Revenue Growth - The Group's revenue increased from RMB1,726.9 million for the six months ended 30 June 2018 to RMB3,062.1 million for the six months ended 30 June 2019, representing an increase of 77.3%[9] - Revenue from property sales recognized increased by RMB1,261.8 million, contributing significantly to the overall revenue growth[9] - Revenue from the property development segment was RMB2,588.7 million, accounting for 85% of total revenue, up from RMB1,326.9 million or 77% in the same period last year[17] - The increase in revenue and profit was mainly driven by higher sales from property developments in key cities such as Suzhou, Shanghai, Wuhan, and Tianjin[13] - The Group achieved aggregated contracted sales of RMB26,168 million for the six months ended June 30, 2019, representing a 64% increase compared to the same period in 2018[47] Profitability - Profit attributable to owners of the Company rose to RMB1,158.3 million, up 93.4% from RMB598.8 million for the corresponding period in 2018[13] - Share of results from joint ventures and associates reported a profit of RMB825.7 million, an increase of 76.6% compared to RMB467.3 million in the previous year[13] - Profit in the property development segment increased to RMB1,790.0 million, compared to RMB851.3 million for the corresponding period, driven by a significant increase in property sales area delivered[17] - Profit before tax for the six months ended June 30, 2019, was RMB1,674,990, compared to RMB861,942 for the same period in 2018, representing a significant increase of 94.3%[73] - Total comprehensive income for the period was RMB1,237,668, an increase of 92.3% from RMB643,454 in the same period of 2018[63] Expenses and Costs - Direct operating expenses rose from RMB410.3 million to RMB638.2 million, an increase of 55.5%, due to expanded business operations[10] - Finance costs increased to RMB185.3 million from RMB128.0 million, reflecting higher bank borrowings and loans from related parties[12] - Administrative expenses slightly increased from RMB19.8 million to RMB22.0 million, reflecting a modest rise in operational costs[10] - The increase in financial expenses was primarily due to higher bank loans and interest payments, rising from RMB128 million to RMB185.3 million[14] - The cost of properties sold was RMB1,496,531 for the six months ended June 30, 2019, up from RMB886,274 in 2018, indicating a significant increase of 68.9%[152] Financial Position - Total shareholders' funds increased from RMB11,835.2 million as of 31 December 2018 to RMB12,564.2 million as of 30 June 2019, driven by profit attributable to owners of the Company[23] - The Group's deposits, bank, and cash balances increased by RMB1,881.0 million or 58% to RMB5,118.9 million as of 30 June 2019[24] - The net debt increased by RMB7,357.7 million to RMB9,318.2 million as of 30 June 2019, resulting in a net debt ratio of 64%, up from 14% at the end of 2018[26] - Total assets as of June 30, 2019, amounted to RMB65,760,400,000, up from RMB51,987,757,000 at the end of 2018, showing a growth of approximately 26.5%[141] - Total liabilities were reported at RMB51,130,430,000, compared to RMB38,117,372,000 at the end of 2018, indicating an increase of about 34.1%[141] Cash Flow - Net cash used in operating activities for the first half of 2019 was RMB4,573,521, a substantial increase from RMB47,447 in the previous year[73] - Net cash from financing activities for the six months ended June 30, 2019, was RMB8,213,444,000, compared to a net cash used of RMB(1,108,550,000) in the same period of 2018[76] - Total cash and cash equivalents at the end of the period reached RMB5,112,619,000, up from RMB2,490,418,000 in the same period of 2018[78] - The company is confident in its ability to meet financial obligations and continue as a going concern based on operational cash inflows[84] Land and Property Development - As of June 30, 2019, the Group's land bank totaled approximately 15.41 million square meters, with 25% in first-tier cities and 65% in second-tier cities[43] - The Group acquired 13 land projects in the first half of 2019, with a total planned GFA of approximately 2.54 million square meters, at a total consideration of approximately RMB25,220 million[45] - The average selling price for properties was approximately RMB21,100 per square meter, reflecting a slight decrease of 2.8% compared to the previous year[47] - The Group plans to focus on expanding contracted sales and land bank accumulation in first-tier and certain