Customer and Supplier Concentration - The top five customers accounted for 11.6% of the total revenue, with the largest customer contributing 2.6%[1] - The top five suppliers represented 15.5% of the total purchase amount, with the largest supplier accounting for 4.0%[2] Financial Performance - The company reported a net loss of RMB 809.1 million for the year ended December 31, 2022, compared to a net profit of RMB 31.5 million for the year ended December 31, 2021[176] - Revenue decreased by 27.0% from RMB 3,058.6 million for the year ended December 31, 2021, to RMB 2,232.3 million for the year ended December 31, 2022[195] - Operating loss shifted from a profit of RMB 157.6 million for the year ended December 31, 2021, to a loss of RMB 317.3 million for the year ended December 31, 2022, representing a decline of 301.3%[196] - The company's net loss attributable to shareholders for the year ended December 31, 2022, was RMB 808.1 million, compared to a profit of RMB 32.4 million in the previous year[196] - The asset-liability ratio increased to 64.2% as of December 31, 2022, compared to 57.0% as of December 31, 2021[200] Revenue and Contracts - The revenue from the PC production equipment manufacturing business decreased by 77.7% from RMB 282.1 million for the year ended December 31, 2021, to RMB 62.9 million for the year ended December 31, 2022[43] - The new contracts signed in the PC components manufacturing business decreased by 56.7% to RMB 2,140.8 million in 2022 from RMB 4,946.8 million in 2021[177] - The unfinished contracts in the PC components manufacturing business decreased by 30.2% to RMB 4,503.3 million as of December 31, 2022, compared to RMB 6,448.2 million in 2021[177] - Revenue from modular integrated product manufacturing increased by 57.4% from RMB 82.0 million for the year ended December 31, 2021, to RMB 129.1 million for the year ended December 31, 2022[175] - The new contracts signed in the modular integrated products manufacturing business increased by 154.2% to RMB 228.5 million in 2022[177] - The unfinished contracts in the modular integrated products manufacturing business grew by 144.9% to RMB 150.6 million as of December 31, 2022, from RMB 61.5 million in 2021[178] Corporate Governance - The company has established an audit committee in compliance with Hong Kong Listing Rules, ensuring proper review of accounting principles and practices[98] - The company has maintained at least 25% of its total issued shares held by the public, meeting the minimum public float requirement under Hong Kong Listing Rules[99] - The company has not changed auditors in the past three years, ensuring continuity in financial oversight[100] - The group is committed to maintaining high levels of corporate governance to protect shareholder interests and enhance corporate value[103] - The company has implemented internal policies to ensure independent viewpoints and opinions are obtained for board decisions[105] - The company has adopted the Corporate Governance Code and has been in compliance with all applicable provisions during the reporting period[136] - The board consists of 11 directors, including 6 executive directors, 1 non-executive director, and 4 independent non-executive directors[123] - The company emphasizes a healthy corporate culture as the core of good corporate governance, promoting values of legality, morality, and responsibility[121] Management and Strategy - The company appointed Hu Shengli as the new General Manager effective December 12, 2022, following the resignation of Tang Fen[13] - The company has established a main business decision committee to ensure stable operations and dynamic balance[44] - The company is focused on expanding both domestic and overseas markets, with 7.04% of the proceeds allocated for this purpose[30] - The company aims to achieve a green building completion rate of 100% for new urban constructions by 2025, with modular buildings accounting for 30%[42] - The core goal for 2023 is to maintain and solidify the company's leading position in the PC market[62] - The company plans to establish strategic alliances with quality state-owned enterprises and suppliers to enhance order quality and supply chain resources[62] - A technology committee will be formed to define and manage the group's technology development strategy, with a goal to apply for at least 120 patents in 2023[63] Research and Development - The company aims to develop and expand its smart equipment business, allocating 5.09% of the proceeds for research and development in this area[30] - The company is also investing 4.41% of the proceeds to develop and create an intelligent assembly building industry service platform[30] - The company is focused on continuous innovation to address customer technical pain points and provide innovative product and technical solutions[63] - The company is actively involved in research and development of new products and technologies to meet evolving market demands[190] Employee and Stakeholder Relations - The company encourages employees to actively explore new projects and models beneficial for the enterprise's sustainability[42] - The company is focused on maintaining strong relationships with its stakeholders and ensuring compliance with relevant regulations[76] - The company has implemented a long-term incentive plan to attract and retain key personnel, approved on September 28 and October 22, 2021[50] - The total number of H-share stock options granted under the incentive plan will not exceed 7 million shares[67] Legal and Compliance - As of December 31, 2022, the group had no significant legal proceedings or arbitrations pending that could threaten its operations[96] - The company has arranged appropriate insurance for potential legal claims against directors, supervisors, and senior management due to their positions[111] - The company has arranged appropriate liability insurance for directors against legal actions[138] Charitable Contributions - The group reported a total charitable donation of RMB 0.8 million for the reporting period, an increase from RMB 0.4 million in 2021[95]

Financial Performance - The company reported a revenue of RMB 1.5 billion for the first half of 2022, representing a year-on-year increase of 15%[1]. - Total revenue decreased by 29.5% from RMB 1,360.2 million for the six months ended June 30, 2021, to RMB 959.6 million for the six months ended June 30, 2022[21]. - Gross profit fell by 54.4% from RMB 401.1 million to RMB 182.9 million during the same period[21]. - The company reported an operating loss of RMB 162.9 million, compared to a profit of RMB 105.8 million in the previous year, marking a decline of 253.9%[21]. - Loss before tax increased to RMB 340.3 million from a profit of RMB 59.4 million, representing a decrease of 673.0%[21]. - The net loss attributable to shareholders was RMB 327.7 million, a significant drop of 794.7% compared to a profit of RMB 47.2 million in the prior year[21]. - Revenue from the PC component manufacturing business decreased by 21.5% from RMB 1,138.8 million to RMB 893.5 million[25]. - The gross profit margin for PC component manufacturing was 19.6%, down from 27.9% in the previous year[22]. - Operating profit turned from a profit of RMB 105.8 million for the six months ended June 30, 2021, to a loss of RMB 162.9 million for the same period in 2022, a decline of 253.9%[1]. - Net profit decreased by 801.9% from a profit of RMB 47.2 million for the six months ended June 30, 2021, to a net loss of RMB 331.0 million for the same period in 2022[1]. Market and Product Development - User data indicates a growth in customer base by 20%, reaching a total of 500,000 active users[1]. - The company expects a revenue guidance of RMB 3 billion for the full year 2022, reflecting a growth target of 10% compared to 2021[1]. - New product launches include the B-house modular villa, which has seen a 30% increase in demand since its introduction[1]. - Market expansion plans include entering three new provinces in China by the end of 2022, aiming for a 25% market share in those regions[1]. - The company aims to transform from a pure PC manufacturer to a provider of complete and highly industrialized