Company Information, Awards and Honors [Company Information](index=2&type=section&id=Company%20Information) This section provides the company's fundamental details, including board members, committees, headquarters, auditor, legal counsel, bankers, investor relations, website, and stock code - The company's Chairman is **Mr. Xia Shaofei**[5](index=5&type=chunk) - The company's auditor is **PricewaterhouseCoopers**[6](index=6&type=chunk) - The company's stock code on the Hong Kong Stock Exchange is **09666**[6](index=6&type=chunk) [Awards and Honors](index=4&type=section&id=Awards%20and%20Honors) This section highlights the company's numerous industry accolades in H1 2021, demonstrating its comprehensive strength, service quality, technological application, and market leadership in property services - The company was honored as one of the "**2021 China Property Service Top 100 Enterprises Comprehensive Strength TOP10**"[9](index=9&type=chunk) - The company received the title of "**2021 China Property Technology Empowerment Leading Enterprise**" for its technology application[9](index=9&type=chunk) - The company was recognized as one of the "**2021 China Property Service Listed Companies Comprehensive Strength TOP10**" for its outstanding capital market performance[10](index=10&type=chunk) Chairman's Statement [Chairman's Statement](index=6&type=section&id=Chairman's%20Statement) Chairman Mr. Xia Shaofei reviewed strong H1 2021 growth amidst a complex environment, reiterating the "Service + Technology, Service + Ecosystem" strategy and outlining progress in urban space, quality life, and smart technology services for high-quality growth and shareholder returns 2021 H1 Key Performance Indicators | Indicator | 2021 H1 | YoY Growth | | :--- | :--- | :--- | | Total Revenue | Approx. **RMB 2.586 billion** | Approx. **89%** | | Of which: Community Value-added Services Revenue | Approx. **RMB 652 million** | Approx. **419%** | | Net Profit | Approx. **RMB 542 million** | Approx. **79%** | | Net Profit attributable to owners | Approx. **RMB 530 million** | Approx. **80%** | - As of June 30, 2021, GFA under management was approximately **187 million sq.m.**, with independent third parties accounting for approximately **52%**; contracted GFA was approximately **315 million sq.m.**, with independent third parties accounting for approximately **58%**[12](index=12&type=chunk) - The company firmly implements the "**Service + Technology, Service + Ecosystem**" strategy, collaboratively building three major business segments: urban space services, quality life services, and smart technology services[13](index=13&type=chunk)[14](index=14&type=chunk) - Future plans include continuously strengthening three core capabilities—new services, new ecosystem, and new technology—and enhancing urban density, deep collaboration, and concentration[14](index=14&type=chunk) Management Discussion and Analysis [Business Overview](index=8&type=section&id=Business%20Overview) The company is a leading, top-ranked integrated smart property service provider in Southwest China, consistently among China's top ten, covering property management, non-owner value-added, community value-added, and smart technology services with a "Service + Technology, Service + Ecosystem" strategy - The company has been ranked among China's Top 10 Property Service Enterprises by CIH for **six consecutive years** and maintained the **largest market share in Southwest China** for six consecutive years[15](index=15&type=chunk) - In 2021, the company was included in the **Hang Seng Composite Index** and **FTSE Russell Flagship Index** constituents, gaining capital market recognition[15](index=15&type=chunk) [Financial Review](index=8&type=section&id=Financial%20Review) This section reviews the company's H1 2021 financial performance, showing an 88.8% revenue increase, 94.0% gross profit growth, and a slight gross margin rise to 32.5%, with detailed analysis of business segments, costs, financial position, and cash flow, reflecting strong growth and robust financial health [Revenue Analysis](index=8&type=section&id=Revenue) For the six months ended June 30, 2021, the Group's total revenue reached **RMB 2.586 billion**, a year-on-year increase of **88.8%**, primarily driven by all four business segments, with community value-added services revenue soaring by **419.0%** 2021 H1 Revenue Composition (by Business Line) | Business Line | 2021 H1 Revenue (RMB thousand) | Proportion (%) | 2020 H1 Revenue (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 1,309,579 | 50.6 | 925,381 | 67.6 | | Non-owner Value-added Services | 567,387 | 21.9 | 292,227 | 21.3 | | Community Value-added Services | 651,744 | 25.2 | 125,568 | 9.2 | | Smart Technology Services | 57,030 | 2.3 | 26,428 | 1.9 | | **Total** | **2,585,740** | **100.0** | **1,369,604** | **100.0** | - Community value-added services revenue significantly increased by **419.0%** year-on-year, primarily due to an increase in customer base and expansion of service types[18](index=18&type=chunk) [Property Management Services Analysis](index=9&type=section&id=Property%20Management%20Services) Property management services revenue grew **41.5%** to **RMB 1.310 billion**, with GFA under management increasing **44.0%** to **187 million sq.m.**, and non-residential property revenue rising **59.4%** - As of June 30, 2021, GFA under management was approximately **187 million sq.m.**, a year-on-year increase of **44.0%**; contracted GFA was approximately **315 million sq.m.**[20](index=20&type=chunk) GFA Under Management and Revenue (by Developer Type) | Developer Type | 2021 H1 GFA Under Management (thousand sq.m.) | 2021 H1 Revenue (RMB thousand) | 2020 H1 GFA Under Management (thousand sq.m.) | 2020 H1 Revenue (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Jinke Group Projects | 78,936 | 723,343 | 60,481 | 559,021 | | Jinke Group Joint Ventures and Associates Projects | 11,025 | 63,983 | 6,396 | 33,122 | | External Expansion Projects | 96,832 | 522,253 | 62,867 | 333,238 | | **Total** | **186,793** | **1,309,579** | **129,744** | **925,381** | - Non-residential property GFA under management increased to **34 million sq.m.