second-tier cities with fast economic growth[51] - The Group plans to continue expanding its property development and management segments, leveraging its strong financial performance to explore new market opportunities[141] Accounting Standards and Policies - The Group adopted HKFRS 16 "Leases" for the first time, impacting the financial statements starting from 1 January 2019[8] - The Group's accounting policies remain consistent with those in the annual financial statements for the year ended December 31, 2018, except for the new standards adopted[88] - The Group recognized an increase in right-of-use assets amounting to RMB78,982,000 as of January 1, 2019[98] - The Group applied short-term lease exemptions for leases with terms ending within 12 months from the date of initial application[96] - Significant judgment is applied in determining the lease term for contracts with renewal options, considering non-cancellable terms and options that are reasonably certain to be exercised[107] Taxation - The Group is subject to Land Appreciation Tax (LAT) in Mainland China, with rates ranging from 30% to 60% on the appreciation of land value[117] - The land appreciation tax (LAT) in Mainland China amounted to RMB230,907,000, up from RMB28,496,000 in the previous year, indicating a significant increase of 709.5%[155] - The corporate income tax expense for Mainland China for the period was RMB298,317,000, compared to RMB153,452,000 in the same period last year, representing an increase of 94.4%[155] Joint Ventures and Investments - The company reported a share of losses from joint ventures amounting to RMB589,865 for the first half of 2019, compared to RMB453,695 in the same period of 2018[73] - Investments in joint ventures totaled RMB8,980,129,000, while investments in associates were RMB3,214,127,000[141] - Capital contributions to joint ventures totaled RMB725,469, indicating a significant investment in joint ventures[75]

[Corporate Information](index=4&type=section&id=Corporate%20Information) The report details core company information including board members, committee structures, company secretary, registered office, principal place of business, share registrar, auditor, legal advisors, and principal bankers - The report details core company information including the board of directors, committee structures, company secretary, registered office, principal place of business, share registrar, auditor, legal advisors, and principal bankers[6](index=6&type=chunk)[7](index=7&type=chunk)[8](index=8&type=chunk) [Chairman's Statement](index=6&type=section&id=Chairman's%20Statement) Despite a slowdown in China's real estate market in 2018, the Group achieved record-high contracted sales and profit attributable to shareholders, growing by 8% and 37% respectively, while maintaining a high gross profit margin of 58% and actively expanding its business park segment [Market Overview](index=6&type=section&id=Market%20Overview) In 2018, China's overall real estate market saw record transaction volumes and prices but slower growth, with hot cities maintaining controls while others adjusted policies due to price pressure, and the industry faced rising financing costs and tight capital supply, leading to increased market differentiation - In 2018, China's real estate market was characterized by decelerated growth, differentiated policies across cities, tightening financing environment, and varied performance among market participants[11](index=11&type=chunk)[12](index=12&type=chunk) [Business Overview And Outlook](index=7&type=section&id=Business%20Overview%20And%20Outlook) In 2018, the Group achieved record performance with contracted sales of 49.03 billion RMB (+8% YoY) and profit attributable to shareholders of 2.253 billion RMB (+37% YoY), maintaining a high gross profit margin of 58% and acquiring 24 new land parcels totaling 2.73 million sq.m., while planning to focus on first and second-tier cities and M&A opportunities in 2019 Key Performance Indicators for 2018 | Metric | Amount/Ratio | YoY Change | | :--- | :--- | :--- | | Contracted Sales | 49.03 billion RMB | +8% | | Profit Attributable to Shareholders | 2.253 billion RMB | +37% | | Gross Profit Margin | 58% | - | | Final Dividend | 2.75 RMB cents per share | +10% | - The Group is rapidly expanding in the business park sector, leveraging the success of Shenzhen Vanke Technology Park, now owning over **1 million sq.m.