building products and services, with new contracts in full decoration business amounting to RMB 150 million[38]. - The company has launched products such as talent apartments, modular products, rural housing, and smart parking buildings, which will be key components of future green enterprise communities[46]. - The smart parking building product can be delivered in 100 days, which is three times faster than traditional parking construction, with a 50% cost reduction, enhancing urban vitality and economic benefits[49]. - The company aims to shorten project construction periods significantly, with a 30-story residential building taking only 10 months from groundbreaking to delivery, improving turnover efficiency and reducing debt[52]. Research and Development - The company is investing RMB 200 million in R&D for new technologies, focusing on smart construction solutions[1]. - The company aims to enhance its digital support system for the entire construction industry chain, leveraging its technological capabilities[14]. - The company is committed to advancing technology research and development, exploring diverse application scenarios, and integrating with Tencent Cloud for digital upgrades and industry solutions[53]. - The company emphasizes the importance of accelerating the development of prefabricated buildings in response to the urgent need for green transformation in the construction industry[46]. Financial Position and Cash Flow - The asset-liability ratio increased to 59.8%, up from 56.0%, reflecting a rise of 3.8 percentage points[21]. - Cash generated from operating activities decreased by 45.5% from RMB 326.7 million for the six months ended June 30, 2021, to RMB 178.0 million for the same period in 2022[27]. - The company reported a net cash outflow from financing activities of RMB 45.8 million, primarily due to loan repayments of RMB 816.7 million[111]. - As of June 30, 2022, total borrowings (including principal and interest) amounted to RMB 3,323.1 million, an increase from RMB 3,082.9 million as of December 31, 2021, representing an increase of 7.8%[114]. - The company recorded a cumulative loss of RMB 81.8 million from the fair value changes of 53 joint ventures, with 4 of them being profitable[97]. Shareholder Information - The company has appointed a new board of directors and supervisory committee, effective from the annual general meeting held on April 29, 2022[167]. - Major shareholder Yuan Da Ling Mu holds 80,912,160 domestic shares, representing approximately 16.59% of the total issued shares[186]. - Major shareholder Da Xin Investment holds 18,600,000 domestic shares, representing approximately 3.81% of the total issued shares[186]. - Major shareholder Yuan Zhi Fu Hai holds 25,404,000 domestic shares, representing approximately 5.21% of the total issued shares[186]. - Major shareholder Hunan Cai Xin Fund holds 10,000,000 domestic shares, representing approximately 2.05% of the total issued shares[186]. - Major shareholder Cassini Partners, L.P. holds 7,939,418 H shares, representing approximately 1.63% of the total issued H shares[186]. - Major shareholder UBS Group AG holds 40,199,305 H shares, representing approximately 8.24% of the total issued H shares[186]. - Major shareholder Franchise Fund LP holds 37,245,900 shares, representing approximately 7.64% of the total issued shares[188]. Compliance and Governance - The independent auditor's report confirms that the interim financial report as of June 30, 2022, complies with International Accounting Standard 34[198]. - The company has not identified any significant issues that would lead to a belief that the interim financial report is not prepared in accordance with the relevant standards[200]. - The review of the interim financial report included inquiries with key financial personnel and analytical procedures[199].

Company Overview - Changsha Broad Homes Industrial Group Co., Ltd. is a pioneer in the construction industrialization sector in China, providing comprehensive solutions for modern construction with advanced technology and continuous innovation[3]. - The company was officially listed on the Hong Kong Stock Exchange on November 6, 2019, under the stock code 2163[5]. - The company’s main operational locations include Changsha, Hunan Province, and Hong Kong[9]. Partnerships and Market Position - The company has established partnerships with 9 out of the top 10 real estate developers and construction companies in China, supplying PC components and technical services for various significant projects[4]. - The company plans to expand its market presence in Southeast Asia, aiming for a 25% increase in market share by 2023[42]. Financial Performance - The company reported a revenue of RMB 1.5 billion for the fiscal year ending December 31, 2021, representing a year-over-year increase of 15%[42]. - Total revenue for the year ended December 31, 2021, was RMB 3,058.6 million, an increase of 17.0% from RMB 2,613.9 million in 2020[50]. - The company’s total assets increased to RMB 9,863.0 million from RMB 9,191.2 million in 2020, reflecting a growth of 7.3%[51]. - Cash generated from operating activities surged by 344.0% to RMB 807.3 million, compared to RMB 181.8 million in the previous year[57]. - The company’s investment relations can be contacted via ir@bhome.com.cn[9]. Revenue Breakdown - Revenue from the PC component manufacturing business increased by 11.4% to RMB 2,694.5 million from RMB 2,419.2 million in 2020[56]. - Revenue from ongoing operations reached RMB 3,058.6 million for the year ended December 31, 2021, representing a 21.8% increase year-over-year[66]. - Revenue from PC production equipment manufacturing surged by 207.4% from RMB 91.8 million in 2020 to RMB 282.1 million in 2021[75]. Profitability and Margins - Gross profit decreased to RMB 855.2 million, down 6.3% from RMB 912.3 million in the previous year, with a gross margin of 28.0%[56]. - The gross margin improved to 35%, up from 30% in the previous year, due to cost optimization strategies[42]. - The net profit attributable to shareholders was RMB 31.5 million, a decline of 85.6% compared to RMB 219.3 million in the prior year[57]. Operational Efficiency - The production volume of PC components increased by 28.7% to 1.026 million cubic meters for the year ended December 31, 2021, compared to 0.797 million cubic meters the previous year[64]. - The production line utilization rate increased from 37.8% in 2020 to 54.3% in 2021, attributed to increased contract amounts and reduced pandemic impacts[64]. Research and Development - The company is investing RMB 50 million in research and development for innovative construction technologies[42]. - R&D expenses increased by 5.0% to RMB 189.8 million for the year ended December 31, 2021, with capitalized R&D costs accounting for 32.9% of total R&D expenses[128]. Strategic Initiatives - The company aims to transform traditional construction practices into a modern manufacturing industry through the integration of digital technologies and the construction industrial Internet of Things[3]. - The company is actively exploring zero-carbon buildings and smart energy systems to align with carbon neutrality goals[89]. - The company aims to enhance the quality of green low-carbon development in urban and rural construction, responding to national carbon reduction targets[90]. Leadership - Zhang Jian, the founder and executive director, has been with the company since its establishment in April 2006, overseeing strategic and operational decisions[195]. - Tang Fen, the executive director and general manager, has been with the group since August 2006, responsible for overall management and operations[200].

6 長 沙 遠 大 住 宅 工 業 集 團 股 份 有 限 公 司 Changsha Broad Homes Industrial Group Co., Ltd. （ 於 中 華 人 民 共 和 國 註 冊 成 立 的 股 份 有 限 公 司 ） 股份代號：2163 中期報告 目 錄 2 釋 義 6 公司簡介 7 公司資料 9 財務摘要及經營摘要 13 管理層討論及分析 34 企業管治及其他資料 40 獨立核數師報告 41 合併綜合收益表 42 合併財務狀況表 44 合併權益變動表 46 合併現金流量表 48 未經審計中期財務報告附註 釋義 於本中期報告內，除文義另有指明外，下列詞彙具有下文所賦予的涵義： | --- | --- | --- | |-------------------------------|-------|------------------------------------------------------------------------------------------------------------------------------------------------ ...

