The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Application Proof.

Application Proof of

Evergrande Property Services Group Limited 恒大物業集團有限公司

(the “ Company ”)

(A limited liability company incorporated in the Cayman Islands)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) and the Securities and Futures Commission (the “ Commission ”) solely for the purpose of providing information to the public in Hong Kong.

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, its joint sponsors, advisors or members of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;
(b) the publication of this document or supplemental, revised or replacement pages on the Stock Exchange’s website does not give rise to any obligation of the Company, its joint sponsors, advisors or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering;
(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;
(d) the Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;
(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;
(g) neither the Company nor any of its affiliates, its joint sponsors, advisors or members of its underwriting syndicate is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document;
(h) no application for the securities mentioned in this document should be made by any person nor would such application be accepted;
(i) the Company has not and will not register the securities referred to in this document under the United States Securities Act of 1933, as amended, or any state securities laws of the United States;
(j) as there may be legal restrictions on the distribution of this document or dissemination of any information contained in this document, you agree to inform yourself about and observe any such restrictions applicable to you; and
(k) the application to which this document relates has not been approved for listing and the Stock Exchange and the Commission may accept, return or reject the application for the subject public offering and/or listing.

If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company’s prospectus registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period.

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

IMPORTANT

If you are in any doubt about any of the contents of this Document, you should obtain independent professional advice.

Evergrande Property Services Group Limited 恒大物業集團有限公司

(Incorporated in the Cayman Islands with limited liability)

[ REDACTED ]

Number of [ REDACTED ] : [ REDACTED ] Shares comprising [ REDACTED ] and [ REDACTED ] (subject to the [ REDACTED ] ) Number of [ REDACTED ] : [ REDACTED ] (subject to reallocation) Number of [ REDACTED ] : [ REDACTED ] comprising [ REDACTED ] and [ REDACTED ] (including [ REDACTED ] under the [ REDACTED ] ) (subject to reallocation and the [ REDACTED ] ) Maximum [ REDACTED ] : HK$ [ REDACTED ] per [ REDACTED ] , plus brokerage of 1%, Stock Exchange trading fee of 0.005% and SFC transaction levy of 0.0027%, payable in full on application subject to refund on final pricing Nominal Value : [US$0.0001] per Share Stock Code : [ REDACTED ]

Joint Sponsors and [ REDACTED ]

==> picture [96 x 54] intentionally omitted <==

==> picture [66 x 57] intentionally omitted <==

[ REDACTED ]

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Document, make no representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Document.

A copy of this Document, having attached thereto the documents specified in “Appendix V—Documents Delivered to the Registrar of Companies and Available for Inspection—Documents Delivered to the Registrar of Companies” to this Document, has been registered by the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance of Hong Kong (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility for the contents of this Document or any other document referred to above.

The [ REDACTED ] is expected to be fixed by agreement between the [ REDACTED ] (on behalf of the [ REDACTED ]) and us (for ourselves and on behalf of the [ REDACTED ]) on the [ REDACTED ]. The [ REDACTED ] is expected to be on or about [ REDACTED ] and, in any event, not later than [ REDACTED ]. The [ REDACTED ] will be not more than HK$[ REDACTED ] and is currently expected to be not less than HK$[ REDACTED ]. Applicants for [ REDACTED ] are required to pay, on application, the maximum [ REDACTED ] of HK$[ REDACTED ] for each [ REDACTED ] together with brokerage of 1%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%, subject to refund if the [ REDACTED ] should be lower than HK$[ REDACTED ]. If, for any reason, the [ REDACTED ] (on behalf of the [ REDACTED ]) and us (for ourselves and on behalf of the [ REDACTED ]) are unable to reach an agreement on the [ REDACTED ] on [ REDACTED ], the [ REDACTED ] will not proceed and will lapse.

The [ REDACTED ] (on behalf of the [ REDACTED ], and with our consent) may reduce the number of [ REDACTED ] and/or the indicative [ REDACTED ] range that stated in this Document at any time prior to the morning of the last day for lodging applications under the [ REDACTED ]. In such a case, a notice of the reduction in the number of [ REDACTED ] and/or the indicative [ REDACTED ] range will be published in the [●] (in English) and [●] (in Chinese) as well as our website [at www.evergrandeservice.com and the Stock Exchange’s website at www.hkexnews.hk] not later than the morning of the last day for lodging applications under the [ REDACTED ]. Further details are set forth in “Structure and Conditions of the [ REDACTED ]” and “How to Apply for [ REDACTED ] and [ REDACTED ]” in this Document. If applications for [ REDACTED ] have been submitted prior to the day which is the last day for lodging applications under the [ REDACTED ], then such applications can be subsequently withdrawn if the number of [ REDACTED ] and/or the indicative [ REDACTED ] range is so reduced.

The obligations of the [ REDACTED ] under the [ REDACTED ] to subscribe for, and to procure applicants for the subscription for, the [ REDACTED ], are subject to termination by the [ REDACTED ] (on behalf of the [ REDACTED ]) if certain grounds arise prior to 8:00 a.m. on the day that trading in the Shares commences on the Stock Exchange. Such grounds are set out in “[ REDACTED ]— [ REDACTED ]” in this Document. It is important that you refer to that section for further details. Prior to making an investment decision, prospective investors should consider carefully all the information set forth in this Document, including but not limited to the risk factors set forth in “Risk Factors” in this Document.

The [ REDACTED ] have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offered, sold, pledged or transferred within the United States, except that the [ REDACTED ] may be offered, sold or delivered (i) within the United States in reliance on an exemption from registration under the U.S. Securities Act provided by, and in accordance with the restrictions of, Rule 144A under the U.S. Securities Act or another exemption from registration under the U.S. Securities Act; and (ii) in offshore transactions outside the United States in reliance on Regulation S under the U.S. Securities Act.

[ REDACTED ]

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

EXPECTED TIMETABLE[(1)]

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

EXPECTED TIMETABLE[(1)]

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

EXPECTED TIMETABLE[(1)]

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

EXPECTED TIMETABLE[(1)]

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

IMPORTANT NOTICE TO INVESTORS

This Document is issued by Evergrande Property Services Group Limited solely in connection with the [ REDACTED ] and does not constitute an offer to sell or a solicitation of an offer to buy any security other than the [ REDACTED ] and the [ REDACTED ] offered by this Document pursuant to the [ REDACTED ] and the [ REDACTED ] . This Document may not be used for the purpose of, and does not constitute, an offer or a solicitation of an offer to subscribe for or buy, any security in any other jurisdiction or in any other circumstances. No action has been taken to permit a [ REDACTED ] of the [ REDACTED ] or the distribution of this Document in any jurisdiction other than Hong Kong (save for the [ REDACTED ] ). The distribution of this Document and the [ REDACTED ] of the [ REDACTED ] in other jurisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdictions pursuant to registration with or authorization by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this Document and the [ REDACTED ] to make your investment decision. We have not authorized anyone to provide you with information that is different from what is contained in this Document. Any information or representation not made in this Document must not be relied on by you as having been authorized by us, the [ REDACTED ] , the Joint Sponsors, the [ REDACTED ] and the [ REDACTED ] , any of the [ REDACTED ] , any of our or their respective directors, officers or representatives, or any other person or party involved in the [ REDACTED ] .

	Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36
INDUSTRY OVERVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	72
INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] . . . . . . .	82
DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] . . . . . . . . . . . .	86

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CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	90
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES . . . .	93
REGULATORY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	102
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE . . . . . . . . . .	121
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	141
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS . . . . . . . . . . . . . . .	209
CONNECTED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	223
DIRECTORS AND SENIOR MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .	234
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	249
SUBSTANTIAL SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	251
FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	253
FUTURE PLANS AND USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	314
[REDACTED]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	321
STRUCTURE AND CONDITIONS OF THE [REDACTED] . . . . . . . . . . . . . . . . .	328
HOW TO APPLY FOR [REDACTED] AND [REDACTED]. . . . . . . . . . . . . . . . . .	345
APPENDIX I ACCOUNTANT’S REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION. .	II-1
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE
COMPANY AND CAYMAN ISLANDS COMPANY
LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV STATUTORY AND GENERAL INFORMATION . . . . . . . . . .	IV-1
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND AVAILABLE FOR INSPECTION. . . . .	V-1

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SUMMARY

This summary aims to give you an overview of the information contained in this Document. As this is a summary, it does not contain all the information that may be important to you. You should read this Document in its entirety before you decide to invest in the [ REDACTED ] .

There are risks associated with any investment. Some of the particular risks in investing in the [ REDACTED ] are set out in “Risk Factors” in this Document. You should read that section carefully before you decide to invest in the [ REDACTED ] .

OVERVIEW

We are one of the largest and fastest-growing comprehensive property management service providers in China. Among the Top 100 Property Management Companies in China, we ranked second in number of cities covered by our projects; third in each of total revenue, total gross profit and total net profit; third in contracted GFA and fourth in GFA under management, as of or for the year ended December 31, 2019, according to CIA. Our net profit increased at a CAGR of 195.5% from 2017 to 2019, which was the highest among the Top 20 Property Management Companies in China, according to CIA.

Our focus on people’s wellbeing and commitment to customer satisfaction have shaped our brand image for high-caliber services. We foster a safe, convenient, healthy and caring community through our butlers who are on call round-the-clock. Our customer-centric culture has guided us to forge ahead and explore new ways to better serve our customers. For example, we have implemented a smart information platform that utilizes information and intelligent technologies to facilitate online interactions between customers and our butlers, which enhances customer experience, reduces our reliance on manual labor and improves operating efficiency.

We believe we have a highly visible path to growth, underpinned by our close cooperation with the Evergrande Group, a conglomerate with diversified businesses covering real estate, cultural tourism, health and wellbeing management and new energy vehicles, among others. The Evergrande Group ranked first among the “Top 100 Real Estate Companies in China” in 2020 in terms of overall strength, according to China Real Estate Top 10 Research Group, and ranked first among property developers in China in terms of attributable contracted sales for three consecutive years starting from 2017, according to CRIC. We believe the Evergrande Group’s vast land bank provides us with a large potential pipeline of high-quality projects.

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SUMMARY

In August 2020, we introduced a group of reputable strategic investors, including, among others, Sequoia Capital China Growth, CITIC Capital Holdings Limited, Yunfeng Capital Limited and Tencent Holdings Limited. We believe that the investment by these strategic investors enables us to explore synergistic new service offerings and other collaborations with them, thereby enhancing the scope and depth of our business operations, and contributing to our long-term sustainable growth.

Our quality services generated robust results of operations during the Track Record Period. In 2017, 2018, 2019 and the six months ended June 30, 2020, our revenue was RMB4,399.4 million, RMB5,903.2 million, RMB7,332.7 million and RMB4,563.9 million, respectively; our net profit amounted to RMB106.6 million, RMB239.0 million, RMB930.5 million and RMB1,147.7 million, respectively.

OUR BUSINESS MODEL

We primarily generate revenue from three business lines: (i) property management services; (ii) value-added services to non-property owners; and (iii) community value-added services.

Property management services. We offer a wide range of property management services to property owners, residents and property developers, as well as tenants in non-residential properties under our management. Our services typically include butler services, security services, cleaning and greening services, and repair and maintenance services. We manage a diverse portfolio of properties, including residential properties, commercial properties, theme parks, industrial parks, healthcare complexes, themed towns and schools, among others. We charge property management fees primarily on a lump sum basis, with only a very small portion on a commission basis.
Value-added services to non-property owners. We offer property developers full-cycle value-added services covering various stages of the property development and delivery process. Our value-added services to non-property owners comprise (i) preliminary property management services, which include (a) construction site management in which we patrol and manage the security of property developers’ construction sites; (b) sales office management services, which include property management services provided to property developers’ sales offices and show flats; and (c) consulting services in which we advise on various stages of property developers’ business operations from a property management perspective; (ii) pre-delivery services in which we clean and inspect the properties to be delivered, as well as assist in the delivery process; (iii) repair and maintenance services in which we assist with the repair and maintenance of properties during their post-delivery quality warranty periods; and (iv) property transaction assistance services in which we facilitate property developers in selling parking spaces and leasing retail spaces.
Community value-added services. We offer community value-added services primarily to property owners and residents, such as (i) community operations services, including (a) community space management services in which we rent out common area to third-party vendors and provide onsite services to promote and facilitate such third-party vendors’ businesses; and (b) offer other services such as group purchase facilitations, electric vehicle charging stations and potable water

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SUMMARY

stations; (ii) community asset management services, including (a) parking space rental services in which we lease parking spaces from property developers and then sublease them to property owners; (b) second-hand property transaction assistance services in which we facilitate property owners in selling or renting out their properties; and (c) recreation center operations services in which we operate recreation centers located in residential properties under our management; and (iii) community living services such as housekeeping, home furnishing, and repair and maintenance.

The following table sets forth a breakdown of our total revenue by business line during the Track Record Period, both in absolute amount and as a percentage of total revenue during the periods indicated.

Property management services . . . . . . . . . Value-added services to non-property owners . . . Community value-added services . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 2,538,392 57.7 1,609,865 36.6 251,099 5.7 4,399,356 100.0	2018 (RMB’000) (%) 3,464,390 58.7 2,103,431 35.6 335,405 5.7 5,903,226 100.0	2019 (RMB’000) (%) (unaudited) 2,154,683 62.2 1,056,069 30.5 255,008 7.3 3,465,760 100.0	2020
				(RMB’000) (%) 2,824,261 61.9 1,231,480 27.0 508,114 11.1 4,563,855 100.0

The following table sets forth a breakdown of our total GFA under management by developer type as of the dates indicated, as well as revenue from property management services by developer type for the years/periods indicated, both in absolute amount and as a percentage of revenue from property management services.

	As of/for theyear ended December 31,	As of/for theyear ended December 31,	As of/for theyear ended December 31,	As of/for theyear ended December 31,		As of/for the six months ended June 30, 2020	As of/for the six months ended June 30, 2020
	2017	GFA under management (sq.m.’000) 183,121 1,886 401 185,408	2018		2019
GFA under management	Revenue		Revenue	GFA under management	Revenue	GFA under management	Revenue
(sq.m.’000) 137,836 312 200	(RMB’000) (%) 2,532,597 99.8 1,699 0.1 4,096 0.1 2,538,392 100.0		(RMB’000) (%) 3,425,456 98.9 33,099 1.0 5,835 0.1 3,464,390 100.0	(sq.m.’000) 233,969 3,064 822	(RMB’000) (%) 4,538,996 98.4 58,589 1.3 14,627 0.3 4,612,212 100.0	(sq.m.’000) 251,339 1,656 1,024	(RMB’000) (%) 2,790,733 98.8 20,067 0.7 13,461 0.5 2,824,261 100.0
138,348				237,855		254,019

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SUMMARY

Notes:

(1) Refers to properties solely developed by the Evergrande Group or jointly developed by the Evergrande Group and independent third-party property developers in which project the Evergrande Group held a controlling interest.
(2) Refers to properties jointly developed by the Evergrande Group and independent third-party property developers in which the Evergrande Group did not hold a controlling interest.
(3) Refers to properties developed solely by independent third-party property developers.

OUR COMPETITIVE STRENGTHS

We believe the following competitive strengths have contributed and will continue to contribute to our success: (i) one of the largest and fastest-growing comprehensive property management service providers in China with an extensive geographical coverage and outstanding service quality; (ii) highly visible growth underpinned by the Evergrande Group’s trusted brand and diversified business segments; (iii) diversified property portfolio and service offerings bringing high-margin revenue streams; (iv) smart information platform and standardized management systems designed to improve customer experience and operating efficiency and reduce costs; (v) high-quality services winning market acceptance and paving the way for expansion; and (vi) seasoned, energetic and stable management team, effective human resource management system and reputable strategic investors.

OUR BUSINESS STRATEGIES

We intend to consolidate our leading position and achieve further expansion by pursuing the following strategies: (i) solidify our leadership position by expanding the scale of our business operations; (ii) diversify value-added service offerings and improve customer satisfaction; (iii) further optimize our smart management platform and enhance our operational capabilities and efficiency powered by technologies; (iv) improve service quality and competitiveness leveraging our brand image and service capabilities and (v) enhance our Human Resource System to motivate organizational growth and higher employee productivity.

CONTROLLING SHAREHOLDERS

Immediately upon completion of the Capitalization Issue and the [ REDACTED ] (assuming the [ REDACTED ] under the [ REDACTED ] are not taken up by our Controlling Shareholders who are [ REDACTED ] and without taking into account any Shares which may be issued or [ REDACTED ] pursuant to the exercise of the [ REDACTED ]), our Company will, in aggregate, be owned as to [ REDACTED ]% by CEG Holdings. CEG Holdings is directly held as to 50% by China Evergrande Group and 50% by Shengjian (BVI), a direct wholly-owned company of Anji (BVI), which in turn is wholly owned by China Evergrande Group. As of the Latest Practicable Date, China Evergrande Group was indirectly owned as to 71.74% by Dr. Hui through Xin Xin (BVI) (a company wholly owned by Dr. Hui) and 6.06% by Mrs. Hui, the spouse of Dr. Hui, through Even Honour which is in turn wholly owned by Yaohua (a company wholly owned company by Mrs. Hui). Accordingly, Dr. Hui, Mrs. Hui, Xin Xin (BVI), Even Honour, Yaohua, China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings together constitute a group of our Controlling Shareholders.

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SUMMARY

China Evergrande Group is a conglomerate listed on the Main Board of the Stock Exchange (Stock Code: 3333) with diversified businesses covering, among others, real estate, cultural tourism, health and wellbeing management and new energy vehicles. Since our establishment, our Group and the Evergrande Group have a long and close working relationship. During the Track Record Period, our Group provided property management services to substantially all of the properties developed by the Evergrande Group. The business relationship between our Group and the Evergrande Group has been mutually beneficial and complementary, as common among property management service providers and their parent companies in the PRC. For more information, see “Relationship with Controlling Shareholders.”

OUR CUSTOMERS AND SUPPLIERS

In 2017, 2018, 2019 and the six months ended June 30, 2020, revenue from sales to our five largest customers amounted to RMB1,943.0 million, RMB2,460.7 million, RMB2,812.3 million and RMB1,713.7 million, respectively, which accounted for approximately 44.2%, 41.7%, 38.4% and 37.6%, respectively, of our total revenue. During the same periods, revenue from sales to our single largest customer, the Evergrande Group, amounted to RMB1,935.4 million, RMB2,439.7 million, RMB2,658.3 million and RMB1,597.4 million, respectively, which accounted for approximately 44.0%, 41.3%, 36.3% and 35.0%, respectively, of our total revenue. In 2017, 2018, 2019 and the six months ended June 30, 2020, purchases from our five largest suppliers amounted to RMB155.2 million, RMB218.5 million, RMB240.7 million and RMB134.8 million, respectively, which accounted for approximately 21.6%, 23.7%, 20.6% and 17.3%, respectively, of our total purchases. During the same periods, purchases from our single largest supplier amounted to RMB100.0 million, RMB138.5 million, RMB106.7 million and RMB63.6 million, respectively, which accounted for approximately 13.9%, 15.0%, 9.1% and 8.2%, respectively, of our total purchases. During the Track Record Period, certain of our customers were also our suppliers. Please see “Business—Customers” and “Business—Suppliers” for details.

SUMMARY KEY FINANCIAL INFORMATION

The summary financial information set forth below has been derived from, and should be read in conjunction with, our combined audited financial statements, including the accompanying notes, set forth in the Accountants’ Report attached as Appendix I to this Document, as well as the information set forth in “Financial Information.” Our financial information was prepared in accordance with HKFRS.

Selected Items of Combined Statements of Comprehensive Income

For theyear ended December 31, 2017 2018 2019 (RMB’000) % (RMB’000) % (RMB’000) % 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0 (3,966,496) (90.2) (5,180,226) (87.8) (5,577,739) (76.1) 432,860 9.8 723,000 12.2 1,754,983 23.9 136,942 3.1 310,292 5.3 1,229,185 16.8 (30,378) (0.7) (71,284) (1.2) (298,661) (4.1) 106,564 2.4 239,008 4.0 930,524 12.7	For theyear ended December 31, 2017 2018 2019 (RMB’000) % (RMB’000) % (RMB’000) % 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0 (3,966,496) (90.2) (5,180,226) (87.8) (5,577,739) (76.1) 432,860 9.8 723,000 12.2 1,754,983 23.9 136,942 3.1 310,292 5.3 1,229,185 16.8 (30,378) (0.7) (71,284) (1.2) (298,661) (4.1) 106,564 2.4 239,008 4.0 930,524 12.7	For theyear ended December 31, 2017 2018 2019 (RMB’000) % (RMB’000) % (RMB’000) % 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0 (3,966,496) (90.2) (5,180,226) (87.8) (5,577,739) (76.1) 432,860 9.8 723,000 12.2 1,754,983 23.9 136,942 3.1 310,292 5.3 1,229,185 16.8 (30,378) (0.7) (71,284) (1.2) (298,661) (4.1) 106,564 2.4 239,008 4.0 930,524 12.7	For the six months ended June 30,	For the six months ended June 30,	For the six months ended June 30,
2017 (RMB’000) % 4,399,356 100.0 (3,966,496) (90.2) 432,860 9.8 136,942 3.1 (30,378) (0.7) 106,564 2.4	2018 (RMB’000) % 5,903,226 100.0 (5,180,226) (87.8) 723,000 12.2 310,292 5.3 (71,284) (1.2) 239,008 4.0		2019 (RMB’000) % (unaudited) 3,465,760 100.0 (2,669,140) (77.0) 796,620 23.0 538,613 15.5 (131,287) (3.8) 407,326 11.8	2020
(RMB’000) 4,399,356 (3,966,496) 432,860 136,942 (30,378) 106,564	(RMB’000) 5,903,226 (5,180,226) 723,000 310,292 (71,284) 239,008	(RMB’000) 7,332,722 (5,577,739) 1,754,983 1,229,185 (298,661) 930,524		(RMB’000) 4,563,855 (2,826,168) 1,737,687 1,500,241 (352,548) 1,147,693	% 100.0 (61.9)
					38.1 32.9 (7.7)
					25.1

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

Selected Items of Combined Balance Sheets

Non-current assets . . . . . . . . . . . . . . Current assets . . . . . . . . . . . . . . . . . Current liabilities. . . . . . . . . . . . . . . Net current assets . . . . . . . . . . . . . . Non-current liabilities . . . . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 138,740 149,752 5,703,078 7,306,903 5,036,741 5,669,448 666,337 1,637,455 8,304 12,750 796,773 1,774,457	As of June 30, 2020
	2017 91,128 3,611,241 3,141,027 470,214 4,704 556,638
			153,261 8,406,539 5,667,849 2,738,690 9,714 2,882,237

Selected Items of Combined Statements of Cash Flows

For the year ended December 31, 2017 2018 2019 (RMB’000) 212,230 372,762 1,321,990 193,125 1,035,792 (368,237) 787,984 (957,511) 122,276 (869,412) 11,797 (123,829) 111,697 90,078 (369,790) 852,363 964,060 1,054,138 964,060 1,054,138 684,348	For the year ended December 31, 2017 2018 2019 (RMB’000) 212,230 372,762 1,321,990 193,125 1,035,792 (368,237) 787,984 (957,511) 122,276 (869,412) 11,797 (123,829) 111,697 90,078 (369,790) 852,363 964,060 1,054,138 964,060 1,054,138 684,348	For the six months ended June 30,	For the six months ended June 30,
2017 212,230 193,125 787,984 (869,412) 111,697 852,363 964,060	2018 372,762 1,035,792 (957,511) 11,797 90,078 964,060 1,054,138	2019 (unaudited) 588,294 (506,013) 331,091 (163,742) (338,664) 1,054,138 715,474	2020
			1,566,283 36,374 51,311 (35,909)
			51,776
			684,348
			736,124

We had negative cash flow from operating activities of RMB368.2 million in 2019, mainly relating to (i) the increase in trade and other receivables, which was in line with our business growth; and (ii) the fact that in late 2018, we collected a significant amount of prepayments of property management fees that would otherwise be collected in 2019 and 2020 in connection with a promotional activity, which resulted in a lower level of cash inflow from operating activities in 2019. See “Financial Information—Liquidity and Capital Resources—Cash Flow—Cash Flows (Used in)/from Operating Activities.”

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

Summary of Key Financial Ratios

Current ratio (times). . . . . . . . . . . . . Gearing ratio (%). . . . . . . . . . . . . . . Net profit margin (%) . . . . . . . . . . . . Return on total assets (%) . . . . . . . . . Return on equity (%) . . . . . . . . . . . .	As of or for the Year Ended December 31, 2017 2018 2019 1.1 1.1 1.3 22.2 21.6 1.7 2.4 4.0 12.7 2.9 4.1 12.5 19.1 30.0 52.4	As of or for the Year Ended December 31, 2017 2018 2019 1.1 1.1 1.3 22.2 21.6 1.7 2.4 4.0 12.7 2.9 4.1 12.5 19.1 30.0 52.4	As of or for the Six Months Ended June 30, 2020
	2017 1.1 22.2 2.4 2.9 19.1	2018 1.1 21.6 4.0 4.1 30.0
			1.5 0.9 25.1 26.8 79.6

See “Financial Information—Summary of Key Financial Ratios” for the definitions and analysis of key financial ratios set forth on the table above.

[ REDACTED ] STATISTICS

The statistics in the following table are based on the assumptions that the [ REDACTED ] is completed and [ REDACTED ] are issued pursuant to the [ REDACTED ].

Market capitalization of our Shares Unaudited pro forma adjusted net tangible asset value per Share(1)	Based on an [REDACTED] of HK$[REDACTED] per [REDACTED] HK$[REDACTED] million HK$[REDACTED]	Based on an [REDACTED] of HK$[REDACTED] per [REDACTED]
		HK$[REDACTED] million HK$[REDACTED]

Note:

(1) The unaudited pro forma adjusted net tangible asset value per Share is calculated after making the adjustments referred to in “Appendix II—Unaudited Pro Forma Financial Information.”

[ REDACTED ]

The [ REDACTED ] will constitute a [ REDACTED ] of our Group from China Evergrande Group. The [ REDACTED ] is not subject to Shareholders’ approval of China Evergrande Group. In order to enable China Evergrande Shareholders to participate in the [ REDACTED ] on a preferential basis as to allocation only, subject to the Stock Exchange granting approval for the [ REDACTED ] of, and permission to [ REDACTED ], the Shares on the Main Board and such approval not having been withdrawn and the [ REDACTED ] becoming unconditional, [ REDACTED ] are being invited to apply for an aggregate of [ REDACTED ] in the [ REDACTED ], representing approximately [ REDACTED ]% and [ REDACTED ]% of the [ REDACTED ] initially available under the [ REDACTED ] and the [ REDACTED ] (assuming that the [ REDACTED ] is not exercised), respectively, as an [ REDACTED ]. The [ REDACTED ] are being [ REDACTED ] out of the [ REDACTED ] under the [ REDACTED ] and are not subject to reallocation as described in “Structure and Conditions of the [ REDACTED ]—[ REDACTED ]” above. In the event the [ REDACTED ] is exercised, the number of [ REDACTED ] will not change.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

Pursuant to Article 23 of the Implementation Rules for Registration, Depository and Clearing Services under the Mainland China-Hong Kong Stock Markets Connect Program (《內地與香港股票市場交易互聯互通機制登記、存管、結算業務實施細則》), CSDCC does not provide services relating to the subscription of newly issued shares. Accordingly, [ REDACTED ] who hold [ REDACTED ] through Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect cannot participate in the [ REDACTED ] and will not be able to take up their respective [ REDACTED ] to the [ REDACTED ] under the [ REDACTED ] through the [ REDACTED ] mechanism of Shanghai-Hong Kong Stock Connect or ShenzhenHong Kong Stock Connect.

For details, see “Structure and Conditions of the [ REDACTED ]—[ REDACTED ].”

DIVIDEND POLICY

No dividend was declared or paid by our Company or the companies constituting our Group for the Track Record Period and up to the Latest Practicable Date save for (i) dividends of approximately RMB3.5 million and RMB7.3 million that were declared by the subsidiaries now constituting our Group to their then shareholders in 2019 and the six months ended June 30, 2020, respectively; and (ii) dividends of RMB355.0 million declared and settled by Success Will in August 2020, details of which are set out in note 13 and note 29, respectively, to Appendix I to this Document. Our dividend distribution record, if any, in the past may not be used as a reference or basis to determine the level of dividends that may be declared or paid by us in the future. We intend to adopt an annual dividend payout ratio of no less than 25% of our annual net profit available for distribution generated in each financial year beginning from the year ending December 31, 2020. However, there can be no assurance that dividends of any amount will be declared or distributed in any year.

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately HK$[ REDACTED ] from the [ REDACTED ], after deducting the [ REDACTED ] commissions and other estimated expenses payable by us in connection with the [ REDACTED ], assuming that the [ REDACTED ] is not exercised and assuming an [ REDACTED ] of HK$[ REDACTED ] per Share (being the mid-point of the indicative [ REDACTED ] range set forth on the cover page of this Document). We intend to use such net proceeds from the [ REDACTED ] for the following purposes: (i) approximately [ REDACTED ]%, or approximately HK$[ REDACTED ], will be used to pursue strategic acquisition and investment; (ii) approximately [ REDACTED ]%, or approximately HK$[ REDACTED ], will be used to develop our value-added services; (iii) approximately [ REDACTED ]%, or approximately HK$[ REDACTED ], will be used to upgrade information system and equipment; (iv) approximately [ REDACTED ]%, or approximately HK$[ REDACTED ], will be used to recruit and cultivate talent; and (v) approximately [ REDACTED ]%, or approximately HK$[ REDACTED ], will be used for working capital and other general corporate purposes. For more information, see “Future Plans and Use of Proceeds.”

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE

New Property Management Agreements

Since June 30, 2020 and up to the Latest Practicable Date, we had entered into 46 new property management agreements, with an aggregate contracted GFA of 13.4 million sq.m. Among these agreements, two agreements were for the provision of property management services to two projects developed by third-party developers with an aggregate contracted GFA of 0.5 million sq.m. As of the Latest Practicable Date, our total contracted GFA was 526.7 million sq.m., and our GFA under management was 269.0 million sq.m.

Acquisitions

We have entered into agreements to acquire five regional property management companies which engaged in the provision of property management services for properties developed by independent third-party property developers with an aggregate GFA under management of 7.72 million sq.m. On September 4, 2020, we entered into an equity transfer agreement to acquire a 100% equity interest in Nanchang Xinya at a consideration of RMB33.0 million payable in instalments, which had a total GFA under management of 1.63 million sq.m. as of September 4, 2020. On September 5, 2020, we entered into an equity transfer agreement to acquire a 100% equity interests in Chengdu Wellspo at a consideration of RMB39.0 million, which had a total GFA under management of 1.31 million sq.m. as of September 5, 2020. On September 8, 2020, we entered into an equity transfer agreement to acquire a 100% equity interest in Zunyi Zhongxin at a consideration of RMB14.5 million, which had a total GFA under management of 1.25 million sq.m. as of September 8, 2020. On September 10, 2020, we entered into an equity transfer agreement to acquire a 51% equity interest in Hubei Guanbo at a consideration of RMB12.2 million, which had a total GFA under management of 2.0 million sq.m. as of September 10, 2020. On September 10, 2020, we also entered into an equity transfer agreement to acquire a 100% equity interest in Yongkang Jiahua at a consideration of RMB20.0 million, which had a total GFA under management of 1.53 million sq.m. as of September 10, 2020. See “Waivers from Strict Compliance with the Listing Rules—Equity Interests Acquired after the Track Record Period.”

Our Financial Performance Subsequent to the Track Record Period

Based on our unaudited management accounts, our revenue and gross profit for July and August 2020 increased as compared to the same period in 2019, which was primarily attributable to our business expansion.

Our Directors confirmed that, as of the date of this Document, there has been no material adverse change in our financial position, indebtedness, mortgage, contingent liabilities, guarantees or prospects since June 30, 2020, the latest date of our financial statements.

COVID-19 PANDEMIC

An outbreak of respiratory illness caused by a novel coronavirus, namely COVID-19, was reported in December 2019 and continues to expand globally. The outbreak of the COVID-19 pandemic is likely to have an adverse impact on the livelihood of people around the world and on the global economy. In response to the COVID-19 pandemic, we have adopted various hygiene and precautionary measures across the properties under our management since late January 2020. See “Business—Effect of the COVID-19 Pandemic—Our Response to the COVID-19 Pandemic.”

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

We believe that our expansion plan as discussed “Business—Our Business Strategies” is feasible, and it is unlikely that we would change the use of the net proceeds received by our Company from the [ REDACTED ] as disclosed in “Future Plans and Use of Proceeds” in this Document as a result of the COVID-19 pandemic. However, we are still subject to certain risks caused by the COVID-19 pandemic. For details, see “Business—Effect of the COVID-19 Pandemic” and “Risk Factors—Risks Relating to Our Business and Industry—Natural disasters, acts of war, occurrence of epidemics and other disasters could affect our business and the national and regional economies in the PRC.”

[ REDACTED ] EXPENSES

The total amount of [ REDACTED ] expenses that will be borne by us in connection with the [ REDACTED ], including but not limited to [ REDACTED ] commissions, is estimated to be HK$[ REDACTED ] (based on the mid-point of the indicative [ REDACTED ] range), accounting for approximately [ REDACTED ]% of the gross proceeds received by our Company from the [ REDACTED ]. Among the [ REDACTED ] expenses, HK$[ REDACTED ] is expected to be accounted for as a deduction from equity upon completion of the [ REDACTED ]. The remaining fees and expenses of HK$[ REDACTED ] are expected to be charged to our profit or loss account upon the [ REDACTED ]. The professional fees and/or other expenses related to the preparation of the [ REDACTED ] are currently in estimates for reference only and the actual amount to be recognized is subject to adjustment based on audit and the then changes in variables and assumptions. Our Directors do not expect that our [ REDACTED ] expenses will have a material adverse impact on our financial performance for the year ending December 31, 2020.

RISK FACTORS

Our operations involve certain risks, some of which are beyond our control. These risks can be broadly categorized into: (i) risks relating to our business and industry; (ii) risks relating to doing business in the PRC; and (iii) risks relating to the [ REDACTED ] and [ REDACTED ]. Some of the risks generally associated with our business and industry include the following: (i) substantially all of our revenue from property management services during the Track Record Period was generated from services we provided in relation to properties developed by the Evergrande Group; (ii) our future growth may not materialize as planned and our historical results may not be indicative of our future prospects and results of operations; (iii) our future acquisitions or investments may not be successful, and we may face difficulties in integrating acquired operations with our existing businesses; (iv) we are in a highly competitive business and we may not be able to compete successfully against existing and new competitors; and (v) we may fail to secure new, or renew our existing, property management service contracts on favorable terms, or at all.

These risks are not the only significant risks that may affect the value of our Shares. You should carefully consider all of the information set forth in this Document and, in particular, should evaluate the specific risks set forth in “Risk Factors” on page [38] in deciding whether to invest in our Shares.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

In this Document, unless the context otherwise requires, the following terms shall have the meanings set out below. Certain other terms are explained in “Glossary of Technical Terms” in this Document.

“Anji (BVI)”

ANJI (BVI) Limited (安基(BVI)有限公司), a company incorporated in the BVI with limited liability on June 26, 2006, which is wholly-owned by China Evergrande Group and is one of our Controlling Shareholders;

[ REDACTED ]

“Articles of Association” or “Articles”

the amended and restated articles of association of the Company, conditionally adopted on [●] 2020 and will become effective upon [ REDACTED ], a summary of which is set out in Appendix IV to this Document;

“associates”

has the meaning ascribed to it under the Listing Rules;

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

[ REDACTED ]

“Board” or “Board of Directors” the board of Directors of our Company;
“Business Day” or “business day”

a day on which banks in Hong Kong are generally open for normal banking business to the public and which is not a Saturday, a Sunday or a public holiday in Hong Kong;

“BVI”

the British Virgin Islands;

“CAGR”

compound annual growth rate;

“Capitalization Issue”

the issue of [ REDACTED ] Shares to be made upon capitalization of certain sum standing to the credit of the share premium account of the Company as referred to in “Appendix IV—Statutory and General Information – A. Further Information about our Company—3. Written Resolutions of our Shareholders Passed on [●] 2020” to this Document;

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

[ REDACTED ]

“CEG Holdings”

“Chengdu Jinbi”
“Chengdu Leju”
“Chengdu Wellspo”
“China” or the “PRC”

CEG Holdings (BVI) Limited, a company incorporated in the BVI with limited liability on July 20, 2020, which is owned as to 50% by China Evergrande Group and 50% by Shengjian (BVI) and is one of our Controlling Shareholders and the [ REDACTED ];

成都金碧河畔物業服務有限公司 (Chengdu Jinbi Hepan Property Services Co., Ltd.), a company established in the PRC with limited liability on April 20, 2009 and an indirect wholly-owned subsidiary of our Company;

成都樂居物業管理有限公司 (Chengdu Leju Property Management Co., Ltd.), a company established in the PRC with limited liability on February 8, 2013 and an indirect wholly-owned subsidiary of our Company;

成都威爾斯普物業管理有限公司 (Chengdu Wellspo Property Management Co., Ltd.), a company established in the PRC with limited liability on December 30, 2001 and, as of the Latest Practicable Date, was respectively owned as to 88.2% by Wei Qiang (魏強) and 11.8% by Li Biao (李彪), both being Independent Third Parties;

the People’s Republic of China, but for the purpose of this Document and for geographical reference only and except where the context requires, references in this Document to “China” and the “PRC” do not include Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

“China Evergrande Group”
“China Evergrande Shareholder(s)”
“China Evergrande Share(s)”
“Chinese government” or “PRC government”
“Chongqing Hengjian”
“Chongqing Tongjing”
“CIA”
“close associate(s)”
“Companies Law”
“Companies Ordinance”

China Evergrande Group (中國恒大集團) (formerly known as Evergrande Real Estate Group Limited (恒大地產集團有限公司)) (Stock Code: 3333), an exempted company incorporated in the Cayman Islands with limited liability on June 26, 2006, the shares of which are listed on the Main Board of the Stock Exchange, and one of our Controlling Shareholders;

holder(s) of China Evergrande Shares;
ordinary share(s) of par value of US$0.01 each in the share capital of China Evergrande Group which are listed on the Stock Exchange;
the central government of the PRC and all governmental subdivisions (including provincial, municipal and other regional or local government entities) and instrumentalities thereof or, where the context requires, any of them;
重慶恒健物業管理有限公司 (Chongqing Hengjian Property Management Co., Ltd.), a company established in the PRC with limited liability on February 27, 2019 and an indirect wholly-owned subsidiary of our Company;
重慶同景物業服務有限公司 (Chongqing Tongjing Property Services Co., Ltd.), a company established in the PRC with limited liability on April 29, 2007 and an indirect wholly-owned subsidiary of our Company;
China Index Academy, our independent industry consultant;
has the meaning ascribed to it under the Listing Rules;
the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands;

the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time;

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

“Companies (Winding up and Miscellaneous Provisions) Ordinance”
“Company,” “the Company,” or “our Company”
“connected person(s)”
“Controlling Shareholder(s)”
“core connected person(s)”
“COVID-19”
“CRIC”
“CSRC”
“Deed of Non-competition”
the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time;
Evergrande Property Services Group Limited (恒大物業集團有限公司) (formerly known as Mangrove 3, Ltd.), an exempted liability company incorporated in the Cayman Islands with limited liability on March 13, 2020;
has the meaning ascribed to it under the Listing Rules;
has the meaning ascribed to it under the Listing Rules and, unless the context requires otherwise, refers to Dr. Hui, Mrs. Hui, Xin Xin (BVI), Even Honour, Yaohua, China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings;
has the meaning ascribed to it under the Listing Rules;

a viral respiratory disease caused by the severe acute respiratory syndrome coronavirus 2, believed to have first emerged in late 2019;

China Real Estate Information Corp;

China Securities Regulatory Commission (中國證券監督管理委員會), a regulatory body responsible for the supervision and regulation of the PRC national securities markets;

the deed of non-competition dated [●], 2020 given by each of Dr. Hui, Xin Xin (BVI), China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings in favor of our Company (for ourselves and for each of our subsidiaries), as further described under “Relationship with Controlling Shareholders – Deed of Non-Competition” in this Document;

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

“Deed of Indemnity”
the deed of indemnity dated [●], 2020 given by each of Dr. Hui, Xin Xin (BVI), China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings in favor of our Company (for ourselves and for each of our subsidiaries), as further described under “Appendix IV—Statutory and General Information—D. Other Information—1. Tax and Other Indemnities” in this Document;
“Director(s)” or “our Directors” the director(s) of our Company;
“Dr. Hui”
Dr. Hui Ka Yan (許家印), one of our Controlling Shareholders;
“Eagle Investment”
Eagle Investment (BVI) Limited, a company incorporated in the BVI with limited liability on July 20, 2020 and a direct wholly-owned subsidiary of our Company;
“EIT Law”
the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法), as amended, supplemented or otherwise modified from time to time;
“Even Honour”
Even Honour Holdings Limited, a company incorporated in the BVI with limited liability on March 31, 2009, which is wholly-owned by Yaohua and is one of our Controlling Shareholders;
“Evergrande Auto”
China Evergrande New Energy Vehicle Group Limited (中國恒大新能源汽車集團有限公司) (formerly known as Evergrande Health Industry Group Limited (恒大健康產業集團有限公司)) (stock code: 708), a company incorporated in Hong Kong with limited liability on October 8, 2007, the shares of which are listed on the Main Board of the Stock Exchange, and a non-whollyowned subsidiary of China Evergrande Group;
“Evergrande Group”

China Evergrande Group and its subsidiaries which, for the purpose of this Document and unless the context otherwise requires, excludes our Group;

“Evergrande Hengkang”
恒大恒康物業有限公司 (Evergrande Hengkang Property Co., Ltd.), a company established in the PRC with limited liability on March 21, 2018 and an indirect wholly-owned subsidiary of our Company;

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DEFINITIONS

“Evergrande Real Estate”
恒大地產集團有限公司 (Evergrande Real Estate Group Co., Ltd.), a company established in the PRC with limited liability on June 24, 1996 and a non-wholly-owned subsidiary of China Evergrande Group;
“Exchange Participant(s)” a person: (a) who, in accordance with the Listing Rules, may trade on or through the Stock Exchange; and (b) whose name is entered in a list, register or roll kept by the Stock Exchange as a person who may trade on or through the Stock Exchange;
“Extreme Conditions” extreme conditions caused by a super typhoon as announced by the Government of Hong Kong;
“Fortune Ascent” Fortune Ascent Property Management Limited (升裕物業管理有限公司) (formerly known as Fortune Ascent Limited (升裕有限公司)), a company incorporated in Hong Kong with limited liability on October 6, 2017 and an indirect wholly-owned subsidiary of our Company;
“Foshan Xinzhongjian” 佛山市南海新中建房地產發展有限公司 (Foshan Nanhai Xinzhongjian Real Estate Development Co., Ltd.), a company established in the PRC with limited liability on September 11, 2001 and a non wholly-owned subsidiary of China Evergrande Group;
“Fuzhou Jinbi”
福州市金碧物業有限公司 (Fuzhou Jinbi Property Co., Ltd.), a company established in the PRC with limited liability on July 13, 2018 and an indirect wholly-owned subsidiary of our Company;

[ REDACTED ]

“Group,” “the Group,” “our Group,” “we” or “us”

our Company and, except where the context otherwise requires, all of its subsidiaries or where the context refers to any time prior to its incorporation, the business which its predecessors or the predecessors of its present subsidiaries were engaged in and which were subsequently assumed by it;

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DEFINITIONS

“Guangzhou Jinbi Hengying”
廣州市金碧恒盈物業服務有限公司 (Guangzhou Jinbi Hengying Property Services Co., Ltd.), a company established in the PRC with limited liability on February 6, 2004 and an indirect wholly-owned subsidiary of our Company;
“Guangzhou Jinbi Huafu” 廣州市金碧華府物業有限公司 (Guangzhou Jinbi Huafu Property Co., Ltd.), a company established in the PRC with limited liability on August 20, 2003 and an indirect wholly-owned subsidiary of our Company;
“Guangzhou Jinbi Shijia”
廣州市金碧世家物業服務有限公司 (Guangzhou Jinbi Shijia Property Services Co., Ltd.), a company established in the PRC with limited liability on November 11, 2003 and an indirect wholly-owned subsidiary of our Company;
“Guiyang Xinshenghuo”
貴陽新生活物業服務有限公司 (Guiyang Xinshenghuo Property Services Co., Ltd.), a company established in the PRC with limited liability on August 21, 2007 and an indirect wholly-owned subsidiary of our Company;
“Guiyang Zhongyu”
貴陽中渝物業管理有限責任公司 (Guiyang Zhongyu Property Management Co., Ltd.), a company established in the PRC with limited liability on June 28, 2011 and an indirect wholly-owned subsidiary of our Company;
“Hainan Lingshui”
海南陵水棕櫚泉物業服務有限公司 (Hainan Lingshui Zonglvquan Property Services Co., Ltd.), a company established in the PRC with limited liability on July 8, 2013 and an indirect wholly-owned subsidiary of our Company;
“HengTen Networks”
HengTen Networks Group Limited (恒騰網絡集團有限公司) (stock code: 136), a company incorporated in Bermuda with limited liability on February 24, 1997, the shares of which are listed on the Main Board of the Stock Exchange, and a non-wholly-owned subsidiary of China Evergrande Group;
“Hengyun Sports”
恒運體育發展有限公司 (Hengyun Sports Development Co., Ltd.), a company established in the PRC with limited liability on December 8, 2017 and an indirect whollyowned subsidiary of our Company;

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

“HKFRS(s)” Hong Kong Financial Reporting Standards issued by the HKICPA;

“HKICPA” Hong Kong Institute of Certified Public Accountants;

[ REDACTED ]

“HK$” or “Hong Kong dollars” Hong Kong dollars and cents respectively, the lawful “HK dollars” or “cents” currency of Hong Kong;
“Hohhot Jinbi” 呼和浩特市金碧物業服務有限公司 (Hohhot Jinbi Property Services Co., Ltd.), a company established in the PRC with limited liability on June 4, 2013 and an indirect wholly-owned subsidiary of our Company;
“Hong Kong” the Hong Kong Special Administrative Region of the PRC;

[ REDACTED ]

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DEFINITIONS

[ REDACTED ]

“Hubei Guanbo”

“Independent Third Party(ies)”

湖北冠博物業管理有限公司 (Hubei Guanbo Property Management Co., Ltd.), a company established in the PRC with limited liability on May 11, 2009 and, as of the Latest Practicable Date, was respectively owned as to 95.0% by Deng Hui (鄧輝) and 5.0% by Guo Xiao (郭曉), both being Independent Third Parties;

an individual or a company who, as far as the Directors are aware after having made all reasonable enquiries is not a connected person of the Company within the meaning of the Listing Rules;

[ REDACTED ]

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DEFINITIONS

[ REDACTED ]

“Jinbi Property”

“Jinbi Smart Life”

金碧物業有限公司 (Jinbi Property Co., Ltd.), a company established in the PRC with limited liability on September 10, 1997 and an indirect wholly-owned subsidiary of our Company;

金碧智慧生活科技(深圳)有限公司 (Jinbi Smart Life Technology (Shenzhen) Co., Ltd.), a company established in the PRC with limited liability on June 5, 2020 and an indirect wholly-owned subsidiary of our Company;

[ REDACTED ]

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DEFINITIONS

“Joint Sponsors” Huatai Financial Holdings (Hong Kong) Limited, UBS Securities Hong Kong Limited, ABCI Capital Limited, CCB International Capital Limited, CLSA Capital Markets Limited and Haitong International Capital Limited;
“Knight Honour” Knight Honour Global Limited, a company incorporated in the BVI with limited liability on November 5, 2019 and an indirect wholly-owned subsidiary of our Company;
“Kunming Jialize” 昆明嘉麗澤物業管理有限公司 (Kunming Jialize Property Management Co., Ltd.), a company established in the PRC with limited liability on August 22, 2014 and an indirect wholly-owned subsidiary of our Company;
“Latest Practicable Date”
September 21, 2020, being the latest practicable date for the purpose of ascertaining certain information in this Document prior to its publication;

[ REDACTED ]

“Listing Committee”

the Listing Committee of the Stock Exchange;

[ REDACTED ]

“Listing Rules”
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time;
“M&A Rules”
the Rules on the Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (關於外國投資者併購境內企業的規定), jointly issued by the State-owned Assets Supervision and Administration Commission of the State Council (國務院國有資產監督管理委員會), MOFCOM, SAT, SAMR, CSRC and SAFE on August 8, 2006 and re-issued by MOFCOM on June 22, 2009;
“Main Board”
the stock exchange (excluding the option market) operated by the Stock Exchange, which is independent from and operated in parallel with GEM of the Stock Exchange;