** of business parks in China and attracting world-class tenants like DJI, Amazon, and Intel[16](index=16&type=chunk)[17](index=17&type=chunk) - During the year, the Group successfully acquired **24 new land parcels** in several core cities, including Beijing and Shanghai, adding approximately **2.73 million sq.m.** of gross floor area, laying a foundation for future profit and cash flow growth[17](index=17&type=chunk)[18](index=18&type=chunk) - 2019 Strategic Outlook: The Group will continue to focus on first and second-tier cities with rapid economic growth and high population inflow, expanding contracted sales and land reserves, and actively developing high-end business parks and commercial projects[20](index=20&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=Management%20Discussion%20and%20Analysis) The Group's total revenue increased by 50% to 7.08 billion RMB and profit attributable to shareholders grew by 37% to 2.25 billion RMB, driven by significant property sales and high gross margins, while financial health improved with net gearing significantly reduced from 73% to 44% [Financial Highlights](index=9&type=section&id=Financial%20Highlights) This fiscal year, the Group achieved significant growth in both revenue and profit, with revenue reaching 7.08 billion RMB and profit attributable to shareholders at 2.25 billion RMB, while optimizing its financial structure by reducing total loans and significantly lowering net gearing from 73% to 44%, demonstrating stronger financial stability Financial Highlights for FY2018 (vs FY2017) | Metric | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | **Performance** | | | | Revenue (thousand RMB) | 7,079,136 | 4,711,019 | | Profit Attributable to Owners of the Company (thousand RMB) | 2,252,622 | 1,643,529 | | Basic Earnings Per Share (RMB) | 0.1419 | 0.1039 | | **Financial Position** | | | | Total Assets (thousand RMB) | 51,987,757 | 43,668,752 | | Total Liabilities (thousand RMB) | 38,117,372 | 30,621,124 | | Total Loans (thousand RMB) | 6,061,306 | 9,544,591 | | Net Loans (thousand RMB) | 1,960,484 | 2,993,271 | | **Key Ratios** | | | | Gearing Ratio | 44% | 73% | | Net Loans to Total Equity | 14% | 23% | [Financial Review](index=10&type=section&id=Financial%20Review) In FY2018, the Group's revenue increased to 7.08 billion RMB, primarily driven by a significant rise in property sales, with adjusted revenue reaching 12.16 billion RMB if excluding the HKFRS 15 impact, while profit attributable to shareholders grew to 2.25 billion RMB (+37% YoY) due to increased sales and improved gross margins, and the Group's financial structure remained healthy with net gearing decreasing from 23% to 14% [Results for the year ended 31 December 2018](index=10&type=section&id=Results%20for%20the%20year%20ended%2031%20December%202018) This section provides a detailed overview of the Group's financial performance for the year ended December 31, 2018, highlighting key revenue, profit, and earnings per share figures compared to the previous year FY2018 Performance Overview (vs FY2017) | Metric | 2018 (million RMB) | 2017 (million RMB) | | :--- | :--- | :--- | | Revenue | 7,079.1 | 4,711.0 | | Other Income and Gains | 588.2 | 426.0 | | Fair Value Gains on Investment Properties | 324.1 | 545.8 | | Finance Costs | 249.8 | 241.8 | | Profit Attributable to Owners of the Company | 2,252.6 | 1,643.5 | | Basic Earnings Per Share (RMB) | 0.1419 | 0.1039 | - The adoption of new accounting standard HKFRS 15 changed revenue recognition; without this impact, current year revenue would be **12.16 billion RMB**, a significant increase of **7.45 billion RMB** from last year[27](index=27&type=chunk)[30](index=30&type=chunk) - Profit attributable to owners of the Company increased by **37%** year-on-year, primarily due to increased sales revenue and higher gross profit margin[35](index=35&type=chunk) [Business Segments](index=12&type=section&id=Business%20Segments) This section details the financial performance of the Group's key business segments, including property development, property investment and management, and micro-lending, highlighting their respective contributions to overall revenue and profit in 2018 compared to 2017 Revenue and Profit by Business Segment (2018 vs 2017) | Business Segment | 2018 Revenue (million RMB) | 2017 Revenue (million RMB) | 2018 Profit (million RMB) | 2017 Profit (million RMB) | | :--- | :--- | :--- | :--- | :--- | | Property Development | 6,184.3 | 3,995.9 | 4,261.9 | 2,055.3 | | Property Investment and Management | 507.3 | 385.2 | 631.1 | 806.5 | | Micro-lending | 387.5 | 330.0 | 