleandpurchaseagreementoftheCaoluassetpackagewassignedatapremium;andalsoTheUKProjectswerepartiallywithdrawn,enablingtheGrouptosuccessfullyimplementthe“realestate+industry”model.

In2018,theGroup’smajorprojectsavailableforsalewereShanghaiXiangzhangGarden,ShanghaiAlbanyOasisGarden,JiaxingProject,ShanghaiHuatingProject,ChengduAlbanyOasisGarden,ShenyangAlbanyGardenandtheAtelier.In2018,theGrouptogetherwithits joint ventures and associates had contracted sales amounting to approximatelyRMB3.266billion,with a total gross floor area ofapproximately87,239m2.

Project

Monetary Amount ofSales Contracts

SignedContractualGross Area

(RMB’000) (m2)

ShanghaiXiangzhangGarden 1,809,000 37,061ShanghaiAlbanyOasisGarden 760,090 9,398JiaxingProject 258,937 25,243ShanghaiHuatingProject 129,947 1,270ChengduAlbanyOasisGarden 128,958 6,036ShenyangAlbanyGarden 113,943 7,318Otherprojects 64,891 913

Total 3,265,766 87,239




In2018,theGrouprecordedanetrevenueofapproximatelyRMB1.551billion(2017:RMB1.620billion).Grossprofitfor2018amountedtoapproximatelyRMB474million(2017:RMB384million).

Revenue 2018(RMB’000)

2017(RMB’000)

Revenue from sale of properties 1,280,765 1,394,541Revenue from property leasing 161,785 153,370Revenue from property management 18,311 14,888Revenuefromconstructionofinfrastructureforanintelligentnetwork 4,985 8,890Other revenue 99,611 62,949

Less:Taxandsurcharges (14,148) (14,165)

Total revenue 1,551,309 1,620,473

Development Projects

OurdevelopmentprojectsmainlyincludedShanghaiRichGateI,ShenyangAlbanyGarden,ChengduAlbanyOasisGarden,ChangshaFudiAlbanyProject,JiaxingProject,DalianOasisCityGardenandtheAtelier.

ProgressofRelocation

Shanghai Rich Gate I (Qinhai Oasis Garden)

Asattheendof2018,contractsweresignedfor911certificatesofhouseholds(includingcertificatesofindividuals)inaggregate,representinga signing rate of 90%;757 certificates of households (including certificates of individuals)were relocated in aggregate, representing arelocating rate of 75%; contractswere re-signed for 702 certificates of households (including certificates of individuals) in aggregate,representingare-signingrateof70%.19certificatesofenterpriseswererelocatedandsettled,accountingfor49%ofthetotal39certificates.Thefirstbatchofexpropriationcompensationnoticeswereissuedfourmonthsinadvancebeforetheproposalofproject.Asattheendoftheyear,expropriationcompensationnoticeswereissuedto168households,effectivelypromotedtheexpropriationwork.

Shenyang Albany Garden

In2018,relocationcontractsweresignedwith38households.Thesigningrateofhouseholdswasapproximately99%,whilesigningrateofenterprisesandschoolswas96%.

Changsha Fudi Albany Project

Asoftheendof2018,theprojectpositioningandplanningplanhasbeencompletedandiscurrentlyundergoingapproval.Therewere99householdsinthelandareaoftheproject.Signingratereached100%fortheyear;100%householdsweredemolished;completionrateoftombrelocationof72.5%.



Dalian Oasis City Garden

TheprojectislocatedinWafangdianCityandisdividedinto9sections.Asoftheendof2018,theSteelSquareandtheAutoSquarehavebeendemolished;contractsforthemobilebasestationhasbeensignedoff;compensationagreementsfortransferoflandhasbeensigned;therelocationworkhasbeencompletedandthecostforrelocationwaswellcontrolled.

Shanty Town Renovation Project in Zhangjiakou

ShantyTownRenovationProjectinZhangjiakou,locatedinQiaoxiDistrict,Zhangjiakou,HebeiProvince,coversanareaofapproximately215muandinvolvesresidentsof930households.Asoftheendof2018,signingratewasapproximately60.3%inaggregateand60.1%ofrelocatingwascompleted.

ProgressofConstruction

Chengdu Albany Oasis Garden

In2018,forPhaseIIofChengduAlbanyOasisGarden,constructionofBlocksNo.3,4,5and6werecompletedinadvance,amongwhich,BlocksNo.5and6launchedsuccessfullywhileinteriorrefineddecorationforBlocksNo.3and4werestarted.

Shenyang Albany Garden

InJanuary2018,BlockNo.8ofSectionBofPhaseIIofShenyangAlbanyGardenreceivedthecertificateofcompletionandwasdeliveredtothepropertyowners.SectionAofPhaseIIIreceivedthecertificateofcompletioninJune2018andSectionBofPhaseIIIiscurrentlypendingplanningproposalapproval,withplotratio-basedareaofapproximately21,600m2,includingtheresidentialareaofapproximately206,000 m2andcommercialareaofapproximately10,000m2.

Jiaxing Project

ThesaleableareaofJiaxingProjectLanwanPhaseIIisapproximately53,000m2,includingresidentialgrossfloorareaofapproximately43,000 m2.Theprojectobtainedaconstructionpermitin2018andiscurrentlyundergoingabasementproject.

75 Howard Project in the USA

75HowardProjectintheUSAislocatedintheCBDofthenortheastcornerofSanFrancisco,adjacenttotheHarbourBridge.Theprojecthasatotalsaleableareaofapproximately20,000m2andisplannedtobe120highendapartments.Agroundbreakingceremonyfortheprojectwassuccessfullyheldin2018,reportedbymainstreammediasuchasForbes,andiscurrentlyundergoingpilefoundationengineeringwork.

The Atelier in the UK

TheAtelierinUKislocatedatKensington,London,with43saleableunitsandsaleableareaof3,259m2.Thebasementprojecthasbeencompletedinthe2018projectandisexpectedtobedeliveredsmoothlyin2019.

LandBank

Asat31December2018,theGroupownedalandbankwithatotalgrossfloorareaofapproximately2.11millionm2 in Shanghai, Shenyang, Chengdu,Changsha,Jiaxing,Dalian,London,SanFrancisco,etc.TheCompanystaysabreastofindustrydevelopmentdynamics,exploresitsownresourcesandadvantageandiscommittedtodiscoveringassetswhichareunderestimatedorwithgrowthpotential.




Commercial Property Operation

In2018,theGroupexpandeditsmarketingandinvestmentchannels, increasedtheintroductionofwell-knownbrands,andcontrolledineffectivecostexpendituretocontinuouslyimproveoperatingincome.

Oasis Central Ring Centre

AsalandmarkoftheShanghaiCentralRingbusinessdistrict,theOasisCentralRingCentre,withitshighqualityGrade5Aofficebuildingswellequippedwithallsortsofancillaryfacilities,hasattractedanincreasingnumberofenterprisestomovein.In2018,theoccupancyrateofOasisCentralRingCentrereached100%,andtheoperatingrevenuewasRMB42.38million.

Shenyang Rich Gate Shopping Mall

ShenyangRichGateShoppingMall iscommittedtobuildingintoaone-stopintegratedcenterwithbusiness, leisureandlifeelements,accommodating for shopping, leisure&entertainment, and food&beverageneeds and requirements.Theproject continued tomaketremendous efforts in attracting tenants. In 2018, the leased area reached77,000m2 in aggregate, and the operating income reached RMB39.35million.

41TowerHillProjectintheUK

TheprojectislocatedattheeastsideoftheCityofLondon.Itisafreeholdpropertywithasiteareaofapproximately7,000m2, and comprises anexistingofficebuildingandanadjoiningcarpark.Currently,theofficebuildinghasafloorareaof15,509m2 and gross floor area of 21,189 m2.TheofficebuildingisleasedtoSociétéGénéraleforatermofabout3yearsexpiringinMarch2020.Atpresent,thedirectionofthemodificationhasbeendetermined,anditisplannedthatslightrenovationandmodificationwillbemadetotheproject.

12MoorgateProjectintheUK

TheprojectislocatedinthecoredistrictoftheCityofLondon,whichisaglobalfinancialandinsurancecenter.Itisafreeholdpropertydevelopedin1998with6floorsandonebasement.Thepropertyhasarentableareaof3,151m2forofficeuse.Atpresent,aleaseintentionhasbeenmadewiththenewtenant.

Development of Investment Projects

CambodianResidentialProject

TheprojectislocatedintheSenSokDistrict,westoftheCambodiancapital,PhnomPenh.ItisadjacenttoRussianBoulevard,theonlymainroadthatrunsthroughtheeastandwestandconnectingtheairporttotheurbanarea,andisabout4.5kilometersfromthePhnomPenhAirportandthePrimeMinister’sOffice.Theprojecthasatotalareaof16,327m2,saleableareaofapproximately90,000m2, including residentialofapproximately80,000m2andancillarycommercialofapproximately10,000m2.Theprojectwassignedatthebeginningof2018,andachievedhighturnoverassaleswerelaunchedinthesameyearwhentheprojectwasacquired.

Exit from Investment after Making a Profit

ShanghaiProjectofBeijing,ShanghaiandShenzhenAssetPackage

TheprojectisacommercialprojectlocatedinShanghaioftheBeijing,ShanghaiandShenzhenAssetPackage.ItissituatedintheprimebusinessdistrictofPlaza66,WestNanjingRoad,JinganDistrict.Theprojectwasacquiredattheendof2016andtenderingforsalewascompletedinFebruary2018.ThesalepricewasatapremiumofapproximatelyRMB300millionoverthelistedprice.Asattheendof2018,allfundshavebeenrecoveredandtransferhasbeencompleted.



CaoluProject

In July 2016, theCompany acquired thedebenture ofCaolu assets packagewithRMB205million.After the acquisition, theGroupcontinuedtonegotiatewiththeactualcontrollerforcooperationandcontactpotentialbuyersforthedebenture.Attheendof2018,itwastransferredatRMB308millionwithapricepremium,demonstratingonsuccessfulimplementationofthe“realestate–financial”model.

TheUKProjects

TheUKProjectswereacquiredin2016.In2018,afterseveralroundsofnegotiationswiththepartners,thepartialexitwassuccessfullyachieved.

Major Transactions

1. On19April2018(aftertradinghours),SREJiayeRealEstateDevelopment(Shanghai)Co.,Ltd.(上置嘉業房地產發展（上海）有限公司),anindirectwholly-ownedsubsidiaryoftheCompany,enteredintotheLoanReceivableTransferAgreementwithShanghaiDaiYong IndustrialCo., Ltd. (上海戴永實業有限公司 ), pursuant towhichSRE JiayeRealEstateDevelopment (Shanghai)Co.,Ltd.agreedtosell,andShanghaiDaiYongIndustrialCo.,Ltd.agreedtoacquire,theloanreceivablesattheconsiderationofRMB330,000,000whichshallbesettledbyShanghaiDaiYongIndustrialCo.,Ltd.bystagepaymentsincash.FurtherdetailsaresetoutintheannouncementoftheCompanydated19April2018.

2. On3May2018,SinopowerInvestmentLimited(華通投資有限公司)(adirectwholly-ownedsubsidiaryoftheCompany),RongheInternationalGroupLimited(榮和國際集團有限公司)(anindependentthirdparty)andProfitConceptInvestmentsLimited(潤斯投資有限公司 )(anindirectwholly-ownedsubsidiaryoftheCompanyon3May2018)enteredintotheAgreement,pursuanttowhichSinopowerInvestmentLimitedagreedtosell,andRongheInternationalGroupLimitedagreedtopurchase,thesharesandtheloanforatotalconsiderationofapproximately£29,475,967.30.FurtherdetailsaresetoutintheannouncementoftheCompanydated3May2018.

3. On15May2018(aftertradinghours),ShangzhiAssetManagement(Shanghai)Co.,Ltd.(上置資產管理（上海）有限公司 )(aconnectedpersonoftheCompanyatthesubsidiarylevel),ShanghaiYidongInvestmentManagementCo.,Ltd.(上海意動投資管理有限公司 )(anindirectwhollyownedsubsidiaryoftheCompany),theCompanyandShanghaiLakeMalarenHospitalInvestmentCo.,Ltd.(上海美蘭湖醫院投資有限公司 )(anindirectnon-whollyownedsubsidiaryoftheCompany)enteredintotheCapitalInjectionAgreement,pursuanttowhichShangzhiAssetManagement(Shanghai)Co.,Ltd.hasagreedtocontributeRMB150milliontotheregisteredcapitalofShanghaiLakeMalarenHospitalInvestmentCo.,Ltd..FurtherdetailsaresetoutintheannouncementsoftheCompanydated15May2018and4June2018.

4. On28June2018(after tradinghours),ShanghaiJinxinRealEstateCo.,Ltd. (上海金心置業有限公司 ) (anon-whollyownedsubsidiary of theCompany) entered into theAgreementswith, amongothers, ShanghaiXiangfuRealEstateDevelopmentCo.,Limited(上海湘府房地產開發有限公司)(aconnectedpersonoftheCompany)pursuanttowhich,amongotherthings,ShanghaiXiangfuRealEstateDevelopmentCo.,LimitedagreedtosellandShanghaiJinxinRealEstateCo.,Ltd.agreedtopurchase33unitsofrelocationandresettlingpropertiessituatedat2,289WanYuanRoad,MinhangDistrict,Shanghai,withatotalgrossfloorareaof2,547.04squaremeters,atthepurchasepriceofRMB127,554,308.37.TheacquisitionisforthepurposeofrelocatingandresettlingtheincumbentresidentsaffectedbythedevelopmentoftheDaxingProjectbyShanghaiJinxinRealEstateCo.,Ltd..FurtherdetailsaresetoutintheannouncementoftheCompanydated28June2018.

5. On5December 2018 (after tradinghours), ShanghaiOasisGardenRealEstateCo.,Ltd. (上海綠洲花園置業有限公司 ) (asubsidiaryoftheCompany),ChinaAviationTrustCo.,Ltd.(中航信託股份有限公司 )andajointventureenteredintoatransferagreementpursuanttowhichShanghaiOasisGardenRealEstateCo.,Ltd.agreedtosellandChinaAviationTrustCo.,Ltd.agreedtopurchasetheinterestataconsiderationofRMB500million.FurtherdetailsaresetoutintheannouncementoftheCompanydated5December2018.



The Group’s Awards

1. Blocks3and10ofOasisCentralRingCentreinShanghaiwonthetitleof“2018BuildingContributingTaxofRMB100MillioninPutuoDistrict”.

2. ShanghaiJinwuRealEstateCo.,Ltd.wonthefirstprizeofContributiontoRegionalDevelopmentofPutuoDistrict,Shanghaiin2018.

3. JiaxingProjectwonthe“AmberHouseinJiaxingLake”atthe2018JiaxingRealEstateAnnualFestival.

4. ShanghaiLakeMalarenObstetricalandGynecologicalHospitalwonthetitleof“Top50CivilizationWindow”atthefirstImportExpo.

5. ShanghaiLakeMalarenObstetricalandGynecologicalHospitalwonthe“ExcellentServiceAward”bytheMotherandBabyUnion.

6. ShanghaiLakeMalarenObstetricalandGynecologicalHospitalwonthe“GoldenRoseWeddingIndustryInnovationAward”atthe2018China-ShanghaitheSecondInternationalWeddingFashionWeek.

Business Outlook

Lookingforwardtothefuturedevelopmentofthepropertymarket,“Housesareforlivingin,notforspeculation”hasbecomeamarketconsensus,anditisexpectedthatthemarketregulationpolicywillnotrelax,therefinedadjustmentof“Targetedpolicyforspecificcity”willcontinue,andthelevelofincreaseinhousingpriceswillgraduallybestabilized.Atthesametime,withthereserverequirementratiocutsatthebeginningoftheyear,itisexpectedthatthefinancialenvironmentin2019willberelaxed,butitisestimatedthatmorefundswillflowtothenon-realestatesector,realestatefinancingwillstillbedifficult,andfinancingcostswillstillbehigher.Marketadjustmentofthefirstandsecond-tiercitieswillgraduallyspreadtothethirdandfourth-tiercities.Inparticular,somecitiesareaffectedbythegradualexitofmonetizedresettlementcompensation,butitisexpectedthatmarketingeneralwillbestabilizedduringtheadjustment.Ingeneral,2019willstillbeanotherdifficultyearforrealestateenterprises,butopportunitieswillbecreatedunderdifficulties.In2019,theGroupwillfurtheradheretothedualdrivemodelofrealestatedevelopmentandrealestateinvestment.Intermsofprojectdevelopment,theGrouphavetoimprovedevelopmentandoperationalefficiency;intermsofrealestateinvestment,capacitybuildingandimplementationofallaspectsoffinancing,investment,managementandwithdrawalhavetobestrengthened.

Acknowledgement

IwouldliketotakethisopportunitytoexpressmygratitudetothecolleaguesintheBoardandthemanagementteam,andconveymyrespecttoallfront-linestaffmembers.Wewillfacevariouschallengesinthenewyear,butwefirmlybelievethatundertheguidanceofthestrategiesandwiththeunremittingeffortsofallstaff,theSREGroupwillsurelyenjoyabrighterfuture.

Peng XinkuangChairman

28 March 2019


Management Discussion and Analysis

Financial Review

Revenueandprofitattributabletoshareholders

In2018,theGrouprecordednetrevenueofapproximatelyRMB1,551million(2017:RMB1,620million),whichrepresentsadecreasebyapproximately4%comparedwiththatof2017.ProfitattributabletoownersoftheCompanyin2018wasapproximatelyRMB114millionwhileprofitattributabletoownersoftheCompanyin2017wasapproximatelyRMB691million.ThedecreasewasmainlyattributabletothedecreaseingainsarisingfromtheGroup’sexitfrominvestmentsasaresultoftheregulationandcontrolofdomesticmacro-economyandpropertyindustryinChinaduringtheyear.DespitethedecreaseinprofitattributabletotheownersoftheCompany,astheGroupstrengthened its cost control during the year, the Group recorded an increase in gross profit from real estate development and a decrease in administrativeexpenseduringtheyearascomparedwiththecorrespondingperiodoflastyear.

Dividend

TheBoardhasresolvednottorecommendthepaymentofafinaldividendinrespectoftheyearended31December2018(2017:Nil).

Financial Resources and Liquidity

Asat31December2018,cashandbankbalances(includingcashandcashequivalentsandrestrictedcash)amountedtoapproximatelyRMB701million(2017:RMB1,453million).Workingcapital(netcurrentassets)oftheGroupasat31December2018amountedtoapproximatelyRMB-345million(2017:RMB1,976million),representingadecreaseof117%ascomparedwiththeprecedingyear,andthecurrentratiowasapproximately0.96x(2017:1.28x).

Asat31December2018,theGroup’stotalliabilitiestototalequitydecreasedto1.67x(2017:1.86x).Asat31December2018,theGroup’sgearingratiowasapproximately47%(2017:48%),calculatedonthebasisoftheGroup’snetborrowings(afterdeductingcashandbankbalanceofapproximatelyRMB701million)overtotalcapital(totalequityandnetborrowings).

Employees

Asat31December2018,theGrouphad482(2017:517)employeesinHongKongandthePeople’sRepublicofChina.TotalstaffcostsoftheGroup,excludingDirectors’remuneration,fortheyear2018amountedtoapproximatelyRMB82million(2017:RMB211million).Staffremunerationpackageswereinlinewiththeprevailingmarketpracticeandweredeterminedonthebasisoftheperformanceandexperienceofeachindividualemployee.




Charges on Assets and Contingent Liabilities

Asat31December2018,bankborrowingsofapproximatelyRMB3,504million(2017:RMB3,740million)weresecuredbypledgeoftheGroup’scertainassetsincludingleaseholdland,investmentproperties,property,plantandequipment,propertiesheldorunderdevelopmentforsale,orbypledgeofequityinterestsincertainsubsidiariesorbankdeposits.

TheGroupprovidedguaranteesinrespectofthemortgagefacilitiesgrantedbycertainbankstothepurchasersoftheGroup’sproperties.Pursuanttothetermsoftheguaranteearrangements,incaseofdefaultonmortgagepaymentsbythepurchasers,theGroupisresponsibleforrepayingtheoutstandingmortgageloanstogetherwithanyaccruedinterestandpenaltyowedbythedefaultedpurchaserstothebanks.TheGroupisthenentitledtotakeoverthelegaltitlesoftherelatedproperties.TheGroup’sguaranteeperiodscommencefromthedateswhentherelevantmortgageloansaregrantedbythebanksandendwhenthepurchaserspledgerelatedpropertyownershipcertificatesassecuritytothebanksofferingthemortgageloans.TheGroupenteredintoguaranteecontractsofprincipalamountstotalingapproximatelyRMB375millionandthesecontractswerestilleffectiveasatthecloseofbusinesson31December2018.

The Group did not incur any material losses during the year in respect of the guarantees provided for mortgage facilities granted to purchasers oftheGroup’sproperties.TheDirectorsconsiderthattheprobabilityofdefaultofpurchasers isremoteandevenincaseofdefaultonpayments,thenetrealisablevalueoftherelatedpropertiesisexpectedtobesufficienttocovertherepaymentoftheoutstandingmortgageloanstogetherwithanyaccruedinterestandpenaltyastheprincipalofeachofthemortgageloanisnormallybelow70%ofsalespriceoftherespectivepropertyatdateofthesalesagreement,andthereforenoprovisionhasbeenmadeinconnectionwiththeguarantees.

TheGroupalsoprovidedguarantee to jointventuresof theGroup.Asat31December2018, theGroupprovidedguarantee totallingapproximatelyRMB3,259million(2017:approximatelyRMB2,826million).

Information on Business Review

TheGroupiscommittedtosupportingtheenvironmentalsustainability.Beinganintegratedrealestatedeveloper,theGrouphascompliedwiththerelevantlawsandregulationsthathavesignificantimpactontheoperationsoftheGroup.Theseincluderegulationsonairandnoisepollutionanddischargeofwasteandwaterintotheenvironment.TheGrouprecognizesthatouremployees,customersandbusinesspartnersarethekeystooursustainabledevelopment.TheGroupiscommittedtoestablishingacloseandcaringrelationshipwithouremployees,providinghighqualityservicestoourcustomersandenhancingcooperationwithourbusinesspartners.



Details of properties under development for sale:

Project Location Land Usse GFA(sqm)

ExpectedDate of

Completion

CompletionRate of

Construction

Group'sHolding

Proportion

Shenyang AlbanyGarden

South Heping Street,Heping District,Shenyang,LiaoningProvince,thePRC

PhaseIIIB/ C Residential

206,851 2021 0% 97.5%

PhaseIIIB/ C Commercial

9,458 2022 0% 97.5%

PhaseIIIB/CFacility 5,100 2022 0% 97.5%PhaseIIIB/ C Underground

62,010 2021 0% 97.5%

ChenduAlbany Oasis Garden

No.555,GanghuaRoad,HongguangTown,PiCounty,Chengdu,SichuanProvience,thePRC

PhaseIISection2 Residential

74,945 2019 99% 100%

JiaxingProject No.1,LinghuRoad,NanhuDistrict,Jiaxing,ZhejiangProvince,thePRC

PhaseIIResidential 42,662 2020 5% 100%PhaseIICommercial 10,556 2020 5% 100%PhaseIIFacility 2,115 2020 5% 100%PhaseIIUnderground 20,029 2020 80% 100%

Shanghai Rich Gate I DaxingStreet,Huangpu District,Shanghai,thePRC

Residential 72,660 2023 0% 51%Commercial 9,244 2023 0% 51%Office 48,600 2023 0% 51%Underground 44,000 2023 0% 51%

Changsha Fudi AlbanyGarden

PengjiaLane,LaodaoheStreet,KaifuDistrict,Changsha, HunanProvince,thePRC

PhaseIResidential 126,287 2021 0% 49.5%PhaseICommercial 3,418 2021 0% 49.5%PhaseIFacility 2,217 2021 0% 49.5%PhaseIUnderground 34,988 2021 0% 49.5%PhaseIIResidential 194,867 2022 0% 49.5%PhaseIICommercial 5,851 2022 0% 49.5%PhaseIIFacility 6,580 2022 0% 49.5%PhaseIIUnderground 50,219 2022 0% 49.5%




Project Location Land Usse GFA(sqm)

ExpectedDate of

Completion

CompletionRate of

Construction

Group'sHolding

Proportion

Dalian Oasis City Garden

West of West Outer RingStreetandSouthofNorthRingRoad,XinchengDistrict, Wafangdian City,Dalian,LiaoningProvince,thePRC

PhaseIResidential 84,748 2022 0% 51%PhaseICommercial 20,234 2022 0% 51%PhaseIUnderground 50,985 2022 0% 51%PhaseIIResidential 100,500 2023 0% 51%PhaseIIFacility 3,600 2023 0% 51%PhaseIIUnderground 42,260 2023 0% 51%PhaseIIIResidential 43,050 2025 0% 51%PhaseIIICommercial 50,723 2025 0% 51%PhaseIIIUnderground 47,040 2025 0% 51%PhaseIVResidential 129,500 2026 0% 51%PhaseIVUnderground 46,820 2026 0% 51%PhaseVResidential 70,219 2029 0% 51%PhaseVCommercial 32,750 2029 0% 51%PhaseVUnderground 46,504 2029 0% 51%

ShanghaiAlbany Oasis Garden

No.699,ZhongxingRoad, Jingan District, Shanghai,thePRC

PhaseIVResidential 40,000 2025 0% 40%PhaseIVCommercial 40,000 2025 0% 40%PhaseIVOffice 100,500 2025 0% 40%Facility 24,292 2025 0% 40%

Shanghai Malaren World

No.8,MeilanhuRoad,BaoshanDistrict,Shanghai,thePRC

PhaseIICommercial 62,890 2021 0% 72.63%PhaseIIFacility 736 2021 0% 72.63%PhaseIIUnderground 29,257 2021 0% 72.63%

Shanghai Shengnan International Garden

Yongfa Road, PudongNewDistrict,Shanghai,thePRC

Residential 58,178 Notyetdecided

0% 100%

The Atelier 45-43SinclairRoad,London,UnitedKindom

Residential 6,397 2019 70% 92.91%

75Howard 75HowardStreet,San Francisco, the USA

Residential 27,236 2021 15% 70%Commercial 456 2021 15% 70%Underground 3,452 2021 15% 70%

Napa Devlin Road, Napa,San Francisco, the USA

Hotel 27,247 Notyetdecided

0% 78.53%

Romduol BoureiMuoyRoyKhnangvillages,TuekThlaCommune,SenSokDistrict,PhnomPenhCity,Cambodia

Residential 82,360 2022 0% 100%Commercial 5,061 2022 0% 100%Facility 3,267 2022 0% 100%Underground 26,284 2022 0% 100%



Details of completed investment properties:

Project Location Land Use GFA (sqm)

Holding Proportion

of SRE

Shenyang Richgate No.118,HarbinRoad,Shenhe District,Shenyang City,LiaoningProvince,thePRC

Commercial 245,252 100%

Oasis Central Ring Center Lane1628,JinshajiangRoad,PutuoDistrict,Shanghai,thePRC

Retail 32,143 97%


Retail 6,499 97%


CarPark 57,045 97%

Unit2605,2606,26(3A),2803, 2806and28(3A)ofUniversal Mansion

No.172YuyuanRoad,Jing’An District, Shanghai,thePRC

Office 732 100%

TransportationHubofLake Malaren

No.1088,LuofenRoad,BaoshanDistrict,Shanghai,thePRC

Commercial 29,389 72.63%

RetailStreetofLakeMalaren Lane989,LuofenRoadandLane555,LuofenRoad,BaoshanDistrict,Shanghai,thePRC

Commercial 72,943 72.63%

41TowerHill 41TowerHill,London,EC3N4SG

Office/CarPark 21,189 51.1%

12 Moorgate 12MoorgateLondonEC2R 6DA

Office 3,151 51.1%


Environmental, Social and Governance Report


1. About this Report

SREGroupLimited (the “Company”) hereby releases the environmental, social and governance report (“ESG report”) on theCompany and its subsidiaries (the “Group” or “we”) to introduce to stakeholders the concepts andpractices of sustainabledevelopmentandsocialresponsibilityoftheGroupintwoareas,namelyenvironmentalandsocialissues.

TheGrouphasadoptedpoliciesandprocedurestoassessandimprovethefunctionsofriskmanagementandinternalcontrol,andtheBoardwillreviewthedesign,implementationandmonitoringoftheGroup’sriskmanagementandinternalcontrolsystems.Fordetails,pleaserefertotheCorporateGovernanceReport.

1.1. ReportingScope

TheReportcoveredtheperiodfrom1January2018to31December2018.Itcoversrealestatedevelopmentandpropertyleasing,whicharetheprincipalbusinessesoftheGroup,aswellasthecommercialproperties.KeyperformanceindicatorsintheenvironmentalareadisclosedduringtheReportingPeriodincludetheGroup’scommercialpropertiesnamelyLakeMalarenGolfCourseinShanghai(referredtoasthe“GolfCourse”)andLakeMalarenObstetricalandGynecologicalHospital(referredtoasthe“ObstetricalandGynecologicalHospital”),andShenyangRichGateShoppingMall(referredtoasthe“ShenyangRichGateShoppingMall”).

Comparedtothe“ESGreport”publishedinthe2017AnnualReportofSREGroupLimited,in2018,theGroup’scommercialproperty,CrownPlazaLakeMalaren,wasconverted toproperty leasingand theGroupwasno longer responsible for theoperationandmanagementoftheproperty,andthereforethepropertyisnotincludedinthedisclosureofkeyperformanceindicatorsintheenvironmentalreportoftheESGreportduringtheReportingPeriod.Inaddition,theGrouphasconductedacomprehensiveanalysisintermsofenvironmentalimpactandmaturityofthekeyperformanceindicatorssystems,soastoincorporatetheGroup’scommercialpropertyoperationprojectShenyangRichGateShoppingMallintothedisclosureofkeyperformance indicators in the environmental report of the 2018 ESG Report1.

1.2. Reportingstandardsandprinciples

TheGroupprepared the 2018ESGReport according to the requirements of theEnvironmental, Social andGovernanceReportingGuideassetoutinAppendix27totheRulesGoverningtheListingofSecuritiesonTheStockExchangeofHongKongLimited.TheReport is in full compliancewith the“Complyorexplain”disclosure requirementsandexplained theunapplicabledisclosurerules.

• “Materiality”principle:TheGroupdetermines importantESG issuesby stakeholders’participationand importanceevaluation;

• “Quantitative”principle:TheReportprovidesquantitativekeyperformanceindicatorsintheenvironmentalaspectsoftheGroup;

• “Balance”principle:TheReportpresentedtheGroup’senvironmentalandsocialperformanceinanunbiasedmanner;

• “Consistency”principle:Thedisclosuremethodologyfordisclosingkeyperformanceindicatorsinenvironmentremainsconsistentwiththatofthepreviousyearandthescopeofdisclosureisadjusted.

1. TheoperatingcharacteristicsofShenyangRichGateShoppingMallisdifferentfromthatofCrownPlazaLakeMalaren.Assuch,thekeyperformanceindicatorsintheenvironmentalareaof2018arenotcomparabletothekeyperformanceindicatorsintheenvironmentalareaof2017andtheReportonlydisclosesrelevantdataof2018.



1.3. ESGGovernance

TheGroup established a soundESGmanagement system.Theboardof directors supports the commitmentsmadebytheGroup inperforming enterprise social responsibilities andassumes all responsibilities to the environmental, social andgovernancestrategiesoftheGroupandthereportingofthem.TheBoardregularlyreviewstheGroup’sESGperformanceandapprovestheGroup’sannualESGreport.

TheSeniorManagementisresponsibleforassessinganddeterminingtheGroup’sESGrisktoensurethattheGrouphasinplaceanappropriateandeffectiveESGriskmanagementandinternalcontrolsystemandreportingrisksandopportunitiesassociatedwithESGtotheBoardandprovidesconfirmationoftheeffectivenessoftheESGsystem.

InordertocarryouttheoverallmanagementofESG,theGrouphassetupanESGworkinggroup,comprisingtheassetoperationdepartment,thequalitymanagementdepartment,thecomprehensiveandadministrativedepartment,thecostandcontractdepartment,thefinancialdepartmentaswellasotherdepartments,whichisresponsibleforimplementingtheBoard’sESGstrategiesandpolicies,performingESGmanagementandreportingprogresstotheSeniorManagement.

1.4. StakeholderEngagement

Wealwaysbelievethattheeffectiveinvolvementandcontinuedsupportofthestakeholdersarecrucialtothelong-termsuccessofourGroup.Weactivelyestablishacommunicationmechanismforstakeholderstoexpresstheirviewsandsuggestionsonoursustainableperformanceandfuturedevelopmentstrategies.

ThestakeholdersoftheGroupcomefromawiderangeofparties,includingconsumers,employees,shareholders,suppliers,governmentregulators,non-governmentalorganizationsandlocalcommunities,andtheopinionsandrecommendationsofthestakeholdersarealsowithintheareasinthisReport.

• We strictly complywith the requirements of regulatory and governmental authorities and conduct complianceoperations;

• Westandardizeourcorporategovernance,protectourcorporatereputationandcommunicatewithourshareholdersandinvestorsthroughtheshareholders’generalmeetingandregularfinancialreports;

• We established a communicationplatform through satisfaction surveys, customer service and customer activities tounderstandtheneedsofourcustomersandimprovethequalityofourservices;

• Wecommunicatewithoursuppliersbywayofon-sitecommunicationanddailymeetings,soastocreateanatmosphereofmutualtrustandco-operation;

• Weprovideouremployeeswithagoodworkplace,andlistentotheemployees’viewsthroughstaffsatisfactionsurveys,etc;

• Weadoptenvironmentalfriendlyofficemeasurestoenhancetheefficiencyofourresourcesandprotecttheenvironment;

• Weactivelyparticipateincommunityactivities,promotecommunitydevelopmentandengageinpublicservice.




1.5. MaterialityAssessmentAfterdiscussionwithourmanagement,combinedwiththecommunicationresultsofstakeholdersandtheactualoperation,werecognizedthefollowingmaterialESGandrelatedissuesthathaveamaterialimpactonourGroup,including:

Important Issues:Strict Operation StandardsProtection of Customer ServiceStrict Brand Management

Quali

ty Ser

vices Sta� Care

Social Servi

cesProtectionEnvironmental

Important Issues:Emissions ManagementUtilization of Resources

Related Issue:The Environment and Natural Resources

Important Issues:Protection of Employee RightsOccupational Health and Safety

Related Issue:Provision of Staff Training

Important Issues:Assurance of Compliance OperationsSustainable Supply Chain

Related Issue:Community Benefit



2. Quality services

Qualityproductsandservicesarethefoundationofthelong-termstabilityanddevelopmentofanenterprise.Wealwaysinsistonaproductstrategyofrefiningourproductstomeettheneedsofthemarketandcustomerswithaviewtoofferingprofessionalandpersonalizedservices.

2.1. Strictoperationstandards

TheGroup strictly complieswith relevantnational and industry laws and regulations, including theLawof thePeople’sRepublicofChinaontheprotectionofConsumerRightsandInterests, theUrbanRealEstateAdministrationLawofthePeople’sRepublicofChina,theRegulationsontheAdministrationofUrbanRealEstateDevelopmentandOperationofRealEstate,theRegulationsonQualityControlofConstructionWork,theStandardsonConstructionSafetyInspectionandtheRegulationsontheTechnicalofFireSafetyatConstructionWork.Inordertoimprovethequalitycontrolrequirementsoftheproject,theGroupestablishedthefollowingsystemstostandardizetheconstructionmanagement:

I. GuidelinesonInspectionandOperationofKeyPointsofProjectQuality

II. KeyPointsforQualityControlofConstructionProject

III. AssessmentofProjectWorks

IV. AdministrativeMeasuresfortheConstructionofConstructionFiles

V. ProjectManagementRegulations

VI. GuidelinesonOn-sitemanagement

VII. AdministrationonProjectCompletionandDeliveryManagement

VIII. OperationalGuidelinesforSafetyCivilizationConstructionInspection

Wecontinuetoimproveoursafetymanagementsystem,improvesafetymanagementperformance,requiresafetymanagementobjectivesbesetateachconstructionsite,establishasafetyworkresponsibilitysystem,setsafetyrulesandregulations,andassigndedicatedsafetypersonneltomeettherequirements,andtakeintoaccountsafetymeasuresinthedesignoftheconstructionorganization.Wealsoconductthree-levelsafetyeducationonthesitestaffs,conductannualsafetytrainingonthemanagementstaff,andconductpre-worksafetyrecords,andregularlyinspectspecialworkcertificateandestablishawork-relatedaccidentmanagementrecord.

Werequireprojectcompaniestocarryout,atleastonceamonth,asitesafetyandcivilengineeringinspectionbyaleadingorganizationledbytheprojectmanager,themaincontractorandthepersoninchargeofthesupervisionunit.Theinspectionproject covers all corners of the construction site, including civil construction, construction of elevators, tower hoists,scaffolding,basepits,waterandelectricityinstallation,firesafetyandother78dangeroussources.Wewilllisttheinspectionitemsasalistandreflecttheinspectionresultsonascoringbasis,andthesupervisionunitwillissueasuspensionnoticetothesitewherethescoreisunsatisfactoryuntiltheconstructionunithasbeenrectifiedandpassedtheinspectionbeforeresumingoperation.




Duringtheconstructionprocess,weactivelycarriedoutinspectionoftheconstructionproject,requiredeachprojectcompanytosubmitamonthlyreportontheconstructionworkandahalf-yearlyconstructionreport,strictlymonitoredtheprogressoftheproject,andspecifiedtheimplementationofvariousguidelinesandmanagementmeasurestoensurethequalityoftheconstructionofeachconstructionproject.

Uponcompletionoftheproject,eachprojectcompanywillreporttothegovernmentauthoritiesforcompletioninspectionandacceptance,andthe“completionacceptanceteam”,comprisingthedesignunits,theconstructionmaincontractor,eachconstruction subcontractor and supervisionunit,will be responsible for supervising relevant department for acceptance.Wehaveestablishedstringentacceptancestandards forcompletion inspection.Theguideontheacceptanceofhouses setsregulationsonthecriteriaonthedeliveryofhousesonatotalof99sub-itemsunder43items,includingthepublicspace,theentrancespace,thedecorationandcomponents,doorsandwindows,thekitchenspace,theitemsinthelivingroom,thesanitationandthereadingsofmeters,toguaranteethequalityofhouses.Atthesametime,an“inspectionandacceptanceteam”comprisingpropertycompanies,marketingdepartmentandengineeringdepartment,willexaminevariousbasicconditionspriortothedeliveryoftheprojectinaccordancewiththelocaladministrationrequirementsoftheprojectandtheagreementwiththepropertycompany.Eachprojectisimplementedwithreferencetothecompletionacceptancerequirementsofthelocalconstructiondepartment.

2.2. Customerprotection

WeactivelyprotectthelegalinterestsofourcustomersandwritetherelevantrequirementsintotheCustomerInformationManagementSystem.Werequiretheofficeofalloperationdivisionstodefineaconfidentiallevelforeachreportedcustomer’sinformation.Alldivisions shall follow theconfidential levels andperform the responsibilities to clients’ informationwhenreferringtosuchinformationfromdifferentdivisionsanditshallpassrelevantreviews.Itrequiresalloperationdivisionsnottokeeptheclients’informationinpaperinanyforms.Underparticularcircumstances,itshallprintonlyafterbeingapprovedbytheresponsiblepersonoftheoperationdivision.Forelectronicinformationaboutclients,itshallsetcorrespondingauthorities.Whenothers are founddivulgingormaydivulge clients’ information, the employees shall be obliged toprevent and themanagementshallbeobligedtotakeremedialmeasuresimmediatelytopreventorreducelosses.

TheGolfCoursewonthetitlesof“TopTenGolfClubs”and“TopTenLawnsofGolfClubs”bytheChinaGolfAssociationforitsexcellentlawnqualityandmaintenancetechniquesaswellasitscaringandpersonalizedservicesforconsecutiveyears.

Weconductannualsurveysofsatisfactionofclients,soastobetterservetheclients.

During theReportingPeriod, theGolfCourse conducted adetailed investigation into every aspectof the serviceprocess,collected the customers’ comments and opinions on the service sectors such as fitting rooms, starting stations, driving ranges, trainingranges,tentaclesandpitches,andsubmittedthemtotherespectiveauthoritiesforrectificationaftertheaggregationofthesegment.TheObstetricalandGynecologicalHospitalhassetupaspecialcustomersatisfactionsurveysystemandspecialpoststobetterensurethatcustomers’complaintscanberesolvedimmediately.Subsequently,acommissionerwillbedesignatedtofollowupandconductin-depthinvestigationonthepersonincharge.Thishasgreatlyincreasedtheefficiencyofthefeedbackmechanismandeffectivelyreducedcomplaints.TheObstetricalandGynecologicalHospitalclearlysetsouttheimportanceofcustomerservicethroughthe“CustomerSatisfactionManagementSystem”,throughwhichthepublicityofmaternalandchildeducationandtheprovisionofpre-nataleducationcoursesareconducted,soastocreateagoodenvironmentforthetreatmentandrehabilitationofclientsasfaraspossible.



Case: Golf training camp for the parents and children in the Golf Course

In April 2018, in order to enrich customers’ spare time life and improve service experiencewe conducted training activitiesfor parents and children, and invited customers to participate with their children, tomakeparents and children growtogetherandexperienceawonderfulfamilylife.

Case: Maternal and Infant Knowledge Publicity in The Obstetrical and Gynecological Hospital

In order to facilitate the better delivery of the “expectantmoms”,TheObstetrical andGynecologicalHospitalregularly conducts maternal and child training for guests, includingweightmanagement duringpregnancy,postpartumrehabilitationandnewborntouch,etc.,tocreatea comfortable,warm andhome-likemedical experience forguests.

2.3. Strictbrandmanagement

We adopt a rigorousbrandmanagement andpromotion strategy and strictly complywith relevant laws and regulationsincluding theAdvertisingLawof thePeople’sRepublic ofChina.Wehave established a press release system to regulatethecontentsoftheexternalpromotionalscriptsandmaterialsofeachoperatingentity,andtostandardizethepromotionalmaterials,allpublicitymaterialsmustbesubjecttointernalreviewandapprovalbeforetheycanbereleased.Wewillregulatethisprocessinthenoticeonstrengtheningtherelevantworkofbrandmanagement.

Meanwhile,tostrengthentheprotectionofcommercialsecretsoftheGroup,raisetheconfidentialityawarenessofemployeesandprotectthebenefitsandcommercialsecretsoftheCompany,theGroupformulatedtheMeasuresonConfidentialityofSREGroupaccordingtotheAnti-UnfairCompetitionLawofthePeople’sRepublicofChinaandotherrelevantlawsandregulations,whichrequiresemployeestosigntheconfidentialagreementtounderstandtheconfidentialcontents,therightsandobligations,theperiodoftheagreementandtheresponsibilitiesonbreachingthecontractwhensigningtheemploymentcontractwiththeCompany.




3. Caring for Employees

Basedonthefirmhumanresourcesinfrastructureandteamsmanagement,theGroupfollowstheguidanceofsystemimprovementandculturalconstruction,systematicallybalancethecommondevelopmentwishesoftheCompanyandthestaffandguidethestaffactivelyintegratingpersonalpursuitsintothelong-termdevelopmentoftheenterprisetobuildasimple,transparent,sunshineandactiveworkingatmosphere.TheGroupimprovesthesatisfactionandsenseofbelongingofthestaffthroughcontinuousimprovementoftheperformanceappraisalandremunerationandwelfaresystemsandtheimprovementoftheworkingenvironmentaswellasdiversifiedstaffactivities.

3.1. Employment

AccordingtotherequirementsoftheLabourLawofthePeople’sRepublicofChina,theLaborContractLawofthePeople’sRepublicofChinaandotherlawsandregulations,wehaveestablishedthefollowingsystems:

I. MeasuresontheRecruitmentofSREGroupLimited

II. DismissalProcessofEmployeesofSREGroup

III. MeasuresonAttendanceandHolidaysofSREGroupLimited

IV. MeasuresonPerformanceAssessmentofStaffofSREGroup

V. MeasuresonPositionsandLevelsofSREGroup

VI. RemunerationSystemofSREGroup

tostandardizethemanagementoftheemploymentofemployeesandsafeguardtherightsandinterestsofemployees.Weplacegreatemphasisoncommunicationandcommunicationwithourstaffandencouragethemtoexpresstheirviewsfreely.

➢ Recruitment, promotion and dismissal

The recruitment shall be open, fair and impartial.Themembers of the recruitment group shall be objective andimpartialandshallnothavediscriminationsorprejudicesagainsttheinterviewees.Followingtheprinciplesofadvanceplanning,widehuntingandstrictenrollment,matchingthestaffwiththepositionaswellasfairnessandtransparency,itimplementsarecruitmentprocesswiththeorientationofhumanresources,attracttalentsthroughawiderangeofrecruitmentchannels,unifyingthequalityofthetalents.Wesetthe“HuntforTalentPrize”toencouragethestafftorecommendpeersortalentswithpartnershipexperiences.Wealsoestablishedatalentpool.Thematerialsabouttheapprovalon the recruitmentareclassifiedbasedon theyear,profession,departmentandother indexesand filed formanagement.Theresumesofthosenotrecruitedareadoptedintothetalentpool.

Basedonthecurrentconditionsofoperationandmanagementandkeydemandsforstrategicdevelopment,wesettheposition order as management and professional technology order, converting our staff from a single management channel todual-trackcareerdevelopmentpathsformanagementandprofessionalandtechnicalpersonnel.

WehaveformulatedacompleteDismissalProcesssothattheinterestsoftheemployeesandtheCompanywillnotbeinfringed.



➢ Remuneration management

Weformulatedastandardremunerationsystem,whichcomposesthetotalcashremunerationandthemedium-andlong-termincentives.TheGroupfollowstheprinciplesof“twoequalities”and“threematchings”.The“twoequalities”refertointernalequalityandexternalequality.The“threematchings”refertothattheindividualremunerationmatchestherelativevalueoftheposition,theindividualremunerationmatchestheability,performanceandpotentialandthetotalremunerationmatchesthebenefitsoftheGroup.

➢ KPI management

Inourperformanceevaluation,weadheredtotheprincipleof“fairness,objectivityandfairness,opencommunicationand compulsory distribution”. In accordancewith the established rules,we assessed the decision-making ability,leadership,accountabilityandsteadyandinnovationawarenessofouremployeesinafairandopenmanner,andactivelypromoted the improvement of the performance of the Group and performance of our employees, so as to drive the Group toachieveitsstrategicobjectives.

In2018,we increased theweightingof the functionof cost and thehuman resources and adjusted themandatorydistributionratioandperformanceratioattheperformancelevel,sothattheperformancemanagementsystemcouldfurtherservetheenterprise.

➢ Working hours and holidays

Weadoptastandardworkinghoursystem.Whenthestaffhastoworkovertimeforworkingdemands,suchstaffshallapplytotheresponsiblepersonofthedepartmentandfillintheApprovalforWorkingOvertimeforStaff.Itwillcomeintoeffectafterbeingsignedandapprovedbytheresponsiblepersonofthedepartment.ThestaffoftheGroupenjoysstatutoryholidays.ThespecificprovisionswillbeadjustedaccordingtorelevantlawsandpoliciesofthestateortheplacewheretheCompanyislocated.Theholidaysincludestatutoryholidays,maritalleaves,maternityleaves,breastfeedingleaves,sickleaves,medicaltreatmentleaves,funeralleaves,work-relatedinjuriesleavesandannualpaidleaves.

➢ Diversification

Weupholdtheprincipleofequalemployment,andalldepartments,organizationsandindividualsstrictlycomplywithvarious laws and regulations of the country and local governments, anddonot discriminate against any individualemployees at all stages of recruitment, labor, salary, training, promotion and compensationdue to their personalcharacteristicssuchasrace,gender,skincolor,age,familybackground,nationaltraditions,religion,bodyqualitiesandoriginalnationality.

➢ Other treatment and welfare

Besidesstatutoryholidays,annualpaidleavesandothersocialinsurancesandthehousingprovidentfund,theGroupalsoprovidesthestaffwithannualcheck-ups,heatstrokepreventionsubsidies,mealssubsidies,transportationsubsidies,communicationsubsidies,birthdaywelfareandotherwelfareforthestaff.TheGroupactivelyorganizestheemployeesto carry out various athletic competitions for their mental and physical health and encourages the employees to actively participateinphysicalfitnessactivities.




Case: Staff Fun Golf Game

In August 2018, the Golf Course staff fun game is in fullswingattheMastersCourse.Staffandmanagementconductedatwo-dayfuncompetitionandselectedtheall-aroundchampion,thefurthestdistanceaward,thenearestholeawardandotherawards.

3.2. HealthandSafety

Weprovideemployeeswithasafe,healthyandenvironmentallyfriendlyworkingenvironmentandprovidethemwithrelevanteducationandtrainingtocultivatetheirhealth,safetyandenvironmentalawareness.

WeabidesbyLawonthePreventionandControlofOccupationalDiseasesofthePeople’sRepublicofChinaandotherlawsandregulationsonhealthandsafety.IntheEmployeeManual, theGrouprequirestheemployeesto implementrulesandregulationsonsafeproductioncarefully,performtheirownsafetydutiesinapracticalway,followmanagementandcooperateincompletingsafetyinspection.Theyshallhavetheobligationtoprohibitothers’unsafebehaviorsandreporthiddendangers.Theemployeesshallhavetherighttorefusecommandsagainstrulesonsafetyproduction.

Weidentifypossiblerisksonthehealthandsafetyoftheemployeesundertheofficeenvironment,suchasfirehazard,accidentalinjuryandelevatorfaults.Wetaketargetedsolutions,strengthenthetrainingandeducationonemployeesandoffersregularphysicalexaminationforemployees.WeformulatedtheemergencyproceduresforpersonalinjuriesandRescuePlaninFireEmergency,takesscientificfirstaidmeasuresforwoundedpersonneltoprotectthephysicalhealthofemployees.Totestthefeasibilityoftherescueplan,wecarriedouttrainingforeachrescueteamsothatitcouldbereadyinatimelymannerinanemergencyandensurethesafetyofpersonnelandsignificantmaterialsduringtherescueprocess.

ToavoiddamagestocustomerscausedbylightningincidentsattheGolfCourseandimplementtheprincipleof“safetyenjoystoppriority”,itrequiresallemployeesoftheCompanytounderstandthespecificoperationprocessesofthelightningwarning.ThetwolightningwarningequipmentontheGolfCoursedividesthelightningforecastintothreelevelswithalarms.Additionallightningrodshavealsobeenbuiltupinthesouthernandnortherncourses.TheGrouphasalsoestablishedoperationprocessforwarningsatalllevelsatthecourse.

TheObstetricsandGynecologyHospitalalsoestablishedemergencyresponseplansforeachriskpointinitsoperations,andregularlyconductssafetytrainingforemployees,includingself-cleaning,emergencyresponseplaneducation,andfireprotectionknowledgeeducation.



Case: Golf Course Heatstroke Prevention Training

Prior to the approachof summer, due to the operationalcharacteristics of the Golf Course, in order to safeguard the healthofouremployeesatworkandtopreventaccidents,wearrangedfirst-aidtrainingforallourheadsofdepartmentsandoutdoor staff in the prevention of heat cooling and cardiac pulmonaryresuscitation.Allstaffoftheoutdoordepartmentareinvolved.

3.3. DevelopmentandTraining

Wecreateanequalandfairworkingenvironmentforemployees.Forthefosteringandselectionoftalents,weconsistentlyimprovetheoverallqualityoftheteamthroughconsistenttrainingonemployeesandinspiringthepotentialofemployees.Weconsistentlyimprovetheconstructionoftalentteamstomaintaintheleadingadvantagesinlaborperformanceandthecomprehensivebenefitsofhumanresourcesand fullyguaranteeandpromote theachievementof the strategicgoalsof theCompany.