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DEFINITIONS

“Memorandum” or the amended and restated memorandum of association of “Memorandum of the Company, adopted on [●], 2020 with immediate Association” effect, a summary of which is set out in Appendix III to this Document;
“MOF” the Ministry of Finance of the PRC (中華人民共和國財政部)
“MOFCOM” the Ministry of Commerce of the PRC (中華人民共和國商務部) or its predecessor, the Ministry of Foreign Trade and Economic Cooperation of the PRC (中華人民共和國對外貿易經濟合作部);
“MOHURD”
the Ministry of Housing and Urban and Rural Development (中華人民共和國住房與城鄉建設部);
“Mrs. Hui”
Ms. Ding Yumei, the spouse of Dr. Hui and one of our Controlling Shareholders;
“Nanchang Xinya” 南昌馨雅物業管理有限公司 (Nanchang Xinya Property Management Co., Ltd.), a company established in the PRC with limited liability on May 4, 2010 and, as of Latest Practicable Date, was wholly-owned by 江西省天潔環保服務有限公司 (Jiangxi Tianjie Environmental Protection Service Co., Ltd.), an Independent Third Party;
“NDRC” the National Development and Reform Commission of the PRC (中華人民共和國國家發展和改革委員會);

[ REDACTED ]

“Ningbo Jinbi”
寧波金碧恒心物業有限公司 (Ningbo Jinbi Hengxin Property Co., Ltd.), a company established in the PRC with limited liability on October 25, 2019 and an indirect wholly-owned subsidiary of our Company;

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DEFINITIONS

[ REDACTED ]

“Oriental Joy”

Oriental Joy Group Limited (東欣集團有限公司), a company incorporated in the BVI with limited liability on November 5, 2019 and an indirect wholly-owned subsidiary of our Company;

[ REDACTED ]

“PBOC”

the People’s Bank of China (中國人民銀行), the central bank of the PRC;

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DEFINITIONS

“People’s Congress” the PRC’s legislative apparatus, including the National People’s Congress and all the local people’s congresses (including provincial, municipal and other regional or local people’s congresses) as the context may require, or any of them; “PRC Legal Advisors” King & Wood Mallesons, our legal advisors as to PRC laws;

[ REDACTED ]

“Document” this Document being issued in connection with the [ REDACTED ];

“Qinhuangdao Jinbi” 秦皇島金碧物業服務有限公司 (Qinhuangdao Jinbi Property Services Co., Ltd.), a company established in the PRC with limited liability on October 22, 2012 and an indirect wholly-owned subsidiary of our Company;

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DEFINITIONS

[ REDACTED ]

“Regulation S” Regulation S under the U.S. Securities Act;

“Reorganization” the reorganization of our Group in preparation of the [ REDACTED ], details of which are set out in “History, Reorganization and Corporate Structure” in this Document;

[ REDACTED ]

“Rule 144A” Rule 144A under the U.S. Securities Act; “SAFE” the State Administration of Foreign Exchange of the PRC (中華人民共和國國家外匯管理局); “SAIC” the State Administration for Industry and Commerce of the PRC (中華人民共和國國家工商行政管理總局);

[ REDACTED ]

“SAT” the State Administration of Taxation of the PRC (中華人民共和國國家稅務總局);

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DEFINITIONS

“Securities and Futures Ordinance” or “SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time;

[ REDACTED ]

“SFC”

the Securities and Futures Commission of Hong Kong;

“Share(s)”
ordinary share(s) with par value of [US$0.0001] each in the share capital of the Company, which are to be [ REDACTED ] in Hong Kong dollars and [ REDACTED ] on the Main Board;
“Shareholders” holders of our Shares;
“Shengjian (BVI)”
Shengjian (BVI) Limited (盛建(BVI)有限公司), a company incorporated in the BVI with limited liability on January 29, 2007, which is wholly-owned by Anji (BVI) and is one of our Controlling Shareholders;
“Shenzhen Jianshe Jiayuan” 深圳市建設家園物業服務有限公司 (Shenzhen Jianshe Jiayuan Property Services Co., Ltd.), a company established in the PRC with limited liability on June 17, 2004 and an indirect wholly-owned subsidiary of our Company;
“Sichuan Zhongjia”
“Sichuan Zhongxin”
四川眾嘉商業管理有限公司 (Sichuan Zhongjia Commercial Management Co., Ltd.), a company established in the PRC with limited liability on October 28, 2014 and an indirect wholly-owned subsidiary of our Company; 四川忠信物業管理有限公司 (Sichuan Zhongxin Property Management Co., Ltd.), a company established in the PRC with limited liability on April 28, 2009 and an indirect wholly-owned subsidiary of our Company;
“Specified Territory(ies)”

jurisdiction(s) outside Hong Kong where, taking into account the legal restrictions under the applicable laws or requirements of the relevant regulatory body or stock exchange of such jurisdiction(s), China Evergrande Group and our Company consider the exclusion of the China Evergrande Shareholders with registered addresses in or who are otherwise known by China Evergrande Group to be residents of, such jurisdiction(s) from the [ REDACTED ] to be necessary or expedient;

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DEFINITIONS

“[ REDACTED ]”

the separate [ REDACTED ] of our Shares on the Main Board to be effected by way of [ REDACTED ] (including the [ REDACTED ]);
“sq.m.”

the measurement unit of square meters;

[ REDACTED ]

“State Council” the State Council of the PRC (中華人民共和國國務院);
“Stock Exchange” The Stock Exchange of Hong Kong Limited;
“subsidiary(ies)”

has the meaning ascribed to it under the Listing Rules;

“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules;
“Success Will”
Success Will Group Limited (雅立集團有限公司), a company incorporated in Hong Kong with limited liability on July 5, 2007 and an indirect wholly-owned subsidiary of our Company;
“Tangshan Yihe” 唐山易合諮詢管理有限責任公司 (Tangshan Yihe Consulting Management Co., Ltd.), a company established in the PRC with limited liability on September 25, 2013 and an indirect wholly-owned subsidiary of our Company;
“Track Record Period” the period comprising the years ended December 31, 2017, 2018 and 2019 and the six months ended June 30, 2020;

[ REDACTED ]

“United States” or “U.S.”
the United States of America, its territories, its possessions and all areas subject to its jurisdiction;
“U.S. dollars” or “US$”
United States dollars, the lawful currency of the United States;

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DEFINITIONS

“U.S. Securities Act” the United States Securities Act of 1933, as amended and supplemented or otherwise modified from time to time, and the rules and regulations promulgated thereunder; “VAT” the PRC value-added tax;

the PRC value-added tax;

[ REDACTED ]

“Wuhan Jinbi”
武漢金碧物業服務有限公司 (Wuhan Jinbi Property Services Co., Ltd.), a company established in the PRC with limited liability on May 5, 2010 and an indirect wholly-owned subsidiary of our Company;
“Wuhan Jinbi Jiayuan” 武漢金碧嘉園物業管理有限公司 (Wuhan Jinbi Jiayuan Property Management Co., Ltd.), a company established in the PRC with limited liability on March 3, 2006 and an indirect wholly-owned subsidiary of our Company;
“Xianju Dawei” 仙居大衛物業管理服務有限公司 (Xianju Dawei Property Management Services Co., Ltd.), a company established in the PRC with limited liability on December 9, 2010 and an indirect wholly-owned subsidiary of our Company;
“Xi’an Hongze” 西安鴻澤物業管理有限公司 (Xi’an Hongze Property Management Co., Ltd.), a company established in the PRC with limited liability on March 12, 2014 and an indirect wholly-owned subsidiary of our Company;
“Xin Xin (BVI)” Xin Xin (BVI) Limited (鑫鑫(BVI)有限公司), a company incorporated in the BVI with limited liability on June 26, 2006, which is wholly-owned by Dr. Hui and is one of our Controlling Shareholders;

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DEFINITIONS

“Yaohua”
Yaohua Limited, an exempted company incorporated in the Cayman Islands with limited liability on February 24, 2009, which is wholly-owned by Mrs. Hui and is one of our Controlling Shareholders;

[ REDACTED ]

“Yongkang Jiahua”
Yongkang Jiahua Property Co., Ltd. (永康市嘉華物業管理有限公司), a company established in the PRC with limited liability on September 25, 2004, and as of the Latest Practicable Date, was respectively owned as to 60.0% by Zhou Erqiang (周爾強) and 40.0% by Chen Jiangbo (陳江波), both being Independent Third Parties;
“Zunyi Zhongxin” 遵義市中信物業管理有限公司 (Zunyi Zhongxin Property Management Co., Ltd.), a company established in the PRC with limited liability on March 30, 2005, and as of the Latest Practicable Date, was respectively owned as to 70.0% by Zhang Chuanfang (張傳芳) and 30.0% by Gan Hong (甘鴻), both being Independent Third Parties;
“Zuolin Youshe”
佐鄰佑舍會員服務(深圳)有限公司 (Zuolin Youshe Member Services (Shenzhen) Co., Ltd., a company with limited liability established in the PRC on May 25, 2018 and an indirect wholly-owned subsidiary of China Evergrande Group.

Unless the content otherwise requires, references to “2017”, “2018” and “2019” in this Document refers to our financial year ended December 31 of such year.

Certain amounts and percentage figures included in this Document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

For ease of reference, the names of the PRC laws and regulations, governmental authorities, institutions, natural persons or other entities (including certain of our subsidiaries) have been included in the Document in both the Chinese and English languages and in the event of any inconsistency, the Chinese versions shall prevail. English translations of official Chinese names are for identification purpose only.

for identification purposes only

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GLOSSARY OF TECHNICAL TERMS

In this Document, unless the context otherwise requires, explanations and definitions of certain terms used in this Document in connection with our Group and our business shall have the meanings set out below. The terms and their meanings may not correspond to standard industry meaning or usage of these terms.

“artificial intelligence”

intelligence demonstrated by machines;

“average property management fee(s)”
revenue generated from property management services of the last month of a period divided by the GFA under management as of the end of the same period;
“cloud computing”
an internet computing method that can provide shared computer processing resources and data on demand to computers and other devices;
“commercial properties”
properties which are used primarily for commercial purposes, including serviced apartments, office buildings, retail complexes and hotels;
“commission basis”
a revenue generating model for our property management business line whereby our fee income from property management consists only of a specified percentage of the total management fees payable by the property owners or property developers while the remainder of such management fees would be used to procure services to the property from other service providers;
“common area” or “communal area”
common areas in residential properties, such as lobbies, hallways, outdoor open spaces, stairways, elevator shafts, equipment rooms, public parking lots and advertisement bulletin boards;
“contracted GFA”
GFA managed or to be managed by our Group under our operating property management service agreements;
“ERP”
Enterprise Resource Planning;
“GFA”

gross floor area;

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GLOSSARY OF TECHNICAL TERMS

“GFA under management”
GFA managed by our Group for which we are already collecting property management fees in relation to contractual obligations to provide our services, excluding the GFA of common areas for which we do not charge property management fees such as landscapes and public roads, excluding properties with respect to which we only provided value-added services to non-property owners rather than property management services as of the end of each fiscal period;
“IoT” or “Internet of Things”

a network of physical devices, vehicles, buildings and other items embedded with electronics, software, sensors and network connectivity that enable these items to collect and exchange data;

“lump sum basis”
a revenue generating model for our property management business line whereby we charge a predetermined property management price per GFA for all units (whether sold or unsold) on a monthly basis which represents the all-inclusive fees for all of the property management services provided by our teams and subcontractors. Under a lump sum basis, the property owners and property developers will be responsible for paying our management fees for the sold and unsold units respectively on a periodic basis;
“residential communities” or “residential properties”
properties which are purely residential or mixed-use properties containing residential units and ancillary facilities that are nonresidential in nature such as commercial or office units but excluding pure commercial properties;
“retention rate”
the aggregate number of properties under management during the period minus the number of properties we ceased to manage during the same period, then divided by the aggregate number of properties under management during the period;
“tender success rate”

the aggregate number of bids we won in a period divided by the aggregate number of bids we submitted in the same period;

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GLOSSARY OF TECHNICAL TERMS

“Top 100 Property Management an annual ranking of China-based property management Companies” companies by overall strength published by CIA solely or jointly with other institution(s) based on a number of key indicators, including management scale, operational performance, service quality, growth potential and social responsibility of such companies in the preceding year. The number of companies included in 2015, 2016, 2017, 2018 and 2019 are 210, 200, 200, 220 and 244, respectively. The number of companies for 2015, 2016, 2017, 2018 and 2019 exceeded 100 as multiple companies with the same or very close scores were assigned the same ranking. Top Ten and Top 20 Property Management Companies have the similar meanings as Top 100 Property Management Companies.

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FORWARD-LOOKING STATEMENTS

We have included in this Document forward-looking statements. Statements that are not historical facts, including statements about our intentions, beliefs, expectations or predictions for the future, are forward-looking statements.

We have included in this Document forward-looking statements that are not historical facts but relate to our intentions, beliefs, expectations or predictions for future events and conditions which may not occur. Even though these statements have been made by our Directors after due and careful consideration and on bases and assumptions that we believe are fair and reasonable at the time, they nevertheless involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Some of the risks are listed in “Risk Factors” and elsewhere in this Document. In some cases, you can identify these forwardlooking statements by words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “propose,” “seek,” “should,” “will,” “would” or similar expressions, or their negatives. These forwardlooking statements include, without limitation, statements relating to:

any changes in the laws, rules and regulations of the central and local governments in the PRC and the rules, regulations and policies of the relevant governmental authorities relating to all aspects of our business and our business plans;
our business and operating strategies and our ability to implement such strategies;
our ability to control or reduce costs;
our capability to identify and integrate suitable acquisition targets;
expected growth of and changes in the PRC real estate and property management industries;
our ability to maintain a strong relationship with major suppliers or customers;
our future business development, results of operations and financial condition;
the future competitive environment for the PRC property management industry;
determination of the fair value of our Shares;
our dividend policy;
capital market development;

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FORWARD-LOOKING STATEMENTS

exchange rate fluctuations and restrictions; and
risks identified under “Risk Factors” of this Document.

This Document also contains market data and projections that are based on a number of assumptions. The markets may not grow at the rates projected by the market data, or at all. The failure of the markets to grow at the projected rates may materially and adversely affect our business and the market price of our Shares. In addition, due to the rapidly changing nature of the PRC economy and the property management industry, projections or estimates relating to the growth prospects or future conditions of the markets are subject to significant uncertainties. If any of the assumptions underlying the market data prove to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

We do not guarantee that the transactions and events described in the forward-looking statements in this Document will happen as described, or at all. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risks and uncertainties set forth in “Risk Factors” in this Document. You should read this Document in its entirety and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements made in this Document relate only to events as of the date on which the statements are made or, if obtained from third-party studies or reports, the dates of the respective studies or reports. Since we operate in an evolving environment where new risks and uncertainties may emerge from time to time, you should not rely upon forward-looking statements as predictions of future events. We undertake no obligation, beyond what is required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, even when our situation may have changed.

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RISK FACTORS

An investment in our Shares involves various risks. You should carefully consider the following information about risks, together with the other information contained in this Document, including our combined financial statements and related notes, before you decide to purchase our Shares. If any of the circumstances or events described below actually arises or occurs, our business, results of operations, financial position and prospects would likely suffer. In any such case, the market price of our Shares could decline, and you may lose all or part of your investment. You should also pay particular attention to the fact that our subsidiaries in China are located in a legal and regulatory environment that in some respects differ significantly from that of other countries. For more information concerning the PRC legal and regulatory system and certain related matters discussed below, see the section headed “Regulatory Overview” in this Document.

We believe that there are certain risks and uncertainties involved in our operations, some of which are beyond our control. We have categorized these risks and uncertainties into: (i) risks relating to our business and industry; (ii) risks relating to conducting business in the PRC; and (iii) risks relating to the [ REDACTED ] and [ REDACTED ] . Additional risks and uncertainties that are not presently known to us or that we currently deem immaterial may develop and become material and could also harm our businesses, financial position and results of operations.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

Substantially all of our revenue from property management services during the Track Record Period was generated from services we provided in relation to properties developed by the Evergrande Group.

During the Track Record Period, substantially all of our revenue from property management services was generated from services provided in relation to properties developed by the Evergrande Group. In particular, in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, revenue generated from property management services provided in relation to the properties developed by the Evergrande Group amounted to RMB2,532.6 million, RMB3,425.5 million, RMB4,539.0 million, RMB2,121.3 million and RMB2,790.7 million, respectively, accounting for 99.8%, 98.9%, 98.4%, 98.4% and 98.8%, respectively, of our revenue generated from property management services.

Our business scaled up in concert with the expansion of the Evergrande Group. During the Track Record Period, we generally went through competitive tender process to procure new property management service contracts for properties developed by the Evergrande Group and our tender success rate with respect to such properties was 100%. However, our tender success rate with respect to properties developed by the Evergrande Group may drop in the future. There is also no assurance that all of our property management service contracts with the Evergrande Group or in relation to properties developed by the Evergrande Group will be renewed successfully upon their expiration. Further, we do not have control over the

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Evergrande Group’s management strategy. Any measures that the PRC government may adopt to further regulate the real estate market, for example, tightened control over real estate financing) or the macro-economic or other factors may affect the business operations and prospects of the Evergrande Group. Any adverse development in the business, financial condition or prospects of the Evergrande Group or its ability to develop and complete new properties may affect our success in procuring the relevant new service contracts for property management services and value-added services to non-property owners. We endeavor to procure more property management service contracts from Independent Third Parties. However, there is no assurance that we will be able to procure property management service contracts from third-party developers to make up for any lost business opportunities with respect to properties developed by the Evergrande Group in a timely manner or on similar or commercially acceptable terms. We also cannot assure you that we will be successful in any effort to compete with other property management companies to obtain property projects developed by third-party developers. Should any of these events occur, we may experience a material adverse effect on our results of operations, financial position and growth prospects.

Our future growth may not materialize as planned and our historical results may not be indicative of our future prospects and results of operations.

We experienced fast growth in revenue, profit and profit margins during the Track Record Period. In 2017, 2018 and 2019, our gross profit was RMB432.9 million, RMB723.0 million and RMB1,755.0 million, respectively, representing a CAGR from 2017 to 2019 of 101.4%. Our gross profit further increased by 118.1% from RMB796.6 million in the six months ended June 30, 2019 to RMB1,737.7 million in the same period of 2020. In 2017, 2018 and 2019, our profit for the year was RMB106.5 million, RMB239.0 million and RMB930.5 million, respectively, representing a CAGR from 2017 to 2019 of 195.5%. Our profit for the period further increased by 181.8% from RMB407.3 million in the six months ended June 30, 2019 to RMB1,147.7 million in the same period of 2020.

We seek to continue to expand through increasing the total GFA and the number of properties we manage in existing and new markets, including properties developed by the Evergrande Group and those developed by third-party property developers. See “Business—Our Business Strategies—Solidify Our Leadership Position by Expanding the Scale of Our Business Operations.” However, our expansion plans are based upon our assessment of market prospects, and we cannot assure you that we can sustain our historical growth in the future. As we start to manage more properties developed by third-party developers or acquire more property management companies, we cannot assure you that we will be able to maintain our gross profit margin at historical levels. We cannot assure you that our assessment will prove to be correct or that we can grow our business as planned. Our expansion plans may be affected by a number of factors, most of which are beyond our control. Such factors include, among other things:

changes in China’s economic condition in general, and the real estate market in particular;
changes in disposable personal income in the PRC;

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the impact of any epidemic, such as the COVID-19 pandemic, on China’s economic condition, disposable income and consumption spending in the PRC;
changes in government regulations or policies;
changes in the supply of and demand for property management and value-added services;
our ability to develop and strengthen collaborative relationship with the Evergrande Group and other property developers and property owners, residents and tenants of properties developed by them; and our ability to develop and maintain cooperative relationship with our business partners and strategic investors;
our ability to generate sufficient liquidity internally and obtain external financing;
our ability to recruit and train competent managerial personnel and other employees;
our ability to select and work with suitable subcontractors and suppliers;
our ability to anticipate and address the needs of owners, residents and tenants in the properties we manage;
our ability to diversify our service offerings and to optimize our business mix;
our ability to adapt to new markets where we have limited or no prior experience including our ability to adjust to the administrative, regulatory and tax environments in such markets;
our ability to maintain effective information technology systems to support our business and development plans;
our ability to solidify our market position in existing markets and our ability to leverage our brand names and compete successfully in new markets, particularly against the incumbent players in such markets who might have more resources and experience than we do; and
our ability to improve our administrative, technical, operational and financial infrastructure.

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We cannot assure you that our future growth will materialize or that we will be able to manage our future growth effectively, and failure to do so may have a material adverse effect on our business, financial position and results of operations. Moreover, our profitability depends partially on our ability to control costs and operating expenses, which will increase as our business expands. You should not rely on our historical results of operations to predict our future financial performance.

Our future acquisitions or investments may not be successful, and we may face difficulties in integrating acquired operations with our existing businesses.

We have, to a certain extent, expanded our business through acquisitions, and plan to evaluate opportunities to acquire other property management companies and other businesses that are complementary to our existing businesses and integrate their operations into ours. However, we cannot assure you that we will be able to identify suitable opportunities. Even if we manage to identify suitable opportunities, we may not be able to complete the acquisitions on terms favorable or acceptable to us, in a timely manner, or at all. The inability to identify suitable acquisition targets or to complete acquisitions could materially and adversely affect our competitiveness and growth prospects.

Acquisitions, even if completed, will involve uncertainties and risks, including, without limitation:

potential ongoing financial obligations and unforeseen or hidden legal, regulatory, financial or other liabilities;
inability to apply our business model or standardized business processes on the acquisition targets;
failure to achieve the intended objectives, synergy benefits or revenue-enhancing opportunities;
assumption of debt and liabilities of the acquired companies, some of which may not have been revealed during the due diligence process; and
diversion of resources and management attention.

Approximately [ REDACTED ]%, or HK$[ REDACTED ], of the net proceeds received by our Company from the [ REDACTED ] is expected to be used to pursue selective strategic investment and acquisition opportunities and further develop strategic alliances. See the section headed “Future Plans and Use of Proceeds—Use of Proceeds.” If we fail to identify suitable acquisition opportunities or our future acquisition transactions fail to consummate for other reasons which may be beyond our control, our proceeds from the [ REDACTED ] may not be effectively used.

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Moreover, we may require additional cash resources to finance our continued growth or other future developments, including any investments or acquisitions we may decide to pursue. To the extent that our funding requirements exceed our financial resources, we will be required to seek additional financing or to defer planned expenditures. Interest rate increases or other unfavorable changes in the financial markets may increase our cost of borrowing or adversely affect our ability to access sources of liquidity upon which we may rely to finance our operations and satisfy our obligations as they become due. There is no assurance that we will be able to obtain sufficient financing on favorable terms, or at all, to fund our future expansion. Furthermore, if we raise additional funds through equity or equity-linked financings, your equity interest in our Company may be diluted. Alternatively, if we raise additional funds by incurring debt obligations, we may be subject to various covenants under the relevant debt instruments that may, among other things, restrict our ability and flexibility to operate our business, pay dividends or obtain additional financing. Servicing such debt obligations could also be burdensome to our operations. If we fail to service such debt obligations or are unable to comply with any of these covenants, we could be in default under such debt obligations and our liquidity and financial condition could be materially and adversely affected.

Furthermore, we may face difficulties in, and additional risks of, integrating acquired operations with our existing business. The difficulties and risks will be affected by different factors, including, among others, the complexity and size of the acquired business. Particularly, we may face the difficulties in retaining the acquired company’s personnel and integrating the existing workforce with that of the acquired companies. Such difficulties could disrupt our ongoing business, distract the attention of our management and employees or increase our expenses. The prior dealings of the acquired company may have given rise to situations which, although unknown or deemed immaterial during due diligence could be exposed postacquisition and cause damage to our brand. We may also face the risks of operating in new markets with local regulations unfamiliar to us and incur additional hidden costs associated with the acquisition. Any of these difficulties or risks could materially and adversely affect our business, financial condition and results of operations.

Acquisitions may result in goodwill recorded in our combined financial statements. If we fail to achieve our desired objectives with respect to our acquisitions, we may need to record impairment losses on our goodwill, which may materially and adversely reduce our assets and impact our profitability that would, in turn, have an adverse effect on our financial position and results of operations.

We are in a highly competitive business and we may not be able to compete successfully against existing and new competitors.

The PRC property management industry is highly competitive and fragmented. See “Industry Overview—Competition—Competitive Landscape” in this Document. Our major competitors include large national, regional and local property management companies. Competition may intensify as our competitors expand their product or service offerings or as new competitors enter our existing or new markets. We believe that we compete with our competitors on a number of factors, primarily including service quality, brand recognition,

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business scale, price and financial resources. Our competitors may have better track records, longer operating histories, greater financial, technical, sales, marketing, distribution and other resources, greater brand recognition and larger customer bases. As a result, these competitors may be able to devote more resources to the development, promotion, sale and support of their services. In addition to competition from established companies, emerging companies may enter our existing or new markets. The emerging companies may have stronger capital resources, greater expertise in management and human resources, greater financial, technical and public relations resources, and stronger relationship with local governments than we do.

We believe our current success can be partially attributed to our standardization of operations in providing our property management services. We plan to optimize our service standardization practice to enhance the quality and consistency of our services, improve our onsite service teams’ efficiency and reduce our costs. Our competitors may emulate our business model, and we may lose a competitive advantage that has distinguished ourselves from our competitors. As a result, we may fail to compete successfully against existing and new competitors, which may have a material adverse impact on our business, financial position, results of operations and prospects.

Furthermore, we seek to have large and reputable property developers as our clients, and such clients may develop their own property management businesses and provide property management services in-house. In such event, we may lose future business from such property developers, and our business, results of operations and financial position could be adversely affected.

We may fail to secure new, or renew our existing, property management service contracts on favorable terms, or at all.

We believe that our ability to expand our portfolio of property management service contracts is key to the sustainable growth of our business. During the Track Record Period, we procured new property management service contracts generally through tender processes. The selection of a property management company depends on a number of factors, including but not limited to the quality of services, the level of pricing, brand recognition, and the operating history of the property management company. Our efforts may be hindered by factors beyond our control, which may include, among others, changes in general economic conditions, evolving government regulations, market competition as well as supply and demand dynamics within the property management industry. We cannot assure you that we will be able to procure new property management service contracts in the future on acceptable terms or at all.

We usually enter into preliminary property management service contracts with real estate developers during the later stages of property development. We cannot assure you that we will be able to maintain our high success rate in winning such preliminary property management service contracts in relation to property projects developed by the Evergrande Group or others. In addition, such contracts are transitional in nature and facilitate the transfer of legal and actual control of the properties from property developers to property owners. Preliminary property management service contracts typically expire only when property owners’

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associations are established and choose to enter into new property management service contracts through required procedures. As of June 30, 2020, property owners’ associations were established in 29 residential properties we managed, accounting for approximately 4.1% of the total number of residential properties under our management and such property owners’ associations had not requested to replace us with other property management companies as of the Latest Practicable Date. As of June 30, 2020, our property management service contracts with an aggregate contracted GFA of 474.2 million sq.m. did not indicate expiration dates, while the remaining property management service contracts with an aggregate contracted GFA of 39.1 million sq.m. had terms ranging from two to ten years. See “Business—Property Management Services—Property Management Service Agreements.” Although, as advised by our PRC Legal Advisors, the establishment of property owners’ associations and the change of property management service providers are subject to certain restrictions, such as the requirement to hold a general meeting of property owners to vote to establish a property owners’ association, and the quorum and approval requirements for the general meeting of the property owners to engage or dismiss a property management service provider. See “Regulatory Overview—Legal Supervision over Property Management Services.” We cannot assure you that these restrictions may be relaxed or removed in the future. Further, we cannot assure you that we will be engaged by the property owners’ associations to provide property management services.

Even where we succeed in entering into property management service contracts with property owners’ associations, we cannot assure you that they will be renewed upon expiration. It is also possible that our contracts with property owners’ association may be early terminated for cause or that property owners’ associations may make allegations of cause in order to pressure us to withdraw from the contracts. In such cases, we would no longer be able to provide community value-added services to residential properties who have terminated our engagements, in addition to our property management services. During the Track Record Period, we terminated two property management service agreements due to our own commercial considerations prior to the expirations of the relevant property management service agreements, and none of our property management service agreements was terminated or not renewed upon expiration by property owners’ associations or property owners. In 2017, 2018, 2019 and the six months ended June 30, 2020, our retention rates for property management service contracts were 100%, 99.8%, 99.9% and 100%, respectively. Our retention rates for 2018 and 2019 was lower than 100% as a result of terminations initiated by us. If our property management service contracts are terminated or not renewed, there can be no guarantee that we would be able to find other business opportunities and enter into alternative property management service contracts on commercially acceptable terms, or at all. Moreover, as both termination and non-renewal of property management service contracts may be detrimental to our reputation, we may experience material adverse effects to our brand value. We believe that our brand value is essential to our ability to procure new property management service contracts. Failure to cultivate our brand value may diminish our competitiveness in the industry.

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We may not be able to collect property management fees from property owners and property developers, and as a result, we may incur impairment losses on trade receivables.

We may encounter difficulties in collecting property management fees from property owners especially in communities where the vacancy rate is relatively high. Even though we seek to collect overdue property management fees through a number of collection measures, we cannot assure you that such measures will be effective. See “Business—Property Management Services—Payment and Credit Terms.”

Before allowance for impairment of trade receivables, our trade receivables were RMB1,882.7 million, RMB2,876.5 million, RMB4,914.1 million and RMB6,011.0 million as of December 31, 2017, 2018 and 2019 and June 30, 2020, respectively. The increase of our trade receivables during the Track Record Period was primarily due to our business expansion. In 2017, 2018, 2019 and the six months ended June 30, 2020, our trade receivable turnover days were 116, 147, 194 and 218 days, respectively. See “Financial Information—Description of Certain Combined Balance Sheet Items—Trade and Notes Receivables.”

Delays in receiving payments from, or non-payment by property developers, third-party property owners and property residents would adversely affect our cash flow position and our ability to meet our working capital requirements. Our allowance for impairment of trade and notes receivables amounted to RMB98.1 million, RMB111.6 million, RMB153.8 million and RMB197.6 million as of December 31, 2017, 2018 and 2019 and June 30, 2020, respectively. Although our management’s estimates and the related assumptions have been made in accordance with information available to us, such estimates or assumptions for receivable provisions may need to be adjusted if new information becomes known. See “Financial Information—Significant Accounting Policies and Critical Accounting Judgments and Estimates.” In the event that the actual recoverability is lower than expected, or that our past allowance for impairment of trade receivables becomes insufficient in light of any new information, we may need to provide for an additional allowance for impairment of trade receivables, which may in turn materially and adversely affect our business, financial position and results of operations.

Natural disasters, acts of war, occurrence of epidemics and other disasters could affect our business and the national and regional economies in the PRC.

Our business is subject to general economic and social conditions in the PRC. Natural disasters, epidemics and other unpredictable or unforeseen events which are beyond our control may adversely affect the economy, infrastructure and livelihood of the people in China. Some regions in China, including the cities where we operate, are under the threat of flood, earthquake, sandstorm, snowstorm, fire, drought, or epidemics such as the Severe Acute Respiratory Syndrome, or SARS, the H5N1 avian flu, the human swine flu, also known as Influenza A (H1N1), or, most recently, the COVID-19 pandemic.

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An outbreak of respiratory illness caused by a novel coronavirus, namely COVID-19, was identified in late 2019 and spread globally in over 200 countries and territories. In March 2020, the World Health Organization characterized the outbreak of COVID-19 a pandemic. The accelerated spread of the virus globally has caused extreme volatility in the global financial markets. For example, China experienced a slower-than-usual growth of 3.2% in its GDP in the second quarter of 2020, following a steep 6.8% slump in the first quarter, which was the biggest contraction since its quarterly GDP records began. In addition, the U.S. economy suffered its sharpest downturn since at least the 1940s in the second quarter of 2020, with its GDP shrinking 9.5% from the first quarter, a drop that equals an annualized pace of 32.9%, and the US stock markets experienced extreme volatilities that repeatedly triggered stock market “circuit breakers.” The COVID-19 pandemic has had an adverse impact, and may continue to cause adverse impacts in the long-term, on the economy and social conditions in China and other affected countries, and this may have an adverse impact on the PRC property development and management industries and adversely affect our business operations. For example, to comply with the requirements of local governments with respect to community management during the outbreak of the COVID-19 pandemic, we assigned personnel to conduct visitor control for properties under our management. In addition, revenue from preliminary property management services decreased as a result of the temporary closure of sales offices and show flats during the outbreak of the COVID-19 pandemic. Our trade receivable turnover days also increased in the six months ended June 30, 2020 compared to those in 2019, partially due to the impact from the COVID-19 pandemic. While the COVID-19 pandemic appears to be contained in China for the time being, international travels and business activities have been substantially reduced which may have a material adverse impact on the Chinese economy. We are uncertain as to when the COVID-19 pandemic will be contained globally or whether it may resurge in China, and we also cannot predict whether COVID-19 pandemic will have a long-term impact on our business operations. If we are not able to effectively and efficiently operate our business and implement our strategies as planned, we may not be able to grow our business and generate revenue as anticipated, and our business operations, financial condition and prospects may be materially and adversely affected. See “Business—Effect of the COVID-19 Pandemic.”

Past occurrences of epidemics, depending on their scale, have caused different degrees of damage to the national and local economies in China. Another public health crisis in China triggered by a recurrence of SARS or an outbreak of any other epidemics, including, for example, the ongoing COVID-19 pandemic, especially in the cities where we have operations, may result in material disruptions to our operations. In addition, the outbreak of communicable diseases may affect investment sentiment and result in sporadic volatility in global capital markets or adversely affect the Chinese and other economies. Such outbreaks have resulted in restrictions on travel and public transportation and prolonged closures of retail businesses and workplaces, which may have a material adverse effect on the global economy. Any material change in the financial markets, the PRC economy or regional economies as a result of these events or developments may materially and adversely affect our business, financial position and results of operations.

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Our strategic plan to further diversify and expand our services may not succeed as planned in the future.

We have diversified our services by providing various value-added services to meet the evolving needs of our customers, primarily including property owners, residents, tenants and property developers. See the section headed “Business.” However, some of our value-added services to non-property owners and community value-added services were recently launched, such as property transaction assistance services and group purchase facilitation. With limited operating history and experience in certain regions, we may face unknown risks, rising expenses and fierce competition in the market. We have encountered and expect to continue to encounter risks and difficulties frequently experienced in relation to new service offerings, and those risks and difficulties may be heightened in a rapidly evolving market. Those risks and difficulties may affect our ability to:

attract and retain customers and qualified employees;
develop and maintain close cooperation with strategic partners to offer certain services;
maintain effective control of our development as well as operating costs and expenses;
develop and maintain internal personnel, systems, controls and procedures to comply with the extensive regulatory requirements applicable to the relevant industries;
cater for various consumer preferences, or anticipate product or service trends that will appeal to existing or potential customers;
respond to competitive market conditions and changes in industry environments; or
respond to changes in regulatory environment.

Our failure to achieve any of the above may jeopardize our ability to offer newly introduced value-added services, as well as other new services we plan to launch. We are dedicated to satisfying our customers’ needs by further strengthening our capabilities to provide and diversify our value-added services. See “Business—Our Business Strategies—Diversify Value-added Service Offerings and Improve Customer Satisfaction.” Moreover, we may consider entering into agreements with the construction companies to provide repair and maintenance services on their behalf during the post-delivery warranty periods of properties and charge service fees on a lump sum basis in the future. Launching new services and products, changing our service models or entering into new markets may also require substantial time, resources and capital. We may have limited ability to leverage on our brand name in the industries related to our value-added services in the way that we have done so in the property management industry, which could hinder our results of operations in the new market.

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Furthermore, we cannot assure you that our investment in our value-added services business can be recouped in a timely manner, or at all, or our investment return would be higher than that of other comparable companies. Our development of and investment in diversified services may be subject to PRC laws and regulations governing license approval and renewal. See “Regulatory Overview—Laws and Regulations relating to Foreign Investment.” We cannot assure you that we can obtain or renew our license on time, if at all. We cannot assure you that our future strategic development plan, which is based upon our forward-looking assessment of market prospects and customer preferences, will always turn out to be successfully. A number of factors beyond our control may also affect our plan for the development of diversified services, including changes in the PRC’s economic conditions in general, government policies and regulations on relevant industries, and changes in supply and demand for our services. Any of the foregoing could adversely affect our business, financial position and results of operations.

Increase in labor costs and subcontracting costs could harm our business and reduce our profitability.

In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our employee benefit expenses, representing our labor costs, recorded under cost of sales and administrative expenses, amounted to RMB3,024.6 million, RMB3,981.3 million, RMB4,133.1 million, RMB2,003.1 million and RMB1,948.1 million, respectively, accounting for 68.8%, 67.4%, 56.4%, 57.8% and 42.7%, respectively, of our total revenue. The increases in employee benefit expenses during the Track Record Period were mainly due to the expansion of our business and the general increase in labor cost in China. Our employee benefit expenses as a percentage of our revenue decreased during the Track Record Period, mainly attributable to our improved employee productivity and efficiency through a series of cost control measures. However, we cannot assure you that we can maintain or further improve our employee productivity and efficiency or that our cost control measures will remain effective. In addition, we outsource certain labor-intensive services and specialized services, primarily including cleaning, greening and gardening, and repair and maintenance services, to subcontractors and incurred subcontracting costs of RMB486.0 million, RMB720.0 million, RMB909.6 million, RMB417.7 million and RMB514.2 million, respectively, accounting for 11.0%, 12.2%, 12.4%, 12.1% and 11.3%, respectively, of our total revenue. To maintain and improve our profit margins, it is critical for us to control and reduce our labor costs as well as other operating costs. We face pressure from rising labor and subcontracting costs due to various contributing factors, including but not limited to:

increases in minimum wages . The minimum wage in the regions where we operate has increased substantially in recent years, directly affecting our direct labor costs as well as the fees we pay to our third-party subcontractors.
increases in headcount . As we expand our operations, we expect the headcount of our property management staff, sales and marketing staff and administrative staff to grow. We will also need to continuously retain and recruit qualified employees to meet our growing demand for talent, which may further increase our total

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headcount. Moreover, as we continue to expand our business scale, we will need more subcontractors. Increases in headcount would result in increases in other associated costs such as those related to training, social insurance and housing provident funds contributions and quality control measures.

delay in implementing management digitalization, procedure standardization and operation automation . There may be a lapse in time between our commencement of property management services for a particular property and any implementation of our management digitalization, procedure standardization and operation automation measures to that property to reduce labor costs. Before we carry out such measures, our ability to mitigate the impact of labor cost increase is limited.

We cannot assure you that we will be able to control our labor and subcontracting costs or improve our efficiency. If we cannot achieve this goal, our business, financial position and results of operations may be materially and adversely affected.

We may be subject to losses and our profit margins may decrease if we fail to control our costs in rendering our property management services on a lump sum basis.

We generated a substantial portion of our revenue from properties managed on a lump sum basis, which accounted for 99.3%, 99.4%, 99.5%, 99.5% and 99.6% of our revenue from property management services in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively. On a lump sum basis, we charge property management fees at a predetermined fixed price per sq.m. per month, representing all-inclusive fees for the property management services provided. When total costs and expenses incurred exceed the amount of property management fees we receive, we bear the shortfall and may not charge additional fees to property developers, property owners or residents during the contract term. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, we incurred losses of RMB114.8 million, RMB112.3 million, RMB59.0 million, RMB34.8 million and RMB14.4 million, respectively, with respect to 96, 84, 48, 50 and 24 properties under our management, respectively. Such losses were primarily because the amount of property management fees we received was insufficient to cover the service costs incurred to offer quality property management services. Our revenue from property management services from such loss-making properties was approximately RMB573.7 million, RMB501.8 million, RMB227.4 million, RMB120.1 million and RMB45.1 million in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively, representing 13.0%, 8.5%, 3.1%, 3.5% and 1.0% of our total revenue for the same periods, respectively.

To improve our profitability, we can either try to improve our fee rates when renewing service agreements, or control our costs and expenses through a series of cost-saving initiatives. However, our ability to mitigate losses through cost-saving initiatives, such as operation automation measures to reduce labor costs and energy-saving measures to reduce energy costs, may not be successful. Moreover, our cost-saving efforts may negatively affect the quality of our property management services, which in turn will reduce owners’ willingness to pay us property management fees. We may be also subject to local regulations on price

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control which may restrict our ability to raise our fee rates. Therefore, we cannot assure you that we could successfully raise our fee rates; nor could we assure you that our cost-saving initiatives will achieve their intended results. Failure to raise our fee rates or implement cost-saving measures could materially and adversely affect our results of operations and financial condition.

We had negative operating cash flow in 2019.

Such operating cash outflows may not always be fully offset by other cash inflows, such as bank and other borrowings. Although we seek to effectively manage our working capital, we cannot assure you that we will be able to match the timing and amounts of our cash inflows with those of our cash outflows, such as our payment obligations.

During the Track Record Period, we mainly relied on internal resources generated from our operations, including proceeds from property management services and other services. Negative operating cash flow may require us to obtain additional financing, such as bank and other borrowings, to meet our operating needs and obligations and to support our expansion plans. In the event that we are unable to generate sufficient cash flow from our operations or otherwise unable to obtain sufficient external funds to finance our business, our liquidity and financial condition as well as our ability to grow our business may be materially and adversely affected. If we resort to other financing activities, we will incur additional financing costs, and we cannot assure you that we will be able to obtain the financing on terms acceptable to us, or at all. Such limitations could reduce our competitiveness and increase our exposure and sensitivity to adverse economic and industry conditions, which could materially adversely affect our financial condition and results of operations. See “Financial Information—Liquidity and Capital Resources—Cash Flow—Net cash Flow (Used in)/from Operating Activities.”

We may be involved in legal and other disputes and claims or subject to administrative actions from time to time arising out of our operations.

During the Track Record Period, we had been involved in legal and other disputes in our ordinary course of business and in the future, we may, from time to time, be involved in disputes with and subject to claims by property developers, property owners, residents and tenants to whom we provide property management and other services. Disputes may also arise if our customers are dissatisfied with our services. In addition, customers may take legal action against us if they perceive that our services are inconsistent with the service standards we agreed to. Furthermore, we may from time to time be involved in disputes with and subject to claims by other parties involved in our business, including, among others, our third-party

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subcontractors, suppliers, employees, business partners, and other third parties. All of these disputes and claims may lead to legal or other proceedings or cause negative publicity against us, thereby resulting in damage to our reputation, substantial costs and diversion of resources and management’s attention from our business activities. Any such dispute, claim or proceeding may have a material adverse effect on our business, financial position and results of operations.

We are also subject to extensive and increasingly stringent environmental protection, health and labor safety laws, regulations and decrees that impose fines for violation of such laws, regulations or decrees. In addition, there is a growing awareness of environmental, health and labor safety issues, and we may sometimes be expected to meet a standard which is higher than the compulsory requirements. There can be no guarantee that more stringent environmental protection, health and labor safety requirements or standards will not be imposed in the future. We cannot assure you that our procedures and training will be effective in satisfying all relevant environmental and safety requirements. If we are unable to comply with existing or future environmental, health and labor safety laws and regulations or are unable to meet public expectations in relation to relevant matters, our reputation may be damaged and we may be required to pay penalties or fines or take remedial actions and our operations may be suspended, any of which may materially and adversely impact our business, financial position, results of operations and growth prospects.

In addition, we are subject to various regulations in relation to price control, fire safety, advertisement, tender and bidding process and other aspects. We may be subject to administrative penalties or other penalties if we fail to comply with applicable regulations and requirements. In 2017, 2018, 2019 and the six months ended June 30, 2020, we incurred administrative penalties of RMB0.8 million, RMB1.1 million, RMB2.0 million and RMB3.3 million, respectively. While we believe the administrative penalties that were imposed on us during the Track Record Period were not material, if similar incidents occur or we fail to comply with other applicable regulations in the future, we may be subject to administrative fines or other penalties, and our business, financial position and results of operations could be materially and adversely affected.

Damage to the communal areas of properties under our management may adversely affect our business, financial position and results of operations.

The communal areas of the properties we manage may suffer damage due to causes beyond our control, including but not limited to natural disasters, accidents, resident’s intended or unintended actions. Although PRC law mandates that each residential community establish a special fund to pay for the repair and maintenance costs of communal areas, there can be no guarantee that there will be sufficient sums in those special funds. Where the damage is caused by natural disasters such as earthquakes, floods or typhoons, or accidents or intentional harm such as fires, the damage caused may be extensive. At times additional resources may have to be allocated to assist police and other governmental authorities in investigating the incidents or criminal actions that may have been involved. We may also be required to designate and use a portion of the communal area specifically for the purpose of epidemic prevention.

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As the property management service provider, we may be viewed as responsible for restoring the communal areas and assisting any investigative efforts. In the event that there is any shortfall in the special funds necessary to cover all the costs involved, we would try to collect the amount of the shortfall from the property owners. To the extent that our collection attempts are unsuccessful, we may still have to proceed with the work and experience material adverse effects on our business, financial position and results of operations. The additional costs we incur due to damage to the communal areas of our properties may increase along with our business growth and geographic expansion.

We may be subject to fines for our failure to register for and/or contribute to social insurance fund and housing provident fund on behalf of some of our employees.

During the Track Record Period, our Company and some of our PRC subsidiaries did not register for and/or fully contribute to certain social insurance and housing provident funds for their employees. As such, we may be subject to late fees and fines for our insufficient contributions to the social insurance plans and housing provident fund as well as nonregistration of an account for housing provident fund. As of the Latest Practicable Date, we had not received any notice from the local government authorities regarding any claim for inadequate contribution of our current and former employees. We made provisions in the amounts of RMB1.1 million, RMB2.4 million, RMB3.9 million and RMB2.3 million in 2017, 2018, 2019 and the six months ended June 30, 2020, respectively.

According to the relevant PRC laws and regulations, (i) for outstanding social insurance fund contributions that we did not fully pay within the prescribed deadlines, the relevant PRC authorities may demand that we pay the outstanding social insurance contribution within a stipulated deadline and we may be liable for a late payment fee equal to 0.05% of the outstanding contribution amount of each day of delay; if we fail to make such payments within a stipulated deadline, we may be liable to a fine of one to three times of the outstanding contribution amount; and (ii) for the housing provident fund registration that we fail to complete before the prescribed deadline, the relevant government authorities may demand that we complete the housing provident fund registration by a stipulated deadline. If we fail to rectify by that deadline, we may be subject to a fine ranging from RMB10,000 to RMB50,000 for each non-compliant subsidiaries or branches and, for outstanding housing provident fund contributions that we did not fully pay within the prescribed period, the relevant government authorities may demand that we pay the outstanding housing provident fund contributions by a stipulated deadline. If we fail to rectify by that deadline, we may be subject to an order from the relevant People’s court for compulsory enforcement. We cannot assure you that the relevant local government authorities will not require us to pay the outstanding amount within a specific time limit or impose late or additional fees or fines on us, which may materially and adversely affect our financial condition and results of operation.

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Negative publicity, including adverse information on the internet, about us, our Shareholders and affiliates, our brand and our management may have a material adverse effect on our business, reputation and the trading price of our Shares.

Negative publicity about us, our Shareholders and affiliates, the properties we manage, our brand, our management and other aspects of our business operations may arise from time to time. They may appear in the form of comments on internet postings and other media sources. For example, in the event that we fail to meet our customers’ expectations as to the quality of our services, our customers may disseminate negative comments on social media platforms. Our subcontractors may also become the subject of negative publicity for various reasons, such as customer complaints about the quality of their services. Given our close relationship with the Evergrande Group from whose projects and properties we derive substantially all of our property management services revenue, negative publicity about the Evergrande Group, its business and financial condition could adversely affect our reputation, business, results of operations and share price. In the long term, if such negative publicity about us, our Shareholders and affiliates, our brand, our management and other aspects of our business operations damage our reputation and result in a loss of customer confidence, it would affect our future ability to attract and retain new customers and employees. As a result, our business, financial position, results of operation and prospects would be materially and adversely affected.

Our success largely depends on the retention of our senior management team and our ability to attract and retain qualified and experienced employees.