149.3 | 141.0 | - The property development segment accounted for **87%** of total revenue, serving as the Group's core revenue source, with its profit significantly increasing primarily due to higher gross profit from property sales and increased sales revenue[37](index=37&type=chunk)[39](index=39&type=chunk) - The growth in property investment and management segment revenue primarily stemmed from the Hangzhou shopping center opened at the end of last year and newly acquired property leasing companies, while segment profit decreased mainly due to reduced fair value gains on investment properties[38](index=38&type=chunk)[40](index=40&type=chunk) [Financial Resources, Liquidity and Capital Structure](index=13&type=section&id=Financial%20Resources%2C%20Liquidity%20and%20Capital%20Structure) This section analyzes the Group's financial resources, liquidity, and capital structure, detailing changes in cash balances, net debt, and gearing ratios, and providing a breakdown of loan maturities to illustrate the company's financial health and debt management - The Group's cash and bank balances decreased from **5.40 billion RMB** to **3.24 billion RMB**, primarily due to payments for land acquisitions, development costs, and dividends[44](index=44&type=chunk)[48](index=48&type=chunk) - Net debt decreased from **2.99 billion RMB** to **1.96 billion RMB**, and the net gearing ratio (net debt/total equity) significantly declined from **23%** to **14%**, indicating reduced financial leverage[51](index=51&type=chunk) Loan Maturity Profile (thousand RMB) | Repayment Period | December 31, 2018 | December 31, 2017 | | :--- | :--- | :--- | | **Bank and Other Loans** | | | | Within 1 year | 1,310,182 | 1,087,557 | | Within 2 years | 435,291 | 163,434 | | **Loans from Related Parties** | | | | Within 1 year | 1,396,316 | 5,394,113 | | Within 2 years | 2,604,478 | 2,593,722 | | **Total Loans** | **6,061,306** | **9,544,591** | [Financial Management and Risks](index=15&type=section&id=Financial%20Management%20and%20Risks) This section outlines the Group's approach to financial management and risk, including foreign exchange exposure, interest rate risk, and asset pledges, demonstrating its commitment to monitoring and mitigating potential financial impacts - The Group primarily operates in mainland China, with most transactions denominated in RMB, but still faces foreign exchange risk, which the Group considers acceptable and will continue to monitor[55](index=55&type=chunk)[56](index=56&type=chunk) - As of the end of 2018, **53%** of the Group's loans were at floating rates, a decrease from **72%** in 2017, indicating reduced interest rate exposure[58](index=58&type=chunk)[59](index=59&type=chunk) - Investment properties valued at **543 million RMB** were pledged by the Group as collateral for other borrowings[61](index=61&type=chunk)[64](index=64&type=chunk) [Contingent Liabilities and Proposed Final Dividend](index=16&type=section&id=Contingent%20Liabilities%20and%20Proposed%20Final%20Dividend) This section details the Group's contingent liabilities, including mortgage loan guarantees for property purchasers and financing guarantees for a joint venture, and outlines the board's recommendation for a final dividend payment - The Group provided mortgage loan guarantees of **1.63 billion RMB** for property purchasers and a financing guarantee of **487 million RMB** for a joint venture[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk) - The Board recommended a final dividend of **RMB 0.0275** per share, an increase from RMB 0.025 in 2017[67](index=67&type=chunk)[68](index=68&type=chunk) [Five-year Financial Summary](index=18&type=section&id=Five-year%20Financial%20Summary) The report presents five years of financial data from 2014 to 2018, clearly reflecting the Group's continuous growth in total assets, total equity, and annual profit, with total assets expanding rapidly from approximately 14.9 billion RMB in 2014 to nearly 52 billion RMB in 2018 Five-Year Financial Data Summary (2014-2018) | Metric (thousand RMB) | 2018 | 2017 (Restated) | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 7,079,136 | 4,711,019 | 8,706,669 | 4,240,759 | 2,168,450 | | Profit for the Year | 2,752,139 | 1,807,248 | 2,004,369 | 1,375,151 | 645,925 | | Profit Attributable to Owners of the Company | 2,252,622 | 1,643,529 | 1,366,512 | 1,056,202 | 360,884 | | Total Assets | 51,987,757 | 43,668,752 | 32,167,328 | 25,100,925 | 14,899,651 | | Total Equity | 13,870,385 | 13,047,628 | 11,637,397 | 9,850,026 | 6,126,030 | [Review of Operations](index=19&type=section&id=Review%20of%20Operations) As of end-2018, the Group's land bank totaled 13.75 million sq.m., primarily in first and second-tier cities, with 24 new land projects acquired during the year adding 2.733 million sq.m. of GFA, while contracted sales reached 49.03 billion RMB (+8% YoY) with a 19% increase in average selling price, and property leasing revenue grew by 32% to 507 million RMB with core commercial projects achieving nearly 100% occupancy [Land Bank](index=19&type=section&id=Land%20Bank) This section provides an overview of the Group's land bank as of December 31, 2018, detailing its total size and strategic distribution across first, second, and third-tier cities, highlighting the company's focus on core urban areas - As of December 31, 2018, the Group's total land bank reached **13.75 million sq.m.**[73](index=73&type=chunk)[100](index=100&type=chunk) - The land bank is strategically distributed across core cities: approximately **23%** in first-tier cities (Beijing, Guangzhou, Shanghai, Shenzhen), about **66%** in second-tier cities (e.g., Wuhan, Nanjing, Hangzhou), and the remaining **11%** in third-tier cities[72](index=72&type=chunk)[73](index=73&type=chunk) [Land acquisitions in 2018](index=29&type=section&id=Land%20acquisitions%20in%202018) This section details the Group's land acquisition activities in 2018, including the number of projects, total planned gross floor area, the Group's attributable interest, total consideration, and average land acquisition cost, demonstrating its strategic expansion efforts Overview of Land Acquisitions in 2018 | Metric | Value | | :--- | :--- | | Number of Land Projects Acquired | 24 | | Total Planned Gross Floor Area | Approx. 2,733,000 sq.m. | | Group's Attributable Interest Area | 1,415,000 sq.m. | | Total Consideration | Approx. 30.696 billion RMB | | Group's Payable Consideration | 15.723 billion RMB | | Average Land Acquisition Cost | Approx. 11,200 RMB/sq.m. | [Segment Information](index=30&type=section&id=Segment%20Information) This section provides operational data for the Group's key segments, including property sales and development, highlighting contracted sales, area sold, and average selling price, as well as the strong performance of property leasing business with significant revenue growth and high occupancy rates for core commercial projects Property Sales and Development Operational Data (2018 vs 2017) | Metric | 2018 | 2017 | YoY Change | | :--- | :--- | :--- | :--- | | Accumulated Contracted Sales (Total) | 49.03 billion RMB | 45.40 billion RMB (Estimated) | +8% | | Accumulated Contracted Sales Area | 2.263 million sq.m. | 2.487 million sq.m. (Estimated) | -9% | | Average Selling Price | Approx. 21,700 RMB/sq.m. | Approx. 18,250 RMB/sq.m. (Estimated) | +19% | - Property leasing business revenue grew significantly, with total rental and management fee income of approximately **507 million RMB** in 2018, a **32%** year-on-year increase[105](index=105&type=chunk)[106](index=106&type=chunk) - Core commercial projects such as Shenzhen Vanke Technology Park, Beijing Sohu Network Building, and Shanghai Bridge 8 project all achieved nearly **100%** occupancy rates, demonstrating strong operational capabilities[105](index=105&type=chunk)[106](index=106&type=chunk) [Corporate Governance and Other Reports](index=31&type=section&id=Corporate%20Governance%20and%20Other%20Reports) This section covers the company's governance structure, board member backgrounds, corporate governance practices, and commitments to environmental, social, and governance (ESG) aspects, demonstrating adherence to high standards despite minor deviations [Profiles of Directors and Company Secretary](index=31&type=section&id=Profiles%20of%20Directors%20and%20Company%20Secretary) This chapter provides detailed background information on the company's executive directors, non-executive directors, independent non-executive directors, and company secretary, highlighting the executive team's extensive experience in real estate development, strategic planning, and financial management from the parent company, while non-executive and independent non-executive directors bring diverse professional perspectives from investment, legal, and accounting fields - Executive Directors Mr. Ling Ke, Mr. Huang Juncan, Mr. Xu Jiajun, and Mr. Wei Chuanjun all hold key management positions such as Chairman, President, and Senior Vice President at the controlling