Inordertofacilitatenewemployees’understandingoftheworkingprocessoftheirpositionsandhelpthemworkinrolerapidlyandundertakeworkingtasks,weformulatedtheMeasuresontheTrainingofNewEmployeestostandardizethetrainingofnewemployees.Weintroducealltherelevantpoliciestonewemployees,demonstratethecorporatecultureandlong-termplans,increaseemployees’confidenceinwork,helpthemunderstandthedevelopmentpathandsetthetargetsforoccupationaldevelopmentbyprovidingahigh-qualitytrainingproject.Meanwhile,theGrouplaysstressontheoveralldevelopmentofitsemployeesbyactivelyorganizingstafftrainingforqualitydevelopment.

Case: Internal Training of “New Logic in the Real Estate Industry after the 19th National Congress”

InJanuary2018,theseventhphaseofthe“SREGathering”of the SREGroup (the first issue of 2018) “TheNewLogic of theRealEstate Industry after the 19thNationalCongress”wasofficiallyopened,atotalof20colleaguesfromtheheadquarter, the business units andChinaMinshengBund,thebrotherunits,oftheSREGroupparticipatedintheinternalsharingtraining.




Weprovideinternalandexternaltrainingtoouremployeesonvariousvocationalskills,andwehavedevelopeddifferentinternaltrainingseries,including“SREGathering”,“CorporateCultureTraining”and“SREPlan”,basedondifferentfocuspoints:

• SREGathering:Combine industry trends to share the frontier dynamics of the real estate industry and enhanceemployees’sensitivity;

• CorporateCultureTraining:Strengthenemotionalties,optimizeworkingatmosphere,andstrengthenemployee’ssenseofbelongingthroughcorporatecultureconstruction;

• SREPlan:Improveprofessionalcompetencethroughgeneraltrainingsuchasworkplaceetiquetteandtimemanagement.

EachdepartmentoftheGroupalsoorganizesitsownspecialtrainingandinternalsharingactivitiestohelpemployeesimprovetheirprofessionalqualityandstrengthentheirprofessionalcapabilities.IncombinationwiththeGroup’sbusiness,wehavealsoorganizedstaffandleadershiptoparticipateinexternaltraining,improvemanagementcapabilities,andenableemployeestoaccessthelatestindustrytrends.Inaddition,weactivelyorganizeemployeeactivitiestoenhancecorporatecohesion.

Case: Hui-Hang Road staff activities

Facedwith the opportunities and challenges in business in2018,we carried out the quality development of “BeyondSelf, Fighting 2018” for staffs, aiming to furthermotivateemployees’workenthusiasm,enhancetheirconvictions,rallypeople’s hearts, and strengthen corporate culture and team building.

Case: The Obstetrics and Gynecology Hospital Business Training

The clinics ofTheObstetrics andGynecologyHospitalregularly carry out business training, and comprehensivelyenhance the business ability ofmedical staff through theimplementationof the “service concept” and “medicalbehaviornorms”andothergeneral-levelcoursesatthehospitallevel. In addition, theObstetrics andGynecologyHospitalregularly conducts simulated disease emergency drills to strengthen the emergency response capacity of medical staff andimproveservicelevel.



3.4. LaborStandards

TheGroupstrictlyabidesbytheRegulationonProvisionontheProhibitionofUsingChildLaborandRegulationsoftheStateCouncilonemployee’sworkinghoursandotherrelevantlawsandregulations.TheGroupresolutelyeliminateschildlaborsandforcedlabors.Inordertofurtherstrengthenrelevantwork,theGroupappointsthird-partycompaniestoconductbackgroundsurveysoneveryemployeeandpreparereportsforfilingtopreventacademicandagefraudandfurthereliminatetheemploymentofchildlabors.

Weestablishedthestandardworkingtimeandtheapplicationforworkingovertimetopreventbreachinglaborstandards.WealsomadefurtherprovisionsintheMeasuresonAttendanceandHolidaysofSREGroupLimitedtosafeguardtheinterestsofemployeesinapracticalway.

4. Serving the Society

TheGrouprequiresitselftoshouldersocialresponsibilitiestobeassumedasalistedcompanyandrequiresallemployeestofulfillthecommitmenttoclients,closelyconnectingcapitalaggregationoftheCompanywithsocialvalueaccumulation,prosperityoftheCompanywithprosperityofthestate.Itemphasizestheimprovementofitsvalueinthesocietyasawholeandreturnsthesocietythroughactivelyparticipatinginpublicwelfareundertakingstomakepositivecontributionstotheprogressofthecountryandtheharmonyofthesociety.

4.1. CompliantOperation

Weabideby theGroupLawof thePeople’sRepublicofChina, theBiddingLawof thePeople’sRepublicofChina, theRegulationontheManagementofConstruction,TenderingandBidingofProjectConstruction,theAnti-UnfairCompetitionLawof thePeople’sRepublic ofChina, the InterimProvisions onProhibitingCommercialBriberies, theAnti-MoneyLaunderingLawofthePeople’sRepublicofChinaandotherlawsandregulationsandactivelycallsforandrequiresleadersatalllevelsandemployeesconsciouslykeepingthepersonconductoflaw-abiding,integrity,honesty,self-disciplinedanddedication.It established a complete anticorruptionmechanism through ideological education, institutional prevention andbehaviorrestriction.

In order tomaintain thenormal production andoperation order, promote allwork in anorderlyway and improve theinspectionandreportingwork,theGroupformulatedtheSystemontheManagementofInspectionandReportingofSREGroup,NoticeonStrengtheningtheCompany’sIntegrityManagement,providingthatallstaffoftheGroupandcompaniesandpersonswithbusiness relationshipwith theGroup canuse the special email theGroup for inspection and reporting,toreportallproblemsaffectingthenormaloperationof theGroup.TheGroupmonitors thebehaviorsof theGroupanditssubsidiariesandcompaniesitinvestedinviolationoflawsandregulationsofthestateandrelevantmanagementsystemsoftheCompanyaswellasbehaviorsjeopardizingthenormalbenefitsoftheCompany,thosesuchkeyprocessesasbiddingand tendering, procurement of materials, financial capitals management, significant investment management, selection and appointment of employees, project visasmanagement, commercial operationmanagement, relocationmanagement andmarketingmanagementinparticular.

TheGrouprequiresall staff to signtheIntegrityAgreement to improve theprofessionalqualityandprofessionalethicsofthestaffandpreventoperationandethicalrisks.Meanwhile,toimplementrelevantlawsandregulationsonanti-commercialbriberies,safeguardfaircompetitionandthelegitimateinterestsofpartiesinvolvedandpreventinequitableconducts,theGroupincludesthePerformanceGuaranteeandtheIntegrityAgreementintothebiddingdocumentsandrequiresPartyAandPartyBtojointlyabidebyintegritycommitments.

In2018, theGroup issued the “Code ofConduct for the Integrity of SREGroupLimited”,whichput forward relevantrequirements for employees’ external communication,dailywork and ethics, strengthened the integrity educationof theGroup’semployees,formedaloyal,pragmatic,honestandefficientworkingstyle.




4.2. Partnership

Wecontinuouslyprovideproductsandserviceswithhighcostperformanceandqualityinthemarket.Itconsistentlyadherestotheconceptofproductresponsibilityforsustainabilityandconductsfullcooperationwithsuppliers.Throughthemeticulousmanagement and control of the full value chains in property development, it creates value for clients through client services in thedesign,construction,promotionandeventhewholeprocess.

Westandardizeourtenderprocurementproceduresbyadoptingthefollowingsystems:

I. DetailsontheOperationofInvitedBiddingofSREGroup

II. MeasuresonBiddingandProcurementofSREGroup

III. DetailsontheOperationofEasyBidding

IV. ProcurementManagementandSupervisionSystemoftheLakeMalarenAssetsPackage

V. GuidelinesfortheManagementofSupplieroftheSREGroupandtheAttachmentsthereto

VI. SREGroupCostManagementMethod

Westandardizedthetenderprocess,clearlyspecifiedthedivisionofresponsibilitiesandresponsibilitiesforinvitingtenders,andformulated a series of model tendering procedures, and assessed the common form and tender evaluation criteria in accordance withthetypesofconstruction,supplyandinstallation,equipmentsupply,supervisionanddesign.WeactivelycontrolledthesupplychainandincludedtheSafetyResponsibilityAgreementinthetenderdocuments,theperformancebondandtheclean-upagreements,andprovideconstructionsubcontractorswithenvironmental,healthandsafety(EHS)requirements,soastodeepenandinstilltheconceptofsustainabledevelopmentofsafetyandenvironmentalprotectionintoallbusinesssegments.

Inorder toregulate theprocurementorganizationsandresponsibilitiesof theLakeMalarenAssetsPackageandclarify theresponsibilitiesoftheprocurementpersonnel,newrenovationprojectsoffixedassets, low-valueconsumables,materials foritems,rawmaterials,etc.willbemanagedinacentralizedmanner,andaself-ownedsupplierbaseisintendedtoestablish,withaviewtofurtherstrengtheningthemanagementandrestrictionoftheenvironmentalandsocialrisksthesuppliersarefacedwith.

Wemaintainagoodcommunicationwithoursuppliersandlistentotheirvoices,formingaharmoniousandgoodcooperativerelationship.Wesetupadedicatedemailaddressforsupplierstocommunicateandreportcomplaints,anddesignatepersontoconductregularcheckandtrackresponses.

In2018,wehavestandardizedthemanagementofoursuppliersthroughouttheirentirelifecycle,includingaccesstotreasury,registermanagementandperformanceassessment,andstrengthenedthemanagementofpowermanagementandresponsibilityforcostmanagementandprocurementcontractpositions.



4.3. CommunityInvestment

TheGroupformulatesMeasuresonCharitable&PublicWelfareActivitiesofSREGrouptostandardizethecharitableandpublicwelfareactivities.BasedontherelationsbetweenbusinessactivitiesoftheCompanyandcommunityinterestsdeterminedbyregularappraisalandincombinationwithitsbusinesscharacteristics,theGroupprovidesvariouspublicwelfareactivitieswithbrandcharacteristicsindiversifiedformstopromotesocialdevelopmentandprogressinmanywaysandfulfillduesocialresponsibilitiesofanenterprisecitizen.

Case: Shenyang Rich Gate Shopping Mall “Cool Heroes Supply Station”

Shenyang Rich Gate Shopping Mall is committed to launching a love refrigeratorwithbuilt-in summerdrinks.Trafficpolice,sanitationworkers,couriers,fooddeliverystaffandothermunicipalworkerscantakeitwiththemselves,andsendacoolmessagetotheworkerswhoholdthejob.Sendingacaringandhardworktothosewhoareactivelycontributingtothecity.

Case: Traditional Chinese Medicine Doctors in The Obstetrics and Gynecology Hospital

In order to better fulfill corporate social responsibility, theObstetrics andGynecologyHospital regularly organizes“TraditionalChineseMedicineClinics” activities, andprovides free clinics for residents in the surrounding communities, and special lectures to popularizehealthknowledge.




5. Environmental Protection

We pay close attention to the impact of corporate operations on the environment, seriously implement our environmental protection management system and measures, and strive to enhance our resources and energy efficiency and fulfill our environmental responsibilitiesasacorporatecitizen.Wealwaysfollowtheprinciplesofbeingresponsiblefornaturalenvironmentandadjustingmeasures to local conditionswithmeticulousdesign.Wealso integrate land-saving, energy saving,water-saving,material-saving,interiorenvironmentaltechnologies,greenconstructionandoperationmanagementwiththepositioningofprojectstostrivetoreducetheeffectsoftheoperationactivitiesontheenvironment.

Inthecourseofouroperations,westrictlycomplywiththefollowinglawsandregulations,andwewilladheretotheattitudeofbeingresponsiblefortheenvironmentineverydetailofourdailyoperations:

I. theEnvironmentalProtectionLawofthePeople’sRepublicofChina

II. theEnergyConservationLawofthePeople’sRepublicofChina

III. theLawofthePeople’sRepublicofChinaonthePreventionandControlofAtmosphericPollution

IV. theLawofthePeople’sRepublicofChinaonthePreventionandControlofEnvironmentalPollutionbySolidWaste

V. theLawofthePeople’sRepublicofChinaonthePreventionandControlofWaterPollution

VI. TheLawofthePeople’sRepublicofChinaonPreventionandControlofPollutionfromEnvironmentalNoise

5.1. Emissions

➢ Waste Water,Gas Emission and Noise

WesetrequirementsonemissionsonthegeneralcontractorofconstructionintheMeasuresontheAssessmentofProjectManagementtopreventenvironmentalpollutionfromthesource.Wealsoadoptedrequirementsonthecontrolofdusts,noisesandwaterpollutiononthefieldintheGuidelineonSafeandCivilizedConstructionandInspection.

The emissionofwaste gas by theGroup ismainly from fuel combustion in the constructionof buildings and theoperationofproperties, theemissionofdusts fromtheconstructionandtheemissionofkitchenfumes.TheGroupadoptsvariousmeasurestopreventandcontroltheemissionofwastegas.Forexample,theGolfClubinstalledfumespurification equipment basedon the operation size. Fumes are emitted through the special smoke channel at highaltitudes.

ThedischargeofwastewaterbytheGroupismainlyfromindustrialwastewateranddomesticwastewaterfromtheoperationofproperties.TheGroupstrictlyabidesbytheLawofthePeople’sRepublicofChinaonthePreventionandControlofWaterPollutionandadoptscorrespondingcontrolandpreventionmeasuresonwastewater.TheGolfCourseadoptedseparatesystemsforthedischargingofrainwaterandwastewater.Thewastewaterwithoilfromkitchenswillbehandledbyoilseparatorsoroil-waterseparatorstomeettheStandardontheQualityofWatertobeDischargedintoUrbanSewersbeforeemission.TheObstetricsandGynecologyHospitalconductsspecialmonitoringonvariousindicatorsofwastewaterdischargeandissuesmonthlymonitoringreportstopreventexcessivedischargeofwastewater.



DetailsofthewastewaterdischargedbytheGroupduringthereportingperiodaresetoutinthetablebelow.

Indicator Emission Volume Unit

Wastewater 157,165.40 Tonne

COD1 12.07 Tonne

N-NH31 0.99 Tonne

Residual chlorine1 0.06 Tonne

Note:

1. AlldomesticwastewaterarisingfromtheoperationofShenyangRichGateShoppingMallaredischargedtothemunicipalpipe

network.Asaresult,wecannotmonitoritsemissionvolumeofCOD,N-NH3andresidualchlorine.Toensuretheaccuracyof

data,thethreeindicatorsofCOD,N-NH3andresidualchlorineonlycoverGolfCoursesandTheObstetricsandGynecology

Hospital.

➢ Greenhouse gas

The emissionof greenhouse gases by theGroup ismainly the greenhouse gases direct emissions causedby theconsumptionoffuelsandthegreenhousegasenergyindirectgasemissionscausedbytheconsumptionofelectricityintheconstructionandoperation.TheGroupadoptedvariousactivemeasurestopromotegreenproductionandstrengthenenergysavingandemissionreductiontoreducetheemissionofgreenhousegasesbytheGroup.

DetailsofthegreenhousegasemissionsoftheGroupduringthereportingperiodaresetoutinthetablebelow.

Indicator 1 Emission Volume Unit

Scope 1: Greenhouse gas direct emissions 793.55 tCO2e

Scope 2: Greenhouse gas energy

indirect emissions 19,149.97 tCO2e

Total greenhouse gas emissions 19,943.52 tCO2e

Greenhouse gasemissions intensity 112.52 tCO2e/revenueofRMB1million

Note:

1. Greenhousegas(GHG)ismeasuredintermsofcarbondioxideandiscalculatedinaccordancewiththeNationalDevelopment

andReformCommission’sGuidelines on theMeasures andReporting ofConvertibleGasEmissions byChinaChemical

ProductionEnterprises.




➢ Wastes

ThedischargeofsolidwastesbytheGroupmainlyincludesnon-hazardouswastesuchasearthworkandconstructionwaste fromtheconstructionanddomesticwastes,kitchenwastes, andhazardouswaste fromGolfCoursesandTheObstetricsandGynecologyHospital.Forthewastecausedbytheconstructionprocess,werequirethegeneralcontractorto strictly complywith the laws and regulations of the state and industry for compliance disposal, and incorporatethe garbage cleanup as an assessment item for safe and civilized constructionmanagement into the “EngineeringManagementAssessmentMeasures”,requiringtheconstructionunittocleanupconstructionwasteinatimelymanner.We collectwastes and entrust themwith relevant qualified units designated by the city’s environmental sanitationdepartment.

BothGolfCoursesandTheObstetricsandGynecologyHospitalestablishedahazardouswastemanagementprocess.TheGolfCourseidentifiesthewastegeneratedaccordingtothe“HazardousWasteList”andentrustshazardouswastessuchasusedpesticidebottlestoqualifiedunitsforrecycling.TheObstetricalandGynecologicalHospitalhasformulatedastrictsystemfortreatmentofmedicalwastes,andhasdevelopedaseriesof“systemsforthemanagementofmedicalwastes”.Strictrequirementshavebeenputinplaceinrespectofeachstepoftheprocess,includingregistration,collection,handingover,transferring,storing,andhandingovertoqualifiedthirdpartiesforprocessing.Inaddition,thehospitalhasalsoestablishedtheResponsibilitiesoftheResponsiblePersonoftheDepartmentforMedicalWastes,RequirementonRewardsandPunishmentsforManagementofMedicalWastesintheHospital,aswellasthePrescribedPlanfortheOccurrenceofLossofMedicalWastesintheHospital,thusdevelopingacomprehensivesystemforthemanagementofmedicalwaste.

Detailsofthehazardouswastesandnon-hazardouswastesdischargedbytheGroupduringthereportingperiodaresetoutinthetablebelow.

Indicator Emission Volume Unit

Medicalwastes 6.99 Tonne

Waste and discarded pesticide bottles 0.30 Tonne

Total hazardous wastes 7.29 Tonne

Total hazardouswaste intensity 0.04 Tonne/revenue of RMB1 million

Domesticwastes 2,526.60 Tonne

Kitchenoilandgrease 0.60 Tonne

Kitchenwastes 21.60 Tonne

Total non-hazardous wastes 2,548.80 Tonne

Total non-hazardouswastes intensity 14.38 Tonne/revenue of RMB1 million



5.2. UseofResources

TheGroupstrictlyabidesbytheEnergyConservationLawofthePeople’sRepublicofChinaandotherrelevantlawsandregulationsandimplementstheresponsibilitiestotheenvironmentinalldetailsinroutineoperationtoenhancethesavingawarenessofemployeesandpopularizetheawarenessongreenoperationinapracticalway.Itrequiresallstaffparticipatinginwater-saving,electricitysavingandenergy-savingworktoensurethateveryoneisresponsibleforsavingandmakestheirowncontributions.

Themainenergyconsumptionof theGroup iselectricityconsumption in theconstructionandoperationwhile thewaterconsumptionismainlythedomesticwaterintheconstructionandoperation.ExceptsomewaterusedbyGolfCoursefromsurfacewater,thewaterweusedcomefrommunicipalwaterandtherearenoissueinsourcingwater.Inordertoimplementthescientificoutlookondevelopmentandstrengthenenergy-savingmanagementinapracticalwayandpromotetheestablishmentofgreenindustrialchains,theGroupactivelymonitorstheenergyandwatersavingintheconstructionprocessofthegeneralcontractorandprojectcompaniesandadopteditintheMeasuresontheAssessmentofProjectManagement.

GolfcoursesandTheObstetricalandGynecologicalHospitalalsostrengthenthemonitoringofenergyconsumptionintheirownoperations.

• TheGolfCoursehasformulatedthe“EnergyManagementSystem”toregulatetheuseofgreenwater,andpromotedsprinklingirrigation,microirrigation,trickleirrigationandotherwater-savingirrigationmethods,andconductregularobservableanalysisofthewaterusage;

• TheObstetricalandGynecologicalHospitalhasformulatedthe“Water-savingManagementSystemfortheHospital”,“Electricity-savingSafetyManagementSystemfortheHospital”and“EnvironmentalSanitationManagementSystemfortheHospital”,whichencouragealldepartmentstoadvocatewaterconservation,electricityconservationandrationaluseofresources.

Inaddition,weareactivelycreatinggreenofficespacesandadoptinggreenofficemeasures,including:

• Saveelectricityconsumptiononofficeequipmentandsettheenergy-savingmodelwhentheyarenot inuse.Newlypurchasedelectricequipmentmustmeetthestipulatedenergylabelsandturnoffelectricequipmentduringnon-workinghours;

• Savewater in bathrooms: strengthen routinemaintenance andmanagement ofwater equipment andpreventwaterrunningforlongtime;

• Encourage employees to conduct e-offices, choose telephone and email communicationmethods, and encourageemployeestousevideoconferencingsystemstoreduceunnecessarytravelandreducevehicleemissions;

• Standardizetheprocurementofofficeproducts,approveandissueprocess,controlthequantityofofficeproductsissued,encouragerecycleduse,andestablishthesystemforwastepapercollection.

In2018,wecarriedouttheofficialcarreforminaccordancewiththerequirementsofthe“WorkplaceManagementMeasuresofSREGroup”,“NoticeonFurtherImprovingIncomeandSavings”,andusedquotasubsidiestoencourageemployeestousepublictransportation.Auctionapartofhigh-displacementoldofficialvehicles,arrangeworkreasonably,minimizetheuseofmotorvehicles,andreducegreenhousegasemissions.




DetailsofconsumptionofresourcesoftheGroupduringthereportingperiodaresetoutinthetablebelow.

Energy 1 Indicator Emission Volume Unit

Direct energy

Gasoline 367.57 MWh

Diesel 186.23 MWh

Naturalgas 3,276.10 MWh

Total direct energy consumption 3,829.89 MWh

Indirect energyElectricity 9,951.31 MWh

Thermal 29,815.18 MWh

Total indirect energy consumption 39,766.49 MWh

Total energy consumption 43,596.38 MWh

Energy consumption intensity 245.97MWh/revenue of RMB1

million

Water consumption 562,038.00 Tonne

Water consumption intensity 3,171.04Tonne/revenue of RMB1

million

Notes:

1. Thetotalenergyconsumptioniscalculatedbasedontheamountofelectricitypurchased,naturalgasconsumption,dieselconsumption,

gasconsumptionand thedefaultvaluesof fossil fuel relatedparameters inAppendix1of the“Guidelines for theAccountingand

ReportingofGreenhouseGasEmissionsofPublicBuildingOperatingEnterprises”issuedbytheNationalDevelopmentandReform

CommissionandthedefaultvalueofAppendix2fueldensity.

2. KeyPerformanceIndicatorsA2.5,Theconsumptionofpackagingmaterialsusedinfinishedproductsandtheamountofproduction

perunitofarenotapplicabletotheGroupandarethereforenotdisclosedinthereport.



5.3. TheEnvironmentandNaturalResources

TheGolfCourseusepesticidesandfertilizersinitsroutineoperation.Toprotectthebiodiversitysurroundingtheareaandpreventtheeffectsontheenvironmentandnaturalresources,theGolfCoursesstrivetominimizeissuesonenvironmentalprotectionandhasformulatedaseriesofmanagementmeasures,including:

• Environment-friendlypesticidesshallbeadopted;

• Strictlycontroltheissuingandcollectionofpesticidesandfertilizers;

• Storethebottlesandbagsforpesticidesindifferentcategoriesanddeliverthemtoprofessionalagenciesforhandling;

• Regularlycollectwaterandsoilsamplesfromthecourseanddeliverthemtoprofessionalinspectiondepartmentsfortestingandhandleproblemsintimeafterbeingfound,andapplythesameasscientificreferenceforrationalfertilizinginthecomingyear;

• Strengthenthepublicityandpromotionofenvironmentalprotectionandraisetheenvironmentalprotectionawarenessofthestaff.


Directors and Senior Management


Directors

ExecutiveDirectors

Mr.PengXinkuang,aged43,wasappointedasanExecutiveDirectorandtheChiefExecutiveOfficeroftheGroupon4December2015.HewasalsoamemberoftheInvestmentCommitteeoftheCompany.Mr.Penghadbeenre-designatedastheChairmanoftheBoard,thechairmanoftheInvestmentCommitteeoftheCompanyandappointedasthechairmanoftheNominationCommitteeoftheCompany,andceasedtobetheChiefExecutiveOfficeroftheGroupon24October2017.Mr.PengiscurrentlyachairmanoftheboardofChinaMinsheng Jiaye InvestmentCo.,Ltd..Mr.Penghas extensive experience in the real estatedevelopment fields, includingprimary landdevelopment,regioncomprehensivedevelopment,newurbanizationconstructionetc.Mr.PengobtainedanexecutivemasterofbusinessadministrationdegreeatCentralSouthUniversity,andisnowpursuingadoctor’sdegreeinfinancebusinessadministrationfromShanghaiAdvancedInstituteofFinance,ShanghaiJiaoTongUniversity.Mr.Penghadheldvariouspositionsinthepast,includingthepositionsasthechairmanofMeixiLakeInvestment(Changsha)Co.,Ltd.(梅溪湖投資（長沙）有限公司),anexecutivedirectorandthegeneralmanagerofChangshaMeixiLakeIndustrialCo.,Ltd.(長沙梅溪湖實業有限公司)andthechairmanofChangshaPilotPublicUtilitiesCompany(長沙先導公共設施公司).Also,Mr.Penghasalsobeentheperson-in-chargeoftheplanningandconstructiondepartmentofgovernment.HeisalsoadirectororgeneralmanagerofothermembersoftheGroup.

Mr.LiuFeng, aged50,was appointed as anExecutiveDirector and theChiefExecutiveOfficer of theGroup and amember of theInvestmentCommitteeoftheCompanyon24October2017.Mr.LiugraduatedfromFudanUniversitywithabachelor’sdegreeinlawsin1992andamaster’sdegreeinlawsfromFudanUniversityin1997.In2003,heearnedamaster’sdegreeinlawsfromtheUniversityofConnecticut.Mr.Liuhasextensiveexperienceinrealestateinvestmentanddevelopment.Hehasparticipatedinthedevelopmentandmanagementofprojects suchasHiltonSanyaYalongBayResort&SpaandTheRitz-CarltonSanyaYalongBayprojects,Yazhouwanproject,YunnanLijiangproject,ShanghaiNorthBundprojectetc.Mr.LiujoinedChinaJinMaoGroupCo.,Ltd.(nowknownasJinmao(China)HotelInvestmentsandManagementLimited,acompanylistedontheStockExchange,stockcode:06139)inJuly2000,andhadheldanumberofpositionsincludingsecretarytothepresidentoffice,deputygeneralmanageroftheinvestmentmanagementdepartment,generalmanageroftheoperationalmanagementdepartment,chiefoperationofficer,vice-president.Duringsuchperiod,Mr.Liualsoservedastheowner’srepresentativeofHiltonSanyaYalongBayResort&Spa,TheRitz-CarltonSanyaYalongBay,JWMarriottHotelShenzhenandTheWestinBeijingChaoyang,etc.Mr.LiuhasbeenthegeneralmanagerofSanyaYazhouwanEconomicDevelopmentCo.,Ltd.ofChinaJinmaoHoldingsGroupLimited(acompanylistedontheStockExchange,stockcode:0817)sinceMay2012.HehasactedasthecommitteememberofCommunistPartyofChinaandvice-presidentandseniorvice-presidentofChinaJinmaoHoldingsGroupLimitedsinceAugust2013.Heisalsoadirectorofothermember(s)oftheGroup.

Mr.ChenDonghui, aged45,was appointed as anExecutiveDirector on6 June2016.Mr.Chenholds a doctorate degree from theaccountingfacultyofRenminUniversityofChina.Mr.CheniscurrentlythepresidentofChinaMinshengJiayeInvestmentCo.,Ltd..Mr.ChenhadservedasasupervisorandavicesupervisorofthestrategicresearchofficeoftheR&DcenterofThePeople’sInsuranceCompanyofChinaLimited,adeputygeneralmanagerandthenthegeneralmanagerofthefinanceandaccountingdepartmentofPICCPropertyandCasualtyCompanyLimitedandthedeputygeneralmanagerofitsJiangsubranch,thegeneralmanagerofthestrategicfinancingdepartmentofChinaExport&CreditInsuranceCorporation,andanexecutivedirectoroffinancialsectorofChinaMinshengInvestmentCorp.,Ltd..Mr.ChenhadservedasthechieffinancialofficerofChinaMinshengDrawinTechnologyGroupLimited(nowknownasChinaMinshengDITGroupLimited),acompanylistedontheStockExchange(stockcode:726)duringtheperiodfromSeptember2015toMay2016andMr.Chenwasappointedasanon-executivedirectorofChinaMinshengDrawinTechnologyGroupLimitedfrom28June2016to8May2018.Mr.ChenhasbeenappointedasanexecutivedirectorofYidaChinaHoldingsLimited,acompanylistedontheStockExchange(stockcode:3639)since31December2016.

Mr.ChenChao,aged39,wasappointedasanExecutiveDirectoron4December2015.Mr.ChenisthechiefinvestmentofficerofChinaMinshengJiayeInvestmentCo.,Ltd..Mr.Chenobtainedabachelor’sdegreeininternationalbusinessmanagementfromFudanUniversityin2002.Mr.ChenholdsthequalificationofcertifiedpublicaccountantinthePeople’sRepublicofChina.BeforejoiningChinaMinshengJiayeInvestmentCo.,Ltd.,Mr.Chenhadengagedinauditingandfinancialadvisoryworkandhadheldvariouspositions,includingthepositionsasaco-directorofthefinancialadvisorydepartmentofErnst&Young(China)andanauditingmanagerofKPMG(China).Mr.Chenwasappointedasanon-executivedirectorofYidaChinaHoldingsLimited,acompanylistedontheStockExchange(stockcode:3639)since31December2016.



Mr.ZhuQiang,aged39,wasappointedasanExecutiveDirectoron4December2015.HeisalsoamemberoftheInvestmentCommitteeoftheCompany.Mr.ZhuisthevicepresidentofChinaMinshengJiayeInvestmentCo.,Ltd.Mr.Zhuobtainedabachelor’sdegreeinmanagementengineeringin2002andamasterdegreeintechnologyeconomicsandmanagementin2005fromTongjiUniversity.Mr.Zhuhasover10yearsofexperienceinrealestateinvestmentanddevelopmentandhadheldvariouspositions,includingthepositionsasadeputygeneralmanagerofFranshionRealEstateChangshaCo.,Ltd.(方興地產長沙有限公司 ),thegeneralmanagerofChangshaMeixiLakeJinyuePropertiesCo.,Ltd.(長沙梅溪湖金悅置業有限公司),aseniorinvestmentmanageroftheinvestmentanddevelopmentdepartmentofFranshionProperties(China)Limited(nowknownasChinaJinmaoHoldingsGroupLimited),acompanylistedontheStockExchange(stockcode:817),aninvestmentdirectoroftheinvestmentmanagementdepartmentofJinmaoGroup(中國金茂集團 )andanindustryanalyst of the administration department of Yunfeng Group (雲峰集團 ).Heisalsoadirectorofothermember(s)oftheGroup.

Ms.QinWenying,aged55,wasappointedasanExecutiveDirectoron6June2016.Ms.QingraduatedfromFudanUniversitywithaBachelor’sdegreeinPhilosophyinJuly1986andobtainedanadvancedmasterofbusinessadministrationdegreefromFudanUniversityinApril2004.ShehasbeenqualifiedasaseniorhumanresourcesprofessionalauthenticatedbytheMinistryofHumanResourcesandSocialSecurityandasaseniorpoliticalscientistauthenticatedbytheState-ownedAssetsSupervisionandAdministrationCommission.Ms.Qinhasover20-yearexperienceinestablishmentofhumanresourcesandcorporatecultureandoperationmanagementandsupervisionmanagementinpropertydevelopmentandhotelmanagementandpropertymanagementindustry.Ms.Qinhadheldvariouspositionsinthepast.In1998,shejoinedSinochemGroup;from1998to2010,sheworkedasthedeputyheadofthechiefexecutiveoffice,generalmanagerofhumanresourcesdepartment,vicechairmanoflabourunionandsupervisorofChinaJinMao(Group)Limited(currentlyknownasJinmao(China)HotelInvestmentsandManagementLimited(stockcode:6139));inMay2010,shewasthechairmanoflabourunion,thedirectorofthedepartmentofParty-civilianrelationshipandtheofficerofthedisciplinaryandinspectiondepartmentofFranshionProperties(China)Limited(currentlyknownasChinaJinmaoHoldingsGroupLimited)(stockcode:817);inAugust2014,shewasthedeputygeneralmanageroftheShanghaiofficeofChinaJinmao;inAugust2015,shewasappointedasthesecretaryofthedisciplinarycommitteeofSinochemInternationalCorporationlistedontheShanghaiStockExchange(stockcode:600500).

Mr.JiangQi,aged36,wasappointedasanExecutiveDirectoron13July2018.Mr.JianggraduatedfromCaliforniaStatePolytechnicUniversity,PomonaintheUSAwithabachelor’sdegreeinbusinessadministrationin2007.Mr.Jianghasmanyyearsofworkexperienceinadministrativepersonnelmanagement,projectsitesmanagementandmarketingplanning.Mr.JiangjoinedSREInvestmentHoldingLimitedin2007,andheservedasassistantofgeneralmanageranddeputygeneralmanagerinShenyangLixiangNewTownDevelopmentCo.,Ltd.*(瀋陽李相新城置業有限公司),asubsidiaryofSREInvestmentHoldingLimitedfromJuly2007toApril2009.HealsoservedasdeputygeneralmanagerinShanghaiShuoChengRealEstateCo.,Ltd.*(上海碩誠置業有限公司 )fromMay2009toAugust2012;theperson-in-chargeofthepreparatoryworkinggroupofTheWestinHaikoufromAugust2012toJune2013;deputygeneralmanagerinGuoKaiChuanSha(Shanghai)UrbanInvestmentDevelopmentCo.,Ltd.*(國開川沙（上海）城鎮投資發展有限公司 ),asubsidiaryofSREInvestmentHoldingLimited,fromSeptember2013toDecember2017.

IndependentNon-executiveDirectors

Mr.ZhuoFumin,aged67,wasappointedasanIndependentNon-executiveDirectoron30November2010.HeisalsoamemberoftheAuditCommittee,theNominationCommitteeandtheRemunerationCommitteeoftheCompany.Mr.ZhuograduatedfromShanghaiJiaotongUniversityofEngineeringSciencein1983andobtainedamasterdegreeineconomicsfromFudanUniversityin1997.Mr.Zhuoserved senior positions such as the assistant officer and the head of the administrative office of the Shanghai Economic System Reform Committee.Subsequently,Mr.ZhuoheldvariousseniorpositionsatShanghaiIndustrialInvestment(Holdings)Co.,Ltd.,includingthechiefexecutiveofficerandthevicechairmanofShanghaiIndustrialHoldingsLimited,acompany listedontheStockExchange(stockcode:363)andthechairmanandanexecutivedirectorofSIICMedicalScienceandTechnology(Group)Limited.Mr.Zhuodevotedtoprivateequityinvestmentsince2002,andwasthechairmanandthechiefexecutiveofficerofVertexChinaInvestmentCo.,Ltd.,awhollyownedsubsidiaryofVertexManagementGroupwhichisaglobalventurecapitalfundmanagementcompany.Mr.Zhuoco-foundedSIGCapitalLimited.Since2008,Mr.ZhuohasbeenapartnerofGGVCapital.Mr.ZhuowaspreviouslyadirectorofGrandhopeBiotechCo.Ltd.,acompanylistedontheShenzhenStockExchange(stockcode:300238),anindependentdirectorofFocusMediaHoldingLimited,acompanylistedonNASDAQ(formerstockcode:FMCN,currentlyprivatized),andanindependentnon-executivedirectorofShenyinWanguo(H.K.)Limited(nowknownasShenwanHongyuan(H.K.)Limited),acompanylistedontheStockExchange(stockcode:218).Currently,Mr.ZhuoisanindependentdirectorofDaqoNewEnergyCorp.,acompanylistedontheNewYorkStockExchange(stockcode:




DQ)andanon-executivedirectorofBesunyenHoldingsCompanyLimited,acompanylistedontheStockExchange(stockcode:926).HealsoservesasanindependentdirectorofChinaEnterpriseCompanyLimited,acompanylistedontheShanghaiStockExchange(stockcode:600675).Mr.ZhuowasappointedasanindependentdirectorofArcplusGroupPlc,acompanylistedontheShanghaiStockExchange(stockcode:600629)sinceSeptember2015,anindependentdirectorofFocusMediaInformationTechnologyCo.,Ltd.,acompanylistedontheShenzhenStockExchange(stockcode:2027)sinceJanuary2016andanindependentnon-executivedirectorofSinopharmGroupCo.Ltd.,acompanylistedontheStockExchange(stockcode:1099)sinceMarch2016.Mr.ZhuowasappointedasanindependentdirectorofShanghaiShine-linkInternationalLogisticsCo.,Ltd.,acompanylistedontheShanghaiStockExchange(stockcode:603648)sinceSeptember2016.

Mr.Chan,CharlesSheungWai,aged65,wasappointedasanIndependentNon-executiveDirectoron10July2012.HeisalsothechairmanoftheAuditCommitteeandamemberoftheRemunerationCommitteeoftheCompany.Mr.ChanobtainedabachelorofcommercedegreeattheUniversityofManitoba,Canadain1977.HeisamemberoftheCharteredAccountantsofCanadaaswellasamemberoftheHongKongInstituteofCertifiedPublicAccountants.HestartedhiscareerasanauditstaffattheCanadianofficeofArthurAndersenin1977andwasadmittedtopartnershipin1988.HesubsequentlyjoinedtheChina/HongKongofficeofArthurAndersenasanauditpartnerin1994.FortheperiodfromJuly2002toJune2012,hewasapartneroftheChina/HongKongOfficeofPricewaterhouseCoopers.Mr.ChanservedasamemberoftheListingCommitteeoftheStockExchangeduringtheperiodfrom1998to2001andalsoservedasamemberoftheSelectionCommitteeforthefirstLegislativeCounciloftheHongKongSpecialAdministrativeRegionin1998.From1996to1999,hewasacouncilmemberoftheHongKongSocietyofCertifiedPublicAccountants(the“Society”).HehadalsoservedasamemberoftheaccountingstandardscommitteeoftheSociety,amemberoftheauditingstandardscommitteeoftheSocietyandthechairmanoftheChinatechnicalcommitteeoftheSociety.Mr.Chaniscurrentlyanindependentnon-executivedirectorofChangyou.comLimited,acompanylistedonNASDAQ(stockcode:CYOU).Mr.Chanformallyactedasanindependentnon-executivedirectorofCITICSecuritiesCompanyLimited,acompanylistedontheStockExchange(stockcode:6030)andtheShanghaiStockExchange(stockcode:600030)since9May2016.Mr.Chanresignedasanindependentnon-executivedirectorofSPIEnergyCo.,Ltd.,acompanylistedonNASDAQ(stockcode:SPI)on29April2016.Mr.Chanwasappointedasanindependentnon-executivedirectorofMaoyanEntertainment,acompanylistedontheStockExchange(stockcode:1896)on22August2018,effectiveon4February2019.

Mr.MaLishan,aged67,wasappointedasanIndependentNon-executiveDirectoron31March2016.HeisalsothechairmanoftheRemunerationCommitteeandamemberoftheNominationCommitteeandtheInvestmentCommitteeoftheCompany.Hehasextensiveexperienceincorporateoperationandmanagement.Mr.MagraduatedfromBeijingForeignStudiesUniversityinthePeople’sRepublicofChinain1975.Mr.Maservedinvariousmanagerialpositionssuchaschairman,executivedirectorandgeneralmanagerincertainlarge-scalegrain,edibleoil,foodprocessingcorporationsandGreatWallWineunderChinaOil&FoodstuffCorporation.FromJanuary1996,Mr.MaservedasanexecutivedirectorofChinaFoodsLimited*(中國食品有限公司 ),acompanylistedontheStockExchange(stockcode:506).FromMay1997toJune2003,Mr.MaservedasexecutivedirectorandmanagingdirectorofChinaFoodsLimited.In2000,Mr.MaservedasthevicepresidentofChinaOil&FoodstuffCorporation.FromJune2008toJanuary2009,Mr.MawasanexecutivedirectorofSinoResourcesGroupLimited(nowknownasElifeHoldingsLimited),acompanylistedontheStockExchange(stockcode:223).FromMarch2008topresent,heisanindependentnon-executivedirectorofSilverBaseGroupHoldingsLimited,acompanylistedontheStockExchange(stockcode:886).FromAugust2009topresent,heisanindependentnon-executivedirectorofSunacChinaHoldingsLimited,acompanylistedontheStockExchange(stockcode:1918).FromSeptember2010toAugust2012,hewasalsotheexecutivedirector,managingdirectorandchairmanofHaoTianResourcesGroupLimited(nowknownasHaoTianDevelopmentGroupLimited),acompanylistedontheStockExchange(stockcode:474).HewastheseniorconsultantinHaoTianDevelopmentGroupLimitedfromAugust2012toAugust2016.Mr.Mawasappointedasanindependentnon-executivedirectorofChinaMinshengDrawinTechnologyGroupLimited(nowknownasChinaMinshengDITGroupLimited),acompanylistedontheStockExchange(stockcode:726)since28June2016andanindependentnon-executivedirectorofHuarongInternationalFinancialHoldingsLimited,acompanylistedontheStockExchange(stockcode:993)since19August2016.



Mr.HanGensheng,aged64,wasappointedasanIndependentNon-executiveDirectoron12October2016.HeisalsoamemberoftheAuditCommitteeoftheCompany.Hehasextensiveexperienceincorporatemanagement.Mr.HangraduatedfromShanghaiMaritimeUniversityandobtainedabachelor’sdegreeinOceanTransportin1978.Mr.HanhasworkedinvariouspositionssinceAugust1978,includingthedirectorofthelogisticsandwarehousingdivisionofChinaNationalChemicalsImport&ExportCorporation*(中國化工進出口總公司 ),thegeneralmanagerofSinochemInternationalStorage&TransportationCo.,Ltd.*(中化國際儲運有限公司 ),thevicepresidentofAmericaWestPacificRefineryCo.,thegeneralmanagerofWestRockiesInc.,thegeneralmanagerofpetroleumdivisionIIofChinaNationalChemicalsImport&ExportCorporation*(中國化工進出口總公司),thevicepresidentandapartymemberofSinochemGroup, the generalmanager of Sinochem InternationalOilCo.,Ltd.* (中化國際石油有限公司 ), the generalmanager of SinochemPetroleumExplorationandProductionCo.Ltd.*(中化石油勘探開發有限公司),thegeneralmanagerofSinochemCorporationandthegeneralmanagerofSinochemEuropeHoldingsPLC.*(中化歐洲集團公司 ).Mr.Hanwasappointedasanindependentnon-executivedirectorofYidaChinaHoldingsLimited,acompanylistedontheStockExchange(stockcode:3639)since31December2016.

Senior Management

Mr.LvYun,aged43,wasappointedthevicepresidentoftheGroupin2016.Mr.LvobtainedabachelordegreeinbusinessadministrationfromTongjiUniversityin2000andamasterdegreeinfinancefromShanghaiUniversityofFinanceandEconomicsin2012.Mr.Lvhasover12yearsofexperienceintheaspectofinvestmentanddevelopmentinrealestate,andhadworkedinvariouspositions,includingthedeputygeneralmanagerofChangshaCompanyofChinaJinmaoHoldingsGroupLimited,acompanylistedontheStockExchange(stockcode:817)andthegeneralmanagerofsalesplanningdepartmentofJinmaoInvestments(Changsha)Co.,Ltd*(金茂投資（長沙）有限公司 ).HehadalsoworkedincompaniessuchasForteGroupSalesPlanning*(復地集團營銷策劃 ),Cushman&Wakefield*(戴德梁行 )and Eslite Real Estate* (誠品房地產 ).

Mr.PangKaFaiAngus,aged49,wasappointedastheCompanySecretaryoftheCompanyon14June2016.Hehas27yearsofexperienceinfinancialmanagement,corporatefinanceandcorporatesecretarialwork.Mr.Pangholdsamaster’sdegreeofcorporategovernancefromtheHongKongPolytechnicUniversity,abachelordegreeofbusinessadministrationinaccounting,andisafellowmemberandaCharteredGovernanceProfessionaloftheHongKongInstituteofCharteredSecretaries,andtheInstituteofCharteredSecretariesandAdministratorsintheUnitedKingdom.Mr.PangisalsoamemberofRegulatoryCommitteeofTheHongKongIndependentNon-ExecutiveDirectorAssociation.

Mr.ZongShihua,aged37,whohasobtainedmasterdegree,andisasenioraccountantandanauditor,iscurrentlythechieffinancialofficeroftheGroup.Mr.ZongobtainedabachelordegreeineconomicsfromNantongUniversityin2003,amasterdegreeinaccountingfromShanghaiJiaoTongUniversityin2013,andamasterdegreeinbusinessadministrationfromFudanUniversityin2014.HeworkedasanauditorinJiangsuGaoshenCPA*(江蘇皋審會計師事務所)in2003.HewasafinancialmanagerofShanghaiZhongRongInternationalBusinessCenterCo.,Ltd.*(上海中融國際商城有限公司)andShanghaiZhongRongPropertyManagementCo.,Ltd.*(上海中融物業管理有限公司)from2004to2007.Heworkedasthevicefinancialdirector(hosting)andchieftaxationofficerofZhongRongGroup*(中融控股集團 )in2007.Mr.ZongjoinedChinaMinshengInvestmentCorp.,Ltd.*(中國民生投資股份有限公司 )in2015andworkedasthefinancialgeneralmanagerofChinaMinshengBundRealEstateDevelopmentCo.,Ltd.*(中民外灘房地產開發有限公司 ).InDecember2015,hejoinedtheGroupasthegeneralmanagerofthefinancialassetdepartmentandwasappointedthechieffinancialofficeron1May2016.Mr.Zonghasover15yearsofworkexperienceintheareasofdevelopmentandinvestmentofrealestate,propertyleasingandthedevelopmentofaccountingpractice.


Report of the Directors


Thedirectorsof theCompany (the “Directors”)havepleasure in submitting the annual report togetherwith the audited consolidatedfinancialstatementsoftheGroupfortheyearended31December2018.

Principal Activities

TheGrouparemainlyengaged inrealestatedevelopmentand investment inMainlandChina,onprojects located ingatewaycitiesofdevelopedmarkets.Theprincipalactivitiesofitsprincipalsubsidiaries,jointventuresandassociatesarerespectivelysetoutinnotes46,22and21totheconsolidatedfinancialstatements.

Segmental Information

DetailsoftheGroup’srevenueandprofitorlossbyprincipalactivityandgeographicalareafortheyearended31December2018aresetoutinnote4totheconsolidatedfinancialstatements.

Results

DetailsoftheGroup’sresultsfortheyearended31December2018aresetoutintheconsolidatedstatementofprofitorlossandothercomprehensiveincome.NointerimdividendwasdeclaredbytheboardoftheDirectors(the“Board”).TheBoarddoesnotrecommendthepaymentoffinaldividendfortheyearended31December2018(2017:Nil).

Bank Loans, Overdrafts and Other Borrowings

Detailsofbankloans,overdraftsandotherborrowingsoftheGrouparesetoutinnote32totheconsolidatedfinancialstatements.

Reserves

Movements in the reserves of the Group and the Company during the year are respectively set out in the consolidated statement of changes inequityandinnote47totheconsolidatedfinancialstatements.

Distributable Reserves

AscomputedinaccordancewiththeCompaniesAct1981ofBermuda,theCompanydoesnothaveretainedprofitsfordistributiontoshareholdersasat31December2018(2017:Nil).ThesharepremiumaccountwithbalanceofapproximatelyRMB5,046million(2017:RMB5,046million)maybedistributedwhencertainconditionsaremet.

Share Capital

Therewasnomovementinsharecapitalduringtheyear.DetailsofthesharecapitaloftheCompanyaresetoutinnote30totheconsolidatedfinancialstatements.

Financial Summary

AfinancialsummaryoftheGroupissetoutonpage5ofthisannualreport.



Business Review

TheinformationonbusinessreviewoftheGroupfortheyearended31December2018isprovidedintheChairman’sStatementandManagementDiscussionandAnalysisofthisannualreport.

Pre-Emptive Rights

Therearenoprovisionsforpre-emptiverightsundertheBye-lawsoftheCompanyorthelawsofBermudawhichwouldobligetheCompanytooffernewsharesonapro-ratabasistoexistingshareholders.

Purchase, Sale or Redemption of Listed Securities

NeithertheCompanynoritssubsidiariespurchased,redeemedorsoldanyoftheCompany’slistedsecuritiesduringtheyearended31December2018.

Fixed Assets and Investment Properties

DetailsofthemovementinfixedassetsandinvestmentpropertiesoftheGrouparerespectivelysetoutinnotes17and18totheconsolidatedfinancialstatements.

Related Party Transactions

Detailsoftherelatedpartytransactions(whichalsoincludeconnectedtransactions)oftheGroupfortheyearended31December2018aresetoutinnote42totheconsolidatedfinancialstatements.Exceptfortheconnectedtransactionmentionedbelow,therelatedpartytransactionsassetoutinnote42totheconsolidatedfinancialstatementsdonotfallunderthedefinitionof“connectedtransaction”or“continuingconnectedtransaction”inChapter14AoftheRulesGoverningtheListingofSecuritiesontheStockExchange(the“ListingRules”).

Connected Transactions

On15May2018,ShangzhiAssetManagement(Shanghai)Co.,Ltd.(the“Investor”)(aconnectedpersonoftheCompanyatthesubsidiarylevel),ShanghaiYidongInvestmentManagementCo.,Ltd.(“ShanghaiYidong”)(anindirectwhollyownedsubsidiaryoftheCompany),theCompanyandShanghaiLakeMalarenHospitalInvestmentCo.,Ltd.(the“TargetCompany”)(anindirectnon-whollyownedsubsidiaryoftheCompany)enteredintotheCapitalInjectionAgreement(Note1),pursuanttowhichtheInvestoragreedtocontributeRMB150milliontotheregisteredcapitaloftheTargetCompany.

Asat15May2018,theTargetCompanywasheldastoapproximately57.14%byShanghaiYidongandapproximately42.86%bytheInvestor.UponcompletionoftheCapitalInjection(Note2),theequityinterestheldbyShanghaiYidongintheTargetCompanywillbediluted fromapproximately57.14%to40%.Therefore, theCapital Injectioncontemplatedunder theCapital InjectionAgreementconstitutedadeemeddisposaloftheGroup’sequityinterestintheTargetCompanyunderRule14.29oftheListingRules.TheTargetCompanywouldremainasanon-whollyownedsubsidiaryoftheCompanyanditsfinancialresultswouldcontinuetobeconsolidatedintothefinancialstatementsoftheGroup.

EachofthegrantoftheCallOption(Note3)andthePutOption(Note4)wastreatedasatransactionbytheCompanypursuanttoRules14.04(1)(b)and14.73oftheListingRules.AstheexerciseoftheCallOptionorthePutOptionbytheInvestorwasnotatthediscretionofShanghaiYidongortheCompany,thetransactionwouldbeclassifiedonthegrantoftheCallOptionandthePutOption(asthecasewouldbe)asifithadbeenexercisedaccordingtoRule14.74oftheListingRules.On15February2019,theInvestorissuedtheexercisenoticeofPutOptiontoShanghaiYidong,requiringShanghaiYidongtorepurchase60%equityinterestoftheTargetCompanyheldbytheInvestorbefore26March2019,withatotalconsiderationofRMB324million.Currently,ShanghaiYidonghascompletedthepaymentofrepurchaseamountandthesharetransferproceduresisinprogress.