Our continued success depends on the efforts of our senior management team and other key employees. As they possess key connections with potential business partners and industry expertise, losing their services may have a material adverse effect on our business. Should any or all members of our senior management team join or form a competing business with their expertise, connections and knowledge of our business operations, we may not be able to estimate the extent of and compensate for such damage. If any of our key employees leaves and we are unable to promptly hire and integrate a qualified replacement, our business, financial position and results of operations may be materially and adversely affected. In addition, the future growth of our business will depend, in part, on our ability to attract and retain qualified personnel in all areas of our business, including corporate management and property management personnel. If we are unable to attract and retain these qualified personnel, our growth may be limited and our business, financial position and operating results could be materially and adversely affected.

We rely on third-party subcontractors and suppliers to perform certain property management services and we may be exposed to liabilities arising from disputes and claims in relation to products and services provided by our subcontractors and suppliers.

During the Track Record Period, we outsourced certain property management services, primarily including cleaning, greening and gardening, and repair and maintenance services, to third-party subcontractors. We may not be able to monitor their services as directly and

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efficiently as with our own services. They may take actions contrary to our or our customers’ instructions or requests, or be unable or unwilling to fulfill their obligations. Moreover, the services and products provided by subcontractors may be substandard or defective, or otherwise result in personal or property damages to our customers. As a result, we may have disputes with our subcontractors, or may be held responsible for their actions, services or products, which could lead to damages to our reputation, additional expenses and business disruptions and potentially expose us to litigation and damage claims. We may also incur additional costs while seeking to monitor or replace subcontractors who do not perform in accordance with the contracts.

We cannot assure you that upon the expiration of our agreements with our current third-party subcontractors we will be able to renew such agreements or find suitable replacements in a timely manner, on terms acceptable to us, or at all.

In addition, if our third-party subcontractors fail to maintain a stable team of qualified labor or do not have easy access to a stable supply of qualified labor or fail to perform their obligations properly or in a timely manner, the work process may be interrupted. Any interruption to the third-party subcontractors’ work process may potentially result in us breaching our contract with our customers. Any of such events could materially and adversely affect our service quality, our reputation, as well as our business, financial position and results of operations.

We are exposed to risks associated with the use of third-party online payment platforms.

We accept payments via various methods, including but not limited to online payments through third-party platforms such as WeChat Pay and Alipay. Transactions conducted through such third-party platforms involve the transmission of confidential information such as credit card numbers, personal information and billing addresses over public networks. However, we do not have control over the security measures taken by third-party platforms. In the event that the security or integrity of these third-party platforms are compromised, we may experience material adverse effects on our ability to process property management fees. In the event funds paid using these platforms are misappropriated or otherwise do not reach our accounts, for example, in the event of a fraud involving wire transfers from the payment platform, we may bear financial loss which is difficult or impossible to recover from the wrongdoers or other responsible parties. We may also be perceived as partially responsible for failures to secure personal information and be subject to claims alleging liability brought by our customers or investigations investigated by regulatory authorities. Such legal proceedings or investigations may divert our management attention, damage our reputation and harm our brand value. Furthermore, the PRC Government may yet promulgate new laws and policies to regulate the use of third-party online payment platforms, which may increase our compliance and operational costs.

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Failure to protect confidential information of our property owners, residents and tenants, and our network against security breaches, any actual or perceived failure by us or third parties to comply with applicable data protection laws and regulations or privacy policies could harm our business, financial condition and results of operations.

During the ordinary course of our business, we collect, store and process personal and other sensitive data from property owners, residents and tenants, such as addresses, facial identity, phone numbers, bank account or credit card numbers. Our security measures may be breached due to employee error, malfeasance, system errors or vulnerabilities, or otherwise. Outside parties may also attempt to fraudulently induce employees to disclose sensitive information in order to gain access to our data or data of property owners, residents and tenants. While we have taken steps to protect the confidential information that we have access to, our security measures could be breached. Because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any accidental or willful security breaches or other unauthorized access to our platforms could cause confidential customer information to be stolen and used for unlawful purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity.

The PRC laws and regulations in relation to cyber security are relatively new and evolving, their interpretation and enforcement involve significant uncertainties, and the PRC government authorities may promulgate new laws and regulations regulating this area in the future, which could be costly to comply with. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, or if there are any public concerns about our practices with regard to the collection, use or disclosure of personal information or other privacy-related matters, even if unfounded, our reputation and brand image could be severely damaged, which may, in turn, have a material and adverse effect on our business, financial position and results of operations.

We may experience failures in or disruptions to our information technology systems.

We use various platforms and systems in our business operations. If we are unable to detect or promptly remedy any system malfunction or misconfiguration, we may experience system interruptions or delays, which could adversely affect our operating results. In addition, we may experience occasional system interruptions and delays or other technical problems that make our online application and related services unavailable or difficult to access, and prevent us from promptly responding or providing services to our customers, which may reduce the attractiveness of our application and even incur losses to our customers who may bring legal proceedings against us. Moreover, failures in or disruptions to our information technology systems, loss or leakage of confidential information, or breach of network security could cause

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transaction errors, processing inefficiencies and the loss of customers and sales, and subject us to increased costs, litigation and other liabilities, which could materially and adversely affect our business, financial position, results of operations and our reputation.

Our value-added services through Evergrande Smart Community mobile application may fail to provide satisfactory products and services and attract and retain sufficient interest from property owners and residents.

We aim to expand the functionality of our Evergrande Smart Community mobile application, to increase accessibility and improve user experience and plan to attract further use by residents of the properties we manage as well as third-party vendors. We regularly seek to introduce different products and services from third-party vendors on the Evergrande Smart Community mobile application. However, our Evergrande Smart Community mobile application is relatively new and still evolving and we cannot assure you that we will be able to grow our online services as planned. There can be no assurance that property owners and residents will respond favorably to the services and products offered on the Evergrande Smart Community mobile application. In addition, the provision of value-added telecommunication service will require us to obtain an Internet Content Provider license, which is not easy to obtain. We do not currently possess such license, which restricts our ability to expand our products and services offering through our Evergrande Smart Community mobile application. If our Evergrande Smart Community mobile application fails to provide satisfactory products and services in order to attract or retain sufficient interests from property owners and residents as planned, property owners and residents may cease using the Evergrande Smart Community mobile application or turn to competing service platforms. In such event, we will not be able to successfully develop our community value-added services or introduce more revenuegenerating value-added and other services through Evergrande Smart Community mobile application. Moreover, we may also encounter technical problems, security issues and logistical issues that may prevent our platform from functioning properly and our users from receiving desired products and services, and our business, financial position and results of operations could be adversely affected.

We may fail to recover all payments made on behalf of property owners and residents of the properties managed on a commission basis.

In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, revenue generated from our property management services on a commission basis accounted for 0.7%, 0.6%, 0.5%, 0.5% and 0.4%, respectively, of our revenue from property management services. When we are contracted to manage communities on a commission basis, we essentially act as an agent of the property owners. As of the end of a period, if the working capital of a project accumulated is insufficient to cover the expenses such project incurs to arrange for property management services, the shortfall will be recognized as receivables subject to impairment. Our management will then make estimates on whether we have the ability to settle the payments made on behalf of residents. For the balances that our management believes may not be recovered within a reasonable time, we will write such balances off as an impairment of trade receivables.

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Although our management’s estimates will be made in accordance with currently available information, such estimates may not be accurate. In the event that the actual recoverability is lower than expected, or that our past allowance on bad debt is deemed insufficient in light of new information, we may need to make more allowance on bad debt, which in turn may materially and adversely affect our business, financial position and results of operations.

We are exposed to risks associated with failing to detect and prevent fraud, negligence or other misconduct (accidental or otherwise) committed by our employees, subcontractors or third parties.

We are exposed to fraud or other misconduct committed by our employees, subcontractors, agents, customers or other third parties that could subject us to financial losses and sanctions imposed by governmental authorities as well as seriously harm our reputation. For example, theft conducted by third parties or properties we manage may cause us to make compensation if we were held to be negligent or reckless and will also cause us to suffer damage to our reputation in the market.

Our management information system and internal control procedures are designed to monitor our operations and overall compliance. However, they may be unable to identify non-compliance and/or suspicious transactions in a timely manner, or at all. There will therefore continue to be the risk that fraud and other misconduct may occur, resulting in financial loss, negative publicity or other negative outcomes, which may have an adverse effect on our business, reputation, financial position and results of operations.

We may be involved in intellectual property disputes and claims.

We currently hold a number of domain names, patents and copyrights and had also obtained the license of certain trademarks in the PRC. See “Business—Intellectual Property.” We rely on and expect to continue to rely on a combination of confidentiality and license agreements, as well as trademark, copyright and domain name protection laws, to protect our proprietary rights. Nevertheless, these measures afford limited protection. Policing unauthorized use of proprietary information can be difficult and expensive. In addition, enforceability, scope and validity of laws governing intellectual property rights in the PRC are uncertain and still evolving, and could involve substantial risks to us. If we were unable to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights, it could have a material adverse effect on our business, results of operations and financial position.

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Moreover, we may become subject to claims from competitors or third parties alleging intellectual property infringement by us in our ordinary course of business from time to time. Any claims or legal proceedings brought against us in relation to such issues, with or without merit, could result in substantial costs and divert capital resources and management attention. In the event of an adverse administrative or judicial decision, we may be compelled to pay substantial damages or to seek licenses from third parties and pay ongoing royalties on unfavorable terms. Moreover, regardless of whether we prevail, intellectual property disputes may damage our brand value and reputation in the eyes of current and potential customers and in our industry.

Fluctuations in amounts of tax benefits or government grants may lead to volatility in our profit.

We enjoy favorable treatment from government authorities in respect of, among other things, tax benefits and government grants to support local corporate and economic development and to encourage our effort of stabilizing employment. Certain of our subsidiaries in the PRC are located in western China or in Hainan Province, which are subject to a preferential income tax rate of 15%. Our government grants amounted to RMB5.4 million, RMB7.7 million, RMB50.9 million, RMB10.6 million and RMB37.9 million, or 5.1%, 3.2%, 5.5%, 2.6% and 3.3% of our profit for the year or period, for 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively. Tax benefits and government grants fluctuated during the Track Record Period because such benefits and grants were subject to the government policy in that year or period. There can be no assurance that we will continue to receive significant amounts of tax benefits or government grants, or at all. Accordingly, we may experience additional fluctuations in our tax benefits and government grants, which may lead to volatility in our profit.

There are uncertainties about the recoverability of our deferred tax assets, which could adversely affect our results of operations.

We recorded deferred tax assets of RMB38.4 million, RMB55.6 million, RMB66.3 million and RMB79.0 million, respectively, as of December 31, 2017, 2018 and 2019 and June 30, 2020. Deferred tax assets can only be recognized to the extent that it is probable that future taxable profits will be available against which the unused tax credits can be utilized. However, there is no assurance that our expectation of future earnings would be accurate due to factors beyond our control, such as general economic conditions and negative development of the regulatory environment, in which case, we may not be able to recover our deferred tax assets which thereby could have an adverse effect on our results of operations.

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Accidents in our business may expose us to liability and reputational risk.

Accidents, such as work injuries, may occur during the course of our business. For example, repair and maintenance services performed by our employees and subcontractors may involve the handling of tools and machinery that carry the inherent occupational risk of accidents. As a result, we are exposed to risks in relation to work safety, including but not limited to claims for injuries, fatal or otherwise, sustained by our employees or subcontractors. To the extent that we incur additional costs, we may suffer material adverse effects to our business, financial position, results of operations and brand value. In addition, we are exposed to claims that may arise due to employees’ or third-party subcontractors’ negligence or recklessness when performing repair and maintenance services. We may be held liable for the injuries or deaths of employees, subcontractors, residents or others. Our insurance may not fully cover the claims or costs arising from such accidents. We may also experience interruptions to our business and may be required to change the manner in which we operate as a result of governmental investigations or the implementation of safety measures upon occurrence of accidents. Moreover, such occurrences may also damage our reputation and brand in the property management industry. Any of the foregoing could adversely affect our reputation, brand, business, financial position and results of operations.

Our insurance coverage may not sufficiently cover the risks related to our business.

We maintain insurance policies against major risks and liabilities arising from our business operations, primarily (i) liability insurance to cover liabilities for property damages or personal injuries suffered by third parties arising out of or related to our business operations; and (ii) property insurance for damages to both movable and immovable properties owned by us or in our custody. We cannot assure you that our insurance coverage will be sufficient or available to cover damage, liabilities or losses we may incur in the course of our business. Moreover, there are certain losses for which insurance is not available in the PRC on commercially practicable terms, such as losses suffered due to business interruptions, earthquakes, typhoons, flooding, war or civil disorder. In the event of a dispute with our insurers, we may be required to engage in protracted litigation or negotiations in order to obtain benefits for which we are legally due, and those efforts may be wholly or partly unsuccessful. If we are held responsible for any such damages, liabilities or losses and there is an insufficiency or unavailability of insurance, there could be a material adverse effect on our business, financial position and results of operations. See “Business—Insurance.”

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Some of our lease agreements have not been filed with the relevant PRC authorities and, as a result, we might be subject to administrative fines.

During the Track Record Period, we leased properties in various locations in the PRC for use primarily as office spaces, canteens and employee dormitories. As of the Latest Practicable Date, we had not completed the administrative filings of 875 lease agreements relating to properties we leased. According to applicable PRC regulations, the lessor and the lessee of a lease agreement are required to file the lease agreement with relevant governmental authorities within 30 days after the execution of the lease agreement. If the filing is not made, the governmental authorities may require that the filing be made within a stated period of time, failing which they may impose a fine ranging from RMB1,000 to RMB10,000 for each agreement that has not been properly filed. According to applicable PRC regulations, lessors of the related leases need to provide us with certain documents (such as their business licenses or identification information) in order to complete the administrative filing. There can be no assurance that the lessors of our leased properties will be cooperative in the process of completing the filings. If we fail to complete the administrative filings within the period required by the relevant governmental authorities and relevant authorities determine that we shall be liable for failing to complete the administrative filings of all the relevant lease agreements, we might be subject to fines. See “Business—Properties.”

We may fail to obtain or renew required permits, licenses, certificates or other relevant PRC governmental approvals necessary for our business operations.

We are required to obtain and maintain certain licenses, permits, certificates and approvals in order to provide property management and certain other services that we currently offer. We must meet various specific conditions in order for the government authorities to issue or renew any certificate or permit. We cannot guarantee that we will be able to adapt to new rules and regulations that may come into effect from time to time with respect to our services or that we will not encounter material delays or difficulties in fulfilling the necessary conditions to obtain or renew all necessary certificates or permits for our operations in a timely manner, or at all, in the future. Therefore, in the event that we fail to obtain or renew, or encounter significant delays in obtaining or renewing, the necessary government approvals for any of our operations, we will not be able to continue with our development plans, and our business, financial position and results of operations may be adversely affected.

We are susceptible to changes in the regulatory landscape of the PRC property management industry.

Our operations are affected by the regulatory environment and measures affecting the PRC property management industry. In particular, the fees that property management companies may charge in connection with property management services are strictly regulated and supervised by relevant PRC authorities. See “Regulatory Overview—Legal Supervision over Property Management Services—Fees Charged by Property Management Enterprises.” In December 2014, the NDRC issued the Circular of NDRC on the Opinions on Relaxing Price Controls in Certain Services (《國家發展和改革委員會關於放開部分服務價格意見的通知》)

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(發改價格[2014]2755號) (the “ NDRC Price Control Circular ”), which requires provinciallevel price administration authorities to abolish all price control or guidance policies on residential properties other than affordable housing, housing-reform properties and properties in old residential areas and preliminary property management agreements. Property management fees for affordable housing, housing-reform properties and properties in old residential areas and management fees under preliminary property management agreements remain subject to price guidance imposed by provincial level price administration departments and the administrative departments of housing and urban-rural development. Although we expect the price controls on residential properties to be relaxed over time pursuant to the NDRC Price Control Circular, our property management fees will continue to be subject to price controls until the relevant authorities pass local regulations to implement the NDRC Price Control Circular.

The limits on fees imposed by government authorities may negatively affect our pricing capability and profit margin. We may experience diminished profit margins should our labor and other operating costs increase but we are unable to raise property management fees accordingly. If a property is managed on a lump sum basis, we may experience a decrease in profit margin. If a property is managed on a commission basis, in the event that the collected fees after deducting the commission are insufficient to cover property management expenses, the property owners are legally responsible for making up for such shortage. In practice, however, it may still be impractical to collect the shortage from property owners due to stringent governmental regulations on property management fees and the lack of cooperation from property owners. We may therefore be forced to reduce costs, so as to strike a balance between collected property management fees and expenditures in relation to service provisions, or write off the uncollected payments. Such cost saving measures to mitigate impact of uncollected property management fees may also adversely affect our service quality and customer satisfaction.

The PRC Government may also unexpectedly promulgate new laws and regulations related to other aspects of our industry. To the extent that they increase our compliance and operational costs, our business, financial position and results of operation could be materially and adversely affected.

Our business is significantly influenced by various factors affecting our industry and general economic conditions and may be adversely affected by fluctuations in the global economy and financial markets.

Our business, financial position and results of operations are and will continue to be dependent on various factors affecting the property management industry, the real estate industry and general economic conditions, most of which are beyond our control. For example, any economic slowdown, recession or other developments in the PRC social, political, economic or legal environment could result in fewer new property development projects, or a decline in the purchasing power of residents living in the communities we manage, resulting in a lower demand for our property management services and value-added services. As such, our business, financial position, results of operations and prospects would be materially and adversely affected.

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In addition, the outlook for the world economy and financial markets remains uncertain. In Europe, several countries are facing difficulties in refinancing sovereign debt. In the United States, the unemployment rate remains relatively high. In Asia and other emerging markets, some countries are expecting increasing inflationary pressure as a consequence of liberal monetary policy or excessive foreign fund inflow and outflow, or both. In the Middle East, Eastern Europe and Africa, political unrest in various countries has resulted in economic instability and uncertainty. In the United Kingdom, a remain-or-leave referendum on its membership within the European Union was held in June 2016, the result of which favored the exit of the United Kingdom from the European Union, or Brexit. On January 31, 2020, the United Kingdom officially exited the European Union following a UK-EU Withdrawal Agreement signed in October 2019. The United Kingdom and the European Union will have a transition period until December 31, 2020 to negotiate, among others, trade agreements in details. Given the lack of precedent and uncertainty of the negotiation, the effect of Brexit remains uncertain, and Brexit has and may continue to create negative economic impact and increase volatility in the global market.

These and other issues resulting from the global economic slowdown and financial market turmoil have adversely affected, and may continue adversely affecting, property owners and potential property purchasers, which may lead to a decline in the general demand for our services and erosion of their prices. In addition, any further tightening of liquidity in the global financial markets may negatively affect our liquidity. Therefore, if the global economic slowdown and turmoil in the financial markets crisis continue, our business, financial condition and results of operations may be negatively affected.

We are affected by the PRC government regulations on the real estate industry.

We generated most of our revenue from our property management services business during the Track Record Period. The performance of our property management services is primarily dependent on the total GFA and number of property projects we manage. As such, the growth in our property management services business is, and will likely continue to be, affected by the PRC government regulations on the real estate industry. For further information, see “Regulatory Overview.”

The PRC Government has implemented various restrictive measures to discourage speculation in the real estate market. The government exerts considerable direct and indirect influence on the development of the PRC real estate industry by imposing industry policies and other economic measures, such as control over the supply of land for property development, control of foreign exchange, property financing, taxation and foreign investment. Through these policies and measures, the PRC Government may restrict or reduce property development activities, place limitations on the ability of commercial banks to make loans to property purchasers, impose additional taxes and levies on property sales and affect the delivery schedule and occupancy rates of the properties we service. Any such governmental regulations and measures may affect the PRC real estate industry, thus limiting our business growth and resulting in a material adverse effect on our business, financial position and results of operations.

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RISK FACTORS

We are subject to changing laws and regulations regarding regulatory matters, environmental, social and governance and public disclosure that have increased both our costs and the risk of non-compliance.

We are or will be subject to rules and regulations by various governing bodies, including, for example, once we have become a public company, the Stock Exchange and the SFC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, as well as the various regulatory authorities in China and the Cayman Islands, and to new and evolving regulatory measures under applicable laws. Our efforts to comply with new and changing laws and regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalties and our business may be harmed.

RISKS RELATING TO DOING BUSINESS IN CHINA

We are vulnerable to adverse changes in economic, political and social conditions and government policies in China.

We manage all of our business operations from our headquarters in Shenzhen. Accordingly, our financial position, results of operations and prospects are, to a significant degree, subject to the economic, political, social and legal conditions in China. The PRC economy differs from that of most developed countries in many respects, including the extent of government involvement, level of economic development, investment control, resource allocation, growth rate and control over foreign exchange.

Although the PRC economy has transitioned from a planned economy to a more market-oriented economy for about four decades, a substantial portion of productive assets in the PRC is still owned by the PRC government. The PRC government also exercises significant control over the economic growth of the PRC through allocating resources, controlling payments of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. In recent years, the PRC government has implemented measures emphasizing the utilization of market forces in economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance practices in business enterprises. We may not in all cases be able to capitalize on such measures, and we may be adversely affected in some cases.

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Fluctuations in exchange rates may have a material adverse impact on our business.

The exchange rate of the Renminbi fluctuates against the Hong Kong dollar, U.S. dollar and other foreign currencies and is affected by, among other factors, the policies of the PRC Government and changes in international and domestic political and economic conditions. It is difficult to predict how market forces and the PRC Government’s policies will continue to impact Renminbi exchange rates. The PRC Government may announce further changes to the exchange rate system, and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the Hong Kong dollar, U.S. dollar or other foreign currencies.

Substantially all of our revenue, liabilities and assets are denominated in Renminbi, while our proceeds from the [ REDACTED ] will be denominated in Hong Kong dollars. Material fluctuations in the exchange rate of the Renminbi against the Hong Kong dollar may negatively impact the value and amount of any dividends payable on our Shares. For example, significant appreciation of the Renminbi against the Hong Kong dollar could reduce the amount of Renminbi received from converting [ REDACTED ] proceeds or proceeds from future financing efforts to fund our operations. Conversely, significant depreciation of the Renminbi may increase the cost of converting our Renminbi-denominated cash flow into Hong Kong dollars, thereby reducing the amount of cash available for paying dividends on our Shares or carrying out other business operations.

Inflation in China could negatively affect our profitability and growth.

Economic growth in China has, in the past, been accompanied by periods of high inflation. In response, the PRC Government has implemented policies from time to time to control inflation, such as restricting the availability of credit by imposing tighter bank lending policies or higher interest rates. The PRC Government may take similar measures in response to future inflationary pressures. Rampant inflation without the PRC Government’s mitigation policies would likely increase our costs, thereby materially reducing our profitability. There is no assurance that we will be able to pass any additional costs to our customers. On the other hand, such control measures may also lead to slower economic activity and we may see reduced demand for our properties.

Uncertainties with respect to the PRC legal system could limit the legal protection available to you.

The legal system in China has inherent uncertainties that could limit the legal protection available to our Shareholders. As we conduct substantially all of our business operations in China, we are principally governed by PRC laws, rules and regulations. The PRC legal system is based on the civil law system. Unlike the common law system, the civil law system is established on the written statutes and their interpretation by the Supreme People’s Court (最高人民法院), while prior legal decisions and judgments have limited significance as

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precedents. The PRC Government has been developing a commercial law system, and has made significant progress in promulgating laws and regulations related to economic affairs and matters, such as corporate organization and governance, foreign investments, commerce, taxation and trade.

However, many of these laws and regulations are relatively new. There may be a limited volume of published decisions regarding their interpretation and implementation, or the relevant local administrative rules and guidance on implementation and interpretation have not been put into place. Thus, there are uncertainties involved in their enactment timetable, which may not be as consistent and predictable as in other jurisdictions. In addition, the PRC legal system is based in part on government policies and administrative rules that may have retroactive effect. Furthermore, different local governmental authorities may have different interpretations over the implementation and enforcement of the PRC laws, rules and regulations, which may also differ from our interpretations as to such PRC laws, rules and regulations. Consequently, we may not be aware of any violation of these policies and rules until sometime after such violation has occurred. Furthermore, the legal protection available to you under these laws, rules and regulations may be limited. Any litigation or regulatory enforcement action in China may be protracted and result in substantial costs and diversion of resources and management attention.

You may experience difficulties in effecting service of process or enforcing foreign judgments against us, our Directors or senior management residing in China.

Our Company is incorporated in the Cayman Islands. Substantially all of our assets are located in China and substantially all of our executive and non-executive Directors and senior management ordinarily reside in China. Therefore, it may not be possible to effect service of process in Hong Kong or elsewhere outside of China upon us or our Directors or senior management. Moreover, China has not entered into treaties for the reciprocal recognition and enforcement of court judgments with Japan, the United Kingdom, the United States and many other countries. As a result, recognition and enforcement in China of a court judgment obtained in other jurisdictions may be difficult or impossible.

We may be deemed a “PRC resident enterprise” under the EIT Law and be subject to a tax rate of 25% on our global income, which could result in unfavorable tax consequences to us.

Pursuant to the EIT Law, which came into effect on January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, an enterprise established outside China whose “de facto management body” is located in China is considered a “PRC resident enterprise” and will generally be subject to the uniform enterprise income tax rate, or EIT rate, of 25% on its global income. Under the implementation rules of the EIT Law, “de facto management body” is defined as the organizational body that effectively exercises management and control over such aspects as the business operations, personnel, accounting and properties of the enterprise.

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In April 2009 and July 2011, the SAT issued several circulars to clarify certain criteria for the determination of the “de facto management bodies” for foreign enterprises controlled by the PRC enterprises, however, no official implementation rules have been issued regarding the determination of the “de facto management body” for foreign enterprises that are not controlled by the PRC enterprises. We are a holding company incorporated in the Cayman Islands and substantially all members of our senior management are currently based in China; if we are deemed a PRC resident enterprise, the EIT rate of 25% on our global taxable income may reduce capital we could otherwise divert to our business operations.

You may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our Shares under PRC law.

Under the EIT Law and its implementation rules, subject to any applicable tax treaty or similar arrangement between China and your jurisdiction of residence that provides for a different income tax arrangement, PRC withholding tax at the rate of 10% is normally applicable to dividends from PRC sources payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of business in China, or which have such establishment or place of business if the relevant income is not effectively connected with the establishment or place of business. Any gains realized on the transfer of shares by such investors are subject to a 10% PRC income tax rate if such gains are regarded as income from sources within China unless a treaty or similar arrangement provides otherwise. Under the PRC Individual Income Tax Law (中華人民共和國個人所得稅法) and its implementation rules, dividends from sources within China paid to foreign individual investors who are not PRC residents are generally subject to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by such investors on the transfer of shares are generally subject to a 20% PRC income tax rate, in each case, subject to any reduction or exemption set forth in applicable tax treaties and PRC laws.

Although we conduct substantially all of our business operations in China, it is unclear whether dividends we pay with respect to our Shares, or the gain realized from the transfer of our Shares, would be treated as income from sources within China and as a result be subject to PRC income tax if we are considered a PRC resident enterprise. If PRC income tax is imposed on gains realized from the transfer of our Shares or on dividends paid to our non-PRC resident investors, the value of your investment in our Shares may be materially and adversely affected. Furthermore, our Shareholders whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for benefits under such tax treaties or arrangements.

PRC laws and regulations establish more complex procedures for some acquisitions of PRC companies by foreign investors, which could make it difficult for us to pursue growth through acquisitions in China.

A number of PRC laws and regulations, including the M&A Rules, the Anti-Monopoly Law (反壟斷法), and the Rules of MOFCOM on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (商務部實施外國投資者併購境內企業安全審查制度的規定) promulgated by MOFCOM on August 25, 2011 and

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effective from September 1, 2011 (the “ Security Review Rules ”), have established procedures and requirements that are expected to make the review of certain merger and acquisition activities by foreign investors in China more time-consuming and complex. These include requirements in some instances to notify MOFCOM in advance of any transaction in which foreign investors take control of a PRC domestic enterprise, or to obtain approval from MOFCOM before overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also require certain merger and acquisition transactions to be subject to merger control or security review.

We may grow our business in part by acquiring other companies operating in our industry. Complying with the requirements of the relevant regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such transactions, thus affecting our ability to expand our business or maintain our market share.

Governmental control of currency conversion may limit our ability to use capital effectively.

The PRC Government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. See “Regulatory Overview—Regulations Relating to Foreign Exchange.” We receive substantially all our revenue in Renminbi. Under our current structure, our income is primarily derived from dividend payments from our PRC subsidiaries. The foreign exchange control system may prevent us from obtaining sufficient foreign currency to satisfy our currency demands. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends or other payments to our shareholders, or otherwise satisfy our foreign currency denominated obligations, if any.

The PRC Government may also at its discretion restrict access in the future to foreign currencies for current account transactions. Under existing PRC foreign exchange regulations, payments of certain current account items can be made in foreign currencies without prior approval from the local branch of SAFE by complying with certain procedural requirements. However, approval from appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of indebtedness denominated in foreign currencies. The restrictions on foreign exchange transactions under capital accounts could also affect our ability to obtain foreign exchange through debt or equity financing, including by means of loans or capital contribution from us.

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Regulations relating to offshore investment activities by PRC residents may subject us to fines or sanctions imposed by the PRC Government, including restrictions on the ability of our PRC subsidiaries to pay dividends or make distributions to us and our ability to increase our investment in our PRC subsidiaries.

SAFE promulgated the Circular on Management of Offshore Investment and Financing and Round Trip Investment By Domestic Residents through Special Purpose Vehicles (Huifa [2014] No. 37) (《關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知》(匯發[2014]37號)) (“ Circular 37 ”) in July 2014. Pursuant to Circular 37 and its implementation rules, PRC residents, including PRC institutions and individuals, must register with local branches of SAFE in connection with their direct or indirect offshore investments in an overseas special purpose vehicle, or SPV, directly established or indirectly controlled by PRC residents for the purposes of offshore investment and financing with their legally owned assets or interests in domestic enterprises, or their legally owned offshore assets or interests or any inbound investment through special purpose vehicles. Such PRC residents are also required to amend their registrations with SAFE when there is change to the required information of the registered SPV, such as changes to its PRC resident individual shareholder, name, operation period or other basic information, or the PRC individual resident’s increase or decrease in its capital contribution in the SPV, or any share transfer or exchange, merger or division of the SPV. In accordance with the Notice of the SAFE on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (《國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通知》) (匯發[2015]13號) (Huifa [2015] No. 13), the foreign exchange registration aforesaid has been directly reviewed and handled by banks since June 1, 2015, and SAFE and its branches perform indirect regulation over such foreign exchange registration through local banks. Under this regulation, failure to comply with the registration procedures set forth in Circular 37 may result in restrictions being imposed on the foreign exchange activities of our PRC subsidiaries, including the payment of dividends and other distributions to its offshore parent or affiliate, the capital inflow from the offshore entities and its settlement of foreign exchange capital, and may also subject the relevant onshore company or PRC residents to penalties under PRC foreign exchange administration regulations.

We are committed to complying with and ensuring that our Shareholders who are subject to the regulations will comply with the relevant rules. Any future failure by any of our Shareholders who is a PRC resident, or controlled by a PRC resident, to comply with relevant requirements under this regulation could subject us to penalties or sanctions imposed by the PRC Government. However, we may not at all times be fully aware or informed of the identities of all of our Shareholders who are PRC residents, and we may not always be able to timely compel our Shareholders to comply with the requirements of Circular 37. Moreover, there is no assurance that the PRC Government will not have a different interpretation of the requirements of Circular 37 in the future.

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Our ability to access credit and capital markets may be adversely affected by factors beyond our control.

Interest rate increases by the PBOC, or market disruptions such as those experienced in the United States, European Union and other countries or regions, may increase our cost of borrowing or adversely affect our ability to access sources of liquidity upon which we may rely to finance our operations and satisfy our obligations as they become due. We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges. There can be no assurance that the anticipated cash flow from our operations will be sufficient to meet all of our cash requirements, or that we will be able to secure external financing at competitive rates, or at all. Any such failure may adversely affect our ability to finance our operations, meet our obligations or implement our growth strategy.

RISKS RELATING TO THE [ REDACTED ] AND [ REDACTED ]

There has been no prior market for our Shares, and their liquidity and market price following the [ REDACTED ] may be volatile.

Prior to the [ REDACTED ], there was no public market for our Shares. The indicative [ REDACTED ] range and the [ REDACTED ] will be determined by negotiations between us and the [ REDACTED ] (on behalf of the [ REDACTED ]), and they may differ significantly from the market price of our Shares following the [ REDACTED ].

We have applied to [ REDACTED ] and [ REDACTED ] our Shares on the Stock Exchange. However, even if approved, there can be no guarantee that: (i) an active or liquid trading market for our Shares will develop; (ii) if such a [ REDACTED ] market does develop, it will be sustained following completion of the [ REDACTED ]; or (iii) the market price of our Shares will not decline below the [ REDACTED ]. The [ REDACTED ] volume and price of our Shares may be subject to significant volatility in response to, among others, the following factors:

variations in our financial position and/or results of operations;
changes in securities analysts’ estimates of our financial position and/or results of operations, regardless of the accuracy of information on which their estimates are based;
changes in investors’ perception of us and the investment environment generally;
loss of visibility in the markets due to lack of regular coverage of our business;
strategic alliances or acquisitions;
industrial or environmental accidents, litigation or loss of key personnel;

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RISK FACTORS

changes in laws and regulations that impose limitations on our industry;
fluctuations in the market prices of our properties;
announcements made by us or our competitors;
changes in pricing adopted by us or our competitors;
release or expiry of lock-up or other transfer restrictions on our Shares;
the liquidity of the market for our Shares; and
general economic and other factors.

Potential investors will experience immediate and substantial dilution as a result of the [ REDACTED ] and could face dilution as a result of future equity financings.

The [ REDACTED ] substantially exceeds the per Share value of our net tangible assets after subtracting our total liabilities, and therefore potential investors will experience immediate dilution when they purchase our Shares in the [ REDACTED ]. If we were to distribute our net tangible assets to our Shareholders immediately following the [ REDACTED ], potential investors would receive less than the amount they paid for their Shares.

We will comply with Rule 10.08 of the Listing Rules, which specifies that no further Shares or other securities convertible into equity securities of our Company (subject to certain exceptions) may be issued or form the subject of any agreement to such an issue within six months from the [ REDACTED ]. However, after six months from the [ REDACTED ] we may raise additional funds to finance future acquisitions or expansions of our business operations by issuing new Shares or other securities of our Company. As a result, the percentage shareholding of the then Shareholders may be diluted and such newly issued Shares or other securities may confer rights and privileges that have priority over those of the then Shareholders.

Future or perceived sales of substantial amounts of our Shares could affect their market price.

The market price of our Shares could decline as a result of future sales of substantial amounts of our Shares or other related securities, or the perception that such sales may occur. Our ability to raise future capital at favorable times and prices may also be materially and adversely affected. Our Shares held by the Controlling Shareholders and the Pre-[ REDACTED ] Investors are currently subject to certain lock-up undertakings, the details of which are set out in “[ REDACTED ]—[ REDACTED ]” and “History, Reorganization and Corporate Structure—Pre-[ REDACTED ] Investments—3. Lock-up and Public Float.” However, there is no assurance that following the expiration of the lock-up periods, these Shareholders will not dispose of a substantial amount of Shares they hold. We cannot predict the effect of any future sales of the Shares by any of our Shareholders on the market price of our Shares.

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We may not declare dividends on our Shares in the future.

Any declaration of dividends will be proposed by our Board of Directors, and the amount of any dividends will depend on various factors, including, without limitation, our results of operations, financial position, capital requirements and surplus, contractual restrictions, future prospects and other factors which our Board of Directors may determine are important. See “Financial Information—Dividend Policy and Distributable Reserves.” There can be no guarantee when, if and in what form dividends will be paid. Our historical dividend policy should not be taken as indicative of our dividend policy in the future.

Our management has significant discretion as to how to use the net proceeds received by our Company from the [ REDACTED ] , and you may not necessarily agree on how we use them.

Our management may use the net proceeds received by our Company from the [ REDACTED ] in ways that you may not agree with or that do not yield a favorable return to our Shareholders. By investing in our Shares, you are entrusting your funds to our management, upon whose judgment you must depend, for the specific uses we will make of the net proceeds received by our Company from this [ REDACTED ]. For more information, see “Future Plans and Use of Proceeds.”

Investors may experience difficulties in enforcing their Shareholder rights because we are incorporated in the Cayman Islands, and the protection afforded to minority Shareholders under Cayman Islands law may be different from that under the laws of Hong Kong or other jurisdictions.

Our Company is incorporated in the Cayman Islands and its affairs are governed by our Memorandum, Articles of Association, the Cayman Islands company law and the common law of the Cayman Islands. The laws of the Cayman Islands may differ from those of Hong Kong or those of other jurisdictions where investors may be located. As a result, minority Shareholders may not enjoy the same rights as those afforded under the laws of Hong Kong or in other jurisdictions. A summary of the Cayman Islands company law on protection of minority shareholders is set out in “Appendix III—Summary of the Constitution of the Company and Cayman Islands Company Law—3. Cayman Islands Company Law—(f) Protection of Minorities and Shareholders’ Suits” to this Document.

Our Controlling Shareholders have substantial influence over our Company and their interests may not align with the interests of Shareholders who subscribe for Shares in the [ REDACTED ] .

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our other Shareholders. Our Controlling Shareholders will have significant influence on the outcome of any corporate transaction or other matters submitted to our Shareholders for approval, including mergers, consolidations, sales of all or substantially all of our assets, election of Directors and other significant corporate actions. This concentration of ownership may discourage, delay or prevent changes in control of our Company that would otherwise benefit our other Shareholders. To the extent that the interests of our Controlling Shareholders conflict with those of our other Shareholders, our other Shareholders may be deprived of opportunities to advance or protect their interests.

Since there will be a gap of several days between the [ REDACTED ] and [ REDACTED ] of our [ REDACTED ] , the price of our [ REDACTED ] could fall below the [ REDACTED ] when [ REDACTED ] commences.

The [ REDACTED ] of our Shares will be determined on the [ REDACTED ], which is expected to be on or around [ REDACTED ], but in any event not later than [ REDACTED ]. However, our Shares will not commence [ REDACTED ] on the Stock Exchange until the [ REDACTED ], which is expected to be [ REDACTED ]. Accordingly, investors may not be able to [ REDACTED ] or [ REDACTED ] in our Shares during the period between the [ REDACTED ] and the [ REDACTED ]. Our Shareholders are subject to the risk that the price of our Shares could fall before trading begins, as a result of adverse market conditions or other adverse developments that could occur between the [ REDACTED ] and the [ REDACTED ].

We cannot guarantee the accuracy of facts, forecasts and statistics with respect to the PRC, its economy and our relevant industries contained in this Document.

Certain facts, forecasts and statistics in this Document relating to the PRC, its economy and industries relevant to us were obtained from information provided or published by PRC Government agencies, CIA, independent research institutions or other third-party sources, and we can guarantee neither the quality nor reliability of such source materials. They have not been prepared or independently verified by us, the [ REDACTED ], the Joint Sponsors, the [ REDACTED ], the [ REDACTED ], the [ REDACTED ] and the [ REDACTED ] or any of their respective affiliates or advisors. Therefore, we make no representation as to the accuracy of such facts, forecasts and statistics, which may not be consistent with other information compiled within or outside of China. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice, the statistics herein may be inaccurate or incomparable to statistics produced for other economies and should not be relied upon. Furthermore, there can be no assurance that they are stated or compiled on the same basis, or with the same degree of accuracy, as similar statistics presented elsewhere. In all cases, investors should consider how much weight or importance they should attach to or place on such facts, forecasts or statistics.

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RISK FACTORS

Forward-looking statements contained in this Document are subject to risks and uncertainties.

This Document contains certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this Document, the words “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “going forward,” “intend,” “ought to,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and similar expressions, as they relate to our Company or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, business operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this Document. Subject to the ongoing disclosure obligations of the Listing Rules or other requirements of the Stock Exchange, we do not intend to update or otherwise revise the forward-looking statements in this Document, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on such forward-looking statements and information.

You should read this entire Document carefully and not consider or rely on any particular statements in this Document or in published media reports without carefully considering the risks and other information in this Document.

Prior or subsequent to the publication of this Document, there has been or may be press and media coverage regarding us and the [ REDACTED ], in addition to marketing materials we published in compliance with the Listing Rules. Such press and media coverage may include references to information that do not appear in this Document or is inaccurate. We have not authorized the publication of any such information contained in unauthorized press and media coverage. Therefore, we make no representation as to the appropriateness, accuracy, completeness or reliability of any information disseminated in the media and do not accept any responsibility for the accuracy or completeness of any financial information or forwardlooking statements contained therein. To the extent that any of the information in the media is inconsistent or conflicts with the contents of this Document, we expressly disclaim it. Accordingly, prospective investors should only rely on information included in this Document and not on any of the information in press articles or other media coverage in deciding whether or not to purchase the [ REDACTED ].

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INDUSTRY OVERVIEW

The information in this section is derived from an independent report prepared by CIA. The industry report prepared by CIA is based on information from its database, publicly available sources, industry reports, data obtained from interviews and other sources. We believe that the sources of the information in this section are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any part has been omitted that would render such information false or misleading. The information has not been independently verified by us, the [ REDACTED ] , the Joint Sponsors, the [ REDACTED ] , the [ REDACTED ] , the [ REDACTED ] , the [ REDACTED ] , any of its directors, officers, affiliates, advisors or representatives, or any other party (other than CIA) involved in the [ REDACTED ] . We, the [ REDACTED ] , the Joint Sponsors, the [ REDACTED ] , the [ REDACTED ] , any of its directors, officers, affiliates, advisors or representatives, and any other party (other than CIA) involved in the [ REDACTED ] make no representation as to the completeness, accuracy or fairness of such information and accordingly such information should not be unduly relied upon.

THE PRC PROPERTY MANAGEMENT INDUSTRY

Overview of the Property Management Industry

The history of the PRC property management industry dates back to the early 1980s with the establishment of the first property management company in Shenzhen, Guangdong province. Since then, the PRC Government has sought to construct and update a regulatory framework for the PRC property management industry in parallel with its growth. The PRC Government promulgated an increasing number of regulations over the years, with the aim to establish an open market system for the property management industry that served to promote its rapid growth and standardized operation. PRC property management companies now provide services in relation to a wide range of properties including residential properties, commercial properties, office buildings, public properties, industrial parks, schools and hospitals, cultural tourism projects, healthcare complexes, among others.

With the adoption of advanced technologies, such as cloud application, e-commerce, Internet of Things, big data and artificial intelligence, property management companies are gradually replacing manual labor with smart business operations management systems. The PRC Government has also promulgated a series of favorable policies supporting the development and modernization of the property management industry. In addition, property management companies have gained wider access to the capital market for equity and/or debt financing in recent years, following listings of property management companies. Driven by technology development, governmental support and capital market activities, the property management industry is expected to maintain rapid growth.

Major Fee Models in the PRC Property Management Industry

Property management companies in the PRC primarily generate revenue from property management services and other value-added services, including, among others, preliminary property management services, repair and maintenance services and sales and rental services, engineering services and community value-added services such as home decorations, property sales and rental services, group purchase facilitation, tourism, healthcare, wealth management and insurance services.

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INDUSTRY OVERVIEW

Property management companies charge property management fees either on a lump sum basis or a commission basis. The lump-sum fee model for property management fees is the dominant fee model in the PRC property management industry, especially for residential properties. The lump-sum fee model brings efficiency by not requiring collective decisionmaking procedures for large expenditures by property owners and residents, and incentivizing property management service providers to optimize their operations to enhance profitability. In contrast, the commission model is increasingly popular among non-residential properties, which allows property owners to become more involved in their property management and service providers to be more closely supervised.

Overview of the Top 100 Property Management Companies

In recent years, following the rapid urbanization and continuous growth in per capita disposable income, the total market size in terms of the aggregate GFA under management by all property management companies in China’s property management industry reached 23.9 billion sq.m. as of December 31, 2019, according to CIA. In particular, the GFA and number of properties managed by the Top 100 Property Management Companies have increased rapidly. The average total GFA under management by the Top 100 Property Management Companies increased from approximately 23.6 million sq.m. as of December 31, 2015 to approximately 42.8 million sq.m. as of December 31, 2019, representing a CAGR of approximately 16.0%. The average number of properties managed by the Top 100 Property Management Companies increased from 154 as of December 31, 2015 to 212 as of December 31, 2019, representing a CAGR of approximately 8.3%. The average number of cities in which Top 100 Property Management Companies have entered into increased from 27 as of December 31, 2015 to 31 as of December 31, 2019, according to CIA. The following chart sets forth the rise in average GFA under management and average number of properties for the Top 100 Property Management Companies in the years indicated.

Average GFA under Management and Average Number of Properties for the Top 100 Property Management Companies, 2015-2024E

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400
Unit: million sq.m and number
297
300 278
260
243
227
212
192
200 166 178
154
100
23.6 27.3 31.6 37.2 42.8 45.8 49.0 52.4 56.1 60.0
0
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e
Average GFA under Management Average number of managed
properties
----- End of picture text -----

Unless otherwise indicated, the source of all graphs and rankings in this Industry Overview section is CIA.

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INDUSTRY OVERVIEW

The following table sets forth the total GFA under management of the property management industry in China as of the end of the years indicated.

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

35.0
Unit: sq.m. in billions 29.6 31.1
30.0 28.1
26.6
25.1
23.9
25.0
21.1
19.5
20.0 17.5 18.5
15.0
10.0
5.0
0
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e
----- End of picture text -----

As a result of the growth in GFA and number of properties under management, the average revenue of the Top 100 Property Management Companies increased from approximately RMB540.8 million in 2015 to approximately RMB1,040.2 million in 2019, representing a CAGR of approximately 17.8%. The following chart sets forth the rise in average revenue of the Top 100 Property Management Companies in the years indicated.

Average Revenue of the Top 100 Property Management Companies, 2015-2024E

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

2,000 1,833.1
Unit: RMB in millions
1,636.7
1,461.3
1,500 1,304.8
1,165.0
1,040.2
886.2
1,000
742.1
540.8 [627.8 ]
500
0
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e
----- End of picture text -----

GROWTH DRIVERS OF PRC PROPERTY MANAGEMENT INDUSTRY

Growth in Urbanization Rate and Per Capita Disposable Income Driving Growth in Demands for Quality Property Management Services

The urbanization rate in China increased from 33.4% as of December 31, 1998 to 60.6% as of December 31, 2019. The growing urbanization rate has led to high demands for property management services, and the PRC property management industry is expected to continue to grow in tandem with a rising level of urbanization in the PRC. We expect that, backed with increasing per capita disposable income, consumers in China will become willing to pay premiums for quality services and have more discretions on spending in goods and services beyond basic necessities.

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INDUSTRY OVERVIEW

According to the CIA, China’s significant growth in urbanization and per capita disposable income have been the principal drivers for the growth of the property management industry. Consumers in China are increasingly demanding better living conditions and higher quality property management services, which is another underlying reason for the growth of the PRC property management industry. In addition, we believe the emerging middle-to high-income population in the PRC and their growing spending power will have a significant influence on the development of mid-to high-end property management services in the PRC through their demand for more quality products and services.

Driven by customer demand and intense competition, property management companies have invested in improving their service quality and paid more attention to their customers’ demands. The Top 100 Property Management Companies have responded to this trend by, among other steps, optimizing their traditional property management services and upgrading the quality of their services by applying technological solutions. According to the CIA, property management companies with enhanced service quality can charge higher service fee.

Favorable Policies for the Property Management Industry

In June 2003, the PRC Government promulgated the Regulations on Property Management (《物業管理條例》), establishing a regulatory framework for the property management industry in China. Since then, a number of laws and rules have come into effect regulating various aspects of the property management industry and numerous policies enacted to promote its development. These include, but are not limited to, the Circular of the NDRC on the Opinions of Relaxing Price Controls in Certain Services (《國家發展和改革委關於放開部分服務價格意見的通知》), the Guidance on Accelerating the Development of the Resident Service Industry to Promote the Upgrading of Consumption Structure (《關於加快發展生活性服務業促進消費結構升級的指導意見》) and the Announcement on Preferential Taxation for the Elderly Care, Child Care, Housekeeping and Other Community Living Services (《關於養老、托育、家政等社區家庭服務業稅費優惠政策的公告》). Furthermore, various provincial and municipal governments have issued their own laws and regulations. We expect that these laws, regulations and policies will continue to fuel the growth of the PRC property management industry in China.

The favorable policies also encourage the development of smart communities. In May 2014, the Ministry of Housing and Urban-rural Development issued Guidance on Smart Community Construction (Trial) (《智慧社區建設指南(試行)》), which recommended the modernization of community management by integrating modern technologies, public resources and commercial services into the management process. We believe that such policies will jointly create a supportive and orderly environment for the development of the property management industry and property management companies. Please see “Regulatory Overview — Laws and Regulations relating to Foreign Investment.” for more information on laws and regulations related to the property management industry.

