Annual Report 紅星美凱龍家居集團股份有限公司 Ltd
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Red Star Macalline Group Corporation Ltd. 紅星美凱龍家居集團股份有限公司 Red Star Macalline Group Corporation Ltd. (A SINO-FOREIGN JOINT STOCK COMPANY INCORPORATED IN THE PEOPLE'S REPUBLIC OF CHINA WITH LIMITED LIABILITY) STOCK CODE: 1528 紅星美凱龍家居集團股份有限公司 Red Star Macalline Group Corporation Ltd. Annual Report Annual Report 2019 Contents Company Profile 2 Corporate Information 3 Financial and Operational Highlights 5 Chairman’s Statement 7 Management Discussion and Analysis 11 Directors, Supervisors and Senior Management 57 Report of Directors 66 Report of Supervisors 103 Corporate Governance Report 106 Social Responsibility Report 130 Auditor’s Report 134 Consolidated Balance Sheet 142 Consolidated Income Statement 145 Consolidated Statement of Changes in Equity 147 Consolidated Cash Flow Statement 149 Company’s Balance Sheet 151 Company’s Income Statement 153 Company’s Statement of Changes in Equity 154 Company’s Cash Flow Statement 156 Notes to the Consolidated Financial Statements 158 Supplementary Information 633 Five-Year Financial Summary 635 Definitions 636 Company Profile The Company was founded in 2007, and its H shares were listed on the Main Board of the Hong Kong Stock Exchange in June 2015 (Stock Code: 1528) and its A shares were listed on the Shanghai Stock Exchange in January 2018 (Stock Code: 601828). As a leading home improvement and furnishing shopping mall operator in China, the Group mainly engages in the business of offering comprehensive services to the merchants, consumers and partners of the home improvement and furnishing shopping malls under “Red Star Macalline” through the operation and management of both Portfolio Shopping Malls and Managed Shopping Malls. The Group is also involved in pan-home furnishing consumption services, including internet home decoration, internet retail, as well as logistics and delivery services. According to the statistics of Frost & Sullivan, the Group is a nationwide home improvement and furnishing shopping mall operator in China, which ranks first in terms of area of operational premises, the number of malls, and the geographic coverage. As at the end of the Reporting Period, we operated 337 shopping malls with a total operating area of 20,986,950 sq.m. in 212 cities in 29 provinces, municipalities and autonomous regions in China. The malls offer more than 27,000 brands in total. According to the statistics of Frost & Sullivan, in 2019, the Group had a 15.5% market share in the chain home improvement and furnishing mall sector and a 6.3% market share in the whole home improvement and furnishing mall sector (including chain and non-chain) in terms of retail sales, owning the largest market share in China’s steadily growing home improvement and furnishing retail industry. The Group has been committed to “building warm and harmonious homes and enhancing taste for home life of Chinese”, and will continue to follow the operation and management mode of “market-oriented operation and shopping- mall-based management”. The Company will further strengthen its cooperation with home improvement and furnishing manufacturers and distributors, and persistently optimize the structure of brands operated by us in home improvement and furnishing shopping malls. We are able to provide consumers with better services and better understandings of the home culture philosophy. In the future, the Group will continue to implement the two-pronged business model, with a focus on continuing development of our asset-light managed business model and strategically expanding our shopping mall network nationwide in order to further enhance our Group’s market share, and thereby persistently strengthening our market leadership in China’s home improvement and furnishing industry. Meanwhile, we will gradually expand the application of the Internet pan-home improvement and furnishing consumption business based on our online and offline shopping malls network and strengthen the “Red Star Macalline” brand as the expert of home living in the minds of consumers through integrated online and offline operations. As such, the Company aims at becoming China’s most professional and advanced “omni-channel platform provider in the home improvement and furnishing industry”. 2 Red Star Macalline Group Corporation Ltd. Corporate Information BOARD OF DIRECTORS NOMINATION COMMITTEE Executive Directors Mr. LEE Kwan Hung, Eddie (Chairman) Mr. CHE Jianxing (Chairman) Mr. CHE Jianxing Mr. GUO Binghe (Vice Chairman) Ms. ZHAO Chongyi Ms. CHE Jianfang Mr. JIANG Xiaozhong STRATEGY AND INVESTMENT COMMITTEE Non-executive Directors Mr. CHE Jianxing (Chairman) Ms. CHEN Shuhong Mr. GUO Binghe Mr. XU Guofeng Mr. JIANG Xiaozhong Mr. XU Hong Ms. ZHAO Chongyi Mr. JING Jie Mr. XU Hong Independent Non-executive Directors COMPANY SECRETARY Mr. QIAN Shizheng Mr. GUO Binghe Mr. LEE Kwan Hung, Eddie Mr. WANG Xiao AUTHORIZED Ms. ZHAO Chongyi REPRESENTATIVES SUPERVISORS Mr. CHE Jianxing Mr. GUO Binghe Mr. PAN Ning (Chairman) Ms. CHAO Yanping Mr. ZHENG Hongtao REGISTERED OFFICE Suite F801, 6/F Mr. CHEN Gang No. 