TheInvestorwasasubstantialshareholderoftheTargetCompany,anindirectnon-whollyownedsubsidiaryoftheCompany.Accordingly,theInvestorwasaconnectedpersonoftheCompanyatthesubsidiarylevel.EachoftheCapitalInjection,thegrantoftheCallOptionandthegrantofthePutOptionconstitutedaconnectedtransactionoftheCompanyunderChapter14AoftheListingRules.

PursuanttoRules14.22and14A.81oftheListingRules,theCapitalInjectionwasrequiredtobeaggregatedwiththeFirstCapitalInjection(Note5)andthegrantoftheCallOptionastheywereallenteredintowithina12-monthperiod.AsoneormoreoftheapplicablepercentageratiosinrespectoftheDeemedDisposal(Note6)(i.e.theCapitalInjection),whenaggregatedwiththeFirstCapitalInjectionandthegrantoftheCallOption(withreferencetotheMaximumCallOption(Note3)Interest),exceed(s)5%butwas/werelessthan25%,theDeemedDisposalconstitutedadiscloseabletransactionoftheCompanyunderChapter14oftheListingRulesandwassubjecttothereportingandannouncementrequirements.

Since(i)theInvestorwasaconnectedpersonoftheCompanyatthesubsidiarylevel;(ii)theBoardhadapprovedtheCapitalInjectionAgreementandthetransactionscontemplatedthereunder;and(iii)theindependentnon-executiveDirectorshadconfirmedthatthetermsoftheCapitalInjectionAgreementwerefairandreasonable,onnormalcommercialtermsandintheinterestsoftheCompanyandtheShareholdersasawhole(despitetheCapitalInjectionnotbeingintheordinaryandusualcourseofbusinessoftheGroup),eachoftheCapitalInjection(asaggregatedwiththeFirstCapitalInjectionandthegrantoftheCallOption)andthegrantofthePutOptionwasonlysubject to thereportingandannouncementrequirementsbutexempt fromthecircular, independent financialadviceandshareholders’approval requirementspursuant toRule 14A.101of theListingRules. Furtherdetails of theDeemedDisposalweredisclosed in theannouncementsoftheCompanydated15May2018and4June2018.

On28June2018,ShanghaiJinxinRealEstateCo.,Ltd.(the“Purchaser”)(anon-whollyownedsubsidiaryoftheCompany)enteredintotheAgreements(Note7)with,amongothers,ShanghaiXiangfuRealEstateDevelopmentCo.,Limited(the“Vendor”)(aconnectedpersonoftheCompany)pursuanttowhich,amongotherthings,theVendoragreedtosellandthePurchaseragreedtopurchasetheTargetProperties(Note8)at thePurchasePriceofRMB127,554,308.37.TheAcquisition (Note9)was for thepurposeof relocatingandresettling theincumbentresidentsaffectedbythedevelopmentoftheDaxingProjectbythePurchaser.

Asat28June2018,theVendorwasanassociateofZhongchongGroupCo.,Ltd.,whichwasanindirectsubstantialshareholderofthePurchaser.Assuch,theVendorwasaconnectedpersonoftheCompany.Accordingly,theAcquisitionconstitutedaconnectedtransactionoftheCompanyunderChapter14AoftheListingRules.

Asalloftheapplicablepercentageratios(asdefinedunderRule14.07oftheListingRules)inrespectoftheAcquisitionweremorethan0.1%butlessthan5%,theAcquisitionwassubjecttothereportingandannouncementrequirementsbutwasexemptfromtheindependentshareholders’ approval requirement underChapter 14Aof theListingRules. Further details of theAcquisitionwere disclosed in theannouncementoftheCompanydated28June2018.

Notes:

Definitions

(1) “CapitalInjectionAgreement” acapitalinjectionagreementdated15May2018andenteredintoamongtheInvestor,ShanghaiYidong,the

CompanyandtheTargetCompanyinrelationtotheCapitalInjection

(2) “CapitalInjection” the capital injection ofRMB150million (for illustrationpurpose only, equivalent to approximately

HK$186,000,000usingtheexchangerateofRMB1:HK$1.24)bytheInvestortotheregisteredcapitalofthe

TargetCompanyascontemplatedundertheCapitalInjectionAgreement

(3) “CallOption” ShanghaiYidonghaswarrantedandguaranteedtotheInvestorthattheauditedoperatingnetprofitoftheTarget

Companyshallnotbelessthan(i)RMB6millionforthefinancialyearended31December2018;(ii)RMB8

millionforthefinancialyearended31December2019;and(iii)RMB10millionforthefinancialyearended31

December2020(the“GuaranteedAmounts”).



Definitions

PursuanttotheCapitalInjectionAgreement, intheeventthattheauditedoperatingnetprofitoftheTarget

Companyislessthan90%oftherelevantGuaranteedAmountforthecorrespondingfinancialyear,theInvestor

shallhavetheright,exercisablebytheInvestorinitssolediscretion,toeither:

(i) require ShanghaiYidong to transfer to it (the “CallOption”), as compensation and at a nominal

considerationofRMB1,certainpercentageofequityinterestintheTargetCompanyinproportionto

theshortfall inoperatingprofit,subjecttoamaximumpercentageof4%equityinterestintheTarget

Company(the“MaximumCallOptionInterest”);or

(ii) disposeofitsequityinterestintheTargetCompany.

(4) “PutOption” PursuanttotheCapitalInjectionAgreement,despitetheprovisionsundertheCallOption,theInvestorshallhave

theright,exercisableinitssolediscretion,torequireShanghaiYidongtoacquirefromit(the“PutOption”)all

ofitsequityinterestintheTargetCompanywithinaperiodspecifiedbytheInvestorandataconsiderationtobe

agreedbetweentheInvestorandShanghaiYidong(the“PutOptionExercisePrice”)(whichshallbenolessthan

theaggregateamountofactualcontributionsbytheInvestortotheregisteredcapitaloftheTargetCompanyand

subjecttothemaximumamountofRMB380million(the“PutOptionMaximumExercisePrice”))uponthe

occurrenceofcertainspecifiedevents,including:

(i) theTargetCompanyhavingrecordedadditionallossexceedingacertainthreshold;

(ii) theactualnetprofitoftheTargetCompanybeinglessthan70%oftherelevantGuaranteedAmountfor

thecorrespondingfinancialyear;

(iii) material changes inmanagementpersonnelorprincipalbusinessof theTargetCompanywithout the

consentoftheInvestor;or

(iv) earlyterminationoftheCapitalInjectionAgreementbytheInvestorpursuanttothetermsthereinby

reasonofbreachesbyShanghaiYidong,theCompanyortheTargetCompanyofitsobligationsunderthe

CapitalInjectionAgreement(“EarlyTerminationbyInvestor”).

(5) “FirstCapitalInjection” InMarch2018,theInvestor(ShangzhiAssetManagement(Shanghai)Co.,Ltd.(上置資產管理（上海）有限公司),athirdpartyindependentoftheCompanyanditsconnectedpersonsattherelevanttime),hassubscribedforandcontributedRMB150milliontotheregisteredcapitaloftheTargetCompany(ShanghaiLakeMalaren

HospitalInvestmentCo.,Ltd.(上海美蘭湖醫院投資有限公司 ))

(6) “DeemedDisposal” thedeemeddisposalofapproximately17.14%equityinterestintheTargetCompanybyShanghaiYidongtothe

InvestorasaresultoftheCapitalInjection

(7) “Agreements” theSaleandPurchaseAgreementandtheSupplementalSaleandPurchaseAgreement

(8) “TargetProperties” 33 units of relocation and resettling properties situated at 2,289 Wan Yuan Road, Minhang District, Shanghai

withatotalgrossfloorareaof2,547.04squaremeters

(9) “Acquisition” theacquisitionoftheTargetPropertiesbythePurchaserfromtheVendorpursuanttotheAgreements




Directors

Thedirectorswhoheldofficeduringtheyearandasofthedatewhentheannualreportwaspublishedare:

ExecutiveDirectors

Mr.PengXinkuangMr.LiuFengMr.ChenDonghuiMr.ChenChaoMr.ZhuQiangMs.QinWenyingMr.JiangQi (appointed on 13 July 2018)Mr.ShiJansonBing (resigned on 13 July 2018)


Mr.ZhuoFuminMr.Chan,CharlesSheungWaiMr.MaLishanMr.HanGensheng

TheCompanyhadreceivedconfirmationfromeachoftheIndependentNon-executiveDirectorsoftheirindependencepursuanttoRule3.13oftheListingRulesandconsideredallIndependentNon-executiveDirectorstobeindependent.

InaccordancewithBye-laws86(2),87(1)and87(2)oftheBye-lawsoftheCompany,Mr.PengXinkuang,Mr.ChenDonghui,Mr.ChenChao,Ms.QinWenyingandMr.JiangQiwillretireattheforthcomingannualgeneralmeetingoftheCompany,andbeingeligible,willofferthemselvesforre-election.

BiographicaldetailsfortheDirectorsaresetoutonpages50to53ofthisannualreport.

Change in Information of Directors

PursuanttoRule13.51B(1)oftheListingRules,changeintheinformationoftheDirectorssincethedisclosuremadeintheInterimReport2018anduptothedateofthisannualreportoftheCompanyissetoutbelow:

Name of Director(s) Detail(s) of Change

Mr.Chan,CharlesSheungWai Appointedasanindependentnon-executivedirectorofMaoyanEntertainment,acompanylistedontheStockExchange(stockcode:1896)on22August2018,effectiveon4February2019.

Directors’ Emoluments

ThefixedannualremunerationoftheExecutiveDirectorsisdeterminedbytheRemunerationCommitteeoftheCompany.EachExecutiveDirectorisalsoentitledtoanannualmanagementbonusundertherelevantservicecontract,theamountofwhichistobedeterminedbytheBoardfromtimetotime,providedthattheaggregatemanagementbonuspayabletoallExecutiveDirectorsforafinancialyearshallnotbemorethan10%oftheCompany’snetprofitaftertaxationandnon-controllinginterestsasshownintheauditedconsolidatedfinancialstatementsoftheCompanyfortherelevantyear.



DetailsofDirectors’emolumentsaresetoutinnote11totheconsolidatedfinancialstatements.

Directors’ Service Contracts

NoneoftheDirectorswhoareproposedforre-electionattheforthcomingannualgeneralmeetingoftheCompanyhasaservicecontractwithanymemberof theGroupwhich isnotdeterminablewithinoneyearwithoutthepaymentofcompensationother thanstatutorycompensation.

Directors’ Interest in Transactions, Arrangements or Contracts

No transaction, arrangementor contract of significance towhich theCompany, or anyof its holding company, subsidiaries or fellowsubsidiarieswasaparty,andinwhichaDirector,oranentityconnectedwithaDirector,oftheCompanyhadamaterialinterest(directorindirect),subsistedattheendofthefinancialyearoratanytimeduringtheyearended31December2018.

Directors’ Rights to acquire Shares or Debentures

SaveasdisclosedinthesectionofShareOptionSchemeofthisreport,atnotimeduringtheyearwastheCompanyoranyofitssubsidiariesapartytoanyarrangementstoenabletheDirectorstoacquirebenefitsbymeansoftheacquisitionofsharesin,ordebtsecurities(includingdebentures)of,theCompanyoranyotherbodycorporate.

Directors’ and Chief Executives’ Interests in Shares, Underlying Shares and Debentures

Asat31December2018,theinterestsandshortpositionsoftheDirectorsandthechiefexecutiveoftheCompanyintheshares,underlyingsharesanddebenturesoftheCompanyoritsassociatedcorporations(withinthemeaningofPartXVoftheSecuritiesandFuturesOrdinance(the“SFO”)),asrecordedintheregisterrequiredtobekeptundersection352oftheSFO,orasotherwisenotifiedtotheCompanyandtheStockExchangepursuanttotheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuers(the“ModelCode”)assetoutinAppendix10totheListingRuleswereasfollows:

LongpositioninsharesoftheCompany(the“Shares”)andunderlyingShares

Name of DirectorPersonal interests

Family interests

Corporate interests Total

Approximate percentage of shareholding

PengXinkuang 112,000,000(Note 1)

– – 112,000,000 0.54%

Zhu Qiang 84,000,000(Note 1)

– – 84,000,000 0.41%

Qin Wenying 84,000,000(Note 1)

– – 84,000,000 0.41%

Chen Donghui 56,000,000(Note 1)

– – 56,000,000 0.27%

Chen Chao 56,000,000(Note 1)

– – 56,000,000 0.27%

Zhuo Fumin – 160,000(Note 2)

– 160,000 0.0008%




Notes:

(1) ThisreferstotheunderlyingSharescoveredbyshareoptionsgranted,suchoptionsbeingunlistedphysicallysettledequityderivatives.

(2) TheseShareswereheldbyMadamHePeiPei,thespouseofMr.ZhuoFumin.

Saveasdisclosedabove,asat31December2018,noneoftheDirectorsorchiefexecutivesoftheCompany,noranyoftheircloseassociateshadanyinterestsorshortpositionsintheshares,underlyingsharesanddebenturesoftheCompanyoranyofitsassociatedcorporations(withinthemeaningofPartXVoftheSFO)whichwererequiredtoberecordedintheregisterkeptbytheCompanyundersection352oftheSFOorasotherwisenotifiedtotheCompanyandtheStockExchangepursuanttotheModelCode.

Substantial Shareholders’ Interests

Asat31December2018,sofarasisknowntoanyDirectororchiefexecutiveoftheCompany,thefollowingpersons,otherthanaDirectororchiefexecutiveoftheCompany,hadinterestsoftheCompanyorshortpositionsinthesharesorunderlyingsharesoftheCompanyasrecordedintheregisterrequiredtobekeptunderthesection336oftheSFO:

LongpositionsintheShares

Name of Shareholder Capacity

Number ofissued ordinary

Shares interested in


ChinaMinshengInvestmentCorp.,Ltd. Interest in controlled corporation 15,435,567,128(Note 1, 3 & 4)

75.06%

ChinaMinshengJiayeInvestmentCo.,Ltd. Interest in controlled corporation 15,435,567,128(Note 1, 3 & 4)

75.06%

JiaxinInvestment(Shanghai)Co.,Ltd. Interest in controlled corporation 15,435,567,128(Note 1, 3 & 4)

75.06%

Jiasheng(Holding)InvestmentLimited Interest in controlled corporation 15,389,659,128(Note 1, 3 & 4)

74.84%

Jiashun(Holding)InvestmentLimited Beneficialownerandinterestin controlled corporation

15,389,659,128(Note 1, 3 & 4)

74.84%

Shi Jian Beneficialownerandinterestin controlled corporation

2,902,666,119(Note 2, 3 & 4)

14.11%

SiXiaoDong Beneficialownerandinterestin controlled corporation

2,889,661,452(Note 2, 3 & 4)

14.05%

SREInvestmentHoldingLimited Beneficialownerandinterestin controlled corporation

2,889,659,128(Note 2, 3 & 4)

14.05%

RegalGloryLimited Interest in controlled corporation 2,022,761,390(Note 4)

9.84%

StariteInternationalLimited Interest in controlled corporation 2,022,761,390(Note 4)

9.84%

SunLuDong Nomineeforanotherperson (otherthanabaretrustee)

2,022,761,390(Note 4)

9.84%

PauShingKwan Nomineeforanotherperson (otherthanabaretrustee)

2,022,761,390(Note 4)

9.84%



Name of Shareholder Capacity

Number ofissued ordinary

Shares interested in


JiaboInvestmentLimited Interest in controlled corporation 2,889,659,128(Note 3 & 4)

14.05%

JiaYunInvestmentLimited Interest in controlled corporation and person having a security interest in shares

2,889,659,128(Note 3 & 4)

14.05%

JiazhiInvestmentLimited Interest in controlled corporation 2,022,761,390(Note 4)

9.84%

ZhiTongInvestmentLimitedPartnership Beneficialowner 2,022,761,390(Note 4)

9.84%

Notes:

(1) ChinaMinshengInvestmentCorp.,Ltd.holdsa67.40%directinterestinChinaMinshengJiayeInvestmentCo.,Ltd.,whichholdsa100%direct

interestinJiaxinInvestment(Shanghai)Co.,Ltd.,whichinturnholdsa100%interestinJiasheng(Holding)InvestmentLimited.Jiashun(Holding)

InvestmentLimitedisawholly-ownedsubsidiaryofJiasheng(Holding)InvestmentLimited.Therefore,ChinaMinshengInvestmentCorp.,Ltd.,

ChinaMinshengJiayeInvestmentCo.,Ltd.,JiaxinInvestment(Shanghai)Co.,Ltd.andJiasheng(Holding)InvestmentLimitedarealldeemedtobe

interestedinalltheSharesheldbyJiashun(Holding)InvestmentLimitedforthepurposesoftheSFO.

(2) TheseSharescomprise13,006,991SharesheldbyMr.ShiJian,2,324SharesheldbyMadamSiXiaoDongand2,889,659,128Sharesinterestedin

bySREInvestmentHoldingLimited.AseachofMr.ShiJianandMadamSiXiaoDongownsmorethan30%ofSREInvestmentHoldingLimited,

theyaredeemedtobeinterestedinalltheSharesinterestedinbySREInvestmentHoldingLimitedforthepurposesoftheSFO.

(3) 866,897,738SharesheldbySREInvestmentHoldingLimited(inwhichMr.ShiJianandMadamSiXiaoDongaredeemedtobeinterested)are

charged to JiaYun InvestmentLimited (inwhichChinaMinsheng InvestmentCorp.,Ltd.,ChinaMinsheng Jiaye InvestmentCo.,Ltd., Jiaxin

Investment(Shanghai)Co.,Ltd.,Jiasheng(Holding)InvestmentLimited,Jiashun(Holding)InvestmentLimitedandJiaboInvestmentLimitedare

deemedtobeinterested),SREInvestmentHoldingLimitedretainsthevotingrightsofShares.

(4) Pursuanttoasaleandpurchaseagreementdated28December2017enteredintoby,amongothers,SREInvestmentHoldingLimitedandZhiTong

InvestmentLimitedPartnership,SREInvestmentHoldingLimitedagreedtoselltoZhiTongInvestmentLimitedPartnership2,022,761,390Shares.

JiazhiInvestmentLimitedisageneralpartnerofZhiTongInvestmentLimitedPartnership,andisheldasto60%byJiaYunInvestmentLimited

and40%byStariteInternationalLimited.JiaYunInvestmentLimitedisalsoalimitedpartnerofZhiTongInvestmentLimitedPartnership.Jia

YunInvestmentLimitediswholly-ownedbyJiaboInvestmentLimited,whichwasinturnwholly-ownedbyMr.XiaShu.Ontheotherhand,Starite

InternationalLimitediswholly-ownedbyMr.PauShingKwan(asnomineeforandonbehalfofRegalGloryLimited);andRegalGloryLimitedis

inturnwholly-ownedbyMr.SunLuDong(asnomineeforandonbehalfofSREInvestmentHoldingLimited).On26June2018,alltheshares

heldbyMr.XiaShuinJiaboInvestmentLimitedweretransferredtoJiashun(Holding)InvestmentLimited.Therefore,ChinaMinshengInvestment

Corp.,Ltd.,ChinaMinshengJiayeInvestmentCo.,Ltd.,JiaxinInvestment(Shanghai)Co.,Ltd.,Jiasheng(Holding)InvestmentLimited,Jiashun

(Holding)InvestmentLimited,JiaboInvestmentLimited,JiaYunInvestmentLimited,Mr.ShiJian,MadamSiXiaoDong,SREInvestmentHolding

Limited,Mr.SunLuDong,RegalGloryLimited,Mr.PauShingKwan,StariteInternationalLimitedandJiazhiInvestmentLimitedarealldeemed

tobeinterestedinthe2,022,761,390SharesheldbyZhiTongInvestmentLimitedPartnershipforthepurposesoftheSFO.

Saveasdisclosedabove,asat31December2018,noneoftheDirectorsnorthechiefexecutivesoftheCompanywasawareofanyotherperson(otherthanaDirectororchiefexecutiveoftheCompany)orcorporationwhohadaninterestorshortpositionintheSharesorunderlyingShareswhichwererequiredtoberecordedintheregisterkeptbytheCompanyundersection336oftheSFO.




Share Option Scheme

On3 June2016, theBoardproposed to adopt a new share option scheme (the “Scheme”),whichwas approved and adoptedby theshareholdersoftheCompanyon6July2016.

On14July2016(the“DateofGrant”),optionstosubscribe(the“ShareOptions”)foratotalof1,073,717,976newShareswereofferedtocertainDirectorsandemployeesoftheGroup(the“Grantees”).TheShareOptionsgrantedtoeachGranteearevalidforaperiodoffiveyearscommencingfromtheDateofGrantandshallbevestedinthreetranchesinaccordancewiththefollowingvestingdates:(i)40%oftheShareOptionsgrantedtoeachGranteeshallbevestedandexercisablefrom30August2016to13July2021;(ii)anadditional30%(i.e.upto70%intotal)shallbevestedandexercisablefrom30August2017to13July2021;and(iii)theremaining30%(i.e.upto100%intotal)shallbevestedandexercisablefrom30August2018to13July2021.

Theexercisepriceof theShareOptions isHK$0.2132perShare,whichrepresents thehighestof (i) theclosingpriceof theSharesofHK$0.212perShareasstatedinthedailyquotationsheetissuedbytheStockExchangeontheDateofGrant;(ii)theaverageclosingpricesoftheSharesofHK$0.2132perShareasstatedinthedailyquotationsheetsissuedbytheStockExchangeforthefivebusinessdaysimmediatelyprecedingtheDateofGrant;and(iii)thenominalvalueoftheShare,whichisHK$0.10.

TheShareOptionsweregrantedtothefollowingDirectors:

Executive Directors Number of Share Options Granted

HeBinwu(resigned on 24 October 2017) 160,000,000PengXinkuang 160,000,000Zhu Qiang 120,000,000Qin Wenying 120,000,000Chen Donghui 80,000,000Chen Chao 80,000,000ShiJansonBing(resigned on 13 July 2018) 50,000,000

ThegrantoftheShareOptionstoeachoftheaboveDirectorshasbeenapprovedbytheIndependentNon-executiveDirectorsinaccordancewithRule17.04(1)oftheListingRules.Saveasdisclosedabove,noneoftheGranteesisaDirector,chiefexecutiveorsubstantialshareholderoftheCompany,oranassociateofanyofthem.

ThefairvalueofoptionsgrantedduringtheperioddeterminedonthedateonwhichtheoptionsweregrantedusingtheBinomialvaluationmodelwasdividedintothreetrenchesaccordingtovestingperiod,beingHK$7.80centsperoptionforoptionsvestedon30August2016,HK$7.99centsperoptionforoptionsvestedon30August2017andHK$8.21centsperoptionforoptionsvestedon30August2018.ThesignificantinputsintothemodelwereclosingsharepriceofHK$0.2120atthegrantdate,exercisepriceshownabove,volatilityof46%,dividendyieldofnil,anexpectedoptionlifeof5,4and3yearsrespectivelyandanannualrisk-freeinterestrateof0.69%.Thevolatilitymeasuredatthestandarddeviationofcontinuouslycompoundedsharereturnsisbasedontheaveragerateofcomparablecompanies.TheBinomialvaluationmodelisonlyoneofthecommonlyusedmodelstoestimatethefairvalueofanoption.Thevalueofanoptionvarieswithdifferentvariablesofcertainsubjectiveassumptions.Anychangeinthevariablessoadoptedmaymateriallyaffecttheestimationofthefairvalueofanoption.

NoShareOptionsweregranted,exercised,orcancelledduring2018.160,000,000ShareOptionswerelapsedduring2017.309,115,393ShareOptionswerelapsedduring2018.TheoutstandingShareOptionsasat1January2018and31December2018are913,717,976and604,602,583respectively.



ThefollowingisasummaryoftheprincipaltermsoftheScheme:

1. PurposeoftheScheme:

Thepurpose of the Scheme is to reward the contributionsmadeby anyDirectors or employees of theGroup (the “EligibleEmployees”),toprovideincentivefortheEligibleEmployeestoworktowardsenhancingthevalueoftheCompanyandtheSharesforthebenefitoftheCompanyandtheshareholdersoftheCompanyasawhole.

2. ParticipantsoftheScheme:

TheBoardmayatitsdiscretiongrantoptionstotheEligibleEmployees.

3. GrantofoptionundertheScheme

AnofferofthegrantofanoptionshallbemadetoanEligibleEmployeebyletterinsuchformastheBoardmayfromtimetotimedetermine,requiringtheEligibleEmployeetoundertaketoholdtheoptiononthetermsonwhichitistobegrantedandtobeboundbytheprovisionsoftheScheme.Theoffershallremainopenforacceptanceforaperiodof14daysfromthedateofgrant.Subjecttothetermsoftheofferletter,thereshallbenominimumholdingperiodforthevestingorexerciseoftheoptions.

AnoptionshallbedeemedtohavebeenacceptedandtohavetakeneffectwhentheduplicatelettercomprisingacceptanceoftheoptiondulysignedbythegranteetogetherwitharemittanceinfavouroftheCompanyofHK$1.00bywayofconsiderationforthegrantoftheoptionshallhavebeenreceivedbytheCompanyonorbeforethelastdayforacceptanceassetoutintheofferletter.Theremittanceisnotinanycircumstancesrefundable.Onceaccepted,theoptionisgrantedasfromthedateofgrant.

4. TotalnumberofSharesavailableforissueundertheSchemeandpercentageofissuedsharecapitalasat31December2018:

Asat31December2018,thetotalnumberofShareswhichmaybeissuedundertheSchememustnotexceed2,056,471,372Shares,representingapproximately10%oftheissuedsharecapitaloftheCompany.

5. MaximumentitlementofeachparticipantundertheScheme:

UnlessapprovedbytheshareholdersoftheCompanyingeneralmeetinginthemannerprescribedintheListingRules,theBoardshallnotgrantoptionstoanygranteeiftheacceptanceofthoseoptionswouldresultinthetotalnumberofSharesissuedandtobeissuedtothatgranteeonexerciseofhisoptions(includingbothexercisedandoutstandingoptions)duringany12monthperiodexceeding1%ofthetotalSharestheninissue.

6. TheperiodwithinwhichtheoptionsmustbeexercisedundertheScheme:

TheperiodduringwhichanoptionmaybeexercisedinaccordancewiththetermsoftheScheme(“OptionPeriod”)shallbeaperiodoftimetobenotifiedbytheBoardtoeachgrantee,whichtheBoardmayinitsabsolutediscretiondetermine,savethatsuchperiodshallnotbemorethantenyearscommencingontheDateofGrant.

7. Thebasisofdeterminingtheexerciseprice:

ThesubscriptionpriceperSharepayableontheexerciseofanoptionistobedeterminedbytheBoardbutinanyeventshallbeatleastthehighestof:(i)theclosingpriceoftheSharesasstatedintheStockExchange’sdailyquotationssheetontheDateofGrant;(ii)theaverageoftheclosingpricesoftheSharesasstatedintheStockExchange’sdailyquotationsheetsforthefivebusinessdaysimmediatelyprecedingtheDateofGrant;and(iii)thenominalvalueoftheShareontheDateofGrant.




8. TheremaininglifeoftheScheme:

SubjecttoearlyterminationbytheCompanyingeneralmeetingorbytheBoard,theSchemeshallbevalidandeffectiveforaperiodof10yearscommencingfromthedateonwhichtheSchemeisdeemedtotakeeffectinaccordancewithitsterms,afterwhichtimenofurtheroptionswillbegrantedbuttheprovisionsoftheSchemeshallremaininfullforceandeffectinallotherrespects.Inparticular,alloptionsgrantedbeforetheendofsuchperiodshallcontinuetobevalidandexercisableaftertheendofsuchperiodinaccordancewiththetermsoftheScheme.

Competing Interests

NoneoftheDirectorshasinterestinanybusinesswhichcompetesorislikelytocompete,eitherdirectlyorindirectly,withthebusinessesoftheGroup.

Major Customers and Suppliers

TheGroup’scustomersfromwhomtherevenueofcontinuingoperationsderivedarewidelydispersed.Nocustomernorasinglegroupofcustomersundercommoncontrolofcontinuingoperationscontributed10%ormoreoftheGroup’srevenuefortheyearsended31December2018and2017.During2018, less than30%of theGroup’s revenuewasattributable to theGroup’s five largestcustomerscombined.

During2018,lessthan30%oftheGroup’spurchaseswasattributabletotheGroup’sfivelargestsupplierscombined.

Public Float

AccordingtotheinformationthatispubliclyavailabletotheCompanyandwithintheknowledgeoftheDirectorsasatthedateofthisannualreport,theCompanyhascompliedwiththepublicfloatrequirementundertheListingRules.

Audit Committee

Theauditedannualconsolidatedfinancialstatementsfortheyearended31December2018hasbeenreviewedbytheAuditCommitteeoftheCompany.

Pension Scheme

DetailsoftheGroup’spensionschemesaresetoutinthesectionofemployeebenefitsofNote15totheconsolidatedfinancialstatements.

Auditor

Theconsolidatedfinancialstatementsfortheyearended31December2018havebeenauditedbyPricewaterhouseCoopers,CertifiedPublicAccountants.Aresolutionfortheirre-appointmentastheauditoroftheCompanyfortheensuingyearistobeproposedattheforthcomingannualgeneralmeetingoftheCompany.

On25May2016,thetermofofficeoftheformerauditoroftheCompany,Ernst&Young,hasexpiredandPricewaterhouseCooperswasappointedastheauditoroftheCompanyonthesameday.

Saveasdisclosedabove,therehasbeennochangeintheauditoroftheCompanyduringthepastthreeyears.



Permitted Indemnity Provision

TheBye-lawsoftheCompanyprovidesthattheDirectorsshallbeindemnifiedandsecuredharmlessoutoftheassetsandprofitsoftheCompanyfromandagainstallactions,costs,charges,losses,damagesandexpenseswhichtheymayincurorsustainbyreasonofanyactdone,concurredinoromittedinorabouttheexecutionoftheirduty,orsupposedduty,intheiroffices,providedthatsuchindemnityshallnotextendtoanymatterinrespectofanyfraudordishonesty.

Closure of Register of Members

TheregisterofmembersoftheCompanywillbeclosedfromWednesday,29May2019toMonday,3June2019(bothdaysinclusive),for the purpose of determining the entitlement of the shareholders of the Company to attend and vote at the forthcoming annual general meetingoftheCompany.Notransferofsharesduringthesaidperiodwillberegistered.Inordertoqualifytoattendandvoteatthemeeting,allcompletedtransferforms,accompaniedbytherelevantsharecertificates,havetobelodgedwiththeCompany’sbranchshareregistrarinHongKong,TricorTengisLimited,atLevel22,HopewellCentre,183Queen’sRoadEast,HongKongforregistration,notlaterthan4:30p.m.onTuesday,28May2019.

OnbehalfoftheBoardPeng XinkuangChairman

HongKong,28March2019


Corporate Governance Report


TheCompanyfirmlybelievesthatgoodcorporategovernanceisfundamentalinensuringthattheCompanyiswellmanagedintheinterestsofallofitsstakeholders.TheBoardandseniormanagementarecommittedtomaintainahighstandardofcorporategovernancewhichprovidesaframeworkandasolidfoundationforachievingahighstandardofaccountabilityandtransparency.

Corporate Governance Practices

TheBoardhadrevieweditscorporategovernancepracticesthroughouttheyearended31December2018,andconfirmedthattheCompanyhascompliedwithallprinciplesandcodeprovisionsoftheCorporateGovernanceCodeandCorporateGovernanceReport(the“CGCode”)assetoutinAppendix14oftheListingRulesexceptforthefollowingdeviations:

CodeProvisionA.2.7

CodeprovisionofA.2.7requirestheChairmanoftheBoardtoholdmeetingsatleastannuallywiththenon-executivedirectors(includingindependentnon-executivedirectors)withouttheexecutivedirectorspresent.AstheChairmanoftheBoardisalsoanExecutiveDirector,theCompanyhastechnicallydeviatedfromthiscodeprovision.

CodeProvisionA.6.7

PursuanttocodeprovisionA.6.7,independentnon-executivedirectorsandothernon-executivedirectorsshouldattendgeneralmeetings.Mr.HanGensheng,IndependentNon-executiveDirector,didnotattendtheannualgeneralmeetingoftheCompanyfortheyear2018duetootherbusinessengagements.

Model Code for Securities Transactions by Directors

TheCompanyhasadoptedtheModelCodeassetoutinAppendix10totheListingRules.SpecificenquiryhasbeenmadeofallDirectorsandallofthemhaveconfirmedthattheyhavecompliedwiththerequiredstandardsetoutintheModelCodethroughouttheyearended31December2018.

Board of Directors

Throughouttheyearended31December2018,theCompanyhascompliedwiththeBoard’spracticesandproceduresassetoutintheListingRules.

BoardComposition

Asat31December2018,theBoardconsistsofelevenDirectors,includingsevenExecutiveDirectors,namely,Mr.PengXinkuang,Mr.LiuFeng,Mr.ChenDonghui,Mr.ChenChao,Mr.ZhuQiang,Ms.QinWenyingandMr.JiangQi;andfourIndependentNon-executiveDirectors,namely,Mr.ZhuoFumin,Mr.Chan,CharlesSheungWai,Mr.MaLishanandMr.HanGensheng.

Saveasdisclosedintheabovesection“DirectorsandSeniorManagement”,thereisnofinancial,business,familyorothermaterial/relevantrelationshipamongsttheDirectors.



RoleoftheBoard

TheBoard,whichisaccountabletoshareholdersforthelong-termperformanceoftheCompany,isresponsiblefordirectingthestrategicobjectivesoftheCompanyandoverseeingthemanagementofthebusiness.TheDirectorsarechargedwiththetaskofpromotingthesuccessoftheCompanyandmakingdecisionsinthebestinterestoftheCompany.

TheBoardformulates,approvesandmonitorsGroup-widestrategiesandpolicies,evaluatestheperformanceoftheCompany,andsupervisesthemanagementoftheCompany.ThemanagementoftheCompanyisresponsiblefortheday-to-dayoperationsoftheGroupundertheleadershipoftheChiefExecutiveOfficeroftheGroup.

ChairmanandChiefExecutiveOfficer

TheChairmanoftheCompanyisresponsibleforformulating,developingandreassessingtheGroup’sstrategiesandpoliciesandforallBoardmatters.TheChiefExecutiveOfficeroftheGroupisresponsiblefortheexecutionoftheGroup’sbusinessstrategiesandplans.ThepositionsoftheChairmanoftheCompanyandtheChiefExecutiveOfficeroftheGroupareheldbyseparateindividualssoastomaintainaneffectivesegregationofduties.


As at31December2018, theBoardhas11memberswith4of thembeing IndependentNon-executiveDirectors.This satisfiesboththerequirementsofhavingatleast3IndependentNon-executiveDirectorsunderRule3.10(1)oftheListingRules,aswellasofhavingIndependentNon-executiveDirectorsrepresentingatleastone-thirdoftheBoardunderRule3.10AoftheListingRules.TheIndependentNon-executiveDirectorsareexpresslyidentifiedinallcorporatecommunicationspursuanttotheListingRules.

ThefunctionsofIndependentNon-executiveDirectorsinclude:

• expressinganindependentviewandjudgementatBoardmeetings;• takingtheleadtoidentifypotentialconflictsofinterestsifany;• servingonBoardcommitteesifinvited;and• scrutinizingtheCompany’sperformanceandmonitoringperformancereporting.

TheIndependentNon-executiveDirectorshavemadeapositivecontributiontothedevelopmentoftheCompany’sstrategyandpoliciesthroughindependent,constructiveandinformedcomments.TheygavetheBoardandtheBoardcommitteesthebenefitoftheirskills,expertise,variedbackgroundsandqualificationsthroughregularattendanceandactiveparticipation.

Corporate Governance Function

TheBoardiscollectivelyresponsibleforperformingthecorporategovernancedutiesincluding:

(a) todevelop,reviewandimplementtheCompany’spoliciesandpracticesoncorporategovernance;(b) to review andmonitor the training and continuousprofessional developmentof theDirectors and seniormanagementof the

Company;(c) toreviewandmonitortheCompany’spoliciesandpracticesoncompliancewithlegalandregulatoryrequirements;(d) todevelop,reviewandmonitorthecodeofconductapplicabletoemployeesandtheDirectors;and(e) toreviewtheCompany’scompliancewiththeCGCodeanditsdisclosureintheCorporateGovernanceReport.




Meetings

TheBoardmeetsatleastfourtimesayearatapproximatelyquarterlyintervals.During2018,theBoardheldsixmeetingstoreviewthefinancial performance, annual and interim results, material investments, operating report, amendment to the terms of reference of the Audit CommitteeandtheNominationCommitteeoftheCompanyandtheBoardDiversityPolicy,adoptionofthedividendpolicyandtheDirectorNominationPolicy,andothersignificantmattersoftheGroup.TheBye-lawsoftheCompanyprovidesfortheconveningoftheBoardorBoardcommitteemeetingsbywayoftelephonicorsimilarcommunications.

Theattendance recordsof theDirectors at theBoardmeetings, theBoardcommitteemeetings and the annualgeneralmeetingof theCompanyforthefinancialyearended31December2018aresetoutbelow:

Attendance/Number of Meetings (during Director’s tenure)

BoardAudit

CommitteeNomination Committee

Remuneration Committee

Investment Committee

Annual General

Executive DirectorsPengXinkuang 6/6 3/3 1/1 1/1LiuFeng 6/6 1/1 1/1Chen Donghui 6/6 0/1Chen Chao 4/6 0/1Zhu Qiang 6/6 1/1 1/1Qin Wenying 6/6 1/1Jiang Qi (Note 1) 3/3 0/0ShiJansonBing (Note 2) 3/3 1/1

Independent Non-executive DirectorsZhuo Fumin 5/6 2/3 2/3 2/2 1/1Chan, Charles Sheung Wai 6/6 3/3 2/2 1/1MaLishan 6/6 3/3 2/2 1/1 1/1Han Gensheng 6/6 3/3 0/1

Notes:

1. Mr.JiangQiwasappointedasanExecutiveDirectoron13July2018.

2. Mr.ShiJansonBingresignedasanExecutiveDirectoron13July2018.

BoardpapersarecirculatedandtheCompanySecretaryattendsallregularboardmeetingstoadviseoncorporategovernanceandstatutorycompliancewhennecessary.Inaddition,theCompanymaintainsaprocedurefortheDirectorstoseekindependentprofessionaladviceinappropriatecircumstances.



Board Committees

TheBoardhasestablished4committees,namelyAuditCommittee,NominationCommittee,RemunerationCommitteeandInvestmentCommittee.ThesecommitteesperformtheirdistinctrolesinaccordancewiththeirrespectivetermsofreferenceandassisttheBoardinsupervisingcertainfunctionsoftheseniormanagement.TherespectivetermsofreferenceareavailableonthewebsitesoftheCompanyandtheStockExchange.TheCompanyhasprovidedsufficientresourcestotheBoardcommitteestoperformtheirduties.

Audit Committee

TheCompanyhas established theAuditCommitteeof theCompany.During the financial year ended31December2018, theAuditCommitteeoftheCompanycomprisesthreemembersasfollows:

IndependentNon-executiveDirectorsMr.Chan,CharlesSheungWai–ChairmanMr.ZhuoFumin–MemberMr.HanGensheng–Member

ThemajordutiesoftheAuditCommitteeoftheCompanyinclude:

• toconsiderandrecommendtheappointment,re-appointmentandremovalofexternalauditor;

• toapprovetheremunerationandtermsofengagementofexternalauditor,anyquestionsofresignationordismissalofthatauditor;

• toreviewandmonitorexternalauditor’sindependenceandobjectivityandtheeffectivenessoftheauditprocessinaccordancewithapplicablestandards;

• todiscusswithexternalauditorthenatureandscopeoftheauditandreportingobligationsbeforetheauditcommences;

• todevelopandimplementpolicyontheengagementofanexternalauditortosupplynon-auditservicesandtomakerecommendationofanymeasuresforimprovementstobetaken;

• toreviewtheinterimandannualfinancialstatementsandtheinterimandannualreportsbeforesubmissiontotheBoard;

• toreviewtheGroup’sfinancialcontrols,riskmanagementandinternalcontrolandensurethatthemanagementhasdischargeditsdutytohaveeffectiveriskmanagementandinternalcontrolsystems;

• toconsidermajorinvestigationfindingsonriskmanagementandinternalcontrolmattersasdelegatedbytheBoardoronitsowninitiativeandmanagement’sresponse;

• to reviewand consider the adequacyof resources, qualifications and experienceof staff of theGroup’s accounting and financialreportingfunction,theirtrainingprogrammesandbudget,andthechangesinthenatureandextentofsignificantrisks;

• to consider any significant or unusual items that are, ormayneed to be, reflected in reports and accounts andmust give dueconsideration to anymatters that have been raisedby the staff responsible for the accounting and financial reporting function,complianceofficerorauditors;

• toreviewtheinternalauditprogramme,ensureco-ordinationbetweentheinternalandexternalauditors,andensurethattheinternalauditfunctionisadequatelyresourcedandhasappropriatestandingwithintheGroupandtoreviewandmonitortheeffectivenessoftheinternalauditfunction;




• to review the external auditor’smanagement letter, anymaterial queries raisedby the auditor tomanagement in respect of theaccountingrecords,financialaccountsorsystemsofcontrolandmanagement’sresponseandtoensurethattheBoardwillprovideatimelyresponsetotheissuesraised;and

• toreviewtheGroup’sfinancialandaccountingpoliciesandpractices.

TheAuditCommitteeoftheCompanyhasexplicitauthoritytoinvestigateintoanymatterunderthescopeofitsdutiesandtheauthoritytoobtainindependentprofessionaladvice.Itisgivenfullaccesstoreasonableresourcesandassistancefromthemanagementtodischargeitsdutiesproperly.

In2018,theAuditCommitteeoftheCompanyheldthreemeetingsto,amongotherthings,reviewtheinterimandannualresultsoftheGroup,theamendmenttothetermsofreferenceoftheAuditCommitteeoftheCompanyandreviewothersignificantmatters.TheAuditCommitteeoftheCompanyhadreviewedtheGroup’ssignificantinternalcontrolandfinancialmatters,anddiscussedwiththemanagementoftheCompanyandtheexternalauditors.TheAuditCommitteeoftheCompanyhadalsoreviewedtheauditplansandfindingsoftheexternalauditors,theindependenceoftheexternalauditors,theGroup’saccountingprinciplesandpractices,theListingRulesandstatutorycompliance,financialreporting,internalcontrolandriskmanagement.Theattendancerecordofeachcommitteememberisshownonpage68inthesectionofMeetingsofthisreport.

TheAuditCommitteeoftheCompanyhadmettheexternalauditorsthreetimesduringthefinancialyearended31December2018.TherewasnodisagreementbetweentheBoardandtheAuditCommitteeoftheCompanyregardingtheselectionandappointmentofexternalauditors.TheAuditCommitteeoftheCompanyissatisfiedthattheexternalauditorsareabletomeettheauditobligationsoftheCompany.

TheexternalauditorsoftheCompanywereinvitedtoattendthemeetingwithoutthepresenceofthemanagementtodiscusswiththeAuditCommitteeoftheCompanyissuesarisingfromtheauditandfinancialreportingmatters.

NominationCommittee

TheCompanyhas established theNominationCommitteeof theCompany.During the financialyear ended31December2018, theNominationCommitteeoftheCompanycomprisesthreemembersasfollows:

ExecutiveDirectorMr.PengXinkuang–Chairman

IndependentNon-executiveDirectorsMr.ZhuoFumin–MemberMr.MaLishan–Member

ThemajordutiesoftheNominationCommitteeoftheCompanyinclude:

• toidentifyindividualssuitablyqualifiedtobecomeBoardmembersandselectormakerecommendationstotheBoardontheselectionofindividualsnominatedfordirectorships;

• toreviewthestructure,sizeandcomposition(includingthediversityofskills,knowledge,experienceandperspectives)oftheBoardatleastannuallyandmakerecommendationsonanyproposedchangestotheBoardtocomplementtheCompany’scorporatestrategy;

• todevelop and review, as appropriate, theBoarddiversity policy (“BoardDiversityPolicy”) and anymeasurable objectives forimplementingsuchBoardDiversityPolicyasmaybeadoptedbytheBoardfromtimetotimeandtoreviewtheprogressonachievingtheobjectives;



• developandreview,asappropriate,thepolicyfornominationofDirectorssettingouttheprocessandcriteriatoselectandrecommendtotheBoardcandidatesfordirectorship;

• toassesstheindependenceoftheIndependentNon-executiveDirectors,withregardtotherequirementsundertheListingRules;and

• tomakerecommendationstotheBoardontheappointmentorre-appointmentofDirectorsandsuccessionplanningforDirectorsinparticulartheChairmanandtheChiefExecutive.

In2018,theNominationCommitteeoftheCompanyheldthreemeetings.TheNominationCommitteeoftheCompanyhadreviewedthestructure,size,compositionanddiversityoftheBoard,theamendmenttothetermsofreferenceoftheNominationCommitteeoftheCompanyandtheBoardDiversityPolicy,andadoptionoftheDirectorNominationPolicy.Theattendancerecordofeachcommitteememberisshownonpage68inthesectionofMeetingsofthisreport.

TheCompanyhad also assessed the independenceof all the IndependentNon-executiveDirectors and considers that all of them areindependentunderRule3.13oftheListingRules,havingtakenintoaccount(i)theirannualconfirmationonindependenceasrequiredundertheListingRules,(ii)theabsenceofinvolvementinthedailymanagementoftheCompanyand(iii)theabsenceofanyrelationshipsorcircumstanceswhichwouldinterferewiththeexerciseoftheirindependentjudgment.

BoardDiversityPolicy

TheBoardadoptedtheBoardDiversityPolicyon29August2013andamendediton19December2018,settingouttheapproachtoachievediversitywithin theBoard. Inassessing theBoardcomposition, theNominationCommitteeof theCompanywould take intoaccountvariousaspectssetoutinthepolicy,includingbutnotlimitedtogender,age,culturalandeducationalbackground,ethnicity,professionalqualifications,skills,knowledge,industryandregionalexperience,andanyotherfactorsthattheBoardmayconsiderrelevantandapplicablefromtimetotime.Inidentifyingandselectingsuitablecandidatesfordirectorships,theNominationCommitteeoftheCompanywouldconsiderthecandidate’scharacter,qualifications,experience,independenceandotherrelevantcriterianecessarytocomplementthecorporatestrategyandachieveboarddiversity,whereappropriate,beforemakingrecommendationtotheBoard.ThecurrentBoardisconsideredwell-balancedandofadiversemixappropriateforthebusinessoftheGroup.SelectionofcandidateswouldbebasedontheCompany’sdirectornominationpolicyandwouldalsotakeintoaccounttheBoardDiversityPolicy.TheNominationCommitteeoftheCompanywoulddiscussandagreeonmeasurableobjectivesforachievingdiversityontheBoard,wherenecessary,andrecommendthemtotheBoardforadoption.TheNominationCommitteeoftheCompanywouldalsomonitortheimplementationoftheBoardDiversityPolicybyconductingperiodicreviewasappropriateandrecommendrevisions,ifany,totheBoardforconsiderationandapproval.

ThenominationproceduresfortheDirectorscanbeaccessedfromthewebsiteoftheCompany.

DirectorNominationPolicy

TheGroupadoptedadirectornominationpolicy(the“DirectorNominationPolicy”)on19December2018.Asummaryofthispolicyisdisclosedasbelow.

1. Introduction

1.1 TheCompanyhastheBoardDiversityPolicyinplaceincompliancewiththeListingRules.Thisdirectornominationpolicy(“Procedures”)aimsatapplyingtheprinciplesoftheBoardDiversityPolicyandotherprovisionsundertheListingRulestoimprovetransparencyaroundtheprocessandcriteriaadoptedbytheNominationCommitteeoftheCompanyinselectingandrecommendingcandidatesasDirectorsoftheCompany.

1.2 TheseProceduresshallbereviewedbytheNominationCommitteeoftheCompanyatleastannuallytoensurefullcompliancewiththeListingRules,theCompany’sBye-laws(“Bye-laws”)andapplicablethelawsofBermuda.




2. ApplicableBye-laws

2.1 AccordingtoBye-law86.(2)oftheBye-laws,theDirectorsshallhavethepowerfromtimetotimeandatanytimetoappointanypersonasaDirectoreithertofillacasualvacancyontheBoardorasanadditiontotheexistingBoard.

2.2 TheBoardshallgivedueconsiderationtotherecommendationoftheNominationCommitteeoftheCompanyapplyingthefollowingprocedureswhenapprovinganyappointmentofDirectors.

3. ProceduresfornominationofaDirector

AnyDirectormaynominateapersonforappointment,electionorre-electionasaDirectorbytheBoardoratthegeneralmeetinguponfirstobtainingthefollowinginformation:

(a) awrittenconsentgivenbythecandidate(“Candidate”)tobeappointed,electedorre-elected(asthecasemaybe)asaDirectorstatinghisconsentforactingasaDirectorandthesupplyanddisclosureofhisinformationasrequiredundertheListingRulesandotherapplicablelawsandregulations;

(b) detailsofthecharacter,qualifications,background,experienceandotherbusinessinterestsoftheCandidateforthepurposeofRules3.09,3.10and3.12oftheListingRules,togetherwithsupportingdocumentsevidencingthesame(ifapplicable);

(c) (for aCandidatewhomaybenominated as anNon-executiveDirector or IndependentNon-executiveDirector) detailsassessingtheCandidate’sindependenceunderCodeProvisionsA.3.3(BestRecommendedPractice)andA.4.3oftheCGCode,andRule3.13oftheListingRules,togetherwithsupportingdocumentsevidencingthesame(ifapplicable);

(d) detailsoftheCandidate’sinformation,togetherwithsupportingdocumentsevidencingthesame(ifapplicable),asrequiredtobedisclosedunderRule13.51(2)oftheListingRules;

(e) (foraCandidatewhomaybenominatedasanIndependentNon-executiveDirectoratageneralmeeting)explanationfromtheCandidateforinformationrequiredunderCodeProvisionA5.5oftheCGCode;

(f) (for aCandidatewhomaybenominated tobeappointedas amemberof theAuditCommitteeof theCompany)detailsassessingtheCandidate’sindependenceunderCodeProvisionC.3.2oftheCGCode,togetherwithsupportingdocumentsevidencingthesame;and

(g) up-to-datecontactdetailsoftheCandidate.

4. CriteriafornominationofaDirector

4.1 Uponobtainingtheinformationlistedinparagraph3above,theNominationCommitteeoftheCompanyshallreviewwhethertheCandidateisqualifiedtobeappointed,electedorre-electedintotheBoardundertherelevantListingRulesandCGcodeprovisions.



4.2 Uponfulfilmentoftheconditionsetoutinparagraph4.1,theNominationCommitteeoftheCompanyshallconsiderthefollowingfactorsinassessingthesuitabilityoftheCandidatefordirectorship:

(a) reputationforintegrity;

(b) accomplishmentandexperienceinthepropertydevelopmentsector;

(c) commitmentinrespectofavailabletimeandrelevantinterest;

(d) whether(andhow)theCandidatecancontributehis/herperspectives,skillsandexperiencetotheBoard;

(e) theBoardDiversityPolicyandanymeasurableobjectivesadoptedby theNominationCommitteeof theCompanyforachievingdiversityontheBoard,includingbutnotlimitedtogender,age,culturalandeducationalbackground,ethnicity,professionalexperience,skills,knowledgeandlengthofservice;and

(f) suchotherperspectivesappropriatetotheCompany’sbusiness.

Thesefactorsareforreferenceonly,andnotmeanttobeexhaustiveanddecisive.TheNominationCommitteeoftheCompanyhasthediscretiontonominateanyperson,asitconsidersappropriate.

