2018 ANNUAL REPORT Contents

HKEx Stock Code: 0588 SSE Stock Code: 601588 2018 ANNUAL REPORT Contents Corporate Profile 2 Financial Highlights 4 Chairman’s Report 6 Management Discussion and Analysis 8 Report on Corporate Governance 29 Profile of Directors, Supervisors and Senior Management 41 Report of the Directors 45 Report of the Supervisory Committee 57 Independent Auditor’s Report 58 Consolidated Financial Statements 65 Supplementary Information 176 Directors’ Proposal on the Appropriation of Profit for the Year of 2018 177 Corporate Information 178 2 BEIJING NORTH STAR COMPANY LIMITED Corporate Profile Beijing North Star Company Limited (the “Company”) was established by its sole promoter, Beijing North Star Industrial Group Limited Liabilities Company on 2 April 1997. The shares of the Company were listed on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) in May in the same year. In October 2006, the Company’s A shares were issued and listed on the Shanghai Stock Exchange. The Company’s total registered capital is 3,367,020,000 shares, of which 2,660,000,000 shares (representing 79.002% of the total share capital) are A shares and 707,020,000 shares (representing 20.998% of the total share capital) are H shares. The Company is principally engaged in development properties and investment properties (including hotels). The development properties business mainly set foot in Beijing aiming to expand beyond Beijing. In recent years, as the Company continued to deepen the regional exploration and development in new cities, a multi-level nationwide development layout covering a number of regions is gradually taking shape. The development properties consist of the development and sales of residential units, apartments, villas, offices and commercial buildings of different classes and features. The development projects are spread in the key cities in 14 hot regions including Northern China, Central China, Eastern China and Southwest China, and there are 45 projects under construction or for sale. Both the development scale and market share of the Company have been continuously enhanced. ANNUAL REPORT 2018 3 Corporate Profile (Continued) Properties held and operated by the Company involve convention and exhibition, hotel, office and apartment, with a total gross floor area exceeding 1,270,000 m2, out of which 1,200,000 m2 is in the Asian-Olympic core district in Beijing. Its operating items mainly include the National Convention Centre, Beijing International Convention Centre, InterContinental Beijing Beichen, North Star V-Continent Beijing Parkview Wuzhou Hotel, Beijing Continental Grand Hotel, National Convention Centre Hotel, Hui Bin Offices, Hui Xin Offices, North Star Times Tower, North Star Century Center, Hui Yuan Apartment, etc. Projects outside Beijing include Intercontinental Changsha (長沙北辰洲際酒店). While optimising and consolidating traditional properties held, the Company strengthened resources integration and exerted continued efforts on the expansion of new businesses and new technologies of exhibition industry relying on North Star Exhibition Group (北辰會展集團). In recent years, the brand operation and provision of management services for exhibitions and hotels saw significant achievements, and gradually formed a diversified service profit model with entrusted management as the core. At present, North Star Exhibition Group provides entrusted management for up to 26 exhibition and hotel projects, and the total area of the venues of the exhibition under entrusted management is 2.76 million square meters. As a result, it has become the largest exhibition brand enterprise in terms of the total area of venues under management in the PRC and the brand influence of “North Star Exhibition” has been continuously enhanced. Adhering to the principle of maximizing shareholders’ profit and on a historic mission to “create property value, build a century’s foundation”, the Company continues its great effort to develop into a nationally leading integrated real estate enterprise and China’s most influential exhibition-brand enterprise. 4 BEIJING NORTH STAR COMPANY LIMITED Financial Highlights RESULTS Year ended 31st December 2018 2017 2016 2015 2014 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Revenue 17,859,790 15,303,224 9,642,510 7,185,973 6,233,623 Profit before income tax 3,860,018 2,979,513 1,448,024 1,345,150 1,569,370 Income tax expenses 1,606,703 1,402,372 703,864 561,098 733,013 Profit for the year 2,214,119 1,559,959 730,830 784,052 836,357 Attributable to: Ordinary shareholders of the Company 1,403,430 1,389,761 806,811 760,687 779,992 Investors of perpetual bonds 7,059 – – – – Non-controlling interests 803,630 170,198 (75,981) 23,365 56,365 ASSETS AND LIABILITIES As at 31st December 2018 2017 2016 2015 2014 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Total assets 99,910,665 87,701,646 71,730,452 54,527,322 44,474,442 Total liabilities 77,054,480 68,548,411 53,939,155 37,322,788 28,307,778 Total equity 22,856,185 19,153,235 17,791,297 17,204,534 16,166,664 