ai158944360523_SRE AR19 cover & backcover_26.5mm.pdf 1 14/5/2020 下午4:06 CONTENTS Corporate Information 2 Introduction of the Group 4 Financial Summary 5 Chairman’s Statement 16 Management Discussion and Analysis 23 Environmental, Social and Governance Report 28 Directors and Senior Management 44 Report of the Directors 49 Corporate Governance Report 60 The Board’s Response to the Opinion of the Independent Auditor 73 Independent Auditor’s Report 74 Consolidated Financial Statements • Consolidated Statement of Profit or Loss and 82 Other Comprehensive Income • Consolidated Statement of Financial Position 84 • Consolidated Statement of Changes in Equity 86 • Consolidated Statement of Cash Flows 88 • Notes to the Consolidated Financial Statements 90 Corporate Information Board of Directors Lei Dechao (Chairman) (appointed on 28 February 2020) Liu Feng (resigned on 18 July 2019) Chen Chao (retired on 3 June 2019) Zhu Qiang (Acting Chief Executive Officer) Qin Wenying Jiang Qi Jiang Chuming (appointed on 18 July 2019) Zong Shihua (appointed on 10 September 2019) Peng Xinkuang (suspension of duties on 28 February 2020) Chen Donghui (suspension of duties on 28 February 2020) Zhuo Fumin* Chan, Charles Sheung Wai* Ma Lishan* Han Gensheng* * Independent Non-executive Directors Authorized Representatives Lei Dechao Zhu Qiang Company Secretary Chu Hoe Tin Legal Adviser Norton Rose Fulbright Hong Kong Auditor PricewaterhouseCoopers Certified Public Accountants Registered Public Interest Entity Auditor Principal Bankers Hong Kong: Agricultural Bank of China China CITIC Bank International Limited PRC: Industrial and Commercial Bank of China Agricultural Bank of China China Construction Bank Shanghai Pudong Development Bank Xiamen International Bank China Minsheng Bank China Merchants Bank 2 SRE GROUP LIMITED 2019 Annual Report Corporate Information Registered Office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Principal Place of Business in Hong Kong Level 11 Admiralty Center Tower II 18 Harcourt Road Admiralty Hong Kong Principal Share Registrar and Transfer Office MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08, Bermuda Hong Kong Branch Share Registrar and Transfer Office Tricor Tengis Limited Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong Stock Code 1207 Internet Web Site www.sre.com.cn E-mail [email protected] SRE GROUP LIMITED 2019 Annual Report 3 Introduction of the Group SRE Group Limited (the “Company”) and its subsidiaries (the “Group”) is an integrated real estate developer focusing on real estate investment and development business in first and second-tier cities in the PRC, particularly in the Shanghai Metropolitan Area, which is geographically the base for the Group’s property development business and popular cities in the Yangtze River Economic Belt. The Group is committed to expanding the project by virtue of integration development of “Industry + Real Estate + Finance” under the models of the Financial City and the “Primary and secondary co-development in industrial-urban integration”. The Group will also expand its investment businesses, accelerate the investment-withdrawal and profit-making process by adopting the “financing, investment, management and exit” approach, and operate in a “light and heavy assets in parallel” model. The Group also focuses on investment opportunities in the high-growth regions along the “One Belt, One Road”, striving to become a fully integrated trans-sector finance and real estate group. The shares of the Company have been listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) since 10 December 1999. 4 SRE GROUP LIMITED 2019 Annual Report Financial Summary Summary of Results Year ended 31 December 2019 2018 2017 2016 2015 RMB’M RMB’M RMB’M RMB’M RMB’M Revenue 651 1,551 1,620 3,403 1,419 Gross profit/(loss) 187 474 384 612 (1,093) Profit/(loss) before income tax (2,236) 207 878 684 (2,168) Income tax (expense)/credit (45) (108) (158) (341) 185 Profit/(loss) for the year (2,281) 99 720 343 (1,983) Non-controlling interests 25 15 (30) (111) 83 Profit/(loss) attributable to owners of the Company (2,256) 114 691 232 (1,900) Proposed dividends – – – – – Earnings/(loss) per share – Basic (RMB) (0.11) 0.01 0.03 0.01 (0.28) (0.11) – Diluted (RMB) 0.01 0.03 0.01 (0.28) As at 31 December 2019 2018 2017 2016 2015 RMB’M RMB’M RMB’M RMB’M RMB’M Total assets 15,481 20,890 22,385 22,711 29,155 Total liabilities 9,995 13,072 14,571 15,659 22,420 Net assets 5,486 7,818 7,814 7,052 6,735 Cash and bank balances (including restricted cash) 522 701 1,453 1,513 2,555 Equity attributable to owners of the Company 5,181 7,445 7,380 6,674 6,403 Year ended 31 December 2019 2018 2017 2016 2015 RMB’M RMB’M RMB’M RMB’M RMB’M Return on equity (%) (44%) 2% 9% 3% (31%) Current ratio (times) 1.27x 0.96x 1.28x 1.17x 1.24x Total liabilities to net assets ratio (times) 1.82x 1.67x 1.86x 2.22x 3.33x Note: The data for years 2015 to 2016 set out above are extracted from