4.3 UpontheCandidate’sfulfilmentoftheabovecriteria,theNominationCommitteeoftheCompanyshallconveneameetingtodiscussandconsidertherecommendationoftheCandidatetotheBoardforappointmentasaDirector.

Appointment,Re-electionandRemovalofDirectors

Pursuanttothelettersofappointment,allIndependentNon-executiveDirectorsareappointedforatermoftwoyearssubjecttoretirementbyrotationandre-electionattheannualgeneralmeetingoftheCompanyinaccordancewiththeBye-lawsoftheCompany.

Theproceduresandprocessesofappointment,re-electionandremovaloftheDirectorsarelaiddownintheBye-lawsoftheCompany.Recommendationsforappointmentsandre-appointmentsoftheDirectorsandappointmentsofthemembersofvariousBoardcommitteesaremadebytheNominationCommitteeoftheCompanytotheBoardforconsiderationandappointment.AnyDirectorappointedbytheBoardshallholdofficeonlyuntil,andshallretireon,thenextfollowingannualgeneralmeetingoftheCompany.TheBye-lawsoftheCompanyprovidesthatateachannualgeneralmeetingoftheCompany,one-thirdoftheDirectorsforthetimebeing(or,ifthenumberisnotamultipleofthree,thenumbernearesttobutnotlessthanone-third)shallretirefromofficebyrotation.IftheDirectorsobligedtoretirewhothenwishtoretireandnotofferthemselvesforre-electionaccountforlessthanone-third,thosewhohavebeenlongestinofficesincetheirlastre-electionorappointmentshallretiretomakeupfortheshortfall.EachDirectorshouldretireatleastonceeverythreeyears.AretiringDirectoriseligibleforre-electionbytheshareholdersattheannualgeneralmeetingoftheCompany.

Mr.PengXinkuang,Mr.ChenDonghui,Mr.ChenChaoandMs.QinWenyingwillberetiringbyrotationpursuanttothebye-law87ofBye-lawsoftheCompanyattheforthcomingannualgeneralmeetingoftheCompany,andMr.JiangQiwillberetiringpursuanttothebye-law86(2)ofBye-lawsoftheCompanyattheforthcomingannualgeneralmeetingoftheCompany.TheretiringDirectorsareeligibleforre-electionattheforthcomingannualgeneralmeetingoftheCompany.




Remuneration Committee

TheCompanyhasestablishedtheRemunerationCommitteeoftheCompany.Duringthefinancialyearended31December2018,theRemunerationCommitteeoftheCompanycomprisesthreemembersasfollows:

IndependentNon-executiveDirectorsMr.MaLishan–ChairmanMr.Chan,CharlesSheungWai–MemberMr.ZhuoFumin–Member

ThemajordutiesoftheRemunerationCommitteeoftheCompanyinclude:

• tomakerecommendationstotheBoardontheCompany’spolicyandstructureforallremunerationoftheDirectorsandseniormanagementoftheCompany;

• toreviewandapprovethemanagement’sremunerationproposalswithreferencetotheBoard’scorporategoalsandobjectives;

• tomakerecommendationstotheBoardontheremunerationpackagesofindividualExecutiveDirectorsandseniormanagement;

• tomakerecommendationstotheBoardontheremunerationofNon-executiveDirectors;

• toconsidersalariespaidbycomparablecompanies,timecommitmentandresponsibilitiesandemploymentconditionselsewhereintheGroup;

• toreviewandapprovecompensationpayabletoExecutiveDirectorsandseniormanagementforanylossorterminationofofficeorappointmenttoensurethatitisconsistentwithcontractualtermsandisotherwisefairandnotexcessive;

• toreviewandapprovecompensationarrangementsrelatingtodismissalorremovaloftheDirectorsformisconducttoensurethattheyareconsistentwithcontractualtermsandareotherwisereasonableandappropriate;and

• toensurethatnoDirectororanyofhisassociatesisinvolvedindecidinghisownremuneration.

TheRemunerationCommitteeoftheCompanyshouldconsulttheChairmanoftheCompanyand/ortheChiefExecutiveOfficeroftheGroupabouttheirremunerationproposalsforotherExecutiveDirectorsandhaveaccesstoindependentprofessionaladviceifnecessary.

In2018,theRemunerationCommitteeoftheCompanyheldtwomeetings.TheRemunerationCommitteeoftheCompanyhadreviewedtheCompany’sremunerationpoliciesandtheremunerationpackagesoftheDirectors,reviewedandrecommendedtheremunerationoftheDirectors,andreviewedothersignificantmatters.NoDirectorshouldinvolveindecidinghisownremuneration.Theattendancerecordofeachcommitteememberisshownonpage68inthesectionofMeetingsofthisreport.

Details of theDirectors’ and seniormanagement’s remuneration are set out innote 11 and42(b)(viii) to the consolidated financialstatements.Inaddition,pursuanttotheCodeProvisionB.1.5oftheCGCode,theannualremunerationofothermembersoftheseniormanagement(otherthantheDirectors)bybandsfortheyearended31December2018issetoutbelow:

Number of employees

RMB0toRMB1,000,000 1RMB1,000,001toRMB3,000,000 3



Investment Committee

TheCompanyhas established the InvestmentCommittee of theCompany.During the financial year ended31December 2018, theInvestmentCommitteeoftheCompanycomprisesfourmembersasfollows:

IndependentNon-executiveDirectorsMr.MaLishan–Member

ExecutiveDirectorsMr.PengXinkuang–ChairmanMr.LiuFeng–MemberMr.ZhuQiang–Member

ThemajordutiesoftheInvestmentCommitteeoftheCompanyinclude:

• to reviewthemanagement’s recommended investmentopportunities,objectives, strategies,policiesandguidelines thatdirect theinvestmentoftheportfolio;

• to review themanagement’s recommendedportfolio financial goals and requirements, including asset allocation, risk tolerance,investmenttimehorizonandcapitaladequacy;

• toreviewandevaluatetheperformanceoftheinvestmentportfolioregularlytoassureadherencetopolicyguidelinesandmonitorprogresstowardachievinginvestmentobjectives;and

• toreviewthesharespurchase,redemptionorothershareacquisitionactivitiesbeconductedbytheCompany.

In2018,theInvestmentCommitteeoftheCompanyheldonemeeting.TheInvestmentCommitteeoftheCompanyhadreviewedtheCompany’sinvestments.Theattendancerecordofeachcommitteememberisshownonpage68inthesectionofMeetingsofthisreport.

Directors’ Training and Commitment

Upon appointment, eachDirector receives appropriate induction training and coaching todevelop individual skills as required.TheDirectorsarealsoprovidedwithupdatesontherelevantnewlaws,regulationsandchangingcommercialrisksintheGroup’soperatingenvironmentthroughregularpresentationsandmeetings.TheyalsohavetheopportunitytovisittheGroup’soperationalfacilitiesandmeetwithmanagementtogainabetterunderstandingofbusinessoperationsandgovernancepractices.

TheDirectorshaveconfirmedthattheyhavecompliedwiththeCodeProvisionA.6.5oftheCGCodeondirectors’training.Duringthefinancialyearended31December2018,theDirectorshaveparticipatedincontinuousprofessionaldevelopmentbyattendingseminars,in-housebriefingorreadingmaterialsonthefollowingtopicstodevelopandrefreshtheirknowledgeandskillsandprovidedtheirrecordsoftrainingtotheCompany.




Topics

Name of DirectorsLegal, Regulatory and

Corporate GovernanceGroup’s Business

and Industry UpdatesDirectors’ Roles,

Functions and Duties

Executive DirectorsPengXinkuang ✓ ✓ ✓

LiuFeng ✓ ✓ ✓

Chen Donghui ✓ ✓ ✓

Chen Chao ✓ ✓ ✓

Zhu Qiang ✓ ✓ ✓

Qin Wenying ✓ ✓ ✓

Jiang Qi (appointed on 13 July 2018) ✓ ✓ ✓

Independent Non-executive DirectorsZhuo Fumin ✓ ✓ ✓

Chan, Charles Sheung Wai ✓ ✓ ✓

MaLishan ✓ ✓ ✓

Han Gensheng ✓ ✓ ✓

ConfirmationhasbeenreceivedfromtheDirectorsthattheyhaveprovidedsufficienttimeandattentiontotheaffairsoftheGroup.Besides,theDirectorshavebeendisclosingtotheCompanytheirinterestsasthedirectorandotherofficeinotherpubliccompaniesandorganisationsinatimelymannerandupdatetheCompanyonanysubsequentchanges.

Directors’ and Officers’ Liabilities

TheCompanyhasarrangedappropriateliabilityinsurancetoindemnifyitsDirectorsandofficersfortheirliabilitiesarisingoutofcorporateactivities.Theinsurancecoverageisreviewedonanannualbasis.Duringthefinancialyearended31December2018,nolegalactionwasmadeagainstanyoftheDirectorsandofficersinrelationtodutiesperformedfortheCompany.

Company Secretary

ThecompanysecretaryoftheCompanyisanemployeeoftheCompany,andisresponsibleforfacilitatingtheproceduresoftheBoardandadvisingtheBoardoncorporategovernancematters.Duringtheyearunderreview,thecompanysecretaryoftheCompanyhastakennotlessthan15hoursofrelevantprofessionaltraining.

Directors’ Responsibilities for the Financial Statements

TheresponsibilityoftheDirectorsistopreparethefinancialstatements,whiletheresponsibilityoftheauditorsistoexpressanopinionontheGroup’sconsolidatedfinancialstatementsbasedontheiraudit,forparticularspleaserefertothe“IndependentAuditor’sReport”sectionofthisreport.TheBoardshouldensuresuchfinancialstatementsgiveatrueandfairviewofthestateofaffairsoftheGroupandoftheresultsandcashflowsfortherelevantfinancialperiod.Inregardofthis,theDirectorshaveselectedsuitableaccountingpoliciesandappliedthemconsistently,madejudgementsandestimatesthatareprudent,fairandreasonableandpreparedthefinancialstatementsonagoingconcernbasis.Besides,theDirectorsarealsoresponsibleforensuringthattheGroupoperatesanefficientfinancialreportingsystem,keepsproperaccountingrecordswhichdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheGroupandtheGrouphasemployedsufficientqualifiedstafftoassistthepreparationoffinancialstatements.



Risk Management and Internal Control

TheBoardhasoverallresponsibilitiesformaintainingsoundandeffectiveinternalcontrolsystemoftheGroup.TheGroup’ssystemofinternalcontrolincludesadefinedmanagementstructurewithlimitsofauthoritydesignedtohelpthebusinesstoachieveitsobjectives,tosafeguardassetsagainstunauthoriseduseordisposition,toensurethemaintenanceofproperaccountingrecordsfortheprovisionofreliablefinancialinformationforinternaluseorforpublication,andtoensurecompliancewithrelevantlegislationandregulations.Thesystemisdesignedtoprovidereasonable,butnotabsolute,assuranceagainstmaterialmisstatementorlossandtomanageratherthaneliminaterisksoffailureinoperationalsystemsandachievementoftheGroup’sobjectives.

Duringtheyearended31December2018,theBoardexaminedtheeffectivenessoftheriskmanagementandinternalcontrolsystemoftheGroupthroughtheAuditCommitteeoftheCompanyonanannualbasis,includingfinancial,operationalcomplianceandriskmanagementaspects,andconsideredthattheriskmanagementandinternalcontrolsystemiseffectiveandadequateandtheGrouphascompliedwiththecodeprovisionsonriskmanagementandinternalcontroloftheCGCode.

Auditor’s Remuneration

Duringtheyear,theauditoroftheCompany,PricewaterhouseCoopers,CertifiedPublicAccountantschargedRMB4.90millionforannualauditservicesandnonon-auditserviceswasrendered.

Investor Relations

TheCompanyusesanumberofformalcommunicationschannelstoaccounttoitsshareholdersandinvestorsfortheperformanceoftheCompany.Theseinclude(i)thepublicationofinterimandannualreports;(ii)theannualgeneralmeetingorspecialgeneralmeetingoftheCompanyprovidingaforumforshareholdersoftheCompanytoraisecommentsandexchangingviewswiththeBoard;(iii)updatedandkeyinformationoftheGroupavailableonthewebsiteoftheCompany;(iv)theCompany’swebsiteofferingacommunicationplatformbetweentheCompanyanditsshareholdersandinvestors;and(v)theCompany’sshareregistrarsinHongKongservingtheshareholdersoftheCompanyregardingallshareregistrationmatters.

TheCompanyaimstoprovideitsshareholdersandinvestorswithhighstandardsofdisclosureandfinancialtransparency.TheBoardiscommitted to provide clear and detailed information of the Group to shareholders of the Company in a timely manner and on a regular basis through thepublicationof interim and annual reports and/ordispatching circular, notices, announcements andother corporatecommunications.

InvestorsmaywritetotheCompanyattheprincipalplaceofbusinessorviaemailtogeneral@sregroup.com.hkforanyenquiries.

Duringtheyearended31December2018,thereisnochangeintheconstitutionaldocumentsoftheCompany.TheMemorandumofAssociationandBye-lawsoftheCompanyareavailableonthewebsiteoftheCompany.

Shareholders’ Right to convene and put forward Proposals at Special General Meetings

PursuanttotheBye-lawsoftheCompany,membersoftheCompanyholdingatthedateofdepositoftherequisitionnotlessthanone-tenthofthepaidupcapitaloftheCompanycarryingtherightofvotingatgeneralmeetingsoftheCompanyshallatalltimeshavetheright,bywrittenrequisitiontotheBoardandtheSecretaryoftheCompanyattheprincipalplaceofbusinessattheaddresswhichsetoutinCorporateInformationofthisannualreport,torequireaspecialgeneralmeetingoftheCompanytobecalledbytheBoardforthetransactionofanybusinessspecifiedinsuchrequisition;andsuchmeetingshallbeheldwithintwomonthsafterthedepositofsuchrequisition.Ifwithintwenty-onedaysofsuchdeposittheBoardfailstoproceedtoconvenesuchmeeting,therequisitioniststhemselvesmaydosointhesamemanner.



Dividend Policy

TheBoardhasapprovedandadoptedadividendpolicyon19December2018(the“DividendPolicy”).

TheaimofthisDividendPolicyistoallowshareholdersoftheCompanytoparticipateintheCompany’sprofitswhilstretainingadequatereservesforthefuturegrowthanddevelopmentoftheGroup.

Inconsideringanydividendpayout,theBoardshallconsiderthefollowing:

• theCompany’sactualandexpectedfinancialperformance;

• retainedearningsanddistributablereservesoftheCompanyandeachofthemembersoftheGroup;

• theGroup’sworkingcapitalrequirements,capitalexpenditurerequirementsandfutureexpansionplans;

• theGroup’sliquidityposition;

• generaleconomicconditions,businesscycleoftheGroup’sbusinessandotherinternalorexternalfactorsthatmayhaveanimpactonthebusinessorfinancialperformanceandpositionoftheCompany;and

• otherfactorsthattheBoarddeemsrelevant.

Thepayment of dividend is also subject to compliancewith applicable laws and regulations including the laws ofBermuda and theCompany’sBye-laws.TheBoardwillcontinuallyreviewtheDividendPolicyfromtimetotimeandtherecanbenoassurancethatdividendswillbepaidinanyparticularamountforanygivenperiod.


Independent Auditor’s Report

To The Shareholders of SRE Group Limited(incorporated in Bermuda with limited liability)

Opinion

Whatwehaveaudited

TheconsolidatedfinancialstatementsofSREGroupLimited(the“Company”)anditssubsidiaries(the“Group”)setoutonpages88to216,whichcomprise:

• theconsolidatedstatementoffinancialpositionasat31December2018;

• theconsolidatedstatementofprofitorlossandothercomprehensiveincomefortheyearthenended;

• theconsolidatedstatementofchangesinequityfortheyearthenended;

• theconsolidatedstatementofcashflowsfortheyearthenended;and

• thenotestotheconsolidatedfinancialstatements,whichincludeasummaryofsignificantaccountingpolicies.

Our opinion

Inouropinion,theconsolidatedfinancialstatementsgiveatrueandfairviewoftheconsolidatedfinancialpositionoftheGroupasat31December2018,andofitsconsolidatedfinancialperformanceanditsconsolidatedcashflowsfortheyearthenendedinaccordancewithHongKongFinancialReportingStandards(“HKFRSs”)issuedbytheHongKongInstituteofCertifiedPublicAccountants(“HKICPA”)andhavebeenproperlypreparedincompliancewiththedisclosurerequirementsoftheHongKongCompaniesOrdinance.

Basis for OpinionWeconductedourauditinaccordancewithHongKongStandardsonAuditing(“HKSAs”)issuedbytheHKICPA.Ourresponsibilitiesunder those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statementssectionofthisreport.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

Independence

WeareindependentoftheGroupinaccordancewiththeHKICPA’sCodeofEthicsforProfessionalAccountants(the“Code”),andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeCode.

Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidatedfinancial statements of the current period. These matters were addressed in the context of our audit of the consolidated financialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.

Keyauditmattersidentifiedinourauditaresummarisedasfollows:

• Fairvalueofinvestmentproperties

• Recoverabilityofreceivables

• Classificationasasubsidiaryorjointventureuponchangeofequityinterestsduringtheyear

• Goingconcernassumption




Key Audit Matters (continued)

Key Audit Matter 1

Fair value of investment properties How our audit addressed the Key Audit Matter

Refer to Note 3 (Critical accounting judgements and estimates)andNote18(Investmentproperties) totheconsolidatedfinancialstatements.

TheGroup’sinvestmentpropertiesweremeasuredatfairvalueandcarried at approximately RMB5,408 million as at 31 December2018with anet fair valuegainof approximatelyRMB46millionfor the year then ended.The fair values of investment propertiesweredeterminedbytheGroupbasedonthevaluationsperformedby an independent professional valuer (the “Valuer”) engaged bytheGroup.

We focused on this area due to the valuation results of the investment properties are significant to the consolidated financial statements and the valuation of the investment properties washighly dependent on a range of assumptions, such as future rental rates, revisionary rates, estimated vacancy rates, yield rates and refurbishmentrates.

WeevaluatedtheValuer’scompetence,capabilitiesandobjectivityby considering its qualification, relevant experience andrelationshipwiththeGroup.

We obtained and read the valuation reports issued by theValuer for each of the investment properties, and assessed theappropriatenessofvaluationmethodsappliedbytheValuer.

For all the valuation reports, we matched the data includingrental income, rentable areas and lease terms, to the underlyingpropertyrecordsheldbytheGroup.Wecheckedthedatausedinthe valuations to the rent rolls and the rent rates as stated in the relevantleasecontracts,ifapplicable,aswellasthelocation,thesizeandtheageofthepropertieswithpropertycertificates.

Wepaidsitevisittoeachoftheinvestmentpropertiesandobservedphysical conditions of the properties. We also discussed withmanagementtounderstandthebasisoftheirconsiderationappliedin the property valuations in light of physical conditions of the properties.

Wecorroboratedthekeyassumptionsusedinthevaluationsofallthe investment properties, including future rental rates, revisionary rates, estimated vacancy rates, yield rates and refurbishment ratesbygatheringandanalysingthedataofcomparablepropertiesinthemarketandthecharacteristicsoftheGroup’sproperties.

We involved our internal valuation specialists to assist us in assessing the methodologies used by the Valuer and comparedthevaluationsof investmentproperties, on a samplebasis, toourindependentlyformedmarketexpectations.

We also tested the mathematical accuracy used in the valuations for alltheinvestmentpropertiesbyrecalculatingthevaluationvalues.

Based on the above procedures performed, we found the datausedandthekeyassumptionsadoptedinmanagement’svaluationassessments,weresupportablebytheevidencewegathered.




Key Audit Matter 2

Recoverability of receivables How our audit addressed the Key Audit Matter

Refer to Note 3 (Critical accounting judgements and estimates),Note25(Otherreceivables)andNote26(Tradereceivables)totheconsolidatedfinancialstatements.

As at 31 December 2018, the Group had a balance of otherreceivablesofapproximatelyRMB2,624million(beforeprovision)and a balance of trade receivables of approximately RMB45million (before provision), with a provision for impairment ofapproximately RMB259 million and approximately RMB28million, respectively. The impairments were provided for thosereceivables which are subject to high collectability risk due tofinancial difficulty of the debtors, default in payments, relevantlegal disputes and other indicators for a decrease in the estimated futurecashflows.

The Group estimated impairment losses at year end based onthe available information, including the financial position of thedebtors, litigationprogress,valueofpledgedassets,andcreditriskofcounterpartiesetc.

We focused on this area because the amount of impairmentis significant to the consolidated financial statements and the significant judgements and estimates involved in assessingrecoverabilityofthereceivables.

Weassessedandtestedthedesignandoperatingeffectivenessofkeymanagementcontrolsoverimpairmentassessment.

Forother receivableswithmaterialbalance,weobtainedandreadtheagreementsandthesupplementalagreementsifapplicable.

For receivables with disputes, we checked the litigation progress,latest court decisions, and legal counsel’s opinion whereasnecessary.

Wealsocheckedthesettlementhistoryofthereceivablesaswellassubsequentsettlementafteryearenddateonsamplebasis.

We further evaluated management’s assessment on impairment provisionsonreceivableswithmaterialbalanceby:

• interviewing and collaborating with the Group’s riskmanagement department responsible for the collection ofthereceivablesindisputesorformonitoringthestatusofthereceivables to assess the rationaleofmaking the accountingestimates;

• assessing the financial position of the debtors, whereinformationisavailable;and

• assessing other alternative and available sources ofsettlement, including the value of the pledged assets or the financialstatusofthefinancialguarantors.

Based on our audit procedures performed, we found themanagement’s assessment on impairment provision of receivableswassupportablebyevidenceobtained.





Key Audit Matter 3

Classification as a subsidiary or joint venture upon change of equity interests during the year

How our audit addressed the Key Audit Matter

Refer to Note 3 (Crit ica l accounting judgements andestimates), Note 22 (Investments in joint ventures), Note40 (Disposal of subsidiaries) and Note 41 (Subsidiaries withmaterial non-controlling interests and transactions with non-controllinginterests)totheconsolidatedfinancialstatements.

Duringtheyear,asubsidiaryoftheGroupbecameajointventurethrough partial disposal of equity interests which resulted froma loss of control in the subsidiary. Consequently, the remainingequity interestheldby theGroupwas remeasuredat its fairvalueand a gain arose. The carrying value of the Group in the jointventure was approximately RMB196 million as at 31 December2018.TheGroupalsopartiallydisposedcertainequityinterestsinawholly-ownedsubsidiarywithoutlosingcontrolwhichresultedintransactionswithnon-controllinginterests.

Wefocusedonthisareabecauseof thecomplexity incooperatingarrangements, as well as the management’s judgement forappropriate classification and accounting treatment relating to subsidiarie and joint ventures. Inappropriate classification, eitheronacquisitionand/ordisposalmayhaveamaterial impactontheconsolidatedfinancialstatements.

In assessingmanagement’s judgement on whether control over asubsidiarywaslostduetopartialdisposalsofequityinterestsduringtheyearended31December2018,weperformedauditproceduresasfollows:

• We examined the legal documents associated with thosedisposals, and inquiredmanagement tounderstand the keyterms, including rights of the investors, dispute resolution provisions, termination provisions, governance structures, and profit-sharing arrangements, and then assessed theseagainstaccountingstandardsbasedonourownexpertiseandexperienceofapplyingtheminsimilarsituations;

• We confirmed the completeness of the contracts andagreements associated with those disposals, as well as anysubsequent supplementary or amendments, by seekingconfirmationfromthecounterparties;

• We considered the adequacy of the Group’s disclosures inrespect of the classification and carrying value of the newjointventureresultingfromthedisposals.

Based on our audit procedures performed, we consider theclassificationasasubsidiaryorjointventureuponchangeofequityinterestsduringtheyearissupportedbytheevidenceweobtained.




Key Audit Matter 4

Going concern assumption How our audit addressed the Key Audit Matter

RefertoNote2.1(Basisofpreparation–Goingconcernbasis)totheconsolidatedfinancialstatements.

In assessing the appropriateness of management’s going concern assumption inpreparing theconsolidated financial statements,weperformedtheauditproceduresasfollows:

• We obtained and reviewed key terms in loan contracts,checked repayment history and management’s calculationof loan covenants, to assess the appropriateness of the classification of the Group’s borrowings between currentandnon-current,andthosewhichmaybecomeimmediatelyrepayableondemand;

• WeobtainedtheGroup’scashflowforecasts,whichcoveredaperiodofatleast12monthsfrom31December2018;

• We obtained and reviewed written agreements which theGroup reached with its related parties to renew, and/orextend the repayments of RMB2,652.1 million in total ofshareholderloanstodatesbeyond31December2019;

• WeassessedtheGroup’sabilitytorenewexistingloans,andobtainnewloansby

(1) checking the sufficiency of its pledges on certainpropertydevelopmentprojectsandexistingcompletedleasing and operating properties used for these loans,

(2) checking the Group’s repayment history andcompliancewithloancovenantsduringtheyearended31December2018,

(3) checking the intentions of certain banks throughconducting an interview with bank personnels, orobtaininganintentionletter;

• For theGroup’s forecast on cash flows fromdivestment ofinvestments on financial assets, certain property assets and equityholdingsincertainjointventureandassociates,we

(1) obtainedadetail listof thesedivestmentsandrelatedinformation,

(2) inquiredmanagementoftheupdatedprogressofthesedivestments and estimated time of cash collection,

Asat31December2018, theGroup’s current liabilities exceededits current assets by RMB345.1 million. At the same date, theGroup’scurrentliabilitiesincludedRMB4,905.9millionofcurrentborrowings out of which RMB3,366.1million were immediatelyrepayable or payable on demand. In addition, the Group’s cashand cash equivalents decreased from RMB1,207.1 million as at31 December 2017 to RMB698.6 million as at 31 December2018. During the year then ended, the financial conditions ofcertain related parties of the Group changed in such a way thattriggered certain terms specified in the Group’s loan agreements, andthis resulted incertainof theGroup’sborrowingsamountingto RMB714million in total as at 31December 2018 becomingimmediately repayable, so that RMB614 million originallyscheduled due beyond 31 December 2019 were reclassified ascurrentborrowings.

The directors of the Company evaluated the Group’s abilityto continue as a going concern based upon an assessment ofthe financial resources available to the Group, and measurestaken by the Group to mitigate the liquidity pressure, includingsuccessful renewal or extension of repayments of the loans fromparent company and a fellow subsidiary of theGroup (altogether“shareholderloans”)todatesbeyond31December2019;expectedrenewal of the existing bank loans, grant of new bank loans andreplacement of existing loans with alternative financing at areasonable cost; current progress in theGroup’s divestment of itsfinancial assets investments, its investment in certain property assets anditsequityholdingsincertainjointventureandassociates;andthe Group’s cash flow forecasts covering a period of at least 12months from 31December 2018which include anticipated cashflows generated from the Group’s operations and cash proceedsfrom above financing and divestment transactions. The directorsconsideredthattheGroupwillhavesufficientfundstofinanceitsoperationsandtomeetitsfinancialobligationswhentheyfallduewithinthenext12monthsfrom31December2018andthereforeprepared the consolidated financial statements on a going concern basis.





Key Audit Matter 4 (continued)

Going concern assumption (continued) How our audit addressed the Key Audit Matter (continued)

We focused on this assessment as it involved consideration of future events and application of significant judgements andestimatesandaccordingly,thiswasanareaofourauditfocus.

(3) obtained and reviewed the relevant agreements,framework agreements, or meeting minutes, andrelated cash receipts subsequent to 31 December2018, to assess management’s judgement on thesedivestments, and estimates on the timeliness of collectionofrelevantproceeds;

• For the Group’s forecast on cash flow from operatingactivities,weobtainedamonthlycashflowforecastbyeachentity, and selected material operational entities to assess the appropriatenessofkeyassumptionsusedby

(1) comparing their revenue projections to theirpresale plan and historical sales pattern for property development projects, historical sales results forleasing, hotel and other operations,

(2) comparing theestimatedcostsofdevelopment to therelevantconstructionbudget,

(3) comparing estimates on other expenses and taxes tohistoricalresults;

• Weperformedsensitivityanalysisovertheassumptionswithuncertaintycontainedinthecashflowforecaststoascertaintheextentofchange thatwouldmaketheGroup incapableofmeetingitsongoingobligationsastheyfalldue;

• We considered whether the management’s disclosuresrelating to the going concern included in the consolidated financialstatementsareappropriate.

Based on the audit procedures we performed, we found that thejudgements and estimatesmade bymanagement in preparing thecash flow forecasts for the purpose of going concern assessmentweresupportedbyavailableevidence.



Other Information

The directors of the Company are responsible for the other information set out in the Company’s 2018 Annual Report. The otherinformation comprises the information included in the chairman’s statement andmanagement discussion and analysis (but does notinclude the consolidated financial statements and our auditor’s report thereon),whichwe obtained prior to the date of this auditor’sreport, and the corporate information, introduction of the Group, financial summary, directors and senior management, report of the directors,corporategovernancereportandenvironmental,socialandgovernancereportwhichareexpectedtobemadeavailabletousafterthatdate.

Ouropinionontheconsolidatedfinancialstatementsdoesnotcovertheotherinformationandwedonotandwillnotexpressanyformofassuranceconclusionthereon.

Inconnectionwithourauditoftheconsolidatedfinancialstatements,ourresponsibilityistoreadtheotherinformationidentifiedaboveand, in doing so, consider whether the other information ismaterially inconsistent with the consolidated financial statements or ourknowledgeobtainedintheaudit,orotherwiseappearstobemateriallymisstated.

If,basedontheworkwehaveperformedontheotherinformationthatweobtainedpriortothedateofthisauditor’sreport,weconcludethat there is amaterialmisstatement of this other information,we are required to report that fact.Other than certain inconsistencieswhichweresubsequentlycorrected,wehavenothingtoreportinthisregard.

When we read the corporate information, introduction of the Group, financial summary, directors and senior management, reportof thedirectors, corporate governance report and environmental, social and governance report, ifwe conclude that there is amaterialmisstatement therein,weare required tocommunicate thematter to theaudit committee and takeappropriate actionconsideringourlegalrightsandobligations.

Responsibilities of Directors and the Audit Committee for the Consolidated Financial Statements

ThedirectorsoftheCompanyareresponsibleforthepreparationoftheconsolidatedfinancialstatementsthatgiveatrueandfairviewinaccordancewithHKFRSsissuedbytheHKICPAandthedisclosurerequirementsoftheHongKongCompaniesOrdinance,andforsuchinternalcontrolas thedirectorsdetermine isnecessarytoenable thepreparationofconsolidatedfinancial statements thatare free frommaterialmisstatement,whetherduetofraudorerror.

Inpreparingtheconsolidated financial statements, thedirectorsare responsible forassessing theGroup’sability tocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlessthedirectorseitherintendtoliquidatetheGrouportoceaseoperations,orhavenorealisticalternativebuttodoso.

TheauditcommitteeisresponsibleforoverseeingtheGroup’sfinancialreportingprocess.




Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Ourobjectivesaretoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsasawholearefreefrommaterialmisstatement,whetherdue to fraudor error, and to issue anauditor’s report that includesouropinion.We reportouropinion solelytoyou,asabody,inaccordancewithSection90oftheCompaniesAct1981ofBermudaandfornootherpurpose.Wedonotassumeresponsibilitytowardsoracceptliabilitytoanyotherpersonforthecontentsofthisreport.

Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithHKSAswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisoftheseconsolidatedfinancialstatements.

AspartofanauditinaccordancewithHKSAs,weexerciseprofessionaljudgementandmaintainprofessionalscepticismthroughouttheaudit.Wealso:

• Identifyandassesstherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudorerror,designandperformauditprocedures responsive to those risks,andobtainauditevidence that is sufficientandappropriate toprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.

• Obtainanunderstandingof internalcontrolrelevanttotheaudit inordertodesignauditproceduresthatareappropriate inthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheGroup’sinternalcontrol.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmadebythedirectors.

• Concludeontheappropriatenessofthedirectors’useofthegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheGroup’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodrawattentioninourauditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify ouropinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditor’sreport.However,futureeventsorconditionsmaycausetheGrouptoceasetocontinueasagoingconcern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theGroup to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision andperformanceofthegroupaudit.Weremainsolelyresponsibleforourauditopinion.



Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements (continued)

Wecommunicatewiththeauditcommitteeregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.

Wealsoprovidetheauditcommitteewithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependence,and to communicate with the audit committee all relationships and other matters that may reasonably be thought to bear on ourindependence,andwhereapplicable,relatedsafeguards.

Fromthematterscommunicatedwiththeauditcommittee,wedeterminethosemattersthatwereofmostsignificanceintheauditoftheconsolidatedfinancialstatementsofthecurrentperiodandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor’sreport unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determinethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.

Theengagementpartnerontheauditresultinginthisindependentauditor’sreportisMangKwongFung,Frederick.

PricewaterhouseCoopersCertifiedPublicAccountants

HongKong,28March2019


Fortheyearended31December2018(AmountspresentedinthousandsofRenminbiunlessotherwisestated)

Consolidated Statement of Profit or Loss and other Comprehensive Income


Notes 2018 2017

Revenue 5 1,551,309 1,620,473

Cost of sales 7 (1,077,340) (1,236,234)

Gross profit 473,969 384,239

Gainsfromdisposalofsubsidiariesandinterestsinajointventure–net 22, 40 242,900 1,585,922Netimpairmentlossesonfinancialassets 7 (11,476) –Other gains – net 6 176,113 26,743Sellingandmarketingexpenses 7 (45,085) (54,811)Administrativeexpenses 7 (241,587) (679,489)

Operating profit 594,834 1,262,604

Finance income 9 70,350 57,153Finance costs 10 (547,406) (504,051)

Finance costs – net (477,056) (446,898)

Share of results of associates 72,033 74,332Shareofresultsofjointventures 17,672 (12,049)

Profit before income tax 207,483 877,989

Incometaxexpense 12 (108,637) (157,685)

Profit for the year 98,846 720,304

Other comprehensive (losses)/income, net of tax

Items that may be reclassified to profit or loss in subsequent periods:

Changesinthefairvalueofavailable-for-saleinvestments – 1,523Exchangedifferencesontranslationofforeignoperations (4,248) 352

Item recycled to profit or loss:Fair value gains previously recognised through other comprehensive income recycled to profit or loss and included in other gains upon disposal of financial assets at fair value through other comprehensive income 12 (1,523) –

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 93,075 722,179


Consolidated Statement of Profit or Loss and other Comprehensive IncomeFortheyearended31December2018(AmountspresentedinthousandsofRenminbiunlessotherwisestated)

Notes 2018 2017

Profit/(loss)attributableto: OwnersoftheCompany 113,530 690,543 Non-controllinginterests (14,684) 29,761

98,846 720,304

Totalcomprehensiveincome/(losses)attributableto: OwnersoftheCompany 107,759 692,418 Non-controllinginterests (14,684) 29,761

93,075 722,179

EarningspershareattributabletoownersoftheCompany 14 –Basic RMB0.01 RMB0.03

– Diluted RMB0.01 RMB0.03

Theaboveconsolidatedstatementofprofitorlossandothercomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes.


Asat31December2018(AmountspresentedinthousandsofRenminbiunlessotherwisestated)

Consolidated Statement of Financial Position


31 DecemberNotes 2018 2017

ASSETS

Non-current assets Property,plantandequipment 17 706,767 737,265 Investment properties 18 5,408,444 5,375,199 Prepaidlandleasepayments 19 197,500 204,403 Goodwill 20 16,271 16,271 Investments in associates 21 1,105,416 1,043,140 Investmentsinjointventures 22 3,825,696 4,018,705 Deferredtaxassets 33 242,837 242,837 Financial assets at fair value through other comprehensive income 16 150,657 – Available-for-saleinvestments 16 – 407,790 Other financial assets at amortised cost 28 574,426 – Loansandreceivables 28 – 579,994 Othernon-currentassets 29 171,474 810,800

12,399,488 13,436,404

Current assets Prepaidlandleasepayments 19 1,808,404 1,905,849 Propertiesheldorunderdevelopmentforsale 23 1,542,450 2,257,686 Inventories 848 849 Tradereceivables 26 16,984 24,438 Otherreceivables 25 2,365,212 1,716,383 Prepaymentsandothercurrentassets 24 341,216 322,365 Prepaidincometax 12 103,400 96,419 Other financial assets at amortised cost 28 1,611,011 – Loansandreceivables 28 – 1,172,011 Cashandcashequivalents 27 698,610 1,207,119 Restricted cash 27 2,623 245,796

8,490,758 8,948,915

Total assets 20,890,246 22,385,319


Consolidated Statement of Financial PositionAsat31December2018(AmountspresentedinthousandsofRenminbiunlessotherwisestated)

31 DecemberNotes 2018 2017

EQUITY AND LIABILITIES

Equity Issued share capital and share premium 30 6,747,788 6,747,788 Other reserves 31 235,929 240,440 Retained profits 461,772 391,979

EquityattributabletoownersoftheCompany 7,445,489 7,380,207 Non-controllinginterests 372,762 433,761

Total equity 7,818,251 7,813,968

LIABILITIES

Non-current liabilities Interest-bearingbankandotherborrowings 32 2,737,118 6,151,564 Deferredtaxliabilities 33 1,498,997 1,447,258

4,236,115 7,598,822

Current liabilities Interest-bearingbankandotherborrowings 32 4,905,884 2,447,238 Advancesreceivedfromthepre-saleofpropertiesunderdevelopment 34 – 1,015,262 Contractliabilities 34 420,959 – Tradepayables 35 609,853 703,382 Otherpayablesandaccruals 36 2,041,820 1,893,378 Currentincometaxliabilities 857,364 913,269

8,835,880 6,972,529

Total liabilities 13,071,995 14,571,351

Total equity and liabilities 20,890,246 22,385,319

Theaboveconsolidatedstatementoffinancialpositionshouldbereadinconjunctionwiththeaccompanyingnotes.

Theconsolidatedfinancialstatementsonpages88to216wereapprovedbytheBoardofDirectorson28March2019andweresignedbythefollowingDirectorsonitsbehalf:

Peng Xinkuang Liu Feng Chairman ChiefExecutiveOfficer



Consolidated Statement of Changes in Equity


Attributable to owners of the Company

Issued sharecapital and

share premium(Note 30)

Otherreserves

(Note 31)

Retained profits/

(accumulated losses) Total

Non-controlling

interestsTotal

equity

At 1 January 2018 6,747,788 240,440 391,979 7,380,207 433,761 7,813,968Changes in accounting policies – – (33,964) (33,964) – (33,964)

Restatedtotalequityat1January2018 6,747,788 240,440 358,015 7,346,243 433,761 7,780,004

Comprehensive incomeProfitfortheyear – – 113,530 113,530 (14,684) 98,846Other comprehensive losses – (5,771) – (5,771) 2,153 (3,618)

Total comprehensive income for the year – (5,771) 113,530 107,759 (12,531) 95,228

Transactions with ownersAppropriation from retained earnings – 9,773 (9,773) – – –Disposalofsubsidiaries(Note40) – – – – 6,495 6,495Share-basedpayments(Note15) – (18,019) – (18,019) – (18,019)Changeinownershipinterestsinasubsidiarywithout change of control – 9,506 – 9,506 (54,963) (45,457)

Total transactions with owners – 1,260 (9,773) (8,513) (48,468) (56,981)

At 31 December 2018 6,747,788 235,929 461,772 7,445,489 372,762 7,818,251


Consolidated Statement of Changes in EquityFortheyearended31December2018(AmountspresentedinthousandsofRenminbiunlessotherwisestated)

AttributabletoownersoftheCompany

Issued sharecapital and

share premium(Note30)

Otherreserves

(Note31)

Retained profits/

(accumulated losses) Total

Non-controlling

interestsTotal

equity

At 1 January 2017 6,747,788 212,830 (286,239) 6,674,379 377,682 7,052,061

Comprehensive incomeProfitfortheyear – – 690,543 690,543 29,761 720,304Other comprehensive losses – 1,875 – 1,875 – 1,875

Total comprehensive income for the year – 1,875 690,543 692,418 29,761 722,179

Transactions with ownersAppropriation from retained earnings – 12,325 (12,325) – – –Disposalofsubsidiaries(Note40) – – – – 5,586 5,586Capitalcontributionsfromnon-controllingshareholders – – – – 20,700 20,700Share-basedpayments(Note15) – 13,442 – 13,442 – 13,442Changeinownershipinterestsinasubsidiarywithout change of control – (32) – (32) 32 –

Total transactions with owners – 25,735 (12,325) 13,410 26,318 39,728

At 31 December 2017 6,747,788 240,440 391,979 7,380,207 433,761 7,813,968

Theaboveconsolidatedstatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes.



Consolidated Statement of Cash Flows


Notes 2018 2017

CASH FLOWS FROM OPERATING ACTIVITIES Cashfrom/(usedin)operations 37 41,512 (1,411,256) Interest paid (692,987) (232,758) Incometaxpaid (119,276) (176,934)

Netcashoutflowfromoperatingactivities (770,751) (1,820,948)

CASH FLOWS FROM INVESTING ACTIVITIES Purchasesofproperty,plantandequipment (2,506) (2,973) Proceedsfromdisposalofproperty,plantandequipment 157 508 Proceedsfromdisposalofsubsidiariesandajointventure,netofcashdisposed (64,095) 119,185 Paymentsfordirectacquisitionandcostsincurredofinvestmentproperties (185) (899) Proceedsfromdisposaloffinancialassetsatfairvaluethrough other comprehensive income and at fair value through profit or loss/available-for-saleinvestments 288,155 497,200 Addition of financial assets at fair value through profit or loss/available-for-saleinvestments – (261,999) Investmentsinjointventures (200,162) (783,194) Reductionofcapitalfromjointventuresandassociates 488,118 20,000 Advancetoajointventure (199,588) (654,507) Returnofadvancesmadetoajointventureandanassociate 23,135 480,000 Collectionofamountsduefromsubsidiariesassociatedwithdisposalof thesesubsidiaries – 410,917 SettlementofreceivablesinconnectionwithacquisitionofKonmen InvestmentLimited – 66,106 Return of a loan made to a third party – 165,000 Dividendsreceivedfromajointventureandanassociate 69,030 847 Interest received in relation to financial assets at fair value through profit orloss/available-for-saleinvestments – 2,064 Proceedsfromotherinvestmentactivities – 81,782 Depositforguaranteeofabankborrowingofajointventure (171,684) – Return of payments for other investing activities 458,584 – Paymentsforotherinvestingactivities – (660,800)

Netcashinflow/(outflow)frominvestingactivities 688,959 (520,763)


Consolidated Statement of Cash FlowsFortheyearended31December2018(AmountspresentedinthousandsofRenminbiunlessotherwisestated)

Notes 2018 2017

CASH FLOWS FROM FINANCING ACTIVITIES Decrease/(increase)inrestrictedcash 216,004 (216,022) Paymentofdepositforguaranteeofaborrowing (12,290) – Proceedsfromshort-termborrowings 791,580 2,968,000 Repaymentsofshort-termborrowings (918,000) (5,107,209) Proceedsfromlong-termborrowings 1,187,144 6,384,979 Repaymentsoflong-termborrowings (2,107,000) (1,905,499) Dividendspaidtonon-controllinginterestsofsubsidiaries (6,581) – Advancetoanon-controllinginterestofasubsidiary – (90,000) Capitalinjectionfromnon-controllinginterests – 20,700 Advancefromnon-controllinginterests 428,322 –

Netcash(outflow)/inflowfromfinancingactivities (420,821) 2,054,949

NET DECREASE IN CASH AND CASH EQUIVALENTS (502,613) (286,762) Cashandcashequivalentsatbeginningofyear 1,207,119 1,519,810 Effectofforeignexchangeratechanges,net (5,896) (25,929)

CASH AND CASH EQUIVALENTS AT END OF YEAR 698,610 1,207,119

Theaboveconsolidatedstatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes



Notes to the Consolidated Financial Statements


1. CORPORATE AND GROUP INFORMATION

SREGroupLimited (the “Company”)was incorporated inBermudawith limited liability on 11August 1999 as an exemptedcompanyundertheBermudaCompaniesAct1981.Pursuanttoagroupreorganisation(the“Reorganisation”)inconnectionwiththelistingoftheCompany’ssharesonthemainboardofTheStockExchangeofHongKongLimited(the“StockExchange”),theCompanybecametheholdingcompanyoftheothercompaniescomprisingtheGroupon12November1999.FurtherdetailsoftheReorganisationaresetoutintheCompany’sprospectusdated30November1999.ThesharesoftheCompanybegantolistontheStockExchangeon10December1999.TheprincipalplaceofbusinessoftheCompanyinHongKongisSuite1001,10thFloor,OnePacificPlace,88Queensway,HongKong.

Currently,theCompanyanditssubsidiaries(collectivelyreferredtoasthe“Group”)aremainlyengagedinrealestatedevelopmentandinvestmentinMainlandChina,onprojectslocatedingatewaycitiesofdevelopedanddevelopingmarkets.

As at 31December 2018, the Company’s parent company is ChinaMinsheng Jiaye Investment Co., Ltd. (“ChinaMinshengJiaye”),whichholds61.01%(2017:60.80%)oftheCompany’sshares.

TheconsolidatedfinancialstatementsarepresentedinthousandsofRenminbi(“RMB”),unlessotherwisestated.

2 BASIS OF PREPARATION AND ACCOUNTING POLICIES

Theprincipal accountingpolicies applied in thepreparationof these consolidated financial statements are set out below.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.

2.1 BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with all applicableHong Kong Financial ReportingStandards (“HKFRSs”) and the disclosure requirements of the Hong Kong Companies Ordinance Cap.622. They have beenprepared under the historical cost convention, except for investment properties, financial assets at fair value through othercomprehensive income, financial assets at fair value through profit or loss and available-for-sale investments which have beenmeasuredatfairvalue.

Goingconcernbasis

As at 31 December 2018, the Group’s current liabilities exceeded its current assets by RMB345.1 million. At the same date,the Group’s current liabilities included RMB4,905.9 million of current borrowings out of which RMB3,366.1 million wereimmediately repayable or payable ondemand. In addition, theGroup’s cash and cash equivalents decreased fromRMB1,207.1million as at 31 December 2017 to RMB698.6 million as at 31 December 2018. During the year then ended, the financialconditionsofcertainrelatedpartiesoftheGroupchangedinsuchawaythattriggeredcertaintermsspecifiedintheGroup’sloanagreements,andthisresultedincertainoftheGroup’sborrowingsamountingtoRMB714millionintotalasat31December2018becomingimmediatelyrepayable,sothatRMB614millionoriginallyscheduledduebeyond31December2019werereclassifiedascurrentborrowings.


Notes to the Consolidated Financial StatementsFortheyearended31December2018(AmountspresentedinthousandsofRenminbiunlessotherwisestated)

2 BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

2.1 BASIS OF PREPARATION (continued)

Goingconcernbasis(continued)

Inviewofsuchcircumstance,thedirectorshavegivencarefulconsiderationtothefutureliquidityandperformanceoftheGroupanditsavailablesourcesoffinancinginassessingwhethertheGroupwillhavesufficientfundstofulfillitsfinancialobligationsandcontinueasgoingconcern.TheGrouphastakenthefollowingmeasurestomitigatetheliquiditypressureandtoimproveitscashflows.

1) Included incurrentborrowingsa totalofRMB2,652.1millionare loans fromparentcompanyanda fellowsubsidiaryoftheGroup(altogether“shareholderloans”),whichweredueforrepaymentorpayableondemandasat31December2018.Subsequentto31December2018,theGrouphasreachedwrittenagreementswiththerespectiverelatedpartiesasfollows:

• shareholder loans of US$150 million (equivalent to approximately RMB1,015.7 million) were renewed, and therepaymentdateisextendedto30June2020,withaninterestrateincreasefrom4%to6%perannum;

• therepaymentsofremainingshareholder loanswhicharedueforrepaymentwithinoneyearorpayableondemandby lenders, totallingRMB1,636.4millionwereunconditionally extended todates at least after15months from31December2018.

2) TheGrouphasbeencontinuouslynegotiatingwithcertainbanksforrenewalof itsexistingbank loansthatwouldbeduefor repayment in 2019. These existing bank loans have sufficient pledges on certain property development projects andexisting completed leasing andoperatingproperties.TheGroupplans to continue topledge these assets for renewalof atleast aboutRMB600million.TheGroup is alsoactivelynegotiatingwith severalbanks forgrantofnew loans,offeringasufficientpledgeofassetsandatareasonablecost.Certainbankshaveindicateditsintentiontoreneworgrantofnewloans.ConsideringtheGroup’sability inprovidingsufficientpledgesofpropertiesandotherassets,andtheGroup’sgoodcredithistory,thedirectorsbelievethattheGroupwillbeabletorenewtheexistingloans,aswellastosecurenewbankloansatareasonablecost.

3) Inaddition,theGroupisworkingwithcertainfinancialinstitutionsforalternativefinancingsoastoreplaceexistingothercurrent loans forasizearoundRMB400million.ConsideringtheGroup’sgoodcredithistory, thedirectorsareconfidentthattheGroupwillbeabletosecurenewalternativefinancingatareasonablecost.






Goingconcernbasis(continued)

4) TheGroupisalsospeedingupitsdivestmentsonitsfinancialassetsinvestments,itsinvestmentincertainpropertyassetsanditsequityholdingincertainjointventureandassociatedcompaniesfollowingitscertainstrategicchange.Subsequentto31December2018,theGrouphasachievedcertainprogressinthisaspect:

• secured certain deals in divestment of financial assets and property investments with agreements and frameworkagreements,foraconsiderationofRMB600millionintotal,RMB200millionofwhichhavebeenreceivedincashbythedateofissuranceofthesefinancialstatements,andtheGroupexpectstocollecttheremaininginnextfewmonthsaccordingtothescheduledsettlementdates.

• reachedintentionagreementsorwellprogressedinnegotiationswithspecificcounterpartiesfordivestmentofcertainproperty projects and certain financial assets, for a consideration of RMB1.1 billion in total. The Group expectsto reach final agreements of these transactions in the next few months and recover a significant portion of theconsiderationincashbytheendof2019.

Considering the Group’s financial assets investments mostly have property projects as underlying assets, and our ownpropertyprojectsaremostlyinprimelocations,thedirectorsbelievethattheGroupwillbeabletosuccessfullycompletetheabove-mentioneddivestmentsandsecuremoredealsin2019andtimelygeneratecashinflowsfortheGroup.

Managementhasprepared theGroup’s cash flow forecastwhichcover aperiodof at least12months from31December2018.ThecashflowforecasthastakenintoaccountstheanticipatedcashflowsgeneratedfromtheGroup’soperations,thecompletionof divestment transactions which are currently at different stages, the successful renewal or extension of existing borrowingsand obtaining of new borrowings, and collection of relevant proceeds on time. These assumptions about future events andconditionsaresubjecttoinherentestimationanduncertainties.Thedirectors,aftermakingdueenquiriesandconsiderthebasisofmanagement’sprojectionsdescribedabove,believe that, taking intoaccount theabovementionedactionsandplannedmeasuresandtheirprogress,theGroupwillhavesufficientfundstofinanceitsoperationsandtomeetitsfinancialobligationswhentheyfallduewithinthenext12monthsfrom31December2018.Accordingly,thedirectorsaresatisfiedthatitisappropriatetopreparetheconsolidatedfinancialstatementsonagoingconcernbasis.

Thepreparationof consolidated financial statements in conformitywithHKFRSs requires theuseof certain critical accountingestimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.Theareas involvingahigherdegreeof judgementorcomplexity,orareaswhereassumptionsandestimatesare significant to theconsolidatedfinancialstatementsaredisclosedinNote3.





