Financial Performance - Total revenue for the six months ended June 30, 2019, was RMB 2,241.2 million, representing a 59.0% increase from RMB 1,405.7 million in the same period of 2018[13] - Gross profit for the same period was RMB 829.5 million, with a gross margin of 37.0%, compared to RMB 510.3 million and a gross margin of 36.3% in 2018[13] - Net profit reached RMB 568.4 million, reflecting a net profit margin of 25.4%, up from RMB 335.8 million and a margin of 23.9% in the previous year[13] - The group's revenue for the first half of 2019 was RMB 2,241.2 million, an increase of 59.4% year-on-year[32] - Gross profit reached RMB 829.5 million, up 62.6% year-on-year, with a gross margin of 37.0%, an increase of 0.7 percentage points[32] - Net profit was RMB 568.4 million, a year-on-year increase of 69.3%, with a net profit margin of 25.4%, up 1.5 percentage points[33] - The total comprehensive income for the period was RMB 568,391 thousand, compared to RMB 335,771 thousand in the prior year, reflecting overall growth[101] - The net income attributable to shareholders for the six months ended June 30, 2019, was RMB 541,314 thousand, up from RMB 332,332 thousand in 2018, reflecting a growth of 62.8%[135] Assets and Liabilities - The total assets as of June 30, 2019, amounted to RMB 8,689.6 million, an increase from RMB 7,296.5 million as of December 31, 2018[14] - Total liabilities reached RMB 2,916,945 thousand, up from RMB 1,786,512 thousand, indicating a rise of around 63.3%[104] - The company's goodwill increased to RMB 1,361,906 thousand from RMB 1,045,362 thousand, reflecting a growth of approximately 30.2%[102] - Trade and other receivables increased significantly to RMB 1,808,165 thousand from RMB 1,164,913 thousand, representing a growth of about 55.2%[102] - The total amount of accounts receivable from related parties included trade receivables of RMB 563,373 thousand, which increased from RMB 507,646 thousand in 2018, reflecting a growth of about 10.9%[177] Cash Flow - Cash and cash equivalents were reported at RMB 4,349.7 million, down from RMB 4,808.0 million at the end of 2018[14] - Operating cash flow for the six months ended June 30, 2019, was RMB 652,604 thousand, compared to RMB 248,718 thousand for the same period in 2018, representing a 162% increase[108] - Cash used in investing activities totaled RMB (970,911) thousand, compared to RMB (111,236) thousand in the previous year, indicating a significant increase in investment outflows[108] - The cash flow from financing activities resulted in a net outflow of RMB (24,154) thousand, contrasting with a net inflow of RMB 3,184,134 thousand in the previous year[108] Employee and Operational Costs - The total employee count increased by 59.8% to 30,129 as of June 30, 2019, with total employee costs rising by 58.5% to RMB 965.6 million[80] - Employee benefit expenses rose to RMB 965,636, a 58.5% increase compared to RMB 609,236 in the same period of 2018[125] - Cleaning expenses increased to RMB 149,852, up 69.8% from RMB 88,264 in the previous year[125] - Security expenses surged to RMB 97,202, a significant increase from RMB 24,847 in the same period of 2018[125] Business Expansion and Acquisitions - The company acquired Qingdao Huaren Property Co., Ltd. and Harbin Jingyang Property Management Co., Ltd., expanding its business footprint into Shandong Peninsula and Northeast regions[33] - The establishment of a new public service sector was initiated through the acquisition of Guangzhou Yuehua Property Co., Ltd., enhancing the group's service portfolio[33] - The total acquisition consideration for the business combinations during the period was RMB 583,904,000, with recognized goodwill of RMB 316,544,000 and identifiable net assets of RMB 440,678,000[158] - The acquired businesses contributed revenue of RMB 352,918,000 and net profit of RMB 32,526,000 from the acquisition date to June 30, 2019[161] Corporate Governance - The board of directors consists of eight members, including three executive directors, two non-executive directors, and three independent non-executive directors[82] - The company has adopted the corporate governance code and confirmed compliance with all applicable code provisions except for A.2.1, which allows the same person