雅生活服务(03319) - 2018 - 年度财报

Company Overview Company Overview 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] - 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] - 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] Company Information Company Information 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] - The company's H-shares are listed on the Main Board of the Hong Kong Stock Exchange, stock code 3319[10] - 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][13] Financial and Operational Summary Financial Summary 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 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] - The company actively expanded strategic collaborations, establishing partnerships with industry giants such as Alibaba, Ant Financial, Greenland Property, and JLL[26][27] - Accelerated scale expansion through M&A activities, including the acquisition of a 51% equity stake in Nanjing Zizhu[26] - By year-end, three major business segments were established: property services, community commerce, and asset management, defining a new pattern of synergistic development[27] Key Honors and Awards 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] - Outstanding growth, awarded 'Second Place in Growth for 2018 China Top 100 Property Service Enterprises'[33] - Strong capital market performance, honored with the '2018 Hong Kong Listed Company Golden Lion Award — Most Investable New Stock Company'[33] Chairman's Report Chairman's Report 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] - 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] - 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] Management Discussion and Analysis Financial Review 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 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] Cost, Gross Profit, and Net Profit Analysis 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] - 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][64] - 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] Balance Sheet and Cash Flow 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] - 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] - As of the end of 2018, the company had no bank borrowings, resulting in a zero capital gearing ratio[73] Significant Acquisitions and Capital Operations 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] - 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] - Acquired a 51% equity stake in Nanjing Zizhu for RMB 205 million during the year, consolidating its financial statements from May 2018[77] - 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][80] Employees and Remuneration 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] Business Development and Strategy Business Development 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] - 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][86] - Built smart communities through 'Four Modernizations' (management digitalization, service professionalization, process standardization, operation mechanization) and technology application, enhancing corporate efficiency and owner experience[87] Investor Relations 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][89] - As of the end of 2018, 15 brokerage firms covered the company, issuing over 40 research reports, all giving 'Buy' or 'Outperform' ratings[89] - 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] Corporate Governance Directors, Supervisors, and Senior Management 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] - 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][97][98] - 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] Corporate Governance Report 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][108] - 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] - 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][139][148] Board Report 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] - The controlling shareholder has provided a non-compete undertaking, and independent non-executive directors confirmed full compliance with the undertaking[183][184] - 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][213][215] - Independent non-executive directors and the auditor have reviewed and confirmed the compliance and fairness of the continuing connected transactions[227][228] Supervisory Committee Report 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][239] - 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][245][246] Environmental, Social and Governance (ESG) 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] - 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][159] - The company will publish a separate ESG report in accordance with the HKEX's Environmental, Social and Governance Reporting Guide[159] Financial Statements and Auditor's Report Independent Auditor's Report 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] - 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][253] - 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] Consolidated Financial Statements 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 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) 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) 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] Intangible Assets and Goodwill (Note 16) 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][399] Business Combinations (Note 29) 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][432] - 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][435] Related Party Transactions (Note 30) 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 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 |