Basisofconsolidation

Asubsidiaryisanentity(includingastructuredentity),directlyorindirectly,controlledbytheCompany.ControlisachievedwhentheGroup isexposed,orhasrights, tovariablereturns fromits involvementwiththe investeeandhas theability toaffect thosereturnsthroughitspowerovertheinvestee(i.e.,existingrightsthatgivetheGroupthecurrentabilitytodirecttherelevantactivitiesoftheinvestee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Groupconsidersallrelevantfactsandcircumstancesinassessingwhetherithaspoweroveraninvestee,including:

(a) thecontractualarrangementwiththeothervoteholdersoftheinvestee;

(b) rightsarisingfromothercontractualarrangements;and

(c) theGroup’svotingrightsandpotentialvotingrights.

ThefinancialstatementsofthesubsidiariesarepreparedforthesamereportingperiodastheCompany,usingconsistentaccountingpolicies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to beconsolidateduntilthedatethatsuchcontrolceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to thenon-controlling interests, even if this results in the non-controlling interests having a deficit balance.All intra-group assets andliabilities,equity,income,expensesandcashflowsrelatingtotransactionsbetweenmembersoftheGroupareeliminatedinfullonconsolidation.

TheGroupreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneormoreofthethreeelementsofcontroldescribedabove.Achangeintheownershipinterestofasubsidiary,withouta lossofcontrol, isaccountedforasanequitytransaction.

IftheGrouplosescontroloverasubsidiary,itderecognises(i)theassets(includinggoodwill)andliabilitiesofthesubsidiary,(ii)thecarryingamountofanynon-controllinginterestand(iii)thecumulativetranslationdifferencesrecordedinequity;andrecognises(i)thefairvalueoftheconsiderationreceived,(ii)thefairvalueofanyinvestmentretainedand(iii)anyresultingsurplusordeficitinprofitor loss.TheGroup’s shareofcomponentspreviously recognised inothercomprehensive income is reclassified toprofitorlossorretainedprofits,asappropriate,onthesamebasisaswouldberequirediftheGrouphaddirectlydisposedoftherelatedassetsorliabilities.

Operating cycle

TheoperatingcycleoftheGroupisthetimebetweentheacquisitionofassetsforprocessingandtheirrealisationincashorcashequivalents.DuetothenatureoftheGroup’sbusiness,theGroup’snormaloperatingcycleislongerthan12months.TheGroup’scurrent assets include assets (such as properties held or under development for sale and prepaid land lease payments for property developmentforsaleandprepaidtaxes)thataresold,consumedorrealisedaspartofthenormaloperatingcycleevenwhentheyarenotexpectedtoberealisedwithin12monthsaftertheendofthereportingperiod.





2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

2.2.1NewStandards,amendmentsandinterpretationtoHKFRSsadoptedbytheGroupin2018

The followingnew standards, amendments and interpretationhave been adoptedby theGroup for the first time for thefinancialyearbeginningon1January2018andarerelevanttotheGroup’soperations:

HKFRS 9 “Financial Instruments” replaces themultiple classification andmeasurementmodels inHKAS 39 “FinancialInstruments: Recognition and Measurement” with a single model that has initially only two classification categories:amortisedcostandfairvalue.

HKFRS 15 “Revenue fromContractswithCustomers” replacesHKAS 18which covers contracts for goods and servicesandHKAS11whichcoversconstructioncontracts.Thenewstandard isbasedontheprinciplethatrevenue is recognisedwhencontrolofagoodorservicetransferstoacustomer–sothenotionofcontrolreplacesthepreviousnotionofrisksandrewards.

AmendmentstoHKFRS2“ClassificationandMeasurementofShare-basedPaymentsTransactions”clarifythemeasurementbasisforcash-settledshare-basedpaymentsandtheaccountingformodificationsthatchangeanawardfromcash-settledtoequity-settled.

Amendments to HKAS 28 “Investments in Associates and Joint Ventures” clarify that the election by venture capitalorganisations,mutualfunds,unittrustsandsimilarentitiestomeasureinvestmentsinassociatesorjointventuresatfairvaluethroughprofitorlossshouldbemadeseparatelyforeachassociateorjointventureatinitialrecognition.

AmendmentstoHKAS40“TransfersofInvestmentProperty”clarifythattransfersto,orfrom,investmentpropertycanonlybemadeiftherehasbeenachangeinusethatissupportedbyevidence.

HK (IFRIC) 22 “Foreign Currency Transactions and Advance Consideration” clarifies how to determine the date oftransactionfortheexchangeratetobeusedoninitialrecognitionofarelatedasset,expenseorincomewhereanentitypaysorreceivesconsiderationinadvanceforforeigncurrency-denominatedcontracts.

The adoption of the above new standards, amendments and interpretation to existing HKFRSs do not have a materialimpactonthefinancialpositionandperformanceoftheGroup,exceptforHKFRS9FinancialInstrumentsandHKFRS15RevenuefromContractswithCustomersassetoutbelow.




2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

2.2.2Impactonthefinancialstatements

The following tables show the adjustments recognised for each individual line item.Line items thatwerenot affectedbythechangeshavenotbeenincluded.Asaresult,thesub-totalsandtotalsdisclosedcannotberecalculatedfromthenumbersprovided.Theadjustmentsareexplainedinmoredetailbelow.

Consolidated Statement of Financial Position (extract)31December

2017 HKFRS9 HKFRS151 January

2018

RestatedNon-current assets Financial assets at fair value through other comprehensive income – 382,836 – 382,836 Financial assets at fair value through profit or loss – 24,954 – 24,954 Available-for-saleinvestments 407,790 (407,790) – – Other financial assets at amortised cost – 574,426 – 574,426 Loansandreceivables 579,994 (579,994) – – Othernon-currentassets 810,800 (2,614) – 808,186

Current assets Tradereceivables 24,438 – – 24,438 Otherreceivables 1,716,383 (14,531) – 1,701,852 Other financial assets at amortised cost – 1,160,760 – 1,160,760 Loansandreceivables 1,172,011 (1,172,011) – – Cashandcashequivalents 1,207,119 – – 1,207,119 Restricted cash 245,796 – – 245,796

Total assets 22,385,319 (33,964) – 22,351,355

Current liabilities Advancesreceivedfromthepre-saleofproperties under development 1,015,262 – (1,015,262) – Contractliabilities – – 1,015,262 1,015,262

Total liabilities 14,571,351 – – 14,571,351

Other reserves 240,440 – – 240,440 Retained profits 391,979 (33,964) – 358,015

Total equity 7,813,968 (33,964) – 7,780,004






2.2.3Impactofadoption–HKFRS9

The adoption of HKFRS 9 Financial Instruments from 1 January 2018 resulted in changes in accounting policies andadjustmentstotheamountrecognisedinthefinancialstatements.InaccordancewiththetransitionalprovisioninHKFRS9,comparative figureshavenotbeenrestated.Thereclassificationandadjustmentsarisingfromthenewimpairmentrulesarethereforenotreflectedinthestatementoffinancialpositionasat31December2017,butarerecognisedintheopeningstatementoffinancialpositionon1January2018.

The impact on the Group’s retained profits as at 1 January 2018 due to the classification and measurement of financial instrumentsisasfollows:

Closingretainedprofitsasat31December2017–HKAS39 391,979Increase in provision for other financial assets at amortised cost (16,819)Increaseinprovisionforothernon-currentassets (2,614)Increaseinprovisionforotherreceivables (14,531)

Openingretainedprofitsasat1January2018–HKFRS9 358,015

Classification and measurement

On 1 January 2018 (the date of initial application ofHKFRS 9), theGroup’smanagement has assessedwhich businessmodels apply to the financial assets held by the Group and has classified its financial instruments into the appropriateHKFRS9categories.Themaineffectsresultingfromthisreclassificationareasfollows:

(a) Reclassificationfromavailable-for-saleinvestmentstofinancialassetsatfairvaluethroughprofitorloss(“FVPL”)

Investmentsrelatedtoaloanwithvariablereturngrantedtoanunlistedcompanywerereclassifiedfromavailable-for-saleinvestmentstofinancialassetsatFVPL(approximatelyRMB25millionasat1January2018).TheydonotmeettheHKFRS9criteriaforclassificationatamortisedcost,becausetheircashflowsdonotrepresentsolelypaymentsofprincipalsandinterest.

(b) Available-for-sale investments classified as financial assets at fair value through other comprehensive income(“FVOCI”)

Investmentsinsecuredloanpackageswerereclassifiedfromavailable-for-saleinvestmentstofinancialassetsatFVOCI,as theGroup’sbusinessmodel is achievedbothbycollecting contractual cash flowsand sellingof these assets.Thecontractualcashflowsoftheseinvestmentsaresolelyprincipalsandinterest.Asaresult,investmentsinsecuredloanpackageswithafairvalueofapproximatelyRMB383millionasat1January2018werereclassifiedfromavailable-for-saleinvestmentstofinancialassetsatFVOCIandcorrespondingfairvaluegainsofapproximatelyRMB2millionwerereclassifiedfromtheavailable-for-saleinvestmentsreservetothefinancialassetsatFVOCIreserve.





2.2.3Impactofadoption–HKFRS9(continued)

Impairment of financial assets

TheGrouphasthefollowingtypesoffinancialassetsthataresubjecttoHKFRS9’snewexpectedcreditlossmodel:

• cashandcashequivalents

• restrictedcash

• tradereceivables

• financialassetsatfairvaluethroughothercomprehensiveincome

• otherreceivables

• otherfinancialassetsatamortisedcost

• othernon-currentassets

TheGroupwasrequiredtoreviseitsimpairmentmethodologyunderHKFRS9foreachoftheseclassesofassets.TheimpactofthechangeinimpairmentmethodologyontheGroup’sretainedprofitsisdisclosedinthetableabove.

While cash and cash equivalents, restricted cash, trade receivables and financial assets at fair value through othercomprehensive income are also subject to the impairment requirements ofHKFRS9, the identified impairment losswasimmaterial.

TheGroupadoptsgeneralapproachforexpectedcreditlossofotherreceivables,otherfinancialassetsatamortisedcostandothernon-currentassets,andconsidersthepossibilityofdefaultuponinitialrecognitionofassetsandwhethertherehasbeenasignificantincreaseincreditriskonanongoingbasisthroughouteachreportingperiod.

ApplyingtheexpectedcreditriskmodelresultedintherecognitionoflossallowancesofRMB33,964,000on1January2018andafurtherincreaseinthelossallowancesbyRMB5,237,000forotherreceivables,otherfinancialassetsatamortisedcostandothernon-currentassetsduringtheyearended31December2018.






2.2.4Impactofadoption–HKFRS15

According to the transitionalprovisionofHKFRS15, theGroupappliedmodified retrospectiveapproachuponadoptionanddidnotrestatefiguresofthecomparativeperiods.

Presentation of assets and liabilities related to contracts with customers

The Group has changed the presentation of the following balance in the statement of financial position to reflect theterminologyofHKFRS15:

– Proceeds received in relation to property sales contracts of RMB1,015,262,000 as at 31 December 2017 werepreviouslyincludedinadvancesreceivedfromthepre-saleofpropertiesunderdevelopmentandwerenowreclassifiedascontractliabilitiesasat1January2018.

Timing of revenue recognition

For the year ended 31December 2018, theGroup has assessed that there is no enforceable right to payment from thecustomersforperformancecompletedtodate.Thus,theGrouphasconcludedthattheadoptionofHKFRS15didnothaveanimpactonthetimingofrevenuerecognition.

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS, AMENDMENTS AND INTERPRETATION

Certainnewstandards,amendmentsand interpretationofHKFRSshavebeenpublishedbutarenotyeteffective for theannualperiodbeginningon1January2018.ThosethatarerelevanttotheGroup’soperationsareasfollows:

HKFRS16 Leases (effective for annual periods beginning on or after 1 January 2019)HK(IFRIC)23 Uncertainty over Income Tax Treatments (effective for annual periods beginning on

or after 1 January 2019)AmendmentstoHKFRS9 Prepayment Features with Negative Compensation (effective for annual periods

beginning on or after 1 January 2019)AmendmentstoHKAS28 Long-term Interests in Associates and Joint Ventures (effective for annual periods

beginning on or after 1 January 2019)AnnualImprovements2015-2017Cycle The amendments include changes from the 2015-2017 cycle of the annual

improvements project that affect 4 standards: HKFRS 3 “Business Combinations”, HKFRS 11 “Joint Arrangements”, HKAS 12 “Income Taxes” and HKAS 23 “Borrowing Costs”. (effective for annual periods beginning on or after 1 January 2019)

AmendmentstoHKAS19 Plan Amendment, Curtailment or Settlement (effective for annual periods beginning on or after 1 January 2019)

AmendmentstoHKFRS10andHKAS28 Sale or contribution of assets between an investor and its associate or joint venture (effective for annual periods to be announced)




2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS, AMENDMENTS AND INTERPRETATION (continued)

TheGrouphasnotearlyadoptedanynewaccountingandfinancialreportingstandards,amendmentsorinterpretationtoexistingstandardsofHKFRSswhichhavebeenissuedbutarenotyeteffectivefortheyearended31December2018.

FurtherinformationaboutthoseHKFRSsthatareexpectedtobeapplicabletotheGroupisasfollows:

HKFRS16‘Leases’.ThestandardwillaffectprimarilytheaccountingfortheGroup’soperatingleases.HKFRS16providesnewprovisions for theaccountingtreatmentof leasesandwill in the futureno longerallow lessees torecognisecertain leasesoutsideofthebalancesheet.Instead,allnon-currentleasesmustberecognisedintheformofanasset(fortherightofuse)andafinancialliability (for the payment obligation). Thus each lease will be mapped in the Group’s consolidated balance sheet. Short-termleasesoflessthantwelvemonthsandleasesoflow-valueassetsareexemptedfromthereportingobligation.Thenewstandardwillthereforeresultsinanincreaseinrightofuseassetsandanincreaseinfinancialliabilitiesintheconsolidatedbalancesheet.Intheconsolidated income statement, as a result, the operating expenses under otherwise identical circumstances will decrease, whiledepreciation and amortisation and the interest expenses will increase. As at 31December 2018, theGroup does not have anymaterialnon-cancellableoperatingleasecommitment,sotheimpactofadoptionofHKFRS16isregardednotmaterial.

HK(IFRIC)23clarifieshowtherecognitionandmeasurementrequirementsofHKAS12IncomeTaxes,areappliedwherethereis uncertainty over income tax treatments. An uncertain tax treatment is any tax treatment applied by an entitywhere there isuncertaintyoverwhetherthatapproachwillbeacceptedbythetaxauthority.HK(IFRIC)23appliestoallaspectsofincometaxaccountingwherethereisanuncertaintyregardingthetreatmentofanitem,includingtaxableprofitorloss,thetaxbasesofassetsandliabilities,taxlossesandcreditsandtaxrates.

Amendments toHKFRS 9 is a narrow-scope amendments made toHKFRS Financial Instruments inDecember 2017, whichenables entities tomeasure certainprepayable financial assetswithnegative compensation at amortised cost.These assets,whichinclude some loan anddebt securities,wouldotherwisehave tobemeasured at fair value throughprofit or loss.Toqualify foramortisedcostmeasurement, thenegativecompensationmustbe ‘reasonablecompensationforearlyterminationof thecontract’andtheassetmustbeheldwithina‘heldtocollect’businessmodel.

Amendment toHKAS 28 is part of the annual improvements toHKFRSs 2014-2016Cycle.HKAS 28 allows venture capitalorganisations,mutualfunds,unittrustsandsimilarentitiestoelectmeasuringtheirinvestmentsinassociatesorjointventuresatfairvaluethroughprofitorloss.Thiselectionshouldbemadeseparatelyforeachassociateorjointventureatinitialrecognition.

AmendmentstoHKAS19clarifiestheaccountingfordefinedbenefitplanamendments,curtailmentsandsettlements.

The amendments to HKFRS 10 andHKAS 28 address an inconsistency betweenHKFRS 10 andHKAS 28 in the sale andcontributionof assetsbetweenan investor and its associateor jointventure.A full gainor loss is recognisedwhena transactioninvolvesabusiness.Apartialgainorlossisrecognisedwhenatransactioninvolvesassetsthatdonotconstituteabusiness,evenifthoseassetsareinasubsidiary.





2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Businesscombinations

Businesscombinationsareaccountedforusingtheacquisitionmethod.Theconsiderationtransferredismeasuredattheacquisitiondate fair valuewhich is the sumof the acquisitiondate fair valuesof assets transferredby theGroup, liabilities assumedby theGrouptotheformerownersoftheacquireeandtheequityinterestsissuedbytheGroupinexchangeforcontroloftheacquiree.Foreachbusinesscombination,theGroupelectswhethertomeasurethenon-controllinginterestsintheacquireethatarepresentownershipinterestsandentitletheirholderstoaproportionateshareofnetassetsintheeventofliquidationatfairvalueorattheproportionateshareoftheacquiree’sidentifiablenetassets.Allothercomponentsofnon-controllinginterestsaremeasuredattheiracquisitiondatefairvalue.Acquisition-relatedcostsareexpensedasincurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification anddesignationinaccordancewiththecontractualterms,economiccircumstancesandpertinentconditionsasattheacquisitiondate.

Ifthebusinesscombinationisachievedinstages,thepreviouslyheldequityinterestisremeasuredatitsacquisitiondatefairvalueandanyresultinggainorlossisrecognisedinprofitorloss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingentconsideration classified as an asset or liability is measured at fair value with changes in fair value recognised in profit or loss.Contingentconsiderationthatisclassifiedasequityisnotremeasuredandsubsequentsettlementisaccountedforwithinequity.

Investmentsinassociatesandjointventures

AnassociateisanentityinwhichtheGrouphasalongterminterestofgenerallybetween20%and50%oftheequityvotingrightsandoverwhichitisinapositiontoexercisesignificantinfluence.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvestee,butisnotcontrolorjointcontroloftheinvestee.

Ajointventureisatypeofjointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverightstothenetassetsofthejointventure.Jointcontrol,isthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequiretheunanimousconsentofthepartiessharingcontrol.

The Group’s investments in associates and joint ventures are stated in the consolidated statement of financial position at theGroup’s share ofnet assets under the equitymethodof accounting, less any impairment losses.TheGroup’s share of thepost-acquisition results andother comprehensive incomeof associates and jointventures is included in theconsolidated statementofprofit or loss and other comprehensive income, respectively. In addition, when there has been a change recognised directly inthe equityof the associateor joint venture, theGroup recognises its shareof any changes,whenapplicable, in the consolidatedstatementofchangesinequity.UnrealisedgainsandlossesresultingfromtransactionsbetweentheGroupanditsassociatesorjointventuresareeliminatedtotheextentoftheGroup’sinvestmentsintheassociatesorjointventures,exceptwhereunrealisedlossesprovideevidenceofanimpairmentoftheassetstransferred.GoodwillarisingfromtheacquisitionofassociatesorjointventuresisincludedaspartoftheGroup’sinvestmentsinassociatesorjointventures.

If an investment in an associatebecomes an investment in a joint ventureor vice versa, the retained interest isnot remeasured.Instead,theinvestmentcontinuestobeaccountedforundertheequitymethod.Inallothercases,uponlossofsignificantinfluenceover the associateor joint control over the joint venture, theGroupmeasures and recognises any retained investment at its fairvalue. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or jointcontrolandthefairvalueoftheretainedinvestmentandproceedsfromdisposalisrecognisedinprofitorloss.

Whenaninvestmentinanassociateorajointventureisclassifiedasheldforsale,itisaccountedforinaccordancewithHKFRS5Non-current Assets Held for Sale and Discontinued Operations.




2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Separate financial statements

Investments in subsidiaries are accounted for at cost less impairment.Cost includesdirect attributable costs of investment.Theresultsofsubsidiariesareaccountedforbythecompanyonthebasisofdividendreceivedandreceivable.

Impairmenttestingoftheinvestmentsinsubsidiariesisrequireduponreceivingadividendfromtheseinvestmentsifthedividendexceedsthetotalcomprehensive incomeofthesubsidiary intheperiodthedividendisdeclaredor if thecarryingamountoftheinvestmentintheseparatefinancialstatementsexceedsthecarryingamountintheconsolidatedfinancialstatementsoftheinvestee’snetassetsincludinggoodwill.

Fair value measurement

TheGroupmeasures its investment properties, derivative financial instruments and equity investments at fair value at the endofeachreportingperiod.Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransfera liability inanorderlytransactionbetweenmarketparticipantsat themeasurementdate.The fairvaluemeasurement isbasedonthepresumptionthatthetransactiontoselltheassetortransfertheliabilitytakesplaceeitherintheprincipalmarketfortheassetorliability,orintheabsenceofaprincipalmarket,inthemostadvantageousmarketfortheassetorliability.Theprincipalorthemostadvantageousmarketmustbeaccessibleby theGroup.The fair valueof anassetor a liability ismeasuredusing theassumptions thatmarketparticipantswouldusewhenpricingtheassetorliability,assumingthatmarketparticipantsactintheireconomicbestinterest.

Afairvaluemeasurementofanon-financialassettakesintoaccountamarketparticipant’sabilitytogenerateeconomicbenefitsbyusingtheassetinitshighestandbestuseorbysellingittoanothermarketparticipantthatwouldusetheassetinitshighestandbestuse.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available tomeasurefairvalue,maximisingtheuseofrelevantobservableinputsandminimisingtheuseofunobservableinputs.

Allassetsandliabilitiesforwhichfairvalueismeasuredordisclosedinthefinancialstatementsarecategorisedwithinthefairvaluehierarchy,describedasfollows,basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole:

Level1– basedonquotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitiesLevel2– based on valuation techniques forwhich the lowest level input that is significant to the fair valuemeasurement is

observable,eitherdirectlyorindirectlyLevel3– based on valuation techniques forwhich the lowest level input that is significant to the fair valuemeasurement is

unobservable

Forassetsandliabilitiesthatarerecognisedinthefinancialstatementsonarecurringbasis,theGroupdetermineswhethertransfershaveoccurredbetweenlevelsinthehierarchybyreassessingcategorisation(basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.






Impairmentofnon-financialassets

Where an indication of impairment exists, orwhen annual impairment testing for an asset is required (other than inventories,properties held or under development for sale, financial assets, investment properties, and non-current assets/a disposal groupclassified asheld for sale), the asset’s recoverable amount is estimated.An asset’s recoverable amount is thehigher of the asset’sorcash-generatingunit’svalueinuseanditsfairvaluelesscostsofdisposal,andisdeterminedforanindividualasset,unlesstheassetdoesnotgeneratecashinflowsthatare largelyindependentofthosefromotherassetsorgroupsofassets, inwhichcasetherecoverableamountisdeterminedforthecash-generatingunittowhichtheassetbelongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value inuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Animpairmentlossischargedtothestatementofprofitorlossandothercomprehensiveincomeintheperiodinwhichitarisesinthoseexpensecategoriesconsistentwiththefunctionoftheimpairedassets.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognisedimpairmentlossesmaynolongerexistormayhavedecreased.Ifsuchanindicationexists,therecoverableamountisestimated.Apreviouslyrecognisedimpairmentlossofanassetotherthangoodwill isreversedonlyiftherehasbeenachangeintheestimatesusedtodeterminetherecoverableamountofthatasset,butnottoanamounthigherthanthecarryingamountthatwouldhavebeen determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. Areversal of such an impairment loss is credited to the statement of profit or loss and other comprehensive income in the period in whichitarises,unlesstheassetiscarriedatarevaluedamount,inwhichcasethereversaloftheimpairmentlossisaccountedforinaccordancewiththerelevantaccountingpolicyforthatrevaluedasset.

Related parties

ApartyisconsideredtoberelatedtotheGroupif:

(a) thepartyisapersonoraclosememberofthatperson’sfamilyandthatperson

(i) hascontrolorjointcontrolovertheGroup;

(ii) hassignificantinfluenceovertheGroup;or

(iii) isamemberofthekeymanagementpersonneloftheGrouporofaparentoftheGroup;





Relatedparties(continued)

or

(b) thepartyisanentitywhereanyofthefollowingconditionsapplies:

(i) theentityandtheGrouparemembersofthesamegroup;

(ii) oneentityisanassociateorjointventureoftheotherentity(orofaparent,subsidiaryorfellowsubsidiaryoftheotherentity);

(iii) theentityandtheGrouparejointventuresofthesamethirdparty;

(iv) oneentityisajointventureofathirdentityandtheotherentityisanassociateofthethirdentity;

(v) theentityisapost-employmentbenefitplanforthebenefitofemployeesofeithertheGrouporanentityrelatedtotheGroup;

(vi) theentityiscontrolledorjointlycontrolledbyapersonidentifiedin(a);

(vii) apersonidentifiedin(a)(i)hassignificantinfluenceovertheentityorisamemberofthekeymanagementpersonneloftheentity(orofaparentoftheentity);and

(viii) theentity,oranymemberofagroupofwhichitisapart,provideskeymanagementpersonnelservicestotheGrouportotheparentoftheGroup.

Property,plantandequipmentanddepreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and anyimpairment losses.Whenan itemofproperty,plant and equipment is classified asheld for saleorwhen it ispartof adisposalgroupclassifiedasheldforsale,itisnotdepreciatedandisaccountedforinaccordancewithHKFRS5,asfurtherexplainedintheaccountingpolicyfor“Non-currentassetsanddisposalgroupsheldforsale”.Thecostofanitemofproperty,plantandequipmentcomprises itspurchasepriceandanydirectlyattributablecostsofbringingtheasset to itsworkingconditionand locationfor itsintendeduse.

Expenditureincurredafteritemsofproperty,plantandequipmenthavebeenputintooperation,suchasrepairsandmaintenance,isnormally charged to the statementofprofitor loss andother comprehensive income in theperiod inwhich it is incurred. Insituationswheretherecognitioncriteriaaresatisfied,theexpenditureforamajorinspectioniscapitalisedinthecarryingamountoftheassetasareplacement.Wheresignificantpartsofproperty,plantandequipmentarerequiredtobereplacedatintervals,theGrouprecognisessuchpartsasindividualassetswithspecificusefullivesanddepreciatesthemaccordingly.






Property,plantandequipmentanddepreciation(continued)

Depreciationiscalculatedonthestraight-linebasistowriteoffthecostofeachitemofproperty,plantandequipmenttoitsresidualvalueoveritsestimatedusefullife.Theestimatedusefullivesusedforthispurposeareasfollows:

Hotelbuildings Shorterof40yearsandtheremainingtermsoftheleases,whichrangefrom30to40yearsOtherbuildings 20 yearsLeaseholdimprovements Shorter of the remaining period of the lease and the useful life of the assetsFurniture,fittings,fixtures andofficeequipment

5 to 10 years

Motor vehicles 5 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on areasonablebasisamongthepartsandeachpartisdepreciatedseparately.Residualvalues,usefullivesandthedepreciationmethodarereviewed,andadjustedifappropriate,atleastateachfinancialyearend.

An itemof property, plant and equipment including significant part initially recognised is derecognisedupondisposal orwhenno future economic benefits are expected from its use or disposal.Any gain or loss ondisposal or retirement recognised in thestatementofprofitorlossandothercomprehensiveincomeintheyeartheassetisderecognisedisthedifferencebetweenthenetsalesproceedsandthecarryingamountoftherelevantasset.

Constructioninprogressrepresentsbuildingsunderconstruction,whicharestatedatcostlessanyimpairmentlosses,andarenotdepreciated.Costcomprisesthedirectcostsofconstructionandcapitalisedborrowingcostsonrelatedborrowedfundsduringtheperiodofconstruction.Constructioninprogressisreclassifiedtotheappropriatecategoryofproperty,plantandequipmentwhencompletedandreadyforuse.

Investment properties

Investmentpropertiesare interests inlandandbuildings(includingtheleaseholdinterestunderanoperatingleaseforapropertywhichwouldotherwisemeetthedefinitionofaninvestmentproperty)heldtoearnrentalincomeand/orforcapitalappreciation,ratherthanforuseintheproductionorsupplyofgoodsorservicesorforadministrativepurposes;orforsaleintheordinarycourseofbusiness.Subsequenttoinitialrecognition,investmentpropertiesarestatedatfairvalue,whichreflectsmarketconditionsattheendofthereportingperiod.

Gains or losses arising from changes in the fair values of investment properties are included in the statement of profit or loss and othercomprehensiveincomeintheyearinwhichtheyarise.

Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of profit or loss and othercomprehensiveincomeintheyearoftheretirementordisposal.

Foratransferfrominvestmentpropertiestoowner-occupiedpropertiesorinventories,thedeemedcostofapropertyforsubsequentaccounting is its fair value at the date of change in use. If a property occupied by the Group as an owner-occupied propertybecomesaninvestmentproperty,theGroupaccountsforsuchpropertyinaccordancewiththepolicystatedunder“Property,plantandequipmentanddepreciation”up to thedateofchange inuse,andanydifferenceat thatdatebetween thecarryingamountandthefairvalueofthepropertyisaccountedforasarevaluationinaccordancewithHKAS16.Foratransferfrominventoriesto investment properties, any difference between the fair value of the property at that date and its previous carrying amount isrecognisedinthestatementofprofitorlossandothercomprehensiveincome.





Goodwill

Goodwillisinitiallymeasuredatcost,beingtheexcessoftheaggregateoftheconsiderationtransferred,theamountrecognisedfornon-controllinginterestsandanyfairvalueoftheGroup’spreviouslyheldequityinterestsintheacquireeovertheidentifiablenetassetsacquiredandliabilitiesassumed.Ifthesumofthisconsiderationandotheritemsislowerthanthefairvalueofthenetassetsacquired,thedifferenceis,afterreassessment,recognisedinthestatementofprofitorlossandothercomprehensiveincomeasagainonbargainpurchase.

After initialrecognition,goodwill ismeasuredatcost lessanyaccumulatedimpairment losses.Goodwill is testedfor impairmentannuallyormore frequently if eventsorchanges incircumstances indicate that thecarryingvaluemaybe impaired.TheGroupperformsitsannualimpairmenttestofgoodwillasat31December.Forthepurposeofimpairmenttesting,goodwillacquiredina business combination is, from the acquisitiondate, allocated to eachof theGroup’s cash-generatingunits, or groups of cash-generatingunits,thatareexpectedtobenefitfromthesynergiesofthecombination,irrespectiveofwhetherotherassetsorliabilitiesoftheGroupareassignedtothoseunitsorgroupsofunits.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) towhichthegoodwillrelates.Wheretherecoverableamountofthecash-generatingunit(groupofcash-generatingunits)islessthanthecarryingamount,animpairmentlossisrecognised.Animpairmentlossrecognisedforgoodwillisnotreversedinasubsequentperiod.

Wheregoodwillhasbeenallocatedtoacash-generatingunit(orgroupofcash-generatingunits)andpartoftheoperationwithinthatunitisdisposedof,thegoodwillassociatedwiththeoperationdisposedofisincludedinthecarryingamountoftheoperationwhendeterminingthegainorlossonthedisposal.Goodwilldisposedofinthesecircumstancesismeasuredbasedontherelativevalueoftheoperationdisposedofandtheportionofthecash-generatingunitretained.

Non-currentassetsanddisposalgroupsheldforsale

Non-currentassetsanddisposalgroupsareclassifiedasheldforsaleiftheircarryingamountswillberecoveredprincipallythrougha sales transaction rather than throughcontinuinguse.For this tobe the case, the assetordisposal groupmustbe available forimmediate sale in itspresentcondition subjectonly to terms thatareusualandcustomary for the saleof suchassetsordisposalgroupsanditssalemustbehighlyprobable.AllassetsandliabilitiesofasubsidiaryclassifiedasadisposalgrouparereclassifiedasheldforsaleregardlessofwhethertheGroupretainsanon-controllinginterestinitsformersubsidiaryafterthesale.

Non-currentassetsanddisposalgroups(otherthaninvestmentpropertiesandfinancialassets)classifiedasheldforsalearemeasuredattheloweroftheircarryingamountsandfairvalueslesscoststosell.Property,plantandequipmentandintangibleassetsclassifiedasheldforsalearenotdepreciatedoramortised.

Operating leases

Leaseswhere substantially all the rewards and risksofownershipof assets remainwith the lessor are accounted for asoperatingleases.Where theGroup is the lessor, assets leasedby theGroupunderoperating leases are included innon-current assets, andrentalsreceivableundertheoperatingleasesarecreditedtothestatementofprofitorlossandothercomprehensiveincomeonthestraight-linebasisovertheleaseterms.WheretheGroupisthelessee,rentalspayableunderoperatingleasesnetofanyincentivesreceivedfromthe lessorarechargedtothestatementofprofitor lossandothercomprehensive incomeonthestraight-linebasisovertheleaseterms.






Operatingleases(continued)

Prepaidlandleasepaymentsunderoperatingleasesareinitiallystatedatcostandsubsequentlyrecognisedonthestraight-linebasisovertheleaseterms.

When the lease payments cannot be allocated reliably between the land and buildings elements, the entire lease payments areincludedinthecostofthelandandbuildingsasafinanceleaseinproperty,plantandequipment.

Investments and other financial assets

(a) Classification

From1January2018,theGroupclassifiesitsfinancialassetsinthefollowingmeasurementcategories:

• thosetobemeasuredsubsequentlyatfairvalue(eitherthroughOCIorthroughprofitorloss),and

• thosetobemeasuredatamortisedcost.

Theclassificationdependsontheentity’sbusinessmodelformanagingthefinancialassetsandthecontractualtermsofthecashflows.

Forassetsmeasuredatfairvalue,gainsandlosseswilleitherberecordedinprofitorlossorOCI.Forinvestmentsinequityinstrumentsthatarenotheldfortrading,thiswilldependonwhethertheGrouphasmadeanirrevocableelectionatthetimeofinitialrecognitiontoaccountfortheequityinvestmentatFVOCI.

TheGroupreclassifiesdebtinvestmentswhenandonlywhenitsbusinessmodelformanagingthoseassetschanges.

(b) Recognition and derecognition

Regularwaypurchasesandsalesof financialassetsarerecognisedontrade-date, thedateonwhichtheGroupcommits topurchaseorselltheasset.FinancialassetsarederecognisedwhentherightstoreceivecashflowsfromthefinancialassetshaveexpiredorhavebeentransferredandtheGrouphastransferredsubstantiallyalltherisksandrewardsofownership.

(c) Measurement

Atinitialrecognition,theGroupmeasuresafinancialassetatitsfairvalueplus,inthecaseofafinancialassetnotatFVPL,transaction costs that aredirectly attributable to the acquisitionof the financial asset.Transaction costsof financial assetscarriedatFVPLareexpensedinprofitorloss.

Financial assetswithembeddedderivatives are considered in their entiretywhendeterminingwhether their cash flowsaresolelypaymentofprincipalandinterest.





Investmentsandotherfinancialassets(continued)

(c) Measurement (continued)

Debt instruments

SubsequentmeasurementofdebtinstrumentsdependsontheGroup’sbusinessmodelformanagingtheassetandthecashflowcharacteristicsoftheasset.TherearethreemeasurementcategoriesintowhichtheGroupclassifiesitsdebtinstruments:

• Amortised cost:Assets that areheld for collectionof contractual cash flowswhere those cash flows represent solelypayments of principal and interest are measured at amortised cost. Interest income from these financial assets isincluded in finance income using the effective interest rate method. Any gain or loss arising on derecognition isrecognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains andlosses.Impairmentlossesarepresentedasseparatelineiteminthestatementofprofitorloss.

• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where theassets’ cash flows represent solely payments of principal and interest, aremeasured at FVOCI.Movements in thecarryingamountaretakenthroughOCI,exceptfortherecognitionofimpairmentgainsorlosses,interestincomeandforeignexchangegainsandlosseswhicharerecognisedinprofitorloss.Whenthefinancialassetisderecognised,thecumulativegainorlosspreviouslyrecognisedinOCIisreclassifiedfromequitytoprofitorlossandrecognisedinothergains/(losses).Interestincomefromthesefinancialassetsisincludedinfinanceincomeusingtheeffectiveinterestratemethod.Foreignexchangegainsandlossesarepresentedinothergains/(losses)andimpairmentexpensesarepresentedasseparatelineiteminthestatementofprofitorloss.

• FVPL:AssetsthatdonotmeetthecriteriaforamortisedcostorFVOCIaremeasuredatFVPL.AgainorlossonadebtinvestmentthatissubsequentlymeasuredatFVPLisrecognisedinprofitorlossandpresentednetwithinothergains/(losses)intheperiodinwhichitarises.

Equity instruments

TheGroupsubsequentlymeasuresallequityinvestmentsatfairvalue.WheretheGroup’smanagementhaselectedtopresentfairvaluegainsandlossesonequityinvestmentsinOCI,thereisnosubsequentreclassificationoffairvaluegainsandlossestoprofitorlossfollowingthederecognitionoftheinvestment.DividendsfromsuchinvestmentscontinuetoberecognisedinprofitorlossasotherincomewhentheGroup’srighttoreceivepaymentsisestablished.

ChangesinthefairvalueoffinancialassetsatFVPLarerecognisedinothergains/(losses)inthestatementofprofitorlossas applicable. Impairment losses (and reversal of impairment losses) on equity investmentsmeasured at financial assets atFVOCIarenotreportedseparatelyfromotherchangesinfairvalue.







(d) Impairment

From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debtinstrumentscarriedatamortisedcostandFVOCI.Theimpairmentmethodologyapplieddependsonwhethertherehasbeenasignificantincreaseincreditrisk.

Fortradereceivables, theGroupapplies thesimplifiedapproachpermittedbyHKFRS9,whichrequiresexpected lifetimelossestoberecognisedfrominitialrecognitionofthereceivables.

(e) Accounting policies applied until 31 December 2017

TheGrouphas appliedHKFRS9 retrospectively,buthas electednot to restate comparative information.As a result, thecomparativeinformationprovidedcontinuestobeaccountedforinaccordancewiththeGroup’spreviousaccountingpolicy.

Until31December2017,theGroupclassifiesitsfinancialassetsinthefollowingcategories:

• financialassetsatfairvaluethroughprofitorloss,

• loansandreceivables,

• held-to-maturityinvestments,and

• available-for-salefinancialassets.

The classification determined on the purpose for which the investments were acquired. Management determined theclassificationofitsinvestmentsatinitialrecognitionand,inthecaseofassetsclassifiedasheld-to-maturity,re-evaluatedthisdesignationattheendofeachreportingperiod.

(i) Reclassification

TheGroupcouldchoosetoreclassifyanon-derivativetradingfinancialassetoutoftheheldfortradingcategoryifthefinancialassetwasnolongerheldforthepurposeofsellingitinthenearterm.Financialassetsotherthanloansandreceivableswerepermittedtobereclassifiedoutoftheheldfortradingcategoryonlyinrarecircumstancesarisingfromasingleeventthatwasunusualandhighlyunlikelytorecurinthenearterm.Inaddition,theGroupcouldchoosetoreclassifyfinancialassetsthatwouldmeetthedefinitionofloansandreceivablesoutoftheheldfortradingoravailable-for-salecategoriesiftheGrouphadtheintentionandabilitytoholdthesefinancialassetsfortheforeseeablefutureoruntilmaturityatthedateofreclassification.

Reclassificationsweremadeat fairvalueasof the reclassificationdate.Fairvaluebecame thenewcostoramortisedcostasapplicable,andnoreversalsoffairvaluegainsorlossesrecordedbeforereclassificationdateweresubsequentlymade.Effective interest rates for financial assets reclassified to loans and receivables andheld-to-maturity categoriesweredeterminedatthereclassificationdate.Furtherincreasesinestimatesofcashflowsadjustedeffectiveinterestratesprospectively.






(e) Accounting policies applied until 31 December 2017 (continued)

(ii) Subsequent measurement

ThemeasurementatinitialrecognitiondidnotchangeanadoptionofHKFRS9,seedescriptionabove.

Subsequent to the initial, recognition loans and receivables and held-to-maturity investments were subsequentlycarriedatamortisedcostusingtheeffectiveinterestmethod.

Available-for-salefinancialassetsandfinancialassetsatFVPLweresubsequentlycarriedatfairvalue.Gainsorlossesarisingfromchangesinthefairvaluearerecognisedasfollows:

• for‘financialassetsatFVPL’–inprofitorlosswithinothergains/(loss)

• foravailable-for-salefinancialassetsthataremonetarysecuritiesdenominatedinaforeigncurrency–translationdifferencesrelatedtochanges intheamortisedcostof thesecuritywererecognised inprofitor lossandotherchangesinthecarryingamountwererecognisedinothercomprehensiveincome

• forothermonetaryandnon-monetarysecuritiesclassifiedasavailable-for-sale–inothercomprehensiveincome.

When securities classifiedas available-for-salewere sold, the accumulated fair value adjustments recognised inothercomprehensiveincomewerereclassifiedtoprofitorlossasgainsandotherlossesfrominvestmentsecurities.

(iii) Impairment

TheGroupassessedattheendofeachreportingperiodwhethertherewasobjectiveevidencethatafinancialassetorgroupof financialassetswas impaired.A financialassetoragroupof financialassetswas impairedand impairmentlosseswereincurredonlyiftherewasobjectiveevidenceofimpairmentasaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionoftheasset(a‘lossevent’)andthatlossevent(orevents)hadanimpactontheestimatedfuturecashflowsofthefinancialassetorgroupoffinancialassetsthatcouldbereliablyestimated.Inthecaseofequityinvestmentsclassifiedasavailable-for-sale,asignificantorprolongeddeclineinthefairvalueofthesecuritybelowitscostwasconsideredanindicatorthattheassetsareimpaired.







(e) Accounting policies applied until 31 December 2017 (continued)

(iii) Impairment (continued)

• Assetscarriedatamortisedcost

For loans and receivables, the amountof the losswasmeasuredas thedifferencebetween theasset’s carryingamountandthepresentvalueofestimatedfuturecashflows(excludingfuturecredit lossesthathadnotbeenincurred)discountedatthefinancialasset’soriginaleffectiveinterestrate.Thecarryingamountoftheassetwasreducedandtheamountofthelosswasrecognisedinprofitorloss.Ifaloanorheld-to-maturityinvestmenthadavariableinterestrate,thediscountrateformeasuringanyimpairmentlosswasthecurrenteffectiveinterestratedeterminedunderthecontract.Asapracticalexpedient,theGroupcouldmeasureimpairmentonthebasisofaninstrument’sfairvalueusinganobservablemarketprice.

If, in a subsequent period, the amount of the impairment loss decreased and the decrease could be relatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised(suchasanimprovementinthedebtor’screditrating),thereversalofthepreviouslyrecognisedimpairmentlosswasrecognisedinprofitorloss.

• Assetsclassifiedasavailable-for-sale

If there was objective evidence of impairment for available-for-sale financial assets, the cumulative loss –measuredasthedifferencebetweentheacquisitioncostandthecurrentfairvalue,lessanyimpairmentlossonthatfinancialassetpreviouslyrecognisedinprofitorloss–wasremovedfromequityandrecognisedinprofitorloss.

Impairmentlossesonequityinstrumentsthatwererecognisedinprofitorlosswerenotreversedthroughprofitorlossinasubsequentperiod.

If the fair value of a debt instrument classified as available-for-sale increased in a subsequent period and theincreasecouldbeobjectivelyrelatedtoaneventoccurringaftertheimpairmentlosswasrecognisedinprofitorloss,theimpairmentlosswasreversedthroughprofitorloss.





Financialliabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans andborrowings,orasderivativesdesignatedashedginginstrumentsinaneffectivehedge,asappropriate.

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

The Group’s financial liabilities include trade and other payables, interest-bearing bank loans and other borrowings. FinancialliabilitiesareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsaftertheendofthereportingperiod.

Subsequent measurement

Thesubsequentmeasurementoffinancialliabilitiesdependsontheirclassificationasfollows:

Financial liabilities at fair value through profit or loss

Financialliabilitiesatfairvaluethroughprofitorlossincludefinancialliabilitiesheldfortradingandfinancialliabilitiesdesignateduponinitialrecognitionasatfairvaluethroughprofitorloss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of repurchasing in the near term.Thiscategory includes derivative financial instruments entered into by theGroup that are not designated as hedging instruments inhedgerelationshipsasdefinedbyHKAS39.Separatedembeddedderivativesarealsoclassifiedasheldfortradingunlesstheyaredesignatedaseffectivehedginginstruments.Gainsorlossesonliabilitiesheldfortradingarerecognisedinthestatementofprofitor loss andother comprehensive income.Thenet fair value gainor loss recognised in the statementofprofit or loss andothercomprehensiveincomedoesnotincludeanyinterestchargedonthesefinancialliabilities.

Financial liabilitiesdesignatedupon initial recognitionas at fair value throughprofitor loss aredesignated at thedateof initialrecognitionandonlyifthecriteriainHKAS39aresatisfied.

Other financial liablilities measured at amortised cost-loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequentlymeasured at amortised cost, using the effectiveinterestmethodunless theeffectofdiscountingwouldbe immaterial, inwhichcase theyare statedatcost.Gainsand lossesarerecognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised as well asthroughtheeffectiveinterestrateamortisationprocess.

Amortisedcostiscalculatedbytakingintoaccountanydiscountorpremiumonacquisitionandfeesorcoststhatareanintegralpartoftheeffectiveinterestrate.Theeffectiveinterestrateamortisationisincludedinfinancecostsinthestatementofprofitorlossandothercomprehensiveincome.






Derecognitionoffinancialliabilities

Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelled,orexpires.

Whenanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodificationistreatedasaderecognitionoftheoriginal liabilityandarecognitionofanewliability,andthedifferencebetweentherespectivecarryingamountsisrecognisedinthestatementofprofitorlossandothercomprehensiveincome.

Offsetting of financial instruments

Financialassetsandfinancialliabilitiesareoffsetandthenetamountisreportedinthestatementoffinancialpositionifthereisacurrentlyenforceablelegalrighttooffsettherecognisedamountsandthereisanintentiontosettleonanetbasis,ortorealisetheassetsandsettletheliabilitiessimultaneously.Thelegallyenforceablerightmustnotbecontingentonfutureeventsandmustbeenforceableinthenormalcourseofbusinessandintheeventofdefault,insolvencyorbankruptcyoftherelevantcompanyorthecounterparty.

Derivative financial instruments

Initial recognition and subsequent measurement

Derivativefinancialinstrumentsareinitiallyrecognisedatfairvalueonthedateonwhichaderivativecontractisenteredintoandaresubsequentlyremeasuredatfairvalue.Derivativesarecarriedasassetswhenthefairvalueispositiveandasliabilitieswhenthefairvalueisnegative.

Thefairvalueofcommoditypurchasecontracts thatmeetthedefinitionofaderivativeasdefinedbyHKAS39isrecognised inthe statementofprofitor lossandothercomprehensive incomeascostof sales.Commoditycontracts thatareentered intoandcontinue to beheld for thepurpose of the receipt or delivery of a non-financial item in accordancewith theGroup’s expectedpurchase,saleorusagerequirementsareheldatcost.

Anygainsor lossesarisingfromchanges infairvalueofderivativesaretakendirectlytothestatementofprofitor lossandothercomprehensiveincome,exceptfortheeffectiveportionofcashflowhedges,whichisrecognisedinothercomprehensiveincomeandlaterreclassifiedtoprofitorlosswhenthehedgeditemaffectsprofitorloss.





Derivativefinancialinstruments(continued)

Current versus non-current classification

Derivativeinstrumentsthatarenotdesignatedaseffectivehedginginstrumentsareclassifiedascurrentornon-currentorseparatedintocurrentandnon-currentportionsbasedonanassessmentofthefactsandcircumstances(i.e.,theunderlyingcontractedcashflows).

(a) Where theGroupexpects tohold aderivative as an economichedge (anddoesnot applyhedge accounting) for aperiodbeyond12monthsaftertheendofthereportingperiod,thederivativeisclassifiedasnon-current(orseparatedintocurrentandnon-currentportions)consistentlywiththeclassificationoftheunderlyingitem.

(b) Embeddedderivativesthatarenotcloselyrelatedtothehostcontractareclassifiedconsistentlywiththecashflowsofthehostcontract.

(c) Derivative instruments that are designated as, and are effective hedging instruments, are classified consistently with theclassificationoftheunderlyinghedgeditem.Thederivativeinstrumentsareseparatedintocurrentportionsandnon-currentportionsonlyifareliableallocationcanbemade.

Propertiesheldorunderdevelopmentforsale

Propertiesheldorunderdevelopmentforsaleareincludedincurrentassetsatthelowerofcostandnetrealisablevalue.

The costs of properties held or under development for sale comprise specifically identified cost, including acquisition costs,development expenditures, capitalised borrowing costs and other related expenditure directly attributable to the developmentof such properties.Net realisable value is based on estimated selling prices in the ordinary course of business as determined bymanagementwithreferencetotheprevailingmarketconditions,lessfurthercostsexpectedtobeincurredtocompletionandsellingandmarketingcosts.

Inventories

Inventoriesmainlycomprisefood,beverages,operatingsuppliesandlowvalueconsumables,andarestatedatthelowerofcostornetrealisablevalue.Costisdeterminedontheweightedaveragebasis.Netrealisablevalueisbasedonestimatedsellingpriceslessanyestimatedcoststobeincurredtocompletionanddisposal.

Cashandcashequivalents

Forthepurposeoftheconsolidatedstatementofcashflows,cashandcashequivalentscomprisecashonhandanddemanddeposits,andshorttermhighly liquidinvestmentsthatarereadilyconvertible intoknownamountsofcash,aresubjecttoaninsignificantriskofchangesinvalue,andhaveashortmaturityofgenerallywithinthreemonthswhenacquired,lessbankoverdraftswhicharerepayableondemandandformanintegralpartoftheGroup’scashmanagement.

Forthepurposeoftheconsolidatedstatementoffinancialposition,cashandcashequivalentscomprisecashonhandandatbanks,includingtermdeposits,andassetswithsimilarnaturetocash,whicharenotrestrictedastouse.






Share capital

Ordinarysharesareclassifiedasequity.Mandatorilyredeemablepreferencesharesareclassifiedasliabilities.

Incrementalcostsdirectlyattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromtheproceeds.

Provisions

Aprovisionisrecognisedwhenapresentobligation(legalorconstructive)hasarisenasaresultofapasteventanditisprobablethatafutureoutflowofresourceswillberequiredtosettletheobligation,providedthatareliableestimatecanbemadeoftheamountoftheobligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation.The increase in the discounted present valueamount arising from the passage of time is included in finance costs in the statement of profit or loss and other comprehensive income.

Incometax

Incometaxcomprisescurrentanddeferredtax.Incometaxrelatingtoitemsrecognisedoutsideprofitorlossisrecognisedoutsideprofitorloss,eitherinothercomprehensiveincomeordirectlyinequity.

Current tax assets and liabilities aremeasured at the amount expected to be recovered fromor paid to the taxation authorities,basedontaxrates(andtax laws)thathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod,takingintoconsiderationinterpretationsandpracticesprevailinginthecountriesinwhichtheGroupoperates.

Deferredtaxisprovided,usingtheliabilitymethod,onalltemporarydifferencesattheendofthereportingperiodbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.

Deferredtaxliabilitiesarerecognisedforalltaxabletemporarydifferences,except:

• whenthedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwilloranassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and

• inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiariesandassociates,whenthetimingofthereversalofthetemporarydifferencescanbecontrolledanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.





Incometax(continued)

Deferredtaxassetsarerecognisedforalldeductibletemporarydifferences,thecarryforwardofunusedtaxcreditsandanyunusedtaxlosses.Deferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,thecarryforwardofunusedtaxcreditsandunusedtaxlossescanbeutilised,except:

• whenthedeferredtaxassetrelatingtothedeductibletemporarydifferencesarisesfromtheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and

• inrespectofdeductible temporarydifferencesassociatedwith investments insubsidiariesandassociates,deferredtaxassetsareonlyrecognisedtotheextentthatitisprobablethatthetemporarydifferenceswillreverseintheforeseeablefutureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that itis no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it hasbecomeprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettoberecovered.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealisedortheliabilityissettled,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod.