Financial and Operational Summary [Financial Summary](index=12&type=section&id=%E8%B2%A1%E5%8B%99%E6%A6%82%E8%A6%81) In 2020, the company's total revenue and net profit declined, but its core PC component manufacturing business grew, and its financial structure improved with a lower debt-to-asset ratio Condensed Consolidated Income Statement (2016-2020) | Indicator (RMB in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 2,613,850 | 3,369,416 | 2,269,129 | 1,935,689 | 1,671,495 | | **Gross Profit** | 926,807 | 1,144,019 | 724,547 | 704,930 | 602,483 | | **Operating Profit** | 335,970 | 600,612 | 343,563 | 372,254 | 315,390 | | **Net Profit** | 216,420 | 676,919 | 466,304 | 168,391 | 197,646 | | **Debt-to-Asset Ratio** | 55.0% | 56.5% | 60.7% | 61.2% | 67.9% | Condensed Financial Position Statement (2016-2020) | Indicator (RMB in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | 9,191,168 | 9,567,426 | 7,325,885 | 6,971,391 | 5,797,131 | | **Total Equity** | 4,138,642 | 4,166,041 | 2,882,723 | 2,706,974 | 1,863,215 | | **Total Liabilities** | 5,052,526 | 5,401,385 | 4,443,162 | 4,264,417 | 3,933,916 | - In 2020, **total revenue decreased by 22.4%** year-on-year, and **net profit decreased by 68.0%**; net cash from operating activities decreased by 81.2%[42](index=42&type=chunk)[44](index=44&type=chunk) - The core PC component manufacturing business revenue **grew by 5.0%** year-on-year, its share of total revenue increased from 68.4% to 92.6%, and its gross margin improved from 34.6% to 36.6%[42](index=42&type=chunk) [Operational Summary](index=14&type=section&id=%E7%B6%93%E7%87%9F%E6%91%98%E8%A6%81) The PC component business achieved strong growth in new contracts and backlog, while production line utilization declined due to new capacity and the pandemic PC Component Manufacturing Business Contract Status (RMB in millions) | Contract Type | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **New Contracts** | 4,090.7 | 3,106.2 | 31.7% | | **Uncompleted Contracts** | 5,195.9 | 3,748.9 | 38.6% | - The production volume of PC components **increased by 3.4%** to 797,000 cubic meters, while sales volume **grew by 7.0%** to 872,000 cubic meters[49](index=49&type=chunk) - Production line utilization rate **decreased from 45.8% in 2019 to 37.8% in 2020**, mainly due to the ramp-up phase of new capacity and temporary production halts caused by the pandemic[49](index=49&type=chunk) Chairman's Statement [Chairman's Statement](index=15&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A) Chairman Zhang Jian highlights the company's resilience amid the pandemic, with strong order growth in the core PC business and a strategic pivot towards a "To B + To C" model - Despite the pandemic's impact, new contracts for the PC component business reached **RMB 4.091 billion** in 2020, a **31.7% year-on-year increase**, with orders on hand reaching **RMB 5.196 billion**, up **38.6%**[52](index=52&type=chunk) - The company solidified its **"To B + To C" dual-driver strategy** by launching "B-house," a fully assembled industrialized residential product, to meet the demand for quality rural housing post-pandemic[53](index=53&type=chunk)[54](index=54&type=chunk) - The company advanced its digital transformation with the self-developed PC-CPS intelligent manufacturing system, which is now commercialized and will be upgraded to an AI-CPS platform[56](index=56&type=chunk) - Looking ahead to 2021, the company will seize opportunities from urban renewal and rural construction initiatives, adhering to long-termism and innovation to become a creator of a better life[57](index=57&type=chunk) Management Discussion and Analysis [Business Review and Outlook](index=17&type=section&id=1.%20%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E5%8F%8A%E5%B1%95%E6%9C%9B) In 2020, the company strengthened its core PC component business with significant order growth and margin improvement while launching the "B-house" product to explore a new "To B + To C" model - In 2020, the PC component business secured **RMB 4.09 billion in new contracts**, a **31.7% increase** year-on-year, with **RMB 5.20 billion in orders on hand**, up **38.6%**; the gross margin for this segment improved to 36.6%[60](index=60&type=chunk) - The company is transitioning from a pure To B model to a **"To B + To C" model** with the launch of its "B-house" product, laying the groundwork for future To C business[61](index=61&type=chunk) - To optimize its asset structure, the company **divested its engineering construction business** to an independent third party in September 2020 and will no longer engage in this segment[66](index=66&type=chunk) - Future strategies include expanding the national production center layout, upgrading the digital platform to AI-CPS, focusing technical marketing on top 50 property developers, and developing overseas markets and module integration B2C business[67](index=67&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [Analysis of Operating Results](index=21&type=section&id=2.%20%E7%B6%93%E7%87%9F%E6%A5%AD%E7%B8%BE) In 2020, total revenue and net profit declined significantly, primarily due to a sharp drop in the PC production equipment business and reduced gains from associate companies Revenue by Business Segment (RMB in thousands) | Business Segment | 2020 Revenue | 2020 % | 2019 Revenue | 2019 % | | :--- | :--- | :--- | :--- | :--- | | **PC Component Manufacturing** | 2,419,235 | 92.6% | 2,303,660 | 68.4% | | **PC Production Equipment Manufacturing** | 91,753 | 3.5% | 896,768 | 26.6% | | **Engineering Construction (Discontinued)** | 102,862 | 3.9% | 168,988 | 5.0% | | **Total** | **2,613,850** | **100.0%** | **3,369,416** | **100.0%** | Gross Profit and Gross Margin by Business Segment | Business Segment | 2020 Gross Profit (RMB'000) | 2020 Gross Margin | 2019 Gross Profit (RMB'000) | 2019 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | **PC Component Manufacturing** | 885,440 | 36.6% | 797,903 | 34.6% | | **PC Production Equipment Manufacturing** | 26,823 | 29.2% | 304,482 | 34.0% | | **Engineering Construction (Discontinued)** | 14,544 | 14.1% | 41,634 | 24.6% | | **Total** | **926,807** | **35.5%** | **1,144,019** | **34.0%** | - **Selling and marketing expenses increased by 16.3%** year-on-year, mainly due to higher compensation and market development costs for promoting the new B-house product[107](index=107&type=chunk) - Due to an adjustment in the "dual-level management strategy," the **"gain on losing significant influence over associate companies" dropped sharply from RMB 248 million to RMB 60.2 million**, a key reason for the decline in net profit[122](index=122&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=3.%20%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E6%BA%90) The company's net cash from operations decreased significantly, while total borrowings increased to manage customer payment delays, though its net current asset position improved Cash Flow Statement Summary (RMB in thousands) | Cash Flow Item | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash from operating activities** | 181,814 | 967,056 | | **Net cash used in investing activities** | (367,074) | (1,307,209) | | **Net cash (used in)/from financing activities** | (76,414) | 1,129,410 | | **Cash and cash equivalents at end of year** | 828,288 | 1,084,750 | - **Net cash from operating activities decreased sharply**, mainly due to a RMB 299 million increase in trade and other receivables and a RMB 364 million decrease in trade and other payables[137](index=137&type=chunk) - **Total borrowings increased from RMB 2.62 billion to RMB 2.98 billion** to manage delayed customer payments; the company had unused credit facilities of approximately RMB 2.17 billion at year-end[142](index=142&type=chunk) - **Net current assets improved**, turning from a deficit of RMB 316 million at the end of 2019 to a surplus of RMB 78 million at the end of 2020[144](index=144&type=chunk) [Financial Ratio Analysis](index=35&type=section&id=5.