to hold the roles of chairman and CEO[86] - The company provides updates on business performance and developments through various channels to ensure transparency for shareholders[82] Related Party Transactions - The total revenue from related party transactions for the six months ended June 30, 2019, was RMB 861,891 thousand, an increase from RMB 608,178 thousand in the same period of 2018, representing a growth of approximately 41.5%[174] - The service provided by entities controlled by the same ultimate holding company amounted to RMB 736,607 thousand for the first half of 2019, compared to RMB 487,888 thousand in 2018, reflecting a year-on-year increase of about 51%[174] - The accounts receivable from related parties totaled RMB 606,612 thousand as of June 30, 2019, compared to RMB 578,315 thousand at the end of 2018, showing an increase of about 4.9%[177]

Company Overview [Company Overview](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E6%A6%82%E8%A7%88) A-Living Smart City Services is a leading property management provider focusing on mid-to-high-end properties, offering integrated services and successfully listed on the HKEX in 2018 - The company's core businesses include property management services, extended value-added services, and community value-added services, forming an integrated service value chain[6](index=6&type=chunk) - As of the reporting period, including post-year acquisitions, the Group's total contracted GFA was approximately **246 million square meters**, and total GFA under management was approximately **154 million square meters**[6](index=6&type=chunk) - The company successfully listed in Hong Kong on February 9, 2018, becoming China's first H-share property management company spun off from a red-chip entity[6](index=6&type=chunk) Company Information [Company Information](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides essential company information, including board and committee members, supervisors, company secretary, auditor, legal counsel, principal bankers, office addresses, investor relations contacts, and key listing and dividend dates - The Board of Directors is co-chaired by Mr. Chan Cheuk Hung and Mr. Wong Fung Choy, with Mr. Wong Fung Choy concurrently serving as acting Chief Executive Officer; the company has established four board committees: Audit, Remuneration and Appraisal, Nomination, and Risk Management[8](index=8&type=chunk) - The company's H-shares are listed on the Main Board of the Hong Kong Stock Exchange, stock code **3319**[10](index=10&type=chunk) - Subsequent to the reporting period, the company proposed a final dividend and a special dividend, with a record date of June 6, 2019, and planned payment around July 18, 2019[12](index=12&type=chunk)[13](index=13&type=chunk) Financial and Operational Summary [Financial Summary](index=8&type=section&id=%E8%B2%A1%E5%8B%99%E6%A6%82%E8%A6%81) In 2018, the company achieved significant financial growth, with revenue up **91.8%** to **RMB 3.377 billion**, gross profit up **118.4%** to **RMB 1.29 billion**, and net profit up **170.1%** to **RMB 811 million** Metric | Metric | 2018 | 2017 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Revenue (RMB Million)** | 3,377 | 1,761 | +91.8% | | **Gross Profit (RMB Million)** | 1,290 | 591 | +118.4% | | **Gross Margin** | 38.2% | 33.5% | +4.7pp | | **Net Profit (RMB Million)** | 811 | 300 | +170.1% | | **Net Profit Margin** | 24.0% | 17.0% | +7.0pp | | **Basic EPS (RMB Yuan)** | 0.62 | 0.35 | +77.1% | Metric | Metric | Dec 31, 2018 | Dec 31, 2017 | Change | | :--- | :--- | :--- | :--- | | **Total Assets (RMB Million)** | 7,297 | 2,511 | +190.6% | | **Cash and Cash Equivalents (RMB Million)** | 4,808 | 880 | +446.4% | | **Shareholders' Equity (RMB Million)** | 5,510 | 1,474 | +273.8% | | **Total Liabilities/Total Assets** | 24.5% | 41.3% | -16.8pp | [2018 Milestones](index=10&type=section&id=2018%E5%B9%B4%E5%BA%A6%E5%A4%A7%E4%BA%8B%E8%A8%98) 2018 marked a milestone year for A-Living, with its successful HKEX listing and strategic expansions through partnerships and acquisitions, significantly broadening its business footprint - In February 2018, A-Living successfully listed on the Main Board of the Hong Kong Stock Exchange (stock code: **3319.HK**)[26](index=26&type=chunk) - The company actively expanded strategic collaborations, establishing partnerships with industry giants such as Alibaba, Ant Financial, Greenland Property, and JLL[26](index=26&type=chunk)[27](index=27&type=chunk) - Accelerated scale expansion through M&A activities, including the acquisition of a **51%** equity stake in Nanjing Zizhu[26](index=26&type=chunk) - By year-end, three major business segments were established: property services, community commerce, and asset management, defining a new pattern of synergistic development[27](index=27&type=chunk) [Key Honors and Awards](index=12&type=section&id=%E4%B8%BB%E8%A6%81%E6%A6%AE%E8%AD%BD%E5%8F%8A%E7%8D%8E%E9%A0%85) In 2018, A-Living received multiple industry awards for its outstanding comprehensive strength and market performance, affirming its leading position in property management and capital market recognition - Comprehensive strength recognized by the industry, honored as '2018 China Property Service Enterprises Comprehensive Strength Ranking Top 8' and '2018 China Community Service Provider TOP 10'[33](index=33&type=chunk) - Outstanding growth, awarded 'Second Place in Growth for 2018 China Top 100 Property Service Enterprises'[33](index=33&type=chunk) - Strong capital market performance, honored with the '2018 Hong Kong Listed Company Golden Lion Award — Most Investable New Stock Company'[33](index=33&type=chunk) Chairman's Report [Chairman's Report](index=13&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A) The Chairman's Report reviews the exceptional performance in the first year post-listing, highlighting the '1+N' strategy that fostered synergistic development across property management, asset management, and community commerce segments Financial Metric | Financial Metric | 2018 Amount (RMB) | Y-o-Y Growth | | :--- | :--- | :--- | | **Revenue** | 3.3767 billion RMB | +91.8% | | **Gross Profit** | 1.2899 billion RMB | +118.4% | | **Profit Attributable to Owners** | 801.0 million RMB | +176.5% | | **Basic EPS** | 0.62 RMB Yuan | - | - The Board recommended a 2018 final dividend of **RMB 0.15** per share and a special dividend of **RMB 0.15** per share, totaling **RMB 0.30** per share, representing a payout ratio of **50%**[38](index=38&type=chunk) - In terms of scale expansion, GFA under management and contracted GFA (including post-year acquisitions) reached **153.6 million square meters** and **246.4 million square meters** respectively; projects from third-party developers accounted for **46.3%** of contracted GFA[39](index=39&type=chunk) - Looking ahead to 2019, the company will leverage its listing platform to strengthen its residential property business and establish Zhuosen Property for high-end commercial management; M&A will focus on five major city clusters, including the Yangtze River Delta and Beijing-Tianjin-Hebei, to complete its national footprint[42](index=42&type=chunk) Management Discussion and Analysis [Financial Review](index=18&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section details the company's 2018 financial performance, showing strong revenue growth driven by value-added services, improved profitability, and a robust financial position with ample cash and no bank borrowings [Revenue Analysis](index=18&type=section&id=%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) Total revenue in 2018 increased by **91.8%** to **RMB 3.377 billion**, with extended value-added services showing explosive growth of **222.7%**; GFA under management and contracted GFA grew by over **75%**, driven by third-party expansion and M&A | Business Segment | 2018 Revenue (RMB Million) | Revenue Share | Growth Rate | | :--- | :--- | :--- | :--- | | Property Management Services | 1,624.8 | 48.1% | +34.8% | | Extended Value-added Services | 1,463.1 | 43.3% | +222.7% | | — On-site Property Management Services | 675.2 | 20.0% | +108.9% | | — Other Extended Value-added Services | 788.0 | 23.3% | +505.6% | | Community Value-added Services | 288.8 | 8.6% | +183.7% | | **Total** | **3,376.7** | **100%** | **+91.8%** | GFA Under Management Details (Thousand Sq.m.) | Project Source | 2018 Year-End | Area Share | New Area | New Area Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Agile Group | 48,191.7 | 34.9% | 