**, accounting for **18.2%** of total GFA under management[23](index=23&type=chunk) [Non-owner Value-added Services Analysis](index=12&type=section&id=Non-owner%20Value-added%20Services) Non-owner value-added services revenue increased **94.2%** to **RMB 567 million**, driven by increased sales assistance services and significant growth in consulting and other services, particularly property agency sales Non-owner Value-added Services Revenue Composition | Service Type | 2021 H1 (RMB thousand) | Proportion (%) | 2020 H1 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Sales Assistance Services | 369,802 | 65.2 | 246,890 | 84.5 | | Pre-delivery Services | 85,346 | 15.0 | 42,388 | 14.5 | | Consulting and Other Services | 112,239 | 19.8 | 2,949 | 1.0 | | **Total** | **567,387** | **100.0** | **292,227** | **100.0** | [Community Value-added Services Analysis](index=13&type=section&id=Community%20Value-added%20Services) Community value-added services experienced explosive growth, with revenue surging **419.0%** to **RMB 652 million**, significantly increasing its contribution to total revenue from **9.2%** to **25.2%**, primarily driven by travel and integrated services and park operation services Community Value-added Services Revenue Composition | Service Segment | 2021 H1 (RMB thousand) | Proportion (%) | 2020 H1 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Family Life Services | 132,110 | 20.3 | 62,798 | 50.0 | | Park Operation Services | 205,255 | 31.5 | 32,767 | 26.1 | | Home Renovation Services | 48,759 | 7.5 | 14,587 | 11.6 | | Travel and Integrated Services | 265,620 | 40.7 | 15,416 | 12.3 | | **Total** | **651,744** | **100.0** | **125,568** | **100.0** | - Core community value-added businesses, such as community group buying (**Jinke Jinxuan**), home renovation (**Jinke Yuejia**), and travel and integrated services (**Kangcheng Guolu**), all achieved significant growth[32](index=32&type=chunk) [Smart Technology Services Analysis](index=14&type=section&id=Smart%20Technology%20Services) Smart technology services revenue increased significantly by **115.8%** to **RMB 57 million**, maintaining a high gross margin of **49.4%**, empowering property management for cost reduction and efficiency while exporting digital solutions - In H1 2021, smart technology services revenue was approximately **RMB 57 million**, a year-on-year increase of **115.8%**[34](index=34&type=chunk) - This business segment maintained a high gross margin of **49.4%**[34](index=34&type=chunk) [Gross Profit and Gross Margin Analysis](index=17&type=section&id=Gross%20Profit%20and%20Gross%20Margin) The Group's overall gross profit increased **94.0%** to **RMB 840 million**, with the overall gross margin slightly rising from **31.6%** to **32.5%**, and smart technology services achieving the highest gross margin at **49.4%** 2021 H1 Gross Profit and Gross Margin (by Business Line) | Business Line | 2021 H1 Gross Profit (RMB thousand) | Gross Margin (%) | 2020 H1 Gross Profit (RMB thousand) | Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 372,541 | 28.4 | 257,656 | 27.8 | | Non-owner Value-added Services | 210,036 | 37.0 | 116,512 | 39.9 | | Community Value-added Services | 229,502 | 35.2 | 45,995 | 36.6 | | Smart Technology Services | 28,162 | 49.4 | 12,871 | 48.7 | | **Total** | **840,241** | **32.5** | **433,034** | **31.6** | [Liquidity and Capital Resources Analysis](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2021, the Group maintained a robust financial position with **RMB 6.265 billion** in cash and cash equivalents, a significant increase in operating cash flow to **RMB 673 million**, and a zero capital gearing ratio with no bank borrowings - As of June 30, 2021, cash and cash equivalents were approximately **RMB 6.265 billion**[52](index=52&type=chunk) - Net cash inflow from operating activities was approximately **RMB 673 million**, compared to **RMB 10.7 million** in the same period last year, primarily due to increased operating profit and enhanced collection management[53](index=53&type=chunk) - As of June 30, 2021, the Group had **no borrowings**, and the capital gearing ratio was **zero**[53](index=53&type=chunk)[54](index=54&type=chunk) [Prospects and Future Plans](index=15&type=section&id=Prospects%20and%20Future%20Plans) The company will continue to develop its space, life, and technology services, focusing on urban density and M&A for space, expanding community ecosystem businesses for life, and increasing R&D for technology to enhance barriers and smart city initiatives - **Space Services**: Solidify urban density strategy, consolidate core competitive advantages in Southwest China, actively respond to M&A opportunities, and develop the non-residential segment[35](index=35&type=chunk) - **Life Services**: Thoroughly develop community value-added businesses, focus on the mass consumption sector, vigorously develop community group buying, home renovation and beautification, property brokerage, group meal catering, and travel services[35](index=35&type=chunk) - **Technology Services**: Increase product R&D investment, upgrade the "**Tianqi Cloud City**" smart system, leverage technological advantages to empower business expansion, and actively participate in smart city construction[36](index=36&type=chunk) [Material Acquisitions and Disposals](index=22&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Significant%20Investments%2C%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures) During the reporting period, the company completed two key acquisitions: 100% equity in Chongqing Meilishan Property to boost its high-end residential market share in Chongqing, and 100% equity in Baotou Smart Property to enter the Inner Mongolia market and expand its national footprint - In May 2021, acquired **100% equity** in Chongqing Meilishan Property for a total consideration of approximately **RMB 102.5 million** (including assumed liabilities), aligning with the company's urban density strategy[57](index=57&type=chunk) - In February 2021, acquired **100% equity** in Baotou Smart Property for a transfer consideration of **RMB 57 million**, contributing to the expansion into the Inner Mongolia market[58](index=58&type=chunk) [Use of Net Proceeds from Listing](index=23&type=section&id=Use%20of%20Net%20Proceeds%20from%20Listing) The company disclosed the utilization of approximately **HKD 6.615 billion** net proceeds from its November 2020 listing, with **HKD 1.118 