shareholder Gemdale Corporation, demonstrating the parent company's deep involvement and management synergy with the listed platform[107](index=107&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - The independent non-executive director team, comprising Mr. Hui Chiu Chung, Mr. Jiang Shangyi, and Mr. Hu Chunyuan, possesses profound professional backgrounds and extensive industry experience in securities investment, law, and accounting, providing strong independent oversight for the company's corporate governance and decision-making[116](index=116&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) [Corporate Governance Report](index=35&type=section&id=Corporate%20Governance%20Report) The company is committed to maintaining high governance standards and has adopted the Listing Rules' Corporate Governance Code, with the report period showing compliance with most code provisions, though three deviations were noted regarding director attendance at general meetings and board meeting frequency, while detailing the board's composition, responsibilities, committee operations, and measures for risk management, internal control, and investor relations - The report disclosed three deviations from the Corporate Governance Code: 1. Some non-executive and independent non-executive directors were unable to attend the 2018 Annual General Meeting; 2. The Chairman of the Board was unable to attend the said meeting; 3. Only **two** regular board meetings were held during the year, instead of the recommended quarterly meetings[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - The roles of Chairman of the Board and Chief Executive Officer are held by different individuals (Mr. Huang Juncan and Mr. Xu Jiajun, respectively), ensuring effective segregation between board governance and the Group's daily operations[148](index=148&type=chunk)[151](index=151&type=chunk) - The Board, through its Audit Committee, conducts an annual review of the Group's risk management and internal control systems, confirming their effectiveness and adequacy across financial, operational, and compliance controls[193](index=193&type=chunk)[200](index=200&type=chunk) [Environmental, Social and Governance Report](index=54&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This report outlines the Group's environmental, social, and governance (ESG) commitments and practices in FY2018, emphasizing environmental assessments, green building design, and energy-saving measures, while covering employee welfare, supply chain management, product responsibility, anti-corruption, and community investment, reflecting its dedication to sustainable development, with data primarily covering three core project subsidiaries in Shanghai, Shenzhen, and Xi'an - The Group integrates green concepts into project design, striving to meet China's "Green Building Evaluation Standard" one-star rating, with some projects already achieving one-star green building design certification[235](index=235&type=chunk)[237](index=237&type=chunk) Key Environmental Performance Data for 2018 | Metric | Value | | :--- | :--- | | Total Greenhouse Gas Emissions | 825 tonnes of CO2 equivalent | | Total Electricity Consumption | 1.17 million kWh | | Total Water Consumption | 18,926 cubic meters | | Total Non-hazardous Waste | 3.65 tonnes (primarily paper and plastic) | - The Group prioritizes product responsibility, ensuring project quality and information transparency, and has consequently received multiple honors such as "China Commercial Real Estate TOP100" and "Top 50 Comprehensive Strength of China Real Estate Development Enterprises in Commercial Real Estate"[305](index=305&type=chunk) - In terms of community investment, the Group actively participates in public welfare and charitable activities, for instance, Shanghai Zhongjun Company made a charitable donation to Songjiang District, Shanghai in 2018 to assist needy communities nearby[317](index=317&type=chunk)[319](index=319&type=chunk) [Statutory Reports and Financial Statements](index=80&type=section&id=Statutory%20Reports%20and%20Financial%20Statements) This section includes the statutory Directors' Report, Independent Auditor's Report, and complete consolidated financial statements, providing a comprehensive overview of the Group's financial performance and position in FY2018 [Directors' Report](index=80&type=section&id=Directors'%20Report) The Directors' Report outlines the Group's principal business activities, financial results, and dividend policy for 2018, confirming