6,002.7 | 14.2% | | Greenland Holdings | 4,728.3 | 3.4% | 2,044.1 | 76.2% | | Third-Party Developers | 55,846.6 | 40.4% | 22,384.8 | 66.9% | | Acquisitions | 29,353.0 | 21.3% | 29,353.0 | Not Applicable | | **Total** | **138,119.6** | **100%** | **59,784.6** | **76.3%** | Contracted GFA Details (Thousand Sq.m.) | Project Source | 2018 Year-End | Area Share | New Area | New Area Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Agile Group | 70,370.9 | 30.6% | 11,694.4 | 19.9% | | Greenland Holdings | 22,026.2 | 9.6% | 12,691.6 | 136.0% | | Third-Party Developers | 106,440.6 | 46.3% | 48,351.2 | 83.2% | | Acquisitions | 30,961.0 | 13.5% | 30,961.0 | Not Applicable | | **Total** | **229,798.7** | **100%** | **103,698.2** | **82.2%** | - Average property management fee per square meter per month: **RMB 3.20** for Agile Group and Greenland Holdings residential projects, and **RMB 2.25** for third-party residential projects; collection rate for Agile Group residential projects was as high as **95.7%**[50](index=50&type=chunk) [Cost, Gross Profit, and Net Profit Analysis](index=22&type=section&id=%E6%88%90%E6%9C%AC%E3%80%81%E6%AF%9B%E5%88%A9%E8%88%87%E5%88%A9%E6%BD%A4%E5%88%86%E6%9E%90) In 2018, overall gross profit increased by **118.4%** to **RMB 1.29 billion**, with gross margin rising to **38.2%**, primarily due to the rapid growth of high-margin value-added services; net profit surged by **170.1%** to **RMB 811 million** Gross Profit and Gross Margin by Business Segment | Business Segment | 2018 Gross Profit (RMB Million) | 2018 Gross Margin | 2017 Gross Margin | Gross Margin Change | | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 444.6 | 27.4% | 26.9% | +0.5 pp | | Extended Value-added Services | 698.2 | 47.7% | 49.3% | -1.6 pp | | Community Value-added Services | 147.1 | 50.9% | 41.7% | +9.2 pp | | **Total** | **1,289.9** | **38.2%** | **33.5%** | **+4.7 pp** | - Cost of sales growth (**+78.3%**) was slower than revenue growth (**+91.8%**), primarily due to an increased proportion of high-margin value-added services[60](index=60&type=chunk) - Administrative expenses as a percentage of revenue decreased from **9.7%** to **8.9%**, and selling and marketing expenses as a percentage of revenue decreased from **1.9%** to **1.4%**, reflecting effective cost control and economies of scale[63](index=63&type=chunk)[64](index=64&type=chunk) - Net profit for the year reached **RMB 811 million**, a year-on-year increase of **170.1%**; net profit margin was **24.0%**, an increase of **7.0 percentage points** year-on-year[66](index=66&type=chunk) [Balance Sheet and Cash Flow](index=24&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%80%B5%E8%88%87%E7%8F%BE%E9%87%91%E6%B5%81) As of year-end 2018, the company's financial position was extremely robust, with total assets growing to **RMB 7.297 billion** and cash and cash equivalents significantly increasing to **RMB 4.808 billion** due to IPO proceeds and operating cash inflows - As of the end of 2018, cash and cash equivalents reached **RMB 4.808 billion**, a **446.5%** increase from **RMB 880 million** at the beginning of the year, primarily from IPO proceeds and operating cash inflows[67](index=67&type=chunk) - Goodwill increased to **RMB 1.045 billion** due to acquisitions including Greenland Property and Nanjing Zizhu, a **13.8%** increase from the beginning of the year[70](index=70&type=chunk) - As of the end of 2018, the company had no bank borrowings, resulting in a **zero** capital gearing ratio[73](index=73&type=chunk) [Significant Acquisitions and Capital Operations](index=25&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E8%88%87%E8%B3%87%E6%9C%AC%E9%81%8B%E4%BD%9C) In 2018, the company successfully listed, raising approximately **HKD 3.959 billion**, which provided ample capital for strategic investments and acquisitions, including a **51%** stake in Nanjing Zizhu - Successfully listed on February 9, 2018, raising net proceeds of approximately **HKD 3.959 billion** (approximately **RMB 3.199 billion**)[75](index=75&type=chunk) - Approximately **65%** of the proceeds are planned for strategic investments and acquisitions, with **RMB 422 million** already utilized for this purpose as of the reporting date[76](index=76&type=chunk) - Acquired