Deferredtaxassetsanddeferredtaxliabilitiesareoffsetifalegallyenforceablerightexiststosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandthedeferredtaxesrelatetothesametaxableentityandthesametaxationauthority.

Revenue recognition

Revenueisrecognisedonthefollowingbases:

Sale of development properties

Until31December2017,theGroupaccountedforpropertydevelopmentactivitieswhensignificantriskandrewardsofownershiphasbeentransferredto thecustomersondelivery in itsentiretyata single timeuponvacantpossessionandnotcontinuouslyasconstructionprogresses.






Revenuerecognition(continued)

Sale of development properties (continued)

From1January2018,revenuearerecognisedwhenorasthecontroloftheassetistransferredtothecustomer.Dependingonthetermsofthecontractandlawsthatapplytothecontract,controloftheassetmaytransferovertimeoratapointintime.ControloftheassetistransferredovertimeiftheGroup’sperformance:

• providesallthebenefitsreceivedandconsumedsimultaneouslybythecustomer;or

• createsandenhancesanassetthatthecustomercontrolsastheGroupperforms;or

• do not create an asset with an alternative use to the Group and the Group has an enforceable right to payment forperformancecompletedtodate.

Ifcontroloftheassettransfersovertime,revenueisrecognisedovertheperiodofthecontractbyreferencetotheprogresstowardscompletesatisfactionofthatperformanceobligation.Otherwise,revenueisrecognisedatapointintimewhenthecustomerobtainscontroloftheasset.

A contract liability is recognised for advances received from sales of development properties until control over the relevantpropertiespassedtothecustomer.

Significant financing component

Forcontractswheretheperiodbetweenthepaymentbythecustomerandtransferofthepromisedpropertyorserviceexceedsoneyear,thetransactionpriceshouldbeadjustedfortheeffectsorafinancingcomponent,ifsignificant.TheGrouphasassessedthatthefinancingcomponenteffectwasinsignificant.

Property leasing under operating leases

Operatinglease incomefrominvestmentproperties isrecognisedonthestraight-linebasisoverthe leaseterm,whichisthenon-cancellableperiodforwhichthelesseehascontractedtoleasethepropertiestogetherwithanyfurthertermsforwhichthelesseehastheoptiontocontinuetoleasetheproperties,withorwithoutfurtherpayments,whenitisreasonablycertainthatthelesseewillexercisetheoptionattheinceptionofthelease.





Revenuerecognition(continued)

Construction of infrastructure for intelligent network

Revenuefromtheconstructionofinfrastructureforintelligentnetworkisrecognisedasfollows:

When theoutcomeof a constructioncontract canbeestimated reliably, contract revenueandcontract costs are recognisedoverthetimeinwhichconstructionisconducted,respectively,asrevenuesandexpenses.TheGroupusesthepercentageofcompletionmethod(out-putmethod)todeterminetheappropriateamountofrevenueandcoststoberecognisedovertime.Whentheoutcomeofaconstructioncontractcannotbeestimatedreliably,contractrevenueisrecognisedonlytotheextentofcontractcostsincurredanditisprobablethatsuchcostsincurredwillberecovered.

Property management revenue

Propertymanagementrevenueisrecognisedintheaccountingperiodinwhichtheservicesarerendered.

Interest income

Interestincomeisrecognisedonanaccrualbasisusingtheeffectiveinterestmethod.

Dividend income

Dividendincomeisrecognisedwhentheshareholders’righttoreceivepaymentisestablished.

Employeebenefits

Employee retirement scheme

Theemployeesof theGroup’sentitieswhichoperate inMainlandChinaarerequiredtoparticipate inacentralpensionschemeoperated by the localmunicipal government.The entities are required to contribute 14% to 22% (2017: 14% to 22%) of thestandard salary announced by the government to the central pension scheme. The contributions are charged to the statementof profit or loss and other comprehensive income as they become payable in accordance with the rules of the central pensionscheme.Inaddition,theGroupparticipates intheMandatoryProvidentFundScheme,underwhichcontributionsof5%oftheHongKongemployee’sbasic salariesaremadeby theemployerandtheHongKongemployees, respectively.Theprovisionandcontributionshavebeenincludedinthestatementofprofitorlossandothercomprehensiveincomeuponincurrence.TheGrouphasnoobligationforthepaymentofpensionbenefitsbeyondthecontributionsdescribedabove.






Share-basedpayments

TheGroupoperatesanequity-settled,share-basedcompensationplans,underwhichtheentityreceivesservicesfromemployeesasconsiderationforequityinstruments(options)oftheGroup.Thefairvalueoftheemployeeservicesreceivedinexchangeforthegrantoftheoptionsisrecognisedasanexpense.Thetotalamounttobeexpensedisdeterminedbyreferencetothefairvalueoftheoptionsgranted:

• includinganymarketperformanceconditions;

• excludingtheimpactofanyserviceandnon-marketperformancevestingconditions;and

• includingtheimpactofanynon-vestingconditions.

Attheendofeachreportingperiod, theGrouprevises itsestimatesof thenumberofoptionsthatareexpectedtovestbasedonthenon-marketingperformanceandserviceconditions.Itrecognisestheimpactoftherevisiontooriginalestimates,ifany,inthestatementofprofitorloss,withacorrespondingadjustmenttoequity.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair valueisestimatedforthepurposesofrecognisingtheexpenseduringtheperiodbetweenservicecommencementperiodandgrantdate.

Whentheoptionsareexercised,theCompanyissuesnewshares.Theproceedsreceivednetofanydirectlyattributabletransactioncostsarecreditedtosharecapital.

The grantby theCompanyof options over its equity instruments to the employees of subsidiaryundertakings in theGroup istreatedasacapitalcontribution.Thefairvalueofemployeeservicesreceived,measuredbyreferencetothegrantdatefairvalue,isrecognisedoverthevestingperiodasanincreasetoinvestmentinsubsidiaryundertakings,withacorrespondingcredittoequityintheparententityaccounts.

Borrowingcosts

Borrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassets,i.e.,assetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale,arecapitalisedaspartofthecostofthoseassets.Thecapitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investmentincomeearnedonthetemporaryinvestmentofspecificborrowingspendingtheirexpenditureonqualifyingassetsisdeductedfromtheborrowingcostscapitalised.Allotherborrowingcostsareexpensedintheperiodinwhichtheyareincurred.Borrowingcostsconsistofinterestandothercoststhatanentityincursinconnectionwiththeborrowingoffunds.

Where funds have been borrowed generally, and used for the purpose of obtaining qualifying assets, a weighted averagecapitalisationratehasbeenappliedtotheexpenditureontheindividualassets.





Government grants

Government grants (including non-monetary grants) are recognised at their fair value where there is reasonable assurance thatthe grantswill be received and all attaching conditionswill be compliedwith.When the grant relates to an expense item, it isrecognisedasincomeonasystematicbasisovertheperiodsthatthecosts,whichitisintendedtocompensate,areexpensed.

Wherethegrantrelatestoanasset,thefairvalueisdeductedfromtherelevantassetbeforearrivingatthecarryingamountoftheasset and released to the statementofprofitor loss andothercomprehensive incomebywayofa reducedcostof assets’ charge.GrantsreceivedinconnectionwiththeGroup’sroleinplanningandconstructingtheancillarypublicfacilitiesaredeductedfromthedevelopmentcostoftheancillarypublicfacilitiesandwouldberecognisedindirectlyintheformofanincreasedprofitmarginoverthecourseofrecognisingrevenueinconnectionwiththeancillarypublicfacilitiesservices.

Dividends

Finaldividendsarerecognisedasaliabilitywhentheyareapprovedbytheshareholdersinageneralmeeting.

Foradistributionofnon-cashassetstoshareholders,theGroupmeasurestheliabilitytodistributenon-cashassetsasadividendtoitsshareholdersatthenetcarryingamountoftheassetstobedistributedwhenthenon-cashassetisultimatelycontrolledbythesamepartiesbothbeforeandafterthedistribution.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.Thechiefoperatingdecision-maker,whoisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments,hasbeenidentifiedastheBoardthatmakesstrategicdecisions.

Foreign currencies

(a) Functional and presentation currencies

Items included in the financial statements of each of the entities in the Group are measured using the currency of the primary economicenvironmentinwhichtheentityoperates(the“functionalcurrency”).TheCompany’sanditsmajorsubsidiaries’functionalcurrencyisRenminbi(“RMB”),asthemajorrevenuesarederivedfromoperationsinMainlandChina.Sincetheyearended31December2016,theGrouphaschangeditspresentationcurrencyfromHK$toRMBforthepreparationofitsfinancialstatements.






Foreigncurrencies(continued)

(b) Transactions and balances

Foreigncurrency transactions recordedby theentities in theGroupare initially recordedusing their respective functionalcurrency ratesprevailingat thedatesof the transactions.Monetaryassetsand liabilitiesdenominated in foreigncurrenciesareretranslatedatthefunctionalcurrencyratesofexchangerulingattheendofthereportingperiod.Differencesarisingonsettlementortranslationofmonetaryitemsarerecognisedinprofitorloss.

Non-monetaryitemsthataremeasuredintermsofhistoricalcostinaforeigncurrencyaretranslatedusingtheexchangeratesatthedatesoftheinitialtransactions.Non-monetaryitemsmeasuredatfairvalueinaforeigncurrencyaretranslatedusingtheexchangeratesatthedatewhenthefairvaluewasmeasured.Thegainorlossarisingonretranslationofanon-monetaryitemmeasuredatfairvalueistreatedinlinewiththerecognitionofthegainorlossonchangeinfairvalueoftheitem(i.e.,translationdifferenceontheitemwhosefairvaluegainorlossisrecognisedinothercomprehensiveincomeorprofitorlossisalsorecognisedinothercomprehensiveincomeorprofitorloss,respectively).

(c) Group companies

Theresultsandfinancialpositionofallthegroupentities(noneofwhichhasthecurrencyofahyperinflationaryeconomy)that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assetsandliabilitiesoftheGrouparetranslatedintothepresentationcurrencyoftheCompanyattheexchangeratesprevailingattheendofthereportingperiod;

(ii) incomeandexpensesoftheGrouparetranslatedintothepresentationcurrencyattheaverageexchangeratesfortheperiod(unlesssuchaverageratesarenotthereasonableapproximationofthecumulativeeffectoftheratesprevailingon the transaction dates, in which case income and expenses are translated into the presentation currency at theexchangeratesrulingatthedatesofthetransactions);and

(iii) all resulting exchange differences are recognised in other comprehensive income and accumulated in the exchangefluctuationreserve.

Forthepurposeof theconsolidatedstatementofcashflows, thecashflowsofall thegroupentities thathavea functionalcurrencydifferentfromthepresentationcurrencyaretranslatedintothepresentationcurrencyattheexchangeratesrulingat the dates of the cash flows. Frequently recurring cash flows ofwhich arise throughout the year are translated into thepresentationcurrencyattheweightedaverageexchangeratesfortheyear.

Onconsolidation,exchangedifferencesarisingfromthetranslationofthenetinvestmentinforeignoperations,ifany,andallmonetaryitemsthatprovideaneffectivehedgeforsuchinvestments,ifany,arerecognisedinothercomprehensiveincome.Whenaforeignoperationisdisposedof,suchexchangedifferencesarerecognisedinprofitorlossaspartofthegainorlossonsale.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amount ofassetsandliabilitiesarisingontheacquisitionaretreatedasassetsandliabilitiesoftheforeignoperationandtranslatedattheclosingrate.





Foreigncurrencies(continued)

(d) Disposal of foreign operation and partial disposal

On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving lossof controlover a subsidiary that includesa foreignoperation, adisposal involving lossof joint controlovera jointventure that includesa foreignoperation,oradisposal involving lossof significant influenceoveranassociate thatincludesa foreignoperation),allof thecurrency translationdifferencesaccumulated inequity in respectof thatoperationattributabletotheownersoftheCompanyarereclassifiedtoprofitorloss.

In the case of apartial disposal thatdoesnot result in theGroup losing control over a subsidiary that includes a foreignoperation, the proportionate share of accumulated currency translation differences are re-attributed to non-controllinginterestsandarenotrecognisedinprofitorloss.Forallotherpartialdisposals(thatis,reductionsintheGroup’sownershipinterest in associates or joint ventures that do not result in theGroup losing significant influence or joint control), theproportionateshareoftheaccumulatedexchangedifferenceisreclassifiedtoprofitorloss.

Contingencies

Acontingentliabilityorassetisapossibleobligationorassetthatarisesfrompasteventsandwhoseexistencewillbeconfirmedonlybytheoccurrenceornon-occurrenceofuncertainfutureeventsnotwhollywithinthecontroloftheGroup.Contingentliabilities(exceptforcontingentliabilitiesrecognisedinabusinesscombination)andassetsarenotrecognisedonthestatementoffinancialpositionoftheGroupandtheCompany.

3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

Thepreparation of theGroup’s financial statements requiresmanagement tomake judgements, estimates and assumptions thataffectthereportedamountsofrevenues,expenses,assetsandliabilities,andtheiraccompanyingdisclosures,andthedisclosureofcontingent liabilities.Uncertainty about these assumptions and estimates could result in outcomes that could require amaterialadjustmenttothecarryingamountsoftheassetsorliabilitiesaffectedinthefuture.

Judgements

In the process of applying theGroup’s accounting policies,management hasmade the following judgements, apart from thoseinvolvingestimations,whichhavethemostsignificanteffectontheamountsrecognisedinthefinancialstatements:




3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Judgements(continued)

Classification of subsidiary, joint venture and associate

Inthenormalcourseofbusiness, theGroupdevelopsproperties togetherwithotherdevelopersor institutions, throughenteringinto co-operation agreements with these parties. The rights and obligations of the Group and the other parties are stipulatedby respective co-operation agreements, article of associations of the project companies, etc. Because of the complexity of thearrangements,significantjudgementisneededindeterminingwhethertheprojectcompanyissubsidiary,jointventureorassociateoftheGroup.

The Groupmakes judgement based on the substance of the arrangements and the definition of subsidiary, joint venture andassociateasdisclosedinNotes2.4.

Estimation uncertainty

Thekeyassumptionsconcerningthefutureandotherkeysourcesofestimationuncertaintyattheendofthereportingperiod,thathavea significant riskofcausingamaterialadjustment to thecarryingamountsofassetsand liabilitieswithin thenext financialyear,aredescribedbelow.

Estimation of fair value of investment properties

Investment properties were revalued at the end of each reporting period during the years ended 31 December 2018 and 31December2017usingthetermandreversionmethodonthebasisofcapitalisationofnetrentalincomederivedfromtheexistingtenancieswithdue allowance for reversionary incomepotential of the property interest.These valuationswere based on certainassumptions, which are subject to uncertainty andmightmaterially differ from the actual results. Inmaking the estimate, theGroupconsiders informationfromcurrentprices inanactivemarketforsimilarpropertiesandusesassumptionsthataremainlybasedonmarketconditionsexistingattheendofeachreportingperiod.

Fordetailsofchange infairvaluesof investmentpropertiesandfurtherdetails includingthekeyassumptionsusedfor fairvaluemeasurementandasensitivityanalysisin2018,pleaseseeNote18.

Estimation of fair value of available-for-sale investments/financial assets at FVOCI

Thefairvalueofavailable-for-saleinvestments/financialassetsatFVOCIthatarenottradedinanactivemarketisdeterminedbyusingvaluationtechniquesornetassetvalue.TheGroupusesitsjudgementtoselectavarietyofmethodsandmakeassumptionsthataremainlybasedonmarketconditionsexistingattheendofeachreportingperiod.




Estimationuncertainty(continued)

Impairment of receivables

Impairment of receivables ismade based on assessment of the recoverability of receivables.The identification of impairment ofreceivablesrequiresmanagement’sjudgementsandestimates.Wheretheactualoutcomeorexpectationinfutureisdifferentfromtheoriginal estimation, suchdifferencewillhave impacton the carryingvalueof the receivables and impairmentof receivables/reversalofimpairmentintheperiodinwhichsuchestimatehasbeenchanged.

Impairment of goodwill

TheGroupdetermineswhethergoodwillisimpairedatleastonanannualbasis.Thisrequiresanestimationofthevalueinuseofthecash-generatingunitstowhichthegoodwill isallocated.EstimatingthevalueinuserequirestheGrouptomakeanestimateof theexpected futurecash flows fromthecash-generatingunitsandalso tochoosea suitablediscountrate inorder tocalculatethepresentvalueofthosecashflows.Thecarryingamountofgoodwillat31December2018wasapproximatelyRMB16million(2017:approximatelyRMB16million).Fordetailsofgoodwill,pleaseseeNote20.

Impairment of non-financial assets (other than goodwill)

TheGroupassesseswhetherthereareanyindicatorsofimpairmentforallnon-financialassetsattheendofeachreportingperiod.Othernon-financialassetsaretestedforimpairmentwhenthereareindicatorsthatthecarryingamountsmaynotberecoverable.An impairment testexistswhenthecarryingvalueofanassetoracash-generatingunitexceeds its recoverableamount,which isthehigherofitsfairvaluelesscostsofdisposalanditsvalueinuse.Thecalculationofthefairvaluelesscostsofdisposalisbasedonavailabledata frombinding sales transactions in an arm’s length transactionof similar assetsorobservablemarketprices lessincrementalcostsfordisposingoftheasset.Whenvalueinusecalculationsareundertaken,managementmustestimatetheexpectedfuturecashflowsfromtheassetorcash-generatingunitandchooseasuitablediscountrateinordertocalculatethepresentvalueofthosecashflows.

Deferred tax assets and liabilities and current income tax charge

Uncertaintiesexistwithrespecttotheinterpretationofcertaintaxregulationsandtheamountandtimingoffuturetaxableincome.Given the long-termnatureandcomplexityofexistingcontractualagreements,differencesarisingbetween theactual resultsandthe assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax credit and expensealreadyrecorded.TheGroupestablishesprovisions,basedonreasonableestimates, forpossibleconsequencesofauditsbythetaxauthorities. The amount of these provisions is based on various factors, such as experience of previous tax audits and differinginterpretationsoftaxregulationsbythetaxableentityandtheresponsibletaxauthority.Differencesofinterpretationmayariseonawidevarietyofissuesdependingontheconditionsprevailinginthedomicileoftherespectivegroupentity.





Estimationuncertainty(continued)

Deferred tax assets and liabilities and current income tax charge (continued)

Deferredtaxassetsarerecognisedfordeductibletemporarydifferences,carryforwardofunusedtaxcreditsandunusedtaxlossestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,carryforwardofunusedtaxcreditsandunusedtaxlossescanbeutilised.Significantmanagementjudgementisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognised,baseduponthelikelytimingandtheleveloffuturetaxableprofitstogetherwithfuturetaxplanningstrategies.WheretheactualorexpectedtaxpositionsoftherelevantcompaniesoftheGroupinfuturearedifferentfrom the original estimates, suchdifferenceswill impact on the recognition of deferred tax assets and income tax charge in theperiodinwhichsuchestimatehasbeenchanged.Fordetailsofdeferredtaxassetsandliabilitiesandincometax,pleaseseeNote33andNote12.

4. OPERATING SEGMENT INFORMATION

The chief operating decision-maker has been identified as theBoard.TheBoardmonitors the results of theGroup’s operatingsegments separately for thepurpose ofmakingdecisions about resources allocation andperformance assessment.TheBoardhasdetermined the operating segments based on theGroup’s products and services.The performance of each segment is evaluatedbased on its operating profit or loss before income tax and the methodology used for its calculation is same as that for theconsolidated financial statements.However, group financing (including finance costs and finance income) and income taxes aremanagedonagroupbasisandarenotallocatedtooperatingsegments.

Intersegmentsalesandtransfersaretransactedwithreferencetothesellingpricesusedforsalesmadetothirdpartiesatthethenprevailingmarketprices.

Thereportableoperatingsegmentsareasfollows:

• Thepropertydevelopmentsegmentdevelopsandsellsresidentialandcommercialproperties;

• ThepropertyleasingsegmentleasesofficesandcommercialpropertiesownedbytheGroupwhichareclassifiedasinvestmentproperties;

The other operations comprises, principally, the corporate activities that are not allocated to segments and miscellaneous insignificantoperationsincludingprovisionofpropertymanagementservices.



4. OPERATING SEGMENT INFORMATION (continued)

Ananalysisbyoperatingsegmentisasfollows:

2018

Property development

Property leasing

Other operations Total

Segment revenueSalestoexternalcustomers 1,269,753 160,171 121,385 1,551,309Intersegment sales – – 49,972 49,972

1,269,753 160,171 171,357 1,601,281

Reconciliation:Elimination of intersegment sales (49,972)

Revenue 1,551,309

Segment profit 366,603 143,154 85,077 594,834

Finance income – – – 70,350Finance costs – – – (547,406)

Finance costs – net – – – (477,056)

Share of results of associates – – – 72,033Shareofresultsofjointventures – – – 17,672

Profit before income tax – – – 207,483

Segment assets and liabilities – – –

Segment assets 5,361,440 4,856,819 5,740,875 15,959,134

Investments in associates – – – 1,105,416Investmentsinjointventures – – – 3,825,696

Total assets – – – 20,890,246

Segmentliabilities 5,199,620 2,149,162 5,723,213 13,071,995

Total liabilities 5,199,620 2,149,162 5,723,213 13,071,995





Ananalysisbyoperatingsegmentisasfollows(continued):

2018

Property development

Property leasing


Other segment information:Depreciation and amortisation 1,316 305 28,893 30,514Capitalexpenditure* 827 214 1,649 2,690Netfairvaluegainoninvestmentproperties – (45,956) – (45,956)Reversal of impairment of properties held or under development for sale (69,813) – – (69,813)Reversal of impairment of prepaid land lease payments (158,748) – – (158,748)Provisionforimpairmentoftradereceivables 172 – – 172Provisionforimpairmentofotherfinancial assets at amortised cost – – 4,365 4,365Provisionforimpairmentofotherreceivables – – 6,729 6,729Provisionforimpairmentofother non-currentassets – – 210 210

* Capital expenditure consists of additions of property, plant and equipment (RMB2,505 thousand) and additions in cost of investment

properties(RMB185thousand).





2017

Propertydevelopment

Property leasing


Segment revenueSalestoexternalcustomers 1,382,707 151,644 86,122 1,620,473Intersegment sales – – 31,780 31,780

1,382,707 151,644 117,902 1,652,253

Reconciliation:Elimination of intersegment sales (31,780)

Revenue 1,620,473

Segment profit 188,911 169,424 904,269 1,262,604

Finance income 57,153Finance costs (504,051)

Finance costs – net (446,898)

Share of results of associates 74,332Shareofresultsofjointventures (12,049)

Profit before income tax 877,989

Segment assets and liabilities

Segment assets 6,902,527 5,007,228 5,413,719 17,323,474

Investments in associates 1,043,140Investmentsinjointventures 4,018,705

Total assets 22,385,319

Segmentliabilities 6,315,608 2,281,759 5,973,984 14,571,351

Total liabilities 6,315,608 2,281,759 5,973,984 14,571,351






2017

Propertydevelopment

Property leasing


Other segment information:Depreciation and amortisation 1,689 70 29,851 31,610Capitalexpenditure* 132 987 2,753 3,872Netfairvaluegainoninvestmentproperties – (55,165) – (55,165)Impairmentofinvestmentinajointventure – – 27,882 27,882Write-downofpropertiesheldorunder development for sale 1,663 – – 1,663Reversal of impairment of prepaid land lease payments (156,850) – – (156,850)Provisionforimpairmentoftradereceivables 1,038 – 359 1,397Provisionforimpairmentofloansandreceivables 120,006 – – 120,006Provisionforimpairmentofotherreceivables 175,912 – – 175,912

* Capital expenditure consists of additions of property, plant and equipment (RMB2,973 thousand) and additions in cost of investment

properties(RMB899thousand).

Geographical information

(a) Fortheyearended31December2018:95.7%(2017:96.0%)ofthesalestoexternalcustomersoftheGrouparegeneratedfromMainlandChina.

(b) Non-currentassets

Asof31December2018,morethan83%(2017:morethan92%)oftheGroup’snon-currentassets(basedonthelocationsoftheassetsandexcludesfinancialinstrumentsanddeferredtaxassets)werelocatedinMainlandChina.

Informationaboutmajorcustomers

TheGroup’scustomersfromwhomtherevenueisderivedarewidelydispersed.Nocustomerorasinglegroupofcustomerswhichareknowntobeundercommoncontrolcontributed10%ormoreoftheGroup’srevenuefortheyearsended31December2018and2017.



5. REVENUE

Ananalysisofrevenueisasfollows:

2018 2017

Revenue from sale of properties 1,280,765 1,394,541Revenuefrompropertyleasing(Note18) 161,785 153,370Revenue from property management 18,311 14,888Revenuefromconstructionofinfrastructureforintelligentnetwork 4,985 8,890Other revenue 99,611 62,949

1,565,457 1,634,638Less:Taxandsurcharges(a) (14,148) (14,165)

Total revenue 1,551,309 1,620,473

(a) Taxandsurcharges

Priorto1May2016,businesstaxwascalculatedat5%oftherevenuefromthesaleofproperties,theprovisionofpropertymanagementservicesandpropertyleasingandat3%ofthenetincomereceivedfromtheconstructionofinfrastructureforanintelligentnetworkafterdeductingamountspayabletosubcontractors.

Effectivefrom1May2016,theGroup’srevenueissubjecttovalue-addedtax(“VAT”)whichisdeducteddirectlyfromtheproceeds.TheapplicableVATratefortheGroup’srevenueisasfollows:

• Pursuanttothe‘CircularonAdjustmentofTaxRateofValue-AddedTax’(CaiShui[2018]32)jointlyissuedbytheMinistryofFinanceandtheStateAdministrationofTaxation,theapplicabletaxratesofrevenuearisingfromsaleandleaseofpropertiesandrevenuearisingfromconstructionofinfrastructureforintelligentnetworkare10%from1May2018,whiletheywere11%beforethen.Qualifiedoldprojects,whicharethosewithconstructioncommencedonorbefore30April2016,canadoptasimplifiedVATmethodatarateof5%withnodeductionofinputVAT.RevenuefrompropertymanagementservicesissubjecttoVATat6%.

Governmentsurcharges,comprisingcitymaintenanceandconstructiontax,educationsurtaxandriverwaymanagementfee,arecalculatedatcertainpercentagesofVAT.

6. OTHER GAINS – NET

Ananalysisofothergains–netisasfollows:

2018 2017

GainsfromdisposaloffinancialassetsatFVOCI(Note16) 94,385 –GainsfromdisposaloffinancialassetsatFVPL(Note16) 8,228 –Netfairvaluegainoninvestmentproperties(Note18) 45,956 55,165Netgain/(loss)ondisposalofproperty,plantandequipment 61 (332)Impairmentofinvestmentinajointventure(Note22) – (27,882)Forfeiture of prepayments 60,000 –Penaltiesonidleland (47,000) –Others 14,483 (208)

176,113 26,743




7. EXPENSES BY NATURE

Ananalysisofexpensesbynatureisasfollows:

2018 2017

Costofinventoriessold(excludingdepreciation,(reversalofimpairment)/ write-downofpropertiesheldorunderdevelopmentforsaleandprepaid landleasepayments) 1,263,259 1,351,410Depreciationofitemsofproperty,plantandequipment(Note17) 26,097 27,254Employeebenefitexpenses(includingdirectors’andchiefexecutiveofficer’s emoluments,excludingthosecapitalizedinpropertyunderdevelopment): – Wages and salaries 103,438 193,485 –Othersocialwelfares 20,035 19,084 –Share-basedpayments(Note15) (18,019) 13,442

105,454 226,011

(Reversalofimpairment)/write-downofpropertiesheldorunder developmentforsale(Note23) (69,813) 1,663Reversalofimpairmentofprepaidlandleasepayments(Note19) (158,748) (156,850)Professionalservicefees 67,035 80,852Agent and sale commission for sale of properties 27,800 29,262Operatingleasepaymentsinrespectofbuildings 15,500 7,228Auditor’sremuneration(*) – Annual audit services 4,900 4,900 –Non-auditservices – 250Advertising costs 5,540 7,889Miscellaneoustax 20,196 28,163Transportation fee 9,538 11,475Officeexpenses 8,223 10,819Water and electricity costs 6,668 5,115Provisionforimpairmentofotherreceivables(Note25) 6,729 175,912Provisionforimpairmentoftradereceivables(Note26) 172 1,397Provisionforimpairmentofothernon-currentassets(Note29) 210 –Provisionforimpairmentofotherfinancialassetsatamortisedcosts/ loansandreceivables(Note28) 4,365 120,006Others 32,363 37,778

1,375,488 1,970,534

* Auditor’sremunerationfor2017includednon-auditservicefeesofRMB250thousandinrespectofservicesforcircularsissuedin2017.In

2018,nonon-auditservicefeewasincurred.



8. EMPLOYEE BENEFIT EXPENSES

2018 2017

Wages and salaries 103,438 193,485Share-basedpayments(Note15) (18,019) 13,442Pensioncosts–definedcontributionplans 20,035 19,084

Totalemployeebenefitexpenses 105,454 226,011

(a) Pensions–definedcontributionplans

AllChineseemployeesof theGroupparticipate indefinedcontributionemployeesocial securityplans, includingpension,medical,housingandotherwelfarebenefits,organisedandadministeredbythegovernmentalauthorities.TheGrouphasnoothersubstantialcommitmentstoemployees.

(b) Fivehighestpaidemployees

ThefivehighestpaidemployeesoftheGroupduringtheyearincludedthreedirectors(2017:twodirectors),detailsofwhoseremunerationaresetoutinNote11.Detailsoftheremunerationfortheyearoftheremainingtwo(2017:three)highestpaidemployeeswhoareneitheradirectornorchiefexecutiveoftheCompanyareasfollows:

2018 2017

Salaries,housingallowances,shareoptionscheme,otherallowancesand benefitsinkind 1,865 8,712Compensation for loss of office 1,108 –

2,973 8,712

No discretionary bonuses, inducement fees or employer’s contribution to pension schemes were given to any of theremainingtwo(2017:three)highestpaidemployeeswhoareneitheradirectornorchiefexecutiveoftheCompanyduringtheyearsended31December2018and2017.

Thenumberofnon-director,highestpaidemployeeswhoseremunerationfellwithinthefollowingbandsisasfollows:

2018 2017

RMB3,000,001–RMB5,000,000 – 1RMB2,000,001–RMB3,000,000 – 1RMB1,000,001–RMB2,000,000 2 1

2 3




9. FINANCE INCOME

Ananalysisoffinanceincomeisasfollows:

2018 2017

Interest from financial assets held for cash management purposes 70,350 57,153

10. FINANCE COSTS

Ananalysisoffinancecostsisasfollows:

2018 2017

Interestonbankborrowingsandotherborrowings 565,855 553,757Less:Interestcapitalised (49,021) (41,153)

Interestexpense 516,834 512,604Netforeignexchangegain/(loss) 30,572 (8,553)

Finance costs 547,406 504,051

Duringtheyearended31December2018,theweightedaverageinterestcapitalisationratewas7.15%(2017:4.12%)perannum.

11. BENEFITS AND INTERESTS OF DIRECTORS

(a) Directors’andchiefexecutive’semoluments

Theremunerationofeverydirectorandthechiefexecutiveissetoutasfollows:

2018 2017

Fees 1,236 1,244

Otheremoluments: Salaries 8,259 10,505 Share-basedpayments – 13,386

9,495 25,135



11. BENEFITS AND INTERESTS OF DIRECTORS (continued)

Executivedirectors,non-executivedirectorsandindependentnon-executivedirectors:

2018

Name of directors and the chief executive Salaries Fees

Share option scheme Total

Chairman –Mr.PengXinkuang(appointedin2017) 2,397 – – 2,397Executivedirectors –Mr.ShiJansonBing(resignedin2018)* 799 – – 799 –Mr.ChenChao 51 – – 51 –Mr.ZhuQiang 1,178 – – 1,178 –Mr.ChenDonghui 51 – – 51 –Ms.QinWenying 1,249 – – 1,249 –Mr.QiJiang(appointedin2018) 240 – – 240Independentnon-executivedirectors –Mr.Chan,CharlesSheungWai – 308 – 308 –Mr.ZhuoFumin – 308 – 308 –Mr.MaLishan – 308 – 308 –Mr.HanGensheng – 312 – 312Chiefexecutive – –Mr.LiuFeng(appointedin2017) 2,294 – – 2,294

Total 8,259 1,236 – 9,495




11. BENEFITS AND INTERESTS OF DIRECTORS (continued)

2017

Name of directors and the chief executive Salaries Fees

Share option scheme Total

ChairmanMr.PengXinkuang(appointedin2017)* 3,359 – 3,511 6,870 –Mr.HeBinwu(resignedin2017)* 1,298 – – 1,298Executivedirectors –Mr.ShiJansonBing 1,384 – 1,097 2,481 –Mr.ChenChao 52 – 1,756 1,808 –Mr.ZhuQiang 980 – 2,633 3,613 –Mr.ChenDonghui(appointedin2016) 52 – 1,756 1,808 –Ms.QinWenying(appointedin2016) 1,951 – 2,633 4,584Independentnon-executivedirectors –Mr.Chan,CharlesSheungWai – 311 – 311 –Mr.ZhuoFumin – 311 – 311 –Mr.MaLishan(appointedin2016) – 311 – 311 –Mr.HanGensheng(appointedin2016) – 311 – 311Chiefexecutive –Mr.LiuFeng(appointedin2017) 1,429 – – 1,429

Total 10,505 1,244 13,386 25,135

* InOctober2017,MrPengXinkuang,thechiefexecutiveofficeroftheGroup,hasbeenre-designatedasthechairmanoftheBoard.

* InOctober2017,Mr.HeBinwuresignedandhis160millionsharesgrantedundertheshareoptionschemewaslapsed.Thenetreversalon

expensewasapproximatelyRMB6.5million.

* InJuly2018,Mr.ShiJansonBingresignedandhis50millionsharesgrantedundertheshareoptionschemewaslapsed.Thenetreversalon

expensewasapproximatelyRMB2.4million.

No discretionary bonuses, inducement fees, employer’s contribution to pension schemes or compensation for loss of office asdirectorsweregiventoanyofthedirectorsduringtheyearsended31December2018and2017.

Therewasnoarrangementunderwhichadirectororthechiefexecutivewaivedoragreedtowaiveanyremunerationduringtheyearsended31December2018and2017.

Nosignificanttransactions,arrangementsandcontractsinrelationtotheGroup’sbusinesstowhichtheCompanywasapartyandinwhichadirectoroftheCompanyhadamaterialinterest,whetherdirectlyorindirectly,subsistedattheendoftheyearoranytimeduringtheyear.



12. INCOME TAX EXPENSE/(CREDIT)

Ananalysisofincometaxisasfollows:

2018 2017

Currenttaxation –MainlandChinaincometax(a) 28,045 48,981 –MainlandChinaLAT(c) 28,345 (77,135)

56,390 (28,154)

Deferredtaxation –MainlandChinaincometax 45,977 184,708 –MainlandChinaLAT 3,233 (2,306) –MainlandChinawithholdingtax(d) 3,037 3,437

52,247 185,839

Totaltaxchargefortheyear 108,637 157,685

(a) MainlandChinaincometax

The Group conducts a significant portion of its business inMainland China and the applicable income tax rate of itssubsidiariesoperatinginMainlandChinaisgenerally25%inaccordancewiththePRCCorporateIncomeTaxLawwhichwasapprovedandbecameeffectiveon1January2008.

Forthepre-saleofpropertiesunderdevelopment,thetaxauthoritiesmayimposeincometaxaheadofthecompletionofsaletransactionsandrevenuerecognitionbasedoncertainestimations.Theoutstandingbalancerecordedin“prepaidincometax”wasapproximatelyRMB57millionasat31December2018(2017:approximatelyRMB50million).Suchprepaidtaxesareinitiallyrecordedinthestatementoffinancialpositionandlaterreleasedtoprofitorlossuponrevenuerecognition.

(b) Otherincometax

TheCompanyisexemptedfromtaxationinBermudauntil2035.Taxesonprofitsassessableelsewherearecalculatedattherates of tax prevailing in the jurisdictions inwhich theGroup operates, based on existing legislation, interpretations andpracticesinrespectthereof.

NoprovisionforHongKongprofitstaxhasbeenmadeastheGrouphadnoassessableprofitsarisinginHongKongduringtheyear(2017:Nil).

(c) MainlandChinalandappreciationtax(“LAT”)

LATisincurredupontransferofpropertyandlandownershipandisleviedatprogressiveratesrangingfrom30%to60%ontheappreciationoflandvalue,beingtheproceedsfromthesaleofpropertieslessdeductibleexpendituresincludinglandcosts,borrowingcosts,taxesandallpropertydevelopmentexpenditures.




12. INCOME TAX EXPENSE/(CREDIT) (continued)

(c) MainlandChinalandappreciationtax(“LAT”)(continued)

For the pre-sale of properties under development, the tax authorities may impose LAT ahead of the completion oftransactionsandrevenuerecognition,generallybasedon2%to5%(2017:2%to5%)onproceedsfromthesaleandpre-saleofproperties.PrepaidLAThasbeenrecordedin“prepaidincometax”withanamountofapproximatelyRMB46millionasat31December2018(2017:approximatelyRMB46million).Suchprepaidtaxesareinitiallyrecordedinthestatementoffinancialpositionandlaterreleasedtoprofitorlossuponrevenuerecognition.Thecredittothestatementofprofitorlossandothercomprehensiveincomein2017wasduetothereversalofprovisionuponthefinalassessmentofLATforcertainprojects.

(d) MainlandChinawithholdingtax

PursuanttothePRCCorporateIncomeTaxLawwhichbecameeffectiveon1January2008,a10%withholdingtaxisleviedondividendsdeclaredtoforeigninvestorsfromtheforeigninvestmententerprisesestablishedinMainlandChinaandongainfromdisposalofequityintereststonon-taxresidententerprises.AlowerwithholdingtaxratemaybeappliedifthereisataxarrangementbetweenthePRCandthejurisdictionoftheforeigninvestors.On22February2008,Caishui(2008)No.1waspromulgatedbythetaxauthoritiestospecifythatdividendsdeclaredandremittedoutofthePRCfromretainedprofitsasat31December2007areexemptedfromwithholdingtax.

Areconciliationofthetaxexpenseapplicabletoprofitbeforeincometaxusingthestatutorytaxrateof25%forthejurisdictioninwhichthemajorityoftheCompany’ssubsidiariesaredomiciledtothetaxexpenseattheGroup’seffectivetaxrateisasfollows:

2018 2017

Profitbeforeincometax 207,483 877,989

Taxattheapplicabletaxrateof25% 51,871 219,497Effectofdifferenttaxrate – (2,096)Taxeffectofresultsattributabletoassociatesandjointventures (5,441) (15,571)ImpactofLAT(whichisitselfclassifiedaspartofincometax) asitisdeductibleforincometaxpurposes (7,895) 19,860Incomenotsubjecttotax (1,572) (25,396)Utilisationofpreviouslyunrecognizedtaxlosses (39,032) (193,764)Taxlossesnotrecognised 58,290 116,485Temporarydifferencesnotrecognisedasdeferredtaxassetsduetonon-recoverability 17,038 113,815Expensesnotdeductiblefortax 763 859Effectofwithholdingtaxat10%ontheretainedprofitsexpectedto bedistributed,fortheGroup’ssubsidiariesinMainlandChina 3,037 3,437

MainlandChinaincometax 77,059 237,126MainlandChinaLAT(includingdeferredLAT) 31,578 (79,441)

TotaltaxexpensefortheyearattheGroup’seffectivetaxrate 108,637 157,685



12. INCOME TAX EXPENSE/(CREDIT) (continued)

TheshareoftaxesattributabletoassociatesamountingtoapproximatelyRMB28million(2017:approximatelyRMB41million)isincludedin“shareofresultsofassociates”and“shareofresultsofjointventures”onthefaceoftheconsolidatedstatementofprofitorlossandothercomprehensiveincome.

13. DIVIDENDS PAID AND PROPOSED

TheBoardofDirectorshasresolvednottorecommendthepaymentoffinaldividendinrespectoftheyearended31December2018(2017:Nil).

14. EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY

(a) Basic

BasicearningspershareiscalculatedbydividingtheprofitattributabletoownersoftheCompanybytheweightedaveragenumberofordinarysharesinissueduringtheyear.

2018 2017

ProfitattributabletoownersoftheCompany 113,530 690,543

Weightedaveragenumberofordinarysharesinissue(thousands) 20,564,713 20,564,713

(b) Diluted

Dilutedearningspershareiscalculatedbyadjustingtheweightedaveragenumberofordinarysharesoutstandingtoassumeconversion of all dilutive potential ordinary shares. The share options issued in 2016 constitute dilutive shares. For theCompany’s share options, a calculation is done to determine the number of shares that could have been acquired at fairvalue (determinedas theaverageannualmarket sharepriceof theCompany’s shares)basedon themonetaryvalueof thesubscription rightsattached tooutstanding shareoptions.Thenumberof sharescalculatedasabove is comparedwith thenumberofsharesthatwouldhavebeenissuedassumingtheexerciseoftheshareoptions.

For theyearsended31December2018and2017,as theaverageannualmarket sharepriceof theCompany’s shareswaslowerthanassumedexercisepriceincludingthefairvalueofanyservicestobesuppliedtotheGroupinthefutureundertheshareoptionarrangement,theimpactofexerciseoftheshareoptionsonearningspershareisanti-dilutive.




15. SHARE-BASED PAYMENTS

On3June2016,theBoardproposedtoadoptanewshareoptionscheme(the“Scheme”)torewardthecontributionsmadebytheemployeesthatareeligibleundertheScheme(the“EligibleEmployees”),whichwasapprovedandadoptedbytheshareholdersoftheCompanyon6July2016.

On14July2016,optionstosubscribeforatotalof1,073,717,976newshareswereofferedtotheEligibleEmployees.TheexercisepriceofthegrantedoptionsisequaltotheaverageclosingpricespershareasstatedinthedailyquotationsheetsissuedbytheStockExchangeforthefivebusinessdaysimmediatelyprecedingthedateofthegrantwhichis14July2016.Theoptionsshallbevestedinthreetranchesinaccordancewiththefollowingvestingdateandconditions:(i)40%oftheoptionsshallbevestedon30August2016andexercisablefrom30August2016to13July2021ataconditionoftheGroupachievingitstargettoturnlossesintogainsforthesixmonthsended30June2016;(ii)anadditional30%shallbevestedon30August2017andexercisablefrom30August2017to13July2021ataconditionoftheGroupachievinganetprofitofnolessthanRMB350millionforthesixmonthsending30June2017;and(iii)theremaining30%shallbevestedon30August2018andexercisablefrom30August2018to13July2021ataconditionoftheGroupachievingagrowthrateofnetprofitofnolessthan50%comparingthesixmonthsending30June2018tothesixmonthsending30June2017.TheGrouphasnolegalorconstructiveobligationtorepurchaseorsettletheoptionsincash.

During the year ended 31 December 2018, the Group reversed an expense of approximately RMB18,019 thousand (2017:recognisedanexpenseofapproximatelyRMB13,442thousand)(Note7)inrelationtothelapsedshareoptionsgrantedtodirectorsandemployees.

Movementsinthenumberofshareoptionsoutstandingandtheirrelatedweightedaverageexercisepricesareasfollows:

2018 2017

Average exercise price in HK$

per share option

Number of share options

(thousands)

AverageexercisepriceinHK$

per share option

Numberofshare options (thousands)

At 1 January – 913,718 – 1,073,718Granted – – – –

Lapsed(a) – (309,115) – (160,000)

At31December – 604,603 – 913,718

(a) In2018,the259,115thousandoptionswerelapsedduetothefailureofmeetingtheconditiontovestandexercisethetrench(iii)options,

andthe50,000thousandoptions(2017:160,000thousand)werelapsedduetotheresignationoftheemployees(Note11).

Asat31December2018,outofthe604,603thousand(2017:913,718thousand)outstandingoptions,604,603thousandoptions(2017:639,603thousandoptions)wereexercisable.

Shareoptionsoutstandingattheendoftheyearhavethefollowingexpirydateandexerciseprices:

Expiry date – 13 July

Exercise price in HK$ per

share option

Number of share options

(thousands)

Numberofshare options (thousands)

2018 2017

2021 0.2132 604,603 913,718



15. SHARE-BASED PAYMENTS (continued)

ThefairvalueofoptionsgrantedduringtheperioddeterminedusingtheBinomialvaluationmodelwasdividedintothreetrenchesaccordingtovestingperiod,beingHK$7.80centsperoptionforoptionsvestedon30August2016,HK$7.99centsperoptionforoptionstobevestedon30August2017andHK$8.21centsperoptionforoptionstobevestedon30August2018.Thesignificantinputs into themodelwere closing share price ofHK$0.2120 at the grant date, exercise price shown above, volatility of 46%,dividendyieldofnil,anexpectedoptionlifeof5,4and3yearsrespectively,andanannualrisk-freeinterestrateof0.69%.Thevolatilitymeasuredatthestandarddeviationofcontinuouslycompoundedsharereturnsisbasedontheaveragerateofcomparablecompanies.SeeNote7forthetotalexpenserecognisedinthestatementofprofitorlossandothercomprehensiveincomeforshareoptionsgrantedtodirectorsandemployees.

16. AVAILABLE-FOR-SALE INVESTMENTS/FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME/FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2018 2017Available-for-sale

investmentsFinancial assets

at FVOCIFinancial assets

at FVPLAvailable-for-sale

investments

At 1 January 407,790 – – 642,806Changes in accounting policies (407,790) 382,836 24,954 –

Restated at 1 January – 382,836 24,954 642,806

Additions – – – 261,999Fair value change during the year – – – 2,030Disposals – (232,179) (24,954) (497,200)Currency translation differences – – – (1,845)

At31December – 150,657 – 407,790

Breakdown of financial assets at FVOCI as at 31 December 2018:

Percentage of shares

(%)

Cost at 31 December

2018

Fair value at 31 December

2018

% to total assets at

31 December 2018

InvestmentSecuredloanpackagefrom Industrial and Commercial BankofChina(“ICBC”)(a) Not applicable 150,657 150,657 0.7%




16. AVAILABLE-FOR-SALE INVESTMENTS/FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME/FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)

Breakdownofavailable-for-saleinvestmentsasat31December2017:

Percentageof shares

(%)

Cost at 31December

2017

Fair value at 31December

2017

%tototalassets at

31December2017

InvestmentSecuredloanpackagefromICBC(a) Notapplicable 175,806 175,806 0.8%Securedloanpackagefrom ChinaMinshengBank(“CMSB”)(a) Notapplicable 205,000 207,030 0.9%InvestmentinSouthGordon(b) Notapplicable 24,954 24,954 0.1%

Total 405,760 407,790 1.8%

(a) Asat31December2018, theGroupheld the secured loanpackagesoriginated fromICBCandCMSBwith fairvalueofapproximatelyRMB151million (2017: approximatelyRMB176million) andnil (2017: approximatelyRMB207million)respectively.Thefairvalueofthesecuredloanpackagesarebasedonvaluationtechniques.Thefairvalueiswithinlevel3ofthefairvaluehierarchy.Thesignificantunobservableinputsaretheadjustedunitmarketvalueofthecomparativeproperties.The Group did not make any provision against the balance as it was believed that the properties pledged against suchreceivableswouldbesufficienttocovertheoutstandingloanbalance.

In 2018, the Group disposed partial of the secured loan packages originated from ICBC and total of the secured loanpackagesoriginated fromCMSBandrecordedgains fromdisposalof financialassetsatFVOCIofapproximatelyRMB94million.

(b) AsatDecember2017,thebalancewasrelatedtoaloangrantedwithvariablereturntoanunlistedcompanyinAustraliawithatermofoneandahalfyears.Accordingtotheterms,neitherrepaymentofprincipalnorinvestmentreturnsareguaranteedforsuchinvestmentproducts.

In2018,theGroupdisposedtheinvestmentandrecordedgainsfromdisposaloffinancialassetsatFVPLofapproximatelyRMB8million.



16. AVAILABLE-FOR-SALE INVESTMENTS/FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME/FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)

Amounts recognised in profit or loss and other comprehensive income:

Duringtheyear,thefollowinggainswererecognisedinprofitorlossandothercomprehensiveincome.

2018 2017

Fairvaluegainofavailable-for-saleinvestmentrecognisedin other comprehensive income – 2,030GainsfromdisposaloffinancialassetsatFVOCLrecognisedinothergains(Note6) 94,385 –GainsfromdisposaloffinancialassetsatFVPLrecognisedinothergains(Note6) 8,228 –Gainsfromdisposalofavailable-for-sale investment recognised in finance income – 2,064

95,213 4,094

Movement of financial assets at FVOCI and FVPL for year ended 31 December 2018:

Secured loan package from

ICBC (FVOCI)

Secured loan package from

CMSB (FVOCI)

Investmentin SouthGordon

(FVPL) Total

Beginningofyear 175,806 207,030 24,954 407,790Disposal (25,149) (207,030) (24,954) (257,133)

End of year 150,657 – – 150,657

Dividend received – – – –

Movementofavailable-for-saleinvestmentsforyearended31December2017:

Secured loan packagefrom

ICBC

Secured loan packagefrom

CMSB

Structured deposits

withbanks

Investment in South Gordon Total

Beginningofyear 175,806 205,000 262,000 – 642,806Current year addition – – 235,200 26,799 261,999Fair value change during the year – 2,030 – – 2,030Currency translation differences – – – (1,845) (1,845)Disposal – – (497,200) – (497,200)

End of year 175,806 207,030 – 24,954 407,790

Dividend received – – – – –




17. PROPERTY, PLANT AND EQUIPMENT

2018

BuildingsLeasehold

improvements

Furniture, fittings, fixtures

and office equipment

Motor vehicles Total

CostBeginningofyear 659,496 2,767 105,458 24,185 791,906Additions 34 – 1,887 584 2,505Disposalofsubsidiaries(Note40) – – (66) – (66)Disposals (9,995) – (261) (1,324) (11,580)

End of year 649,535 2,767 107,018 23,445 782,765

Accumulated depreciation and impairmentBeginningofyear 23,499 2,767 7,497 20,878 54,641Depreciationcharge(Note7) 17,165 – 8,002 930 26,097Disposalofsubsidiaries(Note40) – – (14) – (14)Disposals (3,237) – (248) (1,241) (4,726)

End of year 37,427 2,767 15,237 20,567 75,998

Net carrying amountBalance,endofyear 612,108 – 91,781 2,878 706,767

Balance,beginningofyear 635,997 – 97,961 3,307 737,265



17. PROPERTY, PLANT AND EQUIPMENT (continued)

2017

BuildingsLeasehold

improvements

Furniture, fittings, fixtures

and office equipment

Motor vehicles Total

CostBeginningofyear 658,526 2,767 109,410 28,767 799,470Additions 970 – 2,003 – 2,973Disposalofsubsidiaries(Note40) – – (428) – (428)Disposals – – (5,527) (4,582) (10,109)

End of year 659,496 2,767 105,458 24,185 791,906

Accumulated depreciation and impairmentBeginningofyear 5,831 1,914 5,271 23,854 36,870Depreciationcharge(Note7) 17,668 853 7,671 1,062 27,254Disposalofsubsidiaries(Note40) – – (390) – (390)Disposals – – (5,055) (4,038) (9,093)

End of year 23,499 2,767 7,497 20,878 54,641

Net carrying amountBalance,endofyear 635,997 – 97,961 3,307 737,265

Balance,beginningofyear 652,695 853 104,139 4,913 762,600

Depreciation expenses of approximately RMB6,795 thousand (2017: approximately RMB6,880 thousand), of approximatelyRMB15 thousand (2017: approximately RMB21 thousand) and of approximately RMB19,287 thousand (2017: approximatelyRMB20,353 thousand)hadbeen respectively expensed in costof goods sold, selling andmarketing expenses and administrativeexpenses.