the proposed final dividend of RMB 0.0275 per share, detailing share capital changes, share option scheme execution, directors' and major shareholders' interests, and emphasizing various continuing connected transactions with controlling shareholder Gemdale Corporation and its associates, all in compliance with Listing Rules, while also covering business risks, compliance, and stakeholder relations [Principal Activities, Results and Dividends](index=80&type=section&id=Principal%20Activities%2C%20Results%20and%20Dividends) This section details the Group's core business activities, including property investment, development, and management of residential, commercial, and industrial park projects, as well as micro-lending, and outlines the board's recommendation for the final dividend for the year ended December 31, 2018 - The Group's principal activities include property investment, development, and management of residential, commercial, and industrial park projects, as well as micro-lending[322](index=322&type=chunk)[323](index=323&type=chunk) - The Board recommended a final dividend of **RMB 0.0275** per share for the year ended December 31, 2018, an increase from RMB 0.025 in 2017[324](index=324&type=chunk)[325](index=325&type=chunk) [Share Capital and Share Options](index=86&type=section&id=Share%20Capital%20and%20Share%20Options) This section provides an overview of the company's share capital structure and the status of its share option scheme, detailing the number of outstanding options, their weighted average exercise price, and changes during the year, as well as the remaining options available for grant under the 2013 scheme - As of the report date, approximately **440 million** share options, representing **2.77%** of the issued share capital, remain available for grant under the 2013 Share Option Scheme[375](index=375&type=chunk)[378](index=378&type=chunk) Share Option Movements in 2018 | Status | Number of Share Options | Weighted Average Exercise Price (HKD) | | :--- | :--- | :--- | | Outstanding at beginning of year | 958,886,000 | 0.6078 | | Exercised during the year | (12,990,000) | 0.4696 | | Outstanding at end of year | 945,896,000 | 0.6097 | [Connected Transactions](index=99&type=section&id=Connected%20Transactions) This section details the Group's various ongoing connected transactions with its ultimate controlling shareholder, Gemdale Corporation, and its associates, including property development services, project operation management, property management, bulk fitting-out services, and financial advisory services, all of which have been reviewed and confirmed to be conducted on normal commercial terms and in the best interests of shareholders - The Group has multiple continuing connected transactions with its ultimate controlling shareholder, Gemdale Corporation, and its associates, including: - Gemdale Corporation providing property development and technical services to the Group, with service fees of approximately **75.09 million RMB** in 2018 - The Group providing project operation management services to subsidiaries of Gemdale Corporation, with revenue of **26.40 million RMB** in 2018 - Gemdale Property providing property management services to the Group, with total fees of approximately **62.42 million RMB** in 2018 - The Group providing bulk fitting-out services to Gemdale Corporation, with revenue of approximately **52.32 million RMB** in 2018 - Gemdale Corporation providing financial advisory services to the Group, with fees of approximately **61.79 million RMB** in 2018[422](index=422&type=chunk)[424](index=424&type=chunk)[425](index=425&type=chunk)[429](index=429&type=chunk)[441](index=441&type=chunk) - The independent non-executive directors have reviewed all continuing connected transactions, confirming they were conducted in the ordinary course of the Group's business on normal commercial terms, fair and reasonable, and in the overall interest of shareholders, with the company's auditor also issuing an unqualified opinion letter thereon[451](index=451&type=chunk)[452](index=452&type=chunk) [Independent Auditor's Report](index=111&type=section&id=Independent%20Auditor's%20Report) Ernst & Young, the auditor, issued an unqualified opinion on the Group's consolidated financial statements for 2018, affirming their true and fair presentation of the Group's financial position and operating results, while highlighting three key audit matters: fair value estimation of investment properties, determining the nature of