New Opportunities in Property Management Services

Toward the end of 2019, the COVID-19 pandemic broke out and quickly spread across the globe. Property management companies that were capable to provide quality service and meet the residents’ demands during the COVID-19 pandemic were able to enhance customer satisfaction and loyalty with their services and brands.

In addition, due to the quarantine restrictions, property management companies were encouraged to accelerate the development of mobile applications, internet platforms and smart community technologies to provide online products and services to their residents.

Further, driven by the need of community services, run-down residential communities that are not under management of property management companies will seek and entrust ones to provide necessary property management and community services. In the Report of the Work of the Government in 2019 (《政府工作報告》), the PRC Government indicated its plans to

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INDUSTRY OVERVIEW

greatly improve the conditions of the significant number of old and outdated residential communities by carrying out projects including renovations of water pipes and electricity circuits, establishment of common area facilities, installation of elevators, and improvement of conditions of supermarkets, convenience stores, shopping malls, carparks, and wheelchair accessible passages, among other community facilities.

TRENDS IN THE PRC PROPERTY MANAGEMENT INDUSTRY

Increased Market Concentration and Competition

After decades of development, some of the Top 100 Property Management Companies have accelerated their service innovation and business expansion. In addition, the market continues to become more concentrated, and the players in the PRC property management industry are facing increasingly intense market competition. In the competitive PRC property management industry, large-scale property management companies actively improve their strategic layout and accelerate their expansion in order to increase their respective market shares and achieve better results of operations. Their organic growth, as well as mergers and acquisitions, may expose property management companies to challenges arising from the difficulties in integrating acquired operations with existing businesses. The aggregate market share of the Top 10 Property Management Companies increased from 7.6% in 2015 to 9.2% in 2019*.

New Revenue Sources Driven by Information Technologies and Diversified Service Offerings

Many property management companies have developed diversified business, reduced labor costs and enhanced profitability by leveraging information technologies such as cloud applications, e-commerce, Internet of Things, big data and artificial intelligence. For example, artificial intelligence technologies such as smart entrance pass, smart building management, smart energy management, patrol robots, delivery robots and consultancy robots largely reduced the labor costs of property management companies. In addition, by adopting new technologies and using e-service platforms, property management companies could effectively integrate and allocate resources to provide more diversified community value-added services and further expand their services to common space management, community finance, property agency and household services. As a result, the revenue generated from value-added services is increasingly becoming an important source of revenue for property management companies. Moreover, to better control costs and maintain competitiveness, property management companies need to standardize and automate their operations to improve their service capabilities and quality in order to meet diversified customer demands.

In response to the general demands for diversified and high-quality property management services, a growing number of property management companies have been improving the quality of existing services and providing diversified services. Such demands, coupled with the increasing operational pressure driven by cost increases for property management companies, have driven property management companies to adjust their traditional business models in order to remain profitable and competitive by consolidating their resources and transforming their operations to achieve sustainable profitability growth. These property management companies have been expanding their service scopes by effectively utilizing the internet and information technologies to offer community value-added services to their customers. According to CIA, there is vast market potential for community value-added services as they cater to the needs of property owners and residents. The following table sets forth certain information on the revenue from value-added services among Top 100 Property Management Companies in the years indicated.

The market share of the Top 10 Property Management Companies in the PRC decreased from 11.4% in 2018 to 9.2% in 2019, since a major market player who had been ranked among the top ten from 2015 to 2018 did not participate in the ranking in 2019.

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

2,000 30.0%
Unit: RMB in million 1,833.1
1,636.7 25.2%
22.9% 1,461.3 25.0%
22.2%
1,500 17.3% 18.2% 19.5% 21.4% 1,304.8 23.7% 1,236.524.5% 1,371.220.0%
16.7% 1,165.0 1,115.0
1,040.2 1,005.3
1,000 886.2 906.3 15.0%
817.0
742.1
713.3
627.8 607.0 10.0%
540.8 519.3
500 450.3 346.3 400.2 461.9
223.1 258.6 299.4 5.0%
172.9
90.4 108.5 135.1
0 0.0%
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e
Average revenue of Average property Average revenue from Percentage of average
Top 100 Property management service value-added services value-added service
Management Companies revenue revenue over total revenue
----- End of picture text -----

Increasing Standardization of Services

Standardization allows property management companies to improve their service quality, and is the foundation for the sustainable expansion of business operations across multiple regions. The PRC Government has issued Guidelines for Accelerating the Development of Consumer Services and Promoting the Upgrading of Consumption Structure (關於加快發展生活性服務業促進消費結構升級的指導意見). According to CIA, such policy aims at introducing the idea of standardizing the quality of property management services. Many of the Top 100 Property Management Companies in China have established internal standardized operating procedures to guide their service procedures. Information technology is playing an increasingly critical role in property management services in recent years. Property management companies use information technology to implement technological solutions and to automate key business operations. Technological solutions reduce human errors and allow property management companies to consistently apply their standardized procedures and quality standards, reducing their reliance on manual labor and therefore the costs involved in hiring employees and engaging subcontractors. Furthermore, centralized information technology system enables property management companies to monitor the administrative and financial business operations of their branches, subsidiaries and offices, as well as ensure that they are consistently applying their policies, procedures and quality standards.

Increasing Support from Capital Markets

A number of property management companies have gained access to the capital markets to expand their financing channels. As of September 25, 2020, a total of 27 property management companies have been listed on the Stock Exchange, one on the Shanghai Stock Exchange (上海證券交易所上市), two on the Shenzhen Stock Exchange (深圳證券交易所上市) and 37 on the National Equities Exchange and Quotations (全國中小企業股份轉讓系統), according to CIA. These listed property management companies are able to increase their investments in technology innovation, build up intelligent platforms, strengthen the cooperation with other property management companies, improve service quality and increase operational efficiency. In addition, diversified capital sources enable the property management companies to accelerate selective and strategic mergers and acquisitions, and to further expand the scale of business.

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INDUSTRY OVERVIEW

INDUSTRY RISKS AND CHALLENGES

Increasing Labor and Operation Cost

Property management services market is labor-intensive and labor cost is the largest component of property management services companies’ cost of services. The daily operation of property management services, such as security, cleaning, gardening, repair and maintenance services rely heavily on manual labors. From 2016 to 2019, the labor cost of the Top 100 Property Management Companies on average accounted for 53.4%, 55.8%, 57.8% and 59.1% of their total cost of sales, respectively. The minimum wage in China is mainly set by provincial local level authorities. In recent years, the minimum wage has increased significantly in various regions, which directly drove the increases in labor costs. In addition, utility fees such as electricity and water also increased in the last few years. Under the lump-sum fee model for property management fees, the dominant fee model in the property management industry in China according to CIA, the ever-rising labor and operation cost in recent years is becoming a major challenge to the sustainable growth of property management companies.

Increasing Demand for and Shortage of Professional Staff

To adapt to the rapid technological advancements, property management companies in China need to recruit and retain more qualified professional talent with management and technological skills. Property management companies also increasingly outsource laborintensive aspects of their operations such as cleaning and landscaping to subcontractors while placing greater emphasis on recruiting and training professional and skilled employees to facilitate the implementation of smart management and information technologies, promote innovations to maintain their leading market positions, and improve customer satisfactions.

The property management industry also faces challenges such as difficulty with recruiting competent professional staff to provide quality services and expand business operations. Should the property management companies fail to recruit competent professional staff, the business development of properties management companies may be adversely affected.

For more risks in relation to the property management industry in China, see “Risk Factors—Risks Relating to Our Business and Industry.”

COMPETITION

Competitive Landscape

According to CIA, the PRC property management industry is fragmented and competitive, with approximately 130,000 property management service providers operating in the industry in 2019. The property management industry in China is consolidating, with market leaders gaining increasingly larger market shares. We primarily compete with large national and regional property management companies in terms of property management services, and are well-positioned to capture market shares leveraging our high service standards and rich resources. According to CIA, the market share of the Top 100 Property Management Companies was approximately 43.6% in terms of GFA under management in 2019.

Our Competitive Position

We are a leading property management service provider in China. According to CIA, we are a leading property management company with a large and rapidly growing business operations, ranking third among Top 100 Property Management Companies in terms of contracted GFA, revenue and net profit, and fourth in terms of GFA under management as of December 31, 2019. In 2019, among Top 20 Property Management Companies, we rank first in terms of CAGR of net profit growth from 2017 to 2019. We were ranked second in terms of the number of cities where we had operations as of December 31, 2019.

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Ranking Information of Top 100 Property Management Companies in 2019 in Terms of Number of Cities with Business Operations

Ranking 1 2 3 4 5 Ranking 1 2 3 4 5 Ranking 1 2 3 4 5 Ranking 1 2 3 4 5 Ranking 1 2 3 4 5	Name Number of cities Competitor A Over 300 Our Company Over 280 Competitor D Over 250 Competitor C Over 150 Competitor B Nearly 150 Ranking among Top 100 Property Management Companies in Terms of Revenue in 2019 Name Revenue (RMB in millions) Competitor A Over 9,000 Competitor B Over 8,000 Our Company 7,333 Competitor H Over 6,000 Competitor C Nearly 6,000 Ranking among Top 100 Property Management Companies in Terms of Net Profit in 2019 Name Net Profit (RMB in millions) Competitor A Over 1,500 Competitor E Over 1,000 Our Company 923 Competitor F Nearly 800 Competitor P Over 600 Ranking of Top 100 Property Management Companies in Terms of Contracted GFA as of December 31, 2019 Name Contracted GFA (sq.m. in millions) Competitor A Over 600 Competitor D Over 550 Our Company 505 Competitor C Nearly 500 Competitor B Over 400 Ranking among Top 100 Property Management Companies in Terms of GFA under Management as of December 31, 2019 Name GFA under Management (sq.m. in millions) Competitor D Over 300 Competitor C Over 250 Competitor A Over 250 Our Company 238 Competitor E Over 230	Number of cities
		(sq.m. in millions) Over 300 Over 250 Over 250 238 Over 230

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Ranking Information of Top 20 Property Management Companies in Terms of CAGR of Net Profit Growth Rate from 2017 to 2019

Ranking 1 2 3 4 5	Name Our Company Competitor P Competitor W Competitor E Competitor A	CAGR
		(%) 195.5% Over 150.0% Over 100.0% Over 100.0% Nearly 100%

Market Barriers

According to CIA, the following are the barriers to successfully compete and achieve sustainable growth the property management industry in China.

Brand. The Top 100 Property Management Companies, including ourselves, have built up our brand reputation through decades of services and operations. In contrast, new participants without established brands or cultivated business relationships with industry participants face increasing difficulties in penetrating the market.
Capital requirement. Property management companies are increasingly adopting automation and intelligent technologies to improve their management efficiency, which requires significant capital investments to fund equipment purchases, and the establishment of smart community management and information technology systems. New participants with limited financing ability face high barriers to enter the industry.
Quality of management. According to CIA, quality of property management services may significantly contribute to the competitiveness of property management companies. Property management companies now have to implement technological solutions, service quality standards and corporate structure to improve service quality.
Availability of talent and technical expertise. Property management depends on manual labor not only for the delivery of property management services but also for implementing and innovating technological solutions. It is increasingly difficult for property management companies to recruit and retain talented individuals who are skilled in the most recent technological advancements in the industry. New market entrants may find it difficult to compete against larger property management companies with better brand value and recognition which attract talent.
Support from property developers . As the competition in the property management industry intensifies, property management companies with solid developer backgrounds are demonstrating outstanding performances, because they typically obtain the following supports from the related developers: (i) stable source of properties originated from the desirable sales and land reserves of the developers, providing abundant property reserve for the property management company; (ii) brand support where property management companies capitalize on the wellestablished brands of the developers to improve their own stature and value; and (iii) other resources such as the opportunities to enrich the property portfolio of property management companies as the related developers venture into other industries outside property development, such as culture, tourism, finance, healthcare and elderly care, among other commercial areas.

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INDUSTRY OVERVIEW

RESEARCH BACKGROUND AND METHODOLOGIES

We purchased the right to use and quote various data from publications of CIA at a total cost of RMB800,000. CIA is an independent research institute, which has extensive experiences researching and tracking the PRC property management industry, and has conducted research on the top 100 property management companies in the PRC, or Top 100 Property Management Companies, since 2008. In conducting its research, CIA primarily evaluates property management companies that have managed at least ten properties or have an aggregate GFA of 500,000 sq.m. or more in the previous three years. CIA gathers data from multiple primary and secondary sources, including (i) published statistics, websites and marketing materials of property management companies; (ii) surveys and data from the China Real Estate Index System and the China Real Estate Statistics Yearbooks; (iii) public data from governmental authorities; and (iv) data gathered previously for the property management companies. In addition, since 2008, CIA has published the ranking of China’s Top 100 Property Management Companies in terms of overall strength, primarily by evaluating data from the previous year in relation to management scale, operational performance, service quality, growth potential and social responsibility of the property management companies under consideration. In determining such rankings, CIA may assign the same ranking to multiple companies with the same or very close scores, and therefore it is possible that more than 100 companies may be classified as being among the Top 100 Property Management Companies. CIA may, upon specific request, prepare further rankings within the Top 100 Property Management Companies for certain indices. CIA also assesses the growth potential of property management companies primarily in terms of growth rate of revenue, growth rate of total GFA under management, contracted but undelivered GFA, the total number of employees and employee composition. Data analysis in this section includes data and information on the Top 100 Property Management Companies as ranked by CIA.

In preparing the CIA Report, CIA assumed that: (i) the social, economic and political conditions in China and the world will remain stable during the forecast period; (ii) government policies on the property management industry in China will remain unchanged during the forecast period; (iii) all published data by the relevant statistics bureaus are accurate; and (iv) all collected information relating to residential sales transactions from the relevant local housing administrative bureaus are accurate.

DIRECTORS’ CONFIRMATION

Our Directors confirm that, after making reasonable inquiries, there is no material adverse change in the market information since the date of the CIA Report which may qualify, contradict, misrepresent or otherwise adversely affect the accuracy and completeness of the information in this section in material respects.

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DIRECTORS AND PARTIES INVOLVED IN THE [ REDACTED ]

DIRECTORS Name Address Executive Directors Mr. Zhao Changlong (趙長龍) Room 2801, Building 4 Phase V, Zhaoshang Taohuayuan West of Xinggong Road Nanshan District Shenzhen Guangdong PRC Mr. Hu Liang (胡亮) Room 1404, Building 4 Phase V, Zhaoshang Taohuayuan West of Xinggong Road Nanshan District Shenzhen Guangdong PRC Mr. Wang Zhen (王震) Room 204, Building 4 Phase V, Zhaoshang Taohuayuan West of Xinggong Road Nanshan District Shenzhen Guangdong PRC Ms. An Lihong (安麗紅) Room 2303, Building 4 Phase V, Zhaoshang Taohuayuan West of Xinggong Road Nanshan District Shenzhen Guangdong PRC Independent Non-executive Directors Mr. Chan Chun Hung, Vincent (陳鎮洪) Flat 2401 24th Floor, Block A Villa Lotto, 18 Broadwood Road Happy Valley Hong Kong Mr. Victor Huang (黃偉德) Flat A, 6/F, Block 9 Braemar Hill Mansion 31 Braemar Hill Road North Point Hong Kong Mr. Guo Zhaohui (郭朝暉) 8-4-201 Fenghua Tiancheng Taohualin 150 Ping’an Road Wuchang District Wuhan Hubei PRC	Nationality
	Chinese Chinese Chinese Chinese Chinese Chinese Chinese

DIRECTORS
Name
Address
Executive Directors
Mr. Zhao Changlong
(趙長龍)
Room 2801, Building 4
Phase V, Zhaoshang Taohuayuan
West of Xinggong Road
Nanshan District
Shenzhen
Guangdong
PRC
Mr. Hu Liang
(胡亮)
Room 1404, Building 4
Phase V, Zhaoshang Taohuayuan
West of Xinggong Road
Nanshan District
Shenzhen
Guangdong
PRC
Mr. Wang Zhen
(王震)
Room 204, Building 4
Phase V, Zhaoshang Taohuayuan
West of Xinggong Road
Nanshan District
Shenzhen
Guangdong
PRC
Ms. An Lihong
(安麗紅)
Room 2303, Building 4
Phase V, Zhaoshang Taohuayuan
West of Xinggong Road
Nanshan District
Shenzhen
Guangdong
PRC
Independent Non-executive Directors
Mr. Chan Chun Hung, Vincent
(陳鎮洪)
Flat 2401
24th Floor, Block A
Villa Lotto, 18 Broadwood Road
Happy Valley
Hong Kong
Mr. Victor Huang (黃偉德)
Flat A, 6/F, Block 9
Braemar Hill Mansion
31 Braemar Hill Road
North Point
Hong Kong
Mr. Guo Zhaohui (郭朝暉)
8-4-201
Fenghua Tiancheng Taohualin
150 Ping’an Road
Wuchang District
Wuhan
Hubei
PRC

Nationality

Chinese
Chinese
Chinese
Chinese
Chinese
Chinese
Chinese

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DIRECTORS AND PARTIES INVOLVED IN THE [ REDACTED ]

For further information regarding our Directors, see “Directors and Senior Management”.

PARTIES INVOLVED IN THE [ REDACTED ]

Joint Sponsors

Huatai Financial Holdings (Hong Kong) Limited

62/F, The Center 99 Queen’s Road Central Hong Kong

UBS Securities Hong Kong Limited

52/F, Two International Finance Centre 8 Finance Street Central Hong Kong

ABCI Capital Limited

11/F, Agriculture Bank of China Tower 50 Connaught Road Central Hong Kong

CCB International Capital Limited

12/F, CCB Tower 3 Connaught Road Central Central Hong Kong

CLSA Capital Markets Limited

18/F, One Pacific Place 88 Queensway Hong Kong

Haitong International Capital Limited

8/F, Li Po Chun Chambers 189 Des Voeux Road Central Hong Kong

[ REDACTED ]

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DIRECTORS AND PARTIES INVOLVED IN THE [ REDACTED ]

Legal Advisors to our Company As to Hong Kong and U.S. law: Sidley Austin 39th Floor, Two International Finance Centre 8 Finance Street Central Hong Kong As to PRC law: King and Wood Mallesons 25th Floor, Guangzhou CTF Finance Centre No. 6 Zhujiang East Road Zhujiang New Town Tianhe District, Guangzhou Guangdong Province PRC As to Cayman Islands law: Conyers Dill & Pearman Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands Legal Advisors to the Joint As to Hong Kong and U.S. law: Sponsors, [ REDACTED ] and Freshfields Bruckhaus Deringer the [ REDACTED ] 55th Floor, One Island East Taikoo Place Quarry Bay Hong Kong As to PRC law: Commerce & Finance Law Offices 10/F, Tower 1 Jing An Kerry Centre 1515 West Nanjing Road Shanghai PRC

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DIRECTORS AND PARTIES INVOLVED IN THE [ REDACTED ]

Independent Industry Consultant	China Index Academy
	Tower A
	No. 20 Guogongzhuang Middle Street
	Fengtai District
	Beijing
	PRC
Auditor and Reporting Accountant	PricewaterhouseCoopers
	Certified Public Accountants and Registered
	Public Interest Entity Auditor
	22/F, Prince’s Building
	Central
	Hong Kong
Compliance Advisor	Huatai Financial Holdings (Hong Kong) Limited
	62/F, The Center
	99 Queen’s Road Central
	Hong Kong
	[REDACTED]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

CORPORATE INFORMATION

Registered office	Cricket Square
	Hutchins Drive
	PO Box 2681
	Grand Cayman
	KY1-1111
	Cayman Islands
Headquarters and Principal Place	Third Compartment of Room 3101
of Business in the PRC	No. 78, Huangpu Avenue West
	Tianhe District
	Guangzhou
	Guangdong
	PRC
Principal Place of Business in Hong	23rd Floor, China Evergrande Centre
Kong	38 Gloucester Road
	Wanchai
	Hong Kong
Company’s Website	www.evergrandeservice.com
	(Information contained in this website does not
	form part of this Document)
Company Secretary	Mr. Fong Kar Chun, Jimmy (方家俊)
	(Solicitor of Hong Kong)
	23rd Floor, China Evergrande Centre
	38 Gloucester Road
	Wanchai
	Hong Kong
Authorized Representatives	Mr. Zhao Changlong (趙長龍)
	Room 2801, Building 4
	Phase V, Zhaoshang Taohuayuan
	West of Xinggong Road
	Nanshan District
	Shenzhen
	Guangdong
	PRC
	Mr. Fong Kar Chun, Jimmy (方家俊)
	23rd Floor, China Evergrande Centre
	38 Gloucester Road
	Wanchai
	Hong Kong

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

CORPORATE INFORMATION

Audit Committee

Mr. Victor Huang ( Chairperson ) Mr. Chan Chun Hung, Vincent Mr. Guo Zhaohui

Remuneration Committee

Nomination Committee

Mr. Guo Zhaohui ( Chairperson ) Mr. Victor Huang Mr. Hu Liang Mr. Zhao Changlong ( Chairperson ) Mr. Chan Chun Hung, Vincent Mr. Victor Huang

Principal Share Registrar and Transfer Office in the Cayman Islands

[ REDACTED ]

Hong Kong Branch Share Registrar and Transfer Office

[ REDACTED ]

Principal Banks

Shanghai Pudong Development Bank, Guangzhou Dongfeng Branch

Area B, Ground Floor Guangdong Finance Building No. 481, Dongfeng Middle Road Yuexiu District Guangzhou Guangdong PRC

Industrial and Commercial Bank of China,

Guangzhou Industrial Avenue Branch

31 North Industrial Avenue Haizhu District Guangzhou Guangdong PRC

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

CORPORATE INFORMATION

China Minsheng Bank, Guangzhou Xincheng Branch No. 25, Tianhe East Road Tianhe District Guangzhou Guangdong PRC

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

In preparation for the [ REDACTED ], our Group has sought the following waivers from strict compliance with the relevant provisions of the Listing Rules.

MANAGEMENT PRESENCE

Pursuant to Rule 8.12 of the Listing Rules, an issuer must have sufficient management presence in Hong Kong and in normal circumstances, at least two of the issuer’s executive directors must be ordinarily resident in Hong Kong.

Our Company does not, and for the foreseeable future, will not, have executive Directors who are ordinarily resident in Hong Kong for the purpose of satisfying the requirements under Rule 8.12 of the Listing Rules. Our Group’s business operations and assets are primarily based outside Hong Kong, and it would be practically difficult and not commercially necessary for us to relocate our executive Directors to Hong Kong for the purpose of satisfying the requirements under Rule 8.12 of the Listing Rules. Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted] us, a waiver from compliance with Rule 8.12 of the Listing Rules on the basis that the following measures have been adopted by us:

(a) we have appointed two authorized representatives, Mr. Zhao Changlong, our executive Director and chairman of our Board, and Mr. Fong Kar Chun, Jimmy, our company secretary, pursuant to Rule 3.05 of the Listing Rules who will act as our Company’s principal channel of communication with the Stock Exchange and ensure that they comply with the Listing Rules at all times. Mr. Fong Kar Chun, Jimmy is ordinarily resident in Hong Kong. Each of our authorized representatives will be available to meet with the Stock Exchange in Hong Kong within a reasonable time frame upon the request of the Stock Exchange and will be readily contactable by telephone, facsimile and email. Each of the two authorized representatives is authorized to communicate on our behalf with the Stock Exchange;
(b) both our authorized representatives have means to contact all members of our Board (including our independent non-executive Directors) promptly at all times as and when the Stock Exchange wishes to contact the members of our Board for any matters. Our Directors who are not ordinarily resident in Hong Kong possess or can apply for valid travel documents to visit Hong Kong and will be able to meet with the Stock Exchange within a reasonable period of time, when required. All Directors have provided his/her mobile phone numbers, fax numbers and e-mail addresses (where available) to our authorized representatives, in the event that a Director expects to travel, he/she will endeavor to provide the phone number of the place of his/her accommodation to our authorized representatives or maintain an open line of communication via his/her mobile phone and all Directors and authorized representatives have provided his/her mobile numbers, office phone numbers, fax numbers and email addresses (where available) to the Stock Exchange;

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

(c) we will appoint Huatai Financial Holdings (Hong Kong) Limited as our compliance advisor pursuant to Rule 3A.19 of the Listing Rules, which has access at all times to our authorized representatives, Directors, senior management and other officers of our Company, and will act as an additional channel of communication between the Stock Exchange and us; and
(d) meetings between the Stock Exchange and our Directors could be arranged through our authorized representatives or the compliance advisor, or directly with our Directors within a reasonable time frame. Our Company will promptly inform the Stock Exchange of any changes of our authorized representatives and/or the compliance advisor.

CONTINUING CONNECTED TRANSACTIONS

We have entered into certain transactions which will constitute continuing connected transactions for our Company under the Listing Rules after the [ REDACTED ]. We have applied for, and the Stock Exchange [has granted] us, waivers from strict compliance with (i) the announcement requirements under Chapter 14A of the Listing Rules in respect of the continuing connected transaction as disclosed in “Connected Transactions—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but exempt from Independent Shareholders’ Approval Requirement”; and (ii) the announcement and independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules in respect of the continuing connected transactions as disclosed in “Connected Transactions—(C) Continuing Connected Transactions subject to the Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements.” See “Connected Transactions” for further information.

EQUITY INTERESTS ACQUIRED AFTER THE TRACK RECORD PERIOD

Pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules, a new listing applicant is required to include in its accountants’ report in the listing document the results and balance sheets of any subsidiary or business acquired, agreed to be acquired or proposed to be acquired since the date to which the latest audited financial statements of the listing applicant have been made up in respect of each of the three financial years immediately preceding the issue of the listing document, or since the incorporation of such subsidiary or the commencement of such business if this occurred less than three years prior to such issue, or such shorter period as may be acceptable to the Stock Exchange.

Since the end of the Track Record Period, for the purpose of expanding our business, our Group has acquired the equity interests in Nanchang Xinya, Chengdu Wellspo, Zunyi Zhongxin, Hubei Guanbo and Yongkang Jiahua (collectively, the “ Target Companies ”), details of which are set out below (the “ Acquisitions ”).

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

1. Acquisition of Nanchang Xinya

On September 4, 2020, Jinbi Property entered into an equity transfer agreement with each of Jiangxi Tianjie Environmental Protection Service Co., Ltd. (江西省天潔環保服務有限公司) (“ Jiangxi Tianjie ”), Su Chaoqiu (蘇超球), Li Jinglong (李敬龍) and Nanchang Xinya, pursuant to which Jinbi Property agreed to acquire the entire equity interest in Nanchang Xinya from Jiangxi Tianjie, at a consideration of RMB33.0 million. The consideration was determined on an arm’s length basis taking into consideration the then financial and business positions of Nanchang Xinya, the then existing GFA and projects under its management and its business prospects and, subject to the satisfactory completion of the due diligence conducted by Jinbi Property, will be paid with our internal resources by installments as follows:

(i) the first installment of RMB10.56 million, representing 32% of the total consideration, will be settled upon the transfer of 51% of the equity interest in Nanchang Xinya by Jiangxi Tianjie to Jinbi Property, which is expected to be completed by mid-October 2020 and upon which Nanchang Xinya will become our indirect non-wholly-owned subsidiary and its financial results will be consolidated into the financial statements of our Group;
(ii) six months after the completion of equity transfer stated in (i) above, Jiangxi Tianjie will transfer 15% of the equity interest in Nanchang Xinya to Jinbi Property at a consideration of RMB7.92 million, representing 24% of the total consideration, upon which Jinbi Property will hold 66% of the equity interest in Nanchang Xinya;
(iii) six months after the completion of equity transfer stated in (ii) above, Jiangxi Tianjie will transfer 14% of the equity interest in Nanchang Xinya to Jinbi Property at a consideration of RMB7.92 million, representing 24% of the total consideration, upon which Jinbi Property will hold 80% of the equity interest in Nanchang Xinya; and
(iv) 36 months after the completion of equity transfer stated in (i) above, Jiangxi Tianjie will transfer 20% of the equity interest in Nanchang Xinya to Jinbi Property at a consideration of RMB6.6 million, representing 20% of the total consideration, upon which Nanchang Xinya will become our indirect wholly-owned subsidiary.

Nanchang Xinya is a company established in the PRC and is engaged in the provision of property management services, and based on the information provided by the seller, the total GFA under its management as of June 30, 2020, all of which were under projects developed by Independent Third Parties, was 1.63 million sq.m. Given that the property management services of Nanchang Xinya are provided for properties developed by independent third-party property developers, it is expected that the acquisition of Nanchang Xinya will further broaden our property management services portfolio and strengthen our existing customer base, the majority of which are Independent Third Parties. To the best of our Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of Jiangxi Tianjie and its ultimate beneficial owners, Su Chaoqiu and Li Jinglong, is an Independent Third Party.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

2. Acquisition of Chengdu Wellspo

On September 5, 2020, Chengdu Jinbi entered into an equity transfer agreement with Wei Qiang (魏強), Li Biao (李彪) and Chengdu Wellspo, pursuant to which Chengdu Jinbi agreed to acquire (i) 88.24% of the equity interest in Chengdu Wellspo from Wei Qiang, and (ii) 11.76% of the equity interest in Chengdu Wellspo from Li Biao, at a total consideration of RMB39.0 million. The consideration was determined on an arm’s length basis taking into consideration the then financial and business positions of Chengdu Wellspo, the then existing GFA and projects under its management and its business prospects and, subject to the satisfactory completion of the due diligence conducted by Chengdu Jinbi, will be paid with our internal resources in two installments, the first, being RMB27.3 million which represents 70% of the total consideration, upon the transfer of entire equity interest (which is expected to be completed by mid-October 2020), upon which Chengdu Wellspo will become our indirect wholly-owned subsidiary and its financial results will be consolidated into the financial statements of our Group; and the second, being RMB11.7 million which represents 30% of the total consideration, within six months after the equity transfer.

Chengdu Wellspo is a company established in the PRC and is engaged in the provision of property management services, and based on the information provided by the sellers, the total GFA under its management as of June 30, 2020, all of which were under projects developed by Independent Third Parties, was 1.31 million sq.m. Given that the property management services of Chengdu Wellspo are provided for properties developed by independent third-party property developers, it is expected that the acquisition of Chengdu Wellspo will further broaden our property management services portfolio and strengthen our existing customer base, the majority of which are Independent Third Parties. To the best of our Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of Wei Qiang and Li Biao is an Independent Third Party.

3. Acquisition of Zunyi Zhongxin

On September 8, 2020, Guiyang Xinshenghuo entered into an equity transfer agreement with Zhang Chuanfang (張傳芳), Gan Hong (甘鴻) and Zunyi Zhongxin, pursuant to which Guiyang Xinshenghuo agreed to acquire (i) 70% of the equity interest in Zunyi Zhongxin from Zhang Chuanfang, and (ii) 30% of the equity interest in Zunyi Zhongxin from Gan Hong, at a total consideration of RMB14.5 million. The consideration was determined on an arm’s length basis taking into consideration the then financial and business positions of Zunyi Zhongxin, the then existing GFA and projects under its management and its business prospects and, subject to the satisfactory completion of the due diligence conducted by Guiyang Xinshenghuo, will be paid with our internal resources in two installments, the first, being RMB10.15 million which represents 70% of the total consideration, within five business days upon the transfer of entire equity interest (which is expected to be completed by mid-October 2020), upon which Zunyi Zhongxin will become our indirect wholly-owned subsidiary and its financial results will be consolidated into the financial statements of our Group; and the second, being RMB4.35 million which represents 30% of the total consideration, within six months after the equity transfer (subject to the completion of the renewal of the agreement of each of the 20 projects which will expire at the end of 2020 by Zunyi Zhongxin).

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

Zunyi Zhongxin is a company established in the PRC and is engaged in the provision of property management services, and based on the information provided by the sellers, the total GFA under its management as of June 30, 2020, all of which were under projects developed by Independent Third Parties, was 1.25 million sq.m. Given that the property management services of Zunyi Zhongxin are provided for properties developed by independent third party property developers, it is expected that the acquisition of Zunyi Zhongxin will further broaden our property management services portfolio and strengthen our existing customer base, the majority of which are Independent Third Parties. To the best of our Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of Zhang Chuanfang and Gan Hong is an Independent Third Party.

4. Acquisition of Hubei Guanbo

On September 10, 2020, Wuhan Jinbi entered into an equity transfer agreement with each of Hubei Meicen Environmental Service Co., Ltd. (湖北美岑環保服務有限公司) (“ Hubei Meicen ”), Deng Hui (鄧輝), Guo Xiao (郭曉) and Hubei Guanbo, pursuant to which Wuhan Jinbi agreed to acquire 51% of the equity interest in Hubei Guanbo from Hubei Meicen, at a consideration of RMB12.24 million. The consideration was determined on an arm’s length basis taking into consideration the then financial and business positions of Hubei Guanbo, its registered capital of RMB10.03 million and its business prospects and, subject to the satisfactory completion of the due diligence conducted by Wuhan Jinbi, will be paid with our internal resources by two installments, the first, being RMB7.344 million which represents 60% of the total consideration, within 15 business days upon the transfer of 51% of the equity interest (which is expected to be completed by mid-October 2020), upon which Hubei Guanbo will become our indirect non-wholly-owned subsidiary and its financial results will be consolidated into the financial statements of our Group; and the second, being RMB4.896 million which represents 40% of the total consideration, within six months after the first payment is settled (subject to the condition that there is no dispute and compliance issue in relation to the business operations and management of Hubei Guanbo).

Hubei Guanbo is a company established in the PRC and is engaged in the provision of property management services, and based on the information provided by the sellers, the total GFA under its management as of June 30, 2020, all of which were under projects developed by Independent Third Parties, was 2.0 million sq.m. Given that the property management services of Hubei Guanbo are provided for properties developed by independent third party property developers, it is expected that the acquisition of Hubei Guanbo will further broaden our property management services portfolio and strengthen our existing customer base, the majority of which are Independent Third Parties. To the best of our Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of Hubei Meicen and its ultimate beneficial owners, Deng Hui and Guo Xiao, is an Independent Third Party.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

5. Acquisition of Yongkang Jiahua

On September 10, 2020, Ningbo Jinbi entered into an equity transfer agreement with Zhou Erqiang (周爾強), Chen Jiangbo (陳江波) and Yongkang Jiahua, pursuant to which Ningbo Jinbi agreed to acquire (i) 60% of the equity interest in Yongkang Jiahua from Zhou Erqiang, and (ii) 40% of the equity interest in Yongkang Jiahua from Chen Jiangbo, at a total consideration of RMB20.0 million. The consideration was determined on an arm’s length basis taking into consideration the then financial and business positions of Yongkang Jiahua, the then existing GFA and projects under its management and its business prospects and, subject to the satisfactory completion of the due diligence conducted by Ningbo Jinbi, will be paid with our internal resources in two installments, the first, being RMB15.0 million which represents 75% of the total consideration, within ten business days upon the transfer of entire equity interest (which is expected to be completed by mid-October 2020), upon which Yongkang Jiahua will become our indirect wholly-owned subsidiary and its financial results will be consolidated into the financial statements of our Group; and the second, being RMB5.0 million which represents 25% of the total consideration, within six months after the equity transfer.

Yongkang Jiahua is a company established in the PRC and is engaged in the provision of property management services, and based on the information provided by the sellers, the total GFA under its management as of June 30, 2020, all of which were under projects developed by Independent Third Parties, was 1.53 million sq.m. Given that the property management services of Yongkang Jiahua are provided for properties developed by independent third party property developers, it is expected that the acquisition of Yongkang Jiahua will further broaden our property management services portfolio and strengthen our existing customer base, the majority of which are Independent Third Parties. To the best of our Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of Zhou Erqiang and Chen Jiangbo is an Independent Third Party.

We have applied for, and the Stock Exchange [has granted] us, a waiver from strict compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules in relation to the preparation of financial statements in respect of the Target Companies on the following grounds:

(a) Ordinary and usual course of business – the Acquisitions were made in the ordinary and usual course of business of our Group as it is one of our principal business strategies to enhance our market position through acquisition of regional property management companies engaged in our core business. Our Directors believe that the terms of the Acquisitions are fair and reasonable and in the interests of our Company and our Shareholders as a whole.
(b) Immateriality of the Target Companies – the scale of the business operated by the each of the Target Companies as compared to that of our Group is immaterial. Based on the unaudited management accounts of the Target Companies available to us, all the applicable size test percentage ratios (as defined under Rule 14.04(9) of the Listing Rules) in relation to the Acquisitions referenced against the financials of our Company in the most recent financial year of the Track Record Period are less than 5%. Moreover, the Acquisitions, when calculated on an aggregated basis, are not significant enough to require our Company to prepare pro forma financial information under Rule 4.28 of the Listing Rules.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

Accordingly, our Directors believe that (i) the Acquisitions are immaterial when compared to the scale of our Group’s operations as a whole; (ii) the Acquisitions have not resulted in any significant change to the financial position of our Group since the end of the Track Record Period; and (iii) all information that is reasonably necessary for potential investors to make an informed assessment of the activities or financial position of our Group has been included in this Document. As such, an exemption from compliance with the requirements under Rules 4.04(2) and 4.04(4)(a) of the Listing Rules would not prejudice the interests of the investing public.

(c) Unavailability of information – as none of the Acquisitions had been completed as of the Latest Practicable Date, our Group does not have control or influence over the Target Companies to gain access to their books and records for the purpose of complying with the requirements under Rules 4.04(2) and 4.04(4)(a) of the Listing Rules. Even with access to the Target Companies’ books and records, it will require considerable time and resources for our Company to familiarize with the management accounting policies of all Target Companies and for our Company and our reporting accountants to compile the necessary financial information for disclosure in this Document. As such, it would be impracticable and unduly burdensome to our Company to disclose the audited financial information of the Target Companies as required under the Listing Rules.
(d) Alternative disclosure available – our Company has provided in this Document alternative information regarding the Acquisitions which includes:
(i) description of the principal business activities of the Target Companies;
(ii) confirmation that each of the counterparties and/or the ultimate beneficial owners of the counterparties is an Independent Third Party;
(iii) the date of each of the Acquisitions;
(iv) the consideration of each of the Acquisitions, how the consideration was or would be satisfied and the basis upon which the consideration was determined;
(v) the reasons for the Acquisitions and the benefits which are expected to accrue to our Group as a result of the Acquisitions; and
(vi) a statement that our Directors believe that the terms of the Acquisition are fair and reasonable and in the interests of our Company and our Shareholders as a whole.

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WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

[ REDACTED ]

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WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

REGULATORY OVERVIEW

Our business operations are subject to extensive supervision and regulation by the PRC Government. This section sets out a summary of the material laws, regulations and policies to which we are subject.

LAWS AND REGULATIONS RELATING TO FOREIGN INVESTMENT

According to the Provisions on Guiding the Orientation of Foreign Investment (《指導外商投資方向規定》) (No. 346 Order of the State Council) which was promulgated by the State Council on February 11, 2002 and came into effect on April 1, 2002, foreign investment projects are divided into four categories, namely “encouraged”, “permitted”, “restricted” and “prohibited” categories. Foreign investment projects of the encouraged, restricted and prohibited categories are listed in the Catalogue of Industries for Guiding Foreign Investment (《外商投資產業指導目錄》). Foreign investment projects that are not of the encouraged, restricted and prohibited categories belong to the permitted foreign investment projects which are not listed in the Catalogue of Industries for Guiding Foreign Investment.

On March 15, 2019, the National People’s Congress approved the Foreign Investment Law of the People’s Republic of China (《中華人民共和國外商投資法》) (the “ Foreign Investment Law ”), which came into effect on January 1, 2020 and replaced the Sino-Foreign Equity Joint Venture Enterprise Law of the People’s Republic of China (《中華人民共和國中外合資經營企業法》), the Sino-Foreign Cooperative Joint Venture Enterprise Law of the People’s Republic of China (《中華人民共和國中外合作經營企業法》) and the Wholly Foreign-Invested Enterprise Law of the People’s Republic of China (《中華人民共和國外資企業法》), and became the legal foundation for foreign investment in the PRC.

The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign natural persons, enterprises or other organizations (collectively, the “ foreign investors ”) shall not invest in any sector forbidden by the negative list for access of foreign investment, (ii) for any sector restricted by the negative list, foreign investors shall conform to the investment conditions provided in the negative list, and (iii) sectors not included in the negative list shall be managed under the principle of treating domestic investments and foreign investments equally. The Foreign Investment Law also sets forth necessary mechanisms to facilitate, protect and manage foreign investments and proposes to establish a foreign investment information report system in which foreign investors or foreign-funded enterprises shall submit the investment information to competent departments of commerce through the enterprise registration system and the enterprise credit information publicity system.

The Implementing Regulation for the Foreign Investment Law of the PRC (《中華人民共和國外商投資法實施條例》), which was promulgated by the State Council on December 26, 2019 and came into effect on January 1, 2020, provides implementing measures and detailed rules to ensure the effective implementation of the Foreign Investment Law of the PRC. The Measures for the Reporting of Foreign Investment Information (《外商投資信息報告辦法》), which was promulgated on December 30, 2019 and came into effect on January 1, 2020, sets out the details of the foreign investment information report system.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

REGULATORY OVERVIEW

The Catalogue of Industries for Encouraged Foreign Investment (2019 Edition) (《鼓勵外商投資產業目錄(2019年版)》) (the “ Catalogue ”) was promulgated by the National Development and Reform Commission (the “ NDRC ”) and the Ministry of Commerce (the “ MOFCOM ”) on June 30, 2019, and came into effect on July 30, 2019. Catalogue for the Guidance of Foreign Investment Industries (2017 Revision) (《外商投資產業指導目錄(2017年修訂)》) released on June 28, 2017 and the Catalog of Priority Industries for Foreign Investment in the Central-Western Region (2017 Revision) (《中西部地區外商投資優勢產業目錄(2017年修訂)》) released on February 17, 2017, were repealed simultaneously.

According to the Special Administrative Measures for Access of Foreign Investment (Negative List) (2020 Edition) (《外商投資准入特別管理措施(負面清單)(2020年版)》) and Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (Edition 2020) (《自由貿易試驗區外商投資准入特別管理措施(負面清單)(2020年版)》), both promulgated by the NDRC and the MOFCOM on June 23, 2020 and taking effect on July 23, 2020, the property management service does not fall into such categories which foreign investment is restricted or prohibited.

LEGAL SUPERVISION OVER PROPERTY MANAGEMENT SERVICES

On May 28, 2020, the National People’s Congress approved the Civil Code of the People’s Republic of China (《中華人民共和國民法典》) (the “ Civil Code ”), which will come into effect on January 1, 2021 and replace the Property Law of the PRC (《中華人民共和國物權法》), the Contract Law of the PRC (《中華人民共和國合同法》) and several other basic civil laws in the PRC. The Civil Code, which basically follows the current regulatory principles of property management industry, will form the legal foundation for the property management services in the PRC in the future. Prior to the effectiveness of the Civil Code, the Provisions on Property Management (《物業管理條例》) and the Property Law of the PRC (《中華人民共和國物權法》) have laid down the basic legal framework for the property management industry in China.

Qualification of Property Management Enterprises

According to the Regulations on Property Management (《物業管理條例》) promulgated by the State Council on June 8, 2003, taking effect on September 1, 2003 and amended on August 26, 2007 and February 6, 2016, a qualification system for companies engaging in property management activities has been adopted.

In accordance with the Measures for the Administration on Qualifications of Property Management Enterprises (《物業服務企業資質管理辦法》) (formerly known as《物業管理企業資質管理辦法》), which was promulgated by the Ministry of Construction on March 17, 2004, came into effect on May 1, 2004; was amended on November 26, 2007 and May 4, 2015, and abolished by the MOHURD on March 8, 2018, property management enterprises shall be classified into Level 1, Level 2 and Level 3 by qualifications based on relevant specific conditions.

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On 19 November 2015, the General Office of the State Council promulgated the Guiding Opinions of the General Office of the State Council on Accelerating the Development of the Personal Service Industry to Promote the Upgrading of Consumption Structure (《國務院辦公廳關於加快發展生活性服務業促進消費結構升級的指導意見》), which sets out the general requirements, the main tasks and the policy measures to accelerate the development of personal services and upgrade consumption structures. Such main tasks focus on the development of the living services that are closely related to the people’s livelihood with vast demand potential and strong driving forces, among others, to promote the standardisation developments of the real estate intermediary, house leasing, property management, moving and cleaning, household vehicles maintenance and other personal services.

In accordance with the Decision of the State Council on Canceling the Third Batch of Administrative Licencing Items Designated by the Central Government for Implementation by Local Governments (《國務院關於第三批取消中央指定地方實施行政許可事項的決定》) promulgated by the State Council on January 12, 2017 and taking effect on the same day, the examination and approval of Level 2 and Level 3 qualifications of property management enterprises were cancelled. According to the Decision of the State Council on Canceling a Batch of Administrative Licencing Items (《國務院關於取消一批行政許可事項的決定》), which was promulgated by the State Council on September 22, 2017 and came into effect on the same day, the examination and approval of Level 1 qualification of property management enterprises was cancelled.

In accordance with the Notice of the General Office of the MOHURD on Effectively Implementing the Work of Canceling the Qualification Accreditation for Property Management Enterprises (《住房城鄉建設部辦公廳關於做好取消物業服務企業資質核定相關工作的通知》), which was promulgated on December 15, 2017 by the MOHURD and became effective on the same day, the application, change, renewal or re-application of the qualifications of property management enterprises shall no longer be accepted, and the qualifications obtained already shall not be a requirement in any way for property management enterprises to undertake new property management projects.

On March 19, 2018, the State Council promulgated the Decision of the State Council to Amend and Repeal Certain Administrative Regulations (《國務院關於修改和廢止部分行政法規的決定》) (Order of the State Council No. 698), according to which the Regulations on Property Management (《物業管理條例》) was amended. The Regulations on Property Management (2018 Revision) (《物業管理條例》) (2018年修正) has removed the qualification accreditation of the property management enterprises.

Procedures to convene a general meeting of property owners and establish a property owners’ association

According to the Regulations on Property Management (《物業管理條例》), the property owners within a single property management area shall, under the direction of street office or township people’s government or the real estate administration department of the county or district people’s government where the relevant real estate is situated, convene a general

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meeting of property owners and elect a property owners’ association. However, where there is only one property owner or where there are relatively few property owners and they are all in agreement, the property owners(s) may choose not to convene a general meeting of property owners, in which case the functions assigned to both a general meeting of property owners and property owners’ association shall be performed by the owner(s). The Circular on Issuing the Guidance Rules of the General Meeting of the Property Owners and the Property Owners’ Association (關於印發《業主大會和業主委員會指導規則》的通知) (JF[2009] No. 274) (promulgated by MOHURD on December 1, 2009, which came into effect on January 1, 2010) provides a practical guideline for the establishment and governance of the general meeting of property owners and property owners’ association, and the supervision of the real estate administrative department of the local government.

According to the Civil Code, the general meeting of property owners may vote to establish a property owners’ association. The property owners’ association is elected by the property owners, and represents their interest in matters related to property management, and the association’s decisions are binding on the property owners. Property owners of nonresidential properties are not required to establish a property owners’ association under the relevant PRC laws and regulations.

Appointment of Property Management Enterprises

According to the Civil Code, a quorum for the general meeting of the property owners to engage or dismiss a property management enterprise, to change the usage of common space or to conduct operating activities in common space or to decide for certain other matters shall consist of the property owners who hold no less than two-thirds of the total GFA of the exclusive area of the community and represent no less than than two-thirds of the total number of property owners. A general meeting of the property owners of a community can engage or dismiss a property management enterprise with affirmative votes of property owners who participate in the voting and hold more than half of the total GFA of the exclusive area owned by the voting owners and who represent more than half of the total number of property owners participating in the voting. For other matters, such as changing the usage of common space or conducting operating activities in common space, the approvals requires the affirmative votes of property owners who participate in the voting and hold more than 75% of the total GFA of the exclusive area owned by the voting owners and who represent more than 75% of the total number of property owners participating in the voting. In addition, the Civil Code explicitly requires that any income generated from the usage of common space in properties under management, net of any reasonable operating costs, shall belong to the property owners. Under the Civil Code, the income from the buildings and ancillary facilities shall be distributed according to the property owners’ agreement or based on their respective proportion of the total GFA of the exclusive area of the community if there is no agreement or the agreement is ambiguous.