518, Linyu Road AUDIT COMMITTEE Pudong New District Shanghai, the PRC Mr. QIAN Shizheng (Chairman) Mr. LEE Kwan Hung, Eddie Mr. WANG Xiao HEADQUARTERS IN THE PRC Red Star Macalline Headquarter REMUNERATION AND No. 2/5, Lane 1466, Shenchang Road EVALUATION COMMITTEE Minhang District Shanghai, the PRC Mr. QIAN Shizheng (Chairman) Mr. CHE Jianxing Mr. WANG Xiao Annual Report 2019 3 Corporate Information PRINCIPAL PLACE OF AUDITOR BUSINESS IN HONG KONG Ernst & Young Hua Ming LLP 31/F, Tower 2 Level 16, Ernst & Young Tower Times Square Oriental Plaza, No. 1 East Changan Ave. 1 Matheson Street Dongcheng District Causeway Bay Beijing, the PRC Hong Kong PRINCIPAL BANKS H SHARE REGISTRAR Industrial and Commercial Bank of China Computershare Hong Kong Investor Services Limited Shanghai Branch Banking Department Room 1712–1716, 17th Floor No. 24 Zhongshan Dongyi Road Hopewell Centre Shanghai, the PRC 183 Queen’s Road East Wan Chai, Hong Kong China Minsheng Bank Corp., Ltd. Shanghai Xuhui Branch LEGAL ADVISORS No. 1033 Zhaojiabang Road, Xujiahui As to Hong Kong and United States law Shanghai, the PRC Davis Polk & Wardwell Hong Kong Solicitors Bank of Communications 18/F, The Hong Kong Club Building Shanghai Putuo Branch 3A Chater Road No. 2000 Zhongshan North Road Hong Kong Shanghai, the PRC As to the PRC law STOCK CODES Llinks Law Offices Hong Kong Stock Exchange: 1528 19/F One Lujiazui Shanghai Stock Exchange: 601828 68 Yin Cheng Road Middle Shanghai 200120 COMPANY’S WEBSITE The PRC www.chinaredstar.com 4 Red Star Macalline Group Corporation Ltd. Financial and Operational Highlights FINANCIAL HIGHLIGHTS For the year ended 31 December 2019 2018 (Audited) (Audited) (RMB’000, except otherwise stated) Revenue 16,469,238 14,239,793 Gross profit 10,733,627 9,426,093 Gross profit margin 65.2% 66.2% Net profit 4,686,242 4,705,447 Net profit attributable to owners of the Company 4,479,682 4,477,411 Net profit margin attributable to owners of the Company 27.2% 31.4% Net profit attributable to owners of the Company after deducting non-recurring profit or loss 2,613,622 2,566,154 Net profit margin attributable to owners of the Company after deducting non-recurring profit or0 loss 15.9% 18.0% Earnings per share (basic) RMB1.26 RMB1.20 Dividend per share (tax inclusive) RMB0.253 RMB0.27 Key Financial Performance Indicators RMB million 20,000 16,469 15,000 14,240 10,000 5,000 4,477 4,480 2,566 2,614 0 Revenue Net profit Net profit attributable to owners attributable to of the Company owners of after deducting non-recurring the Company profit or loss 2018 2019 Annual Report 2019 5 Financial and Operational Highlights OPERATIONAL HIGHLIGHTS The following table sets forth certain operating statistics of Portfolio Shopping Malls and Managed Shopping Malls in operation as at the dates indicated: As at As at 31 December 31 December 2019 2018 Number of shopping malls 337 308 Operating area of shopping malls (sq.m.) 20,986,950 18,939,341 Number of cities covered 212 199 Number of Portfolio Shopping Malls 87 80 Operating area of Portfolio Shopping Malls (sq.m.) 7,736,844 6,918,993 Average occupancy rate of Portfolio Shopping Malls 93.4% 96.2% Number of Managed Shopping Malls 250 228 Operating area of Managed Shopping Malls (sq.m.) 13,250,106 12,020,347 Average occupancy rate of Managed Shopping Malls 93.5% 95.0% 6 Red Star Macalline Group Corporation Ltd. Chairman’s Statement Dear Shareholders, On behalf of the Board, I am pleased to present the annual result report of the Company and its subsidiaries (the “Group” or “we” or “us”) for the year ended 31 December 2019 (the “Reporting Period”) to all shareholders: In 2019, the Group’s operating revenue amounted to RMB16,469 million; net profit attributable to owners of the Company amounted to RMB4,480 million; and net profit attributable to owners of the Company after deducting non-recurring profit and loss amounted to RMB2,614 million. We are willing to share the development outcomes of the Group with shareholders as we achieve satisfactory financial results. It was pleased to announce at the 2019 Board meeting that the 2019 cash dividend per share proposed to be RMB0.253 (tax inclusive) and one share per 10 shares will be issued to all shareholders by way of conversion of capital reserve. In recent years, with the continuous increase of China’s national income and people’s higher requirements for quality of life, the home improvement and furnishing industry has entered a material strategic period of steady and healthy development. We should capitalize on the development opportunities arising from the home improvement and furnishing industry, be committed to “building warm and harmonious homes and enhancing taste for consumption and home life”, follow the operation and management mode of “market-oriented operation and shopping-mall-based management”, continue to provide consumers with better and professional service, and strengthen the “Red Star Macalline” brand as the expert of home living in the minds of consumers; meanwhile, growing into a benchmark new retailer in the home improvement and furnishing industry to lead the industry in its evolvement.