As at 31 December 2018, the property, plant and equipment with a net carrying amount of RMB123,396 thousand (2017:RMB133,493thousand)werepledgedascollateralfortheGroup’sbankandotherborrowings(Note32).




18. INVESTMENT PROPERTIES

Completed investment properties

2018 2017

Atbeginningofyear 5,375,199 5,270,895Netfairvaluegain(Note6) 45,956 55,165Additions in cost 185 899Currency translation differences (12,896) 48,240

At end of year 5,408,444 5,375,199

Theinvestmentpropertiesasat31December2018mainlyrepresentthefollowingproperties:

– ShanghaiOasisCentralRingCentre–Portionsofeightmulti-storeyshoppingmallsandcar-parkplacesatPutuoDistrict,Shanghai,withatotalfairvalueofapproximatelyRMB1,064million(2017:RMB1,041million),forwhichtheoperatingleasesenteredintohavetermsrangingfrom1to11years;and

– Shenyang Richgate ShoppingMall – A seven-storey shoppingmall at ShenheDistrict, Shenyang, with a total fair valueof approximatelyRMB2,433million (2017:RMB2,436million), forwhich the operating leases entered into have termsrangingfrom1to8years;and

– ShanghaiLakeMalarenTransportationHub–Afive-storeyshoppingmallatBaoshanDistrict,Shanghai,withatotalfairvalueofapproximatelyRMB246million(2017:RMB237million), forwhichtheoperatingleasesenteredintohavetermsrangingfrom1to12years;and

– ShanghaiLakeMalarenCommercialStreet–Acommercial streetatBaoshanDistrict,Shanghai,witha total fairvalueofapproximatelyRMB559million(2017:RMB540million), forwhich theoperating leasesentered intohave termsrangingfrom1to4years;and

– 41TowerHill–Aten-storeyofficebuildingat41TowerHill,London,UK,withatotalfairvalueofapproximatelyGreatBritain Pound(“GBP”) 90million (equivalent to approximately RMB783million) (2017: GBP90million; equivalent toRMB792million),forwhichtheoperatingleasesenteredintohavetermsrangingfrom1to3years;and

– 12Moorgate–Aneight-storeyofficebuildingat12Moorgate,London,UK,withatotalfairvalueofapproximatelyGBP35million(equivalenttoapproximatelyRMB301million)(2017:GBP35million;equivalenttoRMB307million),forwhichthepropertywasletinitsentiretywithoriginalremainingleasetermof5years.Thetenantexercisedthebreakoptionandthenterminatedtheleaseclosetotheendof2018.

Asat31December2018,theGrouphadnounprovidedcontractualobligationsforfuturerepairsandmaintenance(2017:Nil).



18. INVESTMENT PROPERTIES (continued)

Fair value hierarchy

ThefollowingtableillustratesthefairvaluemeasurementhierarchyoftheGroup’sinvestmentproperties:

Fair value measurement as at 31 December 2018 using

Quoted prices in active markets (Level 1)

Significant observable

inputs (Level 2)

Significant unobservable

inputs (Level 3) Total

Recurringfairvaluemeasurementfor:Commercial properties – – 5,196,444 5,196,444Carparks – – 212,000 212,000

– – 5,408,444 5,408,444

Fairvaluemeasurementasat31December2017usingQuoted prices

in active markets(Level1)

Significant observable

inputs (Level2)

Significant unobservable

inputs (Level3) Total

Recurringfairvaluemeasurementfor:Commercial properties – – 5,168,199 5,168,199Carparks – – 207,000 207,000

– – 5,375,199 5,375,199

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the date of the event or change incircumstancesthatcausedthetransfer.

Duringtheyear, therewerenotransfersof fairvaluemeasurementsbetweenLevel1andLevel2andnotransfers intooroutofLevel3.





Fairvaluehierarchy(continued)

ReconciliationoffairvaluemeasurementscategorisedwithinLevel3ofthefairvaluehierarchy:

Commercial properties Car parks Total

Carrying amount at 1 January 2017 5,040,702 230,193 5,270,895Netfairvaluegain/(loss)(Note6) 78,358 (23,193) 55,165Additions in cost 899 – 899Currency translation differences 48,240 – 48,240

Carryingamountat31December2017and1January2018 5,168,199 207,000 5,375,199Netfairvaluegain(Note6) 40,956 5,000 45,956Additions in cost 185 – 185Currency translation differences (12,896) – (12,896)

Carryingamountat31December2018 5,196,444 212,000 5,408,444

Asat31December2018,theGroup’sinvestmentpropertieswerevaluedbyJonesLangLaSalleCorporateAppraisalandAdvisoryLimited(“JonesLangLaSalle”),anindependentprofessionallyqualifiedpropertyvaluerandconsultant.TheGroup’sfinanceteamwillreviewthevaluationperformedbytheindependentvaluer,including:

• verifiesallmajorinputstotheindependentvaluationreport;

• assessespropertyvaluationmovementswhencomparedtotheprioryearvaluationreport;

• holdsdiscussionswithindependentvaluers.

The valuationswere performed based on the income approach (term and reversionmethod or direct capitalisationmethod) ordirect comparisonapproach for those investmentproperties.The following significantunobservable inputs for incomeapproachhavebeenused:

Term yield, reversionary yield 2018 2017

Shanghai Oasis Central Ring Centre 6%, 6.5% 6%,6.5%Shenyang Richgate Shopping Mall 4.5%, 6% 4.5%,6%ShanghaiLakeMalarenTransportationHub 3.5%, 5% 3.5%,5%ShanghaiLakeMalarenCommercialStreet 4.5%, 5% 4.5%,5%41TowerHill,London 5.5%, 6% 5.5%,6%12Moorgate,London 4.25%, 4.75% 4%,4.5%





Information about fair value measurements using significant unobservable inputs (Level 3)

DescriptionFair value at 31 Dec 2018 Valuation technique(s)

Unobservableinputs Range of unobservable inputs

Relationship of unobservableinputs to fair value

Commercial properties – Mainland China

4,324,787(2017:4,276,043)

Income approach Term yield Termyieldof3.5%-6%(2017:3.5%-6.5%),taking

into account of yield generated fromcomparablepropertiesandadjustmenttoeffectthecertaintyoftermincomesecuredandtobe

received

Thehigherthetermyield,thelowerthe fair value

Reversionary yield Reversionary yield of 4%-6.5%(2017:4%-6.5%),

takingintoaccountannualunitmarketrentalincomeandunitmarketvalueofthecomparable

properties

The higher the reversionary yield, the lowerthefairvalue

Marketunitrentofindividual unit

RMB46-RMB285(2017:RMB46–RMB285)persquaremetrepermonth

Thehigherthemarketunitrent,thehigher the fair value

Commerc i a l p roper t i e s –UK

1,083,657(2017:1,099,156)

Income approach Term yield Termyieldof4.3%-5.5%(2017:4%-5.5%),takinginto

account of yield generated from comparablepropertiesand

adjustmenttoeffectthecertaintyoftermincomesecuredandtobe

received

Thehigherthetermyield,thelowerthe fair value

Reversionary yield Reversionary yield of 4.8%-6%(2017:4.5%-6%),

takingintoaccountannualunitmarketrentalincomeandunitmarketvalueofthecomparable

properties

The higher the reversionary yield, the lowerthefairvalue

Marketunitrentofindividual unit

RMB415-RMB537(2017:RMB421-RMB527)persquaremetrepermonth

Thehigherthemarketunitrent,thehigher the fair value






The term and reversionmethodmeasures the fair value of theproperty by taking into account the rental incomederived fromtheexistingleaseswithdueallowanceforthereversionaryincomepotentialoftheleases,whicharethencapitalisedintothevalueat appropriate rates.Thedirect capitalisationmethodmeasures the fair valueof thepropertyby assuming a stabilised economicincomecapitalisedbyamarketyieldrate.Themarketyieldwasdevelopedbasedontheresearchonthesalesandrentalevidencesof the similar properties in the surroundingmarket and assuming the existing tenancywill be extended.A significant increase/(decrease) in the estimated market yield would result in a significant decrease/(increase) in the fair value of the investmentproperties.

Weretherentalrateandyieldraterequiredassumedtoincreaseordecreaseby10%frommanagement’sestimate,thechangesincarryingamountofinvestmentpropertiesasat31December2018and2017wouldhavebeenasfollows:

2018 2017

Investmentpropertiesincrease/(decrease) – 10 percent rental rate higher 468,971 524,922 –10percentrentalratelower (444,262) (526,244)Investmentpropertiesincrease/(decrease) – 10 percent yield rate used higher (356,956) (418,369) –10percentyieldrateusedlower 442,180 480,507

As at 31 December 2018, the Group’s investment properties of approximately RMB2,953 million (2017: approximatelyRMB5,116million)werepledgedascollateralfortheGroup’sbankandotherborrowings(Note32).

Thefollowingamountsrelatingtotheinvestmentpropertieshavebeenrecognisedintheconsolidatedstatementofprofitor lossandothercomprehensiveincome:

2018 2017

Rentalincome(Note5) 161,785 153,370Directoperatingexpensesarisingfrominvestmentproperties that generate rental income (40,769) (28,120)Gainfromincreaseinfairvalue(Note6) 45,956 55,165



19. PREPAID LAND LEASE PAYMENTS

TheGroup’sinterestsinleaseholdlandrepresentprepaidoperatingleasepaymentsandtheirnetbookvaluesareanalysedasfollows:

2018 2017

Atbeginningofyear 2,110,252 2,840,907Additions 157,267 113,458Disposalswiththesaleofcompletedproperties (101,680) (334,098)Disposalofsubsidiaries(Note40) (289,659) (559,375)Amortisation capitalised as properties under development for sale (35,368) (103,134)Amortisationprovidedrelatingtoproperty,plantandequipment (4,417) (4,356)Reversalofimpairmentofprepaidlandleasepayments(Note7) 158,748 156,850Currency translation difference 10,761 –

At end of year 2,005,904 2,110,252

2018 2017

Analysedas:Non-current:inrelationtopropertiesclassifiedunderproperty,plantandequipment 197,500 204,403Current:inrelationtopropertiesheldorunderdevelopmentforsale 1,808,404 1,905,849

2,005,904 2,110,252

Themovementsinreversalofimpairmentofprepaidlandleasepaymentsareasfollows:

2018 2017

At 1 January 326,024 535,180Reversal of impairment of prepaid land lease payments recognised (158,748) (156,850)Disposalofsubsidiaries(Note40) – (52,306)

At31December 167,276 326,024

Asat31December2018,theGroup’sleaseholdlandofapproximatelyRMB58,572thousand(2017:approximatelyRMB117,667thousand)waspledgedascollateralfortheGroup’sbankandotherborrowings(Note32).




20. GOODWILL

2018 2017

CostAtbeginningandendofyear 491,006 491,006

Accumulated impairmentAtbeginningandendofyear 474,735 474,735

Net carrying amountBalance,beginningandendofyear 16,271 16,271

Impairmenttestingofgoodwill

Asat31December2018,goodwillacquiredthroughcertainbusinesscombinationshasbeenmainlyrelatedtothefollowingcash-generatingunitsforimpairmenttesting:

– ShanghaiHaiboPropertyDevelopmentCo.,Ltd.(“Haibo”)

– ShanghaiXiaboIndustryLtd.(“Xiabo”)

Asat31December2018and2017,cash-generatingunitswereparcelsoflandinthecityofShanghai.

As at 31December 2018, the recoverable amountHaibo and Xiabo project cash-generating units had been determined basedona fair value calculationusing residualmethod.Aprofessional valuer, JonesLangLaSalle,was engaged to assist theGroup indeterminingtheestimatedfairvalue.TherecoverableamountsappliedtotheresidualmethodisapproximatelyRMB216millionforHaibo andRMB111million forXiabo (2017:RMB214million forHaibo andRMB111million forXiabo).The carryingamounts are approximatelyRMB175million forHaiboandRMB78million forXiabo (2017:RMB175million forHaiboandRMB78millionforXiabo).



20. GOODWILL (continued)

Movementofnetcarryamountofgoodwillisasfollows:

Opening Impairment Closing

ShenyangAlbanyOasisGarden(a) – – –ShanghaiHuatingProject(“Huating”)(b) – – –Haibo 12,297 – 12,297Xiabo 1,847 – 1,847Others 2,127 – 2,127

16,271 – 16,271

Thecostofgoodwillallocatedtoeachofthemajorcash-generatingunitsbeforeimpairmentisasfollows:

2018 2017

ShenyangAlbanyOasisGarden 316,653 316,653Huating 144,354 144,354Haibo 12,297 12,297Xiabo 1,847 1,847Others 15,855 15,855

491,006 491,006

ThefollowingdescribeseachkeyassumptiononwhichmanagementhasbaseditscashflowprojectionstoundertakeimpairmenttestingofgoodwillwiththeassistancefromJonesLangLaSalle:

– Sellingprices–Themarketpricesofcomparablepropertiesnearby

– Constructioncosts–Theestimatedcostsincludinginfrastructurecoststocompletethepropertydevelopmentprojects

– Discount rates – The discount rates used are before income tax and reflect specific risks relating to the relevant cash-generating units

The values assigned to key assumptions are based on historical experiences, current market condition, approved budgets andforecasts,andareconsistentwithexternalinformationsources.

(a) Inprioryears,theGroupassessedtheimpairmentongoodwillanddeterminedthatthecarryingamountofgoodwillarisingfrom the acquisition of LiaoningGaoXiao SupportGroupPropertyDevelopmentCo., Ltd. (“LiaoningGaoXiao”)washigher than its recoverableamount.Considering thecurrentmarketcondition inShenyangand theactual sellingpriceofShenyangAlbanyOasisGarden(PhasesIIandIII)projectsdevelopedbyLiaoningGaoXiao,theGroupestimatedthatthefuture cash flows that couldbegenerated from the saleof thisproperty (including the remainingdevelopedPhase II andPhaseIIIunderdevelopment)wouldprobablybereduced,resulting inthesignificantdecreaseofvalue-in-use.Asaresult,theGroupprovidedatotal impairment lossofapproximatelyRMB317millioninprioryears.Inadditiontothegoodwillimpairmentrecognised,impairmentprovisionwasalsomadetostatethepropertiesheldorunderdevelopmentforsaleandprepaidlandleasepaymentsofLiaoningGaoXiaoatnetrealisablevalue.




20. GOODWILL (continued)

(b) ThegoodwillarosefromtheacquisitionofShanghaiBairunRealEstateCo.,Ltd.(“Bairun”)isrelatedtoitspropertiesunderdevelopmentsinprioryears.Thegoodwillhasbeenfullyimpairedpursuanttothesalesoftheseproperties.

21. INVESTMENTS IN ASSOCIATES

2018 2017

Share of net assets 1,105,416 1,043,140Less:Provisionforimpairment – –

1,105,416 1,043,140

Asatthe31December2018,theCompanyhadindirectinterestsinthefollowingassociates:

Name

Place and date of incorporation or establishment and business

Proportion of ownership interest

Issued and paid-up capital

Authorised share capital Principal activities

HeldbytheCompany

Indirectly held

ShanghaiHousingIndustryNew TechnologyDevelopmentCo.,Ltd. (“NewTechnology”)

PRC/MainlandChina6 May 1997

– 26% RMB50,000,000 RMB50,000,000 Research and development of housing technology

ShanghaiTelecomBroadband NetworkingCo.,Ltd.(“Broadband”)

PRC/MainlandChina24October2000

– 20% RMB100,000,000 RMB100,000,000 Development and sale of netwareandconstructionofbroadbandfibreprojects

MaysonResourcesLimited(“Mayson”) BritishVirginIslands(“BVI”)29 January 2003

– 40% HKD8 HKD8 Propertysales

ShanghaiOrdaOpto-electronicsScience &TechCo.,Ltd.(“Orda”)

PRC/MainlandChina20 March 2000

– 24% RMB11,000,000 RMB11,000,000 Research and development of optoelectronic products

ShanghaiXinRichgateInvestment MangementCo.,Ltd.(“Richgate”)

PRC/MainlandChina14 July 2011

– 25% RMB9,100,000 RMB9,100,000 Investment management

Shanghai Real Estate Asset Management Co.,Ltd.(“SREAsset”)(a)


– 20% RMB35,000,000 RMB100,000,000 Investment management

NingboMeishanFreeTradeZoneJia MiaoInvestmentCo.,Ltd. (“NingboJiaMiao”)(b)


– 33.34% RMB4,000,000 RMB4,000,000 Investment management



21. INVESTMENTS IN ASSOCIATES (continued)

(a) InAugust2017, theGroupdisposed50%of its70%equity interestand lostcontrol in theoriginallynon-whollyownedsubsidiary,whichbecomeanassociateoftheGroupafterthetransaction(Note40(f)).

(b) InMarch 2018, the Group entered into an agreement to set up Ningbo JiaMiao at a consideration of approximatelyRMB1.3millionwith33.34%equityinterestinNingboJiaMiao.

ThefinancialyearenddatesoftheaboveassociatesarecoterminouswiththatoftheGroup.

The Group’s shareholdings in the associates comprise equity shares held through certain wholly-owned subsidiaries and non-wholly-owned subsidiaries of the Company. All the above associates have been accounted for using the equity method in theconsolidatedfinancialstatements.

Thecommitments relating to theGroup’s interests in associates arepresented inNote39(a).There arenocontingent liabilitiesrelatingtotheGroup’sinterestsintheassociates.

Extractsoffinancialinformationofprincipalassociates

The following tables illustrate the financial information of the Group’s principal associates as extracted from their financialstatements:

(1) Broadband

2018 2017

Current assets 113,474 173,586Non-currentassets 43,618 47,221Currentliabilities (37,769) (65,388)

Netassets 119,323 155,419

Revenue 141,697 135,990Profitaftertax 19,359 14,338Total comprehensive income for the year 19,359 14,338

Dividend received 1,090 847





Extractsoffinancialinformationofprincipalassociates(continued)

(2) Mayson

2018 2017

Current assets 3,903,979 4,709,029Non-currentassets 289,387 298,081Currentliabilities (1,523,814) (2,501,153)Non-currentliabilities (30,789) (40,922)

Netassets 2,638,763 2,465,035

Revenue 469,657 1,210,703Profitaftertax 173,728 181,310Total comprehensive income for the year 173,728 181,310

Dividend received – –

(3) SRE Asset

2018 2017

Current assets 7,425 430,508Non-currentassets 21,452 35Currentliabilities (1,580) (403,361)

Netassets 27,297 27,182

Revenue 11,394 1,676Profit/(loss)aftertax 115 (4,628)Totalcomprehensiveincome/(loss)fortheperiod 115 (4,628)





Reconciliation of summarised financial information

ReconciliationofthesummarisedfinancialinformationpresentedtothecarryingamountoftheGroup’sinterestinassociates.

Broadband Mayson SRE Asset Others Total2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

Opening net assets 155,419 145,318 2,465,035 2,283,725 27,182 4,810 66,868 67,400 2,714,504 2,501,253Profit/(loss)fortheyear 19,359 14,338 173,728 181,310 115 (4,628) (4,076) (532) 189,126 190,488Capital(reduction)/injection (50,000) – – – – 27,000 4,000 – (46,000) 27,000Dividendsdistribution (5,455) (4,237) – – – – – – (5,455) (4,237)

Closing net assets 119,323 155,419 2,638,763 2,465,035 27,297 27,182 66,792 66,868 2,852,175 2,714,504

Interest in associates 20% 20% 40% 40% 20% 20%Goodwillandadjustments (298) (298) – – 638 638 2,931 3,271

Carrying value 23,567 30,786 1,055,507 986,015 6,097 6,074 20,245 20,265 1,105,416 1,043,140




22. INVESTMENTS IN JOINT VENTURES

2018 2017

Share of net assets 3,853,578 4,046,587Less:Provisionforimpairment (27,882) (27,882)

3,825,696 4,018,705

Asatthe31December2018,theCompanyhadindirectinterestsinthefollowingjointventures:

Name





HeldbytheCompany

Indirectly held

JiangsuDaRunSensorTechnologyCo.,Ltd.(“DaRun”)


– 12%* RMB53,000,000 RMB53,000,000 Research and development of sensor

Yunnan Ming Zhen Hospital Management Co.,Ltd.(“MingZhen”)(a)


– – RMB150,000,000 RMB150,000,000 Hospital management

SRegalSinclairLLP(“Sinclair’’)(b) UK/London30September2016

– 92.91%* GBP13,400,000 GBP14,400,000 Propertydevelopment

NingboMeishanFreeTradeZoneZhi MiaoInvestmentCenterLLP (“NingboZhiMiao’)(c)

PRC/MainlandChina29December2016

– 12.75%* RMB3,897,000,002 RMB3,897,000,002 Equityinvestment

CertainBusinessofGoldenLuodian(“RelevantBusinessofGoldenLuodian’’)


– 72.63%* RMB200,000,000 RMB200,000,000 Propertydevelopment

75HowardOwnerLP(“75Howard”)(d) USA/Delaware27 March 2017

– 70%* US$173,967,740 US$173,967,740 Propertydevelopment

ShanghaiJinxinRealEstateCo.,Ltd. (“JinxinRealEstate”)(e)


– 51%* RMB2,660,000,000 RMB2,660,000,000 Propertydevelopment

NapaLifestyleHoldings,LLC(“NAPA”)(f) USA/StateofDelaware01February2015

– 78.53%* US$19,260,310 US$19,260,310 Propertydevelopment

ShanghaiGaoxinBusinessManagementCo.,Ltd.(“GaoXin”)(g)


– 50% RMB8,000,000 RMB8,000,000 Management consulting

Changsha Horoy Real Estate Development Co.,Ltd.(“ChangshaHoroy”)(h)

PRC/MainlandChina25September2017

– 49.50%* RMB100,000,000 RMB100,000,000 Propertydevelopmentandsales

* TheGroupaccounts for its investments in thesecompaniesas jointventuresalthoughtheGroupholdsmoreor less than50%ofequity

interest.Accordingtotheinvestmentagreementsandarticlesofassociations,theGroupandtheotherinvestorswilljointlycontrolthekey

relevantactivitiesofthesecompanies.



22. INVESTMENTS IN JOINT VENTURES (continued)

(a) In July 2017, theGroup disposed all of its equity interest ofMing Zhen for a consideration of approximately RMB62million,withapproximatelyRMB17milliongain.

(b) InSeptember2016, theGroupentered intoanagreement to setupSinclair for a considerationof approximatelyGBP13million (approximatelyRMB114million), ofwhich approximatelyGBP1.8million (approximatelyRMB15million) hadbeen contributed as at 31December 2016 and the remaining commitment was disclosed inNote 39. In January 2017,theGroup paid the remaining consideration in Sinclair of approximatelyGBP11.5million (equivalent to approximatelyRMB100million).

(c) InDecember 2016, theGroup entered into a joint venture agreement in relation to the formation of the joint ventureofNingbo ZhiMiao with the total capital commitment of approximately RMB5,116million, of which an aggregate ofapproximatelyRMB997million,beingapproximately19%ofthetotalcapitalcommitment,wascontributedbytheGroup.InMay2017,theGroupreduceditsinvestmentinNingboZhiMiaoforaconsiderationofRMB20million.AccordinglytheGroup’sequityinterestinNingboZhiMiaoisdecreasedfrom19.49%to19.10%asat31December2017.InDecember2018,theshareholdersofNingboZhiMiaoreducedinvestmentsofapproximatelyRMB1,219millionintotal,ofwhichanaggregateofapproximatelyRMB480millionwasreducedbytheGroup.Assuch,theGroup’sequityinterestinNingboZhiMiaowasdecreasedfrom19.10%to12.75%asat31December2018.

(d) InFebruary2017,theGroupenteredintoanagreementwithRDF75HowardLPtoacquire75Howardataconsiderationof approximatelyUS$92million (equivalent to approximatelyRMB631million) for 80% equity interest in 75Howard.InMarch2018,theGroupdisposed10%ofitsequityinterestin75HowardforaconsiderationofapproximatelyUS$12million (equivalent toapproximatelyRMB80million),withdisposalgainof approximatelyUS$0.5million (equivalent toapproximatelyRMB3.3million).Assuch,theGroup’sequityinterestin75Howardwasdecreasedfrom80%to70%asat31December2018.

(e) InApril 2017, theGroupdisposed49%of its equity interest and lost control in the originallywholly-owned subsidiary,JinxinRealEstate.Assuch,JinxinRealEstatebecameajointventureoftheGroupafterthetransaction(Note40(d)).

(f) InMay2017, theGroupentered intoanagreementtoacquireNAPAataconsiderationofapproximatelyUS$15million(equivalenttoapproximatelyRMB104million)for78.53%equityinterest.

(g) InJuly2017,theGroupenteredintoanagreementtosetupGaoxinataninvestmentofapproximatelyRMB4millionfor50%equityinterest.

(h) InApril2018,athirdpartyinjectedcapitaltoChangshaHoroy,whichwasasubsidiaryoftheGroup,andthustheGroup’sequity interest in Changsha Horoy was diluted from 66.5% to 49.5%. Upon the dilution and change of investmentagreement and articles of association, theGroup lost control andChangshaHoroy became a joint venture of theGroup(Note40(a)).

ThefinancialyearenddatesoftheabovejointventuresarecoterminouswiththatoftheGroup.

TheGroup’sshareholdingsinthejointventurescompriseequitysharesheldthroughcertainwholly-ownedsubsidiariesandnon-wholly-ownedsubsidiariesoftheCompany.Alltheabovejointventureshavebeenaccountedforusingtheequitymethodintheconsolidatedfinancialstatements.

ThecontingentliabilitiesrelatingtotheGroup’sinterestsinthejointventuresarepresentedinNote39.





Extractsoffinancialinformationofprincipaljointventures

ThefollowingtablesillustratethefinancialinformationoftheGroup’sprincipaljointventuresasextractedfromtheirfinancialstatements:

(1) Ningbo Zhi Miao

2018 2017

Current assets Cashandcashequivalents 216,210 2,050 Other current assets 776,843 387,153

Total current assets 993,053 389,203

Non-currentassets 3,021,986 4,856,000Currentliabilities (131,215) (131,205)

Netassets 3,883,824 5,113,998

Revenue – –Profit/(loss)aftertax 344,530 (2,002)Totalcomprehensiveincome/(loss)fortheyear 344,530 (2,002)

Dividend received 67,940 –

(2) Relevant Business of Golden Luodian

2018 2017

Current assets Cashandcashequivalents 18,207 17,741 Other current assets 1,117,478 1,207,811

Total current assets 1,135,685 1,225,552

Non-currentassets 915,660 963,566Currentliabilities (1,242,609) (1,884,251)Non-currentliabilities (649,432) (119,088)

Netassets 159,304 185,779

Revenue 192,110 84,627Lossaftertax (26,475) (93,162)Total comprehensive loss for the year (26,475) (93,162)

Eliminated interest cost 100,958 60,195





Extractsoffinancialinformationofprincipaljointventures(continued)

(3) 75 Howard

2018 2017

Current assets Cashandcashequivalents 4,712 9,048 Other current assets 28,346 109


Non-currentassets 1,217,571 750,216Currentliabilities (47,473) (4,743)

Netassets 1,203,156 754,630

Revenue 2,723 15,143(Loss)/profitaftertax (199) 5,958Totalcomprehensive(loss)/profitfortheyear (199) 5,958


(4) Jinxin Real Estate

2018 2017

Current assets Cashandcashequivalents 128,266 8,518 Other current assets 7,450,152 6,903,239

Total current assets 7,578,418 6,911,757

Non-currentassets 1,029 445Currentliabilities (186,016) (30,155)Non-currentliabilities (3,257,963) (2,743,549)

Netassets 4,135,468 4,138,498

Revenue – –Lossaftertax (3,030) (2,502)Total comprehensive loss for the year (3,030) (2,502)

Eliminated interest cost 14,332 12,670






Extractsoffinancialinformationofprincipaljointventures(continued)

(5) NAPA

2018 2017

Current assets Cashandcashequivalents 534 9 Other current assets 135,062 130,446


Non-currentassets – –Currentliabilities (12,752) (4,605)Non-currentliabilities (8,747) –

Netassets 114,097 125,850

Revenue – –Lossaftertax (14,623) –Total comprehensive loss for the year (14,623) –

Eliminated interest cost 202 –


(6) Changsha Horoy

2018

Current assets Cashandcashequivalents 48,576 Other current assets 1,077,650

Total current assets 1,126,226

Non-currentassets 82Currentliabilities (579,286)Non-currentliabilities (119,880)

Netassets 427,142

RevenueLossaftertax (30,330)Total comprehensive loss for the year (30,330)

Eliminated interest cost 14,958

Dividend received –




Reconciliation of summarised financial information

ReconciliationofthesummarisedfinancialinformationpresentedtothecarryingamountoftheGroup’sinterestinjointventures.

Ningbo Zhi Miao

Relevant Business

of Golden Luodian

75 Howard

Jinxin Real

Estate NAPAChangsha

Horoy Others Total

Opening net assets at 1 January 2018 5,113,998 185,779 754,630 4,138,498 125,850 – 184,047 10,502,802Profit/(loss)fortheyear/ periodafteracquisition 344,530 (26,475) (199) (3,030) (14,623) (30,330) (4,042) 265,831Other comprehensive (loss)/income – – (47) – (3,467) – 53 (3,461)Capital(reduction)/ injection (1,219,000) – 392,927 – – – – (826,073)Disposal of partial interests and lost of control of asubsidiaryandbecame ajointventure – – – – – 457,472 – 457,472Dividendsdistribution (355,704) – – – – – – (355,704)Currency translation difference – – 55,845 – 6,337 – – 62,182

Closing net assets 3,883,824 159,304 1,203,156 4,135,468 114,097 427,142 180,058 10,103,049

Interestinjointventures 12.75% 72.63% 70.00% 51.00% 78.53% 49.50%

Impairmentinjoint ventures – – – – (27,882) – – (27,882)

Goodwillandadjustments 1,925 (100,958) – (27,002) (202) (14,958)

Carrying value at 31December2018 497,113 14,744 842,209 2,082,086 61,511 196,478 131,555 3,825,696





Reconciliationofsummarisedfinancialinformation(continued)

Ningbo Zhi Miao

Relevant Business

of Golden Luodian

75 Howard

Jinxin Real

Estate NAPA Others Total

Opening net assets at 1 January 2017 5,116,000 278,941 – 4,141,000 82,084 194,961 9,812,986(Loss)/profitfortheyear/period afteracquisition (2,002) (93,162) 5,958 (2,502) – (19,948) (111,656)Other comprehensive loss – – (161) – – – (161)Capitalinjection – – 748,833 – 43,766 9,034 801,633

Closing net assets 5,113,998 185,779 754,630 4,138,498 125,850 184,047 10,502,802

Interestinjointventures 19.10% 72.63% 80% 51% 78.53%

Impairmentinjointventures – – – – (27,882) – (27,882)

Goodwillandadjustments 19 – – (12,670) –

Carryingvalueat31December2017 976,618 134,932 603,704 2,097,964 70,943 134,544 4,018,705

23. PROPERTIES HELD OR UNDER DEVELOPMENT FOR SALE

2018 2017

At cost 1,657,721 2,442,770Less:Provisionforimpairmentloss (115,271) (185,084)

1,542,450 2,257,686

–InShanghaiCity,PRC 405,617 449,387 –InShenyangCity,PRC 450,021 865,771 –InChengduCity,PRC 256,693 342,001 –InJiaxingCity,PRC 217,499 325,898 –InDalianCity,PRC 197,920 143,333 –InPhnomPenhCity,Cambodia 14,700 – –InChangshaCity,PRC – 131,296

1,542,450 2,257,686



23. PROPERTIES HELD OR UNDER DEVELOPMENT FOR SALE (continued)

2018 2017

Propertiesheldorunderdevelopmentexpectedtobecompleted,atnetrealisablevalue – Within one year 1,147,338 1,278,558 – After one year 395,112 979,128

1,542,450 2,257,686

Themovementsin(reversalofimpairment)/write-downofpropertiesheldorunderdevelopmentforsaleareasfollows:

2018 2017

At 1 January 185,084 533,530(Reversalofimpairment)/write-downofpropertiesheldorunder development(Note7) (69,813) 1,663Disposalofasubsidiary(Note40) – (350,109)

At31December 115,271 185,084

As at 31 December 2018 and 2017, approximately RMB160million (2017: approximately RMB339million) of the Group’spropertiesheldorunderdevelopmentforsalehadbeenpledgedascollateralfortheGroup’sbankandotherborrowings(Note32).



24. PREPAYMENTS AND OTHER CURRENT ASSETS

2018 2017

Non-currentPrepayment(a) 5,000 5,000Less:Provisionforimpairment(a) (5,000) (5,000)

– –

CurrentPrepaidbusinesstax 25,325 34,768PrepaidVAT 24,375 29,874Prepayments(b) 257,174 254,930Others 50,342 15,543

357,216 335,115Less:Provisionforimpairment (16,000) (12,750)

341,216 322,365

(a) On 12 December 2013, the Company signed a letter of intent with a third party (the “Vendor”) to acquire a 100%equity interest ina real estate company inShanghai at a total considerationofRMB800million. Inconnectionwith thistransaction,theGrouppaidRMB5milliontotheVendorasearnestmoney.Duetotheterminationoftheprojectaswellasthelowprobabilityofcollectionoftheaforementionedprepayment,fullprovisionhasbeenmadefortheearnestmoneyasat31December2018and2017.

(b) The prepayments as at 31December 2018mainly included approximately RMB9million (2017: approximately RMB7million)ofprepaymentsforconstructioncostofpropertiesunderdevelopment,andapproximatelyRMB248million(2017:approximatelyRMB248million)ofprepaymentsforleaseholdlandinthePRC.



25. OTHER RECEIVABLES

2018 2017

Receivablesfromsubsidiariesdisposedofinprioryears 343,224 339,224Receivablesfromrelatedparties(Note42) 1,294,347 1,026,996Advancetoanon-controllingshareholderofasubsidiary 190,000 294,330Receivableofconsiderationarisingfromdisposalofasubsidiary(a) 12,862 12,862Interestsreceivablefromrelatedparties(Note42) 291,582 82,879Advancetoalanddevelopmentproject 205,884 –Receivablefromthedisposaloffinancialassetsatfairvaluethrough other comprehensive income 128,436 –Others 157,505 191,598

2,623,840 1,947,889Less:Provisionforimpairment(Note7) (258,628) (231,506)

Otherreceivables,net 2,365,212 1,716,383

(a) Asof31December2018and2017,thiswastheremainingconsiderationwhichhasnotbeenreceivedforthedisposalofasubsidiary,Skyway.

Allotherreceivablesarenon-interest-bearingandarenormallysettledwithinoneyear.

26. TRADE RECEIVABLES

2018 2017

Tradereceivables 44,999 52,281Less:Provisionforimpairment(Note7) (28,015) (27,843)

16,984 24,438

Anagedanalysisoftradereceivablesasattheendofthereportingperiod,fromthedatewhentheywererecognised,isasfollows:

2018 2017

Within 6 months 6,666 18,0566 months to 1 year 5,504 6,3821 to 2 years 5,610 –Over 2 years 27,219 27,843

44,999 52,281

TheGroup’ssalesofdevelopmentpropertiesaregenerallyonacashbasiswhiletheGroup’stradingtermswithitscustomersforotheroperationsaremainlyoncredit.ThecredittermsoftheGrouparegenerallywithinsixmonths.

TheGroup’stradereceivablesarerelatedtoalargenumberofdiversifiedcustomers.Thereisnosignificantconcentrationofcreditrisk.Tradereceivablesarenon-interest-bearing.




26. TRADE RECEIVABLES (continued)

Anagedanalysisoftradereceivablesneitherpastduenorimpairedandthosepastduebutnotimpairedisasfollows:

2018 2017

Neitherpastduenorimpaired 11,451 17,809

Pastduebutnotimpaired: Within 30 days – 247 31 to 60 days – – 61 to 90 days – – 91 to 120 days – Over 120 days 5,533 6,382

5,533 6,629

16,984 24,438

ReceivablesthatwerepastduebutnotimpairedarerelatedtoanumberofindependentcustomersthathaveagoodtrackrecordwiththeGroup.Basedonpastexperience, thedirectorsof theCompanyareof theopinionthatnoprovisionfor impairment isnecessaryinrespectofthesebalancesastherehasnotbeenasignificantchangeincreditqualityandthebalancesarestillconsideredfullyrecoverable.TheGroupdoesnotholdanycollateralorothercreditenhancementsoverthesebalances.

Themovementsintheprovisionforimpairmentoftradereceivablesareasfollows:

2018 2017

Atbeginningofyear 27,843 26,805Additions(a)(Note7) 414 1,397Reversals(Note7) (242) –Disposalofsubsidiaries(Note40) – (359)

At end of year 28,015 27,843

(a) TheprovisionwasmadeasatDecember2018asthedirectorsoftheGroupconsidertherecoverabilityofthereceivablesisuncertain.



27. CASH AND BANK BALANCES

2018 2017

Cash on hand 605 472Demand deposits 698,005 1,140,431Timedepositswithoriginalmaturityofnomorethan3months – 66,216

Cashandcashequivalents 698,610 1,207,119

Pledgedbankdeposits(a) – 214,000Restrictedbankdepositsrelatingtobankborrowings(b) 2,623 4,626Restrictedbankdepositsrelatingtolawsuits – 27,170

Restricted cash 2,623 245,796Cashandbankbalances 701,233 1,452,915

(a) As at 31December 2017, bank deposits of approximatelyRMB214millionwere pledged as security for bank and otherborrowings(Note32).In2018,theborrowingswererepaid.

(b) An amount of approximatelyRMB3million (2017: approximatelyRMB5million) is restricted in connectionwith bankborrowings.

Thecarryingamountsofthecashandbankbalanceswhicharedenominatedinthefollowingcurrenciesare:

2018 2017

HK$ 4,322 86,012UnitedStatesdollars(“US$”) 44,392 261,137Singapore dollars 1 1Australiandollars(“AUD”) 32,126 90,068GBP 52,392 154,903RMB 568,000 860,794

701,233 1,452,915

TheRMBisnotfreelyconvertibleintoothercurrencies.However,underMainlandChina’sForeignExchangeControlRegulationsandAdministrationofSettlement,SaleandPaymentofForeignExchangeRegulations,theGroupispermittedtoexchangeRMBforothercurrenciesthroughbanksauthorisedtoconductforeignexchangebusiness.

Demanddepositsearninterestatfloatingratesbasedondailybankdepositrates.Timedepositsearninterestattherespectivetimedepositrates.Thebankbalancesandpledgeddepositsaredepositedwithcreditworthybankswithnorecenthistoryofdefault.Thecarryingamountsofthecashandcashequivalentspledgedandrestricteddepositsapproximatetotheirfairvalues.




28. OTHER FINANCIAL ASSETS AT AMORTISED COST/LOANS AND RECEIVABLES

Otherfinancialassetsatamortisedcostincludethefollowingdebtinvestments:

2018 2017Current Non-current Total Current Non-current Total

Loanstorelatedparties(a) 1,626,627 – 1,626,627 1,172,011 – 1,192,011Loanstoadisposedsubsidiary(a) – 700,000 700,000 – 700,000 700,000Otherreceivables(a) 20,000 – 20,000 20,000 – 20,000

1,646,627 700,000 2,346,627 1,192,011 700,000 1,892,011

Less:Lossallowancesfordebtinvestments atamortisedcost(b) (35,616) (125,574) (161,190) (20,000) (120,006) (140,006)

1,611,011 574,426 2,185,437 1,172,011 579,994 1,752,005

(a) The balance as at 31 December 2018 mainly represented the interest-bearing loans granted to related parties ofapproximately RMB1,627million (2017: approximately RMB1,172million) with a provision of approximately RMB16million (2017:Nil) (Note 42(c)), and to a disposed subsidiary of approximately RMB700million (2017: approximatelyRMB700 million) with a provision of approximately RMB126 million (2017: approximately RMB120 million) (Note40(h)),andtocertainthirdparties.

(b) Theprovisionsweremadeasat31December2018and2017as thedirectorsof theGroupconsider the recoverabilityofcertainreceivablesisuncertain.

29. OTHER NON-CURRENT ASSETS

2018 2017

Depositforguaranteeofaloanofajointventure(a) 171,684 –Prepaymentsforacquisitionofcertainrealestateassets(b) – 660,800Receivablesfromlanddevelopment(c) – 150,000Otherreceivables(d) – 4,000Others(d) – 3,250

171,684 818,050Less:Provisionforimpairment(d) (210) (7,250)

171,474 810,800



29. OTHER NON-CURRENT ASSETS (continued)

(a) Asat31December2018,thebalancerepresentedguaranteeforalong-termloanofajointventure.

(b) Asat31December2017,thebalancerepresentedprepaymentsforacquisitionofcertainrealestateassetsofapproximatelyRMB661million.In2018,thetransactionwascancelledduetocertainreasonsothattheprepaymentsweretobereturned.Asat31December2018,approximatelyRMB459millionhasbeencollected,withtheremainingapproximatelyRMB202millionreclassifiedtootherreceivablesfromrelatedparties(Note42).

(c) Asat31December2017,thebalancerepresentedpaymentsfor landredevelopmentofapproximatelyRMB150millioninthePRC.Asat31December2018,totalbalancewasincreasedtoRMB206million,andwasreclassifiedtootherreceivablesasthebalanceisdueforcollectionin2019(Note25).

(d) As at31December2017, thesebalances compriseda cashconsiderationof approximatelyRMB4millionandanon-cashconsiderationofapproximatelyRMB3.25millionforthedisposalofaformersubsidiaryin2014.Fullprovisionsweremadeforsuchbalancesasat31December2018and2017.Asat31December2018,accordingtotheoriginalpaymentschedule,thebalancesaretobesettledwithinoneyear.Thus,thebalancesofotherreceivablesofapproximatelyRMB4millionandits fullprovision, thebalancesofothersofapproximatelyRMB3.25millionand its fullprovision,are reclassified tootherreceivables(Note25)prepaymentsandothercurrentassets(Note24)respectively.

30. ISSUED SHARE CAPITAL AND SHARE PREMIUM

Shares2018 2017

Issuedandfullypaid:20,564,713thousand(2017:20,564,713thousand)ordinaryshares 6,747,788 6,747,788

AsummaryofmovementsintheCompany’ssharecapitalisasfollows:

Amount

Numberof shares

(thousand) Issued capital Share premium Total

At1January2017,31December2017 and31December2018 20,564,713 1,701,661 5,046,127 6,747,788




31. OTHER RESERVES

Surplusreserve

Exchangefluctuation

reserve

Available-for-sale

investments

Financial assets at fair value

through other comprehensive

income Others Total

At 1 January 2018 377,780 3,731 1,523 – (142,594) 240,440Changes in accounting policies – – (1,523) 1,523 – –

Restated at 1 January 2018 377,780 3,731 – 1,523 (142,594) 240,440

Other comprehensive losses, net of taxCurrency translation differences – (4,248) – – – (4,248)Revaluation-gross – – – (2,031) – (2,031)Revaluation-tax – – – 508 – 508

– (4,248) – (1,523) – (5,771)

Transactions with ownersAppropriation from retained profits 9,773 – – – – 9,773Changeinownershipinterestsinasubsidiary withoutchangeofcontrol – – – – 9,506 9,506Share-basedpayments(Note15) – – – – (18,019) (18,019)

9,773 – – – (8,513) 1,260

At 31 December 2018 387,553 (517) – – (151,107) 235,929



31. OTHER RESERVES (continued)

Surplusreserve

Exchangefluctuation

reserve

Available-for-sale

investments Others Total

At 1 January 2017 365,455 3,379 – (156,004) 212,830

Other comprehensive losses, net of taxCurrency translation differences – 352 – – 352Revaluation – gross – – 2,030 – 2,030Revaluation–tax – – (507) – (507)

– 352 1,523 – 1,875

Transactions with ownersAppropriation from retained profits 12,325 – – – 12,325Changeinownershipinterestsinasubsidiary withoutchangeofcontrol – – – (32) (32)Share-basedpayments(Note15) – – – 13,442 13,442

12,325 – – 13,410 25,735

At 31 December 2017 377,780 3,731 1,523 (142,594) 240,440

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statementofchangesinequity.

Pursuant to the relevant laws and regulations for Sino-foreign joint venture enterprises, a portion of the profits of theGroup’sentitieswhichareestablishedinMainlandChinahasbeentransferredtoreservefundswhicharerestrictedastouse.

Companies within the Group, most of which are registered in the PRC as foreign invested entities, are required to makeappropriationsfromstatutorynetprofitstothereservefundandtheenterpriseexpansionfund,upondistributionoftheirpost-taxprofitsofthecurrentyear.Thepercentagestobeappropriatedtothereservefundandtheenterpriseexpansionfundaredeterminedbytheboardsofdirectorsofthesecompanies.

CompanieswithintheGroup,whichareregisteredinthePRCasdomestic investedentities,arerequiredtoappropriate10%ofstatutorynetprofitstothestatutorysurplusreserve,upondistributionoftheirpost-taxprofitsofthecurrentyear.Acompanymaydiscontinue thecontributionwhen theaggregate sumof the statutory surplus reserve ismore than50%of its registeredcapital.Upon contribution to the statutory surplus reserve using its post-tax profit, a companymaymake further contribution to thesurplusreserveusingitspost-taxprofitinaccordancewitharesolutionoftheboardofdirectors.




32. INTEREST-BEARING BANK AND OTHER BORROWINGS

2018 2017

Othershort-termborrowings – Unsecured, from companies ultimately controlled bythesamecompany(d) – 600,000 –Unsecured,fromanassociate(d) 300,000 138,000 – Unsecured, from others 491,580 180,000

791,580 918,000

Currentportionoflong-termbankborrowings –Secured(a) 955,367 621,173

Currentportionofotherlong-termborrowings –Secured,fromparentcompany(e) 560,000 – –Secured,fromothers(c) 473,506 18,000 –Unsecured,fromparentcompany(e) 2,092,113 490,065 –Unsecured,fromcompaniesultimatelycontrolledbythesamecompany(f) – 400,000 – Unsecured, from others 33,318 –

3,158,937 908,065

Borrowings,currentportion 4,905,884 2,447,238

Long-termbankborrowings,non-currentportion –Secured(a) 1,515,301 2,391,830 –Unsecured(b) 330,120 330,120

1,845,421 2,721,950

Otherlong-termborrowings,non-currentportion –Secured,fromparentcompany(e) – 560,000 –Secured,fromothers(c) – 148,638 –Unsecured,fromparentcompany(e) 661,300 2,518,095 – Unsecured, from others 230,397 202,881

891,697 3,429,614

Borrowings,non-currentportion 2,737,118 6,151,564



32. INTEREST-BEARING BANK AND OTHER BORROWINGS (continued)

2018 2017

Thelong-termborrowingsarerepayableasfollows: – Within 1 year 4,114,304 1,529,238 – 1 to 2 years 1,223,595 2,984,770 – 2 to 3 years 487,118 987,819 – 3 to 5 years 460,436 1,537,005 – After 5 years 565,969 641,970

6,851,422 7,680,802Less:Long-termborrowings,currentportion (4,114,304) (1,529,238)

Long-termborrowings,non-currentportion 2,737,118 6,151,564

(a) Long-termbankborrowings–secured

Asat31December2018,long-termbankborrowingsofapproximatelyRMB2,471million(2017:approximatelyRMB3,013million) were secured by the pledges of the Group’s leasehold land, together with bank deposits, property, plant andequipment,investmentproperties,propertiesheldorunderdevelopmentforsaleandequityinterestsofsubsidiaries.

(b) Long-termbankborrowings–unsecured

Asat31December2018,thebalancerepresentedentrusted loansofRMB330million(2017:RMB330million)providedbyathirdparty.ThetenurefortheloanofRMB130millionis60months,andtheinterestrateforthefirstyearis8%perannum,forthesecondtothefifthyearis6%perannum.ThetenurefortheloanofRMB200millionis52months,andtheinterestrateis6%perannum.

(c) Otherlong-termborrowings–secured,fromothers

As at 31December2018, other long-termborrowingof approximatelyRMB474million (2017: approximatelyRMB167million)wassecuredbythepledgesoftheGroup’sleaseholdland,togetherwithproperty,plantandequipment,propertiesheldorunderdevelopmentforsaleandinvestmentproperties.

(d) Othershort-termborrowings–unsecured

As at 31December 2018, the balance of RMB300million (2017: RMB138million) represented a loan from a relatedparty.TheloanwasprovidedbySREAsset,anassociateoftheGroup,withinterestrateof9%perannum(2017:8.5%perannum)andtenureoftwelvemonths.Asat31December2017,theloansofRMB600millionwereprovidedbycompaniesultimatelycontrolledbythesamecompanyin2017,withinterestrates from6%to7.75%perannum.Thetenureoftheloansweretwelvemonthsandtheloanswererepaidin2018.





(e) Otherborrowingsfromparentcompany

Asat31December2018,atotalofRMB3,313million(2017:RMB3,568million)ofotherborrowingsareborrowedfromparentcompany,amongwhichRMB560million(2017:RMB560million)wasguaranteedbyMr.ShiJasonBinguntil13July2018.Interestratesoftheseloansrangedfrom7%to8%perannum.Amongtheseloans,asumofRMB2,652.1millionweredueforrepaymentorpayableondemandasat31December2018.Subsequentto31December2018,theGrouphasreachedwrittenagreementswithparentcompanytorenewtheexistingloanofUS$150million(approximatelyRMB1,016million)whichwerefurtherdesignatedtoafellowsubsidiaryoftheGroupto30June2020,andtounconditionallyextendotherremainingloanstodatesatleastafter15monthsfrom31December2018.

(f) Otherlong-termborrowings–unsecured,fromcompaniesultimatelycontrolledbythesamecompany

Asat31December2017,theloanofRMB400millionwasborrowedin2017withinterestrateof7.75%perannum.Thetenureoftheloanwasfifteenmonthsandtheloanwasrepaidin2018.

Overallcollateralarrangementsforbankandotherborrowings

Asat31December2018and2017,pledgedassetsascollateralfortheGroup’sborrowingsandbankingfacilitieswereasfollows:

2018 2017

Leaseholdland(Note19) 58,572 117,667Investmentproperties(Note18) 2,953,034 5,116,056Propertiesheldorunderdevelopmentforsale(Note23) 160,484 339,111Property,plantandequipment(Note17) 123,396 133,493Bankdeposits(Note27) 2,623 214,000Equityinterestsincertainsubsidiaries 187,807 208,436Pledgedassetsprovidedbyarelatedparty(Note42(c)) 2,569,852 2,525,307




Theweightedaverageeffectiveinterestratesfortheseborrowingsattheendofthereportingperiodwereasfollows:

2018 2017HK$ US$ GBP RMB HK$ US$ GBP RMB

Short-termbankborrowings – – – – – – – –Othershort-termborrowings – – – 7.82% – – – 7.64%Long-termbankborrowings – – 3.53% 5.62% – – 2.80% 5.16%Otherlong-termborrowings 7.85% 4.25% – 7.90% 7.85% 4.00% – 7.64%

Asbankloansareallborrowedatprevailingmarketinterestrates,whichwouldbeadjustedfromtimetotimeinlinewithinterestratechangesinthemarket,thecarryingamountsofthebankloansapproximatetotheirfairvalues.

Thecarryingamountsoftheborrowingsaredenominatedinthefollowingcurrencies:

2018 2017

HK$ 229,398 202,881US$ 1,050,070 980,130GBP 558,880 796,884RMB 5,804,654 6,618,907

7,643,002 8,598,802




33. DEFERRED TAX

Deferredtaxassetsandliabilitiesareoffsetwhenthereisa legallyenforceablerighttooffsetcurrenttaxassetsagainstcurrenttaxliabilitiesandwhenthedeferredincometaxassetsandliabilitiesrelatetoincometaxes,ifany,leviedbythesametaxauthorityonthesametaxableentity.Asof31December2018and2017,themajorityofdeferredtaxassetsandliabilitiesaretoberecoveredaftermorethan12months.