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According to the Regulations on Property Management (2018 Revision) (《物業管理條例》(2018年修正)), a general meeting of the property owners of a community can engage or dismiss a property management enterprise with affirmative votes of owners who own more than half of the GFA of the community and who account for more than half of the total number of the property owners. Property owners’ association, on behalf of the general meeting, can sign the property management contract with the property management enterprise engaged at the general meeting. Before the engagement of a property management enterprise by property owners and a general meeting of the property owners, a written preliminary service contract should be entered into between the property developer and the selected and engaged property management enterprise. The preliminary property management contract may stipulate the contract duration. If the property management contract signed by the property owners’ association and the property management enterprise comes into force within the term of preliminary property management, the preliminary property management contract automatically terminates.

According to the Regulations on Property Management (2018 Revision) and the Interim Measures for Tender and Bidding Management of Preliminary Property Management (《前期物業管理招標投標管理暫行辦法》) promulgated by the Ministry of Construction on June 26, 2003 and taking effect on September 1, 2003, developer of residential buildings and non-residential buildings in the same property management area shall engage property management enterprises by inviting bid. In case where there are less than three bidders or for small-scale properties, the developer can hire property management enterprises by signing an agreement with the approval of the real estate administrative department of the local government of the place where the property is located. Where the developer fails to hire the property management enterprise through a tender and bidding process or hire the property management enterprise by signing agreement without the approval of relevant government authority, the competent real estate administrative department of the local government at the county level or above shall order it to make correction within a prescribed time limit, issue a warning and impose with the penalty of no more than RMB100,000.

Bid assessment shall be the responsibility of the bid assessment committee established by the bid inviter in accordance with relevant laws and regulations. The bid assessment committee shall be composed of the representative of the bid inviter and experts in the related property management fields and the number of members shall be an odd number at or above five. The expert members shall represent at least two-thirds of the total members. Expert members in the bid assessment committee shall be determined by random select from the roster of experts established by the competent real estate administrative department. A person having an interest with a bidder shall not join the bid assessment committee of the related project.

In addition, on May 15, 2009, the Supreme People’s Court promulgated the Interpretation of the Supreme People’s Court on Several Issues the Specific Application of Law in the Trial of Cases of Disputes over Property Management Service (《最高人民法院關於審理物業服務糾紛案件具體應用法律若干問題的解釋》) (the “ Interpretation ”), which came into effect on October 1, 2009. The Interpretation stipulates the interpretation principles applied by the court when hearing disputes on specific matters between property owners and property management enterprises. For example, the preliminary property management contract signed by the

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developer and the property management enterprise according to the relevant laws and regulations, and the property management contract signed by the property owners’ association and property management enterprises hired by the general meeting according to the relevant laws and regulations are legally binding on property owners, the people’s court shall not support a claim if property owners plead as property owners are not a party to the contract. The court shall support a claim if property owners’ association or property owners appeal to the court to confirm that the clauses of property management service contracts which exempt the responsibility of property management enterprises or which aggravate the responsibility or harm the rights of property owners’ association or property owners are invalid.

Fees Charged by Property Management Enterprises

According to the Measures on the Charges of Property Management Enterprise (《物業服務收費管理辦法》) (the “ Measures on the Charges ”), which was jointly promulgated by the NDRC and the Ministry of Construction on November 13, 2003 and came into effect on January 1, 2004, property management enterprises are permitted to charge fees from owners for the repair, maintenance and management of houses and ancillary facilities, equipment and venues and maintenance of the sanitation and order in relevant regions according to the property management contract.

The competent price administration department of the local people’s governments at or above the county level and the competent property administration departments at the same level are responsible for supervising and regulating the fees charged by property management enterprises in their respective administrative regions. The fees charged by property management can be either the government guidance price or market-based price depending on the basis of the nature and features of relevant properties. If the fees charged subject to the government guidance price, the specific pricing principles shall be determined by the competent price administration departments and property administration departments of the people’s governments of each province, autonomous region and municipality directly under the Central Government.

Dependent on the agreement between the property owners and property management enterprises, the fees for the property management services can be charged either as a lump sum basis or a commission basis. The lump sum basis refers to the charging mode requiring property owners to undertake the fixed property management expenses to property management enterprises who shall enjoy or assume the surplus or deficit. The commission basis refers that property management enterprises may collect its service fee in the proportion or amount as agreed from the property management income in advance, the rest of which shall be exclusively used on the items as stipulated in the property management contract, and property owners shall enjoy or assume the surplus or deficit.

In accordance with the Measures on the Charges, except the circumstance where the government guidance price shall be implemented, the market-based price applies to the property management fees. The standard of such fees is determined by the property management enterprise and the developer or property owners through negotiation.

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According to the Provisions on Clearly Marking the Prices of Property Services (《物業服務收費明碼標價規定》), which was jointly promulgated by the NDRC and the Ministry of Construction on July 19, 2004 and came into effect on October 1, 2004, property management enterprises shall clearly mark the price, as well as state service items and standards and relevant information on services (including the property management services as stipulated in the property management service agreement as well as other services requested by property owners) provided to the owners. If the charging standard changes, property management enterprises shall adjust all relevant information one month before implementing the new standard and indicate the date of implementing the new standard. Property management enterprises shall neither use any false or misleading price items or mark prices in a false or misleading manner to commit price fraud, nor charge any fees not clearly specified, other than those expressly marked.

According to the Property Management Pricing Cost Supervision and Examination Approaches (Trial) (《物業服務定價成本監審辦法(試行)》) which was jointly promulgated by the NDRC and the Ministry of Construction on September 10, 2007 and came into effect on October 1, 2007, the competent price administration department of people’s government formulates or regulates property management charging standards, the pricing cost of property management services should be the social average cost of community property services as verified by the competent price administration department of the people’s government. With the assistance of competent real estate administrative department, competent pricing department is responsible to organize the implementation of the property management pricing cost supervision and examination work. Property management service pricing cost shall include staff costs, expenses for daily operation and maintenance on public facilities and equipment, green conservation costs, sanitation fee, order maintenance cost, public facilities and equipment as well as public liability insurance costs, office expenses, shared administration fee, fixed assets depreciation and other fees approved by property owners.

At present, no uniform standard for the government guidance price of fees for property management services has been established at the national level. In accordance with the Circular of the NDRC on the Opinions for Decontrolling the Prices of Some Services (《國家發展和改革委員會關於放開部分服務價格意見的通知》), which was promulgated by NDRC on December 17, 2014 and became effective on the same day, the price control on property services of non-government-supported houses was cancelled. The provincial price authorities shall, jointly with the housing and urban-rural development administrative authorities, decide to implement government guidance prices for property management fees for governmentsupported houses, houses under housing reform, old residence communities and preliminary property management service in light of the actual situation. The benchmark and floating range of these government guidance prices vary from region to region. Fees charged by property management service providers or parking service companies from property owners or users of residential areas for the providing and management of parking spaces and parking facilities in accordance with the agreed parking service contract.

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For example, in Guangdong, according to the Notice of Price Bureau and Housing and Urban Construction Department of Guangdong Province on the Measures of Property Service Fee (《廣東省物價局、廣東省住房和城鄉建設廳關於物業服務收費管理辦法的通知》) (Yue Jia [2010] No. 1), government guidance prices or market-regulated price shall be implemented for charges of property management in light of the nature and characteristics of different properties. The government guidance prices shall be implemented for the charges of property management of a residential property (including self-owned parking space and garages) before the establishment of the owners’ congress, and market-regulated prices shall be implemented for the service fee of villas, residential properties (including self-owned parking space and garages) after the establishment of the owners’ congress and other non-residential properties.

According to the Notice on Further Standardization on Property Management Services Fees (《關於進一步規範物業服務收費的通知》) (Yue Fa Gai Jia Ge Han [2019] No. 2897) issued by the Development and Reform Commission of Guangdong Province and the Guangdong Provincial Bureau of Housing and Urban-rural Development which has taken effect on August 1, 2019, the property management charging standards for which government guidance prices are carried out will be determined by the property management companies and the property owners through negotiation, and will no longer be required to report to the local Development and Reform Commission for filing.

In Shanghai, in accordance with the Residential Property Management Regulation of Shanghai (《上海市住宅物業管理規定》), Shanghai loosened the price control on the local property management market by removing the government guidance prices for residential properties in March 2019. Where property service charges are priced by market, property owners and property management enterprises shall agree on the charges in property management service agreements.

In Chongqing, according to Measures of Chongqing for the Administration of the Fees for Property Management Services (《重慶市物業服務收費管理辦法》) and the Notice of Chongqing Municipal Bureau of Land and House Administration and Chongqing Price Bureau on the Integral Implementation of Measures of Chongqing for the Administration of the Fees for Property Management Services (《重慶市國土房管局、重慶市物價局關於全面貫徹執行< 重慶市物業服務收費管理辦法>的通知》), the government guidance price, within the main districts of Chongqing, is divided into four levels, and the standards of each level differ in contents and qualities of services. Specifically, pursuant to the above regulations, the residential property management services are judged from five aspects, namely (i) basic requirements, including service management procedures and personnel, (ii) maintenance of common area and public facilities, (iii) maintenance of public order, (iv) cleaning and (v) green conservation. Requirements for higher levels are stricter and more comprehensive than those for lower levels. For residential properties with lift, the benchmark price for the first, second, third and fourth level is RMB1.00/sq.m. per month, RMB1.30/sq.m. per month, RMB1.60/sq.m. per month and RMB1.90/sq.m. per month, respectively. For residential properties without lift, the benchmark price for the first, second, third and fourth level is RMB0.60/sq.m. per month, RMB0.85/sq.m. per month, RMB1.10/sq.m. per month and

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RMB1.35/sq.m. per month. For residence communities more than 40,000 sq.m., the pricefloat range for each level is 10%. For residence communities no more than 40,000 sq.m., the price-float range for each level is 15%.

Property Management Service Outsourcing

In accordance with the Regulations on Property Management (2018 Revision), a property management enterprise may outsource a specific service within the property management area to a specialized service enterprise, but it shall not outsource all the property management business within such area to third parties.

Parking Service Fees

According to the Guidance on the Planning, Construction and Management of Urban Parking Facilities (《關於城市停車設施規劃建設及管理的指導意見》) (Jian Cheng 2010 No. 74) (jointly promulgated by the MOHURD, the NDRC and the Ministry of Public Security of the PRC and came into effect on 19 May 2010), a licensed management system shall be adopted with market access and exit standards and the open, fair and equitable selection of professional urban parking service enterprises.

Pursuant to Guidance on Further Improving Charging Policies for Motor Vehicle Parking Service (《關於進一步完善機動車停放服務收費政策的指導意見》) (Fa Gai Jia Ge [2015] No. 2975) (jointly promulgated by NDRC, MOHURD and Ministry of Transport on 15 December 2015 and came into effect on the same day), the fee charged in parking service shall be determined mainly by the market, and the scope of government guidance prices in parking services shall be gradually reduced to encourage the construction of parking facilities by social capital.

According to the Circular of NDRC on the Opinions for Decontrolling the Prices of Some Services (《關於放開部分服務價格意見的通知》) (Fa Gai Jia Ge [2014] No. 2755) (promulgated by NDRC on 17 December 2014 and came into effect on the same day), price control on parking services in residence communities was also cancelled.

Fire Protection

Pursuant to the Fire Protection Law of the PRC (《中華人民共和國消防法》), which was promulgated by the Standing Committee of the National People’s Congress (the “ SCNPC ”) on April 29, 1998, and was amended on October 28, 2008 and April 23, 2019, property management enterprises of residential districts shall carry out maintenance and administration of common firefighting facilities within the area under their management, and provide fire safety prevention services.

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LEGAL SUPERVISION OVER CLUBHOUSES

Supervision on Public Area Hygiene

According to the Public Area Hygiene Administration Regulation (《公共場所衛生管理條例》) which was promulgated by the State Council on April 1, 1987 and amended on February 6, 2016 and April 23, 2019 and according to the Implementing Measures for the Public Area Hygiene Administration Regulation (《公共場所衛生管理條例實施細則》) which was promulgated by the Ministry of Health on March 10, 2011 and amended by the National Health and Family Planning Commission on January 19, 2016 and December 26, 2017, a clubhouse must obtain a public area hygiene license before opening for business, the clubhouses failing to obtain a public area hygiene license or comply with other requirements set forth in such regulations may be subject to the following administrative penalties depending on the seriousness of their respective activities: (i) warnings; (ii) fines between RMB500 and RMB30,000; (iii) orders to correction within a stipulated period or (iv) orders to suspend operations for rectification, or to revoke the public hygiene license.

Supervision on High-Risk Sports Projects

According to the Administrative Measures on Business Licensing for High-Risk Sports Projects (《經營高危險性體育項目許可管理辦法》) which was promulgated by the State General Administration of Sports on February 21, 2013 and amended on April 29, 2016, a clubhouse operating high-risk sports projects must obtain administrative licensing, and shall satisfy the following requirements: (i) relevant sports facilities shall comply with the national standards; (ii) hiring social sports instructors and rescuers who reach the prescribed number and have obtained national professional qualification certificates; (iii) having security systems and measures.

LEGAL SUPERVISION OVER THE INTERNET INFORMATION SERVICES

Regulation on the Internet Information Services

According to the Administrative Measures on Internet Information Services (《互聯網信息服務管理辦法》), which was promulgated by the State Council on September 25, 2000, became effective on the same day and was amended on January 8, 2011, internet information service refers to the provision of information through internet to web users, and includes two categories: commercial and non-commercial. Commercial internet information service refers to the service activities of compensated provision to online subscribers through the internet of information or website production. Non-commercial internet service refers to the provision free of charge of public, commonly-shared information through the internet to web users. Entities engaged in providing commercial internet information service shall apply for a license for value-added telecommunication services of internet information services. As for the operation of non-commercial internet information services, a record-filing is required. Internet information service provider shall provide services within the scope of their licenses or filing.

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Non-commercial internet information service providers shall not provide services with charge of payment. In case an internet information service provider changes its services, website address, etc., it shall apply to submit such changes within 30 days in advance at the relevant government department.

Where an entity provides commercial Internet information service without a license or provides service beyond the scope of the license, provincial telecommunication administrative department shall order it to make correction within a prescribed time limit. Where there are illegal gains, such gains shall be confiscated; and a fine more than three times but less than five times of such gains shall be imposed. Where there is no illegal gain or the gain is less than RMB50,000, a fine of RMB100,000 to RMB1 million shall be imposed. Where the circumstance is serious, the website shall be ordered to shut down. Where an entity provides non-commercial Internet information service without a filing, provincial telecommunication administrative department shall order it to make corrections within a prescribed time limit and to shut down the website if it refused to make corrections.

According to the Provisions on Administration of Mobile Internet Application Information Services (《移動互聯網應用程序信息服務管理規定》), which was promulgated by the Cyberspace Administration of PRC on June 28, 2016 and came into effect on August 1, 2016, entities providing information services through mobile internet applications shall obtain relevant qualifications according to law. Mobile internet application provider shall not use mobile internet application program to carry out activities prohibited by laws and regulations, such as endangering national security, disturbing public orders, and infringing other’s legal rights and interests, or use mobile internet applications to produce, copy, publish and spread illegal information prohibited by laws and regulations. The Cyberspace Administration of PRC shall be responsible for the supervision and administration and law enforcement with regard to the nationwide mobile internet applications information contents. The local cyberspace administrations shall be responsible for the supervision and administration and law enforcement in terms of the mobile internet applications information contents within their respective jurisdiction.

Regulations on Information Security and Privacy Protection

According to the Cyber Security Law of the PRC (《中華人民共和國網絡安全法》), which was promulgated by the SCNPC on 7 November 2016 and came into effect on 1 June 2017, network operators shall comply with laws and regulations and fulfill their obligations to ensure the security of the network when conducting business and providing services. Those who provide services through networks shall take technical measures and other necessary measures in accordance with laws, regulations and compulsory national requirements to safeguard the safe and stable operation of the networks, respond to network security incidents effectively, prevent illegal and criminal activities committed on the network, and maintain the integrity, confidentiality, and availability of network data. In addition, the network operators shall neither collect the personal information irrelevant to the services provided by them nor collect or use the personal information in violation of the provisions of any laws or administrative regulation or the agreement between both parties. On 28 December 2012, the

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SCNPC promulgated the Decision on Strengthening Information Protection on Networks (《關於加強網絡信息保護的決定》) to enhance the protection of information security and privacy on the Internet. On 16 July 2013, the Ministry of Industry and Information Technology (the “ MIIT ”) promulgated the Provisions on Protection of Personal Information of Telecommunication and the Internet Users (《電信和互聯網用戶個人信息保護規定》), which became effective on 1 September 2013, to regulate the collection and use of personal information of users in the provision of telecommunication service and the Internet information service. According to the Several Provisions on Regulating the Market Order of the Internet Information Services (《規範互聯網信息服務市場秩序若干規定》) (the “ Provisions ”), which promulgated by the MIIT on 29 December 2011, and came into effect on 15 March 2012, without the consent of users, the Internet information service providers shall neither collect information which is relevant to users and can serve to identify users solely or in combination with other information (the “ personal information of users ”) nor shall they provide personal information of users to others, unless otherwise provided by laws and administrative regulations. The Provisions also require that the Internet information service providers shall properly preserve the personal information of users.

On May 8, 2017, the Supreme People’s Court and the Supreme People’s Procuratorate released the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Citizens’ Personal Information (《最高人民法院、最高人民檢察院關於辦理侵犯公民個人信息刑事案件適用法律若干問題的解釋》) (the “ Interpretations ”), effective from June 1, 2017. The Interpretations clarify several concepts regarding the crime of “infringement of citizens’ personal information” stipulated by Article 253A of the Criminal Law of the PRC (《中華人民共和國刑法》), including “citizens’ personal information”, “provision of citizens’ personal information” and “illegally obtaining any citizen’s personal information by other methods.” In addition, the Interpretations specify the standards for determining “serious circumstances” and “particularly serious circumstances” of this crime.

SUPERVISION OVER REAL ESTATE BROKERAGE BUSINESS

On July 5, 1994, the SCNPC promulgated the Urban Real Estate Administration Law of the PRC (《中華人民共和國城市房地產管理法》), which came into effect on January 1, 1995 and was revised on August 30, 2007, August 27, 2009 and August 26, 2019. According to the Urban Real Estate Administration Law, real estate intermediate service agencies include real estate consultants, real estate evaluation agencies, real estate brokerage agencies, etc. Real estate intermediate agencies shall meet the following conditions: (i) have their own name and organization; (ii) have a fixed business site; (iii) have the necessary assets and funds; (iv) have a sufficient number of professionals; and (v) other conditions specified by laws and administrative regulations.

According to the Administrative Measures for Real Estate Brokerage (《房地產經紀管理辦法》), which was promulgated by the MOHURD, NDRC and Ministry of Human Resources and Social Security on January 20, 2011, came into effect on April 1, 2011 and was amended

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REGULATORY OVERVIEW

on March 1, 2016, real estate brokerage refers to the acts of providing intermediary and agency services to and collecting commissions from clients by real estate brokerage institutions and real estate brokers for the purpose of promoting real estate transactions. Sufficient real estate agents are required to establish real estate brokerage agencies and their branches. Real estate brokerage agencies and their branches shall go to the competent housing and urban-rural development (real estate) authority for filing formalities within 30 days from the date of receiving business licenses.

LEGAL SUPERVISIONS OVER LABOR PROTECTION IN THE PRC

According to Labor Law of the PRC (《中華人民共和國勞動法》), which was promulgated by the SCNPC on July 5, 1994, came into effect on January 1, 1995 and was amended on August 27, 2009 and December 29, 2018, employers shall develop and improve their rules and regulations in accordance with the law to ensure that workers enjoy their labor rights and perform their labor obligations. Employers shall develop and improve the system of labor safety and sanitation, strictly implement the national protocols and procedures on labor safety, guard against labor safety accidents and reduce occupational hazards. Labor safety and sanitation facilities shall meet the relevant national standards. Employers must provide workers with the necessary labor protection equipment that meets the safety and hygiene conditions stipulated under national regulations by the State, and conduct regular health checks for workers who engage in operations with occupational hazards. Laborers engaged in special operations must have received specialized training and obtained the pertinent qualifications.

According to Labor Contract Law of the PRC (《中華人民共和國勞動合同法》), which was promulgated by the SCNPC on June 29, 2007, came into effect on January 1, 2008, and was amended on December 28, 2012, and the Implementation Regulations on Labor Contract Law of the PRC (《中華人民共和國勞動合同法實施條例》), which was promulgated and became effective on September 18, 2008, employers and employees shall enter into written labor contracts to establish their employment relationship. The labor contracts shall set forth the terms, duties, remunerations, disciplinary rules of the employment and conditions to terminate the labor contracts. With respect to a circumstance where a labor relationship has already been established but no formal contract has been made, a written labor contracts shall be entered into within one month from the date when the employee begins to work. Meanwhile, it is stipulated that labor contracts must be concluded in written forms, upon reaching an agreement after due negotiation, an employer and an employee may enter into a fixed-term labor contract, a non-fixed-term labor contract or a labor contract that concludes upon the completion of certain work assignments. After reaching an agreement upon due negotiation with employees or by fulfilling other circumstances in line with legal conditions, an employer may legally terminate a labor contract and dismiss its employees.

According to Social Security Law of the PRC (《中華人民共和國社會保險法》), which was promulgated by the SCNPC on October 28, 2010, came into effect since July 1, 2011, and was amended on December 29, 2018, and other relevant PRC laws and regulations such as the Interim Regulations on the Collection and Payment of Social Insurance Premiums (《社會保險費徵繳暫行條例》), Regulations on Work Injury Insurance (《工傷保險條例》),

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Regulations on Unemployment Insurance (《失業保險條例》) and Trial Measures on Employee Maternity Insurance of Enterprises (《企業職工生育保險試行辦法》), the employer shall register with the social insurance authorities and contribute to social insurance plans covering basic pensions insurance, basic medical insurance, maternity insurance, work injury insurance and unemployment insurance. Basic pension, medical and unemployment insurance contributions shall be paid by both employers and employees, while work injury insurance and maternity insurance contributions shall be paid only by employers, and employers who fail to promptly contribute social security premiums in full amount shall be ordered by the social security premium collection agency to make or supplement contributions within a stipulated period, and shall be subject to a late payment fine computed from the due date at the rate of 0.05% per day; where payment is not made within the stipulated period, the relevant administrative authorities shall impose a fine ranging from one to three times the amount of the amount in arrears.

According to Regulations on the Administration of Housing Provident Fund (《住房公積金管理條例》), which was promulgated by the State Council on April 3, 1999, and became effective on the same day, and was amended on March 24, 2002 and March 24, 2019, employers shall undertake registration at the competent administrative center of housing fund and then, upon the verification by such administrative center of housing fund, go to a commissioned bank to go through the formalities of opening housing provident fund accounts on behalf of its employees. The employer shall timely pay up and deposit housing provident fund contributions in full amount and late or insufficient payments shall be prohibited. The employer shall process housing provident fund payment and deposit registrations with the housing provident fund administration center. With respect to companies who fail to process housing provident fund registrations or open housing provident fund accounts for their employees, such companies shall be ordered by the housing provident fund administration center to complete such procedures within a prescribed time limit; where failing to do so by the expiration of the time limit, a fine of not less than RMB10,000 nor more than RMB50,000 shall be imposed. When an employer fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration center shall order it to pay up within a prescribed time limit; where the payment and deposit has not been made after the expiration of the time limit, an application may be made to a people’s court for compulsory enforcement.

REGULATIONS RELATING TO INTELLECTUAL PROPERTY

Trademark

Trademarks are protected by the Trademark Law of the PRC (《中華人民共和國商標法》) promulgated by the SCNPC on August 24, 1982, taking effect on March 1, 1983 and amended on February 22, 1993, October 27, 2001, August 30, 2013 and April 23, 2019, and the Implementation Regulation of the PRC trademark Law (《中華人民共和國商標法實施條例》), which was promulgated by the State Council on August 3, 2002, amended on April 29, 2014, and went into effect on May 1, 2014. The trademark office under the SAMR handles trademark registration and grants registered trademarks for a validity period of 10 years. Trademarks may be renewable every ten years where a registered trademark needs to be used after the expiration

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of its validity period. Trademark registrants may license, authorize others to use their registered trademark by signing up a trademark license contract. For trademarks, trademark law adopts the principle of “prior application” with respect to trademark registration. Where a trademark under registration application is identical with or similar to another trademark that has, in respect of the same or similar commodities or services, been registered or, after preliminary examination and approval, this application for such trademark registration may be rejected. Anyone applying for trademark registration shall not prejudice the existing right first obtained by anyone else, or forestall others by improper means in registering a trademark which others have already begun to use and enjoyed certain degree of influence.

Patent

According to the Patent Law of the PRC (《中華人民共和國專利法》), which was promulgated by the SCNPC on March 12, 1984, came into effect on April 1, 1985, and was amended on September 4, 1992, August 25, 2000 and December 27, 2008, the State Intellectual Property Office is responsible for managing patent work of the whole nation. The patent management departments of the people’s governments of each province, autonomous region and municipality directly under the central government are responsible for the patent management in their respective administrative regions. Chinese patent system adopts the principle of “prior application”, i.e. where two or more applicants file applications for patent for the identical invention or creation respectively, the patent right shall be granted to the applicant whose application was filed first. If one wishes to file application for patent for invention or utility models, the following three standards must be met: novelty, creativity and practicability. The validity period of a patent for invention is 20 years, while the validity period of utility models and design is 10 years. Others may use the patent after obtaining the permit or proper authorization of the patent holder, otherwise such behavior will constitute an infringing act of the patent right.

Copyright

The Copyright Law of the PRC (《中華人民共和國著作權法》), which was promulgated by the SCNPC on September 7, 1990, came into effect on June 1, 1991 and was amended on October 27, 2001 and February 26, 2010, specifies that works of Chinese citizens, legal persons or other organizations, including literature, art, natural sciences, social sciences, engineering technologies and computer software created in writing or oral or other forms, whether published or not, shall enjoy the copyright. Copyright holder can enjoy multiple rights, including the right of publication, the right of authorship and the right of reproduction.

The Measures for the Registration of Computer Software Copyright (《計算機軟件著作權登記辦法》), which was promulgated by the National Copyright Administration on February 20, 2002, and came into effect on the same day, regulates the registration of software copyright, the exclusive licensing contract and transfer contracts of software copyright. The National Copyright Administration is mainly responsible for the registration and management of national software copyright and recognizes the China Copyright Protection Center as the software registration organization. The China Copyright Protection Center will grant

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certificates of registration to computer software copyright applicants in compliance with the regulations of the Measures for the Registration of Computer Software Copyright and the Regulations on Protection of Computers Software (《計算機軟件保護條例》) which was promulgated by the State Council on December 20, 2001, came into effect on January 1, 2002 and was amended on January 8, 2011 and January 30, 2013.

Provisions of the Supreme People’s Court on Certain Issues Concerning the Application of Law in the Trail of Civil Cases Involving Disputes over Infringement of the Right of Dissemination through Information Networks (《最高人民法院關於審理侵害信息網絡傳播權民事糾紛案件適用法律若干問題的規定》), issued by the Supreme People’s Court on December 17, 2012 and came into effect on January 1, 2013, stipulates that web users or web service providers who, through information networks, provide works, performances, or audio-video products in which the right holders enjoy the transmission right of information network without due authorization, they shall be deemed to have infringed upon the transmission right of information network by the people’s court.

Domain Name

According to the Administrative Measures for Internet Domain Names (《互聯網域名管理辦法》), which was promulgated by the Ministry of Industry and Information Technology on August 24, 2017 and came into effect on November 1, 2017, the Ministry of Industry and Information Technology is responsible for managing internet network domain names of China. The principle of “first to-file” is adopted for domain name services. The applicant of domain name registration shall provide the agency of domain name registration with the true, accurate and complete information about the domain name holder’s identity for the registration purpose, and sign the registration agreements. Upon the completion of the registration process, the applicant will become the holder of the relevant domain name.

LEGAL REGULATIONS OVER TAX IN THE PRC

Income Tax

According to the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法》) (the “ EIT Law ”), which was promulgated by the National People’s Congress on March 16, 2007 and came into effect on January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, and the Implementation Regulations on the EIT Law (《企業所得稅法實施條例》) which was issued by the State Council on December 6, 2007, came into effect on January 1, 2008, and was amended on April 23,2019), the tax rate of 25% will be applied to the income related to all PRC enterprises, foreign-invested enterprises and foreign enterprises which have established production and operation facilities in the PRC. These enterprises are classified into as either resident enterprises or non-resident enterprises. Enterprises which are established in accordance with the law of the foreign country or region, but whose actual administration institutions (referring to the institutions conducting substantive and all-around

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management and control over the enterprises production, operation, personnel, accounting matters, finance, etc.) are in PRC, are deemed as resident enterprise. Thus, the tax rate of 25% applies to their income originating from both inside and outside PRC.

According to the EIT Law and the Implementing Regulations of the EIT Law, for dividends payable to investors that are non-resident enterprises (who do not have institutions or places of business in the PRC, or that have institutions and places of business in PRC but to whom the relevant income tax is not effectively connected), 10% of the PRC withholding tax shall be paid, unless there are any applicable tax treaties are reached between the jurisdictions of non-resident enterprises and the PRC which may reduce or provide exemption to the relevant tax. Similarly, any gain derived from the transfer of shares by such investor, if such gain is regarded as income derived from sources within the PRC, shall be subject to 10% PRC income tax rate or a lower tax treaty rate (if applicable).

The PRC and the government of Hong Kong entered into the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) (the “ Arrangement ”) on August 21, 2006 and implemented the Arrangement since December 8, 2006. According to the Arrangement, if the beneficiary of the dividends is a Hong Kong resident enterprise, which directly holds no less than 25% equity interests in a PRC company, the tax levied shall be 5% of the distributed dividends. The 10% withholding tax rate applies to dividends paid by a PRC company to a Hong Kong resident if such Hong Kong resident holds less than 25% of the equity interests in the PRC company.

In accordance with the Measures for Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Treaties (《非居民納稅人享受協定待遇管理辦法》) which was promulgated by the SAT on October 14, 2019, and came into effect on January 1, 2020, if non-resident taxpayers consider they are eligible for treatments under the tax treaties through self-assessment, they may, at the time of filing tax returns or making withholding tax filings through withholding agents, enjoy the treatments under the tax treaties, and shall concurrently collect and retain the relevant documents for inspection according to relevant regulations, and accept tax authorities’ post-filing administration.

Value-added Tax

According to the Temporary Regulations on Value-Added Tax of the PRC (《中華人民共和國增值稅暫行條例》), which was promulgated on December 13, 1993 by the State Council, came into effect on January 1, 1994 and was amended on November 10, 2008 and February 6, 2016 and November 19, 2017, and the Detailed Rules for the Implementation of the Provisional Regulations of the PRC on Value Added Tax (《中華人民共和國增值稅暫行條例實施細則》), which was promulgated by the MOF on December 25, 1993, became effective on the same day and was amended on December 15, 2008 and October 28, 2011 (collectively, the “ VAT Law ”), taxpayers who engaged in the sale of goods, the provision of processing, repairing and

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replacement services, leasing service of tangible movable property or import goods within the territory of the PRC shall pay value-added tax. Except those specified listed in the VAT law, tax rate for selling services or intangible assets is 6%.

Furthermore, in accordance with the Notice on Fully Launch of the Pilot Scheme for the Conversion of Business Tax to Value-Added Tax (《關於全面推開營業稅改徵增值稅試點的通知》), promulgated by the MOF and the SAT on March 23, 2016 and taking effect on May 1, 2016, the state started to fully implement the pilot program from business tax to value-added tax on May 1, 2016. All taxpayers of business tax in construction industry, real estate industry, financial industry and living service industry have been included in the scope of the pilot and should pay value-added tax instead of business tax.

City Maintenance and Construction Tax and Educational Surcharges

According to the Notice on Unifying the System of Urban Maintenance and Construction Tax and Education Surcharge Paid by Domestic and Foreign-invested Enterprises and Individuals (《關於統一內外資企業和個人城市維護建設稅和教育費附加制度的通知》), which was promulgated by the State Council on October 18, 2010 and came into effect on December 1, 2010, since December 1, 2010, the Temporary Regulation on Urban Maintenance and Construction Tax of the PRC (《中華人民共和國城市維護建設稅暫行條例》) which was promulgated in 1985 and the Temporary Provisions on the Collection of Educational Surcharges (《徵收教育費附加的暫行規定》) which was promulgated in 1986 and other rules and regulations promulgated by the State Council and other competent departments in charge of relevant financial and tax authorities shall apply to foreign-invested enterprises, foreign enterprises and foreign individuals.

According to the Temporary Regulation on Urban Maintenance and Construction Tax of the PRC (《中華人民共和國城市維護建設稅暫行條例》), which was promulgated by the State Council on February 8, 1985, retroactive to January 1, 1985 and was amended on January 8, 2011, entities and individuals who pay consumption tax, value-added tax and business tax shall pay city maintenance and construction tax. The payment of city maintenance and construction tax is based on the actual amount of consumption tax, value-added tax and business tax paid by the entities and individuals and shall be paid at the same time along with the above taxes. If the location of the taxpayer is in city downtown area, the tax rate shall be 7%; if the location of the taxpayer is in a county or town, the tax rate shall be 5%; the tax rate shall be 1% for taxpayer located out of city downtown area, country or town.

According to the Temporary Provisions on the Collection of Educational Surcharges (《徵收教育費附加的暫行規定》), which was promulgated by the State Council on April 28, 1986, came into effect on July 1, 1986 and was amended on June 7, 1990, August 20, 2005 and January 8, 2011, the tax rate of education surcharges shall be 3% of the actual amount of consumption tax, value-added tax and business tax paid by the entities and individuals and paid at the same time along with the above taxes.

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REGULATIONS RELATING TO FOREIGN EXCHANGE

According to the PRC Foreign Currency Administration Rules (《中華人民共和國外匯管理條例》) promulgated by the State Council on January 29, 1996, taking effect on April 1, 1996 and amended on January 14, 1997 and August 5, 2008, the RMB is generally freely convertible for current account items, including the distribution of dividends, trade and service related foreign exchange transactions, but not for capital account items, such as direct investment, loan, repatriation of investment and investment in securities outside the PRC, unless the prior approval of the SAFE is obtained.

According to the Notice of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》) which was promulgated by the SAFE on June 9, 2016 and came into effect on the same day, the settlement of foreign exchange receipts under the capital account (including but not limited to foreign currency capital and foreign debts) may convert from foreign currency into RMB on self-discretionary basis. The RMB funds obtained by a domestic entity from its discretionary settlement of foreign exchange receipts under the capital account shall be included in the account pending for foreign exchange settlement and payment. This Notice reiterates the principle that RMB converted from foreign currency capital may not directly or indirectly used for purpose beyond its business scope and investments in securities with the exception of bank financial products that guarantee the relevant PRC regulations. The ratio of the discretionary exchange rate of foreign exchange receipts under domestic capital account is tentatively set at 100%. The SAFE may adjust the above ratio in due time according to the balance of payment status.

In accordance with the Circular on Further Promoting Cross-border Trade and Investment Facilitation (《國家外匯管理局關於進一步促進跨境貿易投資便利化的通知》) which was promulgated by the SAFE on October 23, 2019, and became effective on the same day, foreign-invested enterprises engaged in non-investment business are permitted to settle foreign exchange capital in RMB and make domestic equity investments with such RMB funds according to law under the condition that the current Special Administrative Measures (Negative List) for Foreign Investment Access are not violated and the relevant domestic investment projects are true and compliant.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

HISTORY AND DEVELOPMENT

Overview

Our history dates back to 1997 when we began providing property management services to properties developed by our Controlling Shareholder, China Evergrande Group, a leading property development company in the PRC. Leveraging our long-term and close cooperation with China Evergrande Group and benefiting from China Evergrande Group’s rapid expansion, we have experienced significant growth in our business scale. The provision of our property management services has also extended to properties developed by independent third-party property developers.

We have also expanded our service offerings, and have introduced and upgraded our community value-added services and value-added services to non-property owners. The quality of our services has been well recognized and evidenced by various awards and rankings as detailed below. As of June 30, 2020, we were contracted to provide property management services, value-added services to non-property owners and/or community value-added services to 1,354 projects in over 280 cities in 22 provinces, five autonomous regions, four municipalities and Hong Kong, with a total GFA under management of approximately 254.0 million sq.m. and contracted GFA of 513.3 million sq.m., serving nearly two million households.

Key Business Development Milestones

The following events set forth the key milestones in the history of our business development:

YEAR 1997 2004 2007	EVENT
	Jinbi Property was established as Guangzhou Jinbi Property Management Co., Ltd. (廣州市金碧物業管理有限公司) and we began offering property management services. As our business scale expanded, we changed our name to Guangzhou Jinbi Property Group Co., Ltd. (廣州市金碧物業集團有限公司). We changed our name to Jinbi Property Co., Ltd. (金碧物業有限公司). We obtained the OHSAS18001:2007 international occupational health and safety management system certification in recognition of our service quality.

YEAR
1997
2004
2007

EVENT

Jinbi Property was established as Guangzhou Jinbi Property
Management Co., Ltd. (廣州市金碧物業管理有限公司) and we
began offering property management services.
As our business scale expanded, we changed our name to
Guangzhou Jinbi Property Group Co., Ltd. (廣州市金碧物業集團
有限公司).
We changed our name to Jinbi Property Co., Ltd. (金碧物業有限
公司).
We obtained the OHSAS18001:2007 international occupational
health and safety management system certification in recognition
of our service quality.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

YEAR 2015 2016 2017 2019 2020	EVENT
	We obtained the ISO9001:2015 standards, which was successfully renewed in 2017. We also obtained the ISO14001:2015 environmental management certification. Our GFA under management exceeded 100 million sq.m. We began to roll out a series of smart community initiatives to develop a series of smart community solutions. Our GFA under management exceeded 200 million sq.m. We were ranked 5th among the Top 100 Property Management Companies in China by CIA in terms of overall strength. We were ranked as one of the Top 50 Property Management Company Brand Value (物業服務企業品牌價值50強) by China Property Management Institute (中國物業管理協會). We were ranked 5th among the Top 500 Property Management Companies (物業服務企業綜合實力500強) by China Property Management Institute (中國物業管理協會) and China Real Estate Appraisal Center of Shanghai E-House Real Estate Research Institute (上海易居房地產研究院中國房地產測評中心). We were named the Property Management Service Provicer of First Choice for the Top 500 Property Developers in China (中國房地產開發企業500強首選物業管理公司10強) by the China Real Estate Association (中國房地產業協會) and China Real Estate Appraisal Center of Shanghai E-House Real Estate Research Institute (上海易居房地產研究院中國房地產測評中心) in 2019. Since the outbreak of the COVID-19 pandemic, our employees have been providing 24/7 property management services to property owners and residents across over 280 cities in China. In addition to overtime pay, China Evergrande Group awarded our employees with a “Special Recognition Award” (重大嘉獎令) to those who worked in the front-line during the COVID-19 pandemic.

YEAR
2015
2016
2017
2019
2020

EVENT

We obtained the ISO9001:2015 standards, which was
successfully renewed in 2017. We also obtained the
ISO14001:2015 environmental management certification.
Our GFA under management exceeded 100 million sq.m.
We began to roll out a series of smart community initiatives to
develop a series of smart community solutions.
Our GFA under management exceeded 200 million sq.m.
We were ranked 5th among the Top 100 Property Management
Companies in China by CIA in terms of overall strength.
We were ranked as one of the Top 50 Property Management
Company Brand Value (物業服務企業品牌價值50強) by China
Property Management Institute (中國物業管理協會).
We were ranked 5th among the Top 500 Property Management
Companies (物業服務企業綜合實力500強) by China Property
Management Institute (中國物業管理協會) and China Real
Estate Appraisal Center of Shanghai E-House Real Estate
Research Institute (上海易居房地產研究院中國房地產測評中心).
We were named the Property Management Service Provicer of
First Choice for the Top 500 Property Developers in China (中
國房地產開發企業500強首選物業管理公司10強) by the China
Real Estate Association (中國房地產業協會) and China Real
Estate Appraisal Center of Shanghai E-House Real Estate
Research Institute (上海易居房地產研究院中國房地產測評中心)
in 2019.
Since the outbreak of the COVID-19 pandemic, our employees
have been providing 24/7 property management services to
property owners and residents across over 280 cities in China.
In addition to overtime pay, China Evergrande Group awarded
our employees with a “Special Recognition Award” (重大嘉獎
令) to those who worked in the front-line during the COVID-19
pandemic.

We introduced a group of strategic investors including Sequoia Capital China Growth, CITIC Capital Holdings Limited, Yunfeng Capital Limited and Tencent Holdings Limited at a total consideration of HK$23.5 billion.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Corporate Development

The major corporate developments of our subsidiaries which were material to our performance during the Track Record Period are set out below:

Jinbi Property

Jinbi Property was established in the PRC on September 10, 1997 with an initial registered capital of RMB1,000,000. It is engaged in the provision of property management services and related value-added services. Jinbi Property is the principal operating subsidiary of our Company in the PRC. Upon its establishment, Jinbi Property was owned as to 80% by Guangzhou Evergrande Industrial Group Co., Ltd. (廣州恒大實業集團有限公司), a company wholly owned by Mrs. Hui, the spouse of Dr. Hui, and 20% by Guangzhou Kailong Real Estate Co., Ltd. (廣州市凱隆置業有限公司), an indirectly wholly-owned subsidiary of China Evergrande Group.

Subsequent to a series of equity transfers, Jinbi Property became wholly owned by Success Will on October 27, 2007.

Following a series of changes in registered capital, as of January 1, 2017, Jinbi Property was wholly owned by Success Will, with a registered capital of RMB177,600,000.

Hengyun Sports

Hengyun Sports was established in the PRC on December 8, 2017 with an initial registered capital of RMB50,000,000. It is mainly engaged in the provision of recreation operational management services. Hengyun Sports has been wholly owned by Jinbi Property since its establishment.

ACQUISITIONS AFTER THE TRACK RECORD PERIOD

Since the end of the Track Record Period, for the purpose of expanding our business, our Group has entered into agreements to acquire the equity interest in certain property management companies. It is expected that such acquisitions will broaden our management portfolio and expand our business in terms of services provided in respect of properties developed by independent third-party property developers. For details, see “Waivers from Strict Compliance with the Listing Rules—Equity Interests Acquired after the Track Record Period.”

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

REORGANIZATION

The following diagram illustrates our shareholding structure before the Reorganization:

	Dr. Xin Xi (B	Hui	Hui	Mrs. Hui	Mrs. Hui	Mrs. Hui	Mrs. Hui	Other shareholders Fortune Ascent (HK) i Hengyun Sports (PRC) Hohhot Jinbi (PRC) Zuolin Youshe (PRC) 38 subsidiaries of Hengyun Sports (PRC) 22.19% 100% 50% 100% 100% % 100%	Other shareholders Fortune Ascent (HK) i Hengyun Sports (PRC) Hohhot Jinbi (PRC) Zuolin Youshe (PRC) 38 subsidiaries of Hengyun Sports (PRC) 22.19% 100% 50% 100% 100% % 100%	Other shareholders Fortune Ascent (HK) i Hengyun Sports (PRC) Hohhot Jinbi (PRC) Zuolin Youshe (PRC) 38 subsidiaries of Hengyun Sports (PRC) 22.19% 100% 50% 100% 100% % 100%
				Even Honour (BVI)
						6.06%
		China Evergrande Group (Cayman Islands) Anji (BVI) (BVI) Guangzhou Chaofeng Property Co., Ltd (PRC) Guangzhou Kailong Property Co., Ltd (PRC) Evergrande Real Estate (PRC) Tianji Holding Limited (HK) Ever Grace Group Limited (BVI) Success Will (HK) 100% 100% 100% 63.46% 100% 100% 100% 100%
		Jinbi Property (PRC)		Jinbi Property (PRC)

	100%	100%	100%		100%		100	%	100%	100%
	an Yihe RC) Qinghuang (PR	dao Jinbi C) Guangzhou Jinbi Huafu (PRC) Ningbo Jinbi (PRC) Fuzhou Jinb (PRC) Foshan Xinzhongjian (PRC) Foshan Shifan (PRC) 100% 100%
Tangsh (P	an Yihe RC)

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

In preparation of the [ REDACTED ], the following steps were implemented to establish our Group:

1. Incorporation of our Company

On March 13, 2020, our Company was incorporated in the Cayman Islands under the Companies Law as an exempted company with limited liability with an authorized share capital of US$50,000 divided into 5,000,000 ordinary shares of US$0.01 each. Upon its incorporation, one share was issued at par to an initial subscriber, being an Independent Third Party, which was transferred to CEG Holdings at a consideration of US$0.01 on July 20, 2020.

On July 27, 2020, each of our issued and unissued shares of US$0.01 each was subdivided into 100 Shares of US$0.0001 each. Accordingly, the one issued share of US$0.01 of our Company held by CEG Holdings was subdivided into 100 Shares of US$0.0001 each. On the same date, an additional 9,999,900 Shares of US$0.0001 each were issued to CEG Holdings at par.

2. Incorporation of Eagle Investment

On July 20, 2020, Eagle Investment was incorporated in the BVI with limited liability and is authorized to issue up to 50,000 ordinary shares of a single class without par value. As of the date of incorporation, one share was issued to our Company at a subscription price of US$1.00.

3. Acquisition of Success Will

On August 6, 2020, Knight Honour, which was wholly owned by Flying Bloom Investments Limited (“ Flying Bloom ”), an indirect subsidiary of Ever Grace Group Limited, acquired the entire issued share capital of Success Will from Ever Grace Group Limited. In consideration of such acquisition, Knight Honour issued two shares to Flying Bloom. Upon completion of the acquisition, Success Will became wholly owned by Knight Honour.

4. Acquisition of Fortune Ascent

On August 6, 2020, Oriental Joy, a wholly-owned subsidiary of Eagle Investment, acquired the entire issued share capital of Fortune Ascent from Tianji Holding Limited, a wholly-owned subsidiary of Evergrande Real Estate, at a consideration of HK$9,939,000, which was determined after arm’s length negotiation with reference to the net asset value of Fortune Ascent as of June 30, 2020. The consideration was fully settled on September 25, 2020. Upon the completion of such transfer, Fortune Ascent became wholly owned by Oriental Joy.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

5. Transfer of Knight Honour

On August 18, 2020, Flying Bloom transferred the entire issued share capital of Knight Honour to Shengjian (BVI), an indirect wholly-owned subsidiary of China Evergrande Group, in exchange of the entire issued share capital of Grandday Group Limited, the appraised value of which was approximately equivalent to the appraised value of Success Will, the only investment holding of Knight Honour. Upon completion of such shares exchange, Knight Honour became wholly owned by Shengjian (BVI).

On the same date, Shengjian (BVI) transferred the entire issued share capital of Knight Honour to Eagle Investment in consideration of the issue of one share of CEG Holdings to Shengjian (BVI). Upon completion of such transfer, Knight Honour became wholly owned by Eagle Investment, and CEG Holdings became owned as to 50% by China Evergrande Group and 50% by Shengjian (BVI).

6. Restructuring of Jinbi Property

The following transactions were effected to consolidate all the property management operating entities of our business into our Group.

