Chen Xing Development Holdings Limited - Annual Report 2020

誠[以致遠，] 信[達天下]

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2 公司資料 4 財務摘要 5 主席報告 7 管理層討論及分析 22 董事及高級管理層履歷 27 董事會報告 43 企業管治報告 57 環境、社會及管治報告 81 獨立核數師報告 199 Corporate Information 88 綜合損益表 201 Financial Highlights 89 綜合全面收益表 202 Chairman’s Statement 90 綜合財務狀況表 205 Management Discussion and Analysis 92 綜合權益變動表 220 Biographies of Directors and Senior Management 94 綜合現金流量表 225 Directors’ Report 96 財務報表附註 241 Corporate Governance Report 197 五年財務摘要 255 Environmental, Social and Governance Report 279 Independent Auditor’s Report 286 Consolidated Statement of Profit or Loss

Management Discussion and Analysis Biographies of Directors and Senior Management Directors’ Report

Environmental, Social and Governance Report Independent Auditor’s Report

Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to Financial Statements Five Year Financial Summary

288

290 292 294 395

CORPORATE INFORMATION

DIRECTORS

REMUNERATION COMMITTEE

Executive Directors

Mr. Bai Xuankui (Chairman) Mr. Bai Wukui

Mr. Bai Guohua

Mr. Tian Hua (Chairman) Ms. Gao Jianhua Mr. Bai Xuankui

NOMINATION COMMITTEE

Mr. Dong Shiguang

Independent Non-executive Directors

Mr. Bai Xuankui (Chairman) Mr. Qiu Yongqing Ms. Gao Jianhua

Mr. Tian Hua

AUDITOR

Mr. Qiu Yongqing

Ms. Gao Jianhua

(appointed with effect from 26 February 2021) Mr. Gu Jiong (resigned with effect from 30 November 2020)

COMPANY SECRETARY

Ms. Ng Wing Shan

Ernst & Young

PRINCIPAL BANKERS

Industrial and Commercial Bank of China Limited China Merchants Bank Co. Ltd. China Construction Bank Corporation Bank of China Limited Bank of Jinzhong Co. Ltd.

AUTHORIZED REPRESENTATIVES

Mr. Bai Guohua Ms. Ng Wing Shan

AUDIT COMMITTEE

Mr. Tian Hua (Chairman) Mr. Qiu Yongqing Ms. Gao Jianhua

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CORPORATE INFORMATION

LEGAL ADVISORS

As to Hong Kong law Jingtian & Gongcheng LLP

As to PRC law Shanxi Dingzheng Law Office

REGISTERED OFFICE

Cricket Square, Hutchins Drive PO Box 2681 Grand Cayman KY1-1111, Cayman Islands

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN THE PRC

18 Anning Street Yuci District, Jinzhong City Shanxi Province The People’s Republic of China (“ China ”)

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

40/F, Dah Sing Financial Centre 248 Queen’s Road East Wanchai Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

Conyers Trust Company (Cayman) Limited Cricket Square, Hutchins Drive PO Box 2681 Grand Cayman KY1-1111, Cayman Islands

SHARE REGISTRAR AND TRANSFER OFFICE IN HONG KONG

Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17th Floor Hopewell Centre, 183 Queen’s Road East Wanchai, Hong Kong

PLACE OF LISTING

The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”)

STOCK CODE

2286

COMPANY WEBSITE

www.chen-xing.cn

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Annual Report 2020

FINANCIAL HIGHLIGHTS

The board (the “ Board ”) of directors (the “ Directors ”) of Chen Xing Development Holdings Limited (the “ Company ”) is pleased to announce to the Company’s shareholders (the “ Shareholders ”) the audited annual results of the Group and its subsidiaries (collectively, the “ Group ”) for the year ended 31 December 2020 together with the comparative figures for the year ended 31 December 2019.

For the year ended 31 December 2020 (the “ Reporting Period ”), contracted sales amounted to approximately RMB922.2 million and the corresponding contracted gross floor area (“ GFA ”) amounted to approximately 137,480 sq.m., representing decreases of approximately 57.0% and 45.4% comparing with the same period last year, respectively;
Revenue for the Reporting Period amounted to approximately RMB1,207.5 million, of which approximately RMB1,180.8 million was revenue from property development;
Gross profit for the Reporting Period amounted to approximately RMB463.9 million, of which approximately RMB457.3 million was gross profit from property development;
Net profit for the Reporting Period amounted to approximately RMB236.1 million, of which approximately RMB206.7 million was net profit attributable to equity holders of the Company;
Total GFA of land bank amounted to approximately 2,742,730 sq.m. and the average cost of land bank was approximately RMB755.9 per sq.m. as at the end of Reporting Period;
Contracted average sales price (the “ Average Sales Price ”) for the Reporting Period was approximately RMB6,707.6 per sq.m.;
Basic earnings per share for the Reporting Period was approximately RMB0.34; and
The Board has resolved not to declare a final dividend for the year ended 31 December 2020.

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CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of the Board, I am pleased to present the annual results of the Group for the year ended 31 December 2020.

Review of and Annual Results for 2020

In 2020, the national real estate industry has been heavily impacted by the COVID-19 epidemic (the “ epidemic ”), with the overall sales performance of the real estate market being lower than that of the same period in 2018 and 2019. Year-round sales maintained negative growth over a long period of time, while growth for most real estate enterprises slowed down and faced higher pressure in inventory turnover and business operation. Meanwhile, in 2020, the PRC government has put forward the policy requirement of “Three Red Lines” for real estate enterprises. Under the capital control requirement of “Three Red Lines”, the financing, investment and development pace of real estate enterprises have slowed down to varying degrees, reducing the capital bubble of real estate enterprises while enhancing the stable development of the real estate industry.

During the Reporting Period, the Group has been affected by the epidemic and regulatory policies, and the sales scale, construction area and financing speed have been appropriately reduced to ensure the smooth operation of the Group. The Group proactively made adjustments in response to market shifts according to analyses on changes in industry and market as well as interpretation on government policies. As the Group revised the management system during the year, it focused on adjusting the direction of product research and development and optimizing product design as its major business direction, analysing market demands and enhancing product quality in order to enhance the Group’s market competitiveness and achieve stable development of the Group ’s operating results.

During the Reporting Period, the Group recorded a revenue of approximately RMB1,207.5 million, representing a decrease of approximately 7.6% as compared with the same period last year, among which, revenue from property development was approximately RMB1,180.8 million, representing a decrease of approximately 6.5% as compared with the same period last year. Profit attributable to the owners of the Group for the year was approximately RMB206.7 million, representing an increase of approximately 95.0% as compared with the same period last year, which was mainly attributable to the higher profit margin of the projects of land parcel B of Yosemite Valley Town-Taiyuan and Phase II of Chang Xing Star Gardens in Mianyang, and gain on disposal of an associate.

As at the end of the Reporting Period, the Group’s land bank was approximately 2,742,730 sq.m.

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CHAIRMAN’S STATEMENT

Final Dividend

The Board has resolved not to declare a final dividend for the year ended 31 December 2020.

Prospect for 2021

In 2020, the real estate industry was in a downturn. As the impact of the epidemic has not completely eliminated, it is expected that the domestic real estate market will still be tested in 2021. Under the backdrop of a slowdown in the growth of the industry as a whole, the impacts of the epidemic and “Three Red Lines” will further test the operational strength of real estate enterprises. Therefore, preventing risks and adapting to market adjustments are our major development direction. In accordance with in-depth analyses of the real estate market and the development of the Group, the Group will continue to focus on stable development as a key development strategy in 2021, deepen its development on existing projects, optimize product design, enhance the operational capability of regional projects and strengthen the Group’s defense against market risks and core competitiveness by adjustments in product strategies.

In 2021, the Group will focus on product research and development as well as design. As there are numerous existing products of the same category in the market, the product competition pressure arises from product homogeneity. Therefore, based on the analysis of existing products in the market, the Group will put emphasis on optimizing its product design and enhancing product quality in all aspects. In addition to creating mainstream products with rigid demands, we will focus on creating improvement products through product design concepts, material choice for construction and product services, in order to win market approval through improvement in product quality, enhance the Group’s corporate and product competitiveness, and gain development opportunities and market competitive advantages.

With regards to market analysis, the domestic consumption structure has been gradually changing as the consumption market puts more emphasis on the characteristics and changing trends of customer demands. The Group will conduct in-depth research on the real estate industry and the real estate market, strengthen the market analytic capability and product planning capability of the Company’s management, enhance the accuracy in market analysis, and provide precise and effective information assurance for the product research and development as well as operation and management of the Group.

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CHAIRMAN’S STATEMENT

ACKNOWLEDGMENT

Finally, I would like to express my sincerest gratitude, on behalf of the Board, to the management and all employees of the Company for their hard work. Meanwhile, I would also like to thank the investors, customers and partners for their unfailing support and trust in the Group.

Chairman Bai Xuankui

Jinzhong, Shanxi, China

25 March 2021

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MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

During the Reporting Period, the Group’s contracted sales amounted to approximately RMB922.2 million, representing a decrease of approximately 57.0% as compared with the same period last year. During the Reporting Period, the Group’s revenue amounted to approximately RMB1,207.5 million, representing a decrease of approximately 7.6% as compared with the same period last year, among which, revenue from property development was approximately RMB1,180.8 million, representing a decrease of approximately 6.5% as compared with the same period last year. During the Reporting Period, net profit of the Group amounted to approximately RMB236.1 million, of which net profit attributable to the Company’s equity holders was approximately RMB206.7 million.

Contracted Sales

The Group’s contracted sales for the years ended 31 December 2020 and 2019 were approximately RMB922.2 million and RMB2,144.3 million, respectively, representing a decease of approximately 57.0%. The Group’s total contracted GFAs for the years ended 31 December 2020 and 2019 were approximately 137,480 sq.m. and 251,771 sq.m., respectively, representing a decrease of approximately 45.4%. By geographical location, the Group’s contracted sales from Jinzhong, Taiyuan and Mianyang, were approximately RMB397.0 million, RMB447.4 million and RMB77.8 million, respectively, representing approximately 43.1%, 48.5% and 8.4% of the Group’s total contracted sales, respectively.

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MANAGEMENT DISCUSSION AND ANALYSIS

The table below sets forth the Group’s contracted sales for the year ended 31 December 2020 by geographic location:

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Average Average
Contracted Contracted Contracted Contracted Contracted Contracted
Sales for Sales for GFA for GFA for Sales Price Sales Price
2020 2019 2020 2019 for 2020 for 2019
(RMB million) (RMB million) (sq.m.) (sq.m.) (RMB/sq.m.) (RMB/sq.m.)
Jinzhong
Yijun Community
(頤郡小區) 27.9 470.7 3,692 55,754 7,568.0 8,441.6
Chenxing Yijun
(辰興頤郡) 333.6 43.7 42,281 5,003 7,889.0 8,736.2
Xiyuan
(熙苑) 31.1 450.7 3,573 52,789 8,717.3 8,537.9
Xin Xing International
Cultural Town
(新興國際文教城)
(Phases III, IV and V) 4.4 5.6 2,123 1,626 2,067.8 3,447.7
Taiyuan
Yosemite Valley Town —
Taiyuan
(龍城優山美郡)
(Phase I) 38.4 114.9 4,745 11,312 8,081.8 10,155.8
Yosemite Valley Town —
Taiyuan
(龍城優山美郡)
(Phase II) 51.5 255.2 6,223 22,977 8,271.7 11,107.5
Yosemite Valley Town —
Taiyuan
(龍城優山美郡)
(Phase III) 357.5 624.6 49,998 67,285 7,150.5 9,282.7
Mianyang
Yosemite Valley Town
(優山美郡) 3.4 4.0 1,695 2,882 1,983.6 1,378.1
Elite Gardens
(天禦) 2.3 4.5 1,140 2,841 1,989.8 1,576.2
Chang Xing Star Gardens
(長興星城) 72.1 170.4 22,010 29,302 3,277.2 5,813.8
Total 922.2 2,144.3 137,480 251,771 6,707.6 8,516.9
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Note:

Contracted Sales, Contracted GFAs and Average Contracted Sales Price in the above table also include the car parking spaces sold, if applicable.

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MANAGEMENT DISCUSSION AND ANALYSIS

Property Projects

The Group’s property projects fall into the following three categories by the development stage: completed properties, properties under development and properties held for future development. As some projects are developed in several phases, a single project may fall into different development stages: completed, under development and held for future development.

As at the end of the Reporting Period, the Group had a completed total GFA of approximately 2,887,508 sq.m. and a land bank with a total GFA of approximately 2,742,730 sq.m., comprising (i) a total GFA of approximately 200,254 sq.m. which is completed but unsold; (ii) a total GFA of approximately 1,604,134 sq.m. which is under development; and (iii) a total planned GFA of approximately 938,342 sq.m. held for future development.

The Group selectively retains the ownership of substantially all self-developed commercial properties with a strategic value to generate sustainable and stable revenue. As at the end of the Reporting Period, the Group had investment properties with a total GFA of approximately 21,613 sq.m.

Property Portfolio Summary

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Total GFA held
Total GFA GFA under for future
Intended use [(1)] completed development development
(sq.m.) (sq.m.) (sq.m.)
Mid-rise 844,994 116,743 425,086
High-rise 1,010,806 706,297 82,297
Townhouses 27,612 19,966 123,489
Multi-story garden apartments 576,743 74,194 14,096
Retail outlets 178,573 293,175 75,151
SOHO apartments 6,931 15,984 15,791
Hotels — 111,359 20,499
Parking spaces 235,199 247,356 161,933
Ancillary facilities [(2)] 6,650 19,060 20,000
Total GFA 2,887,508 1,604,134 938,342
Attributable GFA [(3)] 2,749,847 1,313,306 862,712
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Notes:

(1) Includes the portion of GFA held by the Group as public facilities (not saleable or leasable).

(2) Includes primarily public facilities which are not saleable.
(3) Comprises the total GFA attributable to the Group based on the Group’s actual interests in the relevant projects or project phases.

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MANAGEMENT DISCUSSION AND ANALYSIS

Completed Projects

The following table sets forth a summary of the information about the Group’s completed projects and corresponding project phases, if any, as at 31 December 2020:

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Saleable/
Leaseable
Actual GFA GFA
Completion Completed remaining held for Other Ownership
Project Location Project Type Date Site Area GFA unsold investment GFA sold GFA [(1)] Interest [(2)]
(sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (%)
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Jinzhong (晉中)	Jinzhong (晉中)
1.	East Lake Mall	Jinzhong, Shanxi	Retail Outlets	July 2000	1,330	17,886	—	10,610	7,276	—	100.00
	(東湖井)	(山西省晉中市)
2.	Grand International	Jinzhong, Shanxi	Residential/	June 2007	7,465	65,544	9,081	8,241	48,222	—	100.00
	Mall & Apartments	(山西省晉中市)	Commercial
	(君豪國際)
3.	Blossoms Gardens	Jinzhong, Shanxi	Residential	April 2007	5,261	39,080	—	—	39,080	—	100.00
	(錦綉新城)	(山西省晉中市)
4.	Xin Xing International
	Culture Town
	(新興國際文教城)
	Phase I	Jinzhong, Shanxi	Residential	December 2005	5,600	24,602	—	—	24,602	—	100.00
		(山西省晉中市)
	Phase II	Jinzhong, Shanxi	Residential/	April 2012	17,968	93,060	—	—	92,909	151	100.00
		(山西省晉中市)	Commercial
	Phase III	Jinzhong, Shanxi	Residential/	December 2009	255,918	545,046	2,587	—	542,459	—	100.00
		(山西省晉中市)	Commercial
	Phase IV	Jinzhong, Shanxi	Residential/	July 2016	30,987	71,103	2,821	—	68,282	—	100.00
		(山西省晉中市)	Commercial
	Phase V	Jinzhong, Shanxi	Residential/	July 2016	22,578	50,438	3,265	—	46,138	1,035	100.00
		(山西省晉中市)	Commercial
5.	Upper East Gardens
	(上東庭院)
	Phase I	Jinzhong, Shanxi	Residential/	November 2006	19,361	47,926	—	—	47,926	—	100.00
		(山西省晉中市)	Commercial
	Phase II	Jinzhong, Shanxi	Residential/	December 2011	24,343	75,889	—	—	75,889	—	100.00
		(山西省晉中市)	Commercial
6.	Riverside Gardens	Jinzhong, Shanxi	Residential/	December 2007	73,035	98,545	—	—	97,990	555	100.00
	— Zuoquan	(山西省晉中市)	Commercial
	(左權濱河嘉園)
7.	SOLO Apartments	Jinzhong, Shanxi	Commercial/	September 2009	2,411	9,783	255	—	9,528	—	100.00
	(尚座公寓)	(山西省晉中市)	Complex
8.	Riverside Gardens
	— Heshun
	(和順濱河小區)
	Stage I	Jinzhong, Shanxi	Residential	June 2008	60,100	62,507	—	—	62,167	340	100.00
		(山西省晉中市)
	Stage II	Jinzhong, Shanxi	Residential	October 2012	5,898	51,217	—	—	51,217	—	100.00
		(山西省晉中市)
9.	Mandarin Gardens —	Jinzhong, Shanxi	Residential/	May 2011	30,690	51,525	—	—	51,525	—	100.00
	Taigu	(山西省晉中市)	Commercial
	(太谷文華庭院)
10.	Shuncheng Street	Jinzhong, Shanxi	Retail Outlets	August 2015	—	897	—	—	897	—	100.00
	Underground Space	(山西省晉中市)
	(順城街地下空間)

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MANAGEMENT DISCUSSION AND ANALYSIS

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11.	Yijun Community
	(頤郡小區)
	Part of Phase I	Jinzhong, Shanxi	Residential	November 2020	25,661	59,660	45,220	—	13,609	831	51.00
		(山西省晉中市)
Taiyuan (太原)
1.	Yosemite Valley Town
	— Taiyuan
	(龍城優山美郡)
	— Southern District,	Taiyuan, Shanxi	Residential/	December 2014	117,128	406,164	30,131	—	376,033	—	100.00
	Phase I	(山西省太原市)	Commercial
	— Northern District,	Taiyuan, Shanxi	Residential/	November 2016	108,005	397,938	15,193	—	312,367	70,378	100.00
	Phase I	(山西省太原市)	Commercial
	Phase II (portion)	Taiyuan, Shanxi	Residential/	June 2020	16,108	45,655	1,123	—	44,532	—	100.00
		(山西省太原市)	Commercial
Mianyang (綿陽)
1.	Yosemite Valley	Mianyang, Sichuan	Residential/	May 2012	74,124	126,329	5,288	—	119,196	1,845	83.89
	Town (優山美郡)	(四川省綿陽市)	Commercial
2.	Elite Gardens (天禦)	Mianyang, Sichuan	Residential/	September 2014	68,529	116,817	1,265	—	114,864	688	83.89
		(四川省綿陽市)	Commercial
3.	Chang Xing Star Gardens
	(長興星城)
	Phase I	Mianyang, Sichuan	Residential/	June 2017	68,150	288,450	11,499	—	275,630	1,321	83.89
		(四川省綿陽市)	Commercial
	Phase II	Mianyang, Sichuan	Residential/	November 2020	36,158	141,447	72,526	—	67,990	931	83.89
		(四川省綿陽市)	Commercial
Total					1,076,808	2,887,508	200,254	18,851	2,590,328	78,075
Total Attributable GFA(3)					1,024,449	2,749,847	163,504	18,851	2,490,595	76,897

Notes:

(1) Includes the GFA held by the Group as public facilities (not saleable or leasable).
(2) Calculated based on the Group’s actual ownership interests in the respective project companies.

(3) Comprises the total GFA attributable to the Group based on the Group’s actual interests in the relevant projects or project phases.

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MANAGEMENT DISCUSSION AND ANALYSIS

Properties under Development and Properties Held for Future Development

The following table sets forth a summary of the information about the Group’s projects under development and corresponding project stages, if any, and properties held for future development as at 31 December 2020:

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Under development Held for future development
GFA
Actual/ with the
Estimated Saleable/ land use
Completion GFA under Leasable Pre-sold Planned certificate not Ownership
Project Location Project Type Site Area Date development GFA GFA GFA obtained yet interest [(1)]
(sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (sq.m.) (%)
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Jinzhong (晉中)	Jinzhong (晉中)
1.	Phase I of Longtian			129,049	449,634	428,000	30,059	—	—	51.00
	Project
	(龍田項目一期)
	Stage I	Jinzhong, Shanxi	Residential/	14,346 December 2021	78,954	74,203	30,059	—	—	51.00
		(山西省晉中市)	Commercial/
			Parking Space
	Stage II	Jinzhong, Shanxi	Residential/	24,367 December 2021	110,725	101,386	—	—	—	51.00
		(山西省晉中市)	Commercial/
			Parking Space
	Stage III	Jinzhong, Shanxi	Residential/	26,682 December 2021	126,120	121,061	—	—	—	51.00
		(山西省晉中市)	Commercial/
			Parking Space
	Stage IV	Jinzhong, Shanxi	Commercial/	13,422 December 2021	28,819	28,819	—	—	—	51.00
		(山西省晉中市)	Parking Space
	Stage V	Jinzhong, Shanxi	Commercial/	50,232 December 2021	105,016	102,531	—	—	—	51.00
		(山西省晉中市)	Parking Space
2.	Yijun Community			79,203	52,641	19,267	916	154,347	—	51.00
	(頤郡小區)
	Part of Stage I	Jinzhong, Shanxi	Residential	21,102 December 2021	52,641	19,267	916	—	—	51.00
		(山西省晉中市)
	Stage II	Jinzhong, Shanxi	Commercial	16,410 August 2022	—	—	—	44,157	—	51.00
		(山西省晉中市)
	Stage III	Jinzhong, Shanxi	Residential/	41,691 August 2022	—	—	—	110,190	—	51.00
		(山西省晉中市)	Commercial
3.	Chenxing Yijun			197,286	130,236	87,468	47,111	356,400	—	100.00
	(辰興頤郡)
	Stage I	Jinzhong, Shanxi	Residential/	56,601 December 2021	130,236	87,468	47,111	—	—	100.00
		(山西省晉中市)	Commercial
	Stage 2	Jinzhong, Shanxi	Residential/	37,462 December 2022	—	—	—	99,500	—	100.00
		(山西省晉中市)	Commercial
	Stage 3	Jinzhong, Shanxi	Residential/	85,669 December 2022	—	—	—	209,300	—	100.00
		(山西省晉中市)	Commercial
	Stage 4	Jinzhong, Shanxi	Residential/	17,554 December 2022	—	—	—	47,600	—	100.00
		(山西省晉中市)	Commercial
4.	Shiguang Zhicheng	Jinzhong, Shanxi	Commercial	28,296December 2022	112,382	53,880	—	—	—	100.00
	(時光之城)	(山西省晉中市)
5.	Xiyuan (熙苑)	Jinzhong, Shanxi	Residential/	46,603December 2021	67,400	66,971	53,344	—	—	33.66
		(山西省晉中市)	Commercial
6.	Jinxiu SOHO	Jinzhong, Shanxi	Commercial	3,461May 2022	20,506	—	—	—	—	100.00
	(錦綉中心)	(山西省晉中市)

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MANAGEMENT DISCUSSION AND ANALYSIS

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Taiyuan (太原)	Taiyuan (太原)
1.	Yosemite Valley Town			177,248		557,373	526,709	385,295	—	—	100.00
	— Taiyuan
	(龍城優山美郡)
	Phase II (portion)	Taiyuan, Shanxi	Residential/	95,127	December 2021	327,874	310,064	255,296	—	—	100.00
		(山西省太原市)	Commercial
	Phase III	Taiyuan, Shanxi	Residential/	60,273	November 2021	216,880	216,645	129,999	—	—	100.00
		(山西省太原市)	Commercial
	Phase IV	Taiyuan, Shanxi	Primary School	21,848	September 2021	12,619	—	—	—	—	100.00
		(山西省太原市)
Haikou (海口)
1.	Shangpinhui (尚品匯)	Haikou, Hainan	Commercial	43,795	October 2021	98,139	38,524	—	—	—	100.00
		(海南省海口市)
2.	Yousheng (友升)	Haikou, Hainan	Residential	87,021	December 2022	—	—	—	104,426	—	100.00
		(海南省海口市)
Wuzhishan (五指山)
1.	Feicui Yijun (翡翠頤郡)			92,522		115,823	—(3)	—	20,599	—	100.00
	Phase I	Wuzhishan, Hainan	Commercial	28,745	November 2021	48,013	—(3)	—	—	—	100.00
		(海南省五指山市)
	Phase II	Wuzhishan, Hainan	Residential	23,827	May 2022	21,178	—(3)	—	14,096	—	100.00
		(海南省五指山市)
	Phase III	Wuzhishan, Hainan	Residential	18,244	May 2022	26,666	—(3)	—	—	—	100.00
		(海南省五指山市)
	Phase IV	Wuzhishan, Hainan	Residential	21,706	December 2023	19,966	—(3)	—	6,503	—	100.00
		(海南省五指山市)
Xishuangbanna (西雙版納)
1.	International Health City			223,780		—	—	—	302,570	—	100.00
	(國際健康城)
	Stage I	Xishuangbanna	Residential/	51,965	November 2021	—	—	—	59,247	—	100.00
		Dai Autonomous	Commercial
		Prefecture,
		Yunnan
		(雲南省
		西雙版納傣族
		自治州)
	Stage II	Xishuangbanna	Residential/	171,815	December 2022	—	—	—	243,323	—	100.00
		Dai Autonomous	Commercial
		Prefecture,
		Yunnan
		(雲南省
		西雙版納傣族
		自治州)
Total				1,108,264		1,604,134	1,220,819	516,725	938,342	—
Total	Attributable GFA(2)					1,313,306	957,230	466,159	862,712	—

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Notes:

(1) Calculated based on the Group’s actual ownership interests in the respective project companies.
(2) Comprises the total GFA attributable to the Group based on the Group’s actual interests in the relevant projects or project phases.
(3) On 28 September 2017, Hainan Provincial People’s Government issued the “Hainan Provincial People’s Government’s Opinion on Further Deepening the Policy of ‘Two Suspensions’ to Promote the Steady and Healthy Development in Real Estate” (《海南省人民政府關於進一步深化「兩個暫停」政策促進房地產業平穩健康發展的意見》) (Qiong Fu [2017] No. 76), and proposed “to permanently suspend the construction of new real estate projects for foreign sale in four central ecological core areas of Wuzhishan, Baoting, Qiongzhong and Baisha; while the Provincial Housing and Urban-Rural Development Department would work together with the Provincial Planning Commission, the Provincial Department of Land Resources and other departments to formulate another implementation plan with consideration of the situation of commercial residential land use in the central ecological core area of the four cities and counties, which will be promulgated for implementation after approval by the Provincial Government.” “Cities and counties, especially the four central ecological core areas, are encouraged to regulate the use of land in accordance with the law, re-direct the existing supply of commercial residential land to the development in business operation properties such as tourism, culture, education, medical care, health care and commercial use, and promote the transformation of property development. For the existing commercial residential land that cannot be used for residential development due to the factors of planning adjustment, the municipal and county governments can use different approaches in accordance to the laws, including the recovery of land use rights, replacement, extension of the limitation on construction period and arrangement of temporary use, etc.”
As at this moment, the government has not yet to release its implementation plan. The Group’s Wuzhishan project is affected by the policy and there is uncertainly with its subsequent development.

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The table below sets forth a summary of the information about the Group’s investment properties as at 31 December 2020:

==> picture [442 x 175] intentionally omitted <==

----- Start of picture text -----

Rental income
Held for Effective for the year ended
investment leased Occupancy 31 December
Project Property type Total GFA GFA rate 2020 2019
(sq.m.) (sq.m.) (%) (RMB million)
Grand International Mall & Apartments Retail outlets 8,241 — — 0.2 0.8
(君豪國際)
East Lake Mall (東湖井) Retail outlets 10,610 8,161 85.2 1.5 1.5
Office Building of West Yingbin Street Retail outlets 2,762 2,762 100.0 2.7 3.7
(迎賓西街辦公樓)
Total 21,613 10,923 — 4.4 6.0
----- End of picture text -----

The table below sets forth the Group’s land bank as at 31 December 2020 by geographic location:

	Completed Under development For future development Total land bank(1) Percentage of total land bank Average land cost
	saleable/ leasable GFA remaining unsold GFA under development Planned GFA Total GFA
	(sq.m.) (sq.m.) (sq.m.) (sq.m.) (%) (RMB/sq.m.)
Jinzhong Taiyuan Mianyang Haikou Wuzhishan Xishuangbanna	63,229 832,799 510,747 1,406,775 51.3 851.5 46,447 557,373 — 603,820 22.0 393.5 90,578 — — 90,578 3.3 643.5 — 98,139 104,426 202,565 7.4 1,851.7 — 115,823 20,599 136,422 5.0 1,145.2 — — 302,570 302,570 11.0 927.2
Total	200,254 1,604,134 938,342 2,742,730 100.0 755.9

Note:

(1) Land bank equals to the sum of (i) saleable/leasable GFA remaining unsold, (ii) total GFA under development and (iii) total planned GFA held for future development.

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The table below sets forth the Group’s land bank as at 31 December 2020 by property type:

	Completed Under development For future development Total land bank(1) Percentage of total land bank
	saleable/ leasable GFA remaining unsold GFA under development Planned GFA Total GFA
	(sq.m.) (sq.m.) (sq.m.) (sq.m.) (%)
Mid-rise 47,828 116,743 425,086 589,657 21.5 High-rise 58,661 706,294 82,297 847,255 30.9 Townhouses 1,472 19,966 123,489 144,927 5.3 Multi-story garden apartments 3,408 74,194 14,096 91,698 3.3 Available-for-sale office/commercial properties 36,955 293,175 75,151 405,281 14.8 SOHO apartments 58 15,984 15,791 31,833 1.2 Hotels — 111,359 20,499 131,858 4.8 Parking spaces 51,872 247,356 161,933 461,161 16.8 Ancillary facilities(2) — 19,060 20,000 39,060 1.4
Total 200,254 1,604,134 938,342 2,742,730 100.0

Notes:

(1) Land bank equals to the sum of (i) saleable/leasable GFA remaining unsold, (ii) total GFA under development and (iii) total planned GFA held for future development.

(2) Includes primarily public facilities which are not saleable.

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FINANCIAL REVIEW

Revenue

During the Reporting Period, the Group’s revenue amounted to approximately RMB1,207.5 million, representing a decrease of approximately 7.6% as compared with approximately RMB1,307.1 million in the same period last year. The decrease was mainly due to the decrease in GFA of completed properties delivered by the Group during the Reporting Period.

During the Reporting Period, the Group’s revenue from property development amounted to approximately RMB1,180.8 million, representing a decrease of approximately 6.5% as compared with the same period last year. The decrease was mainly due to the decrease in GFA of completed properties delivered by the Group during the Reporting Period.

Sales and Services Cost

The Group’s sales and services cost decreased by approximately 22.2% from approximately RMB955.6 million for the year ended 31 December 2019 to approximately RMB743.6 million for the Reporting Period, the decrease of which was mainly due to a corresponding decrease in cost of sales and services with the decrease in revenue.

Gross Profit

During the Reporting Period, the Group’s gross profit was approximately RMB463.9 million, representing an increase of approximately 32.0% as compared with approximately RMB351.5 million in the same period last year. During the Reporting Period, the gross profit margin was approximately 38%, as compared with approximately 27% in the same period last year.

During the Reporting Period, the Group’s gross profit from property development was approximately RMB457.3 million, representing an increase of approximately 35.3 % as compared with approximately RMB338.1 million in the same period last year, which was mainly due to the increase in the selling prices of newly delivered projects.