the audited consolidated financial statements of the Group for the relevant years after adjusting retrospectively for the effects of change in presentational currency from Hong Kong dollar to Renminbi adopted in year 2016, while for year 2016, adjustments are also made to reflect the results of discontinued operation in those years on a line by line basis instead of as a single line item. The adjustments made on the results of discontinued operation is not a standard presentation method under Hong Kong Financial Reporting Standards. SRE GROUP LIMITED 2019 Annual Report 5 Shanghai Project 6 SRE GROUP LIMITED 2019 Annual Report SRE GROUP LIMITED 2019 Annual Report 7 Chengdu Project 8 SRE GROUP LIMITED 2019 Annual Report SRE GROUP LIMITED 2019 Annual Report 9 Changsha Project 10 SRE GROUP LIMITED 2019 Annual Report SRE GROUP LIMITED 2019 Annual Report 11 Jiaxing Project 12 SRE GROUP LIMITED 2019 Annual Report SRE GROUP LIMITED 2019 Annual Report 13 Overseas Project 14 SRE GROUP LIMITED 2019 Annual Report SRE GROUP LIMITED 2019 Annual Report 15 Chairman’s Statement Dear Shareholders, On behalf of the board of directors, I would like to present the annual report of SRE Group Limited for the year ended 31 December 2019 to you. 16 SRE GROUP LIMITED 2019 Annual Report Chairman’s Statement BUSINESS REVIEW In 2019, the PRC central government consistently adhered to the long-term mechanism of “Stabilizing land prices, housing prices and expectations”, and not using real estate as a short-term economic stimulus. It has repeatedly emphasized the comprehensive implementation of “targeted policy for specific city” and the policy level has eased, and “four limits” have been partially relaxed. The financing environment was still difficult. Trust, overseas debt, development loans and other channels continue to be limited. The financing cost of the overall interest-bearing debt balance of real estate enterprises continues to rise. The overall pressure was significant. Real estate enterprises paid more attention to the collection of sales receivables and the construction of innovative financing products. In 2019, the sales of new houses by the top 30 real estate enterprises accounted for half of the country’s total. The overall concentration of the industry has further increased; the growth rate of sales has slowed down; and the industry’s profits have entered into a stable period. Facing external environmental pressure, the Group maintained a strategic and steady focus on the optimization and upgrading of existing assets. In terms of sales, the Group increased sales efforts. As for operations, the Group has strengthened its cost control and optimized procedures, pursuing the stability of cash flow while ensuring the progress of the projects. In terms of investment, the Group was more cautious in making investments and managed to catch the right moment for exit. During the year, the Group grasped the market opportunity to realize return from some of its assets in advance. The Group implemented the financial real estate model successfully, to ensure the stability of the Group’s cash flow and the orderly development of various operations. At the same time, the Group further optimized the Company’s asset structure and further consolidated its value. In 2019, the Group’s major projects available for sale were Beijing Chenfang Garden, Shanghai Masters Mansions, Jiaxing Project, Shanghai Albany Oasis Garden, Chengdu Albany Oasis Garden, Phnom Penh Romduol City and the Atelier. In 2019, the Group together with its joint ventures and associates had contracted sales amounting to approximately RMB2.809 billion, with a total gross floor area of approximately 102,855 m2. Monetary Amount of Sales Contracts Contractual Project Signed Gross Area (RMB’000) (m2) Beijing Chenfang Garden 1,122,262 36,483 Jiaxing Project 317,680 28,464 Shanghai Masters Mansions 738,687 27,465 Shanghai Albany Oasis Garden 505,425 4,744 Chengdu Albany Oasis Garden 15,160 983 The Atelier in the UK 48,488 117 Phnom Penh Romduol City 47,312 4,315 Others 13,553 284 13,553 284 Total 2,808,567 102,855 SRE GROUP LIMITED 2019 Annual Report 17 Chairman’s Statement In 2019, the Group recorded net revenue of approximately RMB651 million (2018: RMB1,551 million). Gross profit for 2019 amounted to approximately RMB187 million (2018: RMB474 million). Revenue 2019 2018 (RMB’000) (RMB’000) Revenue from sale of properties 451,378 1,280,765 Revenue from property leasing 114,312 161,785 Revenue from property management 22,885 18,311 Revenue from construction of infrastructure for an intelligent network 1,837 4,985 Other revenue 70,714 99,611 661,126 1,565,457 Less: Tax and surcharges (9,791) (14,148) Total revenue 651,335 1,551,309 DEVELOPMENT PROJECTS Our development projects mainly included Shanghai Rich Gate I, Chengdu Albany Oasis Garden, Changsha Fudi Albany Project, Jiaxing Project, Dalian Oasis City Garden, 75 Howard Project in the USA and Phnom Penh Romduol City.