a **51%** equity stake in Nanjing Zizhu for **RMB 205 million** during the year, consolidating its financial statements from May 2018[77](index=77&type=chunk) - Subsequent to the reporting period, the company continued to pursue acquisitions, including **89.66%** of Qingdao Huaren for **RMB 134 million** and **60%** of Harbin Jingyang for **RMB 114 million**, with plans to consolidate their results from April 2019[79](index=79&type=chunk)[80](index=80&type=chunk) [Employees and Remuneration](index=27&type=section&id=%E5%93%A1%E5%B7%A5%E8%88%87%E8%96%AA%E9%85%AC) Driven by rapid business expansion and M&A activities, the company's workforce significantly grew, with employee numbers increasing by **54.7%** to **18,859** and total staff costs rising by **89.5%** to **RMB 1.473 billion** | Metric | 2018 Year-End | 2017 Year-End | Growth Rate | | :--- | :--- | :--- | :--- | | **Number of Employees** | 18,859 | 12,192 | +54.7% | | **Total Staff Costs (RMB Million)** | 1,472.5 | 777.2 | +89.5% | - The increase in staff costs was primarily due to the addition of personnel from acquired companies and increased incentive costs driven by the rapid development of property agency and community value-added services[82](index=82&type=chunk) Business Development and Strategy [Business Development](index=28&type=section&id=%E6%A5%AD%E5%8B%99%E7%99%BC%E5%B1%95) The company deepens its '1+N' strategy, focusing on property management while diversifying into other services, leveraging dual brands and technological advancements to enhance operational efficiency and service experience - Implemented a dual-brand strategy with 'Agile Property' focusing on mid-to-high-end residential and tourism properties, and 'Greenland Property' specializing in commercial office buildings and super high-rises, leveraging synergistic effects[84](index=84&type=chunk) - Core businesses are divided into three segments: property management services (core business), extended value-added services (full real estate lifecycle services), and community value-added services (building a community economic ecosystem)[85](index=85&type=chunk)[86](index=86&type=chunk) - Built smart communities through 'Four Modernizations' (management digitalization, service professionalization, process standardization, operation mechanization) and technology application, enhancing corporate efficiency and owner experience[87](index=87&type=chunk) [Investor Relations](index=31&type=section&id=%E6%8A%95%E8%B3%87%E8%80%85%E9%97%9C%E4%BF%82) Post-listing, the company actively engaged with the capital market through various channels, maintaining transparency and receiving positive ratings from **15** brokerage firms, reflecting strong market recognition - Adhering to principles of transparency, timeliness, and fairness, the company maintained close communication with the capital market through various channels, hosting over **1,000** investor visits during the year[88](index=88&type=chunk)[89](index=89&type=chunk) - As of the end of 2018, **15** brokerage firms covered the company, issuing over **40** research reports, all giving 'Buy' or 'Outperform' ratings[89](index=89&type=chunk) - During the year, awarded '2018 Hong Kong Listed Company Golden Lion Award — Most Investable New Stock Company' and 'Second China Excellent IR Best Innovation Award'[89](index=89&type=chunk) Corporate Governance [Directors, Supervisors, and Senior Management](index=33&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%E4%BA%BA%E5%93%A1) This section details the professional backgrounds and extensive experience of the company's Board of Directors, Supervisory Committee, and senior management team in real estate, property management, and finance - Co-chairmen of the Board, Mr. Chan Cheuk Hung and Mr. Wong Fung Choy, both hold key positions at Agile Group, possessing over **20 years** of experience in real estate and property management[92](index=92&type=chunk) - Independent Non-executive Directors Mr. Wan Kam To, Mr. Wan Sze Chung, and Mr. Wang Peng possess extensive backgrounds in accounting, financial management, and property management industry associations, providing independent professional judgment to the company[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Chief Financial Officer and