%20%E8%B2%A1%E5%8B%99%E6%AF%94%E7%8E%87) In 2020, the company's liquidity improved, but higher leverage and a sharp decline in net profit led to significantly weaker profitability and debt service capacity Key Financial Ratios | Ratio | 2020 | 2019 | | :--- | :--- | :--- | | **Current Ratio** | 1.0 | 0.9 | | **Quick Ratio** | 1.0 | 0.9 | | **Gearing Ratio** | 72.1% | 62.9% | | **Return on Total Assets (ROA)** | 2.3% | 8.0% | | **Return on Equity (ROE)** | 5.2% | 19.2% | | **Interest Coverage Ratio** | 3.2 | 8.2 | - **Trade and bills receivable turnover days increased from 230 to 346 days**, primarily due to payment delays from some customers affected by the pandemic[170](index=170&type=chunk) Directors, Supervisors, and Senior Management [Biographies of Directors, Supervisors, and Senior Management](index=38&type=section&id=%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4) This section details the professional backgrounds of the company's board of directors, supervisory committee, and senior management team - The executive director team is led by founder **Mr. Zhang Jian (Chairman)** and includes core members Ms. Tang Fen (General Manager), Ms. Shi Donghong (Deputy GM, CFO, Board Secretary), Mr. Zhang Kexiang (Deputy GM), and Mr. Tan Xinming (Deputy GM), all of whom are long-serving executives[179](index=179&type=chunk)[185](index=185&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - The independent non-executive directors, including Mr. Chen Gongrong, Mr. Li Zhengnong, Mr. Wang Jiaxin, and Mr. Zhao Zhengting, bring extensive expertise in accounting, civil engineering, asset management, and real estate industry associations[199](index=199&type=chunk)[202](index=202&type=chunk)[205](index=205&type=chunk)[208](index=208&type=chunk) Report of the Board of Directors [Report of the Board of Directors](index=46&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A) This report details key corporate affairs in 2020, including the use of IPO proceeds, business overview, dividend policy, and major customer and supplier information Use of Proceeds from the Global Offering (HKD in millions) | Purpose | Allocated Amount | Utilized Amount | Unutilized Amount | | :--- | :--- | :--- | :--- | | Expand PC component manufacturing business | 500.2 | 283.85 | 216.44 | | Expand overseas markets | 222.3 | 6.05 | 216.25 | | R&D for intelligent equipment business | 166.8 | 14.25 | 152.46 | | R&D for industrial intelligent service platform | 111.2 | 38.21 | 72.99 | | Working capital and general corporate purposes | 111.2 | 111.20 | 0.00 | | **Total** | **1,111.7** | **453.56** | **658.14** | - The Board **does not recommend the payment of a final dividend** for the year ended December 31, 2020[229](index=229&type=chunk) - For the year ended 2020, the **top five customers accounted for 12.29% of total revenue**, while the **top five suppliers accounted for 18.73% of total purchases**[237](index=237&type=chunk)[238](index=238&type=chunk) - Chairman **Mr. Zhang Jian controls approximately 56.07% of the company's shares** through direct holdings and controlled corporations[261](index=261&type=chunk) Report of the Supervisory Committee [Report of the Supervisory Committee](index=60&type=section&id=%E7%9B%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A) The Supervisory Committee confirms that the company operated in compliance with laws, its financial reports were accurate, and its directors and senior management fulfilled their duties diligently in 2020 - During the reporting period, the Supervisory Committee held **four meetings** to review key proposals, including the 2019 annual report, profit distribution plan, interim report, and confirmation of connected transactions[296](index=296&type=chunk)[298](index=298&type=chunk) - The Committee affirmed the company's lawful operations, noting that decision-making processes were compliant, the Board operated effectively, and directors and senior management acted in the company's best interests[300](index=300&type=chunk) - The Committee reviewed the 2020 financial statements audited by the independent auditor and concluded that they provided a **true and fair view** of the company's financial position and operating results[302](index=302&type=chunk) Corporate Governance Report [Board Governance](index=63&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83) The company's Board of Directors is structured in compliance with listing rules, with a clear separation of Chairman and General Manager roles to ensure balanced governance - The Board comprises **11 directors**, including 5 executive, 2 non-executive, and 4 independent non-executive directors, meeting the Hong Kong Listing Rules' requirements for the number and proportion of INEDs[310](index=310&type=chunk)[311](index=311&type=chunk) - The company maintains a clear distinction between the roles of the **Chairman (Mr. Zhang Jian)**, who leads the Board, and the **General Manager (Ms. Tang Fen)**, who manages daily operations[320](index=320&type=chunk) - During the reporting period, the Board held **7 meetings** and the shareholders held 2 general meetings, with high director attendance; the Chairman also held a meeting with INEDs without other directors present[326](index=326&type=chunk)[327](index=327&type=chunk) [Board Committees](index=69&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%B0%88%E9%96%80%E5%A7%94%E5%93%A1%E6%9C%83) The company has established four specialized board committees—Strategy, Audit, Nomination, and Remuneration and Appraisal—to oversee key governance functions - The **Audit Committee**, composed of three INEDs and chaired by an accounting expert, held 5 meetings to review financial reports and internal controls[336](index=336&type=chunk)[342](index=342&type=chunk) - The **Nomination Committee**, chaired by an INED, held 1 meeting to review director nominations[347](index=347&type=chunk)[349](index=349&type=chunk) - The **Remuneration and Appraisal Committee**, chaired by an INED, held 1 meeting to review director and supervisor remuneration proposals[355](index=355&type=chunk)[360](index=360&type=chunk) - The **Strategy Committee**, chaired by the Chairman, held 4 meetings to review major strategic matters, including share issuance mandates and a potential A-share listing application[365](index=365&type=chunk)[367](index=367&type=chunk) [Internal Control and Risk Management](index=76&type=section&id=%E5%85%A7%E9%83%A8%E7%9B%A3%E6%8E%A7%E5%8F%8A%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The Board is responsible for maintaining an effective internal control and risk management system, which it reviewed and deemed adequate for the reporting period - The Board confirms its ultimate responsibility for maintaining and reviewing the risk management and internal control systems and considers them **effective and adequate** for the reporting period[378](index=378&type=chunk)[379](index=379&type=chunk) - Key operational risks identified include macroeconomic fluctuations, industry policies, market competition, slowing demand for PC production equipment, seasonal fluctuations, and the impact of the pandemic[383](index=383&type=chunk)[384](index=384&type=chunk)[387](index=387&type=chunk)[388](index=388&type=chunk)[390](index=390&type=chunk)[391](index=391&type=chunk) - The company has established a **Risk Control and Administration Center** to oversee internal control, corporate governance, and legal compliance, and has implemented a whistleblowing mechanism[393](index=393&type=chunk) Environmental, Social and Governance (ESG) Report [ESG Governance and Strategy](index=88&type=section&id=ESG%E7%AE%A1%E6%B2%BB%E8%88%87%E7%AD%96%E7%95%A5) The company has established a top-down ESG governance structure and identified key material topics through stakeholder engagement and a materiality assessment - The company has implemented a **top-down ESG governance structure** supervised by the Board and executed by a management-led ESG working group to ensure the integration of sustainability principles[436](index=436&type=chunk) - Through a materiality assessment, the company has identified key focus areas, including **employment and labor practices, supply chain management, anti-corruption, water resources, and indirect energy consumption**[442](index=442&type=chunk)[443](index=443&type=chunk) [Environmental Protection](index=91&type=section&id=%E7%92%B0%E5%A2%83%E4%BF%9D%E8%AD%B7) The