ZHUGUANG HOLDINGS GROUP COMPANY LIMITED (Incorporated in Bermuda with limited liability) Stock Code: 1176 ANNUAL REPORT 2020 * For identification purposes only CONTENTS Corporate Information 2 Milestone 2020 4 Chairman’s Statement 5 Management Discussion and Analysis 8 Environmental, Social and Governance (ESG) Report 2020 27 Biography of Directors 74 Corporate Governance Report 78 Directors’ Report 98 Independent Auditor’s Report 120 Consolidated Statement of Profit or Loss 127 Consolidated Statement of Comprehensive Income 128 Consolidated Statement of Financial Position 129 Consolidated Statement of Changes in Equity 131 Consolidated Statement of Cash Flows 132 Notes to Financial Statements 134 Five-year Financial Summary 234 Particulars of Properties 235 ANNUAL REPORT 2020 Zhuguang Holdings Group Company Limited 1 CORPORATE INFORMATION EXECUTIVE DIRECTORS PRINCIPAL PLACE OF BUSINESS Mr. Chu Hing Tsung (alias Mr. Zhu Qing Yi) (Chairman) Room 5702-5703, 57th Floor Mr. Liu Jie (Chief Executive Officer) Two International Finance Centre Mr. Liao Tengjia (Deputy Chairman) 8 Finance Street Mr. Huang Jiajue (Deputy Chairman) Central Mr. Chu Muk Chi (alias Mr. Zhu La Yi) Hong Kong Ms. Ye Lixia COMPANY SECRETARY INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Choi Kwok Keung Sanvic Mr. Leung Wo Ping JP PRINCIPAL SHARE REGISTRAR Mr. Wong Chi Keung AND TRANSFER OFFICE Dr. Feng Ke MUFG Fund Services (Bermuda) Limited AUDIT COMMITTEE The Belvedere Building 69 Pitts Bay Road Mr. Leung Wo Ping JP (Committee Chairman) Pembroke HM08 Mr. Wong Chi Keung Bermuda Dr. Feng Ke HONG KONG BRANCH SHARE REMUNERATION COMMITTEE REGISTRAR AND TRANSFER OFFICE Mr. Wong Chi Keung (Committee Chairman) Mr. Leung Wo Ping JP Tricor Abacus Limited Mr. Huang Jiajue Level 54, Hopewell Centre 183 Queen’s Road East NOMINATION COMMITTEE Hong Kong Mr. Wong Chi Keung (Committee Chairman) AUDITOR Mr. Leung Wo Ping JP Mr. Huang Jiajue Ernst & Young Registered Public REGISTERED OFFICE Interest Entity Auditor 22/F CITIC Tower Clarendon House 1 Tim Mei Avenue 2 Church Street Central Hamilton HM 11 Hong Kong Bermuda 2 Zhuguang Holdings Group Company Limited ANNUAL REPORT 2020 Corporate Information LEGAL ADVISORS ON HONG KONG LAW LCH Lawyers LLP Room 702, 7/F. Admiralty Centre Tower One 18 Harcourt Road Admiralty Hong Kong LEGAL ADVISORS ON BERMUDA LAW Conyers Dill & Pearman 29th Floor, One Exchange Square 8 Connaught Place Central Hong Kong PRINCIPAL BANKERS Industrial and Commercial Bank of China (Asia) Limited Agricultural Bank of China Limited China Construction Bank (Asia) Corporation Limited Bank of Guangzhou Co., Ltd. China Zheshang Bank Co., Ltd. Guangzhou Rural Commercial Bank WEBSITE www.zhuguang.com.hk STOCK CODE 1176 ANNUAL REPORT 2020 Zhuguang Holdings Group Company Limited 3 MILESTONE 2020 Zhuguang Financial Town One* (珠光金融 城壹號 ) was awarded as the “2020 Most Expected Property *(2020年度值得期待實 力大盤)” The Company was awarded as one of the “Real Estate Companies Top 100* (地產TOP 100)” under the 2020 Brand Value List of Chinese Listed Companies * English name is translated for identification purpose only 4 Zhuguang Holdings Group Company Limited ANNUAL REPORT 2020 CHAIRMan’S STATEMENT I herein present the results and report on the operations of Zhuguang Holdings Group Company Limited (“Company”) and its subsidiaries (collectively, the “Group”) for the financial year ended 31 December 2020 (“FY2020”). RESULTS The consolidated results of the Group for FY2020 are as follows: (1) the consolidated revenue of the Group for FY2020 was approximately HK$6,624,798,000, representing an increase of 62.6% as compared to that of approximately HK$4,074,814,000 for the financial year ended 31 December 2019 (“FY2019”); (2) the consolidated gross profit of the Group increased by 54.5% to approximately HK$3,223,940,000; and (3) the consolidated profit of the Group for FY2020 was approximately HK$2,225,196,000, representing an increase of 209.3% as compared to that of approximately HK$719,497,000 for FY2019. The consolidated profit attributable to the equity holders of the Company for FY2020 was approximately HK$2,242,404,000 and the basic earnings per share was HK30.50 cents, which were higher as compared with the consolidated profit attributable to the equity holders of the Company of approximately HK$747,225,000 and the basic earnings per share of HK9.72 cents for FY2019. NET ASSET VALUE As at 31 December 2020, the number of ordinary shares of the Company (“Shares”) in issue was 7,194,417,247 Shares in aggregate and the shareholders’ equity of the Group was approximately HK$9,318,649,000. The Group’s consolidated net asset value per share attributable to the equity holders of the Company as at 31 December 2020 was approximately HK$1.30. MARKET AND BUSINESS REVIEW In 2020, the Coronavirus Disease 2019 (“COVID-19”) pandemic cast immense uncertainties on the economic development around the world. Following the full recovery of the domestic economy in the second half of the year, the major principle of property market regulation was to remain stable and unchanged. From the perspective