billion** used by June 30, 2021, primarily for strategic investments, value-added services development, and general working capital, consistent with prospectus plans Summary of Use of Net Proceeds from Listing (as of June 30, 2021) | Planned Use | Planned Amount (HKD million) | Utilized Amount (HKD million) | Unutilized Amount (HKD million) | | :--- | :--- | :--- | :--- | | Strategic investments and acquisitions | 3,968.94 | 434.27 | 3,534.67 | | Upgrading digital and smart management systems | 661.49 | 0.49 | 661.00 | | Development of value-added services | 1,322.98 | 178.12 | 1,144.86 | | General business operations and working capital | 661.49 | 505.46 | 156.03 | | **Total** | **6,614.9** | **1,118.34** | **5,496.56** | [Employees and Remuneration Policy](index=27&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2021, the Group employed approximately **9,029** individuals, implementing a remuneration package including salaries, bonuses, and allowances with regular performance appraisals, resulting in total staff costs of **RMB 691.5 million** for the period - As of June 30, 2021, the Group had approximately **9,029** employees[67](index=67&type=chunk) - In H1 2021, total staff costs amounted to **RMB 691.5 million**, compared to **RMB 499.3 million** in the same period last year[67](index=67&type=chunk) Corporate Governance [Corporate Governance](index=28&type=section&id=Corporate%20Governance) The company adopted the Corporate Governance Code, complying with all provisions except for the non-separation of Chairman and CEO roles, and the Audit Committee reviewed the interim report and unaudited financial results - The roles of Chairman and Chief Executive Officer are both held by Executive Director **Mr. Xia Shaofei**, which deviates from Rule A.2.1 of the Corporate Governance Code[69](index=69&type=chunk) - The Audit Committee, together with management and external auditor **PricewaterhouseCoopers**, discussed and reviewed the unaudited interim results for the period[72](index=72&type=chunk) Other Information [Other Information](index=30&type=section&id=Other%20Information) This section details shareholdings of directors, supervisors, chief executives, and major shareholders as of June 30, 2021, noting the Board's decision not to declare an interim dividend for 2021, following the payment of the 2020 final dividend on June 25 - As of June 30, 2021, controlling shareholder **Jinke Property** held approximately **52.33%** of the company's total share capital[77](index=77&type=chunk) - The company paid a final dividend of **RMB 0.5 per share** (before tax) for the year ended December 31, 2020, on June 25, 2021[86](index=86&type=chunk) - The Board resolved **not to declare any interim dividend** for the six months ended June 30, 2021[86](index=86&type=chunk) Interim Financial Information [Review Report on Interim Financial Information](index=37&type=section&id=Review%20Report%20on%20Interim%20Financial%20Information) The independent auditor, PricewaterhouseCoopers, reviewed the interim financial information according to HKSRS 2410, concluding no material issues regarding its preparation under HKAS 34 "Interim Financial Reporting" - Auditor **PricewaterhouseCoopers** issued a review conclusion on the interim financial information, finding **no material issues**[89](index=89&type=chunk) [Financial Statements](index=38&type=section&id=Financial%20Statements) This section presents the condensed consolidated interim statements for the six months ended June 30, 2021, including comprehensive income, financial position, equity changes, and cash flows, showing a **RMB 542 million** profit, **RMB 9.586 billion** total assets, and strong operating cash flow 2021 H1 Financial Summary | Indicator | Amount (RMB thousand) | | :--- | :--- | | **Comprehensive Income Statement:** | | | Revenue | 2,585,740 | | Gross Profit | 840,241 | | Operating Profit | 642,829 | | Profit for the period | 541,761 | | Profit attributable to owners of the Company | 529,813 | | **Statement of Financial Position (Period End):** | | | Total Assets | 9,585,911 | | Total Liabilities | 2,110,805 | | Total Equity | 7,475,106 | - Basic and diluted earnings per share were **RMB 0.81**, higher than **RMB 0.64** in the same period last year[90](index=90&type=chunk) [Notes to the Condensed Consolidated Interim Financial Information](index=43&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Information) This section provides detailed explanations and supplementary information for the interim financial statements, covering preparation basis, accounting policies, segment information, revenue and cost breakdowns, asset and liability composition, business combinations, and related party transactions, essential for understanding the financial reports - During the reporting period, the Group completed business combinations of **seven companies**, with a total purchase consideration of **RMB 139 million**, resulting in goodwill of **RMB 133 million**[146](index=146&type=chunk) - Newly acquired businesses contributed **RMB 35.865 million** in revenue and **RMB 4.337 million** in net profit to the Group from the acquisition date to the end of the period[148](index=148&type=chunk) - The notes detail transactions with the ultimate controlling company, **Jinke Group**, and its associates, including service provision, goods procurement, and fund transfers[160](index=160&type=chunk)[162](index=162&type=chunk) Glossary and Definitions [Glossary and Definitions](index=82&type=section&id=Glossary%20and%20Definitions) This section defines specific terms and abbreviations used throughout the report, such as "Jinke Property," "Jinke Group," "H Shares," and "the Period," ensuring accurate comprehension of the content