During the Reporting Period, the Group’s gross profit margin of property development was approximately 39%, representing an increase of approximately 12% as compared with approximately 27% in the same period last year.

Other Income and Gains

During the Reporting Period, the Group’s other income and gains were approximately RMB93.0 million, representing an increase of approximately 133.7% as compared with approximately RMB39.8 million in the same period last year. The increase was primarily due to the investment gain from the disposal of an associate during the year.

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Net Profit Attributable to Owners of the Company

During the Reporting Period, the net profit attributable to owners of the Company was approximately RMB206.7 million, representing an increase of approximately 95.0% from approximately RMB106.0 million in the same period last year. The increase in the net profit attributable to owners of the Company was mainly due to the increase in gross profit and other income and gains.

Change in Fair Value of Investment Properties

The fair value of the Group’s investment properties decreased by approximately 2.1% from approximately RMB141 million as at 31 December 2019 to approximately RMB138 million as at 31 December 2020, and the decrease was primarily due to the impairment of Grand International Mall & Apartments and Office Building of West Yingbin Street.

Selling and Distribution Expenses

The Group’s selling and distribution expenses decreased by approximately 34.4% from approximately RMB77.6 million for the year ended 31 December 2019 to approximately RMB50.9 million for the Reporting Period, and the decrease was primarily due to the decrease in advertising and publicity expenses during the Reporting Period.

Administrative Expenses

The Group’s administrative expenses decreased by approximately 17.4% from approximately RMB82.2 million for the year ended 31 December 2019 to approximately RMB67.9 million for the Reporting Period, and the decrease was primarily due to the decrease in legal service fees and entertainment expenses during the Reporting Period.

Finance Costs

The Group’s financing expenses decreased by approximately 82.9% from approximately RMB22.2 million for the year ended 31 December 2019 to approximately RMB3.8 million for the Reporting Period, and the decrease was primarily due to the repayment of loans.

Income Tax Expenses

The Group’s income tax expenses increased by approximately 99.9% from approximately RMB88.7 million for the year ended 31 December 2019 to approximately RMB177.3 million for the Reporting Period, and the increase was primarily due to the increase in profit before tax.

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Total Profit and Comprehensive Income for the Year

As a result of the foregoing, the Group’s total profit and comprehensive income for the year increased by approximately 362.5% from approximately RMB50.6 million for the year ended 31 December 2019 to approximately RMB234.0 million for the Reporting Period.

Cash Position

As at the end of the Reporting Period, the Group’s cash and cash equivalents were approximately RMB534.1 million, representing a decrease of approximately 51.8% as compared to approximately RMB1,107.2 million as at 31 December 2019, and the decrease was primarily due to the payment for construction costs and the repayment of loans during the Reporting Period.

Net Operating Cash Flow

The Group recorded a negative operating cash flow of approximately RMB406.3 million as at the end of the Reporting Period, while the Group recorded a negative operating cash flow of approximately RMB1,501.3 million as at 31 December 2019.

Borrowings

The Group had outstanding bank borrowings of approximately RMB2,740.9 million as at the end of the Reporting Period while the Group had outstanding bank borrowings of approximately RMB2,816.0 million as at 31 December 2019.

Pledged Assets

Certain of the Group’s borrowings were secured by completed properties held for sale, properties under development, investment properties, as well as buildings, or a combination of the above items. As at the end of the Reporting Period, the assets pledged to secure certain borrowings granted to the Group amounted to approximately RMB879.7 million.

Financial Guarantees and Contingent Liabilities

In line with the market practice, the Group has entered into agreements of arrangements with various banks for the provision of mortgage financing to its customers. The Group does not conduct any independent credit checks on customers, but relies on the credit checks conducted by mortgagee banks. As with other PRC property developers, the banks usually require the Group to guarantee its customers’ obligations to repay the mortgage loans on the properties. The guarantee period normally lasts until the

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bank receives the strata-title building ownership certificate (分戶產權證) from the customer as security of the mortgage loan granted. As at the end of the Reporting Period, the Group’s outstanding guarantees in respect of the mortgages of its customers amounted to approximately RMB2,477.5 million.

During the Reporting Period, the Group had no material contingent liabilities.

Gearing Ratio

As at the end of the Reporting Period, based on the Group’s total debt of approximately RMB2,740.9 million and total equity of approximately RMB1,609.6 million, the gearing ratio of the Group was approximately 170% (31 December 2019: approximately 205%). Gearing ratio is calculated by dividing total debt over total equity, and total debt includes interest-bearing bank and other borrowings. The decrease in gearing ratio was mainly due to the decrease of interest-bearing bank borrowings and the increase of net profit.

Foreign Currency Risk

The Group operates primarily in the PRC and most of its revenues and expenses are settled in RMB. The Group is exposed to foreign currency risks because its bank balances are denominated in HK dollar and the value of which will fluctuate with exchange rate fluctuations. The exchange rate between RMB and HK dollar may fluctuate as a result of various factors, such as changes in China’s political and economic conditions. The Board expects that the fluctuation of the RMB exchange rate will not have a material adverse effect on the Group. The Group does not have a hedging policy in relation to the foreign currency risk.

Material Acquisitions and Disposals and Material Investments

On 30 October 2020, Chenxing Real Estate Development Co, Ltd. (辰興房地產發展有限公司) (“ Chenxing Real Estate ”), a wholly-owned indirect subsidiary of the Company, entered into an equity transfer agreement with Xishuangbanna Global Sunac Tourism Development Co., Ltd. (西雙版納環球融創旅遊發展有限公司) (“ Global Sunac ”)., Global Sunac acquired 49% of equity interests in Xishuangbanna Yunchen Real Estate Co., Ltd. (西雙版納雲辰置業有限公司) (“ Yunchen Real Estate ”) at a consideration of RMB95.35 million (equivalent to approximately HK$104.89 million). The equity transfer was completed and Yunchen Real Estate ceased to be an associate of our Company and its financial statements were no longer accounted for in the financial statements of our Group under the equity rule. Chenxing Real Estate recorded a gain of approximately RMB46.35 million (equivalent to approximately HK$50.99 million) after the disposal of the equity interest. For details of the disposal of equity interest, please refer to the Company’s announcement dated 30 October 2020.

Save as disclosed in this annual report, the Group did not have any material acquisitions and disposals of subsidiaries, associates and joint ventures and significant investments during the Reporting Period.

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Other Significant Events during the Reporting Period

On 27 October 2020, Chen Xing International Holdings Limited (“ Chen Xing International ”), a wholly owned indirect subsidiary of the Company and Banyan Tree Hotels & Resorts Pte. Ltd. (“ Banyan Tree Group ”) entered into a strategic cooperation agreement. Chen Xing International and Banyan Tree Group will cooperate in strategic operation and both parties will fully leverage their advantages in expertise, operation and management in their respective business areas and explore cooperation opportunities in the development and operation of real estate, hotels and other related projects, and any cooperation in China will exclusively be with Banyan Tree Hotel Management (Tianjin) Limited. The entering into the strategic cooperation agreement with Banyan Tree Group is beneficial to the business development of the Company and is the interest of the Company and its shareholders as a whole. For details of the strategic cooperation agreement, please refer to the Company’s announcements dated 27 October 2020 and 13 November 2020.

Significant Investments held

The Group did not have any significant investments held as at 31 December 2020.

Events after the Reporting Period

Save as disclosed in this annual report, as at the date of this annual report, the Group has no other significant events that require additional disclosures or adjustments occurred after the financial year ended 31 December 2020.

Future Plans for Material Investments or Capital Assets

The Company will continue to invest in property development projects and acquire suitable land parcels in selected cities as appropriate. Internal resources and bank borrowings are expected to be sufficient to meet the necessary funding needs. Save as disclosed in the prospectus of the Company dated 22 June 2015 and above, the Group has no future plans of material investment as at the date of this annual report.

Employees and Remuneration Policies

As at the end of the Reporting Date, the Group had 309 employees. During the Reporting Period, the Group had incurred the employee costs of approximately RMB48.1 million. Employee compensations generally include salaries and quarterly performance bonuses. As required by applicable PRC laws and regulations, the Group participates in various employee benefit plans of the municipal and provincial governments, including housing provident funds, pension, medical, maternity, occupational injury and unemployment benefit plans.

ANNUAL GENERAL MEETING

The annual general meeting of the Company (the “ AGM ”) will be convened on Friday, 28 May 2021, a notice of which will be published and delivered to the Company’s shareholders at the appropriate time.

FINAL DIVIDEND

The Board has resolved not to declare a final dividend for the year ended 31 December 2020 (31 December 2019: nil).

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EXECUTIVE DIRECTORS

Mr. Bai Xuankui (白選奎), aged 69, is one of the founders and controlling shareholders of the Group. He is also an executive Director, chairman of the Board, chairman of the nomination committee as well as the chairman of the Company. Mr. Bai Xuankui is also a director of White Empire (PTC) Limited, one of the controlling shareholders of the Company. Mr. Bai Xuankui has over 20 years of experience in property development, management and operation.

Mr. Bai Xuankui founded the Group in 2004 and since then has been leading the Group to engage in property development. Before founding the Group, Mr. Bai Xuankui worked at Xinxing Construction Ltd. (新興建築公司) where he successively served as assistant manager and manager from April 1983 to May 1992. In July 1993, he was appointed as deputy director of Yuci City Enterprise Management Bureau (榆次市城區企業管理局). From April 1998 to October 2001, he was appointed by People’s Congress of Yuci City as commissioner of Yuci City Industrial Economic Commission (榆次市工業經濟委員會). From December 2001 to October 2010, he served as the chairman of Jinzhong City Yuci Region Federation of Industry & Commerce (晉中市榆次區工商業聯合會). From June 2007 to January 2015, Mr. Bai Xuankui had also been the vice chairman of Jinzhong City Federation of Industry & Commerce (晉中市工商業聯合會).

Mr. Bai Xuankui obtained a postgraduate certificate in master of business administration (工商管理碩士研究生文憑) issued by Tianjin University of Finance & Economics (天津財經學院), the PRC in November 2000. In December 2008, he obtained the qualification as a senior engineer from Shanxi Township Enterprise Engineering Series Senior Technical Position Evaluation Committee (山西鄉鎮企業工程系列高級技術職務評審委員會).

Mr. Bai Wukui (白武魁), aged 58, is the brother of Mr. Bai Xuankui and an executive Director and the chief executive officer of the Company. He is also the vice chairman and general manager of the Company, executive director and general manager of Wuzhishan Chenxing Real Estate Development Co., Limited (五指山辰興房地產開發有限公司), an indirect subsidiary of the Company, executive director of Sichuan Chenxing Real Estate Development Co., Limited (四川辰興房地產發展有限公司), an indirect holding company of the Company, and the chairman of Jinzhong Development Zone Real Estate Development Co., Ltd. (晉中開發區房地產開發有限公司), an indirect holding company of the Company.

Mr. Bai Wukui is also one of the founders of the Group. He has been the chief executive officer of the Group since December 2004. He was appointed as a director of the Group in February 2015. Mr. Bai Wukui is also a director of White Legend Global Holdings Limited.

Before founding the Group, Mr. Bai Wukui served as director and chief executive officer of Yuci Xinxing Real Estate Development Co., Ltd. (榆次新興房屋開發有限公司) from January 1997 to August 2007.

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Mr. Bai Wukui obtained a professional certificate in civil engineering specialty (long distance learning) (工民建專業文憑（函授）) issued by Shanxi Radio & TV University (山西廣播電視大學), the PRC in July 1990 and later obtained a postgraduate certificate in master of business administration (工商管理碩士研究生文憑) issued by Tianjin University of Finance & Economics (天津財經學院), the PRC in November 2000. He obtained the qualification as an engineer from Shanxi Province Engineering Series Intermediate Professional Technical Position Evaluation Committee (山西省工程系列中級專業技術職務評審委員會) and Jinzhong Township (Privately-owned) Enterprise Engineering Series Intermediate Technical Position Evaluation Committee (晉中鄉鎮（民營）企業工程系列中級技術職務評審委員會) in February 2001 and December 2008, respectively. In February 2010, he obtained the qualification as a senior engineer from Shanxi Township Industrial Engineering Series Senior Engineer Evaluation Committee (山西鄉鎮工業工程系列高級工程師職務評審委員會).

Mr. Bai Guohua (白國華), aged 45, is the son of Mr. Bai Xuankui and executive Director and executive vice president of the Company. He is also an executive director of Jinzhong Chenxing Commercial Management Co., Limited (晉中辰興商業管理有限責任公司), an indirect subsidiary of the Company, and executive director and general manager of Shanxi Chenxing Property Services Co., Limited (山西辰興物業服務有限公司), an indirect subsidiary of the Company. Mr. Bai Guohua joined the Group in December 2004 and successively served as associate administration manager, secretary of the board and assistant general manager. Mr. Bai Guohua was appointed as a Director of the Company on 3 November 2014 and the executive vice president of the Group in February 2016. Mr. Bai Guohua is also a director of White Dynasty Global Holdings Limited, one of the controlling shareholders of the Company.

Mr. Bai Guohua obtained a professional certificate in law (法學專業文憑) issued by Shanxi Politics and Law Institute for Administration (山西政法管理幹部學院), the PRC in July 1998. He then undertook and completed an undergraduate degree in law from Shanxi University (山西大學), the PRC, in June 2001. Mr. Bai Guohua has studied business administration at Arizona State University, the United States, and obtained an executive master degree.

Mr. Dong Shiguang (董世光), aged 63, is an executive Director of the Company and a director of Chen Xing.

Mr. Dong joined the Group in December 2005 and successively served as manager in branch offices of Chen Xing (Heshun) and Chen Xing (Taigu). He served as the executive director of Sichuan Chenxing Real Estate Development Co., Limited (四川辰興房地產發展有限公司), a majority-owned subsidiary of the Group, from December 2007 to February 2012. Mr. Dong was appointed as a Director of the Group in November 2007. He was appointed as a Director of the Company in February 2015 and later was redesignated as an executive Director in June 2015. Mr. Dong is also a director of Honesty Priority Global Holdings Limited.

Mr. Dong obtained the qualification as an engineer granted by Shanxi Province Engineering Series Intermediate Professional Technical Position Evaluation Committee (山西省工程系列中級專業技術職務評審委員會) in December 2000 and later as a senior engineer granted by Shanxi Township Enterprise Engineering Series Senior Technical Position Evaluation Committee (山西鄉鎮企業工程系列高級技術職務評審委員會) in February 2010.

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INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Tian Hua (田華), aged 58, is an independent non-executive Director, the chairman of the audit committee and the chairman of the remuneration committee of the Company.

Mr. Tian joined Shanxi Zhongyu Certified Public Accountants (山西中宇會計事務所) in August 1998 as the chief accountant until December 2008. From December 2008 to present, he has been working at Shanxi He Pu Hua Certified Public Accountants (山西禾譜華會計事務所) as an accountant.

Mr. Tian obtained a professional certificate in accountancy issued by Shanxi Finance & Taxation College (山西財政稅務專科學校), the PRC in July 2001. He has been a practicing member of The Chinese Institute of Certified Public Accountants (中國註冊會計師協會) since May 1999.

Mr. Qiu Yongqing (裘永清), aged 56, is an independent non-executive Director and members of the audit committee and the nomination committee of the Company. Mr. Qiu was appointed as the chairman of Shanxi Jintai Venture Capital Co., Ltd. (山西金泰創業投資有限公司) in April 2004 and vice chairman and general manager of Shanxi Small & Medium Enterprises Financing Guarantee Co., Ltd. (山西中小企業發展融資擔保有限公司) in May 2012. He was also appointed as member of the Jinzhong City’s Committee of Chinese People’s Political Consultative Conference (晉中市政協委員) in April 2005, senior expert jointly appointed by Shanxi and Jinzhong Municipal Committee (山西省及晉中市委) in December 2011 and vice chairman of Taiyuan Professional Manager Association (太原職業經理人協會) in March 2014.

Mr. Qiu obtained a certificate in engineering issued by Shanxi Radio & TV University (山西廣播電視大學), the PRC in July 1989. He then undertook and completed a course in business administration from School of Management of Xian Jiaotong University (西安交通大學管理學院) in July 2000. He obtained a master of business administration degree from Arizona State University, the United State, in May 2011. In April 2013, Mr. Qiu obtained the qualification as a senior economist granted by Department of Human Resources and Social Security of Shanxi Province (山西省人力資源和社會保障廳).

Ms. Gao Jianhua (高建華), aged 65, is an independent non-executive Director, members of the audit committee, the nomination committee and the remuneration committee of the Company.

Ms. Gao is a qualified PRC lawyer with more than 39 years of experience in the legal industry. Ms. Gao has been a practising lawyer at Shanxi Fenghui Law Firm (山西豐匯律師事務所) since 1994, an arbitrator of Jinzhong Arbitration Committee (晉中仲裁委員會) since 2013 and the honorary president of Jinzhong Lawyer Association (晉中市律師協會) since 2015. In 2003, Ms. Gao was awarded as “Advanced Lawyer of Shanxi Province” (山西省先進律師) by the Department of Justice of Shanxi Province and the Law Association of Shanxi Province. From 2005 to 2015, Ms. Gao was elected as the president of Jinzhong Lawyer Association. In 2013, Ms. Gao was recognised by the Justice Bureau of Jinzhong (晉中市司法局) and Jinzhong Lawyer Association as one of the ten outstanding lawyers of Jinzhong City (晉中市十大傑出律師)

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in the PRC. Ms. Gao obtained her bachelor’s degree in Engineering (Industrial Automatic Control) from Taiyuan University of Technology in 1982 and a bachelor’s degree in Law from Shanxi University in 1988.

SENIOR MANAGEMENT

Mr. Jiao Wuli (焦悟理), aged 60, is the deputy general manager in engineering of the Group. He joined the Group in March 2008, is responsible for managing the design, procurement, bidding and construction cost of the Group’s projects. He was later promoted to the deputy general manager in engineering of Chen Xing in January 2011.

Before joining the Group, Mr. Jiao worked at Shanxi Third Construction Engineering Co., Ltd. (山西省第三建築工程公司) as technical deputy director from February 1990 to January 1994, and deputy manager and chief engineer from January 1994 to March 1996. In March 1996, he joined Shanxi Construction Engineering (Group) Corporation (山西省建築工程（集團）總公司) and worked at its Wuhan Branch as deputy manager and deputy chief engineer.

Mr. Jiao obtained a professional certificate in civil engineering specialty (工業與民用建築專業文憑) from Taiyuan Institute of Technology (太原工業學院), the PRC in December 1981. Later, he obtained the qualification as a senior engineer granted by Shanxi Construction Profession Senior Engineer Technical Position Evaluation Committee (山西省建設工程專業高級工程師技術職務評審委員會) in April 2004.

Mr. Wang Binzhou (王斌周), aged 44, is the deputy general manager in administration of the Group. Mr. Wang joined the Group in March 2009 and later he served as the general counsel from March 2009 to January 2010 and administrative officer of the board and secretary of the chairman from January 2010 to February 2012. He was promoted to the deputy general manager in administration in February 2012.

Before joining the Group, Mr. Wang worked at Shanxi Shenghe Law Offices (山西聖合律師事務所) as a lawyer from May 2007 to March 2009.

Mr. Wang undertook and completed the bachelor degree in law from Tianjin School of Commerce (天津商學院), the PRC in July 1998 and then master degree in law from Tsinghua University (清華大學), the PRC in July 2008. In December 2002, Mr. Wang obtained the qualification as a legal advisor granted by Department of Personnel of Shanxi Province (山西省人事廳) and then was qualified to practice law in the PRC in March 2004.

Mr. Bai Aijing (白皚晶), aged 44, is nephew of Mr. Bai Xuankui and Mr. Bai Wukui and the chief financial officer of the Group.

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BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT

Mr. Bai Aijing joined the Group in March 2004 and served as the accounting officer from March 2004 to March 2011 and officer of asset management centre from March 2011 to January 2013. He was later promoted to chief financial officer in January 2013.

Mr. Bai Aijing obtained a professional certificate in enterprise management from Beijing Metallurgy Cadre College (北京冶金幹部學院), the PRC in July 1998. He then obtained a professional certificate in accountancy granted by Finance Commission of Yuci Region (榆次區財政局) in March 2011.

Mr. Zhao Haijun (趙海軍), aged 46, is the deputy general manager of operation of the Group.

Mr. Zhao joined the Group in December 2005 as the marketing manager and later he was promoted to the deputy general manager of operation in February 2009.

Mr. Zhao obtained a professional certificate in project cost and management, which is an online learning course, issued by Harbin Institute of Technology (哈爾濱工業大學), the PRC in July 2010. He obtained the qualification as an engineer granted by Jinzhong Township (Private-owned) Enterprise Engineering Series Intermediate Technical Position Evaluation Committee (晉中鄉鎮（民營）企業工程系列中級技術職務評審委員會) in December 2008. He then obtained the qualification as a registered real estate appraiser granted by Finance Department of Shanxi Province (山西省財政廳) in April 2015.

COMPANY SECRETARY

Ms. Ng Wing Shan (吳詠珊), is the company secretary of the Company. She was appointed as company secretary of the Company on 6 February 2015.

Ms. Ng is a fellow member of The Hong Kong Institute of Charted Secretaries and The Chartered Governance Institute (formerly The Institute of Chartered Secretaries and Administrators) in the United Kingdom. Ms. Ng is the assistant vice president of SWCS Corporate Services Group (Hong Kong) Limited (formerly SW Corporate Services Group Limited) and is primarily responsible for assisting listed companies in professional company secretarial work. She has over 10 years of professional experience in the company secretarial field.

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DIRECTORS’ REPORT

The Board is pleased to present the annual report and audited consolidated financial statements of the Group for the year ended 31 December 2020.

PRINCIPAL BUSINESS

The Company is an investment holding company. Its principal subsidiaries are engaging in property development operations in China, and focusing mainly on the development of residential and, to a less extent, commercial property development projects.

An analysis of the revenue generated by the principal business of the Group for the Reporting Period is set out in note 5 to the consolidated financial statements.

RESULTS

The results of the Group for the Reporting Period are set out in the consolidated statement of comprehensive income on page 287.

BUSINESS REVIEW AND FUTURE DEVELOPMENTS

For detailed discussions on business review for the year and future developments of the Group, please refer to pages 202 to 204 of the chairman’s statement. The Group’s financial risk management objectives and policies are set out in note 42 to the consolidated financial statements.

The Group’s analysis of its annual performance using financial key performance indicators is set out in pages 205 to 219 of management discussion and analysis.

PERMITTED INDEMNITY CLAUSE

During the Reporting Period, pursuant to the articles of association of the Company (“ Articles of Association ”), all legal costs, expenses, fees, losses, damages and expenditures incurred during the performance of duties by Directors of the Company may be indemnified by the assets and profits of the Company.

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DIRECTORS’ REPORT

ENVIRONMENTAL POLICY AND PERFORMANCE

The Group continued to use new environmental construction materials in order to meet or stay ahead of environmental standards. The Group kept on strengthening its management of construction sites of on-going projects by controlling and reducing dust and noise pollutions. The Group has implemented energy saving and water conservation measures persistently in office premises, and continued the internal recycling plans for consumables (such as paper, etc.) to reduce the impact of operations on the environment and natural resources.

COMPLIANCE WITH LAWS AND REGULATIONS

The Group always upholds the importance of understanding and compliance with the requirements of laws and regulations, non-compliance with the relevant laws and regulations may render the Group’s normal operation. The Group has a designated legal department to exercise comprehensive management and control over the Company’s sustainable and legal operations. Through effective communication, good working relationship has been maintained with various regulatory authorities.

During the Reporting Period, the Group did not have any events of non-compliance which had a material adverse impact on the Company.

MAJOR RISKS AND UNCERTAINTIES

The Group’s businesses are mainly located in Jinzhong and Taiyuan in Shanxi Province, Mianyang in Sichuan Province, Haikou and Wuzhishan in Hainan Province and Xishuangbanna Autonomous Prefecture in Yunnan Province in China. As the development target of the Group is to further penetrate the markets in Shanxi Province, central and western China and southern China, the operations of the Group are highly dependent on the performance of the real estate markets in these areas.

The real estate market in China has been growing rapidly over the years. However, as the concerns over people’s purchasing power and sustainability of growth continue to mount in the market, and the divergence of property markets between ultra-large cities in the eastern region and small and mediumsized cities in the central and western regions become more intense, there may be uncertainties which impact the business of the Group.

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DIRECTORS’ REPORT

RELATIONSHIP WITH SIGNIFICANT STAKEHOLDERS

The Group’s success is also dependent on the support of the employees, customers, suppliers and shareholders of the Group.

Employees

The Group’s employees are regarded as the most important and most valuable assets of the Group. The most important objective of the Group’s human resources management is to reward the employees with outstanding performance through proper compensation and benefits and implementation of a comprehensive appraisal and evaluation system. With proper training and development, the Company’s employees are provided with opportunities for career development and promotions.

Customers

Most of the Group’s customers are home purchasers. The Group strives to develop high quality residential properties for the improvement of the customers’ quality of living.

In order to fulfill the Group’s commitment for enhancing customer satisfaction persistently, the Group ensures to adopt the best concepts and use products of the highest qualities in development projects. In terms of customer service, the Group has always focused on the overall qualities of frontline staff by providing them with regular training to ensure consistently high service quality.

Suppliers

The service providers of the Group are mainly construction companies and suppliers of construction materials. The Group has good cooperation relationship with all the suppliers, and has signed strategic cooperation agreements with a number of high quality suppliers to ensure higher quality in construction work and materials supplied. The Group upholds the win-win principle to achieve common growth together with the suppliers.

Shareholders

One of the important corporate objectives of the Group is to maximize the value created for Shareholders. The Group continues to promote business developments for the sustainable growth in profits. The Group will strive to deliver stable dividends for the Shareholders, after considering the adequacy of capital, liquidity conditions and requirements for business development of the Group.

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DIRECTORS’ REPORT

DIVIDEND POLICY

The Company aims to provide stable and sustainable returns to the Shareholders of the Company and strives to maintain a stable dividend policy.

Any declaration of dividends will be proposed by the Board and the amount of any dividends will depend on various factors, including, among others, the following:

market conditions;
the strategic plans and prospects of the Company;
the business opportunities of the Company;
the profit and financial position of the Company;
the working capital requirements and anticipated cash needs of the Company;
the contractual restrictions and obligations of the Company;
payments by subsidiaries of cash dividends to the Company;
legal, tax and regulatory restrictions; and
any other factors as the Directors may deem relevant.

Subject to the Cayman Islands Companies Law and the Articles of Association, the Company may declare dividends through a general meeting in any currency but no dividend shall be declared in excess of the amount recommended by the Board. The Articles of Association provides that dividends may be declared and paid out of profit, realized or unrealized, or from any reserve set aside from profits at the Directors’ discretion. With the sanction of an ordinary resolution, dividends may also be declared and paid out of the Company’s share premium account or any other fund or account authorised for this purpose in accordance with the Cayman Islands Companies Law and the Articles of Association.

The Board may from time to time pay dividends to the Shareholders as considered by the Board to be justified by the profits of the Group.

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DIRECTORS’ REPORT

FINAL DIVIDEND

The Board resolved not to declared the payment of final dividend for the year ended 31 December 2020.

ANNUAL GENERAL MEETING

SHARE CAPITAL

The Company allotted and issued 99,999,989 ordinary shares of the Company (the “ Rights Issue ”) by way of the Rights Issue on 7 March 2019. For details of the Rights Issue, please refer to the announcements of the Company dated 11 January and 6 March 2019 and the prospectus of the Company dated 13 February 2019.

As at 31 December 2020, the total number of issued shares of the Company was 599,999,989 shares with a total share capital of RMB4,855,000.

USE OF PROCEEDS FROM THE RIGHTS ISSUE

On 7 March 2019, the Company completed a Rights Issue pursuant to which the Company has issued 99,999,989 ordinary shares of the Company at HK$1.50 per rights share on the basis of one rights share for every five the then shares held on 11 February 2019. Valid applications and acceptances in respect of a total of 130,896,578 rights shares had been received, representing approximately 130.9% of the 99,999,989 total number of rights shares available for subscription under the rights issue. The closing price per Share as quoted on the Stock Exchange on the last trading day (11 January 2019) was HK$1.59. The Directors believe that the Rights Issue will better enhance the Company’s ability to fund and develop the Group’s business.

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DIRECTORS’ REPORT

The net proceeds of the Rights Issue of the Company (after deducting professional fees and other related expenses) were approximately HK$147.31 million (equivalent to approximately RMB125.58 million based on the exchange rate of RMB1 to HK$1.173). The net proceeds from the Rights Issue are to be used in the following manner:

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Amount Amount
utilised not utilised
Amount of as at 31 as at 31
Intended use Percentage proceeds December 2020 December 2020
(%) (HK$ million) (HK$ million) (HK$ million)
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Used to pay for the unpaid	82.11	120.95	110.00	10.95
registered capital of Jinzhong
Chen Xing Hui for future
investment opportunities (if
appropriate opportunities arise)
in Jinzhong Chen Xing Hui’s
construction materials and
decorative materials trading
business
Used as the Company’s general	17.89	26.36	—	26.36
working capital

As at 31 December 2020, the Company utilised HK$110.0 million, representing approximately 74.7% of the net proceeds from the Rights Issue. In view of the slowdown in growth of the global economy and the outbreak of COVID-19, the Company has been taking a more prudent approach in the utilisation of the unutilised proceeds from the Right Issues, resulting in a delay in the utilisation of the use of proceeds. Subject to further weakening of COVID-19 pandemic, the Directors expect the unutilised proceeds will be fully utilised by end of 2021.

EQUITY-LINKED AGREEMENT

Apart from the share option scheme, the Company did not enter into any equity-linked agreement.

PROPERTY, PLANT AND EQUIPMENT

The details of changes in property, plant and equipment of the Group for the Reporting Period are set out in note 13 to the consolidated financial statements.

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DIRECTORS’ REPORT

INVESTMENT PROPERTIES

The details of changes in the investment properties of the Group for the Reporting Period are set out in note 14 to the consolidated financial statements.

RESERVES

The details of changes in the reserves of the Group for the Reporting Period are set out in the consolidated statement of changes in equity on pages 291 of this annual report.

DISTRIBUTABLE RESERVES

Distributable reserves of the Group amounted to RMB865.6 million for the Reporting Period (for the year ended 31 December 2019: distributable reserves of RMB695.2 million).

BANK LOANS AND OTHER BORROWINGS

The details of bank loans and other borrowings of the Group as at the end of the Reporting Period are set out in note 30 to the consolidated financial statements.

DIRECTORS AND SERVICE CONTRACTS OF DIRECTORS

The Directors for the Reporting Period and up to the date of this annual report are as follows:

Executive Directors

Mr. Bai Xuankui (Chairman)

Mr. Bai Wukui

Mr. Bai Guohua Mr. Dong Shiguang

Independent Non-executive Directors

Mr. Tian Hua

Mr. Qiu Yongqing

Ms. Gao Jianhua (appointed with effect from 26 February 2021)

Mr. Gu Jiong (resigned with effect from 30 November 2020)

Biographies of all Directors and senior management are set out in the section headed “Biographies of Directors and Senior Management” herein.

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DIRECTORS’ REPORT

Pursuant to Article 84(1) and Article 83(3) (as the case may be) of the Articles of Association, Mr. Bai Xuankui and Mr. Qiu Yongqing shall retire at the AGM, and being eligible, have offered themselves for reelection.

INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS

The Company has received the confirmation from each of the independent non-executive Directors on his/ her independence pursuant to Rule 3.31 of the Listing Rules. As at the date of this report, the Company considered all of the independent non-executive Directors were independent persons.