company is committed to green industrial construction, focusing on emissions control, resource efficiency, and pollution prevention in its operations Greenhouse Gas Emissions (tonnes of CO2 equivalent) | Scope | 2020 | 2019 | | :--- | :--- | :--- | | **Scope 1 (Direct Emissions)** | 831.19 | 989.25 | | **Scope 2 (Indirect Emissions)** | 12,463.90 | 11,745.59 | | **Total** | **13,295.09** | **12,734.84** | - By centralizing the use of formwork in factories, the company **reduces wood consumption by 75%** compared to traditional construction methods[450](index=450&type=chunk) - Production wastewater is treated in a three-stage sedimentation tank and recycled, achieving **100% compliant discharge**; hazardous waste is handled by qualified third parties[455](index=455&type=chunk)[462](index=462&type=chunk) - The company has adopted a **PE film one-step molding process** for treating rough surfaces of precast components, significantly reducing water consumption compared to traditional washing methods[473](index=473&type=chunk) [Social Responsibility](index=103&type=section&id=%E7%A4%BE%E6%9C%83%E8%B2%AC%E4%BB%BB) The company upholds employee rights, prioritizes health and safety, invests in talent development, ensures product quality, maintains a zero-tolerance policy on corruption, and actively contributes to the community - As of the end of 2020, the company had **3,209 full-time employees** and strictly prohibits the use of child and forced labor[501](index=501&type=chunk)[535](index=535&type=chunk)[538](index=538&type=chunk) - During the reporting period, the company conducted **594 safety training sessions and drills** with 15,186 participants, achieving a 100% safety training coverage rate for new employees[521](index=521&type=chunk) - The company invested in talent development, with an average training duration of **129.06 hours per employee** in 2020, and cultivates industry talent through its B-house Academy[528](index=528&type=chunk)[531](index=531&type=chunk) - As of the end of the reporting period, the company held **950 patents** and actively participated in setting numerous national, industry, and local standards[559](index=559&type=chunk)[567](index=567&type=chunk)[570](index=570&type=chunk) - During the COVID-19 pandemic, the company **donated medical supplies worth RMB 1 million** to Xiangya Hospital of Central South University, fulfilling its social responsibility[600](index=600&type=chunk) Independent Auditor's Report [Independent Auditor's Report](index=132&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) KPMG issued an unmodified audit opinion, confirming the financial statements give a true and fair view, while highlighting four key audit matters requiring significant judgment - The auditor, KPMG, issued an **unmodified (clean) opinion** on the consolidated financial statements for the year ended December 31, 2020[622](index=622&type=chunk) - Key audit matters included: - **Revenue recognition**: Appropriateness of the timing of revenue recognition for PC components and equipment sales - **Capitalization of development costs**: Judgment on whether R&D expenditures meet capitalization criteria - **Provision for expected credit losses on trade receivables**: Significant management judgment in estimating expected credit losses - **Valuation of financial assets at FVTPL**: Complexity in valuing Level 3 financial assets, such as unlisted equity investments in joint factories[627](index=627&type=chunk)[632](index=632&type=chunk)[634](index=634&type=chunk)[637](index=637&type=chunk) Consolidated Financial Statements [Consolidated Statement of Comprehensive Income](index=139&type=section&id=%E5%90%88%E4%BD%B5%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) For the year 2020, the company's net profit was RMB 216 million, a 68.0% decrease year-on-year, driven by lower revenue from continuing operations and a significant reduction in gains from associate companies Consolidated Statement of Comprehensive Income Summary (RMB in thousands) | Item | 2020 | 2019 (Restated) | | :--- | :--- | :--- | | **Revenue (Continuing operations)** | 2,510,988 | 3,200,428 | | **Gross Profit (Continuing operations)** | 912,263 | 1,102,385 | | **Operating Profit (Continuing operations)** | 346,808 | 570,956 | | **Profit before tax (Continuing operations)** | 267,313 | 707,013 | | **Profit from continuing operations** | 219,347 | 658,750 | | **(Loss)/profit from discontinued operations** | (2,927) | 18,169 | | **Profit for the year** | **216,420** | **676,919** | | **Basic earnings per share (RMB)** | 0.44 | 1.76 | [Consolidated Statement of Financial Position](index=141&type=section&id=%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of year-end 2020, the company's total assets stood at RMB 9.19 billion, with a significant portion in non-current assets, while total liabilities decreased to RMB 5.05 billion Consolidated Statement of Financial Position Summary (RMB in thousands) | Item | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Total non-current assets** | 5,207,489 | 4,853,065 | | **Total current assets** | 3,983,679 | 4,714,361 | | **Total assets** | **9,191,168** | **9,567,426** | | **Total current liabilities** | 3,906,068 | 5,030,721 | | **Total non-current liabilities** | 1,146,458 | 370,664 | | **Total liabilities** | **5,052,526** | **5,401,385** | | **Total equity** | **4,138,642** | **4,166,041** | [Consolidated Statement of Changes in Equity](index=143&type=section&id=%E5%90%88%E4%BD%B5%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) Total equity slightly decreased to RMB 4.14 billion by the end of 2020, as the dividend distribution of RMB 244 million outweighed the net profit of RMB 216 million for the year - **Total equity decreased from RMB 4.17 billion to RMB 4.14 billion**, reflecting the net effect of a RMB 216 million profit for the year offset by a RMB 244 million profit distribution[671](index=671&type=chunk)[672](index=672&type=chunk) [Consolidated Statement of Cash Flows](index=144&type=section&id=%E5%90%88%E4%BD%B5%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In 2020, net cash from operating activities saw a sharp 81.2% decline, and overall cash and cash equivalents decreased to RMB 828 million by year-end Consolidated Statement of Cash Flows Summary (RMB in thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash from operating activities** | 181,814 | 967,056 | | **Net cash used in investing activities** | (367,074) | (1,307,209) | | **Net cash (used in)/from financing activities** | (76,414) | 1,129,410 | | **Net (decrease)/increase in cash and cash equivalents** | (261,674) | 789,257 | | **Cash and cash equivalents at end of year** | 828,288 | 1,084,750 | [Summary of Notes to the Consolidated Financial Statements](index=146&type=section&id=%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) The notes detail key accounting policies, including the classification of the divested construction business as a discontinued operation and the valuation methods for significant financial assets - The company **sold its construction business in September 2020**, which has been classified as a discontinued operation with prior-period figures restated accordingly[897](index=897&type=chunk)[899](index=899&type=chunk) - **Financial assets at FVTPL totaled RMB 1.91 billion**, primarily comprising unlisted equity investments in joint factories, which are valued using Level 3 fair value measurement techniques[962](index=962&type=chunk)[1099](index=1099&type=chunk) - The company's key capital management metric, the **debt-to-equity ratio, increased to 74%** at the end of 2020 from 64% in 2019[1052](index=1052&type=chunk)[1053](index=1053&type=chunk)

6 远 中 中 中 中 中 中 中 中 中 中 長 沙 遠 大 住 宅 工 業 集 團 股 份 有 限 公 司 Changsha Broad Homes Industrial Group Co., Ltd. （ 於 中 華 人 民 共 和 國 註 冊 成 立 的 股 份 有 限 公 司 ） 股份代號：2163 中期報告 目 錄 2 釋 義 6 公司簡介 7 公司資料 9 財務摘要 及經營摘要 13 管理層討論與分析 34 企業管治及其他資料 40 獨立核數師報告 4 1 合併綜合收益表 42 合併財務狀況表 44 合併權益變動表 46 合併現金流量表 48 未經審計 中期財務報告附註 釋義 於 本 中期報告 內，除文義另有指明外，下列詞彙具有下文所賦予的涵義： 「審計委員會」 指 本公司審計委員會，為董事會的專門委員會之一 「核數師」 指 本公司的獨立核數師畢馬威會計師事務所 「B-house」 指 遠大美宅的裝配式別墅產品 「B2B」 指 企業與企業之間通過專用網絡或Internet，進 行 數 據 信 息 的 交 換、 傳遞，開展交易活動的商業模式 「B2C」 指 企業通過互聯網為消費者提供一個新型的購物 ...