Joint Company Secretary Mr. Li Dalong has over **12 years** of experience in accounting and capital markets, having previously worked at PricewaterhouseCoopers[101](index=101&type=chunk) [Corporate Governance Report](index=40&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%A0%B1%E5%91%8A) The company is committed to high corporate governance standards, strictly adhering to the Corporate Governance Code since its listing, with robust board committees and internal control systems in place - Since its listing, the company has fully complied with the Corporate Governance Code, with the only deviation being Mr. Wong Fung Choy's dual role as Co-chairman and acting Chief Executive Officer, which the Board deems to be in the company's best interest[105](index=105&type=chunk)[108](index=108&type=chunk) - The Board has established four committees: Audit, Remuneration and Appraisal, Nomination, and Risk Management, whose composition and terms of reference comply with regulations to assist the Board in fulfilling its duties[128](index=128&type=chunk) - A risk management organizational structure and systematic risk management system have been established from the Board to various business units, with the Audit and Supervision Department continuously monitoring the effectiveness of internal control systems; the Board has reviewed the 2018 risk management and internal control systems and deemed them effective and sufficient[138](index=138&type=chunk)[139](index=139&type=chunk)[148](index=148&type=chunk) [Board Report](index=61&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A) The Board Report outlines the company's core business, performance, dividend policy, share capital changes, and significant acquisitions, detailing ongoing connected transactions with controlling shareholders - The Board recommended a 2018 annual dividend (final dividend + special dividend) of **RMB 0.30** per share (pre-tax), with a payout ratio of **50%**[166](index=166&type=chunk) - The controlling shareholder has provided a non-compete undertaking, and independent non-executive directors confirmed full compliance with the undertaking[183](index=183&type=chunk)[184](index=184&type=chunk) - The report details multiple continuing connected transactions with Agile Group and Greenland Group, covering property management, marketing services, leasing, and move-in services, disclosing annual caps for 2018-2020 and actual transaction amounts for the current year[201](index=201&type=chunk)[213](index=213&type=chunk)[215](index=215&type=chunk) - Independent non-executive directors and the auditor have reviewed and confirmed the compliance and fairness of the continuing connected transactions[227](index=227&type=chunk)[228](index=228&type=chunk) [Supervisory Committee Report](index=86&type=section&id=%E7%9B%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A) The Supervisory Committee Report details its 2018 activities, including overseeing board and management performance, connected transactions, and major operational decisions, affirming the company's compliant operations and accurate reporting - In 2018, the Supervisory Committee held **3** meetings, with all supervisors diligently performing their oversight duties[238](index=238&type=chunk)[239](index=239&type=chunk) - The Supervisory Committee provided independent positive opinions on the company's lawful operations, the truthfulness of the annual report, the performance of directors and senior management, and the compliance of continuing connected transactions[244](index=244&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) [Environmental, Social and Governance (ESG)](index=59&type=section&id=%E7%92%B0%E5%A2%83%E3%80%81%E7%A4%BE%E6%9C%83%E5%8F%8A%E7%AE%A1%E6%B2%BB%20%28ESG%29) The company integrates sustainable development into its strategy, actively fulfilling environmental and social responsibilities through energy conservation, waste management, employee development, and community engagement, with a dedicated ESG report to be published - Environmental Protection: Established an environmental management system, implemented electricity and water saving measures, and utilized idle resources to build nurseries, enhancing green and low-carbon operations[157](index=157&type=chunk) - Social