SERVICE CONTRACTS OF DIRECTORS

Each of the executive Directors has entered into a service contract with the Company for a term of three years and may be terminated subject to the relevant terms of the service contracts.

Each of the independent non-executive Directors has entered into an appointment letter with the Company for a term of three years and may be terminated subject to the relevant terms of the appointment letters.

None of the Directors has entered into a service contract with the Company which are not determinable by the Group within one year without payment of compensation (other than statutory compensation).

INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS

During the Reporting Period, none of the Directors or their connected entities and controlling Shareholders had direct or indirect material interest in any transaction, arrangement or contract which was significant to the business of the Group and the Company or any of its subsidiary was a party thereto.

MANAGEMENT CONTRACTS

During the Reporting Period, no contract was or had been signed in relation to the management and administrative matters of the Company’s business as a whole or any material portion thereof.

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DIRECTORS’ REPORT

MAJOR CUSTOMERS AND SUPPLIERS

During the Reporting Period, the amount of purchases from the largest supplier of the Group represented approximately 32.5% of the total purchases of the Group, and the amount of purchases from the five largest suppliers of the Group represented approximately 54.6% of the total amount of purchases of the Group.

During the Reporting Period, the amount of sales to the largest customer of the Group represented approximately 1.0% of the total sales of the Group, and the amount of sales to the five largest customers of the Group represented approximately 3.8% of the total sales of the Group.

None of the Directors or any of their close associates or any Shareholders of the Company has any interest in the five largest customers and suppliers of the Group.

DISCLOSURE OF INTERESTS

Interests and/or Short Positions of Directors and Chief Executives in Shares, Underlying Shares and Debentures of the Company or any of its Associated Corporations

As at 31 December 2020, the following Directors and chief executives of the Company had interests and short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (as defined in Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“ SFO ”)), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or required to be entered into the register mentioned under Section 352 of the SFO, or required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) of Appendix 10 to the Listing Rules:

Long Positions in the Shares of the Company

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Capacity/ Number of Percentage of
Name of Director/chief executive Nature of interest shares held shareholdings [(Note 1)]
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Mr. Bai Xuankui (“Mr. Bai”)(Note 2)	Settlor of a discretionary trust	346,944,000	57.82%
	Interest of a controlled
Mr. Bai Wukui(Note 3)	corporation	64,944,000	10.82%
Mr. Bai Guohua(Note 4)	Beneficiary of a discretionary trust	346,944,000	57.82%
Mr. Dong Shiguang	Interest of a controlled
(“Mr. Dong”)(Note 5)	corporation	10,827,740	1.80%

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DIRECTORS’ REPORT

Notes:

As at 31 December 2020, the total number of issued shares of the Company was 599,999,989 shares.
The shares were held by White Dynasty Global Holdings Limited (“ White Dynasty BVI ”) in the capacity of a legal beneficial owners, which was a corporate controlling shareholder of the Company, and White Dynasty BVI was owned by White Empire (PTC) Limited (“ White Empire BVI ”) in the capacity of a legal beneficial owner. White Empire BVI was the trustee of the family trust established for the benefit of Mr. Bai Guohua, Ms. Cheng Guilian (“ Mrs. Bai ”, the spouse of Mr. Bai), and other beneficiaries to be nominated by the trustee from time to time. Since Mr. Bai was the settlor of the family trust, Mr. Bai was deemed to be interested in the shares held by White Dynasty BVI under the SFO.
The shares were held by White Legend Global Holdings Limited (“ White Legend BVI ”) in the capacity of a legal beneficial owner. White Legend BVI was wholly-owned by Mr. Bai Wukui in the capacity of a legal beneficial owner. Since Mr. Bai Wukui held the entire issued share capital of White Legend BVI, Mr. Bai Wukui was deemed to be interested in the shares held by White Legend BVI under the SFO.
The shares were held by White Dynasty BVI in the capacity of a legal beneficial owner. Since (i) Mr. Bai Guohua was a beneficiary of the family trust; and (ii) Mr. Bai Guohua was a person acting in accordance with the instructions from Mr. Bai, the settlor of the family trust, at all times, hence Mr. Bai Guohua was deemed to be interested in the shares held by White Dynasty BVI under the SFO.
The shares were held by Honesty Priority Global Holdings Limited (“ Honesty Priority BVI ”) in the capacity of a legal beneficial owner. Since Mr. Dong owned 34.87% shares in Honesty Priority BVI, Mr. Dong was deemed to be interested in the shares held by Honesty Priority BVI under the SFO.

Long Positions in the Shares of Associated Corporations of the Company

Name of Director/ chief executive	Name of associated corporation	Capacity/ Nature of interest	Number of shares held	Percentage of shareholdings
Mr. Bai	White Dynasty BVI(Note 1)	Settlor of a discretionary trust	10,000	100%
Mr. Bai	White Empire BVI(Note 1)	Settlor of a discretionary trust		100%
Mr. Bai Guohua	White Dynasty BVI(Note 1)	Beneficiary of a discretionary trust	10,000	100%
Mr. Bai Guohua	White Empire BVI(Note 1)	Beneficiary of a discretionary trust		100%

Note:

White Dynasty BVI was a corporate controlling shareholder of the Company and was wholly-owned by White Empire BVI in the capacity of a legal beneficial owner. White Empire BVI was a company limited by guarantee incorporated in the British Virgin Islands and the trustee of the family trust which was held for the benefits of Mr. Bai Guohua, Mrs. Bai and other beneficiaries to be nominated by the trustee from time to time, and Mr. Bai was the settlor of the family trust.

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DIRECTORS’ REPORT

As at 31 December 2020, save as disclosed above, none of the Directors or chief executives of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which was required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or required to be recorded in the register mentioned under Section 352 of the SFO or required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At any time during the Year or as at the end of the Year, none of the Company, its holding company or any of their subsidiaries or fellow subsidiaries had participated in any arrangement which enabled the Directors of the Company to gain benefits through purchasing of shares or debentures of the Company or any other corporations.

INTERESTS AND/OR SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY HELD BY SUBSTANTIAL SHAREHOLDERS

As at 31 December 2020, to the best knowledge of the Company and the Directors, the following persons (not being Directors or chief executives of the Company) had interests or short positions in the shares and underlying shares of the Company, which were required to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or required to be entered into the register mentioned under Section 336 of the SFO:

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Number of Percentage of
Name of Shareholder Capacity/Nature of interest shares held shareholdings [(Note 1)]
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White Dynasty BVI(Note 2)	Beneficial owner	346,944,000	57.82%
White Empire BVI(Note 2)	Interest of a controlled corporation	346,944,000	57.82%
White Legend BVI(Note 3)	Beneficial owner	64,944,000	10.82%
Mrs. Bai(Note 4)	Beneficiary of a discretionary trust	346,944,000	57.82%
Ms. Zhang Lindi(Note 5)	Interest of spouse	346,944,000	57.82%
Ms. Gan Xuelin(Note 6)	Interest of spouse	64,944,000	10.82%
Hwabao Trust Co. Ltd	Trustee	62,160,000	10.36%

Notes:

As at 31 December 2020, the Company had a total number of 599,999,989 shares in issue.
White Dynasty BVI was wholly-owned by White Empire BVI, hence White Empire BVI was deemed to be interested in the shares owned by White Dynasty BVI under the SFO. White Empire BVI was the trustee for the family trust established for the benefit of Mr. Bai Guohua, Mrs. Bai and other beneficiaries to be nominated by the trustee from time to time. Mr. Bai was the settlor of the family trust.

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Annual Report 2020 Chen Xing Development Holdings Limited 235

DIRECTORS’ REPORT

White Legend BVI was wholly-owned by Mr. Bai Wukui in the capacity of a legal beneficial owner. Since Mr. Bai Wukui had a controlling interest in White Legend BVI, Mr. Bai Wukui was deemed to be interested in the shares held by White Legend BVI under the SFO.
Mrs. Bai was the wife of Mr. Bai. Since Mrs. Bai was a beneficiary of the family trust, Mrs. Bai was deemed to be interested in the shares held by White Dynasty BVI under the SFO.
Ms. Zhang Lindi was the wife of Mr. Bai Guohua. Since Mr. Bai Guohua was a beneficiary of the family trust, Mr. Bai Guohua was deemed to be interested in the shares held by White Dynasty BVI under the SFO, therefore, Ms. Zhang Lindi was deemed to be interested in the shares held by White Dynasty BVI under the SFO.
Ms. Gan Xuelin was the wife of Mr. Bai Wukui. Since Mr. Bai Wukui was deemed to be interested in the shares held by White Legend BVI under the SFO, therefore, Ms. Gan Xuelin was deemed to be interested in the shares held by White Legend BVI.

As at 31 December 2020, save as disclosed above, the Company was not aware of any other persons (other than Directors and chief executives of the Company) who had interests or short positions in the shares and underlying shares of the Company, which were required to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or required to be entered into the register mentioned under Section 336 of the SFO.

RELATED PARTY TRANSACTIONS

The details of related party transactions of the Group for the Reporting Period are set out in note 39 to the consolidated financial statements. Apart from the transactions with Shanxi Wanjia Property Service Co., Ltd. and Shanxi Wanzhong Heating Co., Ltd. which are fully exempt continuing connected transactions, these transactions do not constitute connected transactions or continuing connected transactions in the meaning of Chapter 14A of the Listing Rules. All the transactions are fully exempt from Shareholders’ approval, annual review and all disclosure requirements. The Company has complied with the disclosure requirements set out in Chapter 14A of the Listing Rules.

ANNUAL REVIEW AND DISCLOSURE REQUIREMENT OF DIRECTORS’ INTERESTS IN COMPETING BUSINESS

Save as disclosed in this annual report, for the Reporting Period, none of the Directors or their respective associates engaged in or had any interest in any business which was or might be in competition with the business of the Group.

REMUNERATION POLICY

The Group has established the Remuneration Committee to review the remuneration policy and structure of the Group for the remuneration of all Directors and the senior management of the Group after considering the operating results of the Group, individual performance and contribution, time commitment and responsibilities of the Directors and senior management as well as the remuneration paid by comparable companies.

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DIRECTORS’ REPORT

The Group has formulated and implemented remuneration policies to motivate employees and, in turn, support the long-term development of the Group. Such policies are consistent with the business strategies and development objectives of the Group, which will be helpful in attracting and retaining professional employees with the relevant knowledge and skills.

SHARE OPTION SCHEME

The Company has adopted a share option scheme (the “ Share Option Scheme ”) on 12 June 2015. Since the adoption, the Company has not granted any share options under the Share Option Scheme.

A summary of the key terms of the Share Option Scheme is set out below. The terms of the Share Option Scheme have complied with the requirements of Chapter 17 of the Listing Rules.

(a) Purpose

The Share Option Scheme is a share incentive scheme and is established to recognize and acknowledge the contributions Eligible Participants (as defined in paragraph (b) below) had or may have made to the Group. The Share Option Scheme will provide Eligible Participants an opportunity to have a personal stake in the Company with the view to achieving the following objectives: (i) motivate Eligible Participants to optimize their performance efficiency for the benefit of the Group; and (ii) attract and retain or otherwise maintain on-going business relationship with Eligible Participants whose contributions are or will be beneficial to the long-term growth of the Group.

(b) Eligible Participants

The Board may, at its discretion and subject to such conditions as it thinks fit, offer to grant share options to the following persons (collectively, the “ Eligible Participants ”):

(i) any full-time or part-time employees, executives or officers of the Company or any of its subsidiaries;
(ii) any Directors (including executive, non-executive Directors and independent non-executive Directors) of the Company or any of its subsidiaries;
(iii) any advisers (professional or otherwise), consultants, suppliers, customers and agents to the Company or any of its subsidiaries; and
(iv) related entities who, in the sole opinion of the Board, will contribute or have contributed to the Company or any of its subsidiaries.

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DIRECTORS’ REPORT

The maximum number of shares that may be issued pursuant to the Share Option Scheme is 50,000,000 shares, equivalent to 10% of the issued shares of the Company after completion of the global offering and 8.33% of the issued shares of the Company as at the date of this annual report.

(d) Maximum number of options granted to any individual

The maximum number of shares issued and which may fall to be issued upon exercise of the options granted under the Share Option Scheme and any other share option schemes of the Company (including exercised, cancelled and outstanding options) to each Eligible Participant in any 12-month period shall not exceed 1% of the shares in issue of the Company.

Any further grant of options in excess of the above limit shall be subject to separate approval by the Shareholders in a general meeting (such Eligible Participants and their associates are required to abstain from voting), and shall comply with other requirements prescribed under the Listing Rules and/or other applicable statutory regulations or rules.

(e) Maximum number of options granted to connected persons

Any grant of options to a Director, chief executive or substantial Shareholder (as defined in the Listing Rules) of the Company or any of their respective associates (as defined in the Listing Rules) is required to be approved by the independent non-executive Directors (excluding any independent nonexecutive Director who is the grantee of the options).

If the Board determines to grant options to a substantial Shareholder or any independent nonexecutive Director or any of their respective associates, the maximum number of shares issued and to be issued upon exercise of the options granted under the Share Option Scheme and any other share option scheme of the Company (including exercised, cancelled and outstanding options) to each substantial Shareholder or any independent non-executive Director or any of their respective associates in any 12-month period shall not exceed 0.1% of the shares in issue of the Company or such other percentage as may be from time to time provided under the Listing Rules, and the aggregate value calculated based on the closing price of the shares of the Company as stated in the daily quotation sheets of the Stock Exchange as at each date of grant shall not exceed HK$5,000,000 or such other amount as may be from time to time provided under the Listing Rules.

If any further grant will exceed the above limit on options, such further grant shall be subject to a separate approval by the Shareholders in a general meeting (such Eligible Participants and their associates shall abstain from voting), and shall comply with other requirements prescribed under the Listing Rules and/or other applicable statutory regulations or rules.

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(f) When the options may be exercised

An option may be exercised in accordance with the terms of the Share Option Scheme at any time after the date upon which the option is deemed to be granted and accepted and prior to the expiry of 10 years from that date.

The period during which an option may be exercised will be determined by the Board in its absolute discretion, save that no option may be exercised more than 10 years after it has been granted.

(g) Required minimum holding period before the exercise of an option

There is no minimum holding period required before an option may be exercised.

(h) Acceptance of offer

Upon acceptance of an option, the grantee shall pay HK$1.00 to the Company as consideration for the grant.

(i) Basis for the determination of the exercise price

The share subscription price in respect of any specific option granted under the Share Option Scheme shall be determined at the sole discretion of the Board on the relevant price, but such price shall not be less than the highest of the following:

(i) the official closing market price of the shares as stated in the daily quotation sheet of the Stock Exchange as at the date of grant, which must be a day when the Stock Exchange is open for securities trading business);
(ii) the average official closing market price of the shares as stated in the daily quotation sheets of the Stock Exchange for five business days immediately before the date of grant; and
(iii) par value of the shares.
(j) Residual term of the Share Option Scheme

The Share Option Scheme shall remain valid until 11 June 2025. Unless its early termination is approved by the general meeting of Shareholders or by the Board of the Company, the Share Option Scheme shall remain valid and effective for a period of 10 years from the date when it was adopted.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

During the Reporting Period, neither the Company or any of its subsidiaries has purchased, sold or redeemed any listed securities of the Company.

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PRE-EMPTIVE RIGHTS

There is no provision for pre-emptive rights under the Articles of Association or the laws of Cayman Islands that will oblige the Company to offer new shares to the existing Shareholders on a pro-rata basis.

CORPORATE GOVERNANCE

The Company is dedicated to maintain a high standard in corporate governance practice. Save as disclosed in this report, the Company has complied with the code provisions under the Corporate Governance Code contained in Appendix 14 to the Listing Rules during the Reporting Period. Information about the corporate governance practice adopted by the Company is set out in Corporate Governance Report on page 241 of this annual report.

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and to the best knowledge of the Directors, the Directors have confirmed that as at the date of this annual report, the Company has maintained a sufficient public float of our shares as required under the Listing Rules.

AUDITOR

The Group’s consolidated financial statements for the year ended 31 December 2020 have been audited by Ernst & Young.

Ernst & Young will retire and be eligible for re-appointment at the AGM. The resolution on the re-appointment of Ernst & Young as the auditor of the Company will be submitted to the AGM for approval. There has not been any change of auditors since the listing of the Company.

RECOMMENDATION TO CONSULT PROFESSIONAL TAX ADVICE

If Shareholders of the Company are not sure about the tax effect of the purchase, holding, sale, trading or exercise of any rights attached to the relevant shares of the Company, they are recommended to consult independent experts for advice.

By Order of the Board Chen Xing Development Holdings Limited Bai Xuankui Chairman

Jinzhong, Shanxi, China 25 March 2021

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The Board is pleased to present the corporate governance report of the Company for the year ended 31 December 2020.

CORPORATE GOVERNANCE PRACTICE

The Company is always committed to maintain high standard of corporate governance with a view to assuring the conduct of management of the Company and protecting the interests of the Shareholders. The Company is fully aware that transparency and accountability in corporate governance are crucially important to the Shareholders. The Board considers that sound corporate governance can maximize Shareholders’ interests.

The Company has adopted the Corporate Governance Code (the “ CG Code ”) as set out in Appendix 14 to the Rules (the “ Listing Rules ”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) as its own code of corporate governance. During the Reporting Period, save as disclosed below, the Company had complied with all the code provisions under the CG Code.

On 30 November 2020, Mr. Gu Jiong (“ Mr. Gu ”) resigned as an independent non-executive director of the Company, the chairman of the audit committee, the member of each of the remuneration committee and nomination committee of the Company due to his other business commitments. Following the resignation of Mr. Gu, the Board fails to meet the requirements of having: (i) at least three independent non-executive directors on the Board under Rule 3.10(1) of the Listing Rules; (ii) the audit committee comprising only non-executive directors with a minimum of three members; (iii) at least one of whom is an independent non-executive director with appropriate professional qualifications or accounting or related financial management expertise under Rule 3.10(2) of the Listing Rules; and (iv) any of the other requirements set out in Rule 3.21 regarding the audit committee under Rule 3.23 of the Listing Rules.

On 26 February 2021, the Board appointed Ms. Gao Jianhua as an independent non-executive director and member of each of the audit committee, remuneration committee and nomination committee of the Company. On the same day, Mr. Tian Hua was appointed as the chairman of the audit committee. Since then, the Company has complied with the requirement of Rules 3.10, 3.10A, 3.21 and 3.25 of the Listing Rules and code provision A.5.1 of the CG Code.

The Company shall review and strengthen its corporate governance practice from time to time, and strengthen internal control with the help of its PRC and Hong Kong legal advisors, so as to ensure compliance with the Corporate Governance Code.

The Board consists of four executive Directors and three independent non-executive Directors. The Board is responsible for the operation and coordination of the development of the Company and monitoring the Company’s business, strategic decisions and performance, and has full and timely access to all relevant information in relation to the Company’s businesses and affairs, while the day-to-day management is delegated to the management of the Company. The independent non-executive Directors possess professional qualifications and related management experience in the areas of financial accounting, corporate governance, etc. and have contributed to the Board with their professional opinions.

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Mr. Bai Xuankui (“ Chairman Bai ”) is an executive director and the chairman of the Board. He is responsible for the management of the Board and the overall strategic planning, business development and corporate governance functions. The Company believes that Chairman Bai’s servicing as Director and Chairman since the establishment of the Company is conducive to the Company’s formulating a correct development strategy. In terms of business operations, the Company’s senior management, which comprises experienced and high caliber individuals from various sectors, will ensure decisions made by the Board be thoroughly implemented.

THE BOARD

Duties

The Board is responsible for the operation and planning of the Group’s development. It oversees the business, strategic decision-making and performance of the Group and timely understands all relevant information of the Group’s business. The Board has delegated the day-to-day management and operation powers and duties to the senior management. For overseeing particular areas of affairs of the Company, the Company has established three Board committees, namely the Audit Committee, the Remuneration Committee and the Nomination Committee (together, the “ Board Committees ” ). The Board has delegated to the Board Committees duties as set out in their terms of reference. Some of the independent non-executive Directors have certain qualifications and relevant management experience on financial accounting and corporate governance aspects and provide professional opinions to the Board.

All the Board members should ensure that they shall exercise their duties with integrity and comply with applicable laws and regulations, which is all times in the interests of the Company and its Shareholders.

Composition of the Board

As at the date of this annual report, the Board comprises of four executive Directors (namely Mr. Bai Xuankui, Mr. Bai Wukui, Mr. Bai Guohua, and Mr. Dong Shiguang) and three independent non-executive Directors (namely Mr. Tian Hua, Mr. Qiu Yongqing and Ms. Gao Jianhua). The biographical details of each Director are set out in the “Biographical Details of Directors and Senior Management” section of this annual report.

Save as disclosed in this annual report, to the best knowledge of the Company, none of the Board members have any financial, business, family, or any other substantial relationships.

During the Reporting Period, except for the resignation of Mr. Gu Jiong as an independent non-executive Director of the Company on 30 November 2020, the Board has complied with the requirements under Rule 3.10(1) and Rule 3.10(2) of the Listing Rules that at least three independent non-executive Directors must be appointed and at least one of the independent non-executive Directors must have appropriate professional qualifications or accounting or related financial management expertise. The number of independent non-executive Directors accounts for one-third of the Board members, which complies with the requirement under Rule 3.10A of the Listing Rules. For details, please refer to P.241 of this report.

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The Company has received confirmations from the independent non-executive Directors of their independence pursuant to Rule 3.13 of the Listing Rules. The Company considered all the independent non-executive Directors as independent.

All the Directors (including the independent non-executive Directors) have broad and valuable business experience, expertise and professional skills for the effective operation of the Board. The independent non-executive Directors are appointed as members of the Audit Committee, Remuneration Committee, and Nomination Committee.

Pursuant to code provision A.6.6 of the Corporate Governance Code, each Director should disclose to the issuer at the time of his appointment, and in a timely manner for any change, the number and nature of offices held in public companies or organisations and other significant commitments. The identity of the public companies or organisations and an indication of the time involved should also be disclosed. All Directors have consented to disclose to the Company for the above provision on a timely basis.

Chairman and Chief Executive Officer

The chairman and chief executive officer of the Company are Mr. Bai Xuankui and Mr. Bai Wukui, both being executive Directors, respectively. The separation of roles of Chairman and chief executive officer enables balance of power and delegations, preventing the job responsibilities be concentrated on either one of them. The chairman is responsible for leadership work and the effective operation of the Board, whilst the chief executive officer is delegated for the effective management of business of the Group. The separation of responsibilities between the chairman and the chief executive officer is clearly defined and set out in written form.

Directors’ Training and Continuous Professional Development

All the Board members understand the responsibilities as Directors and the operation and business activities of the Company. The Company is responsible for arranging induction programmes, continuous training and professional development for the Directors, and providing funding therefor. Accordingly, the Company shall arrange induction programmes for any newly appointed Director before formal appointment, ensuring that he/she have certain understanding on the business and operations of the Group and be fully aware of the responsibilities and obligations set out in the Listing Rules and relevant laws and regulations.

The Company arranges seminars regularly, providing the Directors with the development and amendment updates of the Listing Rules and other relevant laws and regulations. The Directors also regularly receive updates on the performance, conditions and outlook of the Company to enable the Board to work as a whole and the Directors to exercise each of their own duties. The Company updates and provides written training materials about Directors’ roles, functions and duties from time to time, and encourages Directors to read such materials. Each Director has to submit a training record each year.

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During the Year, all Directors attended formal and all-rounded training. The Company has received each Director’s training record for the Year.

Appointment and Re-election of Directors

The Nomination Committee is responsible for reviewing Board composition and monitoring the appointment, re-election and succession planning of Directors. Procedures and process for the appointment, re-election and removal of Directors are set out in the Articles of Association.

Each executive Director entered into service contract with the Company for a term of three years. The service contract can be terminated according to its terms.

Each independent non-executive Director entered into a letter of appointment with the Company for a term of three years. The service contract can be terminated according to its terms.

None of the Directors has entered into a service contract with the Group which is not terminable within one year without compensation (other than statutory compensation).

Pursuant to Article 84(1) of the Articles of Association, at each annual general meeting, one-third of the Directors for the time being (or, if their number is not a multiple of three (3), the number nearest to but not less than one-third) shall retire from office by rotation provided that every Director shall be subject to retirement at an annual general meeting at least once every three years.

Pursuant to Article 83(3) of the Articles of Association, any Director appointed by the Board to fill a casual vacancy shall hold office until the first general meeting of members after his appointment and be subject to re-election at such meeting and any Director appointed by the Board as an addition to the existing Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for reelection.

Mr. Bai Xuankui and Mr. Qiu Yongqing will retire at the AGM in accordance with Article 84(1) of the Articles of Association and Ms. Gao Jianhua (appointed on 26 February 2021) will retire at the AGM in accordance with Article 83(3) of the Articles of Association, and all of them are eligible and offer themselves for reelection.

Board Meetings

The Company has adopted the practice of holding at least four regular Board meetings each year (approximately once in a quarter). Notice of regular Board meetings shall be distributed to all the Directors at least 14 days before the meeting. Discussion matters shall be set out in the agenda of each meeting. Notices of other Board Committee meetings shall normally be delivered according to the requirements of the terms of reference. Meeting agenda and relevant meeting papers shall be sent to the Directors and

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Board Committee members at least 3 days before the meeting to ensure that they have adequate time for the review of the documents. If the Directors and the Board Committee members are unable to attend the meetings, they shall be notified of the discussion matters and provide their views to the chairman of meeting before the meeting. Minutes of Board meetings and Board Committee meetings shall be kept by the Company, a copy of which shall be circulated to the Directors and relevant Board Committee members for reference and for records.

Minutes of Board meetings and Board Committee meetings shall record the matters considered and the decisions reached in the meetings, including the questions raised by the Directors and the Board Committee members. Draft of the minutes of Board meetings and Board Committee meetings shall be provided to Directors and relevant Board Committee members in reasonable time for consideration and comments. The Directors are entitled to inspect the minutes of Board meetings and Board Committee meetings.

During the year, the Company held four Board meetings and one general meeting. Attendance of Directors at such meetings is set out in the following table:

Directors	Number of Board meetings attended/held during his/her tenure	Number of general meetings attended/held during his/her tenure
Mr. Bai Xuankui	4/4	1/1
Mr. Bai Wukui	4/4	1/1
Mr. Bai Guohua	4/4	1/1
Mr. Dong Shiguang	4/4	1/1
Mr. Tian Hua	4/4	1/1
Mr. Qiu Yongqing	4/4	1/1
Mr. Gu Jiong (resigned on 30 November 2020)	4/4	1/1

The Chairman of the Board convened a meeting with the independent non-executive Directors without the presence of the executive Directors during the Year.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) as set out in Appendix 10 to the Listing Rules as its own code of conduct for securities transactions by Directors. Having made specific enquiry to all Directors, all Directors confirmed that they have complied with the Model Code during the Reporting Period.

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DELEGATION OF THE BOARD

The Board retains the decision making rights for major matters of the Company, including approving and monitoring all policy affairs, overall strategy and budget, internal control and risk management systems, major transactions (especially those with possible conflict of interests), financial information, appointment of directors and other major financial and operational matters. The Directors may seek independent professional advice when exercising their duties, the cost of which is borne by the Company. The Directors are also encouraged to conduct independent consultation with the senior management of the Company.

The Group’s day-to-day management, administration and operation are delegated to the senior management of the Company. The Board regularly reviews the functions and duties delegated to the senior management of the Company.

CORPORATE GOVERNANCE FUNCTIONS

The Board understands that corporate governance is a shared responsibility among all Directors. The Board has delegated the corporate governance functions to the Audit Committee, including:

(i) to develop and review the Company’s policies and practices on corporate governance and make recommendations to the Board;
(ii) to review and monitor the training and continuous professional development of Directors and senior management;
(iii) to review and monitor the Company’s policies and practices on compliance with legal and regulatory requirements;
(iv) to develop, review and monitor the code of conduct and compliance manual (if any) applicable to employees and Directors; and
(v) to review the Company’s compliance with the Corporate Governance Code and disclosure in the Corporate Governance Report.

During the Year, the Audit Committee has exercised the aforementioned corporate governance functions, and has reported to the Board.

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BOARD COMMITTEES

Nomination Committee

The Nomination Committee comprises of three members, including one executive Director, Mr. Bai Xuankui (chairman), and two independent non-executive Directors, Mr. Qiu Yongqing and Ms. Gao Jianhua. Therefore, the majority of members are independent non-executive Directors. The major duties of the Nomination Committee include:

(i) review the structure, size and composition (including the skills, knowledge, experience and diversification) of the Board and make recommendations on any proposed changes to the Board to complement the Company’s corporate strategy;
(ii) identify individuals suitably qualified to become Board members and select or make recommendations to the Board on the selection of individuals nominated for directorships;
(iii) make recommendations to the Board on the appointment or reappointment of Directors and succession planning for Directors; and
(iv) assess the independence of independent non-executive Directors.

The Nomination Committee shall assess the candidates or the current candidates according to standards, including integrity, experience, skills, time commitment and dedication, and ability to exercise duties and responsibilities.

The terms of reference of the Nomination Committee is posted on the websites of the Stock Exchange and the Company.

In order to enhance the effectiveness of the Board and corporate governance standards, the Board shall maintain a balance of composition of executive and non-executive Directors (including independent non-executive Directors) to enable high level independence of the Board for effective demonstration of independent judgment. During the Year, the Nomination Committee held one meeting. Attendance of the Nomination Committee members at such meeting is set out in the following table:

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Committee members Number of meetings attended/held during his/her tenure
----- End of picture text -----

Mr. Bai	Xuankui	1/1
Mr. Qiu	Yongqing	1/1
Mr. Gu	Jiong (resigned on 30 November 2020)	1/1

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During the Reporting Period, the Nomination Committee has reviewed the structure, size and composition of the Board, made recommendations to the Board on the re-appointment of Directors, and assessed independence of the independent non-executive Directors.

The Company has adopted a board diversity policy and set measurable objectives. The Nomination Committee evaluates the balance and composition of the Board members’ skills, experience and diverse points of views. In selection of candidates, the Nomination Committees considers different points of views, including but not limited to age, cultural and educational background, professional and industrial experience, skills, knowledge, ethnicity, other criteria which is crucial to the business of the Company, and the candidate’s strengths and contributions to the Board. The Board shall review such measurable objectives from time to time, so as to ensure its appropriateness and the progress towards such objectives.

Remuneration Committee

The Remuneration Committee comprises of three members, including two independent non-executive Directors, Mr. Tian Hua (chairman) and Ms. Gao Jianhua, and one executive Director, Mr. Bai Xuankui. Therefore, the majority of members are independent non-executive Directors. Major duties of the Remuneration Committee include:

(i) to make recommendations to the Board on the Company’s policy and structure for all Directors’ and senior management remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy;
(ii) to make recommendations to the Board on the remuneration packages of individual executive Directors and senior management. This should include benefits in kind, pension rights and compensation payments, including any compensation payable for loss or termination of their office or appointment;
(iii) to make recommendations to the Board on the remuneration of non-executive Directors;
(iv) to ensure that no Director or any of his associates be involved in deciding his own remuneration; and
(v) to consider salaries paid by comparable companies, time commitment and responsibilities and employment conditions elsewhere in the Group.

The terms of reference of the Remuneration Committee is posted on the websites of the Stock Exchange and the Company.

During the Year, the Remuneration Committee held one meeting. Attendance of the Remuneration Committee members at such meeting is set out in the following table:

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Committee members Number of meetings attended/held during his/her tenure
----- End of picture text -----

Mr. Tian Hua	1/1
Mr. Gu Jiong (resigned on 30 November 2020)	1/1
Mr. Bai Xuankui	1/1

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The Remuneration Committee has reviewed the remuneration policy and structure for all Directors and senior management of the Company, reviewed the remuneration of individual Directors and senior management and made recommendations to the Board.