[Company Profile](index=3&type=section&id=Company%20Profile) Broad Homes Industrial Group, a pioneer in China's construction industrialization, provides global, specialized prefabricated building services, aiming to upgrade the traditional construction industry - The company is a pioneer and leader in China's construction industrialization, offering comprehensive industrialization solutions for the construction sector, including global, large-scale, specialized, and intelligent prefabricated building manufacturing and services[3](index=3&type=chunk) - The company is committed to building a digital system covering the entire construction industry chain, leveraging information technology and IoT data to transform traditional construction into efficient, intensive modern industrial manufacturing[4](index=4&type=chunk) - As of December 31, 2019, the company owned 15 wholly-owned PC factories and had cumulatively signed 86 joint factories, with a total production capacity of approximately **6.8 million cubic meters**[4](index=4&type=chunk) - The company's H-shares were officially listed on the Main Board of the Hong Kong Stock Exchange on November 6, 2019, with stock code 2163[6](index=6&type=chunk) [Corporate Information](index=4&type=section&id=Corporate%20Information) This section provides essential corporate information, including board and committee members, legal advisors, auditors, registered office, and principal bankers Board of Directors and Key Personnel | Position | Name/Institution | | :--- | :--- | | **Executive Directors** | Mr. Zhang Jian (Chairman), Ms. Tang Fen (General Manager), Ms. Shi Donghong, Mr. Zhang Kexiang, Mr. Tan Xinming | | **Non-Executive Director** | Mr. Zhang Quanxun | | **Independent Non-Executive Directors** | Mr. Chen Gongrong, Mr. Li Zhengnong, Mr. Wang Jiaxin | | **Supervisors** | Ms. Zhang Mingxin, Mr. Li Gen, Ms. Liu Jing | | **Auditor** | KPMG | | **Compliance Advisor** | Anglo Chinese Corporate Finance, Limited | Board Committees | Committee | Chairman | | :--- | :--- | | Audit Committee | Mr. Chen Gongrong | | Remuneration and Appraisal Committee | Mr. Li Zhengnong | | Nomination Committee | Mr. Zhang Jian | | Strategy Committee | Mr. Zhang Jian | [Definitions](index=6&type=section&id=Definitions) This section defines specific terms and abbreviations used in the annual report, covering business, legal, financial, and technical terminology for clarity - "Broad Joint Plan" refers to the company's initiative to establish joint factories with local business partners for the production of PC precast components[25](index=25&type=chunk) - "PC" or "Prefabricated Concrete" refers to building products manufactured in a controlled environment and then transported to the construction site for assembly[65](index=65&type=chunk) - "PC-CPS" refers to a cyber-physical system for managing operations and production[67](index=67&type=chunk) [Financial and Operational Highlights](index=12&type=section&id=Financial%20and%20Operational%20Highlights) In 2019, the company achieved robust financial growth with total revenue up 48.5% and net profit up 45.2%, driven by PC component manufacturing and improved gross margins Condensed Consolidated Income Statement 2016-2019 (RMB in thousands) | Metric | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 3,369,416 | 2,269,129 | 1,935,689 | 1,671,495 | | Gross Profit | 1,144,019 | 724,547 | 704,930 | 602,483 | | Operating Profit | 600,612 | 343,563 | 372,254 | 315,390 | | Profit for the Year | 676,919 | 466,304 | 168,391 | 197,646 | | Gearing Ratio | 56.5% | 60.7% | 61.2% | 67.9% | Financial Data by Business Segment 2019 vs 2018 (RMB in thousands) | Business Segment | Metric | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **PC Component Manufacturing** | Revenue | 2,303,660 | 854,334 | | | Gross Profit | 797,903 | 203,643 | | | Gross Margin | 34.6% | 23.8% | | **PC Production Equipment Manufacturing** | Revenue | 896,768 | 1,226,268 | | | Gross Profit | 304,482 | 466,404 | | | Gross Margin | 34.0% | 38.0% | | **General Contracting** | Revenue | 168,988 | 188,527 | | | Gross Profit | 41,634 | 54,500 | | | Gross Margin | 24.6% | 28.9% | - **Total Revenue**: Increased by **48.5%** year-on-year to **RMB 3.37 billion**[91](index=91&type=chunk) - **Total Gross Profit**: Increased by **57.9%** year-on-year to **RMB 1.14 billion**, with gross margin improving from 31.9% to **34.0%**[91](index=91&type=chunk) - **Operating Profit**: Increased by **74.8%** year-on-year to **RMB 600 million**[91](index=91&type=chunk) - **Net Profit**: Increased by **45.2%** year-on-year to **RMB 680 million**[91](index=91&type=chunk) - **Net Cash from Operating Activities**: Increased by **56.4%** year-on-year to **RMB 970 million**[91](index=91&type=chunk) Key Operating Data Year-on-Year Change 2019 | Operating Metric | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Average Utilization Rate of PC Component Production Lines | 45.8% | 17.4% | +28.4 percentage points | | Cumulatively Signed Joint Factories (units) | 86 | 81 | +5 | | Joint Factories Achieving Profitability (units) | 20 | 8 | +12 | | Total Uncompleted Contract Value (RMB in millions) | 4,960.7 | 4,689.0 | +5.8% | [Chairman's Statement](index=15&type=section&id=Chairman%27s%20Statement) Chairman Mr. Zhang Jian reported that despite macroeconomic challenges, the company achieved high growth in 2019 with significant increases in revenue and net profit, driven by innovation and digital transformation - In 2019, the company achieved revenue of **RMB 3.37 billion** (a **48.5%** year-on-year increase), with PC component business revenue reaching **RMB 2.3 billion** (a **169.6%** year-on-year increase), and net profit of **RMB 680 million** (a **45.2%** year-on-year increase), attributed to technological innovation, quality adherence, and digital management transformation[103](index=103&type=chunk) - The company fully implemented the PC-CPS full-process digital system to enhance mass customization and rapid delivery capabilities, establishing strategic partnerships with major real estate developers like Country Garden and Midea Real Estate, shifting from "business cooperation" to "standard co-construction"[104](index=104&type=chunk) - The company proactively shifted from B2B to B2B+C, establishing Broad Module Integration Technology Co., Ltd., launching the iterated product "Broad Beautiful Home," and entering the trillion-level rural housing market[105](index=105&type=chunk) - Looking ahead, the company will seize opportunities from the "**RMB 25 trillion**" investment plan and the transformation and upgrading of the rural housing market, adhere to technological innovation, and strengthen "cost competitiveness, product competitiveness, and service competitiveness" to enhance overall competitiveness[108](index=108&type=chunk)[109](index=109&type=chunk) [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) [1. Business Review and Outlook](index=17&type=section&id=1.%20Business%20Review%20and%20Outlook) In 2019, the company focused on quality and efficiency, achieving a 48.5% increase in total revenue and a 45.2% rise in net profit, with PC component manufacturing as the core growth driver, while future plans include continued investment, digital platform upgrades, and B2C market expansion 2019 Performance Review by Business Segment | Business Segment | Revenue Change | Key Dynamics | | :--- | :--- | :--- | | **PC Component Manufacturing** | +169.6% year-on-year | Revenue contribution increased from 37.7% to **68.4%**; gross margin improved from 23.8% to **34.6%**; average utilization rate of production lines increased from 17.4% to **45.8%** | | **PC Production Equipment Manufacturing** | -26.9% year-on-year | Operating strategy shifted from pursuing national layout quantity to assisting joint factories in improving operational capabilities | | **General Contracting** | -10.4% year-on-year | Business focus shifted, no new contracts signed, existing projects gradually entering completion phase | - **Future Development Strategy**: - **Continued Investment**: Expand 7 existing regional production centers and add new regional production centers in 14 potential cities, further increasing the number of joint factories[118](index=118&type=chunk) - **Digital Platform Upgrade**: Using PC Maker I as a breakthrough, build a platform-level PC-CPS intelligent manufacturing management system and establish an industry big data platform[122](index=122&type=chunk) - **Focus on Strategic Clients**: Provide customized overall solutions for the top 50 real estate developers nationwide, fostering deep client reliance[126](index=126&type=chunk) - **Overseas Market Expansion**: Promote fully prefabricated villa products to developed regions such as Europe and America, and leverage "Belt and Road" opportunities to export technology and services[127](index=127&type=chunk) - **Module Integration Business Development**: Establish a B2C business unit responsible for B-house and B-BOX products, targeting C-end consumers and developing the rural self-built housing market[131](index=131&type=chunk) [2. Operating Results](index=22&type=section&id=2.