Responsibility: Provided quality services to owners with 'craftsmanship' and 'sincerity', safeguarded employee rights and offered development platforms, fostered win-win cooperation with suppliers, and actively participated in community cultural building and targeted poverty alleviation[158](index=158&type=chunk)[159](index=159&type=chunk) - The company will publish a separate ESG report in accordance with the HKEX's Environmental, Social and Governance Reporting Guide[159](index=159&type=chunk) Financial Statements and Auditor's Report [Independent Auditor's Report](index=89&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) Independent auditor PwC issued an unqualified opinion on the 2018 consolidated financial statements, identifying 'Goodwill Impairment Assessment' as the sole key audit matter due to its materiality and subjective management judgments - Auditor PricewaterhouseCoopers issued a standard unqualified opinion on the consolidated financial statements[250](index=250&type=chunk) - The key audit matter was 'Goodwill Impairment Assessment'; as of the end of 2018, the carrying amount of goodwill was **RMB 1.045 billion**, primarily related to acquisitions of other property management groups; its materiality and the subjective management judgments involved in its assessment made it an audit focus[252](index=252&type=chunk)[253](index=253&type=chunk) - The auditor's procedures included: evaluating the professional competence of external valuers, assessing the reasonableness of valuation methods and key assumptions (e.g., revenue growth rate, gross profit margin, discount rate), and performing sensitivity analysis; the auditor deemed the valuation methods appropriate and key assumptions supported by evidence[253](index=253&type=chunk) [Consolidated Financial Statements](index=93&type=section&id=%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section presents the company's core consolidated financial statements for 2018, including the statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows 2018 Key Financial Data (Consolidated Statements) | Metric | Amount (RMB '000) | | :--- | :--- | | **Income Statement:** | | | Revenue | 3,376,749 | | Operating Profit | 1,076,280 | | Profit for the Year | 810,879 | | **Balance Sheet (Period-End):** | | | Total Assets | 7,296,549 | | Total Liabilities | 1,786,512 | | Total Shareholders' Equity | 5,510,037 | | **Cash Flow Statement:** | | | Net Cash from Operating Activities | 883,165 | | Net Cash Used in Investing Activities | (112,241) | | Net Cash from Financing Activities | 3,142,403 | [Notes to Financial Statements](index=99&type=section&id=%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) The notes to the financial statements provide detailed explanations and supplementary information on the company's principal accounting policies, estimates, segment information, and significant transactions, crucial for understanding its financial position [Segment Information (Note 5)](index=125&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The company manages its operations by brand, segmenting into 'Agile Property' and 'All Other Segments'; in 2018, 'Agile Property' contributed the majority of revenue and profit, with external revenue of **RMB 2.829 billion** and segment profit of **RMB 869 million** 2018 Segment Performance (RMB '000) | Segment | External Customer Revenue (RMB '000) | Segment Performance (RMB '000) | | :--- | :--- | :--- | | Agile Property | 2,829,171 | 868,906 | | All Other Segments | 547,578 | 72,843 | | **Total** | **3,376,749** | **941,749** | [Revenue (Note 6)](index=129&type=section&id=%E6%94%B6%E5%85%A5) The vast majority of the company's revenue (over **99%**) is recognized 'over time', primarily from ongoing property management and related value-added services; as of year-end, contract liabilities, mainly prepaid property management fees, amounted to **RMB 365 million** 2018 Revenue by Recognition Point (RMB '000) | Revenue Type | Recognition Point | Amount | | :--- | :--- | :--- | | Property Management Services | Over Time | 1,624,835 | | Other Extended Value-added Services | Over Time | 1,747,719 | | Sale of Goods, Parking Lots & Shops | At a Point in Time | 4,195 | | **Total** | | **3,376,749** | - As of the end