[Financial Highlights](index=5&type=section&id=Financial%20Highlights) This section provides a concise overview of the company's strong financial performance in the reporting period [Financial Highlights Summary](index=5&type=section&id=Financial%20Highlights%20Summary) In 2020, the company achieved robust financial growth with total revenue increasing by 44.3% to RMB 3.36 billion, gross profit by 56.9% to RMB 997 million, and gross margin improving to 29.7%, while profit attributable to owners surged by 68.5% to RMB 618 million, with total assets doubling to RMB 8.55 billion and cash and cash equivalents soaring to RMB 6.84 billion, primarily due to the H-share listing in November 2020 Comprehensive Income Statement Summary (For the year ended December 31) | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue (RMB million) | 3,358.9 | 2,327.7 | +44.3% | | Gross Profit (RMB million) | 997.4 | 635.7 | +56.9% | | Gross Margin | 29.7% | 27.3% | +2.4pp | | Profit for the Year (RMB million) | 633.2 | 374.4 | +69.1% | | Profit Attributable to Owners of the Company (RMB million) | 617.6 | 366.5 | +68.5% | | Basic Earnings Per Share (RMB) | 1.24 | 0.8 | +55.0% | Comprehensive Balance Sheet Summary (As of December 31) | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Total Assets (RMB million) | 8,552.2 | 4,093.9 | +108.9% | | Cash and Cash Equivalents (RMB million) | 6,840.3 | 333.1 | +1953.5% | | Total Equity (RMB million) | 7,252.5 | 505.0 | +1336.1% | [Chairman's Statement](index=12&type=section&id=Chairman%27s%20Statement) Chairman Mr. Xia Shaofei outlines the company's strategic vision and growth targets for the coming years [Chairman's Statement Summary](index=12&type=section&id=Chairman%27s%20Statement%20Summary) Chairman Mr. Xia Shaofei's statement establishes the first year of the company's "New Five Years, New Tenfold Growth" target, emphasizing the deepening of "Service + Technology, Service + Ecosystem" development strategies by strengthening the "Ecosystem + Technology" dual engines, iterating three major business segments—space services, life services, and technology services—and actively planning for health and cultural tourism businesses, aiming to transform the company from community services to societal services and become a world-class smart service provider, with a goal of 80% annual profit growth through enhanced external expansion, prudent M&A, focus on core value-added service tracks, and accelerated digital transformation - The company proposes a "New Five Years, New Tenfold Growth" plan, with 2021 as the inaugural year targeting **80% annual profit growth**[40](index=40&type=chunk)[44](index=44&type=chunk) - The core strategy involves deepening "Service + Technology, Service + Ecosystem," strengthening the "Ecosystem + Technology" dual engines, and iterating three major business segments: urban space services, beautiful life services, and smart technology services[40](index=40&type=chunk) - For urban space services, the company will increase expansion into non-residential formats such as commercial offices, schools, and hospitals, and extend into urban services[41](index=41&type=chunk) - For beautiful life services, the focus will be on advantageous businesses like travel and accommodation, family life, and home renovation, while exploring spiritual services such as culture, sports, and health[42](index=42&type=chunk) - For smart technology services, the company will accelerate digital transformation, promote robot applications (e.g., cleaning, patrolling), and export its technological and digital service capabilities[43](index=43&type=chunk) [Management Discussion and Analysis](index=14&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the company's operational performance, market conditions, and future strategies [Market and Business Review](index=14&type=section&id=Market%20and%20Business%20Review) In 2020, despite COVID-19 challenges, the company successfully listed on the Hong Kong Stock Exchange, leveraging the property management industry's value re-shaping and capital market recognition, achieving high-speed growth with revenue and net profit increasing by 44.3% and 69.1% respectively, while steadily expanding GFA under management and contracted GFA, with a significant proportion of independent third-party projects, maintaining a quality-first strategy with customer satisfaction exceeding 90% for nine consecutive years and enhancing community value through the "Ten Years as New Plan," optimizing project portfolios, vigorously expanding non-residential formats and urban services, and deepening presence in core regions, with significant achievements in value-added services and technology empowerment, laying a solid foundation for future development 2020 Key Performance Indicators | Indicator | 2020 | YoY Growth | | :--- | :--- | :--- | | Revenue | RMB 3.36 billion | 44.3% | | Gross Profit | RMB 997 million | 56.9% | | Net Profit | RMB 633 million | 69.1% | | Net Profit Attributable to Owners | RMB 618 million | 68.5% | | GFA Under Management | 156 million sqm | - | | Contracted GFA | 277 million sqm | - | - The company's profitability continues to improve, with gross margin reaching **29.7% (+2.4 percentage points)** and net margin reaching **18.9% (+2.8 percentage points)**, primarily due to technology empowerment and cost reduction and efficiency improvement[46](index=46&type=chunk) - In business expansion, independent third-party projects account for **48.6% of GFA under management** and **56.3% of contracted GFA**, demonstrating strong market-oriented expansion capabilities[45](index=45&type=chunk) - The company emphasizes service quality, with customer satisfaction exceeding **90% for nine consecutive years** and property fee collection rates remaining at a high of **90%**[46](index=46&type=chunk)[48](index=48&type=chunk) - Technology empowerment has yielded significant results, with the Tianqi Cloud City smart system upgraded to version 4.0, and the company holding **16 national intellectual property patents** and **19 software copyrights**[49](index=49&type=chunk) [Future Outlook](index=17&type=section&id=Future%20Outlook) Looking ahead, the company will deepen its "Service + Technology, Service + Ecosystem" strategy, focusing on life, technology, and space business segments, planning to achieve simultaneous growth in scale and profitability by improving governance, optimizing talent incentive mechanisms (e.g., partnership schemes), strengthening market-oriented expansion and prudent M&A to address increasing market competition, while continuing to expand into non-residential formats like commercial offices, schools, and hospitals, extending into urban services, accelerating digital transformation and promoting robot applications in technology, and exporting smart solutions, and vigorously developing community group buying, tourism, and asset management businesses around the