%20Operating%20Results) In 2019, total revenue increased by 48.5% to RMB 3.37 billion, driven by PC component manufacturing, leading to a 57.9% increase in gross profit and a 74.8% rise in operating profit, with net profit up 45.2% to RMB 677 million, also benefiting from a RMB 248 million gain and a reduced effective tax rate of 7.7% Revenue by Business Segment 2019 vs 2018 (RMB in thousands) | Business Segment | 2019 Revenue | 2019 Contribution | 2018 Revenue | 2018 Contribution | | :--- | :--- | :--- | :--- | :--- | | PC Component Manufacturing | 2,303,660 | 68.4% | 854,334 | 37.7% | | PC Production Equipment Manufacturing | 896,768 | 26.6% | 1,226,268 | 54.0% | | General Contracting | 168,988 | 5.0% | 188,527 | 8.3% | | **Total** | **3,369,416** | **100%** | **2,269,129** | **100%** | Gross Profit and Gross Margin by Business Segment 2019 vs 2018 (RMB in thousands) | Business Segment | 2019 Gross Profit | 2019 Gross Margin | 2018 Gross Profit | 2018 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | PC Component Manufacturing | 797,903 | 34.6% | 203,643 | 23.8% | | PC Production Equipment Manufacturing | 304,482 | 34.0% | 466,404 | 38.0% | | General Contracting | 41,634 | 24.6% | 54,500 | 28.9% | | **Total** | **1,144,019** | **34.0%** | **724,547** | **31.9%** | - Due to the implementation of a "two-tier management strategy," the company reclassified certain joint factories as financial assets measured at fair value, no longer participating in their principal operating management, thus recognizing a **RMB 248 million** gain from losing significant influence over associates[178](index=178&type=chunk) - The effective income tax rate for 2019 was **7.7%**, a significant decrease from 15.9% in 2018, primarily because four subsidiaries were newly recognized as high-tech enterprises during the year, enjoying a preferential tax rate of **15%**[184](index=184&type=chunk) [3. Liquidity and Capital Resources](index=32&type=section&id=3.%20Liquidity%20and%20Capital%20Resources) As of year-end 2019, the company's cash and cash equivalents significantly increased to RMB 1.08 billion, driven by strong operating cash inflow of RMB 967 million and financing cash inflow of RMB 1.13 billion, despite a RMB 1.31 billion net cash outflow from investing activities and increased capital expenditure Cash Flow Statement Summary 2019 vs 2018 (RMB in thousands) | Cash Flow Item | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 967,056 | 618,296 | | Net Cash Used in Investing Activities | (1,307,209) | (785,560) | | Net Cash from/(Used in) Financing Activities | 1,129,410 | (212,203) | | **Cash and Cash Equivalents at Year-End** | **1,084,750** | **296,475** | - Net cash inflow from financing activities was **RMB 1.13 billion**, primarily attributed to new loans of **RMB 2.28 billion**, repayment of borrowings and interest of **RMB 1.72 billion**, and proceeds from H-share issuance of **RMB 956 million**[194](index=194&type=chunk) - Capital expenditure in 2019 was **RMB 1.46 billion** (2018: RMB 975 million), primarily for the purchase of property, plant, and equipment, and investments in financial assets and associates[196](index=196&type=chunk) [5. Financial Ratios](index=36&type=section&id=5.%20Financial%20Ratios) In 2019, the company maintained a sound financial position, with the gearing ratio decreasing from 67.4% to 62.9% due to H-share issuance and profit growth, while profitability metrics significantly improved, and liquidity ratios remained stable Key Financial Ratios 2019 vs 2018 | Financial Ratio | As of December 31, 2019 | As of December 31, 2018 | | :--- | :--- | :--- | | Current Ratio | 0.9 | 1.0 | | Quick Ratio | 0.9 | 0.9 | | Gearing Ratio | 62.9% | 67.4% | | Return on Total Assets | 8.0% | 6.5% | | Return on Equity | 19.2% | 16.7% | | Interest Coverage Ratio | 8.2 | 8.7 | - The decrease in gearing ratio was primarily due to the company's H-share issuance introducing financial investments and increased profits in 2019[215](index=215&type=chunk) [Directors, Supervisors and Senior Management](index=39&type=section&id=Directors%2C%20Supervisors%20and%20Senior%20Management) This section details the backgrounds and résumés of the company's Board of Directors, Supervisory Committee, and senior management, highlighting the executive team's experience and non-executive directors' expertise in strategic and oversight support - The core members of the executive director team include: Mr. Zhang Jian, founder and Chairman; Ms. Tang Fen, General Manager; Ms. Shi Donghong, Deputy General Manager and Head of Finance; Mr. Zhang Kexiang, Deputy General Manager; and Mr. Tan Xinming, Deputy General Manager[229](index=229&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Independent non-executive directors include Mr. Chen Gongrong (Professor of Accounting, serving as independent director for multiple listed companies), Mr. Li Zhengnong (Professor at the School of Civil Engineering), and Mr. Wang Jiaxin (with extensive experience in accounting and asset management), providing professional independent opinions to the Board[250](index=250&type=chunk)[253](index=253&type=chunk)[256](index=256&type=chunk) [Report of the Directors](index=46&type=section&id=Report%20of%20the%20Directors) The Report of the Directors outlines key corporate affairs for 2019, detailing global offering proceeds, principal business activities, a final dividend of RMB 0.5 per share, and corporate governance matters, affirming adherence to relevant regulations and listing rules Use of Net Proceeds from Global Offering as of December 31, 2019 (HKD in millions) | Purpose | Allocation Ratio | Allocated Amount (HKD in millions) | Amount Used (HKD in millions) | Unused Amount (HKD in millions) | | :--- | :--- | :--- | :--- | :--- | | Expand PC Component Manufacturing Business | 45% | 500.2 | 20.4 | 479.8 | | Expand Overseas Markets | 20% | 222.3 | - | 222.3 | | R&D and Expand Intelligent Equipment Business | 15% | 166.8 | 1.5 | 165.3 | | R&D of Prefabricated Building Industry Intelligent Service Platform | 10% | 111.2 | 0.7 | 110.5 | | Working Capital and General Corporate Purposes | 10% | 111.2 | 81.0 | 30.2 | | **Total** | **100%** | **1,111.7** | **103.6** | **1,008.7** | - The Board recommended a final dividend of **RMB 0.5** per share (tax inclusive) for the year ended December 31, 2019, totaling approximately **RMB 244 million**[278](index=278&type=chunk) - As of the end of 2019, the top five clients accounted for **15.05%** of total revenue, with the largest client contributing **3.31%**; the top five suppliers accounted for **15.55%** of total purchases, with the largest supplier contributing **3.97%**[289](index=289&type=chunk)[290](index=290&type=chunk) - Controlling shareholder Mr. Zhang Jian confirmed his compliance with the non-competition agreement and undertakings during the reporting period[331](index=331&type=chunk) [Report of the Supervisory Committee](index=60&type=section&id=Report%20of%20the%20Supervisory%20Committee) The Supervisory Committee reported diligent oversight in accordance with laws and company articles, holding two meetings to review profit distribution, related party transactions, and financial reports, concluding that the company operated lawfully and no actions detrimental to its interests were found - During the reporting period, the Supervisory Committee held two meetings, approving various proposals including the distribution of retained profits prior to listing, the 2018 annual financial statements and profit distribution plan, and the 2019 financing and guarantee limits[352](index=352&type=chunk) - The Supervisory Committee issued an independent opinion on the company's lawful operations, concluding that the company's decision-making procedures were legal, directors and senior management diligently performed their duties, and no violations of laws or actions detrimental to the company's interests were found[355](index=355&type=chunk) - The