Thegrossmovementsinthedeferredtaxaccountareasfollows:

2018 2017

Atbeginningofyear 1,204,421 1,018,042Disposalofsubsidiaries – 33Recognisedinprofitorloss(Note12) 52,247 185,839Recognisedinothercomprehensiveincomeorloss(Note31) – 507

At end of year 1,256,668 1,204,421

Themovementsindeferredtaxassetsandliabilitiesduringtheyearareasfollows:

Deferredtaxassets

Difference inaccounting and

tax bases arisingfrom share

transferconsideration

At1January2017,31December2017and31December2018 242,837



33. DEFERRED TAX (continued)

Deferredtaxliabilities

Fair value gains

Excess of fairvalue over

book valuein the

subsidiariesas a result

of businesscombination

Withholdingtaxes Others Total

At 1 January 2017 569,662 344,461 260,566 86,190 1,260,879Recognised in profit or loss 15,340 155,263 3,437 11,799 185,839Recognised in other comprehensive income 507 – – – 507Disposalofsubsidiaries – – 33 – 33

At31December2017 585,509 499,724 264,036 97,989 1,447,258Recognised in profit or loss 11,748 22,981 3,037 14,481 52,247Recognised in other comprehensive loss – – – (508) (508)

At31December2018 597,257 522,705 267,073 111,962 1,498,997

Asat31December2018,nodeferred taxassetarose fromunusedtax losses (2017:Nil).Withrespect to therecognitionof thedeferredtaxassets,afterconsideringtheevidenceincludingtheapprovalfromlocalauthoritiespermittingthesaleoftheproperties,and estimated future taxable profit by referring to recent selling prices of certain properties and currentmarket condition, theGroupbelievestherewillbenosufficienttaxableprofitagainstwhichtheunusedtaxlossescanbeutilisedintheforeseeablefuture.

Deferredtaxassetshavenotbeenrecognisedinrespectofthefollowingitems:

2018 2017

Taxlosses 1,515,544 1,563,189

TheabovetaxlossesarisinginMainlandChinaforoffsettingagainstfuturetaxableprofitwillexpireinonetofiveyears.Deferredtaxassetshavenotbeenrecognisedinrespectofthetaxlossesmentionedaboveastheyhaveariseninsubsidiariesthathavebeenloss-making for some timeand it isnot consideredprobable that taxableprofitswillbe available againstwhich these temporarydifferencescanbeutilised.




33. DEFERRED TAX (continued)

Pursuant to the resolution of the Board of Directors of the Company, part of PRC subsidiaries’ profits generated from 2011onwardswill be retained by PRC subsidiaries for use in future operations or investments. In the opinion of the directors, it isprobablethatthetemporarydifferencesrelatingtotheprofitsthatarenotexpectedtobedistributedintheforeseeablefuture.Theaggregateamountof temporarydifferencesassociatedwith investments insubsidiaries inMainlandChina forwhichdeferredtaxliabilitieshavenotbeenrecognisedtotalledapproximatelyRMB759million(2017:approximatelyRMB738million).

TherearenoincometaxconsequencesattachingtothepaymentofdividendsbytheCompanytoitsshareholders.

34. CONTRACT LIABILITIES/ADVANCES RECEIVED FROM THE PRE-SALE OF PROPERTIES UNDER DEVELOPMENT

2018 2017

Contractliabilities 420,959 –Advancesreceivedfromthepre-saleofpropertiesunderdevelopment – 1,015,262

420,959 1,015,262

TheGroup conducts the pre-sale of propertieswhen they are still under development. As contractedwith customers, advancesamountingtoasubstantialportionofsalesconsiderationarepaidtotheGroupshortlyfromthesigningofthepre-salescontract.SuchamountsheldbytheGrouparenon-interest-bearing.

35. TRADE PAYABLES

Anagedanalysisofthetradepayablesasattheendofthereportingperiod,fromthedatewhentheywereincurred,isasfollows:

2018 2017

Within 1 year 343,385 467,6381 to 2 years 102,312 48,693Over 2 years 164,156 187,051

609,853 703,382

Tradepayablesrepresentpayablesarisingfrompropertyconstructionandlanddevelopment.Thetradepayablesarenon-interest-bearingandarenormallysettledwithinoneyear.



36. OTHER PAYABLES AND ACCRUALS

2018 2017

Depositsreceivedfromandotherpayabletocustomersandconstructioncompanies – 8,720Taxandsurtaxespayable 23,391 23,906Dividendspayabletonon-controllinginterestsofsubsidiaries 25,700 32,281Relocationcostspayable 203,456 226,317Depositsfromstores,rentsreceivedfordevelopersandpublicutilityfeescollected and paid for tenants 40,580 26,017Payrollandwelfarepayable 50,976 90,546Accrued interest 235,285 429,896Payablesofconsiderationforacquisitionofnon-controllinginterests 17,000 17,000Payabletotheformernon-controllinginterestsofadisposedsubsidiary 20,000 20,000Payablestorelatedparties(Note42) 836,610 836,560Payablestoanon-controllinginterest(a) 323,992 –Accrualsofpenaltiesonidleland(Note6) 47,000 –Others 217,830 182,135

2,041,820 1,893,378

Otherpayablesarenon-interest-bearingandarenormallysettledwithinoneyear.

(a) As at 31 December 2018, the balance of approximately GBP37 million (approximately RMB324 million) representedpayablestoanon-controllinginterest.TheGrouppledged1.1%ofequityinterestinasubsidiaryand50%ofequityinterestinanothersubsidiaryforthesepayables.




37. CASH FLOW INFORMATION

(a) Cashfrom/(usedin)operations

Reconciliationofprofitbeforeincometaxtocashfrom/(usedin)operations:

2018 2017

Profitbeforeincometax 207,484 877,989

Adjustmentsfor: – Depreciationofproperty,plantandequipment 26,097 27,254 Net(gain)/lossfromdisposalofproperty,plantandequipment (61) 332 Share of results of associates (72,033) (74,332) Shareofresultsofjointventures (17,672) 12,049 Share-basedpayment (18,019) 13,442 Netfairvaluegainoninvestmentproperties (45,956) (55,165) (Reversalofimpairment)/write-downofpropertiesheldorunder development for sale (69,813) 1,663 Reversal of impairment of prepaid land lease payments (158,748) (156,850) Provisionforimpairmentofloansandreceivables 4,365 120,006 Provisionforimpairmentofotherreceivables 6,729 175,912 Provisionforimpairmentoftradereceivables 172 1,397 Provisionforothernon-currentassets 210 – Impairmentofinvestmentinajointventure – 27,882 Forfeiture of prepayments (60,000) – Netgainfromdisposalofsubsidiariesandinterestsinajointventure (242,900) (1,585,922) GainsfromdisposaloffinancialassetsatFVOCI (94,385) – GainsfromdisposaloffinancialassetsatFVPL (8,228) – Finance income (55,386) (35,010) Finance costs 572,470 503,294

(25,674) (146,059)

Decrease/(increase)inrestrictedbankdeposits 27,170 (26,841)(Increase)/decreaseinprepaidlandleasepayments (26,594) 328,130Decrease in properties held or under development for sale 633,640 349,358Decrease/(increase)ininventories 1 (909)Increase in prepayments and other current assets (35,869) (1,037,867)Decrease/(increase)inotherreceivables 156,512 (1,205,782)Increaseinnon-currentassets (50,527) –Increaseinloanandreceivables (4,364) –Decreaseintradereceivables 7,282 140Increaseinnon-currentassets – (150,000)Decreaseintradepayables (93,344) (80,288)(Decrease)/increaseinotherpayablesandaccruals (594,302) 547,289Increaseinadvancesreceivedfromthepre-saleofpropertiesunder development 47,581 11,573

Cashfrom/(usedin)operations 41,512 (1,411,256)



37. CASH FLOW INFORMATION (continued)

(b) Netdebtreconciliation

Ananalysisofnetdebtandthemovementsinnetdebtasfollows:

Net debt

2018 2017

Cashandbankbalances 701,233 1,452,915Borrowings–repayablewithinoneyear (4,905,884) (2,447,238)Borrowings–repayableafteroneyear (2,737,118) (6,151,564)

Netdebt (6,941,769) (7,145,887)

Cashandliquidinvestments 701,233 1,452,915Grossdebt–fixedinterestrates (5,138,017) (5,763,332)Grossdebt–variableinterestrates (2,504,985) (2,835,470)

Netdebt (6,941,769) (7,145,887)

Liabilities from financing activitiesCash and

bank balancesBorrowings duewithin one year

Borrowings dueafter one year Total

Net debt as at 31 December 2017 1,452,915 (2,447,238) (6,151,564) (7,145,887)

Netcashflows (745,786) 1,141,440 (95,164) 300,490Foreignexchangeadjustments (5,896) (24,774) (35,831) (66,501)Amortisation of discount or premium – – (29,871) (29,871)Reclassificationofcurrent/non-current liabilities – (3,575,312) 3,575,312 –

Net debt as at 31 December 2018 701,233 (4,905,884) (2,737,118) (6,941,769)




38. OPERATING LEASE ARRANGEMENTS

(a) Aslessor

TheGroupleases its investmentpropertiesunderoperating leasearrangements,with leasesnegotiatedforremainingtermsmainly ranging from1 to12years.The termsof the leasesgenerally also require the tenants topay securitydeposits andprovideforperiodicrentadjustmentsaccordingtothethenprevailingmarketconditions.

At31December2018,theGrouphadtotalfutureminimumleasereceivablesunderoperatingleaseswithitstenantsfallingdueasfollows:

2018 2017

Within one year 123,025 142,900In the second to fifth years, inclusive 190,684 349,281After five years 78,351 94,520

392,060 586,701

(b) Aslessee

TheGroupleasescertainofitsofficepropertiesunderoperatingleasearrangements.Leasesforpropertiesarenegotiatedfortermsmainlyrangingfromonetofiveyears.

At31December2018,theGrouphadtotalfutureminimumleasepaymentsundernon-cancellableoperatingleasesfallingdueasfollows:

2018 2017

Within one year 13,883 12,491In the second to fifth years, inclusive 14,101 25,620

27,984 38,111



39. COMMITMENTS AND CONTINGENCIES

(a) TheGrouphadthefollowingcapitalcommitmentsandcommitmentsinrespectofpropertydevelopmentforsaleattheendofthereportingperiod:

2018 2017

Contracted, but not provided forPropertiesheldorunderdevelopmentforsale 11,074 58,501Committed investments in a land development 64,116 120,000Committed investments in associates 15,640 15,640

90,830 194,141

(b) TheGroupprovides guarantees in respect of themortgage facilities grantedby certainbanks to certainpurchasers of theGroup’sproperties.Pursuant to the termsof theguaranteearrangements, incaseofdefaultonmortgagepaymentsby thepurchasers, theGroup is responsible for repaying the outstandingmortgage loans togetherwith any accrued interest andpenaltyowedbythedefaultedpurchaserstothebanks.TheGroupisthenentitledtotakeoverthelegaltitlesoftherelatedproperties.TheGroup’sguaranteeperiodscommencefromthedateswhentherelevantmortgageloansaregrantedandendwhen the purchasers pledge related property certificates as security to the banks offering themortgage loans.TheGroupentered into guarantee contracts of principal amounts totalling approximately RMB375 million (2017: approximatelyRMB844million)andthesecontractswerestilleffectiveasatthecloseofbusinesson31December2018.

The Group did not incur any material losses during the financial year in respect of the guarantees provided for mortgage facilitiesgrantedtopurchasersoftheGroup’sproperties.Thedirectorsconsiderthattheprobabilityofdefaultofpurchasersisremoteandevenincaseofdefaultonpayments,thenetrealisablevalueoftherelatedpropertiesisexpectedtobesufficientto cover the repayment of the outstanding mortgage loans together with any accrued interest and penalty, because theprincipalofeachofthemortgageloanswasnormallybelow70%ofthesalespriceofthepropertiesatthedateofthesalesagreement,andthereforenoprovisionhasbeenmadeinconnectionwiththeguarantees.

(c) TheGroupalsoprovidedguaranteetojointventuresoftheGroup.Asat31December2018,theGroupprovidedguaranteetotallingapproximatelyRMB3,259million(2017:approximatelyRMB2,826million).

40. DISPOSAL OF SUBSIDIARIES

(a) InApril2018,athirdpartyinjectedcapitaltoChangshaHoroy,whichwasasubsidiaryoftheGroup,andthustheGroup’sequityinterestinChangshaHoroywasdilutedfrom66.5%to49.5%.TheGrouplostcontrolandChangshaHoroybecameajointventureoftheGroupafterthetransaction.Onthedisposaldate,thenetassetvalueofChangshaHoroyattributabletotheGroupwasapproximatelyRMB-13million.Afterthedilutionof17%equityinterestinChangshaHoroy,the49.5%remaininginterestheldbytheGroupwasremeasuredatitsfairvalueofapproximatelyRMB226milliononthedatewhencontrolwaslost,andthedifferencewithitsthencarryingamountwasapproximatelyRMB239million.Assuch,theGrouprecordedagainondisposalofapproximatelyRMB239million.




40. DISPOSAL OF SUBSIDIARIES (continued)

(a) (continued)

2018

Netassetsdisposedof: Property,plantandequipment 52 Prepaidlandleasepayments–Current 289,659 Propertiesheldorunderdevelopmentforsale 138,050 Prepaymentsandothercurrentassets 47,100 Otherreceivables 140 Cashandbankbalances 64,472 Otherpayablesandaccruals (558,861) Non-controllinginterests 6,495

100%ofnetassetsdisposedatbookvalue (12,893)Fairvalueof49.5%retainedinterestaccountedforasajointventure (226,369)Gainondisposalofthesubsidiary 239,262

Satisfiedbycash –

Ananalysisofthenetoutflowofcashandcashequivalentsinrespectofthedisposalofasubsidiaryisasfollows:

2018

Cash proceeds received –Cashandbankbalancesdisposedof (64,472)

Netoutflowofcashandcashequivalentsinrespectofthedisposalofthesubsidiary (64,472)




(b) InJune2018,theGroupdisposedallofits100%equityinterestinSRECapitalLimited(“SRECapital”)foraconsiderationofapproximatelyRMB0.57million.Onthedisposaldate,thenetassetvalueofSRECapitalattributabletotheGroupwasapproximatelyRMB0.21million.TheGrouprecordedagainondisposalofapproximatelyRMB0.36million.

2018

Netassetsdisposedof: Otherreceivables 246 Cashandbankbalances 193 Otherpayablesandaccruals (225)

214Gainondisposalofthesubsidiary 356

Satisfiedbycash 570

Ananalysisofthenetinflowofcashandcashequivalentsinrespectofthedisposalofasubsidiaryisasfollows:

2018

Cash proceeds received 570Cashandbankbalancesdisposedof (193)

Netinflowofcashandcashequivalentsinrespectofthedisposalofthesubsidiary 377

(c) In July 2018, the Group disposed of its 100% equity interest in Shanghai Xunbo Construction Co., Ltd. (“XunboConstruction”)foraconsiderationofapproximatelyRMB0.75million.Onthedisposaldate,thenetassetvalueofXunboConstruction attributable to theGroupwas approximatelyRMB0.75million.TheGroup recorded a loss on disposal ofapproximatelyRMB277.

2018

Netassetsdisposedof: Cashandbankbalances 750

Lossondisposalofthesubsidiary –

Satisfiedbycash 750


2018

Cash proceeds received 750Cashandbankbalancesdisposedof (750)

Netoutflowofcashandcashequivalentsinrespectofthedisposalofthesubsidiary –





(d) InApril 2017, theGroupdisposedof49%of its equity interest in JinxinRealEstate toShanghaiZhongchongBinjiangIndustryCo.,Ltd. (hereinafter“ZhongchongBinjiang”)and lostcontrol in theoriginallywholly-ownedsubsidiary. JinxinRealEstatebecameajointventureoftheGroupafterthetransaction.

Onthedisposaldate,thenetassetvalueofJinxinRealEstateamountedtoapproximatelyRMB3,082million,andthefairvalueof51%equityinterest inJinxinRealEstatedeterminedbasedonthefairvalueofthenetassetofJinxinRealEstateamounted to approximately RMB2,112million. After the disposal of 49% equity interest in Jinxi Real Estate, the 51%remaininginterestheldbytheGroupwasremeasuredatitsfairvalueofapproximatelyRMB2,112milliononthedatewhencontrolwaslost,andthedifferencewithitsthencarryingamountofapproximatelyRMB540millionwasrecognisedaspartofdisposalgain.Theconsiderationinrelationtothe49%equityinterestinJinxinRealEstatewasapproximatelyRMB2,112million.Assuch,theGrouprecordedagainondisposalofapproximatelyRMB1,142million.

2017

Netassetsdisposedof: Property,plantandequipment 240 Goodwill 75,866 Prepaidlandleasepayments–Current 936,207 Propertiesheldorunderdevelopmentforsale 1,019,421 Prepaymentsandothercurrentassets 2,610,000 Otherreceivables 1,101 Cashandbankbalances 1,237 Deferredtaxliabilities (41,284) Interest-bearingbankandotherborrowings (1,080,000) Otherpayablesandaccruals (439,335) Currentincometaxliabilities (1,577)

100%ofnetassetsdisposedatbookvalue 3,081,876Fairvalueof51%retainedinterestaccountedforasajointventure (2,111,910)Gainondisposalofthesubsidiary 1,141,944

Satisfiedbycash 2,111,910


2017

Cash proceeds received 2,111,910Cashandbankbalancesdisposedof (1,237)

Netinflowofcashandcashequivalentsinrespectofthedisposalofthesubsidiary 2,110,673




(e) In July 2017, the Group disposed of its 100% equity interest held byWuxi Zhongqing Real Estate Co., Ltd. (“WuxiZhongqing”) inWuxi YongqingReal EstateCo., Ltd. (“Wuxi Yongqing”) for a consideration of approximatelyRMB67million.Onthedisposaldate,thenetassetvalueofWuxiYongqingattributabletotheGroupwasapproximatelyRMB17million.TheGrouprecordedagainondisposalofapproximatelyRMB50million.

2017

Netassetsdisposedof: Prepaidlandleasepayments 368,621 Propertiesheldorunderdevelopmentforsale 48,696 Otherreceivables 698 Cashandbankbalances 1,146 Otherpayablesandaccruals (402,585) Non-controllinginterests 349

16,925Gainondisposalofthesubsidiary 50,397

Satisfiedbycash 67,322


2017

Cash proceeds received 67,322Cashandbankbalancesdisposedof (1,146)

Netinflowofcashandcashequivalentsinrespectofthedisposalofthesubsidiary 66,176





(f) InAugust2017,theGroupdisposedof50%outofits70%equityinterestinSREAssetforaconsiderationofnil.SREAssetbecameanassociateoftheGroupafterthetransaction.Onthedisposaldate,thenetassetvalueofSREAssetattributabletotheGroupwasapproximatelyRMB5million.TheGrouprecordedagainondisposalofapproximatelyRMB2million.

2017

Netassetsdisposedof: Property,plantandequipment 33 Prepaymentsandothercurrentassets 148 Otherreceivables 1,366 Tradereceivables 288 Cashandbankbalances 3,222 Otherpayablesandaccruals (177) Currentincometaxliabilities (8) Non-controllinginterests (62)

100%ofnetassetsdisposedatbookvalue 4,810Fairvalueof20%retainedinterestaccountedforasanassociate (7,000)Gainondisposalofthesubsidiary 2,190

Satisfiedbycash –


2017






(g) In September 2017, theGroup disposed of its 100% equity interest held by ShanghaiWingo InfrastructureCo., Ltd inShanghaiShanghuiConstructionCo.,Ltd.(“ShanghuiConstruction”)foraconsiderationofapproximatelyRMB5.8million.Onthedisposaldate, thenetassetvalueofShanghuiConstructionattributabletotheGroupwasapproximatelyRMB-73million.TheGrouprecordedagainondisposalofapproximatelyRMB79million.

2017

Netliabilitiesdisposedof: Inventories 679 Otherreceivables 3,000 Tradereceivables 2 Cashandbankbalances 6,071 Prepaymentsandothercurrentassets (1,393) Otherpayablesandaccruals (69,200) Currentincometaxliabilities (11,691) Non-controllinginterests (292)

(72,824)Gainondisposalofthesubsidiary 78,624

Satisfiedbycash 5,800


2017

Cash proceeds received 5,800Cashandbankbalancesdisposedof (6,071)

Netoutflowofcashandcashequivalentsinrespectofthedisposalofthesubsidiary (271)





(h) InDecember2017,theGroupdisposedofits100%equityinterestheldbyShanghaiOasisGardenRealEstateCo.,Ltd.andLihonInvestmentLimitedinShenyangLukangRealEstateLtd..(“ShenyangLukang”)foraconsiderationofRMB2.

On the disposal date, the net asset value of Shenyang Lukang attributable to the Group was approximately RMB-296million.TheGrouprecordedagainondisposalofapproximatelyRMB296million.Asof31December2017,theGrouphasnotcollectedapproximatelyRMB700millionloansandapproximatelyRMB176millionreceivablesfromShenyangLukang.TheGroupestimatedthatitwouldbeabletocollecttheloanofapproximatelyRMB580millionconsideringtheassetsheldbyShenyangLukang.AsthereisuncertaintyinthecollectionoftheportionofloansofapproximatelyRMB120millionandotherreceivablesofapproximatelyRMB176million,alossofapproximatelyRMB296millionwasrecognised.

2017

Netliabilitiesdisposedof: Property,plantandequipment 19 Prepaidlandleasepayments 190,754 Propertiesheldorunderdevelopmentforsale 500,180 Prepaymentsandothercurrentassets 13,845 Otherreceivables 396,458 Tradereceivables 10 Cashandbankbalances 1,183 Interest-bearingbankandotherborrowings (700,000) Advancesreceivedfromthepre-saleofpropertiesunderdevelopment (137,397) Tradepayables (8,631) Otherpayablesandaccruals (557,776) Currentincometaxliabilities (154) Non-controllinginterests 5,591

(295,918)Gainondisposalofthesubsidiary 295,918

Satisfiedbycash –


2017





41. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS AND TRANSACTIONS WITH NON-CONTROLLING INTERESTS

(a) DetailsoftheGroup’ssubsidiariesthathasmaterialnon-controllinginterestaresetoutbelow:

Bairun2018 2017

Percentageofequityinterestheldbynon-controllinginterest: 49.00% 49.64%

Bairun2018 2017

Profitfortheyearallocatedtonon-controllinginterest: 14,953 6,944

Transactionwithnon-controllinginterests(b) (1,256) –

Accumulatedbalanceofnon-controllinginterestsatthereportingdates 131,825 118,128

ThefollowingtablesillustratethesummarisedfinancialinformationofBairun.

Bairun2018 2017

Revenue 134,786 255,861Totalexpenses 81,867 238,976Other losses – (10,633)Profitfortheyear 30,319 13,990Total comprehensive income for the year 30,319 13,990

Current assets 773,449 792,828Non-currentassets 88 141Currentliabilities (501,907) (551,490)Non-currentliabilities (3,320) (3,499)

Netcashflowsusedinoperatingactivities (117,301) (167,179)Netcashflowsfrominvestingactivities – 261,204Netcashflowsfrom/(usedin)financingactivities 104,330 (90,000)

Net(decrease)/increaseincashandcashequivalents (12,971) 4,025




41. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS AND TRANSACTIONS WITH NON-CONTROLLING INTERESTS (continued)

(b) In July 2018, theGroup acquired all non-controlling interests in a number of partly owned subsidiaries from ShanghaiYaluo EnterpriseManagement Partnership LLP at a total consideration of RMB45 million. After the transaction, thesesubsidiaries becomewholly owned by theGroup. The carrying amounts of the non-controlling interests in these partly-ownedsubsidiariesonthedateofacquisitionwereRMB91millionintotal.

The effect of acquisitionof equity interests in thesepartly-owned subsidiaries on the equity attributable toowners of theCompanyduringtheyearissummarisedasfollows:

2018RMB million

Carryingamountofnon-controllinginterestsacquired 91Considerationpaidtonon-controllinginterests (45)

Savingfromconsiderationpaidrecognisedwithinequity 46

(c) InJune2018,theGroupreducedacapitalofRMB700millionofLiaoningGaoXiao,resultinginadecreaseoftheGroup’sequityinterestsinLiaoningGaoXiaofrom98.71%to97.5%.Thecarryingamountofthedeemeddisposalof1.21%equityinterestsinLiaoningGaoxiaowasRMB12million.

InMay2018,theGroupdisposed48.9%ofequityinterestsinitswholly-ownedsubsidiaryProfitConceptInvestmentsLtd.toRongheInternationalGroupLimitedforaconsiderationofHKD489.Thedifferencebetweenfairvalueofconsiderationreceived and the carrying amount of disposed equity interests in ProfitConcept Investments Ltd. amounting toRMB24millionisrecordedinotherreserves.

The effect of the above disposals of equity interests in subsidiaries on the equity attributable to owners of theCompanyduringtheyearissummarizedasfollows:

2018RMB million

Carryingamountofnetassetstransferredtonon-controllinginterests (36)Considerationreceivedfromnon-controllinginterests –

Lossondisposalofequityinterestrecognisedwithinequity (36)



42. RELATED PARTY TRANSACTIONS

Inadditiontotherelatedpartytransactionsandbalancesdisclosedelsewhereintheseconsolidatedfinancialstatements,theGrouphadthefollowingsignificanttransactionsandbalanceswithrelatedparties.

(a) Nameandrelationshipwithrelatedparties

Name Relationship

Broadband An associate of the GroupNewTechnology An associate of the GroupDa Run AjointventureoftheGroupRelevantBusinessofGoldenLuodian AjointventureoftheGroupMayson An associate of the GroupShanghaiShuoChengRealEstateCo.,Ltd.(“ShuoCheng”) AsubsidiaryofanassociateoftheGroupBlackEagle(Shanghai)InvestmentManagementCo.,Ltd. (“BlackEagle”)

Asubsidiaryoftheminority shareholder of the Group

JinxinRealEstate AjointventureoftheGroupSRE Asset An associate of the GroupGaoXin AjointventureoftheGroupChinaMinshengInvestYunhong(Shanghai)Investment ManagementCo.,Ltd.(“ChinaMinshengYunhong”)

A company ultimatelycontrolledbythesamecompany

Changsha Horoy AjointventureoftheGroupNAPA AjointventureoftheGroupNingboJiaMiao An associate of the GroupCMIGSouthernChina(Guangzhou)RealEstateCo.,Ltd. (“CMIGSouthern”) An associate of the Group75Howard AjointventureoftheGroup

(b) Transactionswithrelatedparties

(i) Purchases from a related party

2018 2017

Da Run – 1,500




42. RELATED PARTY TRANSACTIONS (continued)

(b) Transactionswithrelatedparties(continued)

(ii) Advances to related parties

2018 2017

JinxinRealEstate 40,890 147,166Changsha Horoy 25,000 –RelevantBusinessofGoldenLuodian 13,540 654,507NAPA 11,098 –NingboJiaMiao 4,900 –CMIG Southern 4,476 –GaoXin – 42,000Broadband – 89

99,904 843,762

(iii) Repayment from related parties

2018 2017

Shuo Cheng 458,584 –RelevantBusinessofGoldenLuodian 23,135 –Changsha Horoy 25,000 –Broadband 45 –

506,764 –

(iv) Fundings/advances from related parties

2018 2017

Broadband 50 –Shuo Cheng – 480,000

50 480,000

(v) Repayment of fundings to a related party

2018 2017

BlackEagle – 270,124





(vi) Interest income from related parties

2018 2017

RelevantBusinessofGoldenLuodian 139,003 82,879Changsha Horoy 15,260 –NAPA 258 –

154,521 82,879

(vii) Interest expenses charged by related parties

2018 2017

Interestexpensechargedbyparentcompany 269,840 292,447Interestexpensechargedbycompaniesultimatelycontrolledby the same company 21,753 97,047InterestexpensechargedbyanassociateoftheGroup 16,939 1,571

308,532 391,065

(viii) Compensation to key management personnel of the Group

2018 2017

Salariesandothershort-termemployeebenefits 16,667 36,636

(ix) Occupation of properties owned by a related party

Before March 2018, some subsidiaries of the Group occupied certain properties with total gross floor areas ofapproximately1,150squaremeters leasedbytheCompany’sparentcompanyforoperationaluse,whichwas freeofcharge.FromMarch2018, these subsidiariesmoved to another floor and started tobear rental costsby themselvesaccordingtorentalcontractsenteredwiththirdparties.






(x) Guarantees provided to related parties

Guaranteed party 2018 2017

JinxinRealEstate(a) 3,259,450 2,826,40075Howard(b) – –

3,259,000 2,826,400

(a) Fortheyearended31December2018,theGroupchargedRMB53million(beforeconsolidationelimination)ofincomefromJinxinRealEstateinrelationtothisguarantee.

(a) Fortheyearended31December2018,theGroupalsoprovidedadepositofRMB172millionasguarantor’sletterofcreditfortheloanof75Howardapartfromtheguaranteeabove.Asat31December2018,75Howardhasnotdrawndowntherelevantloans.

(c) Related-partybalances

(i) Trade receivable due from a related party

2018 2017

Broadband 247 247

(ii) Trade payable due to a related party

2018 2017

NewTechnology 109 109

(iii) Other receivables due from related parties

2018 2017

JinxinRealEstate 466,995 397,899RelevantBusinessofGoldenLuodian 410,541 433,676Shuo Cheng 202,216 –Mayson 160,406 153,376GaoXin 42,000 42,000NingboJiaMiao 4,900 –CMIG Southern 4,476 –NAPA 2,813 –Broadband – 45

1,294,347 1,026,996

Amountsduefromrelatedpartiesareunsecured,bearnointerestandarerepayableondemand.




(c) Related-partybalances(continued)

(iv) Other payables due to related parties

2018 2017

Shuo Cheng 836,560 836,560Broadband 50 –

836,610 836,560

Amountsduetorelatedpartiesareunsecured,bearnointerestandarerepayableondemand.

(v) Prepayments due from a related party

2018 2017

Da Run 1,500 1,500

(vi) Non-current asset (downpayment) due from a related party

2018 2017

Shuo Cheng – 660,800

(vii) Loans receivable due from related parties

2018 2017

RelevantBusinessofGoldenLuodian(a) 1,185,551 1,172,011ChangshaHoroy(b)* 432,791 –NAPA(c) 8,285 –

1,626,627 1,172,011

* Thebalancecomprisesaninter-companyreceivablefullyeliminateduponconsolidationasat31December2017,butturned

intoloansreceivableasChangshaHoroywasdisposedandbecameajointventureoftheGroup.






(vii) Loans receivable due from related parties (continued)

(a) TheloansreceivableduefromRelevantBusinessofGoldenLuodianareinterest-bearingloansofapproximatelyRMB1,186million(2017:approximatelyRMB1,172million)withaninterestrateof8%perannum.

(b) The loans receivabledue fromChangshaHoroyare interest-bearing loansofapproximatelyRMB433million(2017:Nil)withaninterestrateof10%perannum.

(c) The loans receivabledue fromNAPAare interest-bearing loansof approximatelyRMB8million (2017:Nil)withaninterestrateof10%perannum.

Interestsreceivablefromrelatedpartiesinrelationtotheloansabovearesummarisedasbelow:

2018 2017

RelevantBusinessofGoldenLuodian 221,882 82,879Changsha Horoy 69,448 –NAPA 251 –

291,581 82,879

(viii) Loans from related parties

2018 2017

Loansfromparentcompany(a) 3,313,413 3,568,160– Current 2,652,113 490,065–Non-current 661,300 3,078,095Loansfromcompaniesultimatelycontrolledbythesamecompany–Current(b) – 1,000,000LoansfromanassociateoftheGroup–Current(c) 300,000 138,000

3,613,413 4,706,160

Interestspayabletorelatedpartiesinrelationtotheloansabovearesummarisedasbelow:

2018 2017

Interests due to parent company 166,868 337,759Interestsduetocompaniesultimatelycontrolledbythesamecompany 22,592 78,779Interests due to an associate of the Group 16,939 1,571

206,399 418,109





(viii) Loans from related parties (continued)

(a) TheloansofapproximatelyRMB3,313million(31December2017:approximatelyRMB3,568million)wereprovided by the parent company, ChinaMinsheng Jiaye in 2017 and 2018. Please refer toNote 32(e) fordetailedinformation.

(b) Asat31December2017,theloansofRMB1,000millionwereprovidedbycompaniesultimatelycontrolledbythesamecompany,whichwererepaidin2018.

(c) TheloanofRMB300million(2017:RMB138million)wasprovidedbyarelatedparty,SREAssetwithtenureoftwelvemonths.Interestrateoftheloanwas9%perannum(2017:8.5%perannum).

(ix) Pledged assets provided by a related party

2018 2017

RelevantBusinessofGoldenLuodian 2,569,852 2,525,307




43. FINANCIAL INSTRUMENTS BY CATEGORY

Thecarryingamountsofeachofthecategoriesoffinancialinstrumentsasattheendofthereportingperiodareasfollows:

2018 2017

Financial assets

Financial assets at fair value through other comprehensive income 150,657 –Available-for-saleinvestments – 407,790Other financial assets at amortised cost 2,185,437 –

Loansandreceivables–Loansandreceivables – 1,752,005–Otherreceivables 2,365,212 1,716,383–Tradereceivables 16,984 24,438–Cashandbankbalances 701,233 1,452,915–Othernon-currentassets 171,474 810,800

5,590,997 6,164,331

Financial liabilities

Financialliabilitiesatamortisedcost–Interest-bearingbankandotherborrowings 7,643,002 8,598,802–Tradepayables 609,853 703,382– Others 1,732,168 1,349,030

9,985,023 10,651,214

44. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Fairvaluesoffinancialassetsandliabilities

Fairvalueestimatesaremadeataspecificpointintimebasedonrelevantmarketinformationandinformationaboutthevariousfinancialinstruments.Whenanactivemarketexists,suchasanauthorisedsecuritiesexchange,themarketvalueisthebestreflectionofthefairvaluesoffinancialinstruments.Forfinancialinstrumentswherethereisnoactivemarketorwhencurrentmarketpricesarenotavailable,fairvalueisdeterminedusingvaluationtechniques.

TheGroup’sfinancialassetsmainlyincludecashandbankbalances,receivablesandfinancialassetsatFVOCIandfinancialassetsatFVPL.

TheGroup’sfinancialliabilitiesmainlyincludeinterest-bearingbankandotherborrowingsandpayables.

ThefairvaluesoftheGroup’sfinancialinstrumentsarenotmateriallydifferentfromtheircarryingamounts.Fairvalueestimatesaremadeataspecificpointintimeandarebasedonrelevantmarketinformationandappropriatevaluationmodels.



44. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

Fairvaluesoffinancialassetsandliabilities(continued)

Assets and liabilities measured at fair value:

FinancialassetsatFVOCI,FinancialassetsatFVPLandavailable-for-salefinancialassetsoftheGrouparemeasuredatfairvalue.

The following tablepresents theGroup’s financial assets thataremeasuredat fairvalueat31December2018.SeeNote18 fordisclosuresoftheinvestmentpropertiesthatarealsomeasuredatfairvalue.

Level1 Level2 Level3 Total

FinancialassetsatFVOCI – – 150,657 150,657FinancialassetsatFVPL – – – –

Therewerenotransfersbetweenlevel1and2duringtheyear.

Thefollowingtablepresentsthechangesinlevel3instrumentsfortheyearended31December2018.

Openingbalance 407,790Disposals (257,133)

Endingbalance 150,657

45. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

TheGroup’sprincipal financial instrumentscomprisebank loans,other interest-bearing loans, andcashandbankdeposits.Themain purpose of these financial instruments is to raise funds to finance theGroup’s operations. TheGroup has various otherfinancialassetsandliabilitiessuchastradereceivablesandtradepayables,whicharisedirectlyfromitsoperations.

The Group does not enter into derivative transactions for trading purposes. The Group’s accounting policies in relation toderivativesaresetoutinNote2.4tothefinancialstatements.

ThemainrisksarisingfromtheGroup’sfinancialinstrumentsareinterestraterisk,foreigncurrencyrisk,creditriskandliquidityrisk.TheBoardofDirectorsreviewsandagreespoliciesformanagingeachoftheserisksandtheyaresummarisedbelow.

Interestraterisk

TheGroup’sexposuretotheriskofchangesininterestratesrelatesprimarilytoitsinterest-bearingbankandotherborrowings.TheGroupdoesnotusederivativefinancialinstrumentstomanageitsinterestraterisk.TheinterestratesandtermsofrepaymentoftheborrowingsaredisclosedinNote32.




45. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Interestraterisk(continued)

ThefollowingtabledemonstratesthesensitivityattheendofthereportingperiodtoareasonablypossiblechangeininterestratesofthemajorcurrenciesinwhichtheGroup’sborrowingsaredenominated,withallothervariablesheldconstant,oftheGroup’sprofit before income tax (through the impact on floating rate borrowings). TheGroup’s equity is not affected, except for theconsequentialeffectonretainedprofits(acomponentoftheGroup’sequity)bythechangesinprofitbeforeincometax.

2018 2017Impact on profit

before income taxImpact on profit beforeincometax

Changes in variables – RMB interest rate

+50basispoints (8,849) (10,061)-50basispoints 8,849 10,061

Changes in variables – GBP interest rate

+50basispoints (2,751) (3,052)-50basispoints 2,751 3,052

Foreigncurrencyrisk

MostoftheGroup’soperatingentitiesoperateinMainlandChinawithmostofthetransactionsdenominatedinRenminbi.TheGroup is exposed to foreign exchange riskwith only limited exposure arising primarilywith respect to cash at banks andbankborrowings,whicharemainlydenominatedinUS$,HK$,GBPandAUD.

Renminbi is not a freely convertible currency. The conversion of Renminbi into foreign currencies is subject to the rules andregulationsoftheforeignexchangecontrolpromulgatedbythePRCgovernment.

ThefollowingtabledemonstratesthesensitivityattheendofthereportingperiodtoareasonablypossiblechangeintheUS$,theHK$,theGBPandtheAUDexchangerates,withallothervariablesheldconstant,oftheGroup’sprofitbeforeincometax(duetochangesinthefairvalueofmonetaryassetsandliabilities).TheGroup’sequityisnotaffected,exceptfortheconsequentialeffectonretainedprofits(acomponentoftheGroup’sequity)bytheimpactonprofitbeforeincometaxasdisclosedbelow.




Foreigncurrencyrisk(continued)

2018 2017Impact on profit

before income taxImpact on profit beforeincometax

Changes in exchange rate of US$ against Renminbi

+5% (4,901) (2,197)-5% 4,901 2,197

Changes in exchange rate of HK$ against Renminbi

+5% (3,238) (5,844)-5% 3,238 5,844

Changes in exchange rate of GBP against Renminbi

+5% (9,326) 781-5% 9,326 (781)

Changes in exchange rate of AUD against Renminbi

+5% – 5,751-5% – (5,751)

Creditrisk

Creditriskmainlyarisesfromcashatbanks,tradereceivablesandotherreceivables.TheguaranteesasdisclosedinNote39mightalsoresult increditrisktotheGroup.Forthesaleofdevelopedproperties toretailcustomers,considerationwouldbesettled incashor customers’ purchasewouldbe financedbymortgage loansprovidedbybanks.Receivablebalances aremonitoredon anon-goingbasisotherthanthesignificantreceivablesinNote25.Exceptforduefromrelatedparties,thereisnoothersignificantconcentrationofcreditriskwithintheGroupasotherdebtorsoftheGroup’sreceivablesarewidelydispersedandthemajorityoftheGroup’sfinancialassetsarecashatbanksasat31December2018.DirectorsoftheGrouphaveconsideredthecreditriskwiththesebalancesandbelievethatcreditriskassociatedwithcurrentcarryingamountsofduefromrelatedpartiesislow.





Creditrisk(continued)

Thetablebelowshowsthemaximumexposuretocreditriskfortheassetssubjecttocreditriskattheendofthereportingperiod.Themaximumexposureisshowngross,beforetheeffectofmitigationthroughanycollateralheldorothercreditenhancement.

2018 2017

Financial assetsAvailable-for-saleinvestments – 407,790–Loansandreceivables – 1,752,005–Otherreceivables 2,365,212 1,716,383–Tradereceivables 16,984 24,438–Cashatbanks 701,233 1,452,915–Othernon-currentassets 171,474 810,800

3,254,903 6,164,331

Liquidityrisk

2018

On demandLess than 3 months

3 toless than

12 months 1 to 5 years Over 5 years Total

Interest-bearingbankandother borrowings(includinginterestpayment) 53,365 373,069 4,853,026 2,589,870 742,606 8,611,936Tradepayables 93,878 73,105 102,313 340,557 – 609,853Others 989,315 1,528 741,325 – – 1,732,168

1,136,558 447,702 5,696,664 2,930,427 742,606 10,953,957

2017

On demandLessthan3 months

3 to less than12 months 1 to 5 years Over 5 years Total

Interest-bearingbankandother borrowings(includinginterestpayment) 490,065 602,742 1,558,013 6,223,355 927,873 9,802,048Tradepayables 95,015 80,626 142,506 385,235 – 703,382Others 981,167 2,874 364,989 – – 1,349,030

1,566,247 686,242 2,065,508 6,608,590 927,873 11,854,460




Liquidityrisk(continued)

Managementhasassessedthatthefairvaluesoftradepayablesandothersapproximatetotheircarryingamountslargelyduetotheshorttermmaturitiesoftheseinstruments.

PleaserefertoNote2.1foranalysisofgoingconcernbasisofpreparation.

Capital management

TheprimaryobjectivesoftheGroup’scapitalmanagementaretosafeguardtheGroup’sabilitytocontinueasagoingconcernandtomaintainhealthycapitalratiosinordertosupportitsbusinessandmaximiseshareholders’value.

TheGroupmanagesitscapitalstructureandmakesadjustmentstoitinlightofchangesineconomicconditions.Tomaintainoradjust the capital structure, theGroupmayadjust thedividendpayment to shareholdersor issuenew shares.TheGroup isnotsubjecttoanyexternallyimposedcapitalrequirements.Nochangesweremadeintheobjectives,policiesorprocessesformanagingcapitalduringtheyearsended31December2018and2017.

As theGroup ismainlyengaged in thedevelopmentofproperties, itneedsa substantialamountof funds.TheGroupmonitorscapitalusingagearingratio,asdefinedbymanagementforcapitalmanagementpurposes,whichisnetdebtdividedbycapitalplusnetdebt.

Netdebtincludesinterest-bearingbankandotherborrowings,lesscashandbankbalances,andexcludesassetsclassifiedasheldforsaleandliabilitiesdirectlyassociatedwiththeassetsclassifiedasheldforsale.Capitalincludesequityattributabletoownersoftheparentandnon-controllinginterests.Thegearingratiosarecalculatedasfollows:

2018 2017

Interest-bearingbankandotherborrowings(Note32) 7,643,002 8,598,802Less:Cashandbankbalances(Note27) (701,233) (1,452,915)

Netdebt 6,941,769 7,145,887

EquityattributabletoownersoftheCompany 7,445,489 7,380,207Non-controllinginterests 372,762 433,761

Capital 7,818,251 7,813,968

Capitalandnetdebt 14,760,020 14,959,855

Gearing ratio 47% 48%




46. INFORMATION ABOUT SUBSIDIARIES

Asat31December2018,theCompanyhaddirectorindirectinterestsinthefollowingprincipalsubsidiaries:

Name





Heldbythe Company

Indirectly held

SinopowerInvestmentLimited BVI1October1998

100% – US$52 US$50,000 Investment holding

ShanghaiXinDongIndustryCo.,Ltd. PRC/MainlandChina28 May 1993

– 100% US$3,457,729 US$3,457,729 Property leasing and realestate agency

Shanghai Oasis Garden Real Estate Co.,Ltd.(“OasisGarden”)


– 100% US$19,600,000 US$19,600,000 Propertydevelopment

ShanghaiWingoInfrastructureCo.,Ltd. PRC/MainlandChina4 August 1999

– 100% US$20,000,000 US$20,000,000 Development of technology housing and provision of construction services

ShanghaiZhufuPropertyDevelopment Co.,Ltd.(“Zhufu”)

PRC/MainlandChina11 August 2000

– 51% RMB10,000,000 RMB10,000,000 Propertydevelopment

AndersonLand(Shanghai)Ltd. BVI29September2001 – 52% US$100 US$50,000 Investment holding

ShanghaiAndersonFuxingLandCo.,Ltd. PRC/MainlandChina16 April 2002

– 52.48% US$20,000,000 US$20,000,000 Propertydevelopment

Shanghai Hangtou Govern Real Estate Co.,Ltd.

PRC/MainlandChina14 June 2002

– 98% US$10,000,000 US$10,000,000 Propertydevelopment

Shanghai Andong Real Estate Development Ltd.



ShanghaiJinwuRealEstateCo.,Ltd. PRC/MainlandChina12 August 2002

– 97% RMB442,235,160 RMB442,235,160 Property development andproperty leasing

ShenyangHuaruiShijiAssetManagementCo.,Ltd.(“HuaruiAssetManagement”)


– 100% US$31,936,200 US$31,936,200 Propertyleasing

ShanghaiShangzhiRealEstateDevelopmentCo.,Ltd.



LiaoningGaoXiaoSupportGroupPropertyDevelopmentCo.,Ltd.(“LiaoningGaoXiao”)


– 97.50% RMB750,000,000 RMB750,000,000 Propertydevelopment



Name





Heldbythe Company

Indirectly held

ShanghaiXiangdaoRealEstateLtd.(“Xiangdao”)



ShanghaiXiaboIndustryLtd.(“Xiabo”) PRC/MainlandChina14September1995


ShanghaiHaiboPropertyDevelopmentCo.,Ltd.(“Haibo”)



ShanghaiBairunRealEstateCo.,Ltd.(“Bairun”)



WuxiZhongqingRealEstateCo.,Ltd.(“WuxiZhongqing”)



JiaxingLakeRichgateRealEstateCo.,Ltd.(“JiaxingLakeRichgate”)



ShanghaiZhiyiEnterpriseLtd. PRC/MainlandChina14 March 2011

– 100% RMB30,000,000 RMB30,000,000 Procurementmanagement

DalianShangzhiRealEstateDevelopmentCo.,Ltd.



ShanghaiZhiYiInvestmentLtd. PRC/MainlandChina21 January 2014

– 100% RMB140,000,000 RMB790,000,000 Investment

ChengduShanghaiRealEstateCo.,Ltd PRC/MainlandChina20December2010


ShanghaiLakeMalarenObstetricalandGynecologicalHospitalCo.,Ltd.


– 100% RMB10,000,000 RMB10,000,000 Hospital

ShanghaiLakeMalarenCorporateDevelopmentCo.,Ltd

PRC/MainlandChina8 April 2014


ShanghaiLakeMalarenCommercialManagementCo.,Ltd

PRC/MainlandChina8 April 2014


46. INFORMATION ABOUT SUBSIDIARIES (continued)




Name





Heldbythe Company

Indirectly held

Jiangsu Jiaye SRE Commercial Factoring Limited

PRC/MainlandChina10February2017

– 80% RMB100,000,000 RMB100,000,000 Factoring

Qingdao Zhongtong Environmental Fund Center(LimitedPartnership)


– 100% RMB90,000,000 RMB90,000,000 Investment

Zhongtong Wanfang Construction and Development(Zhangjiakou)Co.,Ltd.

PRC/MainlandChina21November2017

– 90% RMB100,000,000 RMB100,000,000 Construction

CMSREUKTowerHillPropcoLimited UK/BailiwickofJersey25 August 2016

– 51.10% GBP15,000,000 GBP15,000,000 Propertyleasing

CMSREUKMoorgatePropcoLimited UK/BailiwickofJersey14September2016

– 51.10% GBP5,700,000 GBP5,700,000 Propertyleasing

GullveigInvestmentCo.,Ltd.* Cambodia30 January 2018

– 100% US$250,000 US$250,000 Investment

ValkyrieInvestmentCo.,Ltd.* Cambodia30 January 2018

– 100% US$260,000 US$260,000 Investment

RomduolOverseasCo.,Ltd. Cambodia30 January 2018

– 100% KHR4,000,000,000 KHR4,000,000,000 Propertydevelopment

* Although theGroup holds less than 50% of theseCambodian companies legally, the other shareholders are deprived of the rights and

obligationsoftheseinterestssothattheGroup,insubstance,holds100%interestintheseCambodiancompanies.

TheabovetableliststhesubsidiariesoftheGroupwhich,intheopinionofthedirectors,principallyaffectedtheresultsfortheyearor formedasubstantialportionofthenetassetsof theGroup.Togivedetailsofothersubsidiarieswould, intheopinionofthedirectors,resultinparticularsofexcessivelength.

Other thandisclosedabove, theCompanyhasseveral investmentholdingsubsidiaries incorporated intheBVI,HongKong, theUnitedKingdom,Australia and theUnited States of Americawith nominal issued shares. All subsidiaries located inMainlandChinaarelimitedliabilityentities.

46. INFORMATION ABOUT SUBSIDIARIES (continued)



47. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

InformationaboutthestatementoffinancialpositionoftheCompanyattheendofthereportingperiodisasfollows:

2018 2017

ASSETS

Non-current assets Property,plantandequipment 19 18 Investmentsinsubsidiaries 2,376,034 2,391,954 Advancestosubsidiaries 2,260,056 1,965,695

4,636,109 4,357,667

Current assets Dividendsreceivablefromsubsidiaries 1,951,622 1,951,622 Prepaymentsandothercurrentassets 42,395 42,373 Cashandbankbalances 59,250 529,108

2,053,267 2,523,103

Total assets 6,689,376 6,880,770

EQUITY AND LIABILITIES

Equity Issued share capital and share premium 6,747,788 6,747,788 Reserves (1,411,456) (1,303,091)

Total equity 5,336,332 5,444,697

LIABILITIES

Non-current liabilities Interest-bearingbankandotherborrowings 196,081 889,600

Current liabilities Interest-bearingbankandotherborrowings 1,049,071 490,065 Otherpayablesandaccruals 107,892 56,408

1,156,963 546,473

Total liabilities 1,353,044 1,436,073

Total equity and liabilities 6,689,376 6,880,770

ThestatementoffinancialpositionoftheCompanywasapprovedbytheBoardofDirectorson28March2019andwassignedbythefollowingDirectorsonitsbehalf:

Peng Xinkuang Liu Feng Chairman ChiefExecutiveOfficer



47. STATEMENT OF FINANCIAL POSITION OF THE COMPANY (continued)

AsummaryoftheCompany’sreservesisasfollows:

Accumulated losses Others Total

Balanceat1January2018 (1,645,333) 342,242 (1,303,091)

Total comprehensive loss for the year (92,751) – (92,751)

Transactionwithowners: Share-basedpayments – (15,614) (15,614)

Balanceat31December2018 (1,738,084) 326,628 (1,411,456)

Accumulated losses Others Total

Balanceat1January2017 (1,524,709) 318,921 (1,205,788)

Total comprehensive loss for the year (120,624) – (120,624)

Transactionwithowners: Share-basedpayments – 23,321 23,321

Balanceat31December2017 (1,645,333) 342,242 (1,303,091)

48. APPROVAL OF THESE CONSOLIDATED FINANCIAL STATEMENTS

TheseconsolidatedfinancialstatementswereapprovedandauthorisedforissuebytheBoardofDirectorsoftheCompanyon28March2019.

Documents

SRE GROUP LIMITED 上置集團有限公司 · 2019-04-30 · SRE GROUP LIMITED 2018 Annual Report 5 Financial Summary Summary of Results Year ended 31 December 2018 2017 2016 2015