Audit Committee

The Audit Committee comprises of three independent non-executive Directors, including Mr. Tian Hua (chairman), Mr. Qiu Yongqing and Ms. Gao Jianhua.

The major duties of the Audit Committee include:

(i) to monitor and review financial statements, annual report and account, interim report and quarterly report (if any)), and review material comments regarding financial reporting as set out therein, and consider any material or unusual items put forward by the internal control department or the external auditor before presenting relevant documents to the Board;
(ii) to review the relationship with the external auditor according to the duties of the auditor, their fees and engagement terms, and to make recommendations to the Board on the appointment, reappointment and removal of the external auditor; and
(iii) to review the adequacy and effectiveness of the Company’s financial reporting system, internal control system and risk management system and relevant procedures, including resources, staff qualifications and experience, training programmes and budget of the Company’s accounting and financial reporting functions.

The terms of reference of the Audit Committee is posted on the websites of the Stock Exchange and the Company.

During the Year, the Audit Committee held two meetings. Attendance of the Audit Committee members at such meetings is set out in the following table:

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----- Start of picture text -----

Committee members Number of meetings attended/held during his/her tenure
----- End of picture text -----

Mr. Tian Hua	2/2
Mr. Qiu Yongqing	2/2
Mr. Gu Jiong (resigned on 30 November 2020)	2/2

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During the Year, the Audit Committee reviewed the annual results of the Group for the year ended 31 December 2019, the interim results of the Group for the six months ended 30 June 2020, the financial reporting systems, compliance procedures, internal control (including the adequacy of resources, staff qualifications and experience, training programmes and budget for accounting and financial reporting functions), risk management systems and process. The Board has not deviated from the recommendation of the Audit Committee on selection, appointment, resignation and removal of external auditor.

The Audit Committee also reviewed the annual results of the Group for the year ended 31 December 2020, and the audit report prepared by the external auditor related to accounting issues and material findings during the audit process.

REMUNERATION OF DIRECTORS AND FIVE EMPLOYEES WITH HIGHEST REMUNERATION

Details of the remuneration of the Directors and five employees with the highest remuneration for the Year are set out in note 8 and note 9 to the consolidated financial statements, respectively.

REMUNERATION OF SENIOR MANAGEMENT

During the Year, the remuneration of senior management of the Group fell within the following bands:

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Number of individuals
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HK$300,000	or below	3
HK$300,001	to HK$400,000	1

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Directors acknowledge their responsibility for preparing the financial statements for the year ended 31 December 2020, which gives a true and fair view of the financial position of the Group.

The Board is supplied with sufficient explanation and information by the management to enable the Board to make an informed assessment of financial and other information put before it for approval.

The Board is not aware of any material uncertainties relating to events or factors that may cast significant doubt upon the Group’s ability to operate as a going concern.

The statement by the Company’s auditors about their reporting responsibilities on the consolidated financial statements is set out in Independent Auditor’s Report on page 279 of this annual report.

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RISK MANAGEMENT AND INTERNAL CONTROL

The Board acknowledges its responsibility for monitoring the risk management and internal control systems, and ensuring the proper maintenance and effectiveness of the risk management and internal control systems. The Board also oversees the management in the design, implementation and monitoring of the risk management and internal systems, and the management provides the Board with confirmation on the effectiveness of the relevant systems. The Board considers that such systems aim at managing, instead of eliminating, the risk of failure in performing business objectives, and merely giving reasonable but not absolute guarantee to the absence of unmaterial fact, statement or loss.

The Board is responsible for the risk management and internal control system. It performs a review on the effectiveness of the risk management and internal control systems at least once a year. The Company has established an internal control department, which plays an important role in monitoring the risk management and internal control systems of the Group. Through the Audit Committee, the Board will continuously review the effectiveness of the risk management and internal control systems, including monitoring procedures for finance, operations, compliance, risk identification and assessment, and implementation of risk response measures. The audit procedures include:

(1) the internal control department of the Group assessing the relevant systems;
(2) the management ensuring the maintenance of effective risk management and internal control systems; and
(3) the external auditors discovering internal control problems when carrying out statutory audits.

The management and internal control department, supported by the Board, are responsible for the design, implementation and monitoring of the risk management and internal control systems, as well as reporting to the Board and the Audit Committee.

During the Year, the management and internal control department reported to the Board and the Audit Committee periodically in relation to the adequacy and effectiveness of internal controls, including but not limited to any indications of failings or material weaknesses in the control procedures.

The following key processes are used to identify, evaluate and manage the Group’s significant risks:

(1) the Board and the Audit Committee set up the targets for risk management;
(2) internal control department identifies the risks, which may potentially impact the normal operation of the Company, and analyses the and evaluates the significance of such risks;

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(3) the management, internal control and various departments assess the adequacy of existing controls, determine and adopt plans to mitigate the risks;
(4) the management monitors the risk mitigation activities; and
(5) reports regularly to the Board and the Audit Committee.

The Company has adopted policies and procedures for assessing the effectiveness of the risk management and internal control systems, and requiring the management to provide confirmation to the Board periodically on the effectiveness of the systems. The Board has also established a set of reporting procedures, whereby employees, customers, suppliers and other cooperative partners can report any actual or suspected occurrence of misconduct involving the Group, and for such matters to be investigated and dealt with efficiently in an appropriate and transparent manner.

The Company strictly regulates the handling and dissemination of inside information to ensure such information remains confidential until the disclosure of such information is appropriately approved, and the dissemination of such information is efficiently and consistently made.

During the Reporting Period, the management and internal control department have performed extensive assessments on special risks faced by the Group and conducted a review on the effectiveness of the risk management and internal control systems of the Group. The Board and the Audit Committee were not aware of any areas of concern that would have material impact on the Group’s financial position or operating results, and considered the risk management and internal control systems to be generally effective and adequate, including the adequacy of resources, staff qualifications and experience, training programs and budget of the accounting and financial reporting functions.

NON-COMPETITION UNDERTAKING

Mr. Bai Xuankui, Mr. Bai Guohua, Ms. Cheng Guilian, White Dynasty Holdings Limited and White Empire (PTC) Limited, the controlling shareholders of the Company, have confirmed in writing with the Company that they have complied with the undertakings under the deed of non-competition during the period from the date of signing the Deed of Non-competition until 31 December 2020.

The independent non-executive Directors have also reviewed the compliance with the undertakings under the Deed of Non-competition by the Controlling Shareholders during the Reporting Period and confirmed that there was no breach of undertakings under the Deed of Non-competition by any of the Controlling Shareholders.

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AUDITOR’S FEES

For the year ended 31 December 2020, the audit services fees payable to its external auditor, Ernst & Young, amounted to RMB2.15 million. No non-audit services fee was incurred.

COMPANY SECRETARY

To maintain sound corporate governance and ensure the compliance with the Listing Rules and applicable Hong Kong laws, the Company engaged Ms. Ng Wing Shan, the assistant vice president of SWCS Corporate Services Group (Hong Kong) Limited (company secretarial services provider), to act as the company secretary of the Company, and her primary contact person at the Company is Mr. Bai Guohua, an executive Director.

According to the requirements of Rule 3.29 of the Listing Rules, Ms. Ng Wing Shan took no less than 15 hours of relevant professional training during the Year.

SHAREHOLDERS’ COMMUNICATIONS AND INVESTOR RELATIONS

The Company believes that effective communication with Shareholders is very important for strengthening investor relations and allowing investors to understand the Group’s business, performance and strategy. The Company is also convinced of the importance of timely and non-selective disclosure of Company information for Shareholders and investors to make informed investment decisions.

The annual general meeting of the Company provides opportunities for Shareholders to communicate with the Directors directly. Chairman of the Board and chairmen of each Board Committee will attend the annual general meeting and answer questions raised by the Shareholders. The external auditor will also attend the annual general meeting and answer questions regarding audit work, preparation of auditor’s report and its content, accounting policies and independence of auditor.

To promote effective communication, the Company has adopted the Shareholders’ communication policy, with a view to establishing relationship and communication between the Company and its Shareholders. A website (www.chen-xing.cn) is also established. The Company shall post on its website updated information related to its business operations and development, financial information, corporate governance practices and other information for the review of the public.

SHAREHOLDERS’ RIGHTS

For the protection of Shareholders’ benefits and rights, the Company shall propose separate resolutions for each question (including the election of each Director) at a general meeting.

All resolutions proposed at a general meeting shall be voted on by poll according to the Listing Rules, the results of which shall be posted on the websites of the Stock Exchange and the Company after the date of the general meeting in due course.

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CONVENING OF EXTRAORDINARY GENERAL MEETING AND THE PROPOSAL OF RESOLUTIONS

Pursuant to Article 58 of the Articles of Association, any one or more members holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all times have the right, by written requisition to the Board or the secretary of the Company, to require an extraordinary general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two (2) months after the deposit of such requisition. If within twenty-one (21) days of such deposit the Board fails to proceed to convene such meeting the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to the requisitionist(s) by the Company. The procedures for Shareholders to convene an extraordinary general meeting are set out in the document entitled “Procedures for Shareholders to Convene a General Meeting”, which is posted on the Company’s website.

The Articles of Association and the laws of the Cayman Islands do not stipulate the procedures for Shareholders to propose resolutions at annual general meetings. Should the Shareholders wish to propose resolutions, they may refer to the “Procedures for Shareholders to Convene a General Meeting”.

Regarding the procedures for nomination of Directors, please refer to “Procedures for Shareholders to Nominate Candidates for Directors” posted on the website of the Company for details.

ENQUIRY TO THE BOARD

Shareholders may send by email to the Company’s email address ([email protected]) or by post to the Company’s Hong Kong principal place of business (40/F, Dah Sing Financial Centre, 248 Queen’s Road East, Wanchai, Hong Kong) to raise enquiries regarding the Company to the Board.

AMENDMENT TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

The Company has not made any amendments to the Company’s memorandum and articles of association during the Reporting Period.

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ABOUT THE ESG REPORT

This report is the environmental, social and governance (“ ESG ”) report issued by Chen Xing Development Holdings Limited (“ Chen Xing Development ” or the “ Company ”) and its subsidiaries (the “ Group ” or “ we ”). The Report summarizes the Group’s effort in respect of the implementation of sustainable development and corporate social responsibility. The Board has the overall responsibility for formulating and reporting our ESG strategies and identifying, evaluating, managing and reporting material ESG-related issues as well as reviewing progress made against ESG-related goals and targets. The Board has reviewed and approved the Report.

Reporting Standard

The Report is prepared in accordance with the “Environmental, Social and Governance Reporting Guide” (the “ Guide ”) set out in Appendix 27 to “The Rules Governing the Listing of Securities” on the Stock Exchange of Hong Kong Limited. The Report has complied with all the provisions of “Comply or Explain” in the Guide, and the contents are in line with the reporting principles of “materiality”, “quantitative”, “balance” and “consistency” in the Guide.

Reporting Scope

The Report contains the overall performance of the Group in implementing sustainable development on the businesses directly controlled by the Group during the period from 1 January 2020 to 31 December 2020 (the “ Year ” or “ Reporting Period ”). The environmental data disclosed in the Report are collected from the Group’s headquarters in Jinzhong City, Shanxi Province and its subsidiary Chen Xing Real Estate Development Co., Ltd. Taiyuan Branch Office. For detailed disclosure of our corporate governance, please refer to the Corporate Governance Report of this annual report or the official website of the Group (http://www.chen-xing.cn).

Reporting Language

This Report is issued in both Traditional Chinese and English. Should there be any discrepancies, the Traditional Chinese version shall prevail.

Feedback to the Report

If you have any enquiries or advices about the Report or the sustainable development policies of the Group, please contact us via email ([email protected]).

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SUSTAINABLE DEVELOPMENT STRATEGY

The Group has always been adhering to the operating principle of “people-oriented corporate culture, honest business operation, responsible property development and harmonious society contribution” and continuously provide high-quality products and services to achieve “breakthrough in development”, striving to become a leading “healthy life service provider” in China. We will integrate ESG concepts into development strategies, corporate culture and business processes to actively achieve sustainable corporate development and create value for all stakeholders.

Stakeholder Engagement

The Group attaches great importance to the communication with stakeholders. Our key stakeholders include customers, employees, shareholders/investors, business partners, regulatory authorities, suppliers, media and community/non-governmental organizations. During the Year, we maintained effective communication with each of our stakeholders through various channels to fully understand the ESG issues they concern and their expectations, which can be used as a reference for us to formulate the short-term and long-term sustainable development strategies.

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Stakeholders Communication Channels
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Customers	•	Customer service centre
	•	Online service platform
	•	Customer satisfaction survey and feedback form
	•	Daily operation/communication
	•	Customer relations manager visits
	•	Telephone
	•	Email
Employees	•	Work performance meetings/appraisal
	•	Labor union meetings
	•	Special advisory committee/discussion panel
	•	Face-to-face meetings/panel discussions
	•	Employee intranet
Shareholders/investors	•	Annual general meetings and other shareholders’ meetings
	•	Senior management/investor meetings
	•	Interim reports and annual reports
	•	Corporate correspondence
	•	Result announcements
	•	Shareholders’ visits

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Stakeholders Communication Channels
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Business partners	•	Meetings
	•	Strategic cooperation projects
	•	Reports
	•	Visits
Regulatory authorities	•	Compliance reports
	•	Written replies to public inquiries
	•	Meetings
Suppliers	•	Supplier management procedures
	•	Supplier/contractor assessment system
	•	Meetings
	•	On-site visits
Media	•	News releases/press conferences
	•	Result announcements
	•	Media gatherings
Community/	•	Community activities
non-governmental	•	Donations
organizations	•	Seminars/lectures/workshops
	•	Meetings

Materiality Assessment

During the Year, the Group identified 35 ESG issues related to the Group’s business, taking into account the operation of its business and main concerns of stakeholders and with reference to the disclosure obligations covered by the Guide, the Material Issues Database of the Sustainability Accounting Standards Board (SASB) of the United States and industry best practices. In order to further understand the materiality of each issue to stakeholders, we invited stakeholders to submit an online questionnaire to rate the materiality of each issue. We received over a hundred valid questionnaire responses and identified 13 issues of high importance, 20 issues of moderate importance and 2 issues of general importance as the basis for our preparation of the Report.

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Materiality Matrix of Chen Xing Development

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Issues of High Importance
10
8
7 5
9
20 3
14
11
12 13
15
6
2 19 294 22 18
21 31
27 25 28 17
26 16
32 30
35 24 33 Issues of Moderate Importance
1
23
34
Issues of General Importance
Importance to the Business
Importance to the Stakeholders
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1 Economic performance
2 Market competitiveness 3 Compliance with laws and regulations
4 Responsible procurement
5 Quality control
6 Technology development and application
7 Customer health and safety
8 Service commitment
9 Protection of customers’ privacy
10 Customer satisfaction
11 Anti-corruption
12 Whistle-blowing mechanism
13 Complaint handling and responding mechanism
14 Protection of intellectual property right
15 Product labelling
16 Employment rights
17 Labour relations
19 Employee diversity, non-discrimination and equal opportunity
20 Prevention of child labour and forced labour
21 Employee training and development
22 Employee professional conduct
23 Energy efficiency
24 Greenhouse gas emission
25 Water efficiency
26 Exhaust emission
27 Sewage discharge and treatment
28 Waste disposal
29 Use of materials
30 Climate change
31 Employee environmental awareness
32 Biodiversity
33 Green building
34 Attention to community
35 Community investment and involvement
18 Occupational health and safety

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HONEST BUSINESS OPERATION

The Group attaches great importance to brand integrity and has always been adhering to the principle of “building our brand name with good faith and improving earnings through a quality brand” in its business operation. By establishing a sound internal control system, we regulate the entire business operation process so as to continuously improve our brand influence and industry status.

Safe and Compliant Production

The Group upholds the principle of “safety is first, precaution is crucial” in implementing the safety management system to ensure the safety of construction work. We strictly abide by laws and regulations such as the Law of the People’s Republic of China on Work Safety (《中華人民共和國安全生產法》) and has formulated the “Emergency Plan for Project Site Safety” (《項目現場安全應急預案》), which specifies the responsibility of production safety for each unit and regulates the production safety management of project supervision units and contractors.

The Group requires contractors to strictly abide by national, local and industrial regulations with respect to environmental protection and health and safety, establish comprehensive construction management plans, and implement safety inspection systems and safe production responsibility systems. We convey the safety concept of “safety is first, precaution is crucial and comprehensive rectification” to our employees through targeted occupational safety training, instruct our employees to execute prevention and protective measures with respect to occupational safety and make appropriate responses and arrangements at times of incidents, so as to reduce production risks. In addition, the Group regularly identifies sources of hazards and assesses the impact of the relevant risk factors. According to the assessment results, the Group will implement corresponding protective and technical safety measures. We will record all safety inspections and implementation of safety measures, which will serve as the basis for investigating the safety incidents and preventing similar accidents in the future. During the Reporting Period, the Group did not have any project that was not accepted due to safety reasons.

Customer Service as the Priority

The Group strives to deliver a high level of product and service experience to our customers. In terms of project development, we have formulated the “Measures for Quality Standard and Constructional Quality Acceptance of Construction” (《工程施工質量標準及施工驗收辦法》) to specify the industry standards that all kinds of projects need to comply with at different construction stages, and regulate the procedures concerning quality control, material inspection, equipment acceptance and completion acceptance, monitoring the quality of project construction. We have also formulated the “Project Supervision Management System” (《工程監理管理制度》) and “Project Management Inspection System” (《工程管理巡查制度》), arranging regular inspections for construction companies and supervision companies on the quality of construction to safeguard the quality of engineering products and services. Upon completion of

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the project, members of the Group’s customer service department, engineering department, supervision companies, construction contractors and property management agencies will carry out building inspection with the clients. We will arrange follow-up actions and handle the issues identified during the inspection.

In terms of day-to-day management of projects, we have established the “Property Service Centre for Receiving Complaints Made by Visiting Customers and Regular Return Visits System” (物業服務中心接待來訪投訴和定期回訪制度》), as to actively collect customers’ opinions through various channels and strengthen the connection between the property service centre and customers. The receptionist of the property service centre will promptly investigate, verify and record the complaints made by the residents and the issues mentioned during the visit, and give feedback on the results to the relevant responsible departments. We have also arranged a specialist to conduct regular visits in order to ensure the customer complaints have been properly handled and improve our customer services continuously. During the Year, the Group received no complaints from customers regarding our services which received a high customer service satisfaction rate of 93%.

Safeguarding Information Security

The Group strictly abides by the laws and regulations relating to information security of the People’s Republic of China, such as the Regulations on Security Protection of Computer Information Systems (《電腦資訊系統安全保護條例》), the Administrative Measures for Security Protection of International Networking of Computer Information Networks (《電腦資訊網路國際聯網安全保護管理辦法》), the Provisions on Technical Measures for Security Protection of Internet (《互聯網安全保護技術措施規定》), the Requirements for Security Protection of Interactive Internet Services (《互聯網互動式服務安全保護要求》) and the Basic Procedures and Requirements for Security Assessment of Internet Services (《互聯網服務安全評估基本程式及要求》), comprehensively maintaining the integrity of business information.

We have established the “Information Management System” (《信息化管理制度》) and the “Document Management System of Marketing Department” (《營銷部檔案管理制度》) to specify the duties and rights of document managers in the design, development, operation and maintenance of information systems, and regulate the archive room management, computer and network equipment management, information management, network security management and computer operator management based on the principles of security, practicality and systematization. We have also strengthened the security and confidentiality of the office system and financial system by restricting the access rights of employees through the establishment of a firewall and password setting to provide multiple protection for business information security. In addition, we have set out the confidentiality responsibilities of all our employees for the Group’s business secrets and customer information in the “Staff Handbook” (《員工手冊》), and have signed nondisclosure agreements with third-party companies, requiring third-party companies to regularly conduct information security checks and carry out strict security management on document archives.

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In terms of disclosure of business information, the Group strictly abides by relevant regulations such as the Advertising Law of the People’s Republic of China (《中華人民共和國廣告法》), the Patent Law of the People’s Republic of China (《中華人民共和國專利法》), the Detailed Rules for the Implementation of the Patent Law of the People’s Republic of China (《中華人民共和國專利法實施細則》), the Trademark Law of the People’s Republic of China (《中華人民共和國商標法》), the Copyright Law of the People’s Republic of China (《中華人民共和國著作權法》) and Provisions on the Release of Real Estate Advertisement (《房地廣告發佈規定》). We have formulated the “Administration of the Release of Advertisement” (《廣告發佈管理辦法》) to regulate the approval procedures for all kinds of marketing promotion and handle matters relating to advertising and intellectual property rights carefully. We strive to safeguard the intellectual property rights of the Group and our business partners including patents, trademarks and copyrights, ensure that complete, genuine and accurate information is delivered to the public in advertisements and eliminate all acts of deceiving customers by using false and misleading trade descriptions.

Strengthening Anti-corruption Efforts

The Group attaches great importance to business ethics and continuously reinforces our anti-corruption efforts. We strictly comply with laws and regulations relating to anti-corruption operations, such as the Supervision Law of the People’s Republic of China (《中華人民共和國監察法》), the Company Law of the People’s Republic of China (《中華人民共和國公司法》), the Criminal Law of the People’s Republic of China (《中華人民共和國刑法》) and the Anti-Money Laundering Law of the People’s Republic of China (《中華人民共和國反洗錢法》), solidly carrying out anti-corruption work and safeguarding brand integrity.

In order to prevent all kinds of illegal or unethical acts in seeking improper benefits, we have signed “Integrity Agreement” (《廉政公約》) with our employees and “Probity Agreement” (《廉政協議書》) with third-party companies through coordination, which prohibits our employees from accepting any kind of benefits (including gifts, bribes, sum of money, etc.) offered by any related party of the Group, nor introducing his/her family or friends to relative business departments to engage in economic activities related to the Group’s business operation such as supplying equipment or subcontracting in the process of purchasing and tendering. We also carry out anti-corruption supervision and professional ethics education to our employees from time to time so to strengthen the internal control.

Furthermore, we encourage our employees and persons with business relations with the Group to report any possible acts of corruption within the Group through email, phone call, mail and other channels, so as to promptly identify and rectify any acts of misconduct. During the Reporting Period, the Group was not aware of any legal cases against the Group or our employees regarding bribery, extortion, fraud and money laundering.

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Sustainable Supply Chain

A sustainable supply chain is an important part of maintaining stable and healthy business development. The Group attaches importance to supply chain management and is committed to establishing good cooperation relationships with suppliers and contractors. We strictly abide by the laws and regulations such as the Tendering and Bidding Law of the People’s Republic of China (《中華人民共和國招標投標法》) and the Regulations on the Implementation of the Tendering and Bidding Law of the People’s Republic of China (《中華人民共和國招標投標法實施條例》), and have formulated a clearly defined tendering process to ensure fairness, justice and transparency in the selection of suppliers.

When reviewing suppliers, we require them to provide a series of qualification documents to understand their business nature and basic information. The Group will determine the involvement and performance of suppliers in areas such as product quality, environmental protection, occupational safety and health based on grading items including whether the suppliers are certified with ISO9001 Quality Management System, whether they are experienced in similar projects and whether they have the abilities to perform their duties according to laws and regulations, etc. The Group conducts stringent background checks on suppliers, investigates and records the authenticity of their relevant qualifications to strengthen the prevention of environmental and social risks associated with the supply chain.

The Group carries out follow-up evaluation regularly on qualified suppliers. We conduct quality assurance or on-site inspection to suppliers of materials and evaluate the management standards of supervision companies, quality of supervising engineers and the working condition in construction sites to ensure the selected suppliers meet various business and management needs and facilitate the continuous improvement of suppliers.

PEOPLE-ORIENTED CORPORATE CULTURE

Employees are the basis of the Group’s business operations. We regard our employees as our most valuable asset and are committed to improving the human resource management system. We also introduce and retain talents by providing our employees with competitive benefit packages, all-rounded training and career development opportunities to promote a “people-oriented” corporate culture.

Employee Rights

The Group attaches great importance to the rights and interests of its employees and strictly abides by the laws and regulations in relation to labour and employment including the Labour Law of the People’s Republic of China (《中華人民共和國勞動法》), the Labour Contract Law of the People’s Republic of China (《中華人民共和國勞動合同法》), the Law of the People’s Republic of China on the Protection of Minors (《中華人民共和國未成年人保護法》) and the Provisions on the Prohibition of Using Child Labour (《禁止使用童工的規定》). We have formulated a human resource management system to create a diverse,

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equal, harmonious and inclusive working atmosphere without harassments or discrimination and eliminate workplace discrimination, exploitation and harassments. During the Reporting Period, the Group did not violate any law or regulation in relation to remuneration and termination of employment, recruitment and promotion, working hours, equal opportunities, diversity, anti-discrimination, prevention of child labour or forced labour, nor did it identify any case of child labour or forced labour.

In terms of personnel recruitment, the applicant’s educational background, work experience, skills, and the alignment of his/her credentials with the position’s requirements, among others, are the major considerations in determining whether to provide interview opportunities and in making recruitment assessment, while background factors such as the applicant’s gender, age, nationality, religion, family status and race shall not affect his/her interview and employment opportunities. We conduct the examination, background checks, application approval and other procedures on the part of the applicant in a fair, impartial and open manner. In order to avoid the employment of child labour, we have an internal policy to strictly verify and confirm the identities of new employees during the recruitment process.

In addition, the Group also implements a standard working hour system restricting the working hours of all employees to no more than eight hours a day and forty hours a week to eliminate forced labour or exploitation. In case of any resignation of employees, we will get to know the reasons for the resignation request, and terminate the employment in accordance with the applicable provisions of the Labor Law of the People’s Republic of China and the Labor Contract Law of the People’s Republic of China, so that no unfair or unreasonable event shall happen.

Employee Welfare

In strict compliance with the Labor Law of the People’s Republic of China and other relevant regulations in the place where its operations are located, the Group has compiled “Chen Xing Development Salary System Design Plan” (《辰興發展薪酬體系設計方案》) and “Staff Welfare System” (《員工福利制度》), which provide employees with competitive employee salaries and benefits packages. Remuneration for the employees comprises basic salary, assessment-based bonus, performance-based bonus and seniority bonus. We pay seniority bonus according to the employee’s time of service in the Group and distribute assessment-based bonus and performance-based bonus to our employees according to their regular performance appraisal results, ensuring that our employees receive reasonable remuneration.

In addition to statutory holidays, employees are entitled to annual leave, wedding leave, compassionate leave, maternity leave, sick leave and work-related injury leave, etc. In accordance with the national policies of China, the Group participates in the staff retirement benefit plan and housing provident fund plan and provides eligible employees with basic pension insurance, unemployment insurance, basic medical insurance, large-amount medical insurance, employment injury insurance, maternity insurance and housing provident fund. Depending on circumstances, we also provide our employees with the only-child allowance, allowances for working under high temperature, heating fees and allowances for working in the Mid-Autumn Festival and the Chinese New Year and other benefits, satisfying the needs of our employees in all respects.

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Occupational Health and Safety

Occupational safety and physical and mental health of the employees are of vital importance to the Group. We are committed to providing employees with a healthy and safe working environment in strict compliance with relevant laws and regulations, including the Law of the People’s Republic of China on the Prevention and Control of Occupational Diseases (《中華人民共和國職業病防治法》), the Law of the People’s Republic of China on Work Safety (《中華人民共和國安全生產法》), the Fire Law of the People’s Republic of China (《中華人民共和國消防法》), the Regulations on Supervision and Administration of Occupational Health in Workplace (《工作場所職業衛生監督管理規定》), and the Regulation on WorkRelated Injury Insurances (《工傷保險條例》). During the Reporting Period, the Group did not violate any relevant laws and regulations regarding the provision of a safe working environment and the protection of employees from occupational hazards, nor did it have any accident involving work-related injury or fatality.

We have formulated the “Requirements for Environmental Protection and Occupational Health and Safety Control in Construction Processes” (《施工過程環保和職業健康安全控制要求》), and implemented occupational safety management in all aspects of our business operations. The Group always provides employees with corresponding protective equipment, and arranges regular physical examinations for its employees, which assures basic occupational safety and health and protects employees from occupational hazards. In addition, the Group pays close attention to the mental health of employees and advocates a balanced work life by organizing activities for our employees from time to time, such as the team-building activity with the theme of “Challenging, Integrating, Cohering and Success”, which allows employees to relax physically and mentally while preventing the spread of COVID-19 epidemic.

Case: Epidemic Prevention and Control

In 2020, an unexpected pneumonia epidemic caused by novel coronavirus (COVID-19) broke out. In view of the outbreak of COVID-19, the Group implemented the anti-epidemic decision and arrangement made by the State Council of the People’s Republic of China in order to prevent and control the epidemic.

We held work meetings by flexible means such as telephone and online video calls, to support our employees affected by the epidemic for remote office work. We also provided sufficient anti-epidemic materials such as masks, disinfectant sprays and hand sanitizers for front-line personnel who needed to stand fast at their posts and projects to ease their concerns about going to work. In addition, we arranged employees to work flexibly, constantly monitored the body temperature of returning employees, strictly controlled the personnel to and from the office premises, and arranged the cleaning and disinfection of the office premises to protect the health of our employees.

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Employee Training and Development

We concern about the career development of our employees. By establishing a sound employee training system and a well-defined corporate ladder for employees’ promotion and development, we strive to build a highly efficient professional team and enhance the core competitiveness of the Group.

In alignment with the needs and objectives of business development, the Group has formulated an annual training plan for employees to improve their comprehensive capabilities including working skills and career development capabilities. During the Year, we adjusted the annual training plan as soon as possible considering the outbreak of COVID-19. We carried out specific and effective online “cloud training” education for our employees using the meeting function of the corporate WeChat application. The training was diversified, covering corporate organizational structure, meeting process management, planning and operation and etc., in order to cultivate talents in various areas.

In order to help employees make effective career planning, the Group has formulated the “Administration Measures of Employee Promotion Competition for Chen Xing Development” (《辰興發展員工晉升競聘管理辦法》), which clearly sets out the administration system for employees’ promotion and career development. We will give employees opportunities for promotion according to the performance assessment results of employees in a periodic manner. An employee’s personal quality, ability and performance at work are all considered as the basis for his/her promotion. When there is a job vacancy, we will consider internal transfer of employees, providing employees with another path of career development other than vertical promotion. Employees can be re-allocated to different career development paths according to their career development objectives, professional knowledge and working skills, ensuring that the employees make good use of all their talents in a suitable workplace.

ENVIRONMENTAL MANAGEMENT

The Group is committed to sound environmental management, and has been continuously identifying and managing the impacts of our business operations on the use of resources and the environment to promote green corporate culture. We strictly abide by the laws and regulations including the Environmental Protection Law of the People’s Republic of China (《中華人民共和國環境保護法》), Energy Conservation Law of the People’s Republic of China (《中華人民共和國節約能源法》), Law of the People’s Republic of China on Prevention and Control of Water Pollution (《中華人民共和國水污染防治法》), Law of the People’s Republic of China on Prevention and Control of Pollution from Environmental Noise (《中華人民共和國環境雜訊污染防治法》), Law of the People’s Republic of China on Prevention and Control of Environmental Pollution from Solid Waste (《中華人民共和國固體廢物污染環境防治法》) and the Regulations on Environmental Protection Management of Construction Projects (《建設項目環境保護管理條例》), and have developed the Environmental Protection Management System for Construction Projects (《建設項目環境保護管理制度》) and the Management Provisions on Code of Ethics at Project Sites (《工程現場文明標化管理規定》) to regulate development projects that have potential impacts on the environment, so

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as to avoid generating pollution sources or damaging the ecological environment. We have also set up an environmental protection management leading group, which is responsible for environmental assessment of our development projects and environmental protection check and acceptance of completed projects, strictly monitoring the environmental quality of development and construction projects.