community ecosystem in life services, exploring cultural, sports, and health consumption, aiming to become a first-class beautiful life service provider - Talent and Incentives: The company will implement a **partnership mechanism** based on existing employee stock ownership plans, and carry out departmental reforms for value-added service segments[51](index=51&type=chunk) - Urban Space Services: Scale growth will be achieved through **bidding, strategic cooperation, and prudent M&A**, with a focus on expanding non-residential formats and urban services[51](index=51&type=chunk) - Smart Technology Services: The company will continue to **upgrade smart systems**, accelerate the implementation of robot applications, and export full-lifecycle smart solutions to small and medium-sized property management companies in the industry[52](index=52&type=chunk) - Beautiful Life Services: The company will vigorously develop businesses such as **community group buying, tourism, asset management, and growth education**, and actively explore cultural, sports, and health-related consumption, extending its services from communities to society[53](index=53&type=chunk) [Financial Review](index=18&type=section&id=Financial%20Review) In 2020, the company's total revenue increased by 44.3% to RMB 3.36 billion, driven by comprehensive growth across four major business segments, with property management services, non-owner value-added services, community value-added services, and smart technology services revenues growing by 38.1%, 46.9%, 72.3%, and 77.3% respectively, while gross profit increased by 56.9% to RMB 997 million, and overall gross margin improved from 27.3% to 29.7%, with a healthy financial position, ample cash after IPO, no borrowings at year-end, and a capital gearing ratio reduced to zero [Revenue Analysis](index=18&type=section&id=Revenue%20Analysis) Total revenue reached RMB 3.36 billion in 2020, a 44.3% year-on-year increase, primarily driven by the synergistic efforts of four business lines: 1) Property Management Services (revenue RMB 2.02 billion, +38.1%), benefiting from an increase in GFA under management from 121 million sqm to 156 million sqm; 2) Non-owner Value-added Services (revenue RMB 876 million, +46.9%), mainly driven by increased sales venue services; 3) Community Value-added Services (revenue RMB 411 million, +72.3%), benefiting from business scale expansion and service diversification; 4) Smart Technology Services (revenue RMB 48 million, +77.3%), due to increased output of smart solutions, with property management services remaining the primary revenue source, accounting for 60.3% Total Revenue by Business Line | Business Line | 2020 Revenue (RMB thousand) | Share (%) | 2019 Revenue (RMB thousand) | Share (%) | YoY Growth | | :--- | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 2,024,034 | 60.3 | 1,465,792 | 62.9 | +38.1% | | Non-owner Value-added Services | 876,082 | 26.1 | 596,391 | 25.6 | +46.9% | | Community Value-added Services | 411,100 | 12.2 | 238,603 | 10.3 | +72.3% | | Smart Technology Services | 47,728 | 1.4 | 26,871 | 1.2 | +77.3% | | **Total** | **3,358,944** | **100.0** | **2,327,657** | **100.0** | **+44.3%** | - GFA under management increased by **29.6%** from **120.5 million sqm** at the end of 2019 to **156.2 million sqm** at the end of 2020, which was the primary driver for the growth in property management service revenue[55](index=55&type=chunk) - Non-residential property management area significantly increased, with the number of projects growing from **132 to 215**, optimizing the structure of property management revenue[60](index=60&type=chunk) - Among community value-added services, family life services (including community group buying) experienced the most rapid growth, with revenue increasing from **RMB 81.64 million to RMB 250 million**, a year-on-year increase of **206%**[68](index=68&type=chunk)[49](index=49&type=chunk) [Cost and Gross Profit Analysis](index=23&type=section&id=Cost%20and%20Gross%20Profit%20Analysis) In 2020, the Group's gross profit increased by 56.9% to RMB 997 million, with the overall gross margin improving from 27.3% to 29.7%, primarily due to economies of scale and technology empowerment for cost reduction and efficiency improvement, while gross margins varied across business segments: property management services gross margin significantly increased from 21.7% to 26.3% mainly due to an increase in high-margin non-residential projects; smart technology services gross margin increased from 48.3% to 53.6%; non-owner value-added services gross margin slightly increased to 33.4%; and community value-added services gross margin decreased from 46.1% to 35.9%, mainly affected by the increased proportion of lower-margin community group buying business Gross Profit and Gross Margin by Business Line | Business Line | 2020 Gross Profit (RMB thousand) | 2020 Gross Margin (%) | 2019 Gross Profit (RMB thousand) | 2019 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 531,397 | 26.3 | 318,765 | 21.7 | | Non-owner Value-added Services | 292,613 | 33.4 | 193,919 | 32.5 | | Community Value-added Services | 147,764 | 35.9 | 110,003 | 46.1 | | Smart Technology Services | 25,580 | 53.6 | 12,991 | 48.3 | | **Total** | **997,354** | **29.7** | **635,678** | **27.3** | - Cost of sales increased by **39.6%** to **RMB 2.36 billion**, largely consistent with business growth[71](index=71&type=chunk) - Property management services gross margin increased by **4.6 percentage points**, primarily due to an increase in average property management fees for residential properties and a rise in the number of high-margin non-residential properties[74](index=74&type=chunk) - Community value-added services gross margin decreased by **10.2 percentage points**, mainly due to the increased proportion of lower-margin community group buying business[74](index=74&type=chunk) [Other Income Expenses and Tax](index=24&type=section&id=Other%20Income%20Expenses%20and%20Tax) In 2020, the Group recorded a net other loss of RMB 37.3 million, compared to a net other income of RMB 1.8 million in 2019, primarily due to exchange losses incurred during the year, while administrative expenses remained stable at approximately RMB 238 million, demonstrating effective cost control, and income tax expense increased to RMB 134 