subsidiary acquisitions as asset or business combinations, and revenue recognition timing for property sales due to HKFRS 15 adoption - Auditor Ernst & Young issued an **unqualified opinion** (standard audit opinion) on the financial statements, deeming them true and fair[481](index=481&type=chunk) - Key Audit Matters include: - **Estimation of fair value of investment properties**: Involves highly subjective estimates such as rent, occupancy rates, and capitalization rates - **Determining whether acquisition of subsidiaries constitutes a business combination**: Management needs to make significant judgments to distinguish between asset acquisition and business combination - **Revenue recognition from property sales**: Due to the adoption of new accounting standard (HKFRS 15), management needs to determine the point at which performance obligations are satisfied[488](index=488&type=chunk)[490](index=490&type=chunk)[494](index=494&type=chunk) [Consolidated Financial Statements](index=119&type=section&id=Consolidated%20Financial%20Statements) This section provides the Group's detailed consolidated financial data, with the consolidated statement of profit or loss showing 2018 revenue of 7.08 billion RMB and profit for the year of 2.75 billion RMB, the consolidated statement of financial position indicating total assets of 51.99 billion RMB and total equity of 13.87 billion RMB, and the consolidated statement of cash flows revealing net cash inflow from operating activities of 6.17 billion RMB, net outflows from investing and financing activities, resulting in a net decrease in cash and cash equivalents of 2.15 billion RMB [Consolidated Statement of Profit or Loss](index=119&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) This section presents the Group's consolidated statement of profit or loss for the year ended December 31, 2018, detailing revenue, gross profit, profit before tax, profit for the year, and profit attributable to owners of the company, providing a clear overview of the Group's financial performance Summary of Consolidated Statement of Profit or Loss for 2018 (thousand RMB) | Item | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | Revenue | 7,079,136 | 4,711,019 | | Gross Profit | 4,108,955 | 1,859,468 | | Profit Before Tax | 4,787,694 | 2,751,774 | | Profit for the Year | 2,752,139 | 1,807,248 | | Profit Attributable to Owners of the Company | 2,252,622 | 1,643,529 | [Consolidated Statement of Financial Position](index=121&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) This section presents the Group's consolidated statement of financial position as of December 31, 2018, detailing its assets, liabilities, and equity, providing a comprehensive snapshot of the Group's financial health and structure Summary of Consolidated Statement of Financial Position as at December 31, 2018 (thousand RMB) | Item | December 31, 2018 | December 31, 2017 | | :--- | :--- | :--- | | **Assets** | | | | Total Non-current Assets | 22,426,705 | 15,645,017 | | Total Current Assets | 29,561,052 | 28,023,735 | | **Total Assets** | **51,987,757** | **43,668,752** | | **Liabilities and Equity** | | | | Total Current Liabilities | 33,722,078 | 26,598,176 | | Total Non-current Liabilities | 4,395,294 | 4,022,948 | | **Total Liabilities** | **38,117,372** | **30,621,124** | | **Net Assets** | **13,870,385** | **13,047,628** | | Equity Attributable to Owners of the Company | 11,835,161 | 10,914,825 | | Non-controlling Interests | 2,035,224 | 2,132,803 | | **Total Equity** | **13,870,385** | **13,047,628** | [Consolidated Statement of Cash Flows](index=125&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) This section presents the Group's consolidated statement of cash flows for the year ended December 31, 2018, detailing cash flows from operating, investing, and financing activities, and showing the net change in cash and cash equivalents, providing insights into the Group's liquidity and cash management Summary of Consolidated Statement of Cash Flows for 2018 (thousand RMB) | Item | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 6,168,420 | 2,873,308 | | Net Cash (Used in)/from Investing Activities | (3,338,500) | 1,265,671 | | Net Cash Used in Financing Activities | (4,979,652) | (1,575,432) | | **Net (Decrease)/Increase in Cash and Cash Equivalents** | **(2,149,732)** | **2,563,547** | | Cash and Cash Equivalents at Beginning of Year | 5,349,765 | 2,822,968 | | **Cash and Cash Equivalents at End of Year** | **3,214,170** | **5,349,765** |