During the Reporting Period, the Group did not violate any environmental protection law nor cause any major accident that affects the environment and natural resources, nor did we receive any penalty and litigation notice on environmental issues.

Energy Conservation and Emission Reduction

The Group pays close attention to the climate change issues, and actively implements measures that save energy and reduce consumption in all aspects of its business operations to manage greenhouse gas emissions. We have compiled the Design Concept Brochure for Green Building Projects (《綠色建築項目的設計概念小冊子》). We use highly effective thermal materials and devices and adopt designs that integrate with the nature as much as possible in each of our construction projects. For example, we adopt natural lighting, widely incorporate planting, and use solar water heating systems to improve the efficiency of energy utilization and create a sustainable living environment for the residents or tenants.

We promote and educate our employees to develop environmental protection habits (e.g. taking public transport as much as possible and switching off electronic devices that are not in use) from time to time through different media channels such as email, posters and intranet. Our offices are divided into different areas equipped with independent controllable lighting switches so that the employees can use the lighting system flexibly. We also measure the brightness of various areas in offices periodically, install motion sensor lights in less-frequently-used zones, and reduce the number of lamps in areas brighter than required. In addition, the Group adopts a water-cooled air-conditioning system with a variable speed drive and adjusts the air-conditioning temperature in the office area according to actual needs. We regularly clean the lightings and the filters of air conditioning systems to improve their energy efficiencies. During the Reporting Period, the total electricity consumption of the Group’s headquarters office in Jinzhong City in Shanxi Province and its subsidiary Chen Xing Real Estate Development Co., Ltd. Taiyuan Branch Office during business operations was 4,762.00 MWh and the electricity consumption intensity was 0.48 MWh per square metre, which were approximately 7% less than those of the previous year.

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In addition to continuously monitoring the electricity consumption during our business operations, we have conducted a GHG inventory with reference to the Greenhouse Gas Protocol (《溫室氣體盤查議定書》) issued by the World Resources Institute and the World Business Council for Sustainable Development and the ISO14064-1 formulated by the International Organization for Standardization. A summary of the GHG emissions of the Group’s headquarters office in Jinzhong City in Shanxi Province and its subsidiary Chen Xing Real Estate Development Co., Ltd. Taiyuan Branch Office during the Reporting Period is as follows:

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Unit 2020
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Scope 1 Direct GHG emissions	tonnes CO2equivalent (CO2e)	158.56
Scope 2 Indirect GHG emissions	tonnes CO2e	2,905.30
Scope 3 Other Indirect GHG emissions	tonnes CO2e	183.68
Total GHG emissions	tonnes CO2e	3,247.54
GHG emission intensity	tonnes CO2e/m²	0.33

Scope 1: The direct GHG emissions generated from sources owned and controlled by the Group and removals.
Scope 2: GHG emissions indirectly generated by electricity generation, heating and cooling or steam purchased externally by the Group.
Scope 3: Emissions include GHG emissions indirectly generated by sources that are not owned or directly controlled by the Group but related to the Group’s business activities.

In the coming year, the Group will consider gradually expanding the scope of GHG inventory and work on identifying, quantifying and reporting climate risks and opportunities, as well as develop management strategies in relation to climate change and GHG emission reduction targets in the short-term and mid-to-long term, with reference to the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD), so as to improve our overall environmental performance.

Air Quality Management

We strictly comply with the Emergency Plan in Response to Severe Pollution in Taiyuan (《太原市重污染天氣應急預案》) and other regulations, to regulate the construction environment and the prevention and control of pollution from road dust. We adopt new technologies and equipment, for example, using integrated wood processing machines in woodworking, derusting steel structures in enclosed space, and replacing traditional green nets with the novel flame-retardant dustproof cloth to cover building materials, in order to reduce the release of dust during projects construction. We also require the contractors to ensure that the cement storage areas in the construction sites remain closed, store all powder

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construction materials in bags or buckets and cover them or put them behind fences or in sheds to prevent dust from spreading. The contractors timely clean up the sites and designate personnel to spray water regularly on powder materials in the construction sites to control dust spreading. For dust control with regard to transportation, we grow plants in green areas in the construction sites and sprinkle regularly on the roads with water. We also require all vehicles entering the construction sites to be covered with tarpaulin sheets. Moreover, the Group strengthens the repair and maintenance of vehicles to ensure they are in good condition, and use fuels with higher efficiency so as to reduce the emissions of exhaust gas.

Water Resources Management

The Group has been continuously monitoring the water consumption during its business operations and promoting the good use of water resources. Water conservation signs are posted in washrooms to remind our employees to turn the running water off after using. We also choose to use sensor faucets and dual flush toilets. We check the water meter regularly, carry out pipeline leakage detection and arrange faucet repairs when appropriate to avoid water leakage and wastage During the Year, there was no issue in sourcing water that was fit for purpose; the total water consumption of the Group’s headquarters office in Jinzhong City in Shanxi Province and its subsidiary Chen Xing Real Estate Development Co., Ltd. Taiyuan Branch Office in business operations was 55,699.00 m[3] and the water consumption intensity was 5.66 m[3] per square metre, representing a decrease of approximately 7% compared with that of last year.

The Group’s wastewater during its business operations is mainly sourced from domestic sewage and sewage from construction projects. We strictly comply with the Integrated Wastewater Discharge Standard (《污水綜合排放標準》), which restricts the discharge of domestic sewage produced by the Group into the municipal drainage pipe system. For the sewage generated from construction projects, we have formulated various supervision guidelines and measures, and require contractors to manage wastewater according thereto. Before the commencement of construction projects, our relevant departments will declare and register sewage discharge in accordance with relevant regulations of competent environmental authorities where the projects locate, and establish rainwater drainage system. During construction, the contractors are required to set up drainage ditches and sedimentation tanks using the well-point dewatering method and have grease traps in place in the temporary canteen at construction sites for the purpose of reusing or discharging wastewater into the municipal drainage pipe system in order to ensure proper handling.

Noise Control

The Group monitors the noises produced at different construction stages and requires contractors to assume the responsibilities of noise management. To control construction noise and noise sources in the construction sites, the Group strictly abides by the national and local announcements on construction and requirements with regard to construction hours. Before construction, we build fences and other temporary facilities to effectively prevent the noise from spreading and prohibit construction operators from throwing

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steel tools at all stages of construction. We also take measures in the design of construction sites, such as putting mechanical devices which generate noises at the same place and enclosing the sites with sound insulation materials. In addition, we use mechanical equipment which generates less noises or is equipped with noise reduction designs while in good condition, and conduct regular inspection and maintenance to all mechanical equipment to ensure smooth operations and reduce chances of noise pollution.

Waste Management

The Group supports the responsible use of various materials and advocates waste reduction from the source. We use the electronic office system to replace the office administrative system based on paper records, and encourage employees to reuse office stationery such as envelopes and loose-leaf binders, reduce the use of disposable or non-recyclable products, and apply electronic communication technology to convey information as much as possible. We also count the inventory of materials and estimate the consumption from time to time to avoid excessive purchases which lead to waste.

Regarding waste disposal, the Group classifies and collects waste and transports it to the designated places for disposal. We collect, monitor and treat construction waste adhering to the requirements of local environmental protection authority where the construction project is located, and require contractors to establish waste records and a sound management system. Hazardous wastes are stored separately from general wastes, and the places and containers where the hazardous waste is stored are clearly marked for identification. Due to the potential risks of storing hazardous wastes, we adopt rigorous rainproof, seepage-proof and fire-proof measures for the storage places, and strictly comply with the relevant requirements of risk prevention facilities for inflammable and explosive articles. Hazardous wastes are transported to hazardous waste storage sites by special vehicles. During transport, we also take specific pollution prevention measures. For electronic wastes, we cooperate with electronics companies to recycle used computers and other electronic wastes for recycling.

The total amount of non-hazardous wastes produced by the Group’s headquarters office in Jinzhong City in Shanxi Province and its subsidiary Chen Xing Real Estate Development Co., Ltd. Taiyuan Branch Office during the Reporting Period was 46.00 tonnes, and the hazardous wastes produced included 15 computers and 210 used ink cartridges/toner cartridges. The intensity of non-hazardous wastes produced was 4.68 kg per square metre, representing a decrease of more than 10% from that of last year. The Group will continue to monitor the amount of non-hazardous and hazardous wastes produced and strengthen pollution prevention and control.

HARMONIOUS SOCIETY CONTRIBUTION

Consistently adhering to the development concept of “honesty and kindness, social commitment, gratitude and giving”, the Group always concerns about the community, and is committed to building a harmonious society with people from all walks of life.

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In the face of the outbreak of COVID-19, we have adopted a number of measures to actively fulfill our corporate social responsibilities. In particular, we participated in the charity project known as “Working Together against the Epidemic” of Beijing Generoad Foundation and donated RMB50,000; we also donated RMB100,000 to Shanxi Provincial Red Cross to support the epidemic prevention of the community.

The communities that have been delivered, such as Yosemite Valley Town, Cultural Town and Star Gardens of the Group, procured property management personnel to form an anti-epidemic work group and develop anti-epidemic emergency plans once they were known of the outbreak of COVID-19. We implemented a “health code” policy and strictly inquired, verified and registered outsiders and foreign vehicles to prevent the spread of COVID-19 within the community or to the outside. Through the official accounts, WeChat groups, bulletin boards, public broadcasting and other channels of the communities, we disseminated the information on anti-epidemic precautions and COVID-19 prevention measures to residents. We have also set up charitable anti-epidemic stations in prominent locations in some of the exhibition centers of the Group, and distributed anti-epidemic materials such as masks and disinfectants free of charge to citizens in need to fight against the COVID-19 with people from all walks of life.

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The charitable station for distributing anti-epidemic materials at Yosemite Valley Town

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The inspection station at the entrance of the Cultural Town property

During the Year, the Company received the “Outstanding Contribution Award Against the Epidemic 2020” (2020年抗擊疫情卓越貢獻獎) granted by the Taiyuan Real Estate Chamber of Commerce. We have invested a total of approximately RMB470,000 and organized more than 550 hours of charity projects, in which we procured nearly 4,000 persons to participate.

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“Outstanding Contribution Award Against the Epidemic 2020”

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APPENDIX I: SUSTAINABILITY DATA STATEMENTS

A summary of the environmental sustainability data of the Group’s headquarters in Jinzhong City in Shanxi Province and its subsidiary Chen Xing Real Estate Development Co., Ltd. Taiyuan Branch Office Building is as follows:

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Environmental Unit 2020
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Emissions*
Nitrogen oxides	kg	0.52
Sulphur oxides	kg	0.76
Suspended particles	kg	0.04
GHG Emissions
Direct GHG emissions (Scope 1)	tonnes CO2e	158.56
Indirect GHG emissions (Scope 2)	tonnes CO2e	2,905.30
Other indirect GHG emissions (Scope 3)	tonnes CO2e	183.68
Total GHG emissions (Scope 1, 2 & 3)	tonnes CO2e	3,247.54
GHG emissions intensity	tonnes CO2e/m2	0.33
Energy Consumption
Purchased electricity consumption	MWh	4,762.00
Purchased electricity consumption intensity (per square metre)	MWh/m2	0.48
Natural gas consumption	m3	9,300.00
Diesel oil consumption	litre	7,566.00
Gasoline consumption	litre	43,678.00
Water Consumption
Total water consumption	m3	55,699.00
Water consumption intensity (per square metre)	m3/m2	5.66
Paper Consumption
Total paper consumption	kg	2,075.63
Paper consumption intensity (per staff)	kg/staff	14.22
Waste Produced
Total amount of non-hazardous waste produced	tonnes	46.00
Non-hazardous waste produced intensity (per square metre)	kg/m2	4.68
Hazardous waste produced (computer)	sets	15
Hazardous waste produced (ink cartridges, toner cartridges)	pieces	210

Data are estimated based on the fuel usage of the Group’s vehicle

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APPENDIX II: HONG KONG STOCK EXCHANGE ESG REPORTING GUIDE INDEX

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A. Environmental
A1: Emissions	General	Information on: (a) the policies;	Environmental Management
	Disclosure	and (b) compliance with relevant	— Energy Conservation and
		laws and regulations that have a	Emission Reduction;
		significant impact on the issuer
		relating to air and greenhouse gas	Environmental Management
		emissions, discharges into water and	— Air Quality Management;
		land, and generation of hazardous
		and nonhazardous waste.	Environmental Management
			— Waste Management
	A1.1	The types of emissions and	Environmental Management
		respective emissions data.	— Air Quality Management;
			Sustainability Data Statements
	A1.2	Greenhouse gas emissions in total	Environmental Management
		and intensity.	— Energy Conservation and
			Emission Reduction;
			Sustainability Data Statements
	A1.3	Total hazardous waste produced and	Environmental Management
		intensity.	— Waste Management;
			Sustainability Data Statements
	A1.4	Total non-hazardous waste produced	Environmental Management
		and intensity.	— Waste Management;
			Sustainability Data Statements
	A1.5	Description of measures to mitigate	Environmental Management
		emissions and results achieved.	— Energy Conservation and
			Emission Reduction;
			Air Quality Management

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	A1.6	Description of how hazardous and	Environmental Management
		non-hazardous wastes are handled,	— Waste Management
		reduction initiatives and results
		achieved.
A2: Use of	General	Policies on the efficient use of	Environmental Management
Resources	Disclosure	resources.	— Energy Conservation and
			Emission Reduction;
			Water Resources Management
	A2.1	Direct and/or indirect energy	Environmental Management
		consumption by type in total and	— Energy Conservation and
		intensity.	Emission Reduction;
			Sustainability Data Statements
	A2.2	Water consumption in total and	Environmental Management
		intensity.	— Water Resources
			Management;
			Sustainability Data Statements
	A2.3	Description of energy use efficiency	Environmental Management
		initiatives and results achieved.	— Energy Conservation and
			Emission Reduction
	A2.4	Description of whether there is any	Environmental Management
		issue in sourcing water that is fit for	— Water Resources
		purpose, water efficiency initiatives	Management
		and results achieved.
	A2.5	Total packaging material used for	Not applicable, for the
		finished products and, with reference	business of the Company
		to per unit produced.	does not involve packaging
			material.

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A3: The	General	Policies on minimizing the	Environmental Management
Environment	Disclosure	issuer’s significant impact on the
and Natural		environment and natural resources.
Resources
	A3.1	Description of the significant impacts	Environmental Management
		of activities on the environment and
		natural resources and the actions
		taken to manage them.
B. Social
B1: Employment	General	Information on: (a) the policies;	People-oriented Corporate
	Disclosure	and (b) compliance with relevant	Culture — Employee Rights;
		laws and regulations that have
		a significant impact on the	People-oriented Corporate
		issuer relating to compensation	Culture — Employee Welfare
		and dismissal, recruitment and
		promotion, working hours, rest
		periods, equal opportunity, diversity,
		anti-discrimination, and other
		benefits and welfare.
	B1.1	Total workforce by gender,	The Group will consider
		employment type, age group and	making relevant disclosures
		geographical region.	in the future
	B1.2	Employee turnover rate by gender,	The Group will consider
		age group and geographical region.	making relevant disclosures
			in the future
B2: Health and	General	Information on: (a) the policies;	Honest Business Operation
Safety	Disclosure	and (b) compliance with relevant	— Safe and Compliant
		laws and regulations that have a	Production;
		significant impact on the issuer
		relating to providing a safe working	People-oriented Corporate
		environment and protecting	Culture — Occupational
		employees from occupational	Health and Safety
		hazards.

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	B2.1	Number and rate of work-related	People-oriented Corporate
		fatalities.	Culture — Occupational
			Health and Safety
	B2.2	Lost days due to work injury.	People-oriented Corporate
			Culture — Occupational
			Health and Safety
	B2.3	Description of occupational health	Honest Business Operation
		and safety measures adopted	— Safe and Compliant
		how they are implemented and	Production;
		monitored.
			People-oriented Corporate
			Culture — Occupational
			Health and Safety
B3: Development	General	Policies on improving employees’	People-oriented Corporate
and Training	Disclosure	knowledge and skills for discharging	Culture — Employee Training
		duties at work. Description of	and Development
		training activities.
	B3.1	The percentage of employees trained	The Group will consider
		by gender and employee category.	making relevant disclosures
			in the future
	B3.2	The average training hours	The Group will consider
		completed per employee by gender	making relevant disclosures
		and employee category.	in the future
B4: Labor	General	Information on: (a) the policies;	People-oriented Corporate
Standards	Disclosure	and (b) compliance with relevant	Culture — Employee Rights
		laws and regulations that have a
		significant impact on the issuer
		relating to preventing child and
		forced labor.
	B4.1	Description of measures to review	People-oriented Corporate
		employment practices to avoid child	Culture — Employee Rights
		and forced labor.

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	B4.2	Description of steps taken to	People-oriented Corporate
		eliminate such practices when	Culture — Employee Rights
		discovered.
B5: Supply Chain	General	Policies on managing environmental	Honest Business Operation —
Management	Disclosure	and social risks of the supply chain.	Sustainable Supply Chain
	B5.1	N u m b e r o f s u p p l i e r s ’ b y	The Group will consider
		geographical region.	making relevant disclosures
			in the future
	B5.2	Description of practices relating	Honest Business Operation —
		to engaging suppliers, number of	Sustainable Supply Chain
		suppliers where the practices are
		being implemented, how they are
		implemented and monitored.
B6: Product	General	Information on: (a) the policies;	Honest Business Operation
Responsibility	Disclosure	and (b) compliance with relevant	— Safe and Compliant
		laws and regulations that have a	Production;
		significant impact on the issuer
		relating to health and safety,	Honest Business Operation
		advertising, labelling and privacy	— Customer Service as the
		matters relating to products and	Priority;
		services provided and methods of
		redress.	Honest Business Operation
			— Safeguarding Information
			Security
	B6.1	Percentage of total products sold or	Honest Business Operation
		shipped subject to recalls for safety	— Safe and Compliant
		and health reasons.	Production
	B6.2	Number of products and service	Honest Business Operation
		related complaints received and how	— Customer Service as the
		they are dealt with.	Priority
	B6.3	Description of practices relating to	Honest Business Operation
		observing and protecting intellectual	— Safeguarding Information
		property rights.	Security

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	B6.4	Description of quality assurance	Honest Business Operation
		process and recall procedures.	— Customer Service as the
			Priority
	B6.5	Description of consumer data	Honest Business Operation
		protection and privacy policies,	— Safeguarding Information
		how they are implemented and	Security
		monitored.
B7: Anti-	General	Information on: (a) the policies;	Honest Business Operation
corruption	Disclosure	and (b) compliance with relevant	— Strengthening
		laws and regulations that have a	Anti-corruption Efforts
		significant impact on the issuer
		relating to bribery, extortion, fraud
		and money laundering.
	B7.1	Number of concluded legal cases	Honest Business Operation
		regarding corrupt practices brought	— Strengthening
		against the issuer or its employees	Anti-corruption Efforts
		during the Reporting Period and the
		outcomes of the cases.
	B7.2	Description of preventive measures	Honest Business Operation
		and whistleblowing procedures,	— Strengthening
		how they are implemented and	Anti-corruption Efforts
		monitored.
B8: Community	General	Policies on community engagement	Harmonious Society
Investment	Disclosure	to understand the needs of the	Contribution
		communities where the issuer
		operates and to ensure its activities
		take into consideration the
		communities’ interests.
	B8.1	Focus areas of contribution.	Harmonious Society
			Contribution
	B8.2	Resources contributed to the focus	Harmonious Society
		area.	Contribution

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INDEPENDENT AUDITOR’S REPORT

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To the shareholders of Chen Xing Development Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

OPINION

We have audited the consolidated financial statements of Chen Xing Development Holdings Limited (the “ Company ”) and its subsidiaries (the “ Group ”) set out on pages 286 to 394, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”) issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing (“ HKSAs ”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the “ Code ”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

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KEY AUDIT MATTERS (continued)

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Key audit matter

How our audit addressed the key audit matter

Net realisable value of properties under development and completed properties held for sale

As at 31 December 2020, the Group’s properties under development and completed properties held for sale amounted to RMB9,128,247,000 and RMB931,224,000, respectively, which represented in aggregate 79.3% of the total assets of the Group. The assessment of whether the carrying values of the properties were higher than their net realisable values, and consequently, whether a provision to reduce the carrying values was required, was made by management through the application of judgement and the use of subjective assumptions such as the expected selling prices, the costs of completion of properties under development and the costs to be incurred in selling the properties based on prevailing market conditions.

We evaluated the basis for the provision assessment by understanding the assumptions used to determine the net realisable values of properties under development and completed properties held for sale. We evaluated the assumptions used by checking, on a sample basis, the selling prices of properties to latest sale transactions and the forecasted selling prices and reviewing the pre-sale status of other projects in the same location to evaluate the saleability. We assessed the costs to complete or sell the properties by reviewing budgets contractor agreements signed and comparing with historical expenses rate for other similar projects. We also performed gross profit margin analysis for projects with completed properties held for sale.

The Group’s disclosures about the provision for properties under development and completed properties held for sale are included in notes 2.4, 3, 7, 15 and 22 to the financial statements, which also explain the accounting policies and management’s accounting estimates.

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KEY AUDIT MATTERS (continued)

Key audit matter

How our audit addressed the key audit matter

Valuation of investment properties

As at 31 December 2020, the Group’s investment properties amounted to RMB138,000,000 and were measured at fair value. It is the Group’s policy to have investment property valuations performed by an independent professional valuer at least once a year, to assist management in the fair valuation process. The valuations of the investment properties were highly dependent on estimates such as current and future market rents and yields, which were subject to uncertainty and might materially differ from the actual results.

The Group’s disclosures about the valuation of investment properties are included in notes 2.4, 3 and 14 to the financial statements, which also explain the accounting policies and management’s accounting estimates.

We evaluated the objectivity of the valuation process and expertise of the independent professional valuer. We involved our internal valuation specialists to assist in evaluating the methods applied, the underlying assumptions and parameters adopted in the valuation of investment properties performed by management and the independent professional valuer. We assessed the property-related data used as inputs for the valuations by checking to existing rental agreements, the rates of rent quoted for similar properties and the occupancy rates of the properties. We also reviewed the related disclosures in the financial statements.

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KEY AUDIT MATTERS (continued)

Key audit matter

How our audit addressed the key audit matter

Impairment of buildings and prepaid land lease payments

As the carrying amount of the net assets of the Group was higher than the market capitalisation of the Company as at 31 December 2020, the Group performed impairment tests on its buildings and prepaid land lease payments with carrying values of RMB56,381,000 and RMB1,284,000, respectively. These impairment tests involved significant estimation and judgements around assumptions used, including current and future market rents, yields and available data from market transactions of similar assets.

We evaluated management’s identification of indicators of impairment. We assessed the inputs used for the estimation of recoverable amounts by comparing to rentals quoted for similar assets and observable prices from market transactions. We also involved our internal valuation specialists to assist in evaluating the methodology used, and the underlying assumptions and parameters adopted by management to estimate the recoverable amounts of the buildings and prepaid land lease payments.

Management determined that no provision for impairment of buildings and prepaid land lease payments was required.

The Group’s disclosures about the impairment testing of non-financial assets, which included buildings and prepaid land lease payments, are included in notes 2.4 and 3 to the financial statements, which explain the accounting policies and management’s accounting estimates.

OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

The directors of the Company are responsible for the other information. The other information comprises the Management Discussion and Analysis of the Annual Report (but does not include the consolidated financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the Chairman’s Statement, the Directors’ Report, the Corporate Governance Report and the Environmental, Social and Governance Report, which are expected to be made available to us after that date.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT (continued)

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

284

Chen Xing Development Holdings Limited Annual Report 2020

INDEPENDENT AUDITOR’S REPORT

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Lai Chee Kong.

Ernst & Young Certified Public Accountants Hong Kong 25 March 2021

Annual Report 2020 Chen Xing Development Holdings Limited

285

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Year ended 31 December 2020

==> picture [441 x 430] intentionally omitted <==

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Notes 2020 2019
RMB’000 RMB’000
REVENUE 5 1,207,502 1,307,084
Cost of sales (743,629) (955,554)
Gross profit 463,873 351,530
Other income and gains 5 93,015 39,845
Selling and distribution expenses (50,932) (77,560)
Administrative expenses (67,865) (82,219)
Other expenses (22,165) (6,957)
Finance costs 6 (3,806) (22,168)
Share of profits and losses of:
Joint ventures 1,453 1,198
Associate (128) (10)
PROFIT BEFORE TAX 7 413,445 203,659
Income tax expense 10 (177,344) (88,666)
PROFIT FOR THE YEAR 236,101 114,993
Attributable to:
Owners of the parent 206,738 106,028
Non-controlling interests 29,363 8,965
236,101 114,993
EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY
EQUITY HOLDERS OF THE PARENT
Basic and diluted 12 RMB0.34 RMB0.18
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286

Chen Xing Development Holdings Limited Annual Report 2020

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2020

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
PROFIT FOR THE YEAR 236,101 114,993
OTHER COMPREHENSIVE INCOME
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods:
Exchange differences on translation of foreign operations (3,259) 5,144
Net other comprehensive income that may be reclassified to
profit or loss in subsequent periods (3,259) 5,144
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods:
Equity investments designated at fair value through other
comprehensive income:
Changes in fair value 1,603 (92,739)
Income tax effect (401) 23,185
1,202 (69,554)
Net other comprehensive income that will not be reclassified
to profit or loss in subsequent periods 1,202 (69,554)
OTHER COMPREHENSIVE INCOME
FOR THE YEAR, NET OF TAX (2,057) (64,410)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 234,044 50,583
Attributable to:
Owners of the parent 204,681 41,618
Non-controlling interests 29,363 8,965
234,044 50,583
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Annual Report 2020 Chen Xing Development Holdings Limited

287

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2020

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Notes 2020 2019
RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 13 78,051 74,234
Investment properties 14 138,000 141,000
Right-of-use assets 16(a) 1,735 2,929
Properties under development 15 253,101 601,408
Intangible assets 17 111 163
Investments in joint ventures 18 2,846 1,393
Investment in an associate 19 — 48,980
Equity investments designated at fair value
through other comprehensive income 20 64,501 62,898
Deferred tax assets 31 224,166 225,551
Total non-current assets 762,511 1,158,556
CURRENT ASSETS
Properties under development 15 8,875,146 8,395,674
Completed properties held for sale 22 931,224 411,983
Inventories 21 31,916 16,561
Trade receivables 23 4,319 5,679
Prepayments, other receivables and other assets 24 1,429,486 1,142,309
Tax recoverable 93,182 133,214
Financial assets at fair value through profit or loss 25 — 1,500
Pledged deposits 26 20,652 68,257
Restricted cash 26 1,033 —
Cash and cash equivalents 26 534,101 1,107,248
Total current assets 11,921,059 11,282,425
CURRENT LIABILITIES
Trade and bills payables 27 1,210,518 1,036,422
Other payables and accruals 28 1,841,889 1,831,239
Contract liabilities 29 5,125,592 5,335,734
Interest-bearing bank and other borrowings 30 2,034,122 429,556
Tax payable 10 131,288 34,121
Total current liabilities 10,343,409 8,667,072
NET CURRENT ASSETS 1,577,650 2,615,353
TOTAL ASSETS LESS CURRENT LIABILITIES 2,340,161 3,773,909
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288

Chen Xing Development Holdings Limited Annual Report 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2020

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Notes 2020 2019
RMB’000 RMB’000
NON-CURRENT LIABILITIES
Interest-bearing bank and other borrowings 30 706,737 2,386,478
Deferred tax liabilities 31 23,823 12,846
Total non-current liabilities 730,560 2,399,324
Net assets 1,609,601 1,374,585
EQUITY
Equity attributable to owners of the parent
Share capital 32 4,855 4,855
Reserves 33 1,445,988 1,241,307
1,450,843 1,246,162
Non-controlling interests 158,758 128,423
Total equity 1,609,601 1,374,585
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Bai Xuankui Director

Bai Wukui Director

Annual Report 2020 Chen Xing Development Holdings Limited

289

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2020

==> picture [442 x 484] intentionally omitted <==

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Attributable to owners of the parent
Fair value
reserve of
financial
assets
at fair value
through
Share Statutory Asset other Exchange Non-
Share premium Capital surplus revaluation comprehensive fluctuation Retained controlling Total
capital account reserve reserve reserve income reserve profits Total interests equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 32) (note 32)
—
At 1 January 2019 4,003 219,418 102,552 118,502 23,331 11,972 599,191 1,078,969 118,858 1,197,827
— — — — — — —
Profit for the year 106,028 106,028 8,965 114,993
Other comprehensive income
for the year:
Changes in fair value of
equity investments
at fair value through
other comprehensive
— — — — — — — —
income, net of tax (69,554) (69,554) (69,554)
Exchange differences on
translation of
— — — — — — — —
foreign operations 5,144 5,144 5,144
Total comprehensive income
— — — — —
for the year (69,554) 5,144 106,028 41,618 8,965 50,583
Issue of shares 852 126,993 — — — — — — 127,845 — 127,845
— — — — — — — —
Share issue expenses (2,270) (2,270) (2,270)
Capital contribution by a
non-controlling shareholder — — — — — — — — — 600 600
— — — — — — — — —
Transfer to statutory reserve 9,987 (9,987)
At 31 December 2019 4,855 344,141 102,552 128,489 23,331 (69,554) 17,116 695,232 1,246,162 128,423 1,374,585
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290

Chen Xing Development Holdings Limited Annual Report 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2020

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----- Start of picture text -----

Attributable to owners of the parent
Fair value
reserve of
financial
assets
at fair value
through
Share Statutory Asset other Exchange Non-
Share premium Capital surplus revaluation comprehensive fluctuation Retained controlling Total
capital account reserve reserve reserve income reserve profits Total interests equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 32) (note 32)
At 1 January 2020 4,855 344,141 102,552 128,489 23,331 (69,554) 17,116 695,232 1,246,162 128,423 1,374,585
— — — — — — —
Profit for the year 206,738 206,738 29,363 236,101
Other comprehensive income
for the year:
Changes in fair value of
equity investments
at fair value through
other comprehensive
— — — — — — — —
income, net of tax 1,202 1,202 1,202
Exchange differences on
translation of
foreign operations — — — — — — (3,259) — (3,259) — (3,259)
Total comprehensive income
— — — — —
for the year 1,202 (3,259) 206,738 204,681 29,363 234,044
Disposal of a subsidiary — — — — — — — — — 972 972
— — — — — — — — —
Transfer to statutory reserve 36,398 (36,398)
At 31 December 2020 4,855 344,141 102,552 164,887 23,331 (68,352) 13,857 865,572 1,450,843 158,758 1,609,601
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These reserve accounts comprise the consolidated reserves of RMB1,445,988,000 at 31 December 2020 (2019: RMB1,241,307,000) in the consolidated statement of financial position.