of China’s land market, the land transaction amount reached a new high with intensifying city differentiations. The first-tier and second-tier cities had significant improvement, particularly the Yangtze River Delta and Guangdong-Hong Kong-Macau Greater Bay Area. The overall transactions in the property market remained generally the same as in 2019 with stable transaction prices. Meanwhile, differentiation was striking between regions and cities, the market sizes of the Yangtze River Delta and Guangdong- Hong Kong-Macau Greater Bay Area continued to achieve leading growths. Under the atmosphere where market environment tended to become stable and financial supervision tended to be tightening, real estate enterprises responded to environmental changes in an active and effective manner as well as worked together to maintain a stable and healthy development of the property market. During the Central Economic Work Conference of the People’s Republic of China (“PRC”) held in 2019, the Central Government stressed that its aim was to ensure the “steady and healthy development” of the property market, and it further reiterated the principle that “housing is for accommodation, not for speculative trading”. The need to do more work to ensure the stable supply of homes for the low income urban population, to strengthen urban renewal and enhancement of the existing residential projects, to regenerate old urban communities, and to increase rental housing was also mentioned in the Central Economic Work Conference. In 2020, the Guangzhou Municipal Government announced the “Implementation Opinions of Guangzhou Municipal People’s Government of CPC Guangzhou Municipal Committee regarding the Deepening of Urban Renewal for Promotion of High- quality Development” (referred to as the “Opinions”), which focuses on the work requirements in the “1+1+N” urban renewal policy document, the incorporation of urban renewal into the “big picture” of the territorial spatial plan by the Guangzhou Municipal Planning and Natural Resources Bureau and the implementation of urban renewal projects. The Opinions also revealed the blueprints for old area transformation for the Guangzhou Municipal for the coming 10 years. The transformation of a total of 388 villages in the Guangzhou Municipal shall be implemented within 10 years in three steps, through a three- year implementation plan, a five-year action plan and a ten-year transformation plan. ANNUAL REPORT 2020 Zhuguang Holdings Group Company Limited 5 Chairman’s Statement Stepping into 2021, being the first year under the “14th Five-Year Plan”, the positioning of the principle emphasised by the government that “housing is for accommodation, not for speculative trading” will be clearer and the real estate industry will accelerate its transformation into the stock era. The “Recommendations of the Central Committee of CPC for the 14th Five- Year Plan for Economic and Social Development and the 2035 Vision of the People’s Republic of China” highlighted the enhancement of the transformation of old communities in cities and community construction, and the implementation of a number of major projects, which coincide with the continuous philosophy of 廣州珠光城市更新集團有限公司 (Guangzhou Zhuguang Urban Renewal Group Company Limited*), a wholly-owned subsidiary of the Company and a member of the Company’s urban renewal group. The urban renewal group of the Company will continue its professionalism as an urban renewal specialist to implement each urban renewal project of the Group, secure the Group’s most important source of land supply for the next three years and strengthen the characteristics and competitive edge of the Group’s future development. The Group will also actively seek cooperation in various aspects with its business partners to strengthen and consolidate its position as an urban renewal specialist. The Group will uphold its spirit of craftsmanship, focus on improving its product quality, and proceed with details to build high-quality products with high added value, high profit margins and characteristics for the Group, and provide buyers with products bearing high investment value. LAND ACQUISITIONS The Group strives to maintain a sufficient land bank and its design of accurate urban layout have laid a solid foundation for its future developments. In March 2021, the Group completed (“Completion”) its acquisition of the remaining 49% of the equity interest in 廣州發展汽車城有限公司 (Guangzhou Development Automobile City Co., Ltd.*) (“Guangzhou Project Company”), a company which held interest in an urban renewal project (“AEC Project”) in Guangzhou City known as Zhuguang Financial Town One* (珠光金融城壹號 ) (“Zhuguang Financial Town One”). The results of the Guangzhou Project Company were consolidated into the Group’s immediately after the Completion. It is expected that the pre-sale proceeds of the AEC Project for 2021 will bring a stable source of cash inflows to the Group. Zhuguang Financial Town One is a three-old transformation project* (三舊改造項目) located at Huangpu Road East, Tianhe District, Guangzhou City, Guangdong Province, the PRC.