of 2018, contract liabilities (primarily prepaid customer funds) amounted to **RMB 365 million**, of which **RMB 51.66 million** was from related parties[369](index=369&type=chunk) [Intangible Assets and Goodwill (Note 16)](index=139&type=section&id=%E7%84%A1%E5%BD%A2%E8%B3%87%E7%94%A2%E8%88%87%E5%95%86%E8%AD%BD) As of year-end 2018, the company's intangible assets were **RMB 166 million** and goodwill was **RMB 1.045 billion**, primarily from acquisitions; management performed impairment tests with an independent valuer, concluding no impairment was needed based on future cash flow projections Intangible Assets and Goodwill Net Book Value (RMB '000) | Metric | 2018 Year-End (RMB '000) | 2017 Year-End (RMB '000) | | :--- | :--- | :--- | | Computer Software | 21,736 | 21,916 | | Trademarks | 22,307 | 16,200 | | Customer Relationships | 122,405 | 72,187 | | **Total Intangible Assets** | **166,448** | **110,303** | | **Goodwill** | **1,045,362** | **918,967** | - Key assumptions for goodwill impairment testing include: projected annual revenue growth rates for Greenland Property of **9%-101%** and gross margin of approximately **29-30%** over the next 5 years; for Nanjing Zizhu, projected annual revenue growth rates of **3%-28%** and gross margin of approximately **22%** over the next 5 years; pre-tax discount rates were **20.6%** and **19.9%** respectively[398](index=398&type=chunk)[399](index=399&type=chunk) [Business Combinations (Note 29)](index=152&type=section&id=%E6%A5%AD%E5%8B%99%E5%90%88%E4%BD%B5) In 2018, the company completed two significant business combinations: acquiring a **51%** stake in Nanjing Zizhu for a discounted consideration of **RMB 202 million**, resulting in **RMB 124 million** in goodwill, and **100%** of Jingji Property Services for **RMB 10.5 million**, generating **RMB 2.08 million** in goodwill - On April 30, 2018, the acquisition of a **51%** equity stake in Nanjing Zizhu was completed for a discounted consideration of **RMB 202 million**, recognizing **RMB 124 million** in goodwill[428](index=428&type=chunk)[432](index=432&type=chunk) - On August 31, 2018, the acquisition of a **100%** equity stake in Jingji Property Services was completed for a consideration of **RMB 10.5 million**, recognizing **RMB 2.08 million** in goodwill[434](index=434&type=chunk)[435](index=435&type=chunk) [Related Party Transactions (Note 30)](index=155&type=section&id=%E9%97%9C%E8%81%AF%E6%96%B9%E4%BA%A4%E6%98%93) The company engages in substantial related party transactions, primarily providing services to entities controlled by its ultimate holding company, Agile Holdings, and major shareholder, Greenland Holdings; in 2018, revenue from these transactions totaled **RMB 1.569 billion**, forming a significant portion of the company's total revenue 2018 Key Related Party Transactions (Service Revenue, RMB '000) | Counterparty | 2018 (RMB '000) | 2017 (RMB '000) | | :--- | :--- | :--- | | Entities Controlled by Same Ultimate Holding Company | 1,243,936 | 470,605 | | Greenland Holdings and its Controlled Entities | 207,243 | 43,766 | | Agile Holdings' Joint Ventures and Associates | 114,996 | 18,889 | | **Total** | **1,569,370** | **533,786** | 2018 Year-End Key Related Party Receivables (RMB '000) | Metric | Amount (RMB '000) | | :--- | :--- | | Trade Receivables | 507,646 | | Other Receivables | 70,669 | | **Total** | **578,315** | [Five-Year Financial Summary](index=175&type=section&id=%E4%BA%94%E5%B9%B4%E8%B2%A1%E5%8B%99%E6%A6%82%E8%A6%81) The five-year financial summary illustrates the company's consistent high growth from 2014 to 2018, with revenue and profit attributable to owners showing significant compound annual growth rates Five-Year Financial Data Summary (RMB '000) | Metric | 2018 (RMB '000) | 2017 (RMB '000) | 2016 (RMB '000) | 2015 (RMB '000) | 2014 (RMB '000) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 3,376,749 | 1,760,753 | 1,244,735 | 934,412 | 826,099 | | **Gross Profit** | 1,289,941 | 590,565 | 311,647 | 148,815 | 98,820 | | **Profit Attributable to Owners of the Company** | 801,045 | 289,727 | 160,670 | 64,966 | 41,604 | | **Total Assets** | 7,296,549 | 2,510,797 | 1,898,857 | 1,253,992 | 1,605,432 | | **Total Equity** | 5,510,037 | 1,474,069 | 303,482 | 102,960 | 30,929 |