million, consistent with the growth in profit before tax, with the effective income tax rate remaining low at 17.5% due to preferential policies in Western China and for high-tech enterprises - Other income decreased by **8.3%** from **RMB 52.1 million to RMB 47.8 million**, mainly due to reduced interest income from loans collected from Jinke Group after the repayment of ABS and ABN agreements[75](index=75&type=chunk) - A net other loss of **RMB 37.3 million** was recorded (2019: net income of RMB 1.8 million), primarily due to net exchange losses[76](index=76&type=chunk) - Administrative expenses remained at **RMB 238 million**, largely consistent with the previous year, reflecting effective cost reduction and efficiency improvement measures[77](index=77&type=chunk) - The effective income tax rate was **17.5%** (2019: 16.8%), lower than the general tax rate of 25%, mainly benefiting from Western Development and high-tech enterprise tax incentives[78](index=78&type=chunk) [Key Balance Sheet Items Analysis](index=25&type=section&id=Key%20Balance%20Sheet%20Items%20Analysis) As of the end of 2020, the company's balance sheet structure underwent significant changes, with trade receivables and bills receivable increasing to RMB 1.06 billion due to business expansion, while prepayments and other receivables substantially decreased from RMB 3.08 billion to RMB 520 million, primarily due to the full repayment of amounts under ABS and ABN agreements, and correspondingly, other payables and accrued expenses also significantly decreased from RMB 1.25 billion to RMB 560 million, mainly due to the settlement of advances from related parties, reflecting the company's optimized financial structure and cleared related-party transactions post-listing - Trade receivables and bills receivable increased from **RMB 550 million to RMB 1.06 billion (+91.9%)**, consistent with the expansion of property management and non-owner value-added services[81](index=81&type=chunk) - Prepayments and other receivables significantly decreased by **83.0%** from **RMB 3.08 billion to RMB 520 million**, primarily due to the full repayment of all outstanding amounts under ABS and ABN agreements[83](index=83&type=chunk) - Trade payables and bills payable increased from **RMB 150 million to RMB 280 million (+82.4%)**, mainly due to increased expenses payable to suppliers as GFA under management expanded[84](index=84&type=chunk) - Other payables and accrued expenses decreased by **55.4%** from **RMB 1.25 billion to RMB 560 million**, primarily due to the gradual settlement of advances payable to related parties[85](index=85&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of the end of 2020, the Group's liquidity position was exceptionally strong, with cash and cash equivalents surging from RMB 330 million to RMB 6.84 billion, primarily due to IPO proceeds, and the Group had repaid all bank borrowings, holding no borrowings at year-end compared to RMB 1.83 billion at the end of 2019, thus reducing the capital gearing ratio from 3.62 times to zero, significantly optimizing the financial structure, and all asset pledges were released with the termination of ABS and ABN agreements - Cash and cash equivalents significantly increased from **RMB 333.1 million** at the end of 2019 to **RMB 6.84 billion** at the end of 2020[87](index=87&type=chunk) Borrowing Situation | Borrowing Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Non-current Borrowings | – | 1,145,000 | | Current Borrowings | – | 685,000 | | **Total** | **–** | **1,830,000** | - The capital gearing ratio (total interest-bearing bank borrowings / total equity) decreased from **3.62 times** at the end of 2019 to **zero** at the end of 2020[91](index=91&type=chunk) - With the termination of ABS and ABN agreements in August 2020, the pledge of the Group's rights to receive property management fees was released, and there were no pledged assets at year-end[92](index=92&type=chunk) [Use of IPO Proceeds](index=29&type=section&id=Use%20of%20IPO%20Proceeds) The company raised net proceeds of approximately HKD 6.615 billion from its global offering (including the exercise of over-allotment option) in November and December 2020, with approximately 60% planned for strategic investments and acquisitions, 20% for developing value-added services, 10% for upgrading digital systems, and 10% for general working capital, and as of December 31, 2020, the company had not utilized any of the net IPO proceeds Planned Use of Net IPO Proceeds | Planned Use | Amount (HKD million) | Approximate Percentage | | :--- | :--- | :--- | | Strategic Investments and Acquisition Opportunities | 3,968.94 | 60% | | Upgrading Digital and Smart Management Systems | 661.49 | 10% | | Development of Value-added Services | 1,322.98 | 20% | | General Business Operations and Working Capital | 661.49 | 10% | | **Total** | **6,614.9** | **100%** | - As of December 31, 2020, the company had **not utilized any of the net IPO proceeds**[95](index=95&type=chunk) [Employees and Remuneration Policy](index=30&type=section&id=Employees%20and%20Remuneration%20Policy) As of the end of 2020, the Group had 8,758 employees, with annual staff costs of RMB 1.095 billion, and the company's remuneration policy is linked to operating performance, individual performance, and market levels, aiming to attract and retain talent, having implemented two phases of employee stock ownership plans in 2017 and 2020 to incentivize core employees, also providing systematic training programs and internal promotion opportunities, and attracting young talent through the "Star Elite" recruitment program to maintain team vitality - As of December 31, 2020, the Group had **8,758 employees**, with annual staff costs of **RMB 1.095 billion**[98](index=98&type=chunk) - The company has adopted **two phases of employee stock ownership plans** in 2017 and 2020 to retain talent and achieve strategic goals[98](index=98&type=chunk) - The company provides **systematic training** for employees, including induction training for new hires, assigning mentors to fresh graduates, and offering online courses and regular seminars covering quality control, customer relationship management, and other areas[99](index=99&type=chunk) [Corporate Governance Report](index=43&type=section&id=Corporate%20Governance%20Report) This