Name of entity Sichuan Zhongxin Guiyang Zhongyu	Date of completion June 16, 2020 May 28, 2020	Subject matter(1) Transfer of 100% interests Transfer of 100% interests	Transferor City Faith Limited (都信有限公司)(2) Guiyang Zhongyu Real Estate Development Co., Ltd. (貴陽中渝置地房地產開發有限公司)(2)	Transferee Jinbi Property Jinbi Property	Consideration of the equity transfer
					RMB4.69 million (as determined with reference to the valuation of the target company conducted by an independent third- party valuer) RMB1 (as determined with reference to the net asset value of the target company as of April 30, 2020)

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Name of entity Chengdu Leju Wuhan Jinbi Jiayuan Xi’an Hongze Hainan Lingshui Shenzhen Jianshe Jiayuan Guangzhou Jinbi Shijia	Date of completion June 18, 2020 May 29, 2020 May 25, 2020 May 29, 2020 May 21, 2020 May 27, 2020	Subject matter(1) Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests	Transferor Trend Rich Investment Limited (毅富投資有限公司)(2) Wuhan Evergrande Jinbi Real Estate Development Co., Ltd. (武漢恒大金碧房地產開發有限公司)(3) Xi’an Zhongyu Land Co., Ltd. (西安中渝置地有限公司)(2) Hainan Lingshui Palm Springs Property Co., Ltd. (海南陵水棕櫚泉置業有限公司)(2) Evergrande Property (Shenzhen) Co., Ltd. (恒大地產集團(深圳) 有限公司)(2) Evergrande Real Estate	Transferee Jinbi Property Jinbi Property Jinbi Property Jinbi Property Jinbi Property Jinbi Property	Consideration of the equity transfer
					RMB4.15 million (as determined with reference to the valuation of the target company conducted by an independent third- party valuer) RMB3.56 million (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB1 (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB0.95 million (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB1 (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB8.78 million (as determined with reference to the net asset value of the target company as of April 30, 2020)

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Name of entity Guangzhou Jinbi Hengying Chengdu Jinbi Chongqing Tongjing Xianju Dawei Guiyang Xinshenghuo Wuhan Jinbi	Date of completion June 5, 2020 May 25, 2020 May 25, 2020 June 22, 2020 May 27, 2020 May 21, 2020	Subject matter(1) Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests	Transferor Evergrande Real Estate Evergrande Real Estate Group Chengdu Co., Ltd. (恒大地產集團成都有限公司)(2) Chongqing Tongjing Property Co., Ltd. (重慶同景置業有限公司)(2) Zhejiang Dawei Real Estate Development Co., Ltd. (浙江大衛房地產開發有限公司)(2) Guiyang Xinshijie Real Estate Co., Ltd. (貴陽新世界房地產有限公司)(2) Wuhan Badengcheng Investment Co., Ltd. (武漢巴登城投資有限公司)(4)	Transferee Jinbi Property Jinbi Property Jinbi Property Jinbi Property Jinbi Property Jinbi Property	Consideration of the equity transfer
					RMB5.48 million (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB4.23 million (as determined with reference to the valuation of the target company conducted by an independent third- party valuer) RMB5.10 million (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB1 (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB1 (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB1 (as determined with reference to the net asset value of the target company as of April 30, 2020)

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Name of entity Sichuan Zhongjia Kunming Jialize Evergrande Hengkang	Date of completion June 18, 2020 September 14, 2020 September 14, 2020	Subject matter(1) Transfer of 100% interests Transfer of 100% interests Transfer of 100% interests	Transferor Sichuan Desheng Group Cultural Tourism Investment Development Co., Ltd. (四川德勝集團文化旅遊投資發展有限公司)(2) Kunming Jialize Tourism Culture Co., Ltd. (昆明嘉麗澤旅遊文化有限公司)(5) Guangzhou Hengze Health Service Co., Ltd. (廣州恒澤養生服務有限公司)(6)	Transferee Jinbi Property Jinbi Property Jinbi Property	Consideration of the equity transfer
					RMB1 (as determined with reference to the net asset value of the target company as of April 30, 2020) RMB0.68 million (as determined with reference to the valuation of the target company conducted by an independent third- party valuer) RMB46.86 million (as determined with reference to the valuation of the target company conducted by an independent third- party valuer)

Notes:

All of the above equity transfers had been settled as of the Latest Practicable Date.
Each of City Faith Limited (都信有限公司), Guiyang Zhongyu Real Estate Development Co., Ltd. (貴陽中渝置地房地產開發有限公司), Trend Rich Investment Limited (毅富投資有限公司), Xi’an Zhongyu Land Co., Ltd. (西安中渝置地有限公司), Hainan Lingshui Palm Springs Property Co., Ltd. (海南陵水棕櫚泉置業有限公司), Evergrande Property (Shenzhen) Co., Ltd. (恒大地產集團(深圳)有限公司), Evergrande Real Estate Group Chengdu Co., Ltd. (恒大地產集團成都有限公司), Chongqing Tongjing Property Co., Ltd. (重慶同景置業有限公司), Zhejiang Dawei Real Estate Development Co., Ltd. (浙江大衛房地產開發有限公司), Guiyang Xinshijie Real Estate Co., Ltd. (貴陽新世界房地產有限公司) and Sichuan Desheng Group Cultural Tourism Investment Development Co., Ltd. (四川德勝集團文化旅遊投資發展有限公司) is a wholly-owned subsidiary of Evergrande Real Estate.
Wuhan Evergrande Jinbi Real Estate Development Co., Ltd. (武漢恒大金碧房地產開發有限公司) is owned as to approximately 67.1% by Evergrande Real Estate Group (Wuhan) Co., Ltd. (恒大地產集團武漢有限公司), a wholly-owned subsidiary of Evergrande Real Estate, and as to 32.9% by five Independent Third Parties.
Wuhan Badengcheng Investment Co., Ltd. (武漢巴登城投資有限公司) is an indirect wholly-owned subsidiary of China Evergrande Group.
Kunming Jialize Tourism Culture Co., Ltd. (昆明嘉麗澤旅遊文化有限公司) is owned as to 80% by Evergrande Auto and as to 20% by two Independent Third Parties.
Guangzhou Hengze Health Service Co., Ltd. (廣州恒澤養生服務有限公司) is an indirect wholly-owned subsidiary of Evergrande Auto.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

7. Disposal of Foshan Xinzhongjian

Foshan Xinzhongjian was established in the PRC on September 11, 2001 as a limited liability company and is principally engaged in the business of property development. It also owns a school in Nanhai, the PRC. Prior to the disposal detailed below, Foshan Xinzhongjian was wholly owned by Guangzhou Jinbi Huafu. For the three years ended December 31, 2019 and the six months ended June 30, 2020, the net loss of Foshan Xinzhongjian was approximately RMB17.6 million, RMB100.79 million, RMB4.32 million and RMB273.81 million, respectively. Given that Foshan Xinzhongjian is principally engaged in real estate development which does not form part of our core business, on July 30, 2020, Guangzhou Jinbi Huafu transferred the entire equity interest in Foshan Xinzhongjian to Evergrande Real Estate Group Guangdong Real Estate Development Co., Ltd. (恒大地產集團廣東房地產開發有限公司), a wholly-owned subsidiary of Evergrande Real Estate, at a consideration of RMB684 million. The consideration was determined after arm’s length negotiations with reference to the valuation of Foshan Xinzhongjian conducted by an independent third-party valuer and was fully settled on August 4, 2020. Upon completion of such transfer, Guangzhou Jinbi Huafu ceased to be interested in Foshan Xinzhongjian.

8. Disposal of Zuolin Youshe

Zuolin Youshe was established in the PRC on May 25, 2018 as a limited liability company which had been set up for the purpose of serving as the holding company of the insurance business of the Evergrande Group. Prior to the disposal detailed below, Zuolin Youshe had not commenced business and was owned as to 50% by Jinbi Property and 50% by Evergrande Insurance Brokers Co., Ltd. (恒大保險經紀有限公司) (“ Evergrande Insurance ”), an indirect wholly-owned subsidiary of China Evergrande Group. For the two years ended December 31, 2019 and the six months ended June 30, 2020, the net loss of Zuolin Youshe was approximately RMB0.13 million, RMB0.05 million and RMB0.07 million, respectively. As Zuolin Youshe is the holding company of Evergrande Insurance, the business of which is unrelated to the core business of our Group, on May 22, 2020, Jinbi Property transferred its entire equity interest of Zuolin Youshe to Evergrande Insurance at a nominal consideration of RMB1. The consideration was determined after arm’s length negotiations with reference to the net asset value of Zuolin Youshe as of April 30, 2020 and was fully settled on June 24, 2020. Upon completion of such equity transfer, Jinbi Property ceased to be interested in Zuolin Youshe.

PRC REGULATORY REQUIREMENTS

Our PRC Legal Advisors have confirmed that all the required consents, approvals, authorization or filings in relation to the equity transfers and disposals in respect of the PRC companies as described above have been made or obtained for the completion of the equity transfers and disposals and such equity transfers and disposals have been carried out in accordance with applicable PRC laws and regulations.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

PRE- [ REDACTED ] INVESTMENTS

1. Investments by the Pre- [ REDACTED ] Investors

On August 13, 2020, each of Ms. Chan Hoi Wan (陳凱韻), Huatai International Greater Bay Area Investment Limited (華泰國際大灣區投資有限公司), SCC Growth VI 2020 B, L.P., CC Eagle Investments Limited, YF Evergreat Property Limited, Image Frame Investment (HK) Limited (意像架構投資(香港)有限公司) and Golden Fortune Holding Limited, China Dragon Limited, Tisé Opportunity Fund I LP, ABCI Global Opportunities SPC – ABCI China Rising Private Equity 3 Segregated Portfolio, Elite Explorer Limited, Advance Power International Limited, Super Brilliant Investments Limited (超智投資有限公司), Well Smart Developments Limited and Treasure Pitcher Limited (the “ Pre- [ REDACTED ] Investors ”) entered into an investment agreement (the “ Investment Agreement ”) with CEG Holdings, China Evergrande Group and our Company, pursuant to which CEG Holdings transferred an aggregate of 2,806,115 Shares, representing 28.061% of the issued share capital of our Company, to the Pre-[ REDACTED ] Investors, at a total consideration of HK$23,500 million. Such consideration was determined after arm’s length negotiations between CEG Holdings and each of the Pre-[ REDACTED ] Investors on normal commercial terms after taking into account various factors, including the growth prospects of our Group and the property management sector in the PRC, the financial performance of our Group up to June 30, 2020 and the market value of other comparable companies engaged in the property management business in the PRC as a whole. In addition, the investment risks assumed by the Pre-[ REDACTED ] Investors of investing in a company which was yet to be listed, as well as the potential contributions and strategic benefits expected to be brought about by the Pre-[ REDACTED ] Investors to our Group, were also considered.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Details of the Pre-[REDACTED] Investments are set out below:	Huatai Image Frame	International Investment (HK)	Greater Bay Area CC Eagle Limited and	Ms. Chan Hoi Investment Sequoia Capital Investments YF Evergreat Golden Fortune China Dragon	Wan Limited China Growth Limited Property Limited Holding Limited Limited	Date of agreement August 13, 2020	Consideration HK$4,500 million HK$4,000 million HK$3,450 million HK$3,000 million HK$1,500 million HK$1,200 million HK$1,000 million	Date of settlement of	consideration August 20, 2020 August 20, 2020 August 19, 2020 August 20, 2020 August 20, 2020 August 20, 2020 August 20, 2020	Number of Shares acquired	before Capitalization Issue 537,342 477,637 411,962 358,228 179,114 143,291 119,409	Approximate cost per Share(1) HK$[REDACTED]	Discount to the	[REDACTED](2) [REDACTED]%	Use of proceeds As the Pre-[REDACTED] Investments were effected by way of sale of existing Shares by CEG Holdings, no proceeds were received by our	Company.	Shareholding in our Company	immediately upon	completion of the	Pre-[REDACTED]	Investments 5.373% 4.776% 4.120% 3.582% 1.791% 1.433% 1.194%	Shareholding in our Company	immediately upon	completion of the	[REDACTED] (assuming the	[REDACTED] is not	exercised)(3) [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]%	Strategic benefits to our Our Directors believe that our Group will benefit from the synergy generated by combining the resources and expertise of the	Company Pre-[REDACTED] Investors, as well as the additional value to our corporate profile that the Pre-[REDACTED] Investors, who are renowned	strategic investors, could bring.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

ABCI Global	Opportunities	SPC – ABCI	China Rising Elite Explorer	Private Equity 3 Limited and CEL Advance Power Super Brilliant Well Smart	Tisé Opportunity Segregated Odyssey Project International Investments Developments Treasure Pitcher	Fund I LP Portfolio Fund, L.P.(4) Limited(5) Limited Limited Limited	August 13, 2020	HK$1,000 million HK$1,000 million HK$800 million HK$550 million HK$500 million HK$500 million HK$500 million		August 19, 2020 August 20, 2020 August 20, 2020 August 20, 2020 August 20, 2020 August 20, 2020 August 19, 2020		119,409 119,409 95,527 65,675 59,704 59,704 59,704	HK$[REDACTED]		[REDACTED]%	As the Pre-[REDACTED] Investments were effected by way of sale of existing Shares by CEG Holdings, no proceeds were received by our	Company.					1.194% 1.194% 0.955% 0.657% 0.597% 0.597% 0.597%						[REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]%	Our Directors believe that our Group will benefit from the synergy generated by combining the resources and expertise of the	Pre-[REDACTED] Investors, as well as the additional value added to our corporate profile that the Pre-[REDACTED] Investors, who are	renowned strategic investors, could bring.
							Date of agreement	Consideration	Date of settlement of	consideration	Number of Shares acquired	before Capitalization Issue	Approximate cost per Share(1)	Discount to the	[REDACTED](2)	Use of proceeds		Shareholding in our Company	immediately upon	completion of the	Pre-[REDACTED]	Investments	Shareholding in our Company	immediately upon	completion of the	[REDACTED] (assuming the	[REDACTED] is not	exercised)(3)	Strategic benefits to our	Company

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Notes:

The approximate cost per Share is calculated based on the amount of consideration paid by each Pre-[ REDACTED ] Investor divided by the number of Shares to be held by it upon [ REDACTED ] (assuming the [ REDACTED ] is not exercised).
The discount to the [ REDACTED ] is calculated based on the assumption that the [ REDACTED ] is HK$[ REDACTED ] per Share, being the mid-point of the indicative [ REDACTED ] range of HK$[ REDACTED ] to HK$[ REDACTED ].
Without taking into account any [ REDACTED ] which may be taken up by the Pre-[ REDACTED ] Investors who are [ REDACTED ].
On September 22, 2020, Elite Explorer Limited transferred 93,616 Shares of its initially subscribed 95,527 Shares to CEL Odyssey Project Fund, L.P. at a consideration of HK$784,000,000, the cost per Share of which was equivalent to the cost per Share paid by Elite Explorer Limited. Elite Explorer Limited is wholly owned by China Everbright Limited. CEL Odyssey Project Fund, L.P. is managed, advised and sponsored by China Everbright Limited. Upon completion of such transfer to CEL Odyssey Project Fund L.P., Elite Explorer Limited held 1,911 Shares.
Mr. Xia Haijun, being the vice chairman of the board and the chief executive officer of China Evergrande Group, is the ultimate beneficial owner of Advance Power International Limited.

2. Special Rights

The Pre-[ REDACTED ] Investors were granted certain special rights, including, among others, tag-along rights, pre-emptive rights, redemption rights, information rights, anti-dilution rights and rights to be consented prior to certain corporate actions, none of which shall survive the [ REDACTED ].

3. Lock-up and Public Float

Pursuant to the Investment Agreements, the Pre-[ REDACTED ] Investors shall not sell or transfer any Shares held by them until (i) 18 months from the date of the Investment Agreements, if a [ REDACTED ] is not completed within 18 months from the date of the Investment Agreements; or (ii) six months after the completion of a [ REDACTED ], if a [ REDACTED ] is completed within 18 months from the date of the Investment Agreements.

A “[ REDACTED ]” means an [ REDACTED ] and [ REDACTED ] on the Stock Exchange, under which the price per Share in the [ REDACTED ] will not be less than the cost per Share paid by the Pre-[ REDACTED ] Investors. The [ REDACTED ] constitutes a [ REDACTED ] for the purpose of the Investment Agreements.

Upon completion of the [ REDACTED ], the Shares held by all of the Pre-[ REDACTED ] Investors will be counted towards the public float of our Company.

4. Information on the Pre- [ REDACTED ] Investors

Ms. Chan Hoi Wan is an executive director of Chinese Estates Holdings Limited, a company the shares of which are listed on the Stock Exchange (stock code: 127), and has held various properties and securities investments. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, Ms. Chan is an Independent Third Party.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Huatai International Greater Bay Area Investment Limited is a company incorporated in the BVI wholly owned by Huatai International Greater Bay Area Investment Fund, L.P. (華泰國際大灣區投資資金) (formerly known as Huatai International Acquisition Fund I, L.P.) (“ Huatai Funds ”), an exempted limited partnership formed under the laws of the Cayman Islands. The fund manager of Huatai Funds is Huatai Financial Holdings (Hong Kong) Limited, which is licensed to conduct Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Huatai International Greater Bay Area Investment Limited, Huatai Funds and Huatai Financial Holdings (Hong Kong) Limited, is an Independent Third Party.

SCC Growth VI 2020 B, L.P. (“ Sequoia Capital China Growth ”) is an exempted limited partnership formed under the laws of the Cayman Islands, which is principally engaged in equity investment in private companies. The general partner of SCC Growth VI 2020 B, L.P. is SC China Growth VI Management L.P., the general partner of which is SC China Holding Limited, which is in turn a wholly-owned subsidiary of SNP China Enterprises Limited, the sole shareholder of which is Mr. Neil Nanpeng Shen. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of SCC Growth VI 2020 B, L.P., SC China Growth VI Management L.P., SC China Holding Limited, SNP China Enterprises Limited and Mr. Neil Nanpeng Shen is an Independent Third Party.

CC Eagle Investments Limited is a company incorporated in the Cayman Islands, which is principally engaged in equity investment in private companies. Its ultimate beneficial owner is CC Eagle (2020A) L.P., the general partner of which is CC Eagle (2020A) GP Ltd., which is in turn an associate company of CITIC Capital Holdings Limited, a global alternative investment management and advisory company. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of CC Eagle Investments Limited, CC Eagle (2020A) L.P., CC Eagle (2020A) GP Ltd. and its ultimate beneficial owner is an Independent Third Party.

YF Evergreat Property Limited is a company incorporated in the BVI, which is principally engaged in equity investment in private companies. It is wholly owned by YF Evergreat Fund L.P., a limited partnership formed under the laws of the Cayman Islands with its general partner being YF Evergreat Investment Limited. The Fund is managed by Yunfeng Capital Limited, a well-known market-oriented and independently operated professional investment institution focusing on Great China investment opportunities. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of YF Evergreat Property Limited, YF Evergreat Fund L.P. and YF Evergreat Investment Limited is an Independent Third Party.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Image Frame Investment (HK) Limited is a company incorporated in Hong Kong, which is principally engaged in investment holding. It is a wholly-owned subsidiary of Tencent Holdings Limited, a company whose shares are listed on the Main Board of the Stock Exchange (Stock Code: 700). Tencent Holdings Limited is a leading provider of Internet value-added services in the PRC, including communications and social, digital content online advertising, FinTech and business services in the PRC. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Image Frame Investment (HK) Limited and Tencent Holdings Limited is an Independent Third Party.

Golden Fortune Holding Limited is a wholly-owned subsidiary of TPP Fund II. L.P., a limited partnership formed under the laws of Cayman Islands principally engaged in investment holding. The general partner of TPP Fund II. L.P. is TPP GP II, Ltd., a subsidiary of Tencent Holdings Limited. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Golden Fortune Holding Limited, TPP Fund II. L.P. and TPP GP II, Ltd. is an Independent Third Party.

China Dragon Limited is a company incorporated in the BVI, which is principally engaged in investment holding. It is ultimately wholly owned by Mr. Or Wai Sheun, who has over 35 years of experience in property development, industrial and financial investment business in Hong Kong, Mainland China and Macau and is currently the chairman of the board of Kowloon Development Company Limited, a company the shares of which are listed on the Stock Exchange (stock code: 34). To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of China Dragon Limited and Mr. Or Wai Sheun is an Independent Third Party.

Tisé Opportunity Fund I LP is a limited partnership formed under the laws of Cayman Islands, which is principally engaged in investment holding. The general partner of Tisé Opportunity Fund I LP is Tisé Capital Management Limited, a company wholly owned by Mr. Bryant Yutao Zhang. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Tisé Opportunity Fund I LP, Mr. Bryant Yutao Zhang and Tisé Capital Management Limited is an Independent Third Party.

ABCI Global Opportunities SPC – ABCI China Rising Private Equity 3 Segregated Portfolio is an independent investment portfolio company incorporated under the laws of the Cayman Islands. Its investment manager is ABCI Asset Management Limited, which is a wholly-owned subsidiary of ABC International Holdings Limited, a subsidiary of the Agricultural Bank of China Limited. ABCI Asset Management Limited is licensed to conduct Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of ABCI Global Opportunities SPC – ABCI China Rising Private Equity 3 Segregated Portfolio, ABCI Asset Management Limited, ABC International Holdings Limited and Agricultural Bank of China Limited is an Independent Third Party.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Elite Explorer Limited is a company incorporated in the BVI, which is principally engaged in investment holding. CEL Odyssey Project Fund, L.P. is an exempted limited partnership formed under the laws of the Cayman Islands, which is principally engaged in investment holding. The general partner of CEL Odyssey Project Fund, L.P. is CEL Odyssey Project GP Ltd. Each of Elite Explorer Limited and CEL Odyssey Project GP Ltd is wholly owned by China Everbright Limited, a financial services company the shares of which are listed on the Stock Exchange (stock code: 0165). CEL Odyssey Project Fund, L.P. is managed, advised and sponsored by China Everbright Limited. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Elite Explorer Limited, CEL Odyssey Project Fund, L.P., CEL Odyssey Project GP Ltd and China Everbright Limited is an Independent Third Party.

Advance Power International Limited is a company incorporated in the BVI, which is principally engaged in investment holding. It is ultimately wholly owned by Mr. Xia Haijun, the vice chairman of the board and the chief executive officer of China Evergrande Group.

Super Brilliant Investments Limited is a company incorporated in the BVI, which is principally engaged in investment holding. It is ultimately wholly owned by Mr. Dai Yongge who, together with his associates, are the controlling shareholders of China Dili Group, a company the shares of which are listed on the Stock Exchange (stock code: 1387). Mr. Dai Yongge was the chairman and an executive director of China Dili Group who resigned in September 2018. He is now an entrepreneur with diversified investments in China as well as overseas. He has over 20 years’ experience in investment and currently owns and operates a network of 22 underground shopping malls in 12 cities in China with gross floor area of 1.3 million sq.m. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Super Brilliant Investments Limited and Mr. Dai Yongge is an Independent Third Party.

Well Smart Developments Limited is a company incorporated in the BVI, which is principally engaged in investment holding. It is indirectly wholly-owned by Chow Tai Fook Nominee Limited which is ultimately controlled by Dr. Cheng Kar-Shun, Henry and other family members of the late Dato’ Dr. Cheng Yu Tung. To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Well Smart Developments Limited and Chow Tai Fook Nominee Limited is an Independent Third Party.

Treasure Pitcher Limited is a company incorporated in the BVI, which is principally engaged in investment holding. It is ultimately wholly owned by Lifestyle International Holdings Limited, a company the shares of which are listed on the Stock Exchange (stock code: 1212). To the best of our Directors’ knowledge, information and belief having made all reasonable enquiries, each of Treasure Pitcher Limited and Lifestyle International Holdings Limited is an Independent Third Party.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

5. Joint Sponsors’ Confirmation

The Joint Sponsors confirm that the Pre-[ REDACTED ] Investments are in compliance with Guidance Letter HKEx-GL29-12 issued by the Stock Exchange in January 2012 and updated in March 2017, Guidance Letter HKEx-GL43-12 issued by the Stock Exchange in October 2012 and updated in July 2013 and March 2017 and the Guidance Letter HKExGL44-12 issued by the Stock Exchange in October 2012 and updated in March 2017.

CORPORATE STRUCTURE UPON COMPLETION OF THE REORGANIZATION AND THE PRE- [ REDACTED ] INVESTMENTS

The following chart sets forth our corporate and shareholding structure upon completion of the Reorganization and the Pre-[ REDACTED ] Investments and immediately prior to the Capitalization Issue and the [ REDACTED ]:

==> picture [425 x 392] intentionally omitted <==

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

Dr. Hui Mrs. Hui
100%
100% (Cayman Islands) Yaohua
100%
Xin Xin (BVI) (BVI) Even Honour (BVI) Other shareholders
71.74% 6.06% 22.20%
China Evergrande Group
(Cayman Islands)
100%
Anji (BVI)
(BVI)
50% 100%
Shengjian (BVI)
(BVI)
50%
CEG Holdings (BVI) Pre- [REDACTED] Investors
71.939% 28.061%
Our Company
(Cayman Islands)
100%
Eagle Investment
(BVI) 100%
100%
Oriental Joy
Knight Honour (BVI)
(BVI)
100%
100%
Fortune Ascent
Success Will (HK)
(HK)
100% offshore
Jinbi Property onshore
(PRC)
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Hengyun Hengda Tangshan Qinhuangdao Ningbo Fuzhou Hohhot Sichuan Sichuan Guiyang Chengdu Wuhan Jinbi Xi’an Hainan
Sports Hengkang Yihe Jinbi Jinbi Jinbi Jinbi Zhongjia Zhongxin Zhongyu Leju Jiayuan Hongze Lingshui
(PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC)
100% 100%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
38 subsidiariesof Hengyun(PRC)Sports ChongqingHengjian (PRC) KunmingJialize (PRC) Jinbi HuafuGuangzhou (PRC) Jinbi Smart (PRC) Life Wuhan (PRC) Jinbi XinshenghuoGuiyang (PRC) XianjuDawei (PRC) ChongqingTongjing (PRC) Chengdu (PRC) Jinbi GuangzhouHengying (PRC) Jinbi GuangzhouJinbi Shijia (PRC) ShenzhenJiayuanJianshe (PRC)
----- End of picture text -----

INCREASE IN AUTHORIZED SHARE CAPITAL

On [●], 2020, our Company increased its authorized share capital to US$[10,000,000] by the creation of [99,500,000,000] additional Shares.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

CAPITALIZATION ISSUE

Pursuant to the written resolutions of our Shareholders passed on [●], 2020, conditional on the share premium account of our Company being credited as a result of the [ REDACTED ], our Directors are authorized to capitalize an amount of US$[ REDACTED ] standing to the credit of the share premium account of our Company by applying such sum towards the paying up in full at par a total of [ REDACTED ] Shares for issue and allotment to holders of Shares whose names appear on the register of members of our Company on the date of passing such resolutions in proportion (as near as possible without involving fractions so that no fraction of a share shall be issued and allotted) to their then existing respective shareholdings in our Company.

CORPORATE STRUCTURE UPON COMPLETION OF THE CAPITALIZATION ISSUE AND THE [ REDACTED ]

The following chart sets forth our corporate and shareholding structure upon completion of the Capitalization Issue and the [ REDACTED ] (assuming the [ REDACTED ] under the [ REDACTED ] are fully taken up by [ REDACTED ] and the [ REDACTED ] is not exercised):

==> picture [422 x 392] intentionally omitted <==

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

Dr. Hui Mrs. Hui
100%
100% (Cayman Islands) Yaohua
100%
Xin Xin (BVI) (BVI) Even Honour (BVI) Other shareholders
71.74% 6.06% 22.20%
China Evergrande Group
(Cayman Islands)
100%
Anji (BVI)
(BVI)
50% 100%
Shengjian (BVI)
(BVI)
50%
Pre- [REDACT] Investors CEG Holdings (BVI) [REDACT] Other public shareholders
[REDACT] % [REDACT] % [REDACT] % [REDACT] %
Our Company
(Cayman Islands)
100%
Eagle Investment
(BVI) 100%
100%
Oriental Joy
Knight Honour (BVI)
(BVI)
100%
100%
Fortune Ascent
Success Will (HK)
(HK)
100% offshore
Jinbi Property onshore
(PRC)
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Hengyun Hengda Tangshan Qinhuangdao Ningbo Fuzhou Hohhot Sichuan Sichuan Guiyang Chengdu Wuhan Jinbi Xi’an Hainan
Sports Hengkang Yihe Jinbi Jinbi Jinbi Jinbi Zhongjia Zhongxin Zhongyu Leju Jiayuan Hongze Lingshui
(PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC) (PRC)
100% 100%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
38 subsidiariesof Hengyun(PRC)Sports ChongqingHengjian (PRC) KunmingJialize (PRC) Jinbi HuafuGuangzhou (PRC) Jinbi Smart (PRC) Life Wuhan (PRC) Jinbi XinshenghuoGuiyang (PRC) XianjuDawei (PRC) ChongqingTongjing (PRC) Chengdu (PRC) Jinbi GuangzhouHengying (PRC) Jinbi GuangzhouJinbi Shijia (PRC) ShenzhenJiayuanJianshe (PRC)
----- End of picture text -----

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

REASONS FOR THE PROPOSED [ REDACTED ]

Pursuant to the Listing Rules and in accordance with the corporate structure and ownership of our Company, the [ REDACTED ] of our Company will constitute a [ REDACTED ] of China Evergrande Group.

The board of directors of China Evergrande Group considers that the [ REDACTED ] is in the interests of China Evergrande Group and the shareholders of China Evergrande Group as a whole based on the following reasons:

(a) the [ REDACTED ] will allow China Evergrande Group and its shareholders an opportunity to realize the value of investment in our Group under a separate standalone platform for the [ REDACTED ] business;
(b) the [ REDACTED ] will enable our Group to build our identity as a separately listed group, to have a separate fund-raising platform and to broaden our investor base through the [ REDACTED ]. The [ REDACTED ] would allow us to gain direct access to the capital markets for equity and/or debt financing to fund our existing operations and future expansion without reliance on the Evergrande Group, thereby improving our operating and financial management efficiencies;
(c) the [ REDACTED ] will enable us to enhance our corporate profile, thereby increasing our ability to attract strategic investors for making investment in and forming strategic partnerships directly with us, which could provide synergy for our Group;
(d) the [ REDACTED ] would enable a more focused development, strategic planning and better allocation of resources for China Evergrande Group and our Group with respect to our respective businesses. Both China Evergrande Group and our Group would benefit from the efficient decision-making process under the separate management structures;
(e) the separate [ REDACTED ] of our Group will strengthen our reputation, thus leading to potentially better operational performance and better realization of our value. Such increased value will enable China Evergrande Group and its shareholders an opportunity to increase the value of investment in our Group under such separate standalone platform for our business; and
(f) the [ REDACTED ] will improve the operational and financial transparency of our Company, which would enable investors to better appraise its operation results and financial conditions on a standalone basis, which in turn may enhance the overall value.

The [ REDACTED ] by China Evergrande Group complies with the requirements of Practice Note 15 of the Listing Rules. The [ REDACTED ] is not subject to shareholder’s approval of China Evergrande Group.

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BUSINESS

OVERVIEW

In August 2020, we introduced a group of reputable strategic investors, including, among others, Sequoia Capital China Growth, CITIC Capital Holdings Limited, Yunfeng Capital Limited and Tencent Holdings Limited. We believe the investment by these strategic investors enables us to explore synergistic new service offerings and other collaborations with them, thereby enhancing the scope and depth of our business operations, and contributing to our long-term sustainable growth.

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BUSINESS

OUR COMPETITIVE STRENGTHS

One of the Largest and Fastest-growing Comprehensive Property Management Service Providers in China with an Extensive Geographical Coverage and Outstanding Service Quality

We are one of the largest comprehensive property management service providers in China. According to CIA, among the Top 100 Property Management Companies in China, we ranked:

second in number of cities covered by our projects as of December 31, 2019;
third in each of total revenue, total gross profit and total net profit in 2019;
third in contracted GFA as of December 31, 2019; and
fourth in GFA under management as of December 31, 2019.

We are deeply rooted in China and have an extensive geographical coverage. As of June 30, 2020, we were contracted to provide property management services, value-added services to non-property owners and/or community value-added services to 1,354 projects in over 280 cities in 22 provinces, five autonomous regions, four municipalities and Hong Kong, with a total GFA under management of approximately 254.0 million sq.m. and contracted GFA of 513.3 million sq.m., serving nearly two million households. According to CIA, our GFA under management was 5.6 times the average of the Top 100 Property Management Companies in China as of December 31, 2019.

We are one of the fastest-growing property management service providers in China. According to CIA, our net profit increased from RMB106.6 million in 2017 to RMB930.5 million in 2019 at a CAGR of 195.5%, which was the highest growth rate among the Top 20 Property Management Companies in China, and was significantly higher than both the 26.4% average growth rate of the Top 100 Property Management Companies in China and the 52.3% average growth rate of the Top Ten Property Management Companies in China. Our net profit increased by 181.8% from RMB407.3 million in the six months ended June 30, 2019 to RMB1,147.7 million in the six months ended June 30, 2020.

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BUSINESS

We have been committed to “conscientious services and heartfelt companionship (貼心服務，真誠相伴)” throughout our journey of nearly 24 years. We are customer-centric and result-oriented, in relentless pursuit of scalable development, standardized operation, professional services and intelligent management (規模化發展、標準化運營、專業化服務、智慧化管理). We strive to create happy communities with premium living environment and cultural values with our quality services. Our dedication to quality has earned us extensive market recognition. Over the years, we have received more than 300 awards and accolades in the industry, including 115 at the provincial level or above. For example, as early as 2006, we were named an “Outstanding Enterprise with High Customer Satisfaction (全國用戶滿意先進單位)” by China Real Estate Entrepreneurs Association, becoming one of the first companies to receive this award. We were ranked top three among the Top 100 Property Service Enterprise Brands (中國物業服務企業品牌百強榜) by the China Real Estate News in 2020. In the same year, we were named the Property Management Service Provider of First Choice for the Top 500 Property Developers in China (中國房地產開發企業500強首選物業管理公司) by the China Real Estate Association. We believe that a strong brand appeal and high service quality can help us maintain a relatively high contract retention rate and obtain quality projects from Independent Third Parties, bringing us more market opportunities.

Our leading business scale and geographical coverage bring a large and growing customer base. We are well positioned to leverage this large customer base to develop our community value-added services and further solidify our existing market position.

Highly Visible Growth Underpinned by the Evergrande Group’s Trusted Brand and Diversified Business Segments

We believe we have a highly visible path to growth, as we have long-term and close cooperation with the Evergrande Group. The Evergrande Group is a conglomerate with diversified businesses covering real estate, cultural tourism, health and wellbeing management and new energy vehicles, among others. “Evergrande” is a household brand in China with global reputation, and has been a Fortune Global 500 company for five consecutive years starting from 2016, ranking 152th in 2020. It was also named one of the World’s 100 Most Valuable Brands in 2020 by Brand Finance.

Our long-term cooperation with the Evergrande Group has brought us a stable source of projects and business opportunities. The Evergrande Group is a leading property developer in China. According to China Real Estate Top 10 Research Group, the Evergrande Group ranked No.1 among the “Top 100 Real Estate Companies in China” in 2020 in terms of overall strength. According to its 2020 interim results announcement, the Evergrande Group had residential land reserves of approximately 240 million sq.m. as of June 30, 2020. According to CRIC, it ranked first among property developers in China in terms of attributable contracted sales for three consecutive years starting from 2017. In addition, the Evergrande Group had 104 urban redevelopment projects as of June 30, 2020, 55 of which were located in Shenzhen. We believe the Evergrande Group’s vast land bank provides us with a large potential pipeline of high-quality projects while its growing contracted sales GFA and completed GFA help to quickly turn pipeline projects into our projects under management.

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BUSINESS

Our business integrates well with the Evergrande Group’s diverse business segments. We provide tailored property management and value-added services to the Evergrande Group’s real estate, cultural tourism, health and wellbeing management and new energy vehicles businesses, among others. At the same time, we integrate the resources of the Evergrande Group to create a comprehensive “Evergrande Life Circle (恒大生活圈)” that serves some of the most fundamental needs of our customers, such as housing, travel, leisure and health. The diagram below illustrates our synergies with, and the value-added services we provide to, the Evergrande Group’s business segments:

==> picture [257 x 284] intentionally omitted <==

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

Evergrande Life Circle
Real Estate Health
Residential
properties, Health and
Commercial elderly care,
properties, Specialized
Themed towns our Group hospitals
New Energy Cultural
Vehicle Tourism
New energy Cultural tourism
vehicles, projects,
Electric vehicle Theme parks
charging
Property owners, residents
and tenants
our Group
Others Life Insurance
Life insurance
Calxon Cinema,Football club products,Wealth
management,
Insurance
brokerage
Property management Connect China Evergrande Group and
services and value-added property owners and residents and
services to non-property provide community value-added
owners services
----- End of picture text -----

We believe we will continue to benefit from the Evergrande Group’s multi-disciplinary development and achieve sustainable growth with the leverage on its vast land reserve and other business opportunities.

Diversified Property Portfolio and Service Offerings Bringing High-margin Revenue Streams

Over the years, as our business has grown and our services have evolved, our commitment to “conscientious service and heartfelt companionship (貼心服務，真誠相伴)” has endured. Guided by this commitment, we have tailored our service offerings to address customers’ needs and pain points.

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BUSINESS

Enriched Property Portfolio

We have expanded the property portfolio we serve from mid-to high-end residential properties to other types of properties, such as commercial properties, theme parks, industrial parks, healthcare complexes, themed towns and schools. Our total GFA under management for non-residential properties was 1.4 million sq.m., 1.7 million sq.m., 2.1 million sq.m. and 2.7 million sq.m. as of December 31, 2017, 2018 and 2019 and June 30, 2020, respectively. We expect to continue increasing our portfolio of non-residential properties under management in the future, in particular theme parks, industrial parks and healthcare complexes. Our diversified portfolio of properties under management has helped us diversify our revenue streams. It also positions us well to take advantage of a wide range of high-quality third-party property management projects.

Diversified Value-added Services

Under our “Property Management plus (物業+)” service structure, our services are built on property management and extend outwards from there. We apply transferrable know-how obtained from traditional property management to our value-added services and continuously upgrade and refine our value-added services.

Value-added services to non-property owners

Our value-added services to non-property owners, primarily property developers, cover the entire industry value chain of real estate development. Our value-added services to non-property owners comprise (i) preliminary property management services (including construction site management, sales office management and consulting services) during the course of construction and pre-sale; (ii) pre-delivery services (including pre-delivery cleaning and inspection services and assistance in the delivery process) after the completion of development and during the delivery process; (iii) repair and maintenance services during the post-delivery quality warranty periods of properties; and (iv) property transaction assistance services with respect to parking spaces and retail spaces. In 2017, 2018, 2019 and the six months ended June 30, 2020, revenue from value-added services to non-property owners amounted to RMB1.6 billion, RMB2.1 billion, RMB2.1 billion and RMB1.2 billion, respectively, with a CAGR of 15.5% from 2017 to 2019. Through the provision of such services, we can establish in-depth and extensive cooperative relationships with property developers, which we believe will be more inclined to invite us to bid for property management service contracts for their properties.

Community value-added services

In the course of daily interactions with the extensive network of property owners and residents we have built up over the years, we have obtained first-hand information on their needs and pain points. Leveraging our strong resource integration capability, we offer a wide spectrum of community value-added services that address customers’ needs and pain points. Our community value-added services comprise (i) community operation services (including

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BUSINESS

community space management with respect to common areas, group purchase facilitations, electric vehicle charging stations and potable water stations); (ii) community asset management services (including parking space rental, second-hand property transaction assistance services and recreation center operations services); and (iii) community living services (such as housekeeping, home furnishing, repair and maintenance services). For example, we cooperate with high-quality home decoration service providers to provide property owners with one-stop home decoration and furnishing services, covering preliminary consulting, interior design, onsite construction and after-sales warranty. We offer potable water stations and electric vehicle charging stations in the communities we manage in cooperation with third-party merchants to meet customers’ high-frequency uses of such facilities, which enhances convenience for our customers, improves customer experience and broadens our revenue sources. We also cooperate with reputable merchants to sell and deliver select daily supplies to our customers, such as groceries and local food specialties. In 2017, 2018, 2019 and the six months ended June 30, 2020, revenue from community value-added services amounted to RMB251.1 million, RMB335.4 million, RMB573.0 million and RMB508.1 million, respectively, with a CAGR of 51.1% from 2017 to 2019. As our value-added services are usually highly specialized and customized, they usually generate higher profit margins than conventional property management services. In 2017, 2018, 2019 and the six months ended June 30, 2020, the gross profit margin of our community value-added services was 52.2%, 52.2%, 57.4% and 65.0%, respectively.

Through multi-scenario and high-frequency interactions with customers, we strive to continuously discover unmet market demands and new market opportunities, vastly expanding the potential of our property management business. According to CIA, we ranked fourth among the Top 100 Property Management Companies in China in terms of the percentage of revenue from value-added services in 2019. We were accredited with “Leading Property Management Companies in China in Featured Services – Community Value Enhancement (中國物業特色服務領先企業─社區附加值提升)” from 2018 to 2020 and “Leading Property Management Brands of China in Specialized Operations (中國物業服務專業化運營領先品牌企業)” in 2018 and 2019 by CIA.

Smart Information Platform and Standardized Management Systems Designed to Improve Customer Experience and Operating Efficiency and Reduce Costs

We are dedicated to building our smart information platform and standardized management systems to improve customer experience and operating efficiency, reduce operating costs and enhance our core competitiveness.

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BUSINESS

Smart Information Platform

We have implemented a smart information platform which leverages information and intelligent technologies to improve customer experience, reduce reliance on manual labor and lower operating costs. The following diagram shows the key features of our smart information platform:

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

Evergrande Smart Community mobile application
(for customers)
Payment Smart
Processing Security
Service Request Smart
Management Entrance
Customer Smart
Relations Parking
Smart Management System Smart Community Solutions
Asset Smart Elevator
Management Control
Evergrande Butler mobile application
(for employees)
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Smart Communities

Leveraging technologies such as Internet-of-Things (IoT), cloud computing, artificial intelligence (AI) and facial recognition technologies, we consolidate a series of smart systems to manage pedestrian walkways, vehicle roads, common area surveillance, community bulletin boards and elevator operations. Taken together, these form an integrated smart community platform that creates a safe, comfortable and convenient community for property owners and residents. For example, our smart traffic control system can identify property owners and residents at the entrance using car plate recognition and facial recognition technologies. This allows property owners and residents to pass the entrance without noticing the check-in process. Upon recognizing the property owners and residents, the smart traffic control system will automatically call the elevator for them so that they can access the elevator seamlessly after parking. Using facial recognition technologies, we are able to timely detect unauthorized entries into the properties we manage. Our smart perimeter intrusion monitoring and command system (智能周界入侵監測及安保指揮智慧系統) features 24/7 video surveillance and patrolling, which helps identify non-resident visitors that enter the community to better safeguard property owners and residents. As of the Latest Practicable Date, we had implemented the car plate recognition system and 24/7 video surveillance in all properties under management, and implemented the facial recognition system and smart perimeter intrusion monitoring and command system in some residential communities we managed.

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Smart Life

Leveraging our Evergrande Smart Community mobile application, we offer convenient online living services to users. As of August 31, 2020, the Evergrande Smart Community mobile application had approximately 1.7 million registered users, providing functions including online payment, service request, complaints and feedback, designated butler, community announcements, online booking and visitor registration. During the COVID-19 pandemic, the Evergrande Smart Community mobile application launched functions such as health codes, online daily necessities booking, daily pandemic reports and policy publicity. In March 2020, the Evergrande Smart Community mobile application recorded a total of over three million visits. We believe the Evergrande Smart Community mobile application helped property owners and residents get through those trying times and was widely appreciated by users.

Smart Management

Our ERP system provides technical support for our various business operations, including functions such as data and information management, payment processing, service request management, customer relations management, asset management and repair and maintenance management. We have standardized business operations and improved management effectiveness through streamlined execution procedures, with a focus on the “people, funds, things and events” involved in our operation process.

In addition, our Evergrande Butler mobile application assists our employees in obtaining various management approvals and tracking service orders to enhance work efficiency. Such technological tools also enabled us to access and monitor operating information and data in real time, providing us with valuable information for our management’s decision-making processes.

Standardized Management Systems

Leveraging our rich management and service experience, we have established standardized management systems, including a centralized management system, a uniform service standards system and an internal policy system. We have created a three-tier management structure, comprising management guidelines at the headquarters level, implementation rules at the regional level and operational manuals at the project level. Our standardized management systems help us achieve refined, systematized and flattened management structure, and scale up efficiently.

Through the application of our smart information platform and standardized management systems, we have significantly improved our operational efficiency. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our operating profit margin (calculated as operating profit divided by revenue) was 3.4%, 5.5%, 17.2%, 16.0% and 33.1%, respectively. From December 31, 2017 to December 31, 2019, our per employee GFA under management increased at a CAGR of 34.2%, which was higher than the average CAGR of 17.6% for Top 100 Property Management Companies and of 10.6% for Top Ten Property Management Companies during the same period, according to CIA. Our revenue per employee (calculated as revenue for the period divided by the number of employees at the end of the period)

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increased at a CAGR of 32.7% from 2017 to 2019, which was higher than the CAGR of 19.2% for Top 100 Property Management Companies and 13.6% for Top Ten Property Management Companies during the same period, according to CIA.

High-quality Services Winning Market Acceptance and Paving the Way for Expansion

We believe our leading market position was earned through continuous efforts and dedication to details since our inception. With our high-quality services and colorful cultural activities, we endeavor to foster communities where people live in peace and contentment.

Quality Property Management Services

We are customer-centric and result-oriented. We are dedicated to providing customers with high-quality property management services through our professional butlers. We have a team of highly educated employees who serve as butlers. Nearly 100% of these butlers hold a junior college diploma or above, and over 60% of them hold a bachelor’s degree or above. Each household is assigned a butler whom the property owners and residents can turn to whenever they are in need. Our butlers interact frequently with property owners and residents, obtain first-hand information on their needs and pain points, and provide tailored services. We have a security team known as “a team of civility and etiquette (文明之師，禮儀之師),” and have built an intelligent security system to guard the safety of property owners and residents 24/7. Moreover, we have established a “1-5-30” speedy response mechanism, requiring our butlers to answer customer calls and record requests within one minute, make initial responses within five minutes and dispatch relevant personnel onsite to evaluate the situation and formulate solutions within 30 minutes. Property owners and residents can reach out to our butlers through the Evergrande Smart Community mobile application and our 24/7 customer service hotline. We require all customer feedback be properly and timely handled, keep track of the progress and perform callback interviews to ensure customer satisfaction.

Premium Functional Facilities and Activities

We enrich customers’ lives with our premium functional facilities and colorful cultural activities.

Recreation centers . We provide sports and entertainment services to property owners and residents at the recreation centers we operate, which include facilities such as heated swimming pools, billiard tables, basketball courts, tennis courts, table tennis courts, squash courts, gyms, children’s activity centers, restaurants, bars, tea rooms, and activity rooms for music, dance, art, chess and cards, among others. We engage property owners and residents of all age groups, making community activities a colorful part of the retirement life of the elderly as well as an enjoyable and educational experience for the young. As of June 30, 2020, we operated 647 recreation centers. During the Track Record Period, the recreation centers we operate received an average of approximately 50,000 visitors each day, and served approximately 17 million property owners and residents each year.

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Ancillary commercial spaces . We upgrade ancillary commercial properties by sourcing merchants providing services that meet customers’ diverse needs for shopping, entertainment and social interaction. We aim to create community retail clusters with a focus on convenience, quality and value for money. As of June 30, 2020, we had entered into cooperation agreements with over 400 vendors across the country.
Community cultural activities . We strive to create a healthy, lively and caring community atmosphere through the “Friendly Neighborhood Plan (友鄰友愛計劃).” We endeavor to build our unique brand of community cultural activities through our cultural activity series, such as Impression Evergrande Festival (印象恒大節), Flourish Young Evergrande Festival (花young恒大節), Filial Piety Evergrande Festival (孝悌恒大節), Warm Winter Evergrande Festival (暖冬恒大節) and New Year Evergrande Festival (新春恒大節). As of June 30, 2020, over 2.6 million property owners and residents had participated in our cultural activities.

We believe our premium services have led to high customer satisfactions and contract retention rates. Our survey shows that our customer satisfaction rate reached 92.6% and 95.6% in 2019 and the six months ended June 30, 2020, respectively. During the same periods, our contract retention rate was 100% (excluding one project we voluntarily quit in 2019). According to CIA, we are a “leading property management company in China in terms of customer satisfaction (中國物業服務滿意度領先企業)” in 2020. We believe customer satisfaction will continue to be the touchstone of our future success, and only through such pursuit can we sustain our leadership position amid fierce market competition.

A number of properties we managed were selected as model communities by provincial or municipal government authorities, which we believe enhances our brand awareness and positions us to earn businesses from third-party developers. Subsequent to June 30, 2020 and up to the Latest Practicable Date, we entered into two property management service agreements and five framework property management service agreements in relation to projects developed by independent third-party property developers.

Seasoned, Energetic and Stable Management Team, Effective Human Resource Management System and Reputable Strategic Investors

Professional Management Team

We believe our people are the fundamental drivers for our long-term growth. As of June 30, 2020, we had nearly 50,000 employees. We have an energetic, highly-educated and experienced core management team whose members have on average over ten years of property management industry experience and an average age of approximately 38. More than 60% of its members hold degrees from a well-known university in China. Our core management team has keen insight of the property management industry and stays abreast of industry development trends, which we believe will enable us to capture market growth and make appropriate decisions at the group level. Meanwhile, we have a team of mid-level managers,

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more than 95% of whom hold a bachelor degree or above, and more than half of whom have a degree from a well-known university in China. With solid educational background and an average age of 35, our middle-management team possesses as a group the necessary experience and passion to effectively connect the strategies and initiatives from our core management team with our onsite personnel at the project level to ensure proper implementation.