Supervisory Committee reviewed the 2019 financial report audited by independent auditors, deeming it to objectively and truly reflect the company's financial position and operating results[358](index=358&type=chunk) [Corporate Governance Report](index=63&type=section&id=Corporate%20Governance%20Report) This report details the company's corporate governance practices since its 2019 listing, confirming compliance with Hong Kong Listing Rules, outlining the Board's composition, responsibilities, and committee structures, and covering internal control, risk management, remuneration, and shareholder communication - The company has adopted and complied with the Corporate Governance Code in Appendix 14 of the Hong Kong Listing Rules, adhering to all applicable code provisions from its listing date to the end of 2019[363](index=363&type=chunk) - The Board of Directors comprises 9 directors, including 5 executive directors, 1 non-executive director, and 3 independent non-executive directors, meeting the Listing Rules' requirements for the number and professional qualifications of independent non-executive directors[368](index=368&type=chunk)[369](index=369&type=chunk) - The Board has four specialized committees: Audit Committee, Nomination Committee, Remuneration and Appraisal Committee, and Strategy Committee, each with clearly defined written terms of reference[395](index=395&type=chunk) - The Board is responsible for maintaining adequate internal control and risk management systems and reviews their effectiveness annually; during the reporting period, the Board considered the company's risk management and internal control systems to be effective and sufficient[428](index=428&type=chunk)[442](index=442&type=chunk) [Environmental, Social and Governance Report](index=82&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This inaugural ESG report outlines the Group's environmental protection and social responsibility philosophies, policies, and practices, demonstrating commitment to energy conservation and emission reduction through industrialized construction, strict environmental compliance, employee rights, occupational health and safety, comprehensive training, robust supply chain and quality management, anti-corruption, and community engagement [4. Environmental Protection](index=88&type=section&id=4.%20Environmental%20Protection) The company adheres to green development, promoting low-energy, low-pollution industrialized construction, strictly complying with environmental regulations, and managing emissions and resource use, with total greenhouse gas emissions of approximately 12,365 tons primarily from purchased electricity, while new processes significantly reduced water and timber consumption 2019 Greenhouse Gas Emissions Composition | Item | CO2 Emissions (tons) | Percentage | | :--- | :--- | :--- | | Net Purchased Electricity | 11,488.88 | 90.22% | | Natural Gas Consumption | 256.71 | 2.02% | | Diesel | 988.19 | 7.76% | | **Total** | **12,733.78** | **100.00%** | - Centralized use of formwork for precast PC components in factories reduced timber consumption by **75%** compared to traditional methods[504](index=504&type=chunk) - Production wastewater is treated through a three-stage sedimentation tank and recycled, reducing discharge, with strict wastewater monitoring ensuring **100%** compliant discharge[509](index=509&type=chunk)[514](index=514&type=chunk) Resource Consumption Intensity Change | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Water Consumption Intensity (cubic meters/RMB thousand revenue) | 0.11 | 0.15 | | Electricity Consumption Intensity (kWh/RMB thousand revenue) | 3.88 | 4.76 | [5. Social Responsibility](index=97&type=section&id=5.%20Social%20Responsibility) The company values employees, adhering to labor laws, ensuring equal opportunities, and prohibiting child and forced labor, while prioritizing occupational health and safety with comprehensive training, fostering talent through the Broad Training Center, and implementing transparent procurement, stringent quality control, innovation, anti-corruption, and community engagement - As of the end of the reporting period, the Group had **3,411** full-time employees, with recruitment adhering to fair principles, prohibiting discrimination based on age, gender, race, or other factors[537](index=537&type=chunk) - The company established a comprehensive occupational health and safety management system and obtained ISO45001:2018 certification; in 2019, a total of **655** safety education training sessions and drills were conducted, with **8,342** participants, and new employee safety training coverage reached **100%**[556](index=556&type=chunk)[557](index=557&type=chunk) - In 2019, the Group conducted a total of **299** training sessions, with **30,487** participants, achieving **100%** training coverage and an average training duration of **378.1 hours/year** per person[563](index=563&type=chunk) - The company established China's first Broad Training Center offering systematic training in prefabricated construction, cultivating talent for the industry; as of the end of the reporting period, it had provided systematic training to thousands of managers and technical workers from **53** companies[569](index=569&type=chunk) - The company regards product quality as its lifeline, implementing a full-process quality management system and obtaining ISO9001:2015 certification; as of the end of the reporting period, the company held **696** patents and served as chief editor or participant in drafting multiple national and local industry standards[582](index=582&type=chunk)[583](index=583&type=chunk)[585](index=585&type=chunk)[586](index=586&type=chunk) [Independent Auditor's Report](index=117&type=section&id=Independent%20Auditor%27s%20Report) KPMG, as the independent auditor, audited the company's consolidated financial statements for 2019, concluding they fairly reflect the Group's financial position and performance in accordance with IFRS and Hong Kong Companies Ordinance, with key audit matters including revenue recognition, development expenditure capitalization, and trade receivables impairment - The auditor issued an unmodified opinion on the company's consolidated financial statements for 2019[620](index=620&type=chunk) - **Key Audit Matters** include: - **Revenue Recognition**: As revenue is a key performance indicator, there is a risk that management may recognize revenue in incorrect accounting periods to meet performance targets[622](index=622&type=chunk)[624](index=624&type=chunk) - **Capitalization of Development Expenditure**: Determining compliance with capitalization criteria and the amount to be capitalized involves significant management judgment[629](index=629&type=chunk) - **Impairment Provisions for Trade Receivables**: The determination of expected credit losses involves inherent subjectivity and requires significant management judgment[631](index=631&type=chunk) [Consolidated Financial Statements](index=125&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's audited consolidated financial statements for 2019, including the consolidated statement of comprehensive income, financial position, changes in equity, and cash flows, detailing the Group's financial performance, asset and liability position, equity changes, and cash flows [Consolidated Statement of Comprehensive Income](index=125&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) [Consolidated Statement of Financial Position](index=127&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) [Consolidated Statement of Changes in Equity](index=129&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) [Consolidated Statement of Cash Flows](index=130&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) [Notes to the Consolidated Financial Statements](index=132&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and supplementary information to the consolidated financial statements, covering company information, significant accounting policies, accounting judgments and estimates, detailed analysis of financial statement items, financial risk management, related party transactions, and post-reporting period events [Appendix I: Details of Properties Held by the Group](index=222&type=section&id=Appendix%20I%3A%20Details%20of%20Properties%20Held%20by%20the%20Group) This appendix provides detailed information on the Group's long-term leasehold commercial properties in China, including location, usage, gross floor area, Group's interest percentage, and tenure