section details the company's commitment to maintaining high standards of corporate governance [Corporate Governance Report Summary](index=43&type=section&id=Corporate%20Governance%20Report%20Summary) Since its listing, the company has been committed to maintaining a high level of corporate governance, and during the reporting period, except for the non-separation of the Chairman and CEO roles (both held by Mr. Xia Shaofei), the company complied with all code provisions of the Corporate Governance Code, with the Board believing this arrangement enhances decision-making efficiency, having established audit, remuneration, and nomination committees with clear terms of reference, and a sound risk management and internal control system, whose effectiveness is regularly reviewed by the Board, with the report also outlining shareholder rights, the appointment and training of joint company secretaries, and amendments to the Articles of Association - The company complied with the Corporate Governance Code, with the only deviation being Code Provision A.2.1, where the roles of Chairman and CEO are not separated, both held by Mr. Xia Shaofei, an arrangement the Board believes enhances decision-making efficiency and responsiveness[121](index=121&type=chunk) - The Board has three committees: Audit, Remuneration, and Nomination, with Mr. Chen Zhifeng, Chairman of the Audit Committee, possessing appropriate accounting professional qualifications, and Ms. Yuan Lin, an independent non-executive director, and Mr. Xia Shaofei, an executive director, chairing the Remuneration and Nomination Committees respectively[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - The Board has adopted a Board Diversity Policy and believes that the current Board is sufficiently diverse in terms of age, professional background (management, finance, legal, etc.), and experience to meet the company's governance and business development needs[134](index=134&type=chunk)[135](index=135&type=chunk) - The Board is responsible for overseeing the company's risk management and internal control systems and reviews their effectiveness at least annually, deeming the risk management and internal control systems effective and adequate as of the end of 2020[139](index=139&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) [Board of Directors' Report](index=55&type=section&id=Board%20of%20Directors%27%20Report) This report provides an overview of the company's business, financial position, and compliance matters for the year [Board of Directors' Report Summary](index=55&type=section&id=Board%20of%20Directors%27%20Report%20Summary) The Board of Directors' Report outlines the company's principal business, financial position, and compliance matters for the year 2020, proposing a final dividend of RMB 0.5 per share, noting the successful listing during the period, raising net proceeds of approximately HKD 6.615 billion, which remained unutilized by year-end, detailing four non-exempt continuing connected transactions primarily involving cooperation with controlling shareholder Jinke Property and its associates in property management, system supply, and goods trading, confirming compliance with Listing Rules, with independent non-executive directors and auditors reviewing and confirming these transactions, and also covering the fulfillment of the non-competition undertaking by the controlling shareholder, shareholdings of directors and substantial shareholders, and public float compliance - The Board recommends a final dividend of **RMB 0.5 per share (pre-tax)** for the year ended December 31, 2020, totaling approximately **RMB 326 million**[156](index=156&type=chunk) - The report discloses **four non-exempt continuing connected transaction master agreements** with controlling shareholder Jinke Property: sales, purchases, system supply and installation, and property management services, with the property management services master agreement having the highest annual cap, constituting a transaction subject to independent shareholders' approval[172](index=172&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Independent non-executive directors have reviewed and confirmed that all continuing connected transactions were conducted on normal commercial terms, fair and reasonable, and in the overall interest of shareholders, with auditors also confirming that the transactions did not exceed annual caps and complied with relevant agreements[178](index=178&type=chunk)[179](index=179&type=chunk) - Controlling shareholder Jinke Property has confirmed compliance with the non-competition undertaking, and independent non-executive directors have also reviewed and deemed it compliant[171](index=171&type=chunk) - Based on available information, the company maintained the minimum public float requirement (not less than **21.0%**) after the Listing Rules exemption[202](index=202&type=chunk) [Supervisory Board Report](index=74&type=section&id=Supervisory%20Board%20Report) This report confirms the company's compliance and the diligent performance of its directors and senior management [Supervisory Board Report Summary](index=74&type=section&id=Supervisory%20Board%20Report%20Summary) The Supervisory Board Report confirms that in 2020, the company operated strictly in accordance with laws and regulations, and directors and senior management diligently performed their duties, with no actions found to be detrimental to the company and shareholders' interests, having effectively supervised the company's financial status, major decisions, internal controls, use of proceeds, and connected transactions by attending meetings, believing that the financial report truly and objectively reflects the operating results and financial position, the internal control system is sound and effective, connected transactions are fair and reasonable, and having no objections to the Board's "Internal Control Self-Assessment Report," and looking forward to 2021, the Supervisory Board will continue to fulfill its supervisory duties to safeguard the interests of the company and all shareholders - The Supervisory Board believes the company operated in compliance with laws and regulations, and directors and senior management diligently performed their duties, with no violations or actions detrimental to shareholders' interests