Efficient Human Resources System

We have established an efficient human resources system. Each year, we recruit talent from universities across China and offer them support in compensation schemes, training and career development opportunities. For over 12 years, we have focused our recruitment efforts on outstanding graduates from reputable universities and colleges, and created three-year specialized development plans and related compensation schemes for them, all to ensure a steady stream of well-educated, well-trained and professional workers. Meanwhile, we have created a system of performance appraisal and incentives to reward outstanding performance and create clear career tracks for different types of talent. We upskill our talent through a series of training programs, such as our “Gold Butler (金管家)” and “Gold General Program (金將計劃).”

To create a highly professional workforce and ensure the smooth implementation of our corporate initiative and standardized operations procedures, we offered a series of training sessions. We also organized online exams, covering our corporate cultures, management policies and professional skills through which our employees can earn “Evergrande Property Manager” certificates.

We believe our performance based corporate culture, comprehensive talent development system and effective incentive schemes aligns our employees’ interests with ours, which we believe has enabled us to stand out from our competitors.

Reputable Strategic Investors

In August 2020, we introduced a group of reputable strategic investors, including, among others, Sequoia Capital China Growth, CITIC Capital Holdings Limited, Yunfeng Capital Limited and Tencent Holdings Limited, which collectively acquired a 28.061% equity interest in our Company. We believe the investment by these strategic investors enables us to explore synergistic new service offerings and other collaborations with them, thereby enhancing the scope and depth of our business operations, and contributing to our long-term sustainable growth.

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OUR BUSINESS STRATEGIES

Solidify our Leadership Position by Expanding the Scale of Our Business Operations

Leveraging our long-term and stable relationship with the Evergrande Group, we plan to further expand our service offerings and geographical coverage. In addition to continuing to provide high-quality property management services to existing customers including the Evergrande Group, we plan to capitalize on our brand value and market reputation to develop new business and customers, prioritizing expansions in cities where we already have business operations in order to capitalize on economies of scale and achieve a balance of geographical presence and profitability. Besides residential properties, we plan to enhance expansion efforts on other property types such as office buildings, commercial complexes, hospitals, schools, industrial parks, government buildings and public facilities, to further enrich our property portfolio. In addition, we plan to explore more business opportunities with players in other industries, such as elevators and other equipment maintenance service providers, advertising media companies, real estate agencies, educational service providers, home decoration service providers and insurance brokerage companies, to further diversify our business and consolidate our leading position in the industry.

To improve our market share, we also plan to expand through acquisition of other companies. We intend to primarily target (i) residential property management companies that have solid financial and operational performance, brand image and creditworthiness, and non-residential property companies whose businesses are complementary to our current property portfolio under management; (ii) companies that offer property management related services, including cleaning, greening and gardening, security, equipment maintenance and smart technologies; and (iii) municipal operations service providers. See “Future Plans And Use Of Proceeds.”

Diversify Value-added Service Offerings and Improve Customer Satisfaction

We are dedicated to satisfying our customers’ needs by further strengthening our capabilities to provide and diversify our community value-added services, such as community operations services and community asset management services, collaborating with third-party companies to develop more diversified and high-quality value-added services which are designed to better serve owners and residents of properties under our management as well as surrounding properties.

We plan to further enhance our collaboration with the Evergrande Group, leveraging its strong user base in services related to healthcare, tourism, life insurance and new energy vehicles. Based on the varying characteristics of the different properties, we plan to offer targeted, personalized and featured value-added services to property owners and residents. For example, leveraging the Evergrande Group’s amusement parks and healthcare complexes, we intend to collaborate with the Evergrande Group to design and offer tourism and healthcare

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packages to property owners and residents of properties under our management; we also intend to explore options to introduce insurance products offered by the Evergrande Group to property owners and residents, thereby creating a win-win situation among our customers, the Evergrande Group and us.

We intend to explore cooperation opportunities with our strategic investors such as Sequoia Capital China Growth, CITIC Capital Holdings Limited, Yunfeng Capital Limited and Tencent Holdings Limited to further expand the breadth and depth of our service offerings. We plan to leverage big data technology of some of our strategic investors to conduct behavioral analysis and consumption habits analysis to offer more tailored services. We also intend to cooperate with our strategic investors to develop customized smart municipal services related to public transportation, environmental protection, health-related services and other public services by leveraging their big data, IoT, AI and cloud computing technologies. Our strategic investors have extensive resources and network in industries such as healthcare, elderly care, education, tourism, catering, community retail, as well as new retail which offers a new shopping experience by integrating online and offline commerce. We intend to explore cross-selling and cooperation opportunities in these areas with our strategic investors and companies in which they invest.

Further Optimize Our Smart Management Platform and Enhance Our Operational Capabilities and Efficiency Powered by Technologies

Enabled by our continued investment in technologies, we will continue our dedication to improving online service systems, upgrading our online management systems, improving our smart community solutions, exploring new technological applications and improving our service and management efficiency and effectiveness. Leveraging IoT, big data and artificial intelligence (AI) technologies, we plan to improve our work efficiency, decision-making processes, and customer experience. In particular, we plan to invest in developing or enhancing the following systems.

Safety alert system . Through the application of high-resolution surveillance equipment and AI technologies, we plan to better monitor and detect unauthorized entries into properties under our management, high-rise littering, fire safety and other community safety issues to ensure the overall safety and security of properties under our management.
Smart customer service system . Through the application of voice robots and AI technologies, we plan to analyze text and voice complaints from our hotlines and online platforms, which will help us better understand and address customers’ needs and demands.

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Smart equipment management . Through the application of IoT, AI technologies and 5G network, we aim to remotely extract data, monitor and generate alerts on equipment located in properties under our management, and offer full-cycle intelligent management of these equipment to ensure their safe and efficient operations, which we believe will lead to higher efficiency and lower operating costs.
Smart AI energy management . Through the applications of IoT and big data technologies, we aim to realize the intelligent and standardized management of our energy consumption of water, electricity, natural gas and heat, which we believe will contribute to reduced waste and greater energy conservation in the common areas of properties under our management.
Smart corporate decision-making . Through AI and big data technologies, we aim to extract operating data, such as market data, financial data, ERP data and performance data, and establish multi-tier monitoring interfaces at the headquarters and regional levels, to offer comprehensive and clear data and information support for our decision-making processes, detect potential risks, and improve management efficiency.
Smart customer profiles . Through the combination of big data and AI technologies, we hope to give our personnel tools to combine data and information collected from offline interactions with customers as well as from customers’ input of online information on purchases, complaints and travels. Based on such comprehensive information and data, we plan to create targeted and precise customer profiles, to enable us to provide more customized services to address their individual needs.
Smart robots. Leveraging robotics and AI technologies, we intend to reduce our operating costs by applying smart robots to perform certain property management functions such as cleaning, watering and patrolling.

Improve Service Quality and Competitiveness Leveraging our Brand Image and Service Capabilities

Customer satisfaction is our fundamental standard for managing our services. To improve customer satisfaction and loyalty, as well as enhance our brand image and market influence, we plan to continuously improve our service quality and capabilities. In particular, under our service concept of “conscientious services and heartfelt companionship” (“貼心服務，真誠相伴”), we intend to further enhance our including our 24-hour service hotline, customer complaint hotline, “1-5-30” maintenance response systems, all of which are dedicated to improving our responsiveness to customers’ needs for household services such as maintenance, cleaning and household errands.

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We also plan to tailor service standards for different property types based on the unique features of each property type and varying customer needs. For example, we plan to introduce customized service packages and standards for industrial parks, amusement parks, healthcare complexes and public facilities, leveraging our experience in offering standardized quality services for residential properties. We believe this will improve our operational efficiency, strengthen our brand and improve our market competitiveness.

Enhance Our Human Resource System to Motivate Organizational Growth and Higher Employee Productivity

We believe that human resources lie at the foundation of our corporate growth. To that end, we plan to continue to enhance our incentive schemes and human resource structure to discover, select and cultivate a loyal workforce that identifies with our corporate culture, has a strong sense of belonging, and is motivated to grow. We offer both management track and expertise track for employees with different interests, and provide competitive compensations.

In addition, we intend to deepen our talent development program by enhancing our various training programs as well as our employee evaluation and promotion systems. We also encourage employees to study for various professional certificates and qualifications, as well as higher education degrees, which we believe improves our employees’ professional capabilities. We plan to continue to recruit into our management staff program approximately 120 college-graduate management trainees per year in cooperation with higher education institutions.

We also plan to continue to implement various employee incentive plans to ensure their compensation packages are closely tied to their job performance. We believe that proper incentive schemes recognize their value and hard work, safeguard the stability of our workforce, and promote our long-term sustainable growth.

OUR BUSINESS MODEL

We primarily generate revenue from three business lines: (i) property management services; (ii) value-added services to non-property owners; and (iii) community value-added services.

Property management services. We offer a wide range of property management services to property owners, residents and property developers, as well as tenants in non-residential properties under our management. Our services typically include butler services, security services, cleaning and greening services, and repair and maintenance services. We manage a diverse portfolio of properties, including residential properties, commercial properties, theme parks, industrial parks, healthcare complexes, themed towns and schools, among others. We charge property management fees primarily on a lump sum basis, with only a very small portion charged on a commission basis.

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Value-added services to non-property owners. We offer property developers full-cycle value-added services covering various stages of the property development and delivery process. Our value-added services to non-property owners include (i) preliminary property management services, which include (a) construction site management in which we patrol and manage the security of property developers’ construction sites; (b) sales office management services in which we provide property management services to property developers’ sales offices and show flats; and (c) consulting services in which we advise on various stages of property developers’ business operations from a property management perspective; (ii) pre-delivery services in which we clean and inspect the properties to be delivered, as well as assist in the delivery process; (iii) repair and maintenance services in which we assist with the repair and maintenance of properties during their post-delivery quality warranty periods; and (iv) property transaction assistance services in which we facilitate property developers in selling parking spaces and leasing retail spaces.
Community value-added services. We offer community value-added services primarily to property owners and residents, such as (i) community operations services, including (a) community space management services in which we rent out leasable common area to third-party vendors and provide certain onsite services to promote and facilitate such third-party vendors’ businesses; and (b) offer other services such as group purchase facilitations, electric vehicle charging stations and drinking fountains; (ii) community asset management services, including (a) parking space rental services in which we lease parking spaces from property developers and then sublease them to property owners; (b) second-hand property transaction assistance services in which we facilitate property owners in selling or renting their properties; and (c) recreation center operations services in which we operate recreation centers located in residential properties under our management; and (iii) community living services such as housekeeping, home furnishing, and repair and maintenance.

Property management services . . . . . . . . . Value-added services to non-property owners . . . Community value-added services . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 2,538,392 57.7 1,609,865 36.6 251,099 5.7 4,399,356 100.0	2018 (RMB’000) (%) 3,464,390 58.7 2,103,431 35.6 335,405 5.7 5,903,226 100.0	2019 (RMB’000) (%) (unaudited) 2,154,683 62.2 1,056,069 30.5 255,008 7.3 3,465,760 100.0	2020
				(RMB’000) (%) 2,824,261 61.9 1,231,480 27.0 508,114 11.1 4,563,855 100.0

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PROPERTY MANAGEMENT SERVICES

We have been providing property management services since our establishment in 1997. As of June 30, 2020, our aggregate contracted GFA reached over 513.3 million sq.m., covering more than 280 cities across 22 provinces, five autonomous regions, four municipalities and Hong Kong. As of the same date, we managed 716 properties with an aggregate GFA under management of 254.0 million sq.m. Our revenue from property management services reached RMB2,538.4 million, RMB3,464.4 million, RMB4,612.2 million, RMB2,154.7 million and RMB2,824.3 million in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively, accounting for 57.7%, 58.7%, 62.9%, 62.2% and 61.9% of our total revenue for the same periods, respectively.

The following table sets forth the number of properties and GFA under our management, as well as the number of properties we were contracted to manage and corresponding contracted GFA as of the dates indicated.

Number of properties under management(1) . . . . . . . . . . . . Number of properties we were contracted to manage(2) . . . . . . GFA under management (sq.m. in thousands). . . . . . . . . . . . . . . Contracted GFA (sq.m. in thousands) . . . . . . . .	As	of December 31, 2018 2019 534 686 872 1,060 185,408 237,855 422,540 505,122	As of June 30, 2020
	2017 421 660 138,348 326,694	2018 534 872 185,408 422,540
			716 1,108 254,019 513,310

Notes:

(1) Refers to properties that have been delivered to us for property management purposes.

(2) Refers to all properties for which we have entered into the relevant operating property management service agreements, which may include properties that have not been delivered to us for property management purposes in addition to properties under management.

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Scope of Services

We primarily provide the following types of property management services.

Butler service. We offer property owners of each household under our management butler services which address their daily living needs. Our professional butler service personnel are well-educated with a majority of them holding a bachelor degree or above, which we believe is critical in providing quality services that satisfactorily resolve property owners’ various needs and establishing favorable relationships with them.
Security services . We provide quality security services, as a part of which we manage the overall security, fire safety, and parking in properties under our management. We check the identities of visitors and visiting vehicles, and handle emergencies on demand. We provide security services through our own employees.
Cleaning and greening services . To create a clean and tidy living environment, we provide general cleaning, garbage collection and pest control services for common areas of buildings and public facilities in properties under our management. We also provide greening and gardening services to common areas of the properties we manage. We primarily delegate greening and gardening services to third-party subcontractors, and provide cleaning services using our own employees and through third-party subcontractors.
Common area facility repair and maintenance services . We are generally responsible for the maintenance of (i) common area facilities and construction structures such as lifts, escalators and central air conditioning facilities; (ii) fire and safety facilities such as fire extinguishers and fire alarm systems; (iii) security facilities such as entrance gates, fences and surveillance cameras; and (iv) utility facilities such as electricity generators, power distribution equipment, water pump rooms, water supply and drainage systems. We provide repair and maintenance services using our own employees and through third-party subcontractors.

As of June 30, 2020, we employed more than 26,000 onsite personnel and engaged approximately 260 third-party subcontractors to provide the abovementioned property management services.

Our Geographic Presence

Since our establishment in 1997, we have expanded our presence nationwide, and have achieved an aggregate contracted GFA of 513.3 million sq.m., covering over 280 cities across 22 provinces, five autonomous regions, four municipalities and Hong Kong as of June 30, 2020. We managed 716 properties with an aggregate GFA under management of 254.0 million

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sq.m. as of June 30, 2020. The following map illustrates the locations of properties we managed and were contracted to manage as of June 30, 2020, as well as the number of properties under our management as of December 31, 2017, 2018 and 2019 and June 30, 2020.

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Northwestern Northeastern
GFA under management as of GFA under management as of
December 31, 2017 : 7.1 million sq.m. December 31, 2017 : 16.6 million sq.m.
December 31, 2018 : 8.6 million sq.m. December 31, 2018 : 19.7 million sq.m.
December 31, 2019 : 10.9 million sq.m. December 31, 2019 : 24.7 million sq.m.
June 30, 2020 : 11.3 million sq.m. June 30, 2020 : 25.0 million sq.m.
Contracted GFA as of Contracted GFA as of
June 30, 2020 : 25.5 million sq.m. June 30, 2020 : 52.2 million sq.m.
Heilongjiang
Jilin Northern
GFA under management as of
December 31, 2017 : 14.2 million sq.m.
Xinjiang Liaoning December 31, 2018 : 19.3 million sq.m.
December 31, 2019 : 23.1 million sq.m.
Inner Mongolia Beijing June 30, 2020 : 25.1 million sq.m.
Gansu Tianjin
Hebei Contracted GFA as ofJune 30, 2020 : 39.5 million sq.m.
Ningxia Shanxi
Shandong Eastern
Qinghai GFA under management as of
Shaanxi Henan December 31, 2017 : 34.6 million sq.m.
Jiangsu December 31, 2018 : 48.6 million sq.m.
Tibet Anhui Shanghai December 31, 2019June 30, 2020 : 67.2 million sq.m.: 62.3 million sq.m.
Sichuan Hubei
Contracted GFA as of
Chongqing Zhejiang June 30, 2020 : 143.1 million sq.m.
Jiangxi
Southwestern Hunan
GFA under management as of Guizhou Fujian
December 31, 2017December 31, 2018 : 23.5 million sq.m.: 29.2 million sq.m. Yunnan Taiwan
December 31, 2019 : 37.0 million sq.m. Guangxi Guangdong
June 30, 2020 : 39.9 million sq.m. South China Sea
Hong Kong
Macao
Contracted GFA as of
June 30, 2020 : 85.1 million sq.m.
Central Southern
Hainan
GFA under management as of GFA under management as of
December 31, 2017 : 23.4 million sq.m. December 31, 2017 : 19.0 million sq.m.
December 31, 2018 : 31.2 million sq.m. December 31, 2018 : 28.9 million sq.m.
December 31, 2019 : 40.0 million sq.m. December 31, 2019 : 39.9 million sq.m.
June 30, 2020 : 42.5 million sq.m. June 30, 2020 : 42.9 million sq.m.
Contracted GFA as of Contracted GFA as of
June 30, 2020 : 82.7 million sq.m. June 30, 2020 : 85.3 million sq.m.
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The following table sets forth a breakdown of our total GFA under management by geographic region as of the dates indicated, and our revenue from property management services by geographic region for the years/periods indicated, both in absolute amount and as a percentage of our revenue from property management services.

	As	of/for theyear ended December	of/for theyear ended December	31,		As of/for the six months ended June 30, 2020	As of/for the six months ended June 30, 2020
	2017		2018		2019
GFA under management	Revenue	GFA under management	Revenue	GFA under management	Revenue	GFA under management	Revenue (RMB’000) (%) 635,907 22.5 301,495 10.7 118,933 4.2 558,827 19.8 449,995 15.9 428,243 15.2 330,861 11.7 2,824,261 100.0
(sq.m.’000) 34,577 14,206 7,077 19,042 23,476 23,408 16,562	(RMB’000) (%) 533,688 21.0 254,276 10.0 123,671 4.9 423,294 16.7 449,687 17.7 374,232 14.7 379,544 15.0 2,538,392 100.0	(sq.m.’000) 48,595 19,328 8,553 28,909 29,177 31,178 19,668	(RMB’000) (%) 739,114 21.3 429,776 12.4 159,898 4.6 586,882 16.9 562,931 16.3 521,149 15.1 464,640 13.4 3,464,390 100.0	(sq.m.’000) 62,271 23,071 10,930 39,934 36,971 39,968 24,710	(RMB’000) (%) 1,033,728 22.4 537,303 11.7 205,003 4.4 834,704 18.1 706,765 15.3 721,754 15.7 572,955 12.4 4,612,212 100.0	(sq.m.’000) 67,248 25,074 11,329 42,948 39,914 42,548 24,958
138,348		185,408		237,855		254,019

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Notes:

(1) Includes Anhui, Fujian, Jiangsu, Jiangxi, Shandong, Shanghai and Zhejiang.
(2) Includes Beijing, Hebei, Shanxi and Tianjin.
(3) Includes Gansu, Ningxia, Qinghai, Shaanxi and Xinjiang.
(4) Includes Guangdong, Guangxi, Hainan and Hong Kong.
(5) Includes Guizhou, Sichuan, Tibet, Yunnan and Chongqing.
(6) Includes Henan, Hubei and Hunan.
(7) Includes Heilongjiang, Jilin, Liaoning and Inner Mongolia.

Portfolio of Properties under Management

We primarily offer property management services to properties developed by the Evergrande Group or joint ventures and associates of the Evergrande Group. The following table sets forth a breakdown of our total GFA under management by developer type as of the dates indicated, as well as revenue from property management services by developer type for the years/periods indicated, both in absolute amount and as a percentage of revenue from property management services.

As of/for theyear ended December 31, 2017 2018 2019 GFA under management Revenue GFA under management Revenue GFA under management Revenue (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) 137,836 2,532,597 99.8 183,121 3,425,456 98.9 233,969 4,538,996 98.4 312 1,699 0.1 1,886 33,099 1.0 3,064 58,589 1.3 200 4,096 0.1 401 5,835 0.1 822 14,627 0.3 138,348 2,538,392 100.0 185,408 3,464,390 100.0 237,855 4,612,212 100.0	As of/for theyear ended December 31, 2017 2018 2019 GFA under management Revenue GFA under management Revenue GFA under management Revenue (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) 137,836 2,532,597 99.8 183,121 3,425,456 98.9 233,969 4,538,996 98.4 312 1,699 0.1 1,886 33,099 1.0 3,064 58,589 1.3 200 4,096 0.1 401 5,835 0.1 822 14,627 0.3 138,348 2,538,392 100.0 185,408 3,464,390 100.0 237,855 4,612,212 100.0	As of/for theyear ended December 31, 2017 2018 2019 GFA under management Revenue GFA under management Revenue GFA under management Revenue (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) 137,836 2,532,597 99.8 183,121 3,425,456 98.9 233,969 4,538,996 98.4 312 1,699 0.1 1,886 33,099 1.0 3,064 58,589 1.3 200 4,096 0.1 401 5,835 0.1 822 14,627 0.3 138,348 2,538,392 100.0 185,408 3,464,390 100.0 237,855 4,612,212 100.0	As of/for the six months ended June 30, 2020	As of/for the six months ended June 30, 2020
2017 GFA under management Revenue (sq.m.’000) (RMB’000) (%) 137,836 2,532,597 99.8 312 1,699 0.1 200 4,096 0.1 138,348 2,538,392 100.0	2018 GFA under management Revenue (sq.m.’000) (RMB’000) (%) 183,121 3,425,456 98.9 1,886 33,099 1.0 401 5,835 0.1 185,408 3,464,390 100.0
GFA under management (sq.m.’000) 137,836 312 200 138,348	GFA under management (sq.m.’000) 183,121 1,886 401 185,408	GFA under management (sq.m.’000) 233,969 3,064 822 237,855	GFA under management (sq.m.’000) 251,339 1,656 1,024 254,019	Revenue
				(RMB’000) (%) 2,790,733 98.8 20,067 0.7 13,461 0.5 2,824,261 100.0

Notes:

(1) Refers to properties solely developed by the Evergrande Group or jointly developed by the Evergrande Group and independent third-party property developers in which project the Evergrande Group held a controlling interest.
(2) Refers to properties jointly developed by the Evergrande Group and independent third-party property developers in which the Evergrande Group did not hold a controlling interest.
(3) Refers to properties developed solely by independent third-party property developers.

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We primarily manage residential properties. We also manage other types of properties such as commercial properties, theme parks, industrial parks, healthcare complexes, themed towns and schools, among others. The following table sets forth a breakdown of our total GFA under management by property type as of the dates indicated, and revenue from property management services by property type for the years/periods indicated, both in absolute amount and as a percentage of revenue from property management services.

As	of/for theyear ended December 31, 2018 2019 GFA under management Revenue GFA under management Revenue (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) 183,753 3,398,385 98.1 235,788 4,524,308 98.1 1,655 66,005 1.9 2,067 87,904 1.9 185,408 3,464,390 100.0 237,855 4,612,212 100.0	of/for theyear ended December 31, 2018 2019 GFA under management Revenue GFA under management Revenue (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) 183,753 3,398,385 98.1 235,788 4,524,308 98.1 1,655 66,005 1.9 2,067 87,904 1.9 185,408 3,464,390 100.0 237,855 4,612,212 100.0	As of/for the six months ended June 30, 2020	As of/for the six months ended June 30, 2020
2017 GFA under management Revenue (sq.m.’000) (RMB’000) (%) 136,966 2,452,466 96.6 1,382 85,926 3.4 138,348 2,538,392 100.0	2018 GFA under management Revenue (sq.m.’000) (RMB’000) (%) 183,753 3,398,385 98.1 1,655 66,005 1.9 185,408 3,464,390 100.0
GFA under management (sq.m.’000) 136,966 1,382 138,348	GFA under management (sq.m.’000) 183,753 1,655 185,408	GFA under management (sq.m.’000) 235,788 2,067 237,855	GFA under management (sq.m.’000) 251,355 2,664 254,019	Revenue
				(RMB’000) (%) 2,763,869 97.9 60,392 2.1 2,824,261 100.0

Notes:

(1) Includes carparks, garages, ground-level stores and related facilities in residential facilities.

During the Track Record Period, non-residential properties to which we provided property management services and from which we generated revenue from property management services included China Evergrande Center (中國恒大中心), Guangzhou Evergrande Center (廣州恒大中心), Guilin Evergrande Plaza (桂林恒大廣場), Ningbo Evergrande City Light (寧波恒大城市之光), Yichang Evergrande Pedestrian Street (宜昌恒大步行街), Shenzhen Jianshe Building (深圳建設大廈), Hefei Evergrande Center (合肥恒大中心), Hefei Evergrande Plaza (合肥恒大廣場), Fushun Evergrande International Financial Center (撫順恒大國際金融中心), Harbin Evergrande International Center (哈爾濱恒大國際中心), Ji’nan Evergrande Times Fortune Center (濟南恒大時代財富中心), Shijiazhuang Evergrande Center (石家莊恒大中心), Guiyang Evergrande Center (貴陽恒大中心) and Nanchang Evergrande Famous City (南昌恒大名都). Save for these properties, all other properties from which we generated revenue from property management services during the Track Record Period were classified as residential properties.

Property Management Service Agreements

During the Track Record Period, we generally obtained preliminary property management service agreements by participating in tenders, a process where property developers evaluate and select from multiple property management companies. With respect to residential property management, tender processes are required unless a property is considered by the relevant local real estate administration authorities as insignificant and does not warrant a tendering process, or there are fewer than three bidders and the relevant local real estate administration authorities allow the engagement of a property management company directly through negotiations without going through the tender process.

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The tender process is well-established, competitive and fairly structured. We do not enjoy any preferential treatments in the selection process for properties developed by the Evergrande Group and are not given extra weight in the selection processes due to our relationship with the Evergrande Group.

The tender process requires a minimum of three bidders. Generally, approximately five to seven bidders participate in a tender process. For higher quality projects, the number of bidders could be even higher. The bidders other than ourselves are generally independent regional or national property management companies that possess the necessary qualifications to submit a bid for the tendering process. The tender process will be evaluated by a tender evaluation committee organized under the Interim Measures for Tender and Bidding Management for Preliminary Property Management (前期物業管理招標投標管理暫行辦法) where neither the property developer nor we would be able to exert influence on the selection process. The tender evaluation committee shall consist of an odd number of at least five members, including: (i) at least a two-thirds majority of property management experts who are independent of the relevant developer and our Group and are selected on a random basis from a list of experts compiled by the local real estate administrative department; and (ii) the representative members from the property developer. In evaluating the bids, the tender evaluation committee would consider a number of factors, including reputation, quality of service, management system, human resources management and the proposed management plan.

Tender invitations are usually issued by property developers for properties under development, or from property owners’ associations for properties that wish to replace their existing property management service provider. After receiving the tender invitations, we submit tender documents to the property developer or property owners’ associations which generally include proposed pricing, proposal and plan for property management and other information as specified by the tender invitation. We may be required to provide prequalification documents for vetting before submitting the formal tender documents. The property developers and property owners’ associations will then evaluate the tenders received, and select the winner based on factors such as reputation, quality of service, management system, human resources management and the proposed management plan. After winning the tenders, we enter into property management service agreements with the relevant property developers and property owners’ associations, and then file the agreements with the relevant authorities. The following flow chart illustrates each stage of a typical tender process.

We provide property management services to substantially all residential properties developed by the Evergrande Group or joint ventures and associates of the Evergrande Group. We started to provide property management services to properties solely developed by independent third-party property developers in 2017. We procure a majority of our property management service agreements through the tender process regulated by applicable PRC laws and a small portion through commercial negotiations as permitted by relevant local authorities. Our tender success rate was 100.0% throughout the Track Record Period.

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The following diagram illustrates our relationships with various parties under our property management agreements.

==> picture [309 x 192] intentionally omitted <==

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

Preliminary property management service agreements [(2) ]
Our Group Pay property management fees Property developers
Provide property management
services before property delivery
Provide property management
services after property delivery
Enter into property Pay property Sell property
management management
service fees
agreements [(3)]
Property owners’
associations [(1)] Property owners
Establish property owners’
associations
----- End of picture text -----

Notes:

(1) A property owners’ association is authorized under PRC laws to act on behalf of the property owners.
(2) A preliminary property management service agreement entered into between a property developer and us before the property is delivered to property owners is legally binding on all future property owners in accordance with the relevant PRC laws and regulations.
(3) A property management service agreement entered into between a property owners’ association and us is legally binding on all property owners in accordance with the relevant PRC laws and regulations.

Key Terms of Agreements with Property Developers

Our preliminary property management service agreements with property developers typically include the following key terms.

Scope of services . A typical agreement with a property developer sets out the scope of services, which typically includes the formulation of property management policies and protocols, facility management, security, cleaning, greening and gardening and maintaining common area traffic order and road conditions.
Performance standards . The agreement sets forth specific standards and frequency for our main services, as well as the number of staff for each service.
Property management fees . The agreement sets forth the amount of property management fees and the GFA covered, as well as whether the fee is payable on a lump sum or commission basis. The property developer is responsible for paying the property management fees for unsold property units, which typically begin to accrue upon the execution of the property management service agreement and delivery of

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the relevant unit to a property purchaser. We also charge a late fee for overdue property management fees, which is typically a percentage of the overdue amount. For properties with carparks, we also set out our fee rate for each carpark space per month.

Property developer’s rights and obligations . The property developer is entitled to (i) supervise our services according to the standards included in the agreement; and (ii) review and approve property management service plans and management policies. The property developer is typically responsible for (i) offering us the necessary office space to carry out our services; (ii) cooperating with our work; (iii) informing property owners and residents of their obligations to pay property management fees and follow property management policies; (iv) handling certain repair and maintenance obligations; and (v) offering records, blueprints and other documents and materials as necessary.
Our rights and obligations . We are entitled to receive property management fees according to the relevant provisions in the agreement. We are responsible for (i) providing the services included in the agreement; (ii) cooperating with the supervision by property developers; (iii) monitoring property use; (iv) publicly disclosing collection and spending of public maintenance funds; and (v) offering relevant records and materials as necessary.
Term of service . The agreement typically expires after the property owners’ association is established.
Dispute resolution . Parties are typically required to resolve any contractual dispute through negotiations first, failing which the dispute is to be resolved through court proceedings.

After delivery of the properties by property developers, property owners may form and operate property owners’ associations. For properties where we have entered into property management service agreements with property developers without fixed terms, property owners and residents are obligated to pay property management fees to us until the property owners’ associations enter into new property management service agreements with the property management companies selected by the general meetings of the property owners and the new agreements become effective. For agreements with fixed terms that expire prior to the formation of property owners’ associations, the property developer is responsible for renewing the agreements with us or selecting a new property management company. If, upon the expiration of a preliminary property management service agreement, the property owners’ association has not been formed or a new property management service agreement has not been entered into between the property owners’ association and us, (i) the preliminary property management service agreement will be renewed automatically until a new property management service agreement with the property owners’ association is entered into if there is applicable provision in the preliminary property management service agreement to that effect;

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or (ii) the property developers and us may choose to extend the services absent any automatic renewal provision in the preliminary property management service agreement, in which event a new property management service agreement will be entered into between the property developer and us.

As of June 30, 2020, 29 residential properties under our management established property owners’ associations, which accounted for approximately 4.1% of the total number of residential properties under our management. Such property owners’ associations had not requested to replace us with other property management companies as of the Latest Practicable Date. The property owners’ associations are independent from us.

Key Terms of Agreements with Property Owners

Our property management service agreements with property owners’ associations and property owners typically include the following key terms.

Scope of services . The agreement sets forth our scope of services, which typically includes property management services to common areas and facilities, such as security, cleaning, greening and gardening, managing common area traffic and parking, repairing and maintaining public facilities, managing the carparks, setting up community activities, and recordkeeping. We may outsource certain services to qualified subcontractors.
Performance standards. The agreement sets forth specific standards, staffing requirements and frequency for our main services.
Property management fees. The agreement sets forth the amount, basis (lump sum or commission) and calculation method of property management fees. The amount of property management fees for each period is dependent on the GFA occupied by property owners and residents, as well as property types. The agreement also includes a fee schedule for additional services beyond the scope of services mentioned above, such as parking space management services, which property owners may select based on their needs. We may impose surcharges on property owners or residents who fail to pay property management fees on time.
Rights and obligations of property owners’ associations. The property owners’ association has the right to (i) renew agreements with us or terminate us for cause; (ii) supervise the use of public funds and the management of common areas and public facilities; and (iii) review our annual budget and property management plans. Under the supervision of property owners, property owners’ associations are responsible for (i) ensuring timely payment of property management fees and contributions to specialized repair funds; (ii) cooperating with our property management services; (iii) keeping necessary records; and (iv) offering us office space to carry out our work.

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Our rights and obligations . We are entitled to timely collection of property management fees as provided in the agreement. We are in turn responsible for offering services provided in the agreement pursuant to the relevant service standards. We are also responsible for recordkeeping, managing use of properties by occupants, and announcing major information such as collection and spending of fees.
Terms and termination . The agreement term is typically two to ten years from the date of signing. If property owners’ association decides not to renew the agreement, it is typically responsible for delivering three-month notices. We may be responsible for transitioning the property management work to our successor. The property owners’ association and we both have the right to terminate the agreement prior to the expiration of the agreement term for causes listed in the agreement. Such causes typically include our failure to offer satisfactory services pursuant to the service standards included in the agreements, or property owners’ association’s failure to cooperate with our work which led to our economic losses.
Dispute resolution . Parties are required to resolve any contractual dispute through negotiations first, failing which the dispute is to be resolved through court proceedings.

According to relevant PRC laws and regulations, the property owners’ association is elected by property owners, and represents their interests in matters concerning property management. The property owners’ association’s decisions are binding on all property owners. As advised by our PRC Legal Advisors, the agreements between property owners’ associations and property management companies are valid and legally binding on property owners represented by property owners’ association, even if the property owners are not themselves parties to such agreement. As a result, we have legal claims against property owners for accrued and outstanding property management fees.

Key Terms of Property Management Service Agreements for Non-residential Properties

We enter into property management service agreements with customers such as property owners and property developers for the management of non-residential properties. Our property management service agreements for non-residential properties typically include key terms which largely track the terms contained in property management service agreements in residential properties under our management, such as scope of services, performance standards, property management fees, the parties’ respective rights and obligations, terms of service and dispute resolutions.

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Property Management Fees

We primarily charge property management fees on a lump sum basis where we act as the principal provider of property management services, and recognize the entire amount received or receivable from property developers, property owners and residents as our revenue, and all related costs as cost of sales, over the service period. Our revenue from property management fees charged on a lump sum basis accounted for approximately 99.3%, 99.4%, 99.5%, 99.5% and 99.6% of our revenue from property management services in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively.

The following table sets forth a breakdown of our total GFA under management as of the dates indicated, and revenue from property management services by revenue model during the years/periods indicated, both in absolute amount and as a percentage of revenue from property management services.

As	As	of/for theyear ended December 31,	of/for theyear ended December 31,	of/for theyear ended December 31,	of/for theyear ended December 31,	As of/for the six months ended June 30, 2020	As of/for the six months ended June 30, 2020
2017		2018		2019
GFA under management	Revenue	GFA under management	Revenue	GFA under management	Revenue	GFA under management	Revenue
(sq.m.’000) 135,165 3,183	(RMB’000) (%) 2,520,325 99.3 18,067 0.7 2,538,392 100.0	(sq.m.’000) 181,382 4,026	(RMB’000) (%) 3,443,694 99.4 20,696 0.6 3,464,390 100.0	(sq.m.’000) 232,727 5,128	(RMB’000) (%) 4,586,951 99.5 25,261 0.5 4,612,212 100.0	(sq.m.’000) 248,759 5,260	(RMB’000) (%) 2,813,356 99.6 10,905 0.4 2,824,261 100.0
138,348		185,408		237,855		254,019

We take into account a number of factors in determining whether to charge property management fees on a lump sum basis or a commission basis, including type of properties, local regulations, requirements of property developers or property owners’ associations, local market conditions, and the nature and requirements of individual properties, on a case by case basis. We assess our prospective customers and evaluate key factors such as the estimated costs of managing the properties, historical fee collection rates and projected profitability.

Lump Sum Basis

Under the lump sum basis, we charge a predetermined property management fee per sq.m. of GFA under management on a regular basis which represents an all-inclusive fee for all property management services provided by us and our subcontractors. We are entitled to retain the full amount of property management fees received from property developers, property owners and residents. We also bear property management service costs, which we recognize as our cost of sales. If the property management fees we charge during the term of a property management service agreements are not sufficient to cover all the costs incurred, we bear the loss and may not request property developers, property owners or residents to pay us the shortfall.

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In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, we incurred losses of RMB114.8 million, RMB112.3 million, RMB59.0 million, RMB34.8 million and RMB14.4 million, respectively, with respect to 96, 84, 48, 50 and 24 properties under our management, respectively. Such losses were primarily as the amount of property management fees we received was insufficient to cover the service costs incurred to offer quality property management services. We plan to turn around our operations in relation to these properties by (i) actively communicating with the relevant property developers or property owners’ associations to renegotiate our fee rates upon renewal of the relevant property management service agreements; (ii) further streamlining our business operations and improve the efficiency of our employees leveraging economies of scale as well as our various information systems; and (iii) promoting community value-added services in those properties, which typically generates higher profit margins than property management services. Our revenue from property management services from such loss-making properties was approximately RMB573.7 million, RMB501.8 million, RMB227.4 million, RMB120.1 million and RMB45.1 million in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively, representing 13.0%, 8.5%, 3.1%, 3.5% and 1.0% of our total revenue for the same periods, respectively. See “Risk Factors—Risks Relating to Our Business and Industry—We may be subject to losses and our profit margins may decrease if we fail to control our costs in rendering our property management services on a lump sum basis.”

Commission Basis

During the Track Record Period, we derived revenue from a limited number of property management service agreements on a commission basis. Revenue from property management services derived on a commission basis represented 0.7%, 0.6%, 0.5%, 0.5% and 0.4% of our revenue from property management services in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively. We recognize a predetermined property management commission fee, generally representing 8% to 10% of the property management fees, as revenue, while the remainder serves as working capital to cover the property management costs and expenses incurred by the property. We coordinate various property management services. We typically adopt the commission basis for non-residential properties, especially cultural tourism projects and industrial parks under our management.

Management office of each property typically uses our finance department to collect and make property management service related payments. If the working capital balance of a property is insufficient to cover costs and expenses incurred, the shortfall is recognized as trade receivable subject to impairment. See “Risk Factors—Risks relating to Our Business and Industry—We may fail to recover all payments made on behalf of property owners and residents of the properties managed on a commission basis.” When the ending balance after paying for all property management service costs and expenses is positive, the balance is carried over to the next year. We do not have any claim to such balance besides our predetermined commission, nor do we recognize any cost of sales under commission basis in general.

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Our Pricing Policy

We generally price our services based on a number of factors, including (i) the types, sizes and locations of the properties; (ii) the scope and quality of our services; (iii) our estimated costs and expenses; (iv) our target profit margins; (v) the profiles of property owners and residents; (vi) the local government’s guidance price on property management fees (where applicable); and (vii) the maximum pricing of comparable properties. Under the property management service agreements, we may raise property management fees upon renewal of the agreements after negotiations with property owners and residents.

The relevant price administration department and construction administration department of the State Council are jointly responsible for supervising property management fees and issuing relevant guidance. See “Regulatory Overview—Legal Supervision Over Property Management Services—Fees Charged by Property Management Enterprises.”

The following table sets forth the average property management fee per sq.m. of the properties under our management by developer type for the years indicated.

Residential properties The Evergrande Group(1) . . . . . . . . . . Joint ventures and associates of the Evergrande Group(2) . . . . . . . . . . . . Independent third-party property developers(3) . . . . . . . . . . . . . . . . . Overall average property management fee for residential properties . . . . . . . Non-residential properties Overall average property management fee for non-residential properties . . . . Overall average property management fee . . . . . . . . . . . . . . . .	For the year ended December 31, For the six months ended June 30, 2017 2018 2019 2019 2020 (RMB per sq.m. per month) 2.02 2.11 2.13 2.13 2.18 2.66 2.83 2.97 2.93 2.57 2.16 2.31 2.32 2.28 2.52 2.02 2.11 2.14 2.14 2.19 5.05 5.18 6.11 5.84 5.94 2.05 2.14 2.18 2.17 2.22	For the six months ended June 30,	For the six months ended June 30,
	2017 2.02 2.66 2.16 2.02 5.05 2.05		2020
			2.18 2.57 2.52 2.19 5.94 2.22

Notes:

(1) Refers to properties solely developed by the Evergrande Group or jointly developed by the Evergrande Group and independent third-party property developers in which project the Evergrande Group held a controlling interest.
(2) Refers to properties jointly developed by the Evergrande Group and independent third-party property developers in which the Evergrande Group did not hold a controlling interest.
(3) Refers to properties developed solely by independent third-party property developers.

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We only had a limited number of residential properties under management that were developed by joint ventures and associates of the Evergrande Group and independent third-party property developers during the Track Record Period. The average property management fees of residential properties developed by joint ventures and associates of the Evergrande Group were higher than those of residential properties developed by the Evergrande Group and independent third-party property developers during the Track Record Period, mainly because residential properties developed by joint ventures and associates of the Evergrande Group were relatively new and high-end properties primarily located in provincial capitals and major regional cities such as Shenyang, Hohhot, Chengdu and Dalian. The monthly property management service fees for residential properties developed by independent third-party property developers were higher than those for residential properties developed by the Evergrande Group during the Track Record Period, primarily because residential properties developed by independent third-party property developers were mainly located in tier-one and tier-two cities while residential properties developed by the Evergrande Group cover a wide range of cities across different tiers of cities in China.

Our average property management fees for non-residential properties increased from RMB5.18 per sq.m. in 2018 to RMB6.11 per sq.m. in 2019, primarily due to the increased proportion of high-end commercial properties under our management with relatively higher average property management fees, such as Shijiazhuang Evergrande Center (石家莊恒大中心), a high-end office building, and Ningbo Evergrande City Light (寧波恒大城市之光), a high-end commercial complex.

Payment and Credit Terms

Property management fees are generally due in advance on a monthly, quarterly or annual basis in accordance with the agreement provisions. For property management fees charged on a lump sum basis, property owners and residents pay us a fixed amount, and we retain the surplus and bear the losses after paying necessary operating costs and expenses. For property management fees charged on a commission basis, any surplus in working capital at the end of the year is carried over to the next year, and any shortfalls in working capital are to be recovered from property owners and residents, with each property owner and resident’s share of the shortfall generally proportional to the property owner and resident’s share of the total GFA under management.

We issue demand notes to property owners and/or property developers prior to payment due dates, and typically receive payments of our property management service fees after the issuance of the demand note, which, according to CIA, is consistent with the property management industry norm in the PRC.

We primarily accept payments for property management fees through bank transfers, online payment platforms and cash. We adopt different collection approaches, such as making phone calls, sending text messages, paying in-person visits, issuing legal collection letters and filing lawsuits.

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Expiration Schedule of Property Management Service Agreements

The following table sets forth the expiration schedule of our property management service agreements as of June 30, 2020.

Property management service agreements without fixed term(1) . . . . . . . . . . . . . . . . . Property management service agreements expiring in . . . . . . . . . . . . . . . . . . . . . . . . Year ending December 31, 2020 . . . . . . . . . . . . Year ending December 31, 2021 . . . . . . . . . . . . Years ending December 31, 2022 and beyond . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Contracted	GFA % 92.4 0.6 1.6 5.4 7.6 100.0	Number of agreements	Number of agreements
	(sq.m. in thousands) 474,248 3,137 7,992 27,933 39,062 513,310		1,275 13 27 123 163 1,438	% 88.7 0.9 1.9 8.5 11.3
				100.0

Notes:

(1) Includes preliminary property management service agreements we entered into with property developers. Such agreements can be terminated when the property owners’ associations are formed and decide to select other property management companies.

The following table sets forth movements of our contracted GFA and GFA under management during the periods indicated.

For the year ended December 31, 2017 2018 2019 Contracted GFA GFA under management Contracted GFA GFA under management Contracted GFA GFA under management (sq.m. in thousands) 240,832 90,790 326,694 138,348 422,540 185,408 85,862 47,558 95,905 47,119 82,475 52,340 – – – – 124 124 – – 59 59 17 17 326,694 138,348 422,540 185,408 505,122 237,855	For the year ended December 31, 2017 2018 2019 Contracted GFA GFA under management Contracted GFA GFA under management Contracted GFA GFA under management (sq.m. in thousands) 240,832 90,790 326,694 138,348 422,540 185,408 85,862 47,558 95,905 47,119 82,475 52,340 – – – – 124 124 – – 59 59 17 17 326,694 138,348 422,540 185,408 505,122 237,855	For the six months ended June 30, 2020	For the six months ended June 30, 2020
2017 Contracted GFA GFA under management 240,832 90,790 85,862 47,558 – – – – 326,694 138,348
Contracted GFA 240,832 85,862 – – 326,694	Contracted GFA 326,694 95,905 – 59 422,540	Contracted GFA 505,122 8,188 – – 513,310	GFA under management
			237,855 16,164 – –
			254,019

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Notes:

(1) Primarily includes (i) preliminary property management service agreements entered into with property developers for new properties; and (ii) property management service agreements for residential properties that replaced their previous property management companies. The renewed agreements are not regarded as new engagements entered into during such year. The newly engaged GFA under management includes the newly delivered GFA we contracted in prior years.
(2) Refers to new GFA we obtained through our acquisitions of other property management companies.
(3) Primarily arose out of non-renewal of certain property management service agreements, reflecting our reallocation of resources to more profitable engagements in an effort to optimize our property management portfolio.

During the Track Record Period, our agreement retention rates remained relatively favorable, which we believe reflects on our capabilities in offering quality property management services. During the Track Record Period, we terminated two property management service agreements due to our own commercial considerations prior to the expirations of the relevant property management service agreements, and none of our property management service agreements was terminated or not renewed upon expiration by property owners’ associations or property owners. In 2017, 2018, 2019 and the six months ended June 30, 2020, our property management service agreement retention rate (being the number of property management service agreements effective at the end of a year divided by the number of property management service agreements that existed during the same year) was 100.0%, 99.8%, 99.9% and 100.0%, respectively.

VALUE-ADDED SERVICES TO NON-PROPERTY OWNERS

Our value-added services to non-property owners include (i) preliminary property management services; (ii) pre-delivery services; (iii) repair and maintenance services; and (iv) property transaction assistance services. The following table sets forth a breakdown of our revenue from value-added services to non-property owners for the years/periods indicated, both in absolute amount and as a percentage of our revenue from value-added services to non-property owners.

Preliminary property management services . . Pre-delivery services . . . Repair and maintenance services . . . . . . . . . Property transaction assistance services . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 1,597,021 99.2 1,906,198 90.6 1,605,862 74.8 – 0.0 176,789 8.4 463,586 21.6 9,158 0.6 13,633 0.7 6,570 0.3 3,686 0.2 6,811 0.3 71,509 3.3 1,609,865 100.0 2,103,431 100.0 2,147,527 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 1,597,021 99.2 1,906,198 90.6 1,605,862 74.8 – 0.0 176,789 8.4 463,586 21.6 9,158 0.6 13,633 0.7 6,570 0.3 3,686 0.2 6,811 0.3 71,509 3.3 1,609,865 100.0 2,103,431 100.0 2,147,527 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 1,597,021 99.2 – 0.0 9,158 0.6 3,686 0.2 1,609,865 100.0	2018 (RMB’000) (%) 1,906,198 90.6 176,789 8.4 13,633 0.7 6,811 0.3 2,103,431 100.0	2019 (RMB’000) (%) (unaudited) 790,724 74.9 233,385 22.1 4,677 0.4 27,283 2.6 1,056,069 100.0	2020
				(RMB’000) (%) 710,944 57.7 312,753 25.4 159,435 13.0 48,348 3.9 1,231,480 100.0

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Preliminary Property Management Services

Construction Site Management Services

We manage the construction sites of our property developer customers by patrolling the construction sites and managing the security and orderliness of the construction sites. We typically charge service fees based on the amount of services provided.

Sales Office Management Services

We offer property management services to sales offices and show flats of property developers, such as security services, cleaning services and visitor reception. We do not participate in the sales transactions of our customers.

We typically charge property developers a fixed service fee on a cost-plus basis. As of June 30, 2020, we managed a total of 803 sales offices with a total GFA under management of 9.9 million sq.m.

