Zhuguang Holdings Group Company Limited (incorporated in Bermuda with limited liability) Stock Code : 1176 ANN UAL REPORT 2019 * ANNUAL REPORT 2019 Zhuguang Holdings Group Company Limited 1 CONTENTS Corporate Information 2 Milestone 2019 4 Chairman’s Statement 5 Management Discussion and Analysis 8 Environmental, Social and Governance (ESG) Report 2019 26 Biography of Directors 65 Corporate Governance Report 69 Directors’ Report 89 Independent Auditor’s Report 113 Consolidated Statement of Profit or Loss 121 Consolidated Statement of Comprehensive Income 122 Consolidated Statement of Financial Position 123 Consolidated Statement of Changes in Equity 125 Consolidated Statement of Cash Flows 126 Notes to Financial Statements 128 Five-year Financial Summary 224 Particulars of Properties 225 2 Zhuguang Holdings Group Company Limited ANNUAL REPORT 2019 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. Chan Chit Ming, Joeie 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 22/F CITIC Tower REGISTERED OFFICE 1 Tim Mei Avenue Central Clarendon House Hong Kong 2 Church Street Hamilton HM 11 LEGAL ADVISORS ON HONG Bermuda KONG LAW LCH Lawyers LLP Room 702, 7/F. Admiralty Centre Tower One 18 Harcourt Road Admiralty Hong Kong ANNUAL REPORT 2019 Zhuguang Holdings Group Company Limited 3 Corporate Information 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 Hong Kong Branch China Construction Bank (Asia) Corporation Limited The Hongkong and Shanghai Banking Corporation Limited Bank of China Limited WEBSITE www.zhuguang.com.hk STOCK CODE 1176 4 Zhuguang Holdings Group Company Limited ANNUAL REPORT 2019 MILESTONE 2019 The Company was awarded as the “Most Potential Listed Company (最具潛力上 市公司)” under the 2019 China Financial Market Award Zhuguang Financial Town One was awarded as the “2020 Most Expected Property *(2020年度值得期待實力大盤)” Yujing Scenic Garden was awarded as the “Innovative Quality Habitat Property of the Year *(年度品質人居創新名盤)” in 2019 * English name is translated for identification purpose only ANNUAL REPORT 2019 Zhuguang Holdings Group Company Limited 5 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 2019 (“FY2019”). RESULTS The consolidated results of the Group for FY2019 are as follows: (1) the consolidated revenue of the Group for FY2019 was approximately HK$4,074,814,000, representing an increase of 50.7% as compared to that of approximately HK$2,704,796,000 for the financial year ended 31 December 2018 (“FY2018”); (2) the consolidated gross profit of the Group increased by 91.9% to approximately HK$2,087,261,000; and (3) the consolidated profit of the Group for FY2019 was approximately HK$719,497,000, representing an increase of 824.2% as compared to that of approximately HK$77,852,000 for FY2018. The consolidated profit attributable to the equity holders of the Company for FY2019 was approximately HK$747,225,000 and the basic earnings per share was HK9.72 cents, which were higher as compared with the consolidated profit attributable to the equity holders of the Company of approximately HK$4,717,000 and the basic loss per share of HK0.06 cents for FY2018. NET ASSET VALUE As at 31 December 2019, 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$7,465,574,000. The Group’s consolidated net asset value per share attributable to the equity holders of the Company as at 31 December 2019 was approximately HK$1.04. BUSINESS REVIEW During the Central Economic Work Conference of the People’s Republic of China (“PRC”) held in late 2019, the central government stressed that its aim was to ensure the “steady and healthy development” of the property market. In addition, it further reiterated the principle that “housing is for living in, not for speculation”. During this Central Economic Work Conference, it was also mentioned that more work needs to be done 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. All these dovetail with the vision 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. FY2019 saw the implementation of some of the Group’s significant reforms. Guided by the reform philosophy and direction provided by the board (“Board”) of directors (“Directors”) of the Company, the Company continued to operate two working groups, namely (1) the urban renewal group; and (2) the real estate group, striving to maximise their respective strengths and advantages with a view to achieving “dual-driven” business development for the Group. As a provider of primary land consolidation services, the Company’s urban renewal group should take full advantage of its unique reputation as an “urban renewal expert” and live up to it, carrying out each urban renewal project in a professional and satisfactory manner in order to maintain the Group’s most important land supply in the next three years. This is also the characteristic and advantage of the Group’s future development. In FY2019, the Huocun Urban Renewal Project, one of the Group’s urban renewal projects, has achieved remarkable progress. The overall planning of the Huocun Urban Renewal Project has been completed and the relevant land use right certificates have been obtained. On 22 April 2020, United Talent Investment Limited (“United Talent”, a wholly-owned subsidiary of the Company), the Company, Skyleap Investments * English name is translated for identification purpose only 6 Zhuguang Holdings Group Company Limited ANNUAL REPORT 2019 Chairman’s Statement Limited (“Skyleap”, a wholly-owned subsidiary of the Company), Guangzhou Yuhong Investment Company Limited* (廣 州御宏投資有限公司 ) (“Guangzhou Yuhong”, a non-wholly-owned subsidiary of the Company) and Guangzhou Bohao Corporate Management Partnership (Limited Liability Partnership)* (廣州博浩企業管理合伙企業（有限合伙）) (“Guangzhou Bohao”) entered into a co-development agreement pursuant to which (a) United Talent has conditionally agreed to sell, and Guangzhou Bohao has conditionally agreed to acquire, 100% equity interest in Guangzhou Yuhong which will, through the relevant project company, have interest in the Huocun Urban Renewal Project; (b) Guangzhou Bohao shall (i) bear all the construction costs (and related taxes) of the Huocun Urban Renewal Project; and (ii) be responsible for the construction of part of the area of the Huocun Urban Renewal Project of a site area of approximately 345,420 sqm; and (c) the Group shall be responsible for the construction of the remaining part of the Huocun Urban Renewal Project of a site area of approximately 260,900 sqm, provided that the funding for the cost of construction of both areas shall be provided by Guangzhou Bohao. The Group believes that through proactive introduction of outstanding strategic investors and co- operation partners such as the Huocun Urban Renewal Project mentioned above, it will be able to carry out development of major projects and reorganisation of resources to facilitate continuous breakthrough for its projects and sustainable corporate development. Meanwhile, the Company’s real estate group, as a provider of secondary land development services, should work in an artisanal manner, focusing on the enhancement of product quality and paying attention to the smallest details in order to construct high value-added premier properties with their own characters, which provide high profit margin to the Group and good investment value to the purchasers. LAND ACQUISITIONS The Group’s efforts in maintaining a sufficient land bank and designing accurate urban layout have laid a solid foundation for its future developments. During FY2019, South Trend Holdings Limited (南興控股有限公司) (“South Trend”), a wholly- owned subsidiary of the Company, a vendor and a guarantor entered into an agreement (“SP Agreement”) in relation to the acquisition (“All Flourish Acquisition”) of 100% of the issued share capital of All Flourish Investments Limited (通興投 資有限公司 ) (“All Flourish”), which indirectly holds 51% interests in 廣州發展汽車城有限公司 (Guangzhou Development Automobile City Co.,