Annual Report 2020 Chen Xing Development Holdings Limited

291

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2020

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Notes 2020 2019
RMB’000 RMB’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments for: 413,445 203,659
Depreciation of property, plant and equipment 13 11,058 10,330
Amortisation of intangible assets 17 83 56
Depreciation of right-of-use assets 16(a) 1,194 2,239
Other interest income from financial assets at
fair value through profit or loss 5 (1,313) (4,051)
Finance costs 6 3,766 21,981
Gain on disposal of items of
property, plant and equipment 5 (23) (58)
Changes in fair value of investment properties 14 3,000 4,000
Share of profits and losses of joint ventures and
an associate (1,325) (1,188)
Interest income 5 (16,294) (21,993)
Gain on disposal of a subsidiary 5 (2,917) —
Gain on disposal of an associate 5 (46,498) —
Dividend income from equity investments
at fair value through other
comprehensive income 5 (4,396) —
359,780 214,975
Decrease/(increase) in properties under development 84,576 (2,875,191)
(Increase)/decrease in completed
properties held for sale (519,241) 429,456
Increase in inventories (15,355) (3,311)
Decrease/(increase) in trade receivables 1,360 (5,679)
Increase in prepayments, other receivables and other assets (309,287) (404,828)
Decrease/(increase) in pledged deposits 47,605 (28,086)
(Increase)/decrease in restricted cash (1,033) 103,000
Increase in trade and bills payables 174,096 310,104
(Decrease)/increase in contract liabilities (210,142) 993,521
Increase/(decrease) in other payables and accruals 9,515 (86,910)
Cash used in operations (378,126) (1,352,949)
Tax paid (28,165) (148,316)
Net cash flows used in operating activities (406,291) (1,501,265)
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292

Chen Xing Development Holdings Limited Annual Report 2020

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2020

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----- Start of picture text -----

Notes 2020 2019
RMB’000 RMB’000
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of items of property, plant and equipment (15,172) (7,545)
Proceeds from disposal of items of property, plant and
equipment 291 114
Purchases of intangible assets 17 (31) (158)
Purchases of financial assets at fair value
through profit or loss (176,000) (109,000)
Purchases of financial assets at fair value
—
through other comprehensive income (155,637)
Proceeds from disposal of financial assets at fair value
through profit or loss 177,500 218,400
—
Acquisition of subsidiaries (617,670)
—
Purchase of a shareholding in an associate (26,500)
Advances of loans to an associate — (116,294)
Income from financial assets at fair value
through profit or loss 1,313 4,925
Interest received 27,597 10,253
—
Prepayments of loans from an associate 94,973
—
Disposal of an associate 15,800
Disposal of a subsidiary 35 (1) —
Dividend income from equity investments at fair value
—
through other comprehensive income 4,396
Net cash flows from/(used in) investing activities 130,666 (799,112)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares — 127,845
—
Share issue expenses (2,270)
Capital contribution from a non-controlling shareholder — 600
Principal portion of lease payments 37(a) (1,085) (2,229)
New bank and other loans 395,250 2,864,000
Repayment of bank and other loans (469,340) (908,100)
Interest paid (219,082) (124,528)
Net cash flows (used in)/from financing activities (294,257) 1,955,318
NET DECREASE IN CASH AND
CASH EQUIVALENTS (569,882) (345,059)
Cash and cash equivalents at beginning of year 1,107,248 1,447,161
Effect of foreign exchange rate changes, net (3,265) 5,146
CASH AND CASH EQUIVALENTS AT END OF YEAR 26 534,101 1,107,248
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Annual Report 2020 Chen Xing Development Holdings Limited

293

31 December 2020

NOTES TO FINANCIAL STATEMENTS

1. CORPORATE AND GROUP INFORMATION

The Company is a limited liability company incorporated in the Cayman Islands on 3 November 2014. The registered office address of the Company is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.

During the year, the Group was principally engaged in property development.

In the opinion of the directors, the ultimate controlling shareholders of the Group are Mr. Bai Xuankui and Mr. Bai Guohua.

Information about subsidiaries

Particulars of the Company’s principal subsidiaries are as follows:

==> picture [412 x 73] intentionally omitted <==

----- Start of picture text -----

Place of
incorporation/ Issued ordinary/ Percentage of
registration registered equity attributable Principal
Name and business share capital to the Company activities
Direct Indirect
----- End of picture text -----

Chen Xing Investments	British Virgin	US$10,000	100%	—	Investment
Limited	Islands				holding
Chen Xing International	Hong Kong	HK$100	—	100%	Investment
Holdings Limited					holding
Jinzhong Chen Xing Hui	People’s Republic	RMB105,000,000	—	100%	Investment
Technology and Trade	of China/				holding
Company Limited*	Mainland China
Chenxing Real Estate	People’s Republic	RMB204,000,000	—	100%	Development
Development Co., Ltd.	of China/				and sale of
(“Chen Xing”)**	Mainland China				properties
Sichuan Chenxing Real	People’s Republic	RMB119,200,000	—	83.89%	Development
Estate Development Co.,	of China/				and sale of
Limited (“Chen Xing	Mainland China				properties
Sichuan”)**
Jinzhong Development	People’s Republic	RMB100,000,000	—	51%	Development
Zone Real Estate	of China/				and sale of
Development Co., Ltd.**	Mainland China				properties

294

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

1. CORPORATE AND GROUP INFORMATION (continued)

Information about subsidiaries (continued)

Particulars of the Company’s principal subsidiaries are as follows: (continued)

==> picture [412 x 73] intentionally omitted <==

Wuzhishan Chenxing Real	People’s Republic	RMB90,280,000	—	100%	Development
Estate Development	of China/				and sale of
Co., Limited**	Mainland China				properties
Hainan DeGao	People’s Republic	RMB10,000,000	—	100%	Development
Investment Co., Ltd.	of China/				and sale of
(“Hainan Degao”)**	Mainland China				properties
Hainan Youshenghongtuo	People’s Republic	RMB10,000,000	—	100%	Development
Real Estate Development	of China/				and sale of
Co., Ltd.**	Mainland China				properties
Shanxi Chenxing Zhida	People’s Republic	RMB10,000,000	—	100%	Sale of
Trading Co., Ltd.**	of China/				construction
	Mainland China				materials
Shanxi Chenxing Zhicheng	People’s Republic	RMB50,000,000	—	100%	Property
Construction Engineering	of China/				construction
Co., Ltd.**	Mainland China
Jinzhong Chenxing Yijun	People’s Republic	RMB100,000,000	—	100%	Development
Real Estate Development	of China/				and sale of
Co., Ltd.**	Mainland China				properties
Jinzhong Chenxing	People’s Republic	RMB50,000,000	—	100%	Development
Shiguang Zhicheng Real	of China/				and sale of
Estate Development	Mainland China				properties
Co., Ltd.**
Taiyuan Chenya Real Estate	People’s Republic	RMB10,000,000	—	100%	Development
Development Co., Ltd.**	of China/				and sale of
	Mainland China				properties
Jinzhong Xiya Real Estate	People’s Republic	RMB74,630,000	—	67%	Development
Development Co., Ltd.**	of China/				and sale of
	Mainland China				properties

Annual Report 2020 Chen Xing Development Holdings Limited

295

31 December 2020

NOTES TO FINANCIAL STATEMENTS

1. CORPORATE AND GROUP INFORMATION (continued)

Information about subsidiaries (continued)

Particulars of the Company’s principal subsidiaries are as follows: (continued)

==> picture [412 x 73] intentionally omitted <==

Shanxi Chang Xing	People’s Republic	RMB50,000,000	—	80%	Property
Zhicheng Construction	of China/				construction
Engineering Co., Ltd.**	Mainland China
Xishuangbanna Jingyuan	People’s Republic	RMB290,314,400	—	100%	Development
Investment Development	of China/				and sale of
Co., Ltd. (“Jingyuan”)**	Mainland China				properties
Beijing Chenxing Real	People’s Republic	RMB100,000	—	100%	Real estate
Estate Broker Co., Ltd.	of China/				brokerage
(“Real Estate Broker”)**	Mainland China				and
					exhibition
Mianyang Chenxing Yazhi	People’s Republic	RMB50,000,000	—	100%	Development
Real Estate Development	of China/				and sale of
Co., Ltd. (“Yazhi”)**	Mainland China				properties

The entity is registered as a wholly-foreign-owned enterprise under People’s Republic of China (“ PRC ”) law. ** These entities are limited liability enterprises established under PRC law.

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

296

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for investment properties, wealth management products and equity investment which have been measured at fair value. These financial statements are presented in Renminbi (“ RMB ”) and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries (collectively referred to as the “ Group ”) for the year ended 31 December 2020. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Annual Report 2020 Chen Xing Development Holdings Limited

297

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.1 BASIS OF PREPARATION (continued)

Basis of consolidation (continued)

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the Conceptual Framework for Financial Reporting 2018 and the following revised HKFRSs for the first time for the current year’s financial statements.

Amendments to HKFRS 3 Definition of a Business Amendments to HKFRS 9 Interest Rate Benchmark Reform HKAS 39 and HKFRS7 Amendments to HKFRS 16 Covid-19-Related Rent Concessions (early adopted) Amendments to HKAS 1 Definition of Material and HKAS 8

298

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

The nature and the impact of the Conceptual Framework for Financial Reporting 2018 and the revised HKFRSs are described below:

(a) Conceptual Framework for Financial Reporting 2018 (the “ Conceptual Framework ”) sets out a comprehensive set of concepts for financial reporting and standard setting, and provides guidance for preparers of financial statements in developing consistent accounting policies and assistance to all parties to understand and interpret the standards. The Conceptual Framework includes new chapters on measurement and reporting financial performance, new guidance on the derecognition of assets and liabilities, and updated definitions and recognition criteria for assets and liabilities. It also clarifies the roles of stewardship, prudence and measurement uncertainty in financial reporting. The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The Conceptual Framework did not have any significant impact on the financial position and performance of the Group.
(b) Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did not have any impact on the financial position and performance of the Group.

Annual Report 2020 Chen Xing Development Holdings Limited

299

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

(c) Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative risk-free rate (“ RFR ”). The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the introduction of the alternative RFR. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedging relationships.
(d) Amendment to HKFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective for annual periods beginning on or after 1 June 2020 with earlier application permitted and shall be applied retrospectively. The amendment did not have any significant impact on the financial position and performance of the Group as the Group does not have any rent concessions.
(e) Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information, or both. The amendments did not have any significant impact on the financial position and performance of the Group.

300

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements.

Amendments to HKFRS 3 Reference to the Conceptual Framework[2] Amendments to HKFRS 9, Interest Rate Benchmark Reform — Phase 2[1] HKAS 39 and HKFRS 7, HKFRS 4 and HKFRS 16 Amendments to HKFRS 10 Sale or Contribution of Assets between an Investor and its and HKAS 28 (2011) Associate or Joint Venture[4] HKFRS 17 Insurance Contracts[3] Amendments to HKFRS 17 Insurance Contracts[3, 6] Amendments to HKAS 1 Classification of Liabilities as Current or Non-current[3, 5] Amendments to HKAS 16 Property, Plant and Equipment: Proceeds before Intended Use[2] Amendments to HKAS 37 Onerous Contracts — Cost of Fulfilling a Contract[2] Annual Improvements to Amendments to HKFRS 1, HKFRS 9, Illustrative Examples HKFRSs 2018–2020 accompanying HKFRS 16, and HKAS 41[2]

1 Effective for annual periods beginning on or after 1 January 2021
2 Effective for annual periods beginning on or after 1 January 2022
3 Effective for annual periods beginning on or after 1 January 2023
4 No mandatory effective date yet determined but available for adoption
5 As a consequence of the amendments to HKAS 1, Hong Kong Interpretation 5 Presentation of Financial Statements
Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause was revised in October 2020 to align the corresponding wording with no change in conclusion
6 As a consequence of the amendments to HKFRS 17 issued in October 2020, HKFRS 4 was amended to extend the temporary exemption that permits insurers to apply HKAS 39 rather than HKFRS 9 for annual periods beginning before 1 January 2023

Annual Report 2020 Chen Xing Development Holdings Limited

301

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS (continued)

Further information about those HKFRSs that are expected to be applicable to the Group is as follows:

Amendments to HKFRS 3 are intended to replace a reference to the previous Framework for the Preparation and Presentation of Financial Statements with a reference to the Conceptual Framework for Financial Reporting issued in June 2018 without significantly changing its requirements. The amendments also add to HKFRS 3 an exception to its recognition principle for an entity to refer to the Conceptual Framework to determine what constitutes an asset or a liability. The exception specifies that, for liabilities and contingent liabilities that would be within the scope of HKAS 37 or HK(IFRIC)-Int 21 if they were incurred separately rather than assumed in a business combination, an entity applying HKFRS 3 should refer to HKAS 37 or HK(IFRIC)-Int 21 respectively instead of the Conceptual Framework. Furthermore, the amendments clarify that contingent assets do not qualify for recognition at the acquisition date. The Group expects to adopt the amendments prospectively from 1 January 2022. Since the amendments apply prospectively to business combinations for which the acquisition date is on or after the date of first application, the Group will not be affected by these amendments on the date of transition.

Amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16 address issues not dealt with in the previous amendments which affect financial reporting when an existing interest rate benchmark is replaced with an alternative RFR. The Phase 2 amendments provide a practical expedient to allow the effective interest rate to be updated without adjusting the carrying amount when accounting for changes in the basis for determining the contractual cash flows of financial assets and liabilities, if the change is a direct consequence of the interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis immediately preceding the change. In addition, the amendments permit changes required by the interest rate benchmark reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued. Any gains or losses that could arise on transition are dealt with through the normal requirements of HKFRS 9 to measure and recognise hedge ineffectiveness. The amendments also provide a temporary relief to entities from having to meet the separately identifiable requirement when an RFR is designated as a risk component. The relief allows an entity, upon designation of the hedge, to assume that the separately identifiable requirement is met, provided the entity reasonably expects the RFR risk component to become separately identifiable within the next 24 months. Furthermore, the amendments require an entity to disclose additional information to enable users of financial statements to understand the effect of interest rate benchmark reform on an entity’s financial instruments and risk management strategy. The amendments are effective for annual periods beginning on or after 1 January 2021 and shall be applied retrospectively, but entities are not required to restate the comparative information.

302 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS (continued)

Amendments to HKFRS 10 and HKAS 28 (2011) address an inconsistency between the requirements in HKFRS 10 and in HKAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to HKFRS 10 and HKAS 28 (2011) was removed by the HKICPA in January 2016 and a new mandatory effective date will be determined after the completion of a broader review of accounting for associates and joint ventures. However, the amendments are available for adoption now.

Amendments to HKAS 1 clarify the requirements for classifying liabilities as current or non-current. The amendments specify that if an entity’s right to defer settlement of a liability is subject to the entity complying with specified conditions, the entity has a right to defer settlement of the liability at the end of the reporting period if it complies with those conditions at that date. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability. The amendments also clarify the situations that are considered a settlement of a liability. The amendments are effective for annual periods beginning on or after 1 January 2023 and shall be applied retrospectively. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

Amendments to HKAS 16 prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling any such items, and the cost of those items, in profit or loss. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied retrospectively only to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

Annual Report 2020 Chen Xing Development Holdings Limited

303

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS (continued)

Amendments to HKAS 37 clarify that for the purpose of assessing whether a contract is onerous under HKAS 37, the cost of fulfilling the contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract include both the incremental costs of fulfilling that contract (e.g., direct labour and materials) and an allocation of other costs that relate directly to fulfilling that contract (e.g., an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract as well as contract management and supervision costs). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied to contracts for which an entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments. Earlier application is permitted. Any cumulative effect of initially applying the amendments shall be recognised as an adjustment to the opening equity at the date of initial application without restating the comparative information. The amendments are not expected to have any significant impact on the Group’s financial statements.

Annual Improvements to HKFRSs 2018–2020 sets out amendments to HKFRS 1, HKFRS 9, Illustrative Examples accompanying HKFRS 16, and HKAS 41. Details of the amendments that are expected to be applicable to the Group are as follows:

HKFRS 9 Financial Instruments : clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual periods beginning on or after 1 January 2022. Earlier application is permitted. The amendment is not expected to have a significant impact on the Group’s financial statements.
HKFRS 16 Leases : removes the illustration of payments from the lessor relating to leasehold improvements in Illustrative Example 13 accompanying HKFRS 16. This removes potential confusion regarding the treatment of lease incentives when applying HKFRS 16.

304

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments in associates and joint ventures

An associate is an entity in which the Group has a long term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group’s investments in associates and joint ventures are stated in the consolidated statement of financial position at the Group’s share of net assets under the equity method of accounting, less any impairment losses.

The Group’s share of the post-acquisition results and other comprehensive income of associates and joint ventures is included in the consolidated statement of profit or loss and consolidated other comprehensive income, respectively. In addition, when there has been a change recognised directly in the equity of associate or joint venture, the Group recognises its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s investments in the associates or joint ventures, except where unrealised losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition of associates or joint ventures is included as part of the Group’s investments in associates or joint ventures.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases, upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in the statement of profit or loss.

When an investment in an associate or a joint venture is classified as held for sale, it is accounted for in accordance with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations .

Annual Report 2020 Chen Xing Development Holdings Limited

305

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred.

The Group determines that it has acquired a business when the acquired set of activities and assets includes an input and a substantive process that together significantly contribute to the ability to create outputs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and any fair value of the Group’s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase.

306 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Business combinations and goodwill (continued)

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31 December. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cashgenerating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the operation disposed of and the portion of the cash-generating unit retained.

Fair value measurement

The Group measures its investment properties, wealth management products and equity investments at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

Annual Report 2020 Chen Xing Development Holdings Limited

307

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair value measurement (continued)

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly
Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, deferred tax assets, financial assets and investment properties), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

308

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of non-financial assets (continued)

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;

(b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

Annual Report 2020 Chen Xing Development Holdings Limited

309

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related parties (continued)

(b) the party is an entity where any of the following conditions applies: (continued)
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. When an item of property, plant and equipment is classified as held for sale or when it is part of a disposal group classified as held for sale, it is not depreciated and is accounted for in accordance with HKFRS 5. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

310

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, plant and equipment and depreciation (continued)

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Buildings	1.90%–19.00%
Motor vehicles	9.50%–19.40%
Machinery	9.50%–19.40%
Office equipment	9.50%–32.33%
Leasehold improvements	20.00%–33.33%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the statement of profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Investment properties

Investment properties are interests in buildings (including the leasehold property held as a rightof-use asset which would otherwise meet the definition of an investment property) held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period.

Gains or losses arising from changes in the fair values of investment properties are included in the statement of profit or loss in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of profit or loss in the year of the retirement or disposal.

Annual Report 2020 Chen Xing Development Holdings Limited

311

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investment properties (continued)

If a property occupied by the Group as an owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under “Property, plant and equipment and depreciation” for owned property and/or accounts for such property in accordance with the policy stated under “Right-of-use assets” for property held as a right-of-use asset up to the date of change in use, and any difference at that date between the carrying amount and the fair value of the property is accounted for as a revaluation in accordance with HKAS 16 Property, Plant and Equipment . For a transfer from completed properties held for sale to investment properties, any difference between the fair value of the property at that date and its previous carrying amount is recognised in the statement of profit or loss.

The Group determines whether completed properties held for sale would be transferred to investment properties when, and only when, there is a change in use, evidenced by the following criteria: (a) the Group has prepared a business plan that reflects the future rental income generated by the property and this is supported with evidence that there is demand for rental space; (b) the Group can demonstrate that it has the resources, including the necessary financing or capital, to hold and manage an investment property; (c) the change in use is legally permissible; (d) if the property must be further developed for the change in use, and the development has commenced; and (e) change in use is approved by a board resolution.

Properties under development

Properties under development are intended to be held for sale after completion. On completion, the properties are transferred to completed properties held for sale. Properties under development are stated at the lower of cost and net realisable value and comprise land costs, construction costs, borrowing costs, professional fees and other costs directly attributable to such properties incurred during the development period.

Properties under development are classified as current assets unless they are not realised in the normal operating cycle.

312

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Completed properties held for sale

Completed properties held for sale are stated in the statement of financial position at the lower of cost and net realisable value. Cost is determined by an apportionment of the total costs of land and buildings attributable to the unsold properties. Net realisable value takes into account the price ultimately expected to be realised, less estimated costs to be incurred in selling the properties.

Allocation of property development costs

Land costs are allocated to each unit according to their respective saleable gross floor areas (“ GFA ”) to the total saleable GFA. Construction costs relating to units were identified and allocated specifically. Common construction costs have been allocated according to the saleable GFA similar to land costs.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Annual Report 2020 Chen Xing Development Holdings Limited

313

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (continued)

Group as a lessee (continued)

(a) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Leasehold land 40 years Buildings 1.25 to 3 years

If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

When the right-of-use assets relate to interests in leasehold land held as properties under development, they are subsequently measured at the lower of cost and net realisable value in accordance with the Group’s policy for “properties under development”.

(b) Lease liabilities

Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.

314 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (continued)

Group as a lessee (continued)

(b) Lease liabilities (continued)

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

The Group’s lease liabilities are included in interest-bearing bank and other borrowings.

(c) Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets to leases of office equipment and laptop computers that are considered to be of low value.

Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

Group as a lessor

When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease.

Annual Report 2020 Chen Xing Development Holdings Limited

315

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (continued)

Group as a lessor (continued)

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee are accounted for as finance leases.

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component for which the Group has applied the practical expedient are measured at the transaction price determined under HKFRS 15 in accordance with the policies set out for “Revenue recognition” below.

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“ SPPI ”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

316 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments and other financial assets (continued)

Initial recognition and measurement (continued)

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the statement of profit or loss when the asset is derecognised, modified or impaired.

Financial assets at fair value through other comprehensive income (debt instruments)

For debt investments at fair value through other comprehensive income, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in other comprehensive income. Upon derecognition, the cumulative fair value change recognised in other comprehensive income is recycled to the statement of profit or loss.

Annual Report 2020 Chen Xing Development Holdings Limited

317

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments and other financial assets (continued)

Subsequent measurement (continued)

Financial assets designated at fair value through other comprehensive income (equity investments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under HKAS 32 Financial Instruments : Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to the statement of profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.

This category includes derivative instruments and equity investments which the Group had not irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity investments classified as financial assets at fair value through profit or loss are also recognised as other income in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

318

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (“ ECLs ”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the differences between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

Annual Report 2020 Chen Xing Development Holdings Limited

319

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of financial assets (continued)

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

For debt investments at fair value through other comprehensive income, the Group applies the low credit risk simplification. At each reporting date, the Group evaluates whether the debt investments are considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the external credit ratings of the debt investments. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

320

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of financial assets (continued)

General approach (continued)

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for contract assets which apply the simplified approach as detailed below.

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs
Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs
Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For trade receivables that contain a significant financing component and lease receivables, the Group chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies as described above.

Annual Report 2020 Chen Xing Development Holdings Limited

321

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables and interest-bearing bank and other borrowings.

Subsequent measurement

The subsequent measurement of loans and borrowings is as follows:

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the statement of profit or loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. A financial guarantee contract is recognised initially as a liability at its fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, the Group measures the financial guarantee contracts at the higher of: (i) the ECL allowance determined in accordance with the policy as set out in “Impairment of financial assets”; and (ii) the amount initially recognised less, when appropriate, the cumulative amount of income recognised.

322 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired and form an integral part of the Group’s cash management.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks which are not restricted as to use.

Annual Report 2020 Chen Xing Development Holdings Limited

323

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the statement of profit or loss.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the country in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

324 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income tax (continued)

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Annual Report 2020 Chen Xing Development Holdings Limited

325

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, for which it is intended to compensate, are expensed.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to profit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to profit or loss by way of a reduced depreciation charge.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group with a significant financial benefit for more than one year, revenue recognised under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in HKFRS 15.

326

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition (continued)

Revenue from contracts with customers (continued)

(a) Sale of properties

Revenue from the sale of properties is recognised at the point in time when control of the properties is transferred to the customer, generally on delivery of the properties.

(b) Sale of construction materials

Revenue from the sale of construction materials is recognised at the point in time when control of the assets is transferred to the customer, generally on delivery of the construction materials.

(c) Construction services

Revenue from the provision of construction services is recognised over time, using an input method to measure progress towards complete satisfaction of the service, because the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. The input method recognises revenue based on the proportion of the actual costs incurred relative to the estimated total costs for satisfaction of the construction services.

(d) Provision of real estate agency services

Revenue from the provision of agency services is recognised over the scheduled period on a straight-line basis because the customer simultaneously receives and consumes the benefits provided by the Group.

Revenue from other sources

Rental income is recognised on a time proportion basis over the lease terms. Variable lease payments that do not depend on an index or a rate are recognised as income in the accounting period in which they are incurred.

Annual Report 2020 Chen Xing Development Holdings Limited

327

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition (continued)

Other income

Interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Dividend income is recognised when the shareholders’ right to receive payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

Contract liabilities

A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

Contract costs

Other than the costs which are capitalised as inventories, property, plant and equipment and intangible assets, costs incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are met:

(a) The costs relate directly to a contract or to an anticipated contract that the entity can specifically identify.
(b) The costs generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.
(c) The costs are expected to be recovered.

The capitalised contract costs are amortised and charged to the statement of profit or loss on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. Other contract costs are expensed as incurred.

328

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Employee benefits

Pension scheme

The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute a certain percentage of their payroll costs to the central pension scheme. The contributions are charged to the statement of profit or loss as they become payable in accordance with the rules of the central pension scheme.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Where funds have been borrowed generally, and used for the purpose of obtaining qualifying assets, a capitalisation rate ranging from 5.23% to 15.00% has been applied to the expenditure on the individual assets.

Dividends

Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting. Proposed final dividends are disclosed in the notes to the financial statements.

Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Annual Report 2020 Chen Xing Development Holdings Limited

329

NOTES TO FINANCIAL STATEMENTS

31 December 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currencies

These financial statements are presented in Renminbi (“ RMB ”), which is the Company’s functional currency because the Group’s principal operations are carried out in Mainland China. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in the statement of profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration.

The functional currencies of certain overseas subsidiaries are currencies other than the RMB. As at the end of the reporting period, the assets and liabilities of these entities are translated into RMB at the exchange rates ruling at the end of the reporting period and their statements of profit or loss and other comprehensive income are translated into RMB at the weighted average exchange rates for the year.

The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the statement of profit or loss.

For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are translated into RMB at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into RMB at the weighted average exchange rates for the year.

330 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Property lease classification — Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the present value of the minimum lease payments not amounting to substantially all the fair value of the commercial property, that it retains substantially all the significant risks and rewards incidental to ownership of these properties which are leased out and accounts for the contracts as operating leases.

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately or leased out separately under a finance lease, the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property.

Annual Report 2020 Chen Xing Development Holdings Limited

331

NOTES TO FINANCIAL STATEMENTS

31 December 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Provision for expected credit losses on trade receivables and other receivables

The Group uses a provision matrix to calculate ECLs for trade receivables and other receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns.

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation among historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of a customer’s actual default in the future. The information about the ECLs on the Group’s trade receivables and other receivables is disclosed in note 23 and note 24 to the financial statements.

Estimation of fair value of investment properties

Investment properties were revalued based on the appraised market value by independent professional valuers. Such valuations were based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. In making the estimate, the Group considers information from current prices in an active market for similar properties and uses assumptions that are mainly based on market conditions existing at the end of the reporting period.

332

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty (continued)

Estimation of fair value of investment properties (continued)

In the absence of current prices in an active market for similar properties, the Group considers information from discounted cash flow projections based on reliable estimates of future cash flows, supported by the terms of any existing lease and other contracts and (when possible) by external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

The principal assumptions for the Group’s estimation of the fair value include those related to current market rents for similar properties in the same location and condition, appropriate discount rates and expected future market rents. The carrying amount of investment properties was RMB138,000,000 as at 31 December 2020 (2019: RMB141,000,000).

Net realisable value of properties under development and completed properties held for sale

The Group’s properties under development and completed properties held for sale are stated at the lower of cost and net realisable value. Based on the Group’s historical experience and the nature of the subject properties, the Group makes estimates of the selling prices, the costs to completion for properties under development, and the costs to be incurred in selling the properties based on prevailing market conditions and by reference to the latest selling prices of properties sold in the ordinary course of business by the Group or other developers in the same location.

If there is an increase in costs to completion or a decrease in net sales value, the net realisable value will decrease and this may result in a provision for properties under development and completed properties held for sale. Such provision requires the use of judgements and estimates. Where the expectation is different from the original estimate, the carrying value and provision for properties in the period in which such estimate is changed will be adjusted accordingly. The carrying amounts of properties under development and completed properties held for sale at 31 December 2020 were RMB9,128,247,000 (2019: RMB8,997,082,000) and RMB931,224,000 (2019: RMB411,983,000), respectively.

Annual Report 2020 Chen Xing Development Holdings Limited

333

NOTES TO FINANCIAL STATEMENTS

31 December 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty (continued)

PRC land appreciation tax (“LAT”)

The Group is subject to LAT in the PRC. The provision for LAT is based on management’s best estimates according to the understanding of the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon the completion of the property development projects. The Group has not finalised its LAT calculation and payments with the tax authorities for all its property development projects. The final outcome could be different from the amounts that were initially recorded, and any differences will impact on the LAT expenses and the related provision in the period in which the differences realise.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets relating to recognised tax losses at 31 December 2020 was RMB3,396,000 (2019: RMB1,349,000). The amount of unrecognised tax losses at 31 December 2020 was RMB63,968,000 (2019: RMB40,788,000). Further details are included in note 31 to the financial statements.

Impairment of non-financial assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all non-financial assets (other than properties under development and completed properties held for sale) at the end of each reporting period. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. As at 31 December 2020, the Company’s market capitalisation was lower than the Group’s net asset value which is an indicator of impairment for non-financial assets. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The calculations of the fair value less costs of disposal are based on current prices in an active market for similar non-financial assets and use assumptions that are mainly based on market conditions existing at the end of the reporting period. In the absence of current prices in an active market for similar non-financial assets, the Group estimates the expected future cash flows from the non-financial assets and chooses a suitable discount rate in order to calculate the present value of those cash flows.

334 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty (continued)

Impairment of non-financial assets (other than goodwill) (continued)

The key assumptions used in the fair value less costs of disposal calculations include current market rents for similar properties in the same location and condition, appropriate discount rates and expected future market rents. Where the expectation is different from the original estimates, the carrying value and provision for such non-financial assets in the period in which such estimates are changed will be adjusted accordingly. As at 31 December 2020, the carrying value of long-lived non-financial assets (other than properties under development in non-current assets) was RMB79,897,000 (2019: RMB RMB77,326,000).

Useful lives and residual values of property, plant and equipment

In determining the useful lives and residual values of items of property, plant and equipment, the Group has to consider various factors, such as technical or commercial obsolescence arising from changes or improvements in production, or from a change in the market demand for the product or service output of the asset, expected usage of the asset, expected physical wear and tear, the care and maintenance of the asset and the legal or similar limits on the use of the asset. The estimation of the useful life of the asset is based on the experience of the Group with similar assets that are used in a similar way.

Additional depreciation is made if the estimated useful lives and/or the residual values of items of property, plant and equipment are different from the previous estimation. Useful lives and residual values are reviewed at each financial year end date based on changes in circumstances.

4. OPERATING SEGMENT INFORMATION

For management purposes, the Group is not organised into business units based on their products and services and only has one reportable operating segment. Management monitors the operating results of the Group’s operating segment as a whole for the purpose of making decisions about resource allocation and performance assessment.

No geographical segment information is presented as the Group’s revenue from the external customers was derived solely from its operations in Mainland China and no non-current assets of the Group were located outside Mainland China.

No information about major customers is presented as no revenue from sales to a single customer individually accounted for 10% or more of the Group’s total revenue for the reporting period.