found[205](index=205&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) - The Supervisory Board reviewed the annual financial report and believes it truly and objectively reflects the company's financial position, and the unqualified opinion report issued by the auditing firm is objective and fair[210](index=210&type=chunk) - The Supervisory Board confirms that as of the end of 2020, the IPO proceeds remained unutilized, in compliance with regulations[211](index=211&type=chunk) - The Supervisory Board believes the company's connected transactions followed appropriate decision-making procedures and were fair and reasonable in pricing[212](index=212&type=chunk) - The Supervisory Board has no objections to the company's Internal Control Self-Assessment Report, believing the company's internal control system is sound, reasonable, and effective[213](index=213&type=chunk) [Independent Auditor's Report](index=78&type=section&id=Independent%20Auditor%27s%20Report) This section presents the independent auditor's opinion on the company's consolidated financial statements [Independent Auditor's Report Summary](index=78&type=section&id=Independent%20Auditor%27s%20Report%20Summary) PricewaterhouseCoopers issued an unqualified audit opinion on Jinke Smart Services Group's consolidated financial statements for the year ended December 31, 2020, stating that the financial statements truly and fairly present the Group's financial position, performance, and cash flows in accordance with Hong Kong Financial Reporting Standards and are properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance, with "Impairment assessment of trade receivables" identified as the key audit matter due to its materiality to the financial statements and significant estimation uncertainty involved in the assessment, and the auditors performed relevant procedures and found management's judgments and estimates to be adequately supported - Audit Opinion: PricewaterhouseCoopers issued an **unqualified opinion**, stating that the financial statements truly and fairly present the Group's financial position and operating results[216](index=216&type=chunk) - Key Audit Matter: The only key audit matter identified in this audit was **"Impairment assessment of trade receivables"**[218](index=218&type=chunk) - Reason for Key Audit Matter: This matter was identified due to the **materiality of trade receivables balance** to the consolidated financial statements (accounting for 62% of total non-cash assets) and the **significant estimation uncertainty** in the Expected Credit Loss (ECL) assessment[219](index=219&type=chunk) - Auditor's Response: The auditors performed procedures including understanding and testing key controls, assessing inherent risks, comparing historical data, evaluating the reasonableness of management's estimates, and testing aging accuracy, concluding that management's judgments and estimates for trade receivables impairment assessment were **adequately supported**[219](index=219&type=chunk)[220](index=220&type=chunk) [Consolidated Financial Statements](index=83&type=section&id=Consolidated%20Financial%20Statements) This section contains the audited core financial statements of the Group for the year ended December 31, 2020 [Consolidated Financial Statements Summary](index=83&type=section&id=Consolidated%20Financial%20Statements%20Summary) This section presents the Group's audited core financial statements for the year ended December 31, 2020, including the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, and consolidated statement of cash flows, which comprehensively reflect the company's operating results, financial position, changes in equity, and cash flows during the reporting period Key Data from Consolidated Statement of Comprehensive Income | Indicator (RMB thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 3,358,944 | 2,327,657 | | Gross Profit | 997,354 | 635,678 | | Operating Profit | 760,026 | 449,183 | | Profit and Total Comprehensive Income for the Year | 633,195 | 374,384 | | Profit Attributable to Owners of the Company | 617,594 | 366,452 | Key Data from Consolidated Statement of Financial Position | Indicator (RMB thousand) | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Assets | 8,552,243 | 4,093,893 | | Total Liabilities | 1,299,780 | 3,588,898 | | Total Equity | 7,252,463 | 504,995 | | Of which: Cash and Cash Equivalents | 6,840,339 | 333,149 | | Of which: Borrowings | 0 | 1,830,000 | Key Data from Consolidated Statement of Cash Flows | Indicator (RMB thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 113,432 | 236,801 | | Net Cash from Investing Activities | 2,230,981 | 490,192 | | Net Cash from Financing Activities | 4,203,080 | (810,147) | | Net Increase in Cash and Cash Equivalents | 6,547,493 | (83,154) | [Four-Year Financial Summary](index=179&type=section&id=Four-Year%20Financial%20Summary) This section provides a concise summary of the Group's key financial data over the past four years [Four-Year Financial Summary Details](index=179&type=section&id=Four-Year%20Financial%20Summary%20Details) This section provides a summary of the Group's key financial data for four consecutive years from 2017 to 2020, clearly demonstrating the company's high-speed growth trajectory in recent years, with revenue, gross profit, and net profit all achieving continuous and significant growth over the four-year period, while asset scale and shareholder equity also expanded significantly, especially after the 2020 listing, the financial structure fundamentally improved, and total liabilities significantly decreased Four-Year Consolidated Statement of Comprehensive Income Summary (RMB thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 3,358,944 | 2,327,657 | 1,523,886 | 1,047,041 | | Gross Profit | 997,354 | 635,678 | 390,833 | 280,546 | | Profit and Total Comprehensive Income for the Year | 633,195 | 374,384 | 163,926 | 113,692 | | Profit Attributable to Owners of the Company | 617,594 | 366,452 | 161,776 | 113,551 | Four-Year Consolidated Statement of Financial Position Summary (RMB thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | Total Assets | 8,552,243 | 4,093,893 | 4,125,518 | 2,489,969 | | Total Liabilities | 1,299,780 | 3,588,898 | 3,799,591 | 2,234,922 | | Total Equity | 7,252,463 | 504,995 | 325,927 | 255,047 |