Consulting Services

We offer various planning and design consulting services which address property developers’ needs at different stages of their business operations from a property management perspective. For example, we advise on the design and positioning of property entrances, security technologies, equipment rooms, intelligent equipment, parking spaces for motor and non-motor vehicles and property management offices. We review construction blueprints and advise on building structure, related electricity, water and heating infrastructure, fire safety, home furnishing and decorations, and landscaping. We offer selection and maintenance services over property management equipment, such as central air conditioning, elevators, electricity equipment, energy management equipment, among others. We also provide training on equipment repair and maintenance, cost estimations, energy conservation, and emergency responses, among other areas. We typically charge our customers on a cost-plus basis.

Pre-delivery Services

We offer a series of services to property developers before they deliver completed properties to property owners, including pre-delivery property cleaning and property inspection. Property developers request our inspections after construction is complete. After our initial round of inspections, we provide feedback to property developers in relation to properties that need further work, and conduct follow-up inspections until such properties meet our delivery standards. On the date of property delivery to property owners, we accompany property owners and record their feedback and complaints on the property. We typically charge pre-delivery service fees on a per sq.m. basis.

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Repair and Maintenance Services

We assist with the repair and maintenance of properties during their post-delivery quality warranty periods. We receive requests from property owners and residents for repair and maintenance services through our customer service hotline, our Evergrande Smart Community mobile application and in-person visits. After recording such requests, we dispatch relevant personnel onsite to evaluate the situation and formulate solutions. We then liaise with construction companies to provide the requested services. Under certain circumstances, such as when the construction companies fail to provide the requested services in a timely manner, we may step in and provide the services directly. We charge service fees based on the amount of services provided. In the future, we may consider entering into agreements directly with the construction companies to provide repair and maintenance services on their behalf during the post-delivery warranty periods of properties, and charge service fees on a lump sum basis. We believe this new model would allow us to have more control over the process and respond to property owners and residents’ requests in a more timely and effective manner, thereby improving user experience and customer satisfaction.

Property Transaction Assistance Services

We assist property developers in selling parking spaces in exchange for service fees calculated as a pre-agreed percentage of the transaction value. We also assist property developers in renting out other unsold properties, and charge a fee calculated as a pre-agreed percentage of the monthly rent of the relevant property.

COMMUNITY VALUE-ADDED SERVICES

We offer community value-added services to property owners and residents, including (i) community operations services; (ii) community asset management services; and (iii) community living services. The following table sets forth a breakdown of our revenue from community value-added services during the years/periods indicated, both in absolute amount and as a percentage of revenue from community value-added services.

We believe our quality community value-added services help improve the living experience and environment of property owners and residents of properties under our management, leading to higher overall customer satisfactions.

Community operations services . . . . . . . . . Community asset management . . . . . . . Community living services . . . . . . . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 25,675 10.2 36,657 10.9 202,239 35.3 174,317 69.4 234,034 69.8 302,846 52.9 51,107 20.4 64,714 19.3 67,898 11.8 251,099 100.0 335,405 100.0 572,983 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 25,675 10.2 36,657 10.9 202,239 35.3 174,317 69.4 234,034 69.8 302,846 52.9 51,107 20.4 64,714 19.3 67,898 11.8 251,099 100.0 335,405 100.0 572,983 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 25,675 10.2 174,317 69.4 51,107 20.4 251,099 100.0	2018 (RMB’000) (%) 36,657 10.9 234,034 69.8 64,714 19.3 335,405 100.0	2019 (RMB’000) (%) (unaudited) 96,177 37.7 135,967 53.3 22,864 9.0 255,008 100.0	2020
				(RMB’000) (%) 305,757 60.2 165,975 32.7 36,382 7.1 508,114 100.0

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Community Operations Services

We offer a wide range of community operations services leveraging the common spaces of properties under our management for the benefits of property owners and residents, such as (i) community space management services; (ii) group purchase facilitation services; and (iii) others.

Community Space Management Services

We assist property owners in renting out leasable facilities in the common areas of properties under our management to third-party vendors seeking a place to operate or promote their businesses, and charge a percentage of the rental proceeds as our service fees. We also provide certain onsite services to promote and facilitate such third-party vendors’ businesses in exchange for service fees, such as facilitating their promotional events and equipment maintenance in the properties we manage.

Group Purchase Facilitation

We offer property owners and residents group purchase facilitation services where we facilitate the purchase and sale of agricultural products and other popular merchandise by connecting property owners and residents of properties under our management with vendors of such products. We charge a commission and promotional service fee from the vendors.

Others

We cooperate with third parties to offer electric vehicle charging stations and allow property owners and residents to charge their electric vehicle including electric bicycles and electric cars. We also cooperate with an independent third-party vendor to offer potable water stations where property owners can purchase drinking water. We charge fees in line with the prevailing market prices.

Community Asset Management

Parking Space Rental Services

We lease parking spaces from property developers and sublease such spaces to property owners in exchange for monthly rental fees. We also charge temporary parking fees for customers who did not sublease parking spaces from us based on the length of parking.

Second-hand Property Transaction Assistance Services

We assist property owners in selling and renting out their properties, and charge service fees. We offer second-hand property transaction assistance services primarily in cooperation with third-party real estate agencies where we communicate with property owners seeking to sell or rent out their properties, collect and record their information, and coordinate open house events with third-party real estate agencies, charging a percentage of the sales proceeds as our fees.

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Recreation Center Operations Services

We operate recreation centers mainly located in properties under our management. These centers are primarily open to property owners and residents to satisfy their sports and recreational needs, and typically include facilities such as heated swimming pools, billiard tables, basketball courts, tennis courts, table tennis courts, squash courts, gyms, children’s activity centers, restaurants, bars, tea rooms, and activity rooms for music, dance, art, chess and cards, among others. We typically charge a percentage of the revenue of these centers as our service fees.

Community Living Services

We offer certain household services to property owners to improve their household living experience and charge fixed service fees based on the amount of services rendered, such as housekeeping, home furnishing, repair and maintenance of home appliances, furniture and other in-unit facilities, among others. We also cooperate with third-party service providers to provide home appliance repair and maintenance services, and charge a percentage of the service fees paid to such third-party service providers by property owners as our commission.

RELATIONSHIP WITH THE EVERGRANDE GROUP

Overview

We have a long and close working relationship with the Evergrande Group. We started our business in 1997 by providing property management services to properties developed by the Evergrande Group. As the Evergrande Group started to develop commercial properties, we began managing commercial properties in 2013. During the Track Record Period, we provided property management services to substantially all of the properties developed by the Evergrande Group or its joint ventures and associates. The Evergrande Group was our largest customer during the Track Record Period. According to CIA, it is industry practice for property management companies to have a close business relationship with their affiliated property developer, or their ultimate controlling shareholder.

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Given our long and close relationship with the Evergrande Group, we are familiar with its specific requirements and expected deliverables. We have always provided quality services, which help enhance the brand image of the Evergrande Group and the value of their property development projects. Our Directors are of the view that our relationship with the Evergrande Group is mutually beneficial.

Having considered (i) our long standing cooperation relationship with the Evergrande Group; (ii) our familiarity with the Evergrande Group’s requirements and our capability to provide quality services; and (iii) the mutual benefits for both the Evergrande Group and us to maintain such reciprocal relationship, our Directors are of the view that the current relationship between the Evergrande Group and us is unlikely to be materially adversely changed or terminated. See “Relationship with Controlling Shareholders—Our Relationship with the Evergrande Group.” We expect to continue to provide services to the Evergrande Group and derive revenue therefrom.

We strive to expand our operations by developing business opportunities with Independent Third Parties. During the Track Record Period, revenue from Independent Third Parties as a percentage of our total revenue experienced continuous increases from 55.8% in 2017 to 57.2% in 2018, and further to 62.5% in 2019, and from 61.3% in the six months ended June 30, 2019 to 64.1% in the six months ended June 30, 2020. The following table sets forth a breakdown of our revenue by type of customers for the periods indicated.

	For the year ended December 31,	For the year ended December 31,	For the year ended December 31,	For the year ended December 31,	For the six months ended June	For the six months ended June	30,
2017	(%) 55.8 44.0 0.2 100.0	2018	(%) 57.2 41.3 1.5 100.0	2019	2019 (RMB’000) (%) (unaudited) 2,116,248 61.0 1,316,549 38.0 32,963 1.0 3,465,760 100.0	2020
(RMB’000) 2,456,051 1,935,397 7,908 4,399,356		(RMB’000) 3,377,445 2,439,682 86,099 5,903,226		(RMB’000) 4,586,862 2,658,346 87,514 7,332,722		(RMB’000) 2,926,245 1,597,434 40,176 4,563,855	(%) 64.1 35.0 0.9
							100.0

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Services Provided to the Evergrande Group

Property Management Services

During the Track Record Period, we provided property management services to properties developed by the Evergrande Group. See “—Property Management Services.” The following table sets forth a breakdown of our total GFA under management by developer type as of the dates indicated, as well as revenue from property management services by developer type for the periods indicated, both in absolute amount and as a percentage of revenue from property management services.

	As of/for theyear ended December 31,	As of/for theyear ended December 31,	As of/for theyear ended December 31,	As of/for theyear ended December 31,		As of/for the six months ended June 30, 2020	As of/for the six months ended June 30, 2020
	2017		2018		2019
GFA under management	Revenue	GFA under management	Revenue	GFA under management	Revenue	GFA under management	Revenue
(sq.m.’000) 137,836 312 200	(RMB’000) (%) 2,532,597 99.8 1,699 0.1 4,096 0.1 2,538,392 100.0	(sq.m.’000) 183,121 1,886 401	(RMB’000) (%) 3,425,456 98.9 33,099 1.0 5,835 0.1 3,464,390 100.0	(sq.m.’000) 233,969 3,064 822	(RMB’000) (%) 4,538,996 98.4 58,589 1.3 14,627 0.3 4,612,212 100.0	(sq.m.’000) 251,339 1,656 1,024	(RMB’000) (%) 2,790,733 98.8 20,067 0.7 13,461 0.5 2,824,261 100.0
138,348		185,408		237,855		254,019

Notes:

(1) Refers to properties solely developed by the Evergrande Group or jointly developed by the Evergrande Group and independent third-party property developers in which project the Evergrande Group held a controlling interest.
(2) Refers to properties jointly developed by the Evergrande Group and independent third-party property developers in which the Evergrande Group did not hold a controlling interest.
(3) Refers to properties developed solely by independent third-party property developers.

Value-added Services to Non-property Owners

In addition to property management services, we also provide value-added services to the Evergrande Group, including (i) sales office management services; (ii) preliminary consulting services; (iii) pre-delivery services; (iv) after-sales services; and (v) property transaction assistance services. See “—Value-added Services to Non-property Owners.”

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Purchases from the Evergrande Group

We purchase certain materials and services from the Evergrande Group, primarily including (i) maintenance materials and parts; (ii) office and communication equipment; (iii) staff uniforms and other consumables; and (iv) gardening services.

Our Efforts to Explore Market Opportunities with Independent Third Parties

We began proactively sourcing projects from independent third-party property developers since 2019. As of June 30, 2020, the GFA under management of properties developed by independent third-party property developers was 1.0 million sq.m.

We are one of the leading comprehensive property management service providers in the PRC with more than 20 years of experience in providing property management services. We were ranked 5th among the Top 100 Property Management Companies in China by CIA in 2020 and 5th among the 2019 Top 500 Property Management Companies (2019物業服務企業綜合實力500強) by China Property Management Institute (中國物業管理協會) and China Real Estate Appraisal Center of Shanghai E-House Real Estate Research Institute (“上海易居房地產研究院中國房地產測評中心”) in 2019. Over the years, we have gained extensive experience, reputation and competitive advantages to secure property management service agreements from independent third-party property developers. Benefiting from the quality of our property management services and our brand recognition, we have a proven track record of maintaining a high retention rate of our property management service agreements, which illustrates our ability to operate independently of the Evergrande Group.

In June 2020, we set up an external business development team focusing on developing businesses related to properties developed by independent third-party property developers. The scope of our external business development covers not only residential properties but also non-residential property projects, such as public facilities, commercial properties and industrial properties. When selecting targets for expansion, we primarily focus on (i) the cities in which the properties are located. We give priority to properties located in cities or areas where we already have operations in order to optimize management efficiency and capitalize on economies of scale; (ii) the size, unit property management fee level and collection record of the properties; (iii) in case of acquisitions of property management companies, the financial and operational performance as well as the brand image and creditworthiness of the targets. We direct our regional subsidiaries to conduct preliminary researches on the sizes, business operations, indebtedness, financial condition, and legal compliance statuses of potential acquisition and cooperation targets, and submit research reports for review and approval by our headquarters. If approved, our headquarters will instruct and supervise our regional companies to complete the bidding, contract negotiation and signing, and subsequent ramp-up processes. Subsequent to June 30, 2020 and up to the Latest Practicable Date, we had entered into two property management service agreements for the projects developed by independent third-party

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property developers with an aggregate contracted GFA of 0.5 million sq.m. and five framework property management service agreements for projects developed by independent third-party property developers with a total GFA of 4.4 million sq.m. We plan to continue to leverage our brand image to seek future cooperation opportunities with Independent Third Parties.

In addition, since we set up the external business development team in June 2020, we have initiated a series of acquisitions. As of the Latest Practicable Date, we had entered into agreements to acquire five regional property management companies which had an aggregate GFA under management of 7.72 million sq.m., all developed by independent third-party property developers. On September 4, 2020, we entered into an equity transfer agreement to acquire a 100% equity interest in Nanchang Xinya at a consideration of RMB33.0 million payable in installments. As of September 4, 2020, Nanchang Xinya had a total GFA under management of 1.63 million sq.m. On September 5, 2020, we entered into an equity transfer agreement to acquire a 100% equity interest in Chengdu Wellspo at a consideration of RMB39.0 million. As of September 5, 2020, Chengdu Wellspo had a total GFA under management of 1.31 million sq.m. On September 8, 2020, we entered into an equity transfer agreement to acquire a 100% equity interest in Zunyi Zhongxin at a consideration of RMB14.5 million. As of September 8, 2020, Zunyi Zhongxin had a total GFA under management of 1.25 million sq.m. On September 10, 2020, we entered into an equity transfer agreement to acquire a 51% equity interest in Hubei Guanbo at a consideration of RMB12.2 million. As of September 10, 2020, Hubei Guanbo had a total GFA under management of 2.0 million sq.m. On September 10, 2020, we entered into an equity transfer agreement to acquire a 100% equity interest in Yongkang Jiahua at a consideration of RMB20.0 million. As of September 10, 2020, Yongkang Jiahua had a total GFA under management of 1.53 million sq.m. See “Waivers from Strict Compliance with the Listing Rules—Equity Interests Acquired after the Track Record Period.” We expect to complete these acquisitions in October 2020, subject to satisfaction of conditions precedent pursuant to the relevant acquisition agreements. As these companies over which we have entered into equity transfer agreements primarily provide property management services to properties developed by independent third-party property developers, we expect that the acquisitions will help further expand our property management service portfolio and enlarge our customer base especially with respect to independent third-party property developers.

EFFECT OF THE COVID-19 PANDEMIC

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Effects of the COVID-19 Pandemic on Our Business Operations

According to CIA, the PRC property management industry is under pressure in the short term as property management companies are required to suspend certain services and incur additional costs to comply with additional regulations and government measures. In particular, our following services have experienced certain short-term impacts as a result of the COVID-19 pandemic.

Property management services. To comply with government regulations and measures to combat the COVID-19 pandemic, we assigned additional staff and incurred additional medical material costs, which affected the short-term financial performance of our property management services. The outbreak of COVID-19 pandemic also resulted in the slower collection of property management fees in the first half of 2020.
Sales office management services . Certain of the sales offices and show flats we managed suspended operations after the outbreak of the COVID-19 pandemic as a result of government requirements, decrease in demand, and changes in property developers’ business plans.
Recreation center operations services. A majority of recreation centers located in properties under our management were closed for extended periods of time during the first half of 2020. Because we charge a percentage of the revenue from these centers as our service fees, our financial performance was also negatively affected.
Community space management services . During the COVID-19 pandemic, due to lock-down measures in place in many properties under our management, our ability to rent out community spaces was negatively affected.

Since the outbreak of the COVID-19 pandemic and up to the Latest Practicable Date, we had not encountered any material disruption to the services provided by our subcontractors and utilities service providers and the supply of materials from our suppliers. Our Directors consider that while the supply chains in all industries will be affected to a certain extent by the COVID-19 pandemic, particularly due to the prolonged suspension of business operations and the instability of a workforce arising from the mandatory quarantine requirements, in view of the nature of our business, our Directors do not expect that we will encounter any material disruptions of our supply chain given that we do not rely on any particular service subcontractors or material suppliers and there are many other subcontractors and suppliers in the market as back-up. In view of the foregoing, our Directors believe that we can continue to provide our services and discharge our obligations under existing contracts.

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To the best knowledge of our Directors after consulting China Evergrande Group, we do not anticipate there will be any material delay in sales, construction and delivery of the properties developed by the Evergrande Group, joint ventures and associates of the Evergrande Group and independent third-party property developers for our management as scheduled. We were informed by China Evergrande Group that while the Evergrande Group anticipated certain delay in certain stages of its overall property development progress as a result of the business suspension imposed by the PRC Government in curbing the COVID-19 pandemic, the Evergrande Group expected that it has sufficient resources, capability and capacity to catch up with the process of developments and did not anticipate significant delay in completing the developments of the aforesaid properties. After consulting with China Evergrande Group, our Directors are of the view that nothing has come to their attention which would suggest otherwise. Accordingly, we believe such delay would not be significant and will unlikely have material adverse impact on our financial condition.

In the long term, however, the COVID-19 pandemic is expected to bring about positive changes to the property management industry. During the fight against the COVID-19 pandemic, property management companies played a significant role, serving as a bridge among the government, community workers and residents. We believe our efforts to control the outbreak has earned us higher degrees of trust and reliance from property owners and residents at properties under our management. The lockdown measures imposed in many regions have also led to residents’ increasing reliance on community value-added services to address their daily living needs, which we believe presents us significant opportunities to expand our related service offerings. We also expect that new government regulations on property management industry may be promulgated from time to time, which offers us a higher degree of regulatory certainty in our long-term business operations. Based on the above, our Directors are of the view that no material adverse effect on our operations and financial performance is expected to result from the recent COVID-19 pandemic.

Our Response to the COVID-19 Pandemic

In response to the COVID-19 pandemic, we have adopted the following hygiene and precautionary measures across the properties under our management since late January 2020.

Communications with the relevant government authorities. We have been closely following the latest regulatory measures on combatting the COVID-19 pandemic in terms of checking the health status of property owners and our employees, and timely reporting potential issues to the relevant authorities.
Entrance management. We verify the identities of all people and vehicles entering properties under our management, and check the body temperature of every person that pass through our gates.

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Activity suspension. We suspended various playgrounds and recreation centers and other facilities under our management, and cancelled various community cultural events to reduce gathering of people.
Disinfection. We spray disinfectants in public facilities, building corridors, elevators and other public spaces under our management at least twice a day.
Garbage disposal. We timely remove and transport garbage away from properties under our management, and designate specialized collection and disposal sites for used masks, gloves and other potentially hazardous materials.
Property owner education. We actively inform property owners through WeChat groups and community posters regarding the latest policies and measures on the COVID-19 pandemic as well as our plans as a property management service providers.

We estimate that the additional costs for implementing these enhanced measures, after taking into account the medical and cleaning supplies distributed by local governments, will be approximately RMB10.9 million in 2020. This primarily represents increased staff costs to carry out these measures as well as costs for purchasing protective materials such as face masks, ethanol hand wash, disinfectants, and infrared thermometers. Our Directors confirm that the additional costs associated with the enhanced measures will not have a significant impact on our Group’s financial position or results of operations in 2020.

Effects of the COVID-19 Pandemic on Our Business Strategies

According to CIA, the COVID-19 pandemic is expected to bring about positive changes to the property management industry. We therefore believe that our expansion plan as discussed in “—Business Strategies” is feasible, and we currently expect that it is unlikely that we would change the use of the net proceeds received by our Company from the [ REDACTED ] as disclosed in “Future Plans and Use of Proceeds” in this Document as a result of the COVID-19 pandemic.

SMART INFORMATION PLATFORM

We have implemented a smart information platform leveraging internet and IoT technologies, which we believe enhance our capabilities to improve customer experience, reduce reliance on manual labor, and lower operating costs. Our information systems primarily include (i) our Evergrande Smart Community mobile application; (ii) Evergrande Butler mobile application; (iii) ERP system; and (iv) smart community solutions.

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The following diagram illustrate our smart information platform.

==> picture [349 x 259] intentionally omitted <==

Evergrande Smart Community Mobile Application

We launched our Evergrande Smart Community mobile application in October 2019, and had since attracted over 1.7 million registered users as of August 31, 2020. Currently the application has 26 basic functions and connects users with ten additional functions offered by third parties. These functions primarily include:

Online payment. Users are able to verify their identities by uploading various types of government issued IDs, after which they may pay for various services online instead of physically visiting our offices. In particular, users can monitor the amount of property management fees, carpark related fees and other temporary service fees that are due, past due and paid, and make the relevant payments on the mobile application.
Service request. Users can request various property management services, such as household repair and maintenance services. Users can also track the status of their requests and submit evaluation or complaints.
Community announcements. Users can receive the latest announcements on the mobile application.
Visitor management. Users can apply for guest passes in the form of QR codes, and can set the expiration date and times of entry of the codes on the mobile application. Our security personnel will allow visitors with valid QR codes to enter the properties.

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Third-party services. Users can browse various goods offerings and register their purchase needs. We then redirect users to the relevant vendors for their further transactions with the users. We also redirect users to various third-party service providers in utility payment, household errands, among other services.
The COVID-19 pandemic related functions. Users can access the latest news and local updates on the COVID-19 pandemic, and our responses and measures such as entrance management and online grocery shopping.

According to the Administrative Measures on Internet Information Services (《互聯網信息服務管理辦法》) issued by the State Council which came into effect on September 25, 2000 and was revised on January 8, 2011, internet information services refer to the provision of information to web users through the internet, which can be divided into commercial internet information services and non-commercial internet services. Commercial Internet information services refer to paid services of providing information to or creating web pages for web users through the internet. Non-commercial internet information services refer to free services of providing public, commonly shared information to web users through the internet. Entities engaging in providing commercial internet information services shall apply for a license for value-added telecommunication services of internet information services. As for the operations of non-commercial internet information services, only filings with the relevant authority of the PRC Government are required.

As advised by our PRC Legal Advisors, the business conducted by us is regarded as “non-commercial Internet information services” because we use our Evergrande Smart Community mobile application as a tool to facilitate the provision of our services. We do not generate revenue from matching customers with third-party vendors or paid advertisement services through our mobile application. Therefore, our operations of our Evergrande Smart Community mobile application do not constitute value-added telecommunications services. As of the Latest Practicable Date, we are in the process of making the necessary filings in relation to non-commercial internet information services.

Evergrande Butler Mobile Application

To improve our employees’ work performances, we have launched the Evergrande Butler mobile application, which has covered all of our onsite staff. Our staff can submit their routine work activities for approval, check status of service requests, perform assigned tasks, search customer information, apply for and return materials, respond to customer inquiries, verify visitor identities, among others. We believe our Evergrande Butler helps our staff better manage their work performance and improve their efficiency by enabling our staff to achieve paperless online handling of the above-mentioned tasks.

ERP System

Our ERP system collects and manages data and information on properties and customers in order to avoid inaccuracies in underlying information. Based on such data and information, our ERP system connects cash collection from customers with our financial reporting and invoice systems to ensure accurate and timely financial record. Our ERP system also records customer complaints as well service requests and enables our employees to timely monitor and handle these complaints and requests. Our ERP system provides system support to our

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customer service staff and our Evergrande Butler mobile application. When customers contact us by phone, our ERP system extracts and displays relevant customer information to our service staff, which enable more targeted problem-solving. The system also records each customer phone call, which enable us to monitor the quality of our responses. We also incorporate data about 15 types of over 5,000 pieces of equipment in properties under our management into our ERP system, which allows us to manage the entire cycle of these equipment including purchasing, shelfing, usage, storage, testing, and disposal. We are also able to generate equipment status reports which clearly analyze and illustrate the utilization of various equipment. Below are a few examples of applications of our ERP system.

Parking Management System

Our parking management system handles customer payments of parking related fees and grants entrances to our carparks according to payment status of each vehicle. The system also collects information on vehicle identities, monitors onsite fee collections and entrance management, and generates alerts when abnormalities occur. As of August 31, 2020, we had implemented our parking management system in 544 properties, among which 187 properties supported online payment of parking related fees.

Payment Management System

We have established a payment management system in collaboration with UnionPay, which allows us to monitor and collect cash payments in multiple channels. Such system automates the information input process, enhances the cash collection efficiency, and gives us greater bargaining power with third-party payment service providers in terms of payment processing fees.

Smart Community Solutions

In 2017, we began to roll out a series of smart community initiatives in collaborations with leading external technology companies to develop a series of smart community solutions. Equipped with a wide range of technologies including artificial intelligence, cloud computing, big data, and Internet of Things (IoT) devices, these smart community solutions seek to leverage hardware and software systems to bring convenience, safety and comfort to the lives of property owners and residents.

Smart entrance management. Property owners and residents can expediently verify their identities using facial recognition, QR codes or resident cards and gain access to our properties and buildings without manual checks, which facilitates the smooth flow of people at entrance gates and buildings.
Smart parking system. Carparks equipped with our smart parking system allows users to pay for monthly or temporary parking fees through our Evergrande Smart Community mobile application.
Smart surveillance system. We conduct 24-hour surveillance of the common areas of properties through high-definition digital video surveillance tools, providing realtime footages in our property management offices that allows our personnel to timely respond to abnormal situations inside the properties.

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Others. Our smart community solutions also include systems such as (i) information display system which displays public information such as local events and weather; (ii) broadcasting system which broadcast in targeted areas of properties; and (iii) equipment monitoring system which monitors, reports and handles the status of property alert system, equipment malfunctions and other key incidents in properties under our management.

As of June 30, 2020, we had a team of 20 research and development personnel, most of whom have bachelor’s degrees or above. Our research and development personnel primarily focus on the development, testing, operations, and maintenance of our various abovementioned systems and solutions.

Data Security and Privacy

We have adopted various internal control measures to ensure data security and privacy protection in relation to our internal operational data, as well as external data, such as customer data obtained through our information systems. We have explained the terms and conditions to customers and have also gained their prior consent before collecting their data. We implement strict access control to our physical server rooms and various online applications and systems, and only grant access to employees with legitimate business needs at the appropriate level. All unnecessary access to our database is prohibited. The data and information visible to authorized employees have been anonymized to protect private information. When accessing and editing our database, we record all on-screen activities by our employees to prevent unauthorized operations. In addition, employees can only view private data after logging into our intranet.

SALES AND MARKETING

Our sales and marketing team is primarily responsible for creating and implementing our marketing strategy, conducting market research and organizing our sales and marketing events. Our sales and marketing team also actively communicates with leading property management companies and takes initiative to participate in industry events to learn from the advanced marketing strategy in the industry.

Our sales and marketing team is also responsible for preparing for and participating in tenders to obtain new contracts with third-party property developers and maintain and strengthen our relationships with existing customers. For details on our business expansion with Independent Third Parties, see “—Relationship with the Evergrande Group—Our Efforts to Explore Market Opportunities with Independent Third Parties.”

CUSTOMERS

We have a large, growing and loyal customer base primarily consisting of property owners, residents, third-party providers of home furnishing services and property developers. The following table sets forth the types of our major customers for each of our three business lines.

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Business line Property management services Value-added services to non-property owners Community value-added services	Major customers
	Property owners, residents and property owners’ associations, property developers Property developers Property owners, residents and third-party vendors

In 2017, 2018, 2019 and the six months ended June 30, 2020, revenue from sales to our five largest customers amounted to RMB1,943.0 million, RMB2,460.7 million, RMB2,812.3 million and RMB1,713.7 million, respectively, which accounted for approximately 44.2%, 41.7%, 38.4% and 37.6%, respectively, of our total revenue. During the same periods, revenue from sales to our single largest customer the Evergrande Group amounted to RMB1,935.4 million, RMB2,439.7 million, RMB2,658.3 million and RMB1,597.4 million, respectively, which accounted for approximately 44.0%, 41.3%, 36.3% and 35.0%, respectively, of our total revenue. See “Connected Transactions—(C) Continuing Connected Transactions Subject to the Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements.” We have established ongoing business relationships and cooperation with our largest customer during the Track Record Period, the Evergrande Group, for more than 23 years. The credit terms granted to our five largest customers in 2017, 2018, 2019 and the six months ended June 30, 2020 ranged from 30 to 90 days. We accept payments through bank transfers.

The following tables set out certain details of our five largest customers for the Track Record Period:

Six months ended June 30, 2020

Rank 1. 2.	Customer The Evergrande Group Customer A	Customer Type Property developer Agriculture and animal husbandry	Length of business relationship with us (Year) 23 1	Products/ services provided by us Property management services Product sale	Revenue (RMB in thousands) 1,597,434 77,462	Percentage of total revenue (%) 35.0 1.7	Relationship with us
							Related Party Independent Third Party

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Rank 3. 4. 5.	Customer Customer B Customer C Customer D	Customer Type Food products and edible oil company Beverage company Marketing	Length of business relationship with us (Year) 1 1 1	Products/ services provided by us Product sale Product sale Advertisement and sales office management services	Revenue (RMB in thousands) 15,677 13,666 9,434 1,713,673	Percentage of total revenue (%) 0.3 0.3 0.2 37.6	Relationship with us
							Independent Third Party Independent Third Party Independent Third Party

2019

Rank 1. 2. 3. 4. 5.	Customer The Evergrande Group Customer A Customer B Customer C Customer E	Customer Type Property developer Agriculture and animal husbandry Food products and edible oil company Beverage company Property developer	Length of business relationship with us (Year) 23 1 1 1 6	Products/ services provided by us Property management services Product sale Product sale Product sale Preliminary property management services	Revenue (RMB in thousands) 2,658,346 123,346 13,656 9,290 7,616 2,812,254	Percentage of total revenue (%) 36.3 1.7 0.2 0.1 0.1 38.4	Relationship with us
							Related Party Independent Third Party Independent Third Party Independent Third Party Related Party

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2018

Rank 1. 2. 3. 4. 5.	Customer The Evergrande Group Customer F Customer E Customer H Customer I	Customer Type Property developer Property deverloper Property developer Property developer Property developer	Length of business relationship with us (Year) 23 4 6 4 4	Products/ services provided by us Property management services Preliminary property management services Preliminary property management services Preliminary property management services Preliminary property management services and delivery and acceptance process services	Revenue (RMB in thousands) 2,439,682 6,123 5,193 4,938 4,731 2,460,667	Percentage of total revenue (%) 41.3 0.1 0.1 0.1 0.1 41.7	Relationship with us
							Related Party Related Party Related Party Related Party Related Party

2017

Rank 1. 2. 3. 4. 5.	Customer The Evergrande Group Customer E Customer J Customer K Customer L	Customer Type Property developer Property developer Property developer Property developer Property developer	Length of business relationship with us (Year) 23 6 3 3 3	Products/ services provided by us Property management services Preliminary property management services Preliminary property management services Preliminary property management services Preliminary property management services	Revenue (RMB in thousands) 1,935,397 4,269 1,176 1,146 1,024 1,943,012	Percentage of total revenue (%) 44.0 0.1 0.03 0.03 0.02 44.2	Relationship with us
							Related Party Related Party Independent Third Party Independent Third Party Independent Third Party

As of the Latest Practicable Date, save for disclosed above, none of our Directors, their close associates or any Shareholders who, to the knowledge of our Directors, owns more than 5% of our issued share capital had any interest in any of our five largest customers (other than the Evergrande Group).

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SUPPLIERS

The following table sets forth the types of our major suppliers for our three business lines.

Business line Property management services Value-added services to non-property owners Community value-added services	Major suppliers
	Subcontractors providing cleaning, common area facility repair and maintenance services and greening services; Subcontractors providing customer reception services and cleaning services; Property developers providing parking spaces, subcontractors providing repair and maintenance services, and suppliers of merchandise under our group purchase facilitation services.

In 2017, 2018, 2019 and the six months ended June 30, 2020, purchases from our five largest suppliers amounted to RMB155.2 million, RMB218.5 million, RMB240.7 million and RMB134.8 million, respectively, which accounted for approximately 21.6%, 23.7%, 20.6% and 17.3%, respectively, of our total purchases. During the same periods, purchases from our single largest supplier amounted to RMB100.0 million, RMB138.5 million, RMB107.0 million and RMB63.6 million, respectively, which accounted for approximately 13.9%, 15.0%, 9.1% and 8.2%, respectively, of our total purchases.

The following tables set out details of our five largest suppliers for the Track Record Period:

Six months ended June 30, 2020

Rank	Supplier The Evergrande Group(1) Supplier A Supplier B Supplier C Supplier D	Supplier Type Property developer Elevator manufacturing, sale and maintenance Elevator manufacturing, sale and maintenance Elevator manufacturing, sale and maintenance Cleaning and housekeeping services	Length of business relationship with us (Year) 10 5 11 8 4	Products/services provided to us Materials supplies and greening services Elevator Maintenance Elevator Maintenance Elevator Maintenance Cleaning Services	Purchase amount (RMB in thousands) 63,643 30,017 17,015 12,592 11,499 134,766	Percentage of total purchase (%) 8.2 3.9 2.2 1.6 1.5 17.3	Relationship with us
1. 2. 3. 4. 5.							Related Party Independent Third Party Independent Third Party Independent Third Party Independent Third Party

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2019

Rank 1. 2. 3. 4. 5. 2018 Rank 1. 2. 3. 4. 5.	Supplier The Evergrande Group(1) Supplier A Supplier E(2) Supplier B Supplier D Supplier The Evergrande Group(1) Supplier A Supplier E(2) Supplier D Supplier C	Supplier Type Property developer Elevator manufacturing, sale and maintenance Production and sale of agricultural products Elevator manufacturing, sale and maintenance Cleaning and housekeeping services provider Supplier Type Property developer Elevator manufacturing, sale and maintenance service provider Production and sale of agricultural products Cleaning and housekeeping services provider Elevator manufacturing sale and maintenance	Length of business relationship with us (Year) 10 5 6 11 4 Length of business relationship with us (Year) 10 5 6 4 8	Products/services provided to us Materials supplies and greening services Elevator Maintenance Products such as water, milk powder and oil Elevator Maintenance Cleaning Services Products/services provided to us Materials supplies and greening services Elevator Maintenance Products such as water, milk powder and oil Cleaning Services Elevator Maintenance	Purchase amount (RMB in thousands) 106,695 46,929 38,135 29,881 19,035 240,675 Purchase amount (RMB in thousands) 138,476 30,535 24,057 13,094 12,374 218,536	Percentage of total purchase (%) 9.1 4.0 3.3 2.6 1.6 20.6 Percentage of total purchase (%) 15.0 3.3 2.6 1.4 1.3 23.7	Relationship with us
							Related Party Independent Third Party Independent Third Party Independent Third Party Independent Third Party Relationship with us
							Related Party Independent Third Party Independent Third Party Independent Third Party Independent Third Party

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Notes:

(1) The Evergrande Group provided certain carpark spaces, maintenance and office materials, greening services, cleaning services, hotel services and dining services to us and became one of our top five suppliers during the Track Record Period. The Evergrande Group was also our single largest customer during the Track Record Period.
(2) Supplier E provided products such as water, milk, power and oil to us in 2018 and 2019 and became one of our top five suppliers in the same period. Supplier E was also one of our top five customers in 2019 and the six months ended June 30, 2020 and purchased offline and online promotion services from us. See descriptions of Customer A in “—Customers” for more details.

2017

Rank 1. 2. 3. 4. 5.	Supplier The Evergrande Group(1) Supplier A Supplier D Supplier F Supplier G	Supplier Type Comprehensive provider of goods and services Elevator manufacturing, sale and maintenance service provider Cleaning and housekeeping services provider Cleaning, gardening and municipal engineering service provider Property management and cleaning service provider	Length of business relationship with us (Year) 10 5 4 4 6	Products/services provided to us Property developer Elevator Maintenance Cleaning Services Cleaning Services Cleaning Services	Purchase amount (RMB in thousands) 100,044 20,645 12,425 12,225 9,874 155,213	Percentage of total purchase (%) 13.9 2.9 1.7 1.7 1.4 21.6	Relationship with us
							Related Party Independent Third Party Independent Third Party Independent Third Party Independent Third Party

Note:

(1) The Evergrande Group provided certain carpark spaces, maintenance and office material, and gardening services to us and became one of our top five suppliers during the Track Record Period. The Evergrande Group was also our single largest customer during the Track Record Period.

During the Track Record Period, we did not experience any material delay, supply shortages or disruptions in our operations relating our suppliers, or any material product claims attributable to our suppliers. As of the Latest Practicable Date, save for disclosed above, none of our Directors, their close associates or any Shareholders who, to the knowledge of our Directors, owned more than 5% of our issued share capital had any interest in any of our five

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largest suppliers (other than the Evergrande Group). We do not have any long-term agreements with our top five suppliers. We typically enter into one-year agreements with our suppliers and renew them after negotiations. Payments to suppliers are typically settled by month via bank transfers.

SUBCONTRACTING

We outsource certain labor-intensive services and specialized services, primarily including cleaning, greening and gardening, and repair and maintenance services, to subcontractors, which enables us to reduce our operating and labor costs, improve service quality and dedicate more resources to management and other value-added services. We believe such subcontracting arrangements allow us to leverage the human resources and technical expertise of the subcontractors, and enhance the overall profitability of our operations. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, subcontracting costs amounted to RMB486.0 million, RMB720.0 million, RMB909.6 million, RMB417.7 million and RMB514.2 million, respectively, which accounted for approximately 12.3%, 13.9%, 16.3%, 15.6% and 18.2%, respectively, of our total cost of sales.

As of the Latest Practicable Date, none of our Directors, their close associates or any Shareholders which, to the knowledge of our Directors, owned more than 5% of our share capital had any interest in any of our five largest subcontractors.

Selection and Management of Subcontractors

We aim to create and maintain an effective and comprehensive system for subcontractor management. We constantly monitor and evaluate the subcontractors on their ability to meet our requirements. To ensure the overall quality of our subcontractors, we maintain a list of subcontractors based on our series of assessment standards, including, among others, the amount of registered capital, length of existence, size of overall operations, industry credentials and past cooperation with us. After initial evaluation of subcontractors, we also regularly review the performance of subcontractors and assign grades to subcontractors.

Key Terms of Our Subcontracting Agreement

A typical subcontracting agreement entered into between subcontractors and us generally includes the following key terms:

Term . A subcontracting agreement typically has a term of approximately one year to three years and may be renewed upon mutual consent.
Our responsibilities . We are typically responsible for providing onsite personnel dispatched by the subcontractor with necessary working space, tools and materials. We are also responsible for supervising and providing feedback on the work performed by the personnel dispatched by the subcontractor.

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Obligations of the subcontractor . The subcontractor is typically responsible for providing services in accordance with the scope, frequency and standards prescribed in the relevant subcontracting agreement and in compliance with all applicable laws and regulations. In the event of sub-standard performance, the subcontractor is required to take necessary rectification measures within the period required by us, failing which we have the right to claim damages and penalties, or terminate the contract. The subcontractor is required to manage its personnel providing the contracted services and there is no employment relationship between us and the personnel of the subcontractor.
Risk allocation . The subcontractor is responsible for any damages to property or personal injuries caused by the fault of the subcontractor in the course of providing the contracted services. We typically require the subcontractor to indemnify us for any damages that it causes to the properties of the residents and us. The subcontractor is also required to pay all social insurance and housing provident funds contributions for its personnel in accordance with PRC laws and regulations and bear the liabilities and responsibilities in the event of any non-compliance.
Procurement of raw materials . Raw materials are to be procured by the subcontractor. The procurement costs are usually included in the subcontracting fee.
Subcontracting fee . Subcontracting fee is typically payable monthly, including costs incurred in connection with the procurement of raw materials, labor costs, equipment maintenance costs, tax expenses and other miscellaneous costs incurred by the subcontractor.
Intellectual property. The subcontractors are typically not allowed to use our brand name to promote its businesses, or to cause damages to our brand names.
Confidentiality. The subcontractors are not allowed to disclose the content of the agreement to third-parties or use the agreement for the promotion of their businesses. The confidentiality clause survives the termination of the agreement.
Anti-bribery . We and our employees are forbidden from requesting bribes from the subcontractor in any forms, and the subcontractor is forbidden from offering any financial assistance or other forms of bribes to our employees. The agreement provides ways for subcontractors to report inappropriate behaviors by our employees, and we reserve the right to pursue legal actions if subcontractor’s breach of its anti-bribery obligations causes damages to us.
Termination . The agreement is terminated when the term of the contract expires. We may also terminate the agreement if the subcontractor provides sub-standard performances and fail to rectify upon notices. We may also terminate the agreement if the subcontractor breaches provisions regarding confidentiality, anti-bribery, or other material terms of the agreement.

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QUALITY CONTROL

We believe quality control is crucial to the long-term success of our business. We have a professional quality control team which primarily focuses on maintaining service standards, standardizing service procedures and supervising service quality throughout our operational processes.

Quality Control over Property Management Services

In 2017, we successfully renewed the certification according to ISO9001:2015 standards. We also obtained ISO14001:2015 environmental management certification and OHSAS18001:2007 international occupational health and safety management system certification in recognition of our service quality. We implement a “three-in-one” quality control system by aligning quality, environment protection and occupational health, which provides an all-round quality control guidance to our daily operations and minimize disruption to our operations and related operation costs. In order to ensure service and consumer satisfaction, we conduct internal reviews on consumer satisfaction at all properties under our management on a monthly basis. The quality check and consumer satisfaction results factor in the performance review of project companies and regional companies.

Quality Control over Subcontractors

We typically include in the agreements with subcontractors detailed quality standards for the services to be provided. We regularly monitor and evaluate the performance of the subcontractors and may require the subcontractors to take necessary rectification measures when their services do not meet the agreed standards. We also conduct annual surveys among property owners and residents regarding the quality of services provided by our subcontractors. We have the contractual right to adjust the subcontracting fees and decide whether to continue our subcontracting contract depending on the outcomes of such surveys. See “—Subcontracting—Selection and Management of Subcontractors.”

Quality Control over Third-party Vendors

We implement a various measures and policies to ensure the quality of the products and services offered by third-party vendors, such as screening candidate vendors by examining their qualifications and conducting onsite inspection of their business premises, before entering into cooperation agreements with them. We also conduct annual assessment on our vendors in respect of transaction volume, service quality and after-sales services. We also have the right to replace a third-party vendor in the event of substandard performance.

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Enhanced Hygiene and Precautionary Measures against the COVID-19 Pandemic

In response to the COVID-19 pandemic, we have adopted enhanced hygiene and precautionary measures across the properties under our management since late January 2020. The additional costs for implementing these enhanced measures primarily represent increased staff costs to carry out these measures as well as costs for purchasing protective materials such as face masks, ethanol hand wash, disinfectants, and infrared thermometers. See “—Effect of the COVID-19 Pandemic—Our Response to the COVID-19 Pandemic.”

Feedback and Complaint Management

During the ordinary course of our business, we receive feedback, suggestions and complaints (such as report of loss of properties and request for repair of public facilities) from property owners and residents of the properties we manage from time to time regarding our services. We have established internal procedures to record, process and respond to the feedback, suggestions and complaints and conduct follow-up reviews of the results of our responses.

In our communities, each household is assigned to a butler who attends to their needs and provides one-stop services in a timely manner. For example, we require our butlers to observe the principle of “fast response, efficient service and satisfactory result (響應快速、服務高效、滿意至上)” in providing repair and maintenance services. To enhance our responsiveness to property owners’ and residents’ requests and improve customer satisfactions, we have established the “1-5-30 Prompt Response Mechanism” under which we target to answer customer calls and record their concerns within the first minute, make initial responses within five minutes, and dispatch relevant personnel onsite to evaluate the situation and formulate solutions within 30 minutes. We will follow up with our customers within 24 hours after their problems get resolved to collect customers’ feedback. In order to provide better customer experience and enhance our customer service, we offer a service hotline for residents living in the residential properties we manage, which has been up and running since 2015. Through the hotline, our customers can inquire about our services, provide us with their complaints and feedback as well as order products that are advertised on our service platform, and we can follow up and respond in time to provide timely and efficient solutions to the problems of our clients.

During the Track Record Period, we did not experience any customer complaints about our services or products that would have a material adverse impact on our operations or financial results. In 2017, 2018, 2019 and the six months ended June 30, 2020, our property management service agreement retention rate was 100.0%, 99.8%, 99.9% and 100.0%, respectively.

INTELLECTUAL PROPERTY

We consider our intellectual property rights as critical to our success. We primarily rely on laws and regulations on trademarks and trade secrets and our employees’ and third parties’ contractual commitments to confidentiality and non-competition to protect our intellectual property rights. As of the Latest Practicable Date, we had obtained the license of 11 trademarks

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including ten registered trademarks and one pending registration and had registered four domain names in the PRC. We also had 35 patents for our smart community solutions, two copyrights for our Evergrande Smart Community applications and three copyrights for our ERP System.

As of the Latest Practicable Date, we were not aware of any infringement which could have a material adverse effect on our business operations by our Group against any intellectual property rights of any third party or by any third party against any intellectual property rights of our Group, or any disputes with third parties with respect to intellectual property rights.

AWARDS

The following table sets forth a selection of the notable awards and accreditations we received during the Track Record Period.

Awarding Year 2019 2019 2019 2018 2018-2019 2018-2019 2018-2019 2018-2019 2018-2019	Award/Recognition Top 50 Property Management Company Brand Value (物業服務企業品牌價值50強) Property Management Company with Featured Brand Image in Community Value-added Services (特色物業服務品牌企業– 社區附加值提升) Top 500 Property Management Service Provider in Overall Strength (物業服務企業綜合實力500 強) Top 100 Property Management Company in Overall Strength (物業服務企業綜合實力測評 TOP100) Top 100 Property Management Companies in China (中國物業服務百強企業) Top 100 Property Management Companies in Service Quality (中國物業服務百強服務質量領先企業) Top Ten Property Management Companies in Service Scale (中國物業服務百強企業服務規模TOP Ten) Top 100 Property Management Companies in Community Value-added Services (中國物業服務百強特色服務領先企業– 社區附加值提升) Leading Brands in Professionalized Operations of Property Management Industry (中國物業服務專業化運營領先品牌企業)	Awarding Entity
		China Property Management Institute (中國物業管理協會) China Property Management Institute (中國物業管理協會) China Property Management Institute (中國物業管理協會) China Property Management Institute (中國物業管理協會) CIA CIA CIA CIA CIA

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As of June 30, 2020, 93 properties under our management received provincial level recognition for the excellent property management services. In addition, 73 properties have earned various awards in gardening, greening and general living experience, and 32 properties have earned awards in energy conservation and environmental protection as of the same date.

COMPETITION

According to CIA, the PRC property management industry is fragmented and competitive, with approximately 130,000 property management service providers operating in the industry in 2019. As a property management company with national presence, we compete with both national and regional property management companies in terms of property management companies, and with other providers of similar services in terms of our value-added services. Moreover, according to CIA, there are several barriers for players in China’s property management industry to successfully compete and achieve sustainable growth, such as brand value, capital requirements, quality of management and availability of talent and technical expertise, which we believe we have and will continue to overcome. For more information on the industry and the markets that we operate in, see “Industry Overview” and “Risk Factors—Risks Relating to Our Business and Industry—We are in a highly competitive business and we may not be able to compete successfully against existing and new competitors.”

SOCIAL, HEALTH, SAFETY AND ENVIRONMENTAL MATTERS

We are subject to PRC laws in relation to labor, safety and environment protection matters. In addition, we have established occupational safety and sanitation systems, implemented the ISO14001:2015 and OHSAS18001:2007 standards certified by the China Quality Certification Center, and provided employees with workplace safety trainings on a regular basis to increase their awareness of work safety issues. We also assign security personnel and provide 24-hour safely and security patrol at each of properties under our management to help promote the safety and security of the property owners and residents.

We hire employees based on their merits and it is our corporate policy to offer equal opportunities to our employees regardless of gender, age, race, religion or any other social or personal characteristics. During the Track Record Period and up to the Latest Practicable Date, we had complied with PRC laws in relation to workplace safety in all material respects and had not had any incidents which have materially and adversely affected our operations.

We consider the protection of the environment to be important and have implemented measures in the operation of our businesses to ensure our compliance with all applicable requirements. Given the nature of our operations, we do not believe we are subject to material environmental liability risk or compliance costs. During the Track Record Period and up to the Latest Practicable Date, we have not been subject to any material administrative penalties due to violation of environmental laws in China