Annual Report 2020 Chen Xing Development Holdings Limited

335

NOTES TO FINANCIAL STATEMENTS

31 December 2020

5. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Revenue from contracts with customers 1,203,140 1,301,064
Revenue from other sources
Gross rental income from investment
property operating leases:
Other lease payments, including fixed payments 4,362 6,020
1,207,502 1,307,084
----- End of picture text -----

Revenue from contracts with customers

(a) Disaggregated revenue information

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Types of goods or services
Sale of properties 1,180,816 1,262,763
Sale of construction materials 22,324 36,670
Construction services — 1,482
Real estate agency services — 149
Total revenue from contracts with customers 1,203,140 1,301,064
Timing of revenue recognition
Goods transferred at a point in time 1,203,140 1,299,433
Services transferred over time — 1,631
Total revenue from contracts with customers 1,203,140 1,301,064
----- End of picture text -----

336

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

5. REVENUE, OTHER INCOME AND GAINS (continued)

Revenue from contracts with customers (continued)

(a) Disaggregated revenue information (continued)

The following table shows the amounts of revenue recognised in the current reporting period that were included in the contract liabilities at the beginning of the reporting period and recognised from performance obligations satisfied in previous periods:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Revenue recognised that was included in contract
liabilities at the beginning of the reporting period:
Sale of properties 1,182,662 1,106,126
----- End of picture text -----

(b) Performance obligations

Information about the Group’s performance obligations is summarised below:

Sale of properties

The performance obligation is satisfied upon delivery of the properties and payment in advance is normally required.

Sale of construction materials

The performance obligation is satisfied upon delivery of the construction materials and payment is generally due within 30 days from delivery, except for new customers, where payment in advance is normally required.

Annual Report 2020 Chen Xing Development Holdings Limited

337

NOTES TO FINANCIAL STATEMENTS

31 December 2020

5. REVENUE, OTHER INCOME AND GAINS (continued)

Revenue from contracts with customers (continued)

(b) Performance obligations (continued)

Construction services

The performance obligation is satisfied over time as services are rendered and payment is generally due within 1 year from the date of billing. A certain percentage of payment is retained by customers until the end of the retention period as the Group’s entitlement to the final payment is conditional on the satisfaction of the service quality by the customers over a certain period as stipulated in the contracts.

Real estate agency services

The performance obligation is satisfied over time as services are rendered and short-term advances are normally required before rendering the services. Real estate agency service contracts are for periods of one year or more, and are billed based on the time incurred.

The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 31 December are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Amounts expected to be recognised as revenue:
Within one year 5,146,718 3,575,162
After one year 193,615 1,909,853
5,340,333 5,485,015
----- End of picture text -----

338 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

5. REVENUE, OTHER INCOME AND GAINS (continued)

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Other income
Bank interest income 6,499 10,253
Interest income from loans to an associate 8,716 11,740
—
Other interest income from third parties 1,079
Other interest income from financial assets at
fair value through profit or loss 1,313 4,051
Dividend income from equity investments at
—
fair value through other comprehensive income 4,396
Gross rental income 9,931 10,939
—
Compensation income 10,620
Others 1,023 908
43,577 37,891
Gains
—
Foreign exchange gains, net 1,896
Gain on disposal of items of property, plant and equipment 23 58
—
Gain on disposal of a subsidiary 2,917
Gain on disposal of an associate 46,498 —
49,438 1,954
93,015 39,845
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6. FINANCE COSTS

An analysis of finance costs is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Interest on bank loans 219,507 129,344
Interest on lease liabilities 40 187
Total interest expense on financial liabilities not
at fair value through profit or loss 219,547 129,531
Less: Interest capitalised (215,741) (107,363)
3,806 22,168
----- End of picture text -----

Annual Report 2020 Chen Xing Development Holdings Limited

339

31 December 2020

NOTES TO FINANCIAL STATEMENTS

7. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):

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----- Start of picture text -----

Notes 2020 2019
RMB’000 RMB’000
Cost of properties sold 723,492 924,740
Cost of construction materials sold 20,137 29,932
Cost of services provided — 882
Depreciation of property, plant and equipment 13 11,058 10,330
Depreciation of right-of-use assets 16(a) 1,194 2,239
Amortisation of intangible assets 17 83 56
Lease payments not included in the
measurement of lease liabilities 16(c) 202 410
Auditor’s remuneration 2,150 3,580
Employee benefit expense (excluding directors’ and
chief executive’s remuneration (note 8)):
Wages and salaries 21,197 21,077
Staff welfare expenses 3,689 3,258
Pension scheme contributions 135 1,140
25,021 25,475
Impairment of trade receivables 23 252 281
Impairment of other receivables 24 4,929 1,030
Changes in fair value of investment properties 14 3,000 4,000
Gain on disposal of items of property, plant and
equipment (23) (58)
—
Gain on disposal of a subsidiary (2,917)
—
Gain on disposal of an associate (46,498)
Dividend income from equity investments at fair
—
value through other comprehensive income (4,396)
Foreign exchange losses/(gains), net 6,124 (1,896)
Bank interest income (6,499) (10,253)
Interest income from loans to an associate (8,716) (11,740)
—
Other interest income from third parties (1,079)
Other interest income from financial assets
at fair value through profit or loss (1,313) (4,051)
Impairment of completed properties held for sale 22 5,440 816
----- End of picture text -----*

The amortisation of intangible assets for the year is included in “Administrative expenses” in the consolidated statement of profit or loss.

340 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

8. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION

Directors’ and chief executive’s remuneration for the year, disclosed pursuant to the Listing Rules, section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

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2020 2019
RMB’000 RMB’000
Fees 187 186
Other emoluments:
Salaries, allowances and benefits in kind 1,346 1,247
Performance related bonuses 627 331
Pension scheme contributions 77 82
2,050 1,660
2,237 1,860
----- End of picture text -----

(a) Independent non-executive directors

The fees paid to independent non-executive directors during the year were as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Mr. Gu Jiong 107 106
Mr. Tian Hua 40 40
Mr. Qiu Yongqing 40 40
187 186
----- End of picture text -----

There were no other emoluments payable to the independent non-executive directors during the year (2019: Nil).

Annual Report 2020 Chen Xing Development Holdings Limited

341

NOTES TO FINANCIAL STATEMENTS

31 December 2020

8. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION (continued)

(b) Executive directors and the chief executive

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----- Start of picture text -----

Salaries,
allowances Performance Pension
and benefits related scheme Total
Fees in kind bonuses contributions remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2020
Executive directors:
Mr. Bai Xuankui — 506 144 — 650
Mr. Bai Wukui — 500 234 28 762
Mr. Dong Shiguang — 82 48 21 151
Mr. Bai Guohua — 258 201 28 487
— 1,346 627 77 2,050
2019
Executive directors:
Mr. Bai Xuankui — 542 108 — 650
Mr. Bai Wukui — 495 120 31 646
Mr. Dong Shiguang — 95 8 20 123
Mr. Bai Guohua — 115 95 31 241
— 1,247 331 82 1,660
----- End of picture text -----

Mr. Bai Wukui is the chief executive officer and an executive director of the Group.

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

The directors did not receive any emoluments from the Group as an inducement to join or upon joining the Group or as compensation for loss of office during the year (2019: Nil).

342

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

9. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included three directors (2019: two directors), details of whose remuneration are set out in note 8 above. Details of the remuneration for the year of the remaining two (2019: three) highest paid employees who are neither a director nor chief executive of the Company are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Salaries, allowances and benefits in kind 650 638
Performance related bonuses 162 229
Pension scheme contributions 56 94
868 961
----- End of picture text -----

The number of non-director highest paid employees whose remuneration fell within the following band is as follows:

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----- Start of picture text -----

Number of employees
2020 2019
Nil to HK$1,000,000 2 3
----- End of picture text -----

The five highest paid employees did not receive any emoluments from the Group as an inducement to join or upon joining the Group or as compensation for loss of office during the year (2019: Nil).

Annual Report 2020 Chen Xing Development Holdings Limited

343

31 December 2020

NOTES TO FINANCIAL STATEMENTS

10. INCOME TAX

The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which members of the Group are domiciled and operate. Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands, the Group’s subsidiaries incorporated in the Cayman Islands and the British Virgin Islands are not subject to any income tax. Pursuant to the relevant tax law of the Hong Kong Special Administrative Region, Hong Kong profits tax is based on a tax rate of 16.5% (2019: 16.5%) on the estimated assessable profits arising in Hong Kong during the year. No provision for Hong Kong profits tax has been made as the Group did not generate any assessable profits in Hong Kong during the year (2019: Nil).

The provision for Mainland China current income tax is based on the statutory rate of 25% of the assessable profits of certain PRC subsidiaries of the Group as determined in accordance with the PRC Corporate Income Tax Law which was approved and became effective on 1 January 2008.

According to the requirements of the provisional regulations of the PRC on the land appreciation tax (“ LAT ”) effective from 1 January 1994 onwards, and the detailed implementation rules on the provisional regulations of the PRC on LAT effective from 27 January 1995 onwards, all income from the sale or transfer of state-owned leasehold interests on land, buildings and their attached facilities in Mainland China is subject to LAT at progressive rates ranging from 30% to 60% of the appreciation value, with an exemption provided for property sales of ordinary residential properties if their appreciation values do not exceed 20% of the sum of the total deductible items.

The Group has estimated, made and included in tax provision for LAT according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

Major components of the Group’s income tax expense are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Current tax:
Income tax charge 101,764 44,070
LAT 63,619 33,102
Deferred tax (note 31) 11,961 11,494
Total tax charge for the year 177,344 88,666
----- End of picture text -----

344 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

10. INCOME TAX (continued)

A reconciliation of the tax expense applicable to profit before tax using the statutory rate to the tax expense at the effective tax rate is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Profit before tax 413,445 203,659
Tax at the statutory tax rate 103,779 50,821
Provision for LAT 63,619 33,102
Tax effect of LAT provision (15,905) (8,275)
Effect of withholding tax at 10% on distributable
profits of the Group’s PRC subsidiaries 10,986 6,668
Expenses not deductible for tax 10,429 4,259
Income not subject to tax (1,359) (2,174)
Tax losses not recognised 5,795 4,265
Tax charge at the Group’s effective rate 177,344 88,666
----- End of picture text -----

Tax payable in the consolidated statement of financial position represents:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Tax payable
— PRC corporate income tax 97,650 34,121
—
— PRC land appreciation tax 33,638
131,288 34,121
----- End of picture text -----

11. DIVIDENDS

The directors resolved not to declare a final dividend for the year ended 31 December 2020 (2019: Nil).

Annual Report 2020 Chen Xing Development Holdings Limited

345

NOTES TO FINANCIAL STATEMENTS

31 December 2020

12. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic earnings per share amounts is based on the profit for the year attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 600,000,000 (2019: 584,384,000) in issue during the year, as adjusted to reflect the right issue during the year.

The calculation of basic earnings per share is based on:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Earnings
Profit attributable to ordinary equity holders of the parent,
used in the basic earnings per share calculation 206,738 106,028
----- End of picture text -----

==> picture [413 x 114] intentionally omitted <==

----- Start of picture text -----

Number of shares
2020 2019
’000 ’000
Shares
Weighted average number of ordinary shares in issue
during the year used in the basic earnings per share
calculation 600,000 584,384
----- End of picture text -----

The Group had no potentially dilutive ordinary shares in issue during the years ended 31 December 2020 and 2019.

346

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

13. PROPERTY, PLANT AND EQUIPMENT

==> picture [414 x 441] intentionally omitted <==

----- Start of picture text -----

Motor Office Leasehold
Buildings vehicles Machinery equipment improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2020
At 1 January 2020
Cost 75,713 34,408 1,363 19,538 1,377 132,399
Accumulated
depreciation (22,028) (19,708) (713) (15,463) (253) (58,165)
Net carrying amount 53,685 14,700 650 4,075 1,124 74,234
At 1 January 2020,
net of accumulated
depreciation 53,685 14,700 650 4,075 1,124 74,234
Additions 7,070 2,830 211 3,362 1,699 15,172
Disposals — (257) (11) — — (268)
Disposal of a subsidiary — — — (29) — (29)
Depreciation provided
during the year (4,374) (3,762) (164) (1,971) (787) (11,058)
At 31 December 2020,
net of accumulated
depreciation 56,381 13,511 686 5,437 2,036 78,051
At 31 December 2020:
Cost 82,783 35,677 1,366 22,856 3,076 145,758
Accumulated
depreciation (26,402) (22,166) (680) (17,419) (1040) (67,707)
Net carrying amount 56,381 13,511 686 5,437 2,036 78,051
----- End of picture text -----

Annual Report 2020 Chen Xing Development Holdings Limited

347

NOTES TO FINANCIAL STATEMENTS

31 December 2020

13. PROPERTY, PLANT AND EQUIPMENT (continued)

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----- Start of picture text -----

Motor Office Leasehold
Buildings vehicles Machinery equipment improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2019
At 31 December 2018
and 1 January 2019:
Cost 75,713 30,303 840 16,226 — 123,082
Accumulated
depreciation (17,696) (14,253) (756) (13,694) — (46,399)
Net carrying amount 58,017 16,050 84 2,532 — 76,683
At 1 January 2019,
net of accumulated
depreciation 58,017 16,050 84 2,532 — 76,683
Additions — 2,715 618 2,835 1,377 7,545
Disposals — (55) (1) — — (56)
Acquisition of
subsidiaries — 310 — 82 — 392
Depreciation provided
during the year (4,332) (4,320) (51) (1,374) (253) (10,330)
At 31 December 2019,
net of accumulated
depreciation 53,685 14,700 650 4,075 1,124 74,234
At 31 December 2019:
Cost 75,713 34,408 1,363 19,538 1,377 132,399
Accumulated
depreciation (22,028) (19,708) (713) (15,463) (253) (58,165)
Net carrying amount 53,685 14,700 650 4,075 1,124 74,234
----- End of picture text -----

At 31 December 2020, certain of the Group’s buildings with a net carrying amount of approximately RMB33,207,000 (2019: 36,418,000) were pledged to secure bank loans granted to the Group (note 30).

348 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

14. INVESTMENT PROPERTIES

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Carrying amount at 1 January 141,000 145,000
Net loss from a fair value adjustment (3,000) (4,000)
Carrying amount at 31 December 138,000 141,000
----- End of picture text -----

The Group’s investment properties consist of three commercial properties in China. The directors of the Company have determined that the investment properties consist of two classes of assets, i.e., retail and office, based on the nature, characteristics and risks of each property. The Group’s investment properties were revalued on 31 December 2020 based on valuations performed by DTZ Debenham Tie Leung Limited (“ DTZ ”), an independent professionally qualified valuer, at RMB138,000,000 (2019: RMB141,000,000).

The investment properties are leased to third parties under operating leases, further summary details of which are included in note 16 to the financial statements.

At 31 December 2020, the Group’s investment properties with a carrying value of RMB138,000,000 (2019: RMB141,000,000) were pledged to secure bank loans granted to the Group (note 30).

Annual Report 2020 Chen Xing Development Holdings Limited

349

NOTES TO FINANCIAL STATEMENTS

31 December 2020

14. INVESTMENT PROPERTIES (continued)

Fair value hierarchy

The following table illustrates the fair value measurement hierarchy of the Group’s investment properties:

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----- Start of picture text -----

Fair value measurement
as at 31 December 2020 using
Significant Significant
Quoted prices in observable unobservable
active markets inputs inputs
(Level 1) (Level 2) (Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value
measurement for:
— —
Retail properties 94,000 94,000
— —
Office properties 44,000 44,000
— —
138,000 138,000
Fair value measurement
as at 31 December 2019 using
Significant Significant
Quoted prices in observable unobservable
active markets inputs inputs
(Level 1) (Level 2) (Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value
measurement for:
— —
Retail properties 96,000 96,000
— —
Office properties 45,000 45,000
— —
141,000 141,000
----- End of picture text -----

During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 (2019: Nil).

350

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

14. INVESTMENT PROPERTIES (continued)

Fair value hierarchy (continued)

Reconciliation of fair value measurements categorised within Level 3 of the fair value hierarchy:

==> picture [414 x 179] intentionally omitted <==

----- Start of picture text -----

Retail Office
properties properties
RMB’000 RMB’000
Carrying amount at 1 January 2019 100,000 45,000
Net loss from a fair value adjustment recognised in other
—
expenses in the statement of profit or loss (4,000)
Carrying amount at 31 December 2019 and 1 January 2020 96,000 45,000
Net loss from a fair value adjustment recognised in other
expenses in the statement of profit or loss (2,000) (1,000)
Carrying amount at 31 December 2020 94,000 44,000
----- End of picture text -----

Below is a summary of the valuation techniques used and the key inputs to the valuation of investment properties:

==> picture [414 x 164] intentionally omitted <==

----- Start of picture text -----

Investment Valuation Significant Range of unobservable inputs
properties techniques unobservable inputs 2020 2019
Income Prevailing market RMB24 to RMB121 RMB25 to RMB117
Retail properties approach rents
Yield rate 7% 7%
Income Prevailing market RMB79 to RMB122 RMB79 to RMB122
Office properties approach rents
Yield rate 7% 7%
----- End of picture text -----

Prevailing market rents are estimated based on recent letting transactions within the subject properties and other comparable properties. A significant increase (decrease) in the estimated rental value in isolation would result in a significant increase (decrease) in the fair value of the investment properties. A significant increase (decrease) in the yield rate in isolation would result in a significant decrease (increase) in the fair value of the investment properties. Generally, a change in the assumption made for the estimated rental value is accompanied by an opposite change in the yield rate.

Annual Report 2020 Chen Xing Development Holdings Limited

351

NOTES TO FINANCIAL STATEMENTS

31 December 2020

15. PROPERTIES UNDER DEVELOPMENT

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Carrying amount at 1 January 8,997,082 5,311,072
Additions 1,379,338 4,182,110
Transfer to completed properties held for sale (note 22) (1,248,173) (496,100)
Carrying amount at 31 December 9,128,247 8,997,082
Less: Current portion (8,875,146) (8,395,674)
Non-current portion 253,101 601,408
----- End of picture text -----

Properties under development expected to be recovered:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Within one year 5,180,984 4,728,018
After one year 3,947,263 4,269,064
9,128,247 8,997,082
----- End of picture text -----

At 31 December 2020, certain of the Group’s properties under development with a carrying value of approximately RMB621,233,000 (2019: RMB525,945,000) were pledged to secure bank loans granted to the Group (note 30).

352

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

16. LEASES

The Group as a lessee

The Group has lease contracts for various items of properties, machinery and other equipment used in its operations. Lump sum payments were made upfront to acquire the leased land with lease periods of 40 years, and no ongoing payments will be made under the terms of these land leases. Leases of buildings generally have lease terms between 1.25 and 5 years. Machinery and other equipment generally have lease terms of 12 months or less and/or is individually of low value. Generally, the Group is restricted from assigning and subleasing the leased assets outside the Group.

(a) Right-of-use assets

The carrying amounts of the Group’s right-of-use assets and the movements during the year are as follows:

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----- Start of picture text -----

Prepaid
land lease
payments Buildings Total
RMB’000 RMB’000 RMB’000
—
As at 1 January 2019 1,374 1,374
Additions — 3,794 3,794
Depreciation charge (45) (2,194) (2,239)
As at 31 December 2019 and 1 January 2020 1,329 1,600 2,929
Depreciation charge (45) (1,149) (1,194)
As at 31 December 2020 1,284 451 1,735
----- End of picture text -----

Annual Report 2020 Chen Xing Development Holdings Limited

353

31 December 2020

NOTES TO FINANCIAL STATEMENTS

16. LEASES (continued)

The Group as a lessee (continued)

(b) Lease liabilities

The carrying amount of lease liabilities (included under interest-bearing bank and other borrowings) and the movements during the year are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
—
Carrying amount at 1 January 1,565
New leases — 3,794
Accretion of interest recognised during the year 40 187
Payments (1,125) (2,416)
Carrying amount at 31 December 480 1,565
Analysed into:
Current portion 480 1,036
Non-current portion — 529
----- End of picture text -----

The maturity analysis of lease liabilities is disclosed in note 42 to the financial statements.

(c) The amounts recognised in profit or loss in relation to leases are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Interest on lease liabilities 40 187
Depreciation of right-of-use assets 1,194 2,239
Expense relating to leases of low-value assets
(included in selling and distribution expenses) — 190
Expense relating to leases of low-value assets
(included in administrative expenses) 202 220
Total amount recognised in profit or loss 1,436 2,836
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(d) The total cash outflow for leases is disclosed in notes 37(b) to the financial statements.

354 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

16. LEASES (continued)

The Group as a lessor

The Group leases its investment properties (note 14), office buildings and completed properties held for sale under operating lease arrangements. The terms of the leases generally require the tenants to pay security deposits. Rental income recognised by the Group during the year was RMB14,293,000 (2019: RMB16,959,000), details of which are included in note 5 to the financial statements.

At 31 December 2020, the undiscounted lease payments receivable by the Group in future periods under non-cancellable operating leases with its tenants are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Within one year 7,455 9,777
After one year but within two years 5,213 6,335
After two years but within three years 4,038 5,819
After three years but within four years 3,332 3,637
After four years but within five years 918 3,091
After five years 66 899
21,022 29,558
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Annual Report 2020 Chen Xing Development Holdings Limited

355

NOTES TO FINANCIAL STATEMENTS

31 December 2020

17. INTANGIBLE ASSETS

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----- Start of picture text -----

Software
RMB’000
31 December 2020
Cost at 1 January 2020, net of accumulated amortisation 163
Additions 31
Amortisation provided during the year (83)
At 31 December 2020 111
At 31 December 2020:
Cost 1,993
Accumulated amortisation (1,882)
Net carrying amount 111
31 December 2019
Cost at 1 January 2019, net of accumulated amortisation 9
Acquisition of subsidiaries 52
Additions 158
Amortisation provided during the year (56)
At 31 December 2019 163
At 31 December 2019:
Cost 1,962
Accumulated amortisation (1,799)
Net carrying amount 163
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356

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

18. INVESTMENTS IN JOINT VENTURES

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Share of net assets 2,846 1,393
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The Group’s other receivable balances due from the joint ventures are disclosed in note 24 to the financial statements.

Particulars of the Group’s joint ventures are as follows:

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----- Start of picture text -----

Nominal Percentage
Place of value of of ownership
incorporation/ issued/ interest
registration registered attributable to Principal
Company and business share capital the Group activities
Shanxi Greentown Property PRC/ RMB 49 Property
Service Co., Ltd. Mainland China 6,000,000 management
(“ Shanxi Greentown
Property ”)
Shenzhen Runchen Xinghua PRC/ RMB 50.1 Investment
Industrial Development Mainland China 500,000,000 advisory
Partnership
(Limited Partnership)
(“ Runchen Xinghua ”)
----- End of picture text -----

The above investments are held by an indirectly wholly-owned subsidiary of the Company.

In the opinion of the directors, the joint ventures are not material to the Group. The joint ventures are accounted for using the equity method and there is no quoted market price available for its shares.

The following table illustrates the aggregate financial information of the Group’s joint ventures that are not individually material:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Share of the joint ventures’ profit for the year 1,453 1,198
Share of the joint ventures’ total comprehensive income 1,453 1,198
Aggregate carrying amount of the Group’s
investments in the joint ventures 2,846 1,393
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Annual Report 2020 Chen Xing Development Holdings Limited

357

NOTES TO FINANCIAL STATEMENTS

31 December 2020

19. INVESTMENT IN AN ASSOCIATE

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Share of net assets — 48,980
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Particulars of the Group’s associate are as follows:

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----- Start of picture text -----

Percentage of
Place of Nominal value ownership
incorporation/ of issued/ interest
registration registered attributable to Principal
Company and business share capital the Group activities
Xishuangbanna Yunchen Real PRC/ RMB 49 Development
Estate Co., Ltd. Mainland 100,000,000 and sale of
(“ Yunchen Real Estate ”) China properties
----- End of picture text -----

The above investment in an associate was disposed of by a subsidiary of the Company to a third party on 30 October 2020.

358

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

20. EQUITY INVESTMENTS DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Listed equity investment, at fair value
JINSHANG BANK Co., Ltd. 64,501 62,898
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The above equity investment was irrevocably designated at fair value through other comprehensive income as the Group considers this investment to be strategic in nature.

21. INVENTORIES

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Raw materials 31,897 16,542
Low value consumables 19 19
31,916 16,561
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22. COMPLETED PROPERTIES HELD FOR SALE

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Carrying amount at 1 January 411,983 841,439
Transfer from properties under development (note 15) 1,248,173 496,100
Transfer to cost of properties sold (723,492) (924,740)
Impairment during the year (5,440) (816)
Carrying amount at 31 December 931,224 411,983
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At 31 December 2020, certain of the Group’s completed properties held for sale with a carrying value of approximately RMB87,220,000 (2019: RMB60,521,000) were pledged to secure bank loans granted to the Group (note 30).

Annual Report 2020 Chen Xing Development Holdings Limited

359

NOTES TO FINANCIAL STATEMENTS

31 December 2020

23. TRADE RECEIVABLES

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Trade receivables 4,852 5,960
Impairment (533) (281)
4,319 5,679
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The Group’s trading terms with its customers are mainly on credit. The credit period is generally one month to one year. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by senior management. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Within 3 months 502 5,170
3 to 6 months 3,392 —
Over 6 months 425 509
4,319 5,679
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360

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

23. TRADE RECEIVABLES (continued)

The movements in the loss allowance for impairment of trade receivables are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
At beginning of year 281 —
Impairment losses (note 7) 252 281
At end of year 533 281
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An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about current conditions and forecasts of future economic conditions. The loss rate applied as at 31 December 2020 was assessed to be minimal.

Annual Report 2020 Chen Xing Development Holdings Limited

361

NOTES TO FINANCIAL STATEMENTS

31 December 2020

24. PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS

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2020 2019
Note RMB’000 RMB’000
Prepayments 58,643 13,072
Prepayments for land use rights 528,444 355,087
Deposits and other receivables 530,880 345,196
Due from a related party 26,793 6,993
Loans to an associate - 128,739
Due from joint ventures 246 516
Cost to obtain contracts (a) 73,499 71,205
Other tax recoverable 228,056 233,647
1,446,561 1,154,455
Impairment allowance (17,075) (12,146)
1,429,486 1,142,309
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Note:

(a) Cost to obtain contracts are initially recognised for revenue earned from the sale of completed properties. Included in cost to obtain contracts for the sale of completed properties are sales commission and stamp duty. When the revenue from the related property sale is recognised, the amount recognised as cost to obtain contracts is charged out to selling and distribution expenses and administrative expenses. The increase in cost to obtain contracts in 2020 was the result of the increase in the ongoing sale of properties at the end of the year. As at 31 December 2020 and 2019, the loss allowance was assessed to be minimal.

The expected timing of recovery or settlement for cost to obtain contracts as at 31 December is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Within one year 73,499 30,015
After one year - 41,190
Total cost to obtain contracts 73,499 71,205
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362

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

24. PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS (continued)

The movements in the loss allowance for impairment of other receivables are as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
At beginning of year 12,146 1,140
—
Acquisition of a subsidiary 9,976
Impairment losses (note 7) 4,929 1,030
At end of year 17,075 12,146
----- End of picture text -----

Deposits and other receivables mainly represent deposits with suppliers and governments. Expected credit losses are estimated by applying a loss rate approach with reference to the historical loss record of the Group. The loss rate is adjusted to reflect the current conditions and forecasts of future economic conditions, as appropriate. The loss rate applied as at 31 December 2020 and 2019 was assessed to be minimal.

The financial assets included in the above balances relate to receivables for which there was no recent history of default and past due amounts. As at 31 December 2020 and 2019, the loss allowance was assessed to be minimal.

25. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
—
Unlisted investments, at fair value 1,500
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The above unlisted investments were wealth management products issued by banks in Mainland China and bore expected yield rates of 1.1% to 3.8% (2019: 2.3% to 4.7%) per annum upon maturity in the current year. They were mandatorily classified as financial assets at fair value through profit or loss as their contractual cash flows are not solely payments of principal and interest.

Annual Report 2020 Chen Xing Development Holdings Limited

363

NOTES TO FINANCIAL STATEMENTS

31 December 2020

26. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Total cash and bank balances, including pledged deposits 555,786 1,175,505
Less: Pledged deposits (20,652) (68,257)
Restricted bank balance (1,033) —
Cash and cash equivalents 534,101 1,107,248
----- End of picture text -----

At 31 December 2020, the cash and bank balances of the Group denominated in RMB amounted to RMB385,188,000 (2019: RMB951,928,000). The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default.

Restricted cash represent bank balances of RMB1,033,000 which were frozen pursuant to the relevant civil rulings by the court.

27. TRADE AND BILLS PAYABLES

An ageing analysis of the trade and bills payables as at the end of the reporting period, based on the payment due date, is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Less than 1 year 469,822 421,071
1 to 2 years 213,607 433,577
2 to 3 years 385,995 25,151
3 to 4 years 12,858 83,689
4 to 5 years 74,321 19,489
Over 5 years 53,915 53,445
1,210,518 1,036,422
----- End of picture text -----

The trade and bills payables are unsecured, interest-free and are normally settled based on the progress of construction.

364 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

28. OTHER PAYABLES AND ACCRUALS

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----- Start of picture text -----

2020 2019
Notes RMB’000 RMB’000
Payroll and welfare payable 10,614 7,530
Payables to government authority 2,374 3,038
Deposits related to sales of properties 4,587 4,891
Deposits related to construction 2,893 1,055
Sales commission payable 5,561 7,657
Payables to third parties (a) 115,973 120,761
Due to related parties 935 1,684
Due to a director 87 93
Advances from lessees 4,799 6,263
Interest payable 6,716 6,291
Advances from government
— Phase I of Longtian Project (b) 1,667,450 1,649,254
— Beiliubao Project (c) 3,914 3,914
Taxes payable other than corporate income tax 15,986 18,808
1,841,889 1,831,239
----- End of picture text -----

Notes:

(a) Other payables are unsecured, non-interest-bearing and repayable on demand.

(b) Represented the payment from the management committee and Finance Commission of the Economic Technology Development District, Jinzhong as development costs for the construction of Phase I of Longtian Project, which would be paid to the suppliers.

(c) Represented the payment from the Finance Commission of the Economic Technology Development District, Jinzhong as development costs for the construction of Beiliubao Project, which would be paid to the suppliers.

Annual Report 2020 Chen Xing Development Holdings Limited

365

NOTES TO FINANCIAL STATEMENTS

31 December 2020

29. CONTRACT LIABILITIES

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Contract liabilities 5,125,592 5,335,734
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Details of contract liabilities are as follows:

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----- Start of picture text -----

31 December 31 December 1 January
2020 2019 2019
RMB’000 RMB’000 RMB’000
Sale of construction materials — — 10,000
Sale of properties 5,125,592 5,335,734 4,332,213
Total contract liabilities 5,125,592 5,335,734 4,342,213
----- End of picture text -----

Contract liabilities include the sales proceeds received from buyers in connection with the Group’s pre-sales of properties and short-term advances received from customers to deliver construction materials.