ANNUAL REPORT 2018 5 Financial Highlights (Continued) REVENUE BY BUSINESS RMB’000 6,233,623 7,185,973 9,642,510 15,303,224 17,859,790 15,133,498 12,592,207 7,065,748 Development properties Investment properties (including hotels) Other operation 4,527,036 3,709,222 2,629,020 2,599,091 2,444,525 2,322,017 2,112,147 97,272 123,609 104,796 132,237 111,926 2014 2015 2016 2017 2018 PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS GROSS AREA OF OF THE COMPANY PROPERTY PORTFOLIO RMB’000 m2 For the year ended 31 December 2018 8,461,100 2018 1,403,430 2017 1,389,761 2016 806,811 49,689 Properties under development 2015 760,687 Investment 1,163,679 properties Total Properties with ancillary facilities 2014 779,992 9,674,468 6 BEIJING NORTH STAR COMPANY LIMITED Chairman’s Report Dear Shareholders, On behalf of the board of directors (the “Board”), I am pleased to present you the operating results of the Company for the year ended 31 December 2018. As of 31 December 2018, according to the HKFRSs, during the Reporting Period, as driven by the increase in projects available for settlement and higher proportion of high-priced properties therein, the Company recorded a revenue of RMB17,859,790,000, representing a significant year-on-year increase of 16.71%. Profit before tax amounted to RMB3,860,018,000, representing a year-on-year increase of 29.55%. As there were a number of cooperative projects under the products carried forward, profit attributable to Ordinary Shareholders amounted to RMB1,403,430,000, representing a year-on-year increase of 0.98%.In particular, the after-tax core operating results of the principal businesses of the Company (excluding gains arising from the changes in fair value) were RMB1,319,283,000, representing a year-on-year increase of 3.17%. Gains (after tax) arising from the changes in fair value of investment properties were RMB84,147,000 in the period. Earnings per share were RMB0.42. In retrospect of 2018, against the complicated and grim domestic and overseas situations, the PRC government adhered to the general working guidelines of making progress while maintaining stability, adopted the new development philosophy, and pushed for high-quality development. The supply-side structural reform was deepened; the economic structure was constantly improved; new development drivers grew rapidly and new breakthroughs have been made in reform and opening-up. The economy operated within a reasonable range. In the face of the complex economic environment at home and abroad, the Company followed the guidance of the three major strategies of low-cost expansion, brand expansion and capital expansion with concerted efforts and innovative endeavours, and has thereby achieved historic breakthroughs in respect of both revenue and profit during the Reporting Period. In terms of development properties, the Company, in adherence to the goal of accelerating the turnover rate of projects, made great efforts to accelerate the de-stocking of projects, replenished the land reserve in a rational manner, consummated the management systems from all perspectives and pushed ahead scaled development progressively, having made impressive achievements in low-cost expansion. As for investment properties, the Company insisted on the development strategies of giving equal weight to synergistic progress in asset-heavy investment business and asset-light service business, pursuing intrinsic growth under the guarantee of services, and the extensional development of the whole industrial chain. Thanks to its energetic endeavour in the brand-based, market-oriented, professional and standardized construction, the industrial chain of its convention and exhibition improved consistently; brand image continued to ramp up; and three convention and exhibition sub-brands, i.e., “service guarantee for state-level high-end governmental affairs”, “entrusted operation and management of convention and exhibition venues” and “convention and exhibition industry research and consultation business” sprouted up, which demonstrated fruitful results of brand expansion. With regard to financing, the diversified expansion, growing financing size and further lowered gearing ratio were achieved, which improved the Company’s risk-resistant capability effectively and reflected the remarkable effects of capital expansion. ANNUAL REPORT 2018 7 Chairman’s Report (Continued) Looking into 2019, the PRC will press ahead with the “Five-in-One” general layout, coordinate and advance the “Four Comprehensives” strategic layout, focus on the supply-side structural reform, continue to deepen market-oriented reform, expand high-level opening-up, speed up the building of a modern economic system, innovate and improve the macroeconomic regulation, so as to maintain sustainable and healthy economic development. Under such circumstances, the Company will keep abreast of the times and trends, take hold of opportunities, face up to the challenges courageously and take innovation steps bravely.

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