366 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

30. INTEREST-BEARING BANK AND OTHER BORROWINGS

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----- Start of picture text -----

31 December 2020 31 December 2019
Effective Effective
interest interest
rate (%) Maturity RMB’000 rate (%) Maturity RMB’000
Current
Lease liabilities (note 16(b)) 4.75 2021 480 4.75 2020 1,036
Current portion of long term
bank loans — secured 6.18–15.00 2021 2,033,642 5.23–6.80 2020 428,520
2,034,122 429,556
Non-current
Lease liabilities (note 16(b)) — — — 4.75 2021 529
Bank loans — secured 6.80–8.65 2022-2025 706,737 6.18–15.00 2022 2,385,949
706,737 2,386,478
2,740,859 2,816,034
----- End of picture text -----

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Analysed into:
Bank loans repayable:
Within one year or on demand 2,033,642 428,520
In the second year 409,583 1,897,949
In the third to fifth years, inclusive 297,154 488,000
2,740,379 2,814,469
Other borrowings repayable:
Within one year or on demand 480 1,036
In the second year — 529
480 1,565
2,740,859 2,816,034
----- End of picture text -----

Annual Report 2020 Chen Xing Development Holdings Limited

367

NOTES TO FINANCIAL STATEMENTS

31 December 2020

30. INTEREST-BEARING BANK AND OTHER BORROWINGS (continued)

Notes:

(i) The bank borrowings of approximately RMB181,000,000 (2019: RMB246,000,000) are secured by the pledge of certain of the Group’s completed properties held for sale of RMB69,112,000 (2019: RMB60,521,000) (note 22), the Group’s investment properties of RMB138,000,000 (2019: RMB141,000,000) (note 14), the Group’s buildings of RMB33,207,000 (2019: RMB36,418,000) (note 13) and are guaranteed by the Company.
(ii) The bank borrowings of approximately RMB129,369,000 (2019: RMB130,469,000) are guaranteed by a subsidiary of a non-controlling shareholder of a subsidiary of the Group.
(iii) The bank borrowings of approximately RMB100,000,000 (2019: RMB100,000,000) are guaranteed by three subsidiaries of the Group, a director of the Company and the Company’s controlling shareholder.
(iv) The bank borrowings of approximately RMB1,450,000,000 (2019: RMB1,450,000,000) are pledged by 100% equity interest of a subsidiary of the Group and are guaranteed by three subsidiaries of the Group, a director of the Company and the Company’s controlling shareholder.
(v) The bank borrowings of approximately RMB98,000,000 (2019: RMB98,000,000) are secured by the pledge of certain of the Group’s properties under development of RMB100,900,000 (2019: RMB100,900,000) (note 15) and are guaranteed by a subsidiary of the Group.
(vi) The bank borrowings of approximately RMB255,000,000 (2019: RMB295,000,000) are secured by the pledge of certain of the Group’s properties under development of RMB251,700,000 (2019: RMB251,700,000) (note 15) and 100% equity interest of a subsidiary of the Group and are guaranteed by a subsidiary of the Group.
(vii) The bank borrowings of approximately RMB196,460,000 (2019: RMB150,000,000) are secured by the pledge of certain of the Group’s properties under development of RMB63,700,000 (2019: RMB63,700,000) (note 15) and 100% equity interest of a subsidiary of the Group and are guaranteed by two subsidiaries of the Group.
(viii) The bank borrowings of approximately RMB20,550,000 (2019: Nil) are secured by the pledge of certain of the Group’s completed properties held for sale of RMB18,108,000 (2019: Nil) (note 22), and are guaranteed by a subsidiary of the Group, a director of the Company and the Company’s controlling shareholder.
(ix) The bank borrowings of approximately RMB180,000,000 (2019: Nil) are guaranteed by a subsidiary of the Group and a non-controlling shareholder of a subsidiary of the Group.
(x) The bank borrowings of approximately RMB130,000,000 (2019: Nil) are secured by the pledge of certain of the Group’s properties under development of RMB204,933,000 (2019: Nil) (note 15), and are guaranteed by a subsidiary of the Group and the Company’s controlling shareholder.
(xi) The bank borrowings of approximately nil (2019: RMB20,000,000) are secured by the pledge of certain of the Group’s properties under development of nil (2019: RMB109,645,000) (note 15) and are guaranteed by the Company, a director of the Company and the Company’s controlling shareholder.

368

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

31. DEFERRED TAX

The movements in deferred tax liabilities and assets during the year are as follows:

Deferred tax liabilities

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----- Start of picture text -----

Fair value
adjustment
arising from Gain on
Right-of-use investment Withholding property Cost to obtain
assets properties tax revaluation Accrued LAT contracts Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
—
At 1 January 2019 21,165 6,169 7,777 13,650 11,326 60,087
Deferred tax charged/(credited) to the
statement of profit or loss during
the year (note 10) 400 (1,000) 6,668 — 11,083 6,475 23,626
Gross deferred tax liabilities at
31 December 2019 and
1 January 2020 400 20,165 12,837 7,777 24,733 17,801 83,713
Deferred tax charged/(credited) to
the statement of profit or loss
during the year (note 10) (287) (750) 10,986 — (12,678) 573 (2,156)
Gross deferred tax liabilities at
31 December 2020 113 19,415 23,823 7,777 12,055 18,374 81,557
----- End of picture text -----

Annual Report 2020 Chen Xing Development Holdings Limited

369

NOTES TO FINANCIAL STATEMENTS

31 December 2020

31. DEFERRED TAX (continued)

The movements in deferred tax liabilities and assets during the year are as follows: (continued)

Deferred tax assets

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----- Start of picture text -----

Fair value
adjustments
of equity Unrealised
investments profit Impairment
at fair value attributable Impairment Decelerated of trade
through other Corporate to the of property depreciation receivables
Lease comprehensive income Tax Accrued intra-group held for for tax and other
liabilities income tax losses payroll transactions sale purposes receivables Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2019 — — 248,753 3,145 1,579 4,286 2,015 1,038 285 261,101
Deferred tax credited
to other comprehensive income
— — — — — — — —
during the year 23,185 23,185
Deferred tax credited/(charged)
to the statement of profit or loss
during the year (note 10) 391 — 7,751 (1,796) (343) 8,290 (1,880) (609) 328 12,132
Gross deferred tax assets at
31 December 2019 and
1 January 2020 391 23,185 256,504 1,349 1,236 12,576 135 429 613 296,418
Deferred tax charged
to other comprehensive
income during the year — (401) — — — — — — — (401)
Deferred tax credited/(charged)
to the statement of profit or
loss during the year (note 10) (271) — (30,284) 2,047 (127) 11,742 1,543 (62) 1,295 (14,117)
Gross deferred tax assets at
31 December 2020 120 22,784 226,220 3,396 1,109 24,318 1,678 367 1,908 281,900
----- End of picture text -----

370

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

31. DEFERRED TAX (continued)

For presentation purposes, certain deferred tax assets and liabilities have been offset in the statement of financial position. The following is an analysis of the deferred tax balances of the Group for financial reporting purposes:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Net deferred tax assets recognised in the consolidated
statement of financial position 224,166 225,551
Net deferred tax liabilities recognised in the consolidated
statement of financial position (23,823) (12,846)
----- End of picture text -----

Deferred tax assets have not been recognised in respect of the following item:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Tax losses 63,968 40,788
----- End of picture text -----

The above tax losses are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised in respect of the above items as it is not considered probable that taxable profits will be available against which the above items can be utilised.

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprise established in Mainland China. The requirement is effective from 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be applied if there is a tax treaty/arrangement between Mainland China and the jurisdiction of the foreign investors and the foreign investors are the beneficial owners of the dividends. The Group is therefore liable to withholding taxes on dividends distributed by those foreign invested subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008. For the Group, the applicable rate is 10%.

Deferred tax liabilities are recognised based on the estimated dividend to be distributed from the distributable earnings for the year ended 31 December 2020 from the subsidiaries established in Mainland China. In the opinion of the directors, it is not probable that these subsidiaries established in Mainland China will distribute the remaining earnings in the foreseeable future. The aggregate amount of temporary differences associated with investments in subsidiaries in Mainland China for which deferred tax liabilities have not been recognised was approximately RMB687,873,000 as at 31 December 2020 (2019: RMB578,013,000).

Annual Report 2020 Chen Xing Development Holdings Limited

371

NOTES TO FINANCIAL STATEMENTS

31 December 2020

31. DEFERRED TAX (continued)

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

32. SHARE CAPITAL

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----- Start of picture text -----

2020 2019
HK$’000 HK$’000
Authorised:
1,000,000,000 (2019: 1,000,000,000) ordinary shares of
HK$0.01 each 10,000 10,000
2020 2019
RMB’000 RMB’000
Issued and fully paid:
599,999,989 (2019: 599,999,989) ordinary shares of
HK$0.01 each 4,855 4,855
----- End of picture text -----

A summary of movements in the Company’s share capital and share premium is as follows:

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----- Start of picture text -----

Share
Number of Share premium
shares in issue capital account Total
RMB’000 RMB’000 RMB’000
At 31 December 2018
and 1 January 2019 500,000,000 4,003 219,418 223,421
Right issue 99,999,989 852 126,993 127,845
599,999,989 4,855 346,411 351,266
— —
Share issue expenses (2,270) (2,270)
At 31 December 2019 599,999,989 4,855 344,141 348,996
At 31 December 2019,
1 January 2020 and
31 December 2020 599,999,989 4,855 344,141 348,996
----- End of picture text -----

372

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

33. RESERVES

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity on pages 290 to 291 of the financial statements.

Statutory surplus reserve

In accordance with the Company Law of the PRC, certain subsidiaries of the Group which are registered in the PRC as domestic enterprises are required to allocate 10% of their profit after tax, as determined in accordance with the relevant PRC accounting standards, to their respective statutory surplus reserves until the reserves reach 50% of their respective registered capital. Subject to certain restrictions set out in the Company Law of the PRC, part of the statutory surplus reserves may be converted to increase share capital, provided that the remaining balance after the capitalisation is not less than 25% of the registered capital.

Capital reserve

Capital reserve of the Group represents the aggregate amount of the paid-up capital of those companies comprising the Group prior to the incorporation of the Company.

On 12 September 2013, Sichuan Changxing (Holdings) Limited (“ Sichuan Changxing ”) injected additional capital of RMB139,200,000 into Chen Xing Sichuan. Upon completion of the capital contribution, the shareholding of the Group in Chen Xing Sichuan decreased from 100% to 83.89%. The difference between the contributed amount of RMB139,200,000 net of tax of RMB1,375,000 and the share of net assets of Chen Xing Sichuan by Sichuan Changxing was recorded as capital reserve.

On 24 December 2014 and as part of the reorganisation, the Group acquired Chen Xing from the shareholders of Chen Xing at a cash consideration of RMB203,809,000, which was fully paid in January 2015.

34. PLEDGE OF ASSETS

Details of the Group’s assets pledged for the Group’s bank loans is included in note 30 to the financial statements.

Annual Report 2020 Chen Xing Development Holdings Limited

373

NOTES TO FINANCIAL STATEMENTS

31 December 2020

35. DISPOSAL OF A SUBSIDIARY

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----- Start of picture text -----

2020
Note RMB’000
Net assets disposed of:
Property, plant and equipment 29
Cash and bank balances 1
Prepayments, other receivables and other assets 1,356
Other payables and accruals (2,775)
Non-controlling interests 972
(417)
Gain on disposal of a subsidiary 5 2,917
2,500
Satisfied by:
Cash 2,500
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An analysis of the net inflow of cash and cash equivalents in respect of the disposal of a subsidiary is as follows:

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----- Start of picture text -----

2020
RMB’000
Cash consideration 2,500
—
Cash received from disposal of a subsidiary
Cash and bank balances disposed of (1)
Net outflow of cash and cash equivalents
in respect of the disposal of a subsidiary (1)
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374 Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

36. COMMITMENTS

(a) The Group had the following capital commitments at the end of the reporting period:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Contracted, but not provided for:
Property development activities 2,987,027 2,787,064
Capital contribution payable to joint ventures 252,950 252,950
3,239,977 3,040,014
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37. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

(a) Changes in liabilities arising from financing activities

2020

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----- Start of picture text -----

Interest-
bearing bank
Lease and other
liabilities borrowings
RMB’000 RMB’000
At 1 January 2020 1,565 2,814,469
Changes from financing cash flows (1,085) (74,090)
Interest expense 40 —
Interest paid classified as operating cash flows (40) —
At 31 December 2020 480 2,740,379
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Annual Report 2020 Chen Xing Development Holdings Limited

375

NOTES TO FINANCIAL STATEMENTS

31 December 2020

37. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

(a) Changes in liabilities arising from financing activities (continued)

2019

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----- Start of picture text -----

Interest-
bearing bank
Lease and other
liabilities borrowings
RMB’000 RMB’000
—
At 1 January 2019 858,569
Changes from financing cash flows (2,229) 1,955,900
New leases 3,794 —
Interest expense 187 —
Interest paid classified as operating cash flows (187) —
At 31 December 2019 1,565 2,814,469
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(b) Total cash outflow for leases

The total cash outflow for leases included in the statement of cash flows is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Within operating activities 242 597
Within financing activities 1,085 2,229
1,327 2,826
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376

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

38. CONTINGENT LIABILITIES

At the end of the reporting period, contingent liabilities not provided for in the financial statements were as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Guarantees given to banks in respect of mortgage facilities
granted to the purchasers of the Group’s properties 2,477,533 1,796,911
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The Group provided guarantees in respect of mortgage facilities granted by certain banks to the purchasers of the Group’s completed properties held for sale. Pursuant to the terms of the guarantee arrangements, in case of default on mortgage payments by the purchasers, the Group is responsible for repaying the outstanding mortgage loans together with any accrued interest and penalty owed by the defaulted purchasers to those banks. The Group is then entitled to take over the legal titles of the related properties. The Group’s guarantee period commences from the date of grant of the relevant mortgage loan and ends at the execution of individual purchaser’s collateral agreement.

The Group did not incur any material losses during the reporting period in respect of the guarantees provided for mortgage facilities granted to the purchasers of the Group’s completed properties held for sale. The directors considered that in case of default on payments, the net realisable value of the related properties would be sufficient to repay the outstanding mortgage loans together with any accrued interest and penalty, and therefore no provision has been made in connection with the guarantees.

Annual Report 2020 Chen Xing Development Holdings Limited

377

NOTES TO FINANCIAL STATEMENTS

31 December 2020

39. RELATED PARTY TRANSACTIONS

Details of the Group’s principal related parties are as follows:

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----- Start of picture text -----

Name Relationship
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Mr. Bai Xuankui	Director, the ultimate controlling shareholder
Mr. Bai Guohua	Director, the ultimate controlling shareholder
Shanxi Wanjia Property Service	Company controlled by the daughter of
Co., Ltd. (“Shanxi Wanjia”)	Mr. Bai Xuankui
Shanxi Wanzhong Heating	Company controlled by the daughter of
Co., Ltd. (“Shanxi Wanzhong”)	Mr. Bai Xuankui
Xi’an Agile Consulting	Shareholder of a subsidiary
Co., Ltd. (“Xi’an Agile”)
Shanxi Greentown Property	A joint venture
Yunchen Real Estate	An associate (before 30 October 2020)
Ms. Bai Lihua	The daughter of Mr. Bai Xuankui

378

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

39. RELATED PARTY TRANSACTIONS (continued)

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group had the following transactions with related parties during the year:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Loans to:
Yunchen Real Estate — 116,294
Interest income from:
Yunchen Real Estate 8,716 11,740
Operation support fund to:
Xi’an Agile 19,800 6,993
Property management service from:
Shanxi Greentown Property 4,935 4,984
Shanxi Wanzhong 6,123 1,319
Shanxi Wanjia 771 340
11,829 6,643
Royalty fee to:
Xi’an Agile 197 4,050
Leasing from:
Ms. Bai Lihua 474 480
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(b) Other transactions with related parties:

Mr. Bai Xuankui has guaranteed certain of the Group’s bank loans up to RMB1,700,550,000 (2019: RMB1,570,000,000) as at the end of the reporting period (note 30).

Annual Report 2020 Chen Xing Development Holdings Limited

379

NOTES TO FINANCIAL STATEMENTS 31 December 2020

39. RELATED PARTY TRANSACTIONS (continued)

Details of the Group’s loans to and outstanding balances with its associate as at the end of the reporting period are included in notes 19 and 24 to the financial statements.

Details of the Group’s outstanding balances with its joint ventures, related parties and a director as at the end of reporting period are disclosed in notes 24 and 28 to the financial statements. The balances are unsecured, interest-free and have no fixed terms of repayment.

(d) Compensation of key management personnel of the Group:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Short term employee benefits 3,079 2,418
Pension scheme contributions 188 207
Total compensation paid to key
management personnel 3,267 2,625
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Further details of directors’ and chief executive’s emoluments are included in note 8 to the financial statements.

380

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

40. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

2020

Financial assets

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Financial
assets at
fair value
through other
comprehensive
income
Financial
assets at
Equity amortised
investments cost Total
RMB’000 RMB’000 RMB’000
Financial assets included in
prepayments, other receivables
and other assets — 540,844 540,844
Equity investments
at fair value through
—
other comprehensive income 64,501 64,501
Trade receivables — 4,319 4,319
—
Pledged deposits 20,652 20,652
Restricted cash — 1,033 1,033
—
Cash and cash equivalents 534,101 534,101
64,501 1,100,949 1,165,450
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Annual Report 2020 Chen Xing Development Holdings Limited

381

31 December 2020

NOTES TO FINANCIAL STATEMENTS

40. FINANCIAL INSTRUMENTS BY CATEGORY (continued)

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (continued)

2020

Financial liabilities

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----- Start of picture text -----

Financial
liabilities at
amortised cost
RMB’000
Trade and bill payables 1,210,518
Financial liabilities included in other payables and accruals 134,539
Interest-bearing bank and other borrowings 2,740,859
4,085,916
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382

Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

40. FINANCIAL INSTRUMENTS BY CATEGORY (continued)

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (continued)

2019

Financial assets

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----- Start of picture text -----

Financial
assets at
fair value Financial
through other assets at fair
comprehensive value through
income profit or loss
Financial
assets at Mandatorily
Equity amortised designated
investments cost as such Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets included in
prepayments, other receivables
and other assets — 469,298 — 469,298
Financial assets
at fair value
— —
through profit or loss 1,500 1,500
Equity investments
at fair value through
— —
other comprehensive income 62,898 62,898
— —
Pledged deposits 68,257 68,257
Trade receivables — 5,679 — 5,679
— —
Cash and cash equivalents 1,107,248 1,107,248
62,898 1,650,482 1,500 1,714,880
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Annual Report 2020 Chen Xing Development Holdings Limited

383

31 December 2020

NOTES TO FINANCIAL STATEMENTS

40. FINANCIAL INSTRUMENTS BY CATEGORY (continued)

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (continued)

2019

Financial liabilities

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----- Start of picture text -----

Financial
liabilities at
amortised cost
RMB’000
Trade payables 1,036,422
Financial liabilities included in other payables and accruals 140,579
Interest-bearing bank and other borrowings 2,816,034
3,993,035
----- End of picture text -----

384

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

41. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Management has assessed that the fair values of cash and cash equivalents, pledged deposits, restricted bank balances, trade receivables, financial assets included in prepayments, other receivables and other assets, trade payables, financial liabilities included in other payables and accruals and the current portion of interest-bearing bank and other borrowings, approximate to their carrying amounts largely due to the short term maturities of these instruments.

The Group’s corporate finance team headed by the finance manager is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The corporate finance team reports directly to the board of directors. At each reporting date, the corporate finance team analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the chief financial officer. The valuation process and results are discussed with the board of directors twice a year for interim and annual financial reporting.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a currant transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

The fair values of the financial assets at fair value through profit or loss, which represent wealth management products issued by banks in Mainland China, have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The Group’s own non-performance risk for financial assets at fair value through profit or loss as at the end of the reporting period was assessed to be insignificant.

The fair values of listed equity investments are based on quoted market prices. The directors believe that the estimated fair values resulting from the valuation technique, which are recorded in the consolidated statement of financial position, and the related changes in fair values, which are recorded in other comprehensive income, are reasonable, and that they were the most appropriate values at the end of the reporting period.

Management has assessed that the fair values of the non-current portion of interest-bearing bank and other borrowings approximate to their carrying amounts largely due to the fact that such borrowings were made between the Group and an independent third party financial institution based on prevailing market interest rates.

Annual Report 2020 Chen Xing Development Holdings Limited

385

NOTES TO FINANCIAL STATEMENTS

31 December 2020

41. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Assets measured at fair value:

As at 31 December 2020

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----- Start of picture text -----

Fair value measurement using
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs
(Level 1) (Level 2) (Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Equity investments designated at fair value
— —
through other comprehensive income 64,501 64,501
----- End of picture text -----

As at 31 December 2019

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386 Chen Xing Development Holdings Limited Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

41. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

Fair value hierarchy (continued)

The Group did not have any financial liabilities measured at fair value as at 31 December 2020 and 2019.

During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and financial liabilities (2019: Nil).

42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments mainly include cash and bank balances, pledged deposits, trade receivables and trade payables, which arise directly from its operations. The Group has other financial assets and liabilities such as interest-bearing bank and other borrowings, other receivables and other payables. The main purpose of these financial instruments is to raise finance for the Group’s operations.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. Generally, the Group introduces conservative strategies on its risk management. To keep the Group’s exposure to these risks to a minimum, the Group has not used any derivatives and other instruments for hedging purposes. The Group does not hold or issue derivative financial instruments for trading purposes. The chief financial officer reviews and agrees policies for managing each of these risks and they are summarised below:

Interest rate risk

The Group’s exposure to risk for changes in market interest rates relates primarily to the Group’s interest-bearing bank and other borrowings set out in note 30. The Group does not use derivative financial instruments to hedge interest rate risk. The Group manages its interest cost using variable rate bank borrowings.

The following table demonstrates the sensitivity to a reasonably possible change in the RMB interest rate, with all other variables held constant, of the Group’s profit before tax (through the impact on floating rate borrowings).

Annual Report 2020 Chen Xing Development Holdings Limited

387

NOTES TO FINANCIAL STATEMENTS

31 December 2020

42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Interest rate risk (continued)

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----- Start of picture text -----

Increase/
Increase/ (decrease)
(decrease) in profit
in basis before tax
points RMB’000
2020
RMB 0.5% (18,259)
RMB (0.5%) 18,259
2019
RMB 0.5% (11,170)
RMB (0.5%) 11,170
----- End of picture text -----

Foreign currency risk

Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange rates. Fluctuations in exchange rates between the RMB and other currencies in which the Group conducts business may affect the Group’s financial condition and results of operations. The Group seeks to limit its exposure to foreign currency risk by minimising its net foreign currency position.

The following table demonstrates the sensitivity at the end of the reporting period to a reasonably possible change in the Hong Kong dollar exchange rate, with all other variables held constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities).

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----- Start of picture text -----

Increase/
Increase/ (decrease)
(decrease) in profit
in HK$ before tax
rate % RMB’000
2020
If the RMB weakens against the HK$ 5 7,202
If the RMB strengthens against the HK$ (5) (7,202)
2019
If the RMB weakens against the HK$ 5 7,765
If the RMB strengthens against the HK$ (5) (7,765)
----- End of picture text -----

388

Chen Xing Development Holdings Limited

Annual Report 2020

31 December 2020

NOTES TO FINANCIAL STATEMENTS

42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Credit risk

Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its contractual obligations.

The Group has no concentrations of credit risk in view of its large number of customers. The Group did not record any significant bad debt losses during the reporting period.

The credit risk of the Group’s other financial assets, which mainly comprise pledged deposits and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of interest-bearing bank, lease liabilities and other borrowings. Cash flows are closely monitored on an ongoing basis.

Annual Report 2020 Chen Xing Development Holdings Limited

389

NOTES TO FINANCIAL STATEMENTS

31 December 2020

42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Liquidity risk (continued)

The maturity profile of the Group’s financial liabilities as at the end of the reporting period, based on contractual undiscounted payments, is as follows:

31 December 2020

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----- Start of picture text -----

On Less than 3 to 12 1 to 5
demand 3 months months years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Interest-bearing bank
and other borrowings
(excluding lease liabilities) — 238,736 1,940,276 775,178 2,954,190
— — —
Trade and bills payables 1,210,518 1,210,518
Lease liabilities — 480 — — 480
Financial liabilities included
in other payables and accruals 134,539 — — — 134,539
1,345,057 239,216 1,940,276 775,178 4,299,727
Financial guarantees issued:
Maximum amount guaranteed
(note 38) 2,477,533 — — — 2,477,533
----- End of picture text -----

390

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Liquidity risk (continued)

31 December 2019

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----- Start of picture text -----

On Less than 3 to 12 1 to 5
demand 3 months months years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Interest-bearing bank
and other borrowings
—
(excluding lease liabilities) 95,150 556,430 2,529,025 3,180,605
— — —
Trade payables 1,036,422 1,036,422
Lease liabilities — 629 447 530 1,606
Financial liabilities included
— — —
in other payables and accruals 140,579 140,579
1,177,001 95,779 556,877 2,529,555 4,359,212
Financial guarantees issued:
Maximum amount guaranteed
(note 38) 1,796,911 — — — 1,796,911
----- End of picture text -----

The amounts included above for financial guarantee contracts are the maximum amounts the Group could be required to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Group considers that it is more likely than not that no amount will be payable under the arrangement.

Annual Report 2020 Chen Xing Development Holdings Limited

391

NOTES TO FINANCIAL STATEMENTS

31 December 2020

42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to maintain a strong credit rating and healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure, which includes total equity, and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2020 and 31 December 2019.

The Group monitors capital using a gearing ratio, which is total debt divided by total equity. Total debt includes interest-bearing bank and other borrowings. The gearing ratios as at the end of the reporting periods were as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
Interest-bearing bank and other borrowings 2,740,859 2,816,034
Total debt 2,740,859 2,816,034
Total equity 1,609,601 1,374,585
Gearing ratio 170.28% 204.86%
----- End of picture text -----

43. EVENTS AFTER THE REPORTING PERIOD

As at the date of approval of the financial statements, the Group has no events after the reporting period that needs to be disclosed.

392

Chen Xing Development Holdings Limited Annual Report 2020

NOTES TO FINANCIAL STATEMENTS

31 December 2020

44. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

Information about the statement of financial position of the Company at the end of the reporting period is as follows:

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----- Start of picture text -----

2020 2019
RMB’000 RMB’000
NON-CURRENT ASSET
Investment in a subsidiary 842 896
CURRENT ASSETS
Due from a subsidiary 330,818 337,390
Cash and cash equivalents 33,384 37,546
Total current assets 364,202 374,936
CURRENT LIABILITIES
Due to a director 3 3
Due to subsidiaries 14,686 14,849
Total current liabilities 14,689 14,852
NET CURRENT ASSETS 349,513 360,084
TOTAL ASSETS LESS CURRENT LIABILITIES 350,355 360,980
NET ASSETS 350,355 360,980
EQUITY
Share capital 4,855 4,855
Reserves (note) 345,500 356,125
TOTAL EQUITY 350,355 360,980
----- End of picture text -----

Annual Report 2020 Chen Xing Development Holdings Limited

393

NOTES TO FINANCIAL STATEMENTS

31 December 2020

44. STATEMENT OF FINANCIAL POSITION OF THE COMPANY (continued)

Note:

A summary of the Company’s reserves is as follows:

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----- Start of picture text -----

Share Exchange
premium fluctuation Accumulated
account reserve losses Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2019 219,418 11,479 (2,871) 228,026
Total comprehensive
loss for the year — — (3,305) (3,305)
Issue of shares 126,993 — — 126,993
Share issue expenses (2,270) — — (2,270)
Exchange differences on
translation of foreign operations — 6,681 — 6,681
At 31 December 2019 and 1 January 2020 344,141 18,160 (6,176) 356,125
Total comprehensive
loss for the year — — (2,052) (2,052)
Exchange differences on
translation of foreign operations — (8,573) — (8,573)
At 31 December 2020 344,141 9,587 (8,228) 345,500
----- End of picture text -----

45. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 25 March 2021.

394

Chen Xing Development Holdings Limited Annual Report 2020

FIVE YEAR FINANCIAL SUMMARY

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----- Start of picture text -----

Year ended 31 December
2020 2019 2018 2017 2016
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
REVENUE 1,207,502 1,307,084 1,064,690 1,076,685 1,081,989
Cost of sales (743,629) (955,554) (697,999) (700,354) (745,308)
Gross profit 463,873 351,530 366,691 376,331 336,681
Other income and gains 93,015 39,845 35,110 25,673 10,248
Selling and distribution expenses (50,932) (77,560) (55,063) (46,611) (58,879)
Administrative expenses (67,865) (82,219) (73,395) (45,190) (38,104)
Other expenses (22,165) (6,957) (26,633) (7,356) (9,823)
Finance costs (3,806) (22,168) (19,679) (6,806) (3,763)
Share of profits and losses of:
Joint ventures 1,453 1,198 (295)
Associate (128) (10) (10)
PROFIT BEFORE TAX 413,445 203,659 226,726 296,041 236,360
Income tax expense (177,344) (88,666) (95,540) (116,473) (89,398)
PROFIT FOR THE YEAR 236,101 114,993 131,186 179,568 146,962
Attributable to:
Owners of the parent 206,738 106,028 124,889 170,519 151,832
Non-controlling interests 29,363 8,965 6,297 9,049 (4,870)
236,101 114,993 131,186 179,568 146,962
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Annual Report 2020 Chen Xing Development Holdings Limited

395

FIVE YEAR FINANCIAL SUMMARY

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----- Start of picture text -----

As at 31 December
2020 2019 2018 2017 2016
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
TOTAL ASSETS 12,683,570 12,440,981 8,998,712 6,974,329 6,359,523
TOTAL LIABILITIES (11,073,969) (11,066,396) (7,800,885) (5,866,625) (5,297,488)
NON-CONTROLLING INTERESTS (158,758) (128,423) (118,858) (88,583) (79,534)
1,450,843 1,246,162 1,078,969 1,019,121 982,051
----- End of picture text -----

396

Chen Xing Development Holdings Limited Annual Report 2020

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AI assistant

Chen Xing Development Holdings Limited — Annual Report 2020

50498_rns_2021-04-27_6ae462f5-efa3-4bf5-ac8b-2561b5b1f533.pdf

CORPORATE INFORMATION

DIRECTORS

REMUNERATION COMMITTEE

Executive Directors

NOMINATION COMMITTEE

Independent Non-executive Directors

AUDITOR

COMPANY SECRETARY

PRINCIPAL BANKERS

AUTHORIZED REPRESENTATIVES

AUDIT COMMITTEE

CORPORATE INFORMATION

LEGAL ADVISORS

REGISTERED OFFICE

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN THE PRC

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

SHARE REGISTRAR AND TRANSFER OFFICE IN HONG KONG

PLACE OF LISTING

STOCK CODE

COMPANY WEBSITE

FINANCIAL HIGHLIGHTS

CHAIRMAN’S STATEMENT

Dear Shareholders,

Review of and Annual Results for 2020

CHAIRMAN’S STATEMENT

Final Dividend

Prospect for 2021

CHAIRMAN’S STATEMENT

ACKNOWLEDGMENT

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

Contracted Sales

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

Property Projects

Property Portfolio Summary

MANAGEMENT DISCUSSION AND ANALYSIS

Completed Projects

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

Properties under Development and Properties Held for Future Development

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

Revenue

Sales and Services Cost

Gross Profit

Other Income and Gains

MANAGEMENT DISCUSSION AND ANALYSIS

Net Profit Attributable to Owners of the Company

Change in Fair Value of Investment Properties

Selling and Distribution Expenses

Administrative Expenses

Finance Costs

Income Tax Expenses

MANAGEMENT DISCUSSION AND ANALYSIS

Total Profit and Comprehensive Income for the Year

Cash Position

Net Operating Cash Flow

Borrowings

Pledged Assets

Financial Guarantees and Contingent Liabilities

MANAGEMENT DISCUSSION AND ANALYSIS

Gearing Ratio

Foreign Currency Risk

Material Acquisitions and Disposals and Material Investments

MANAGEMENT DISCUSSION AND ANALYSIS

Other Significant Events during the Reporting Period

Significant Investments held

Events after the Reporting Period

Future Plans for Material Investments or Capital Assets

Employees and Remuneration Policies

ANNUAL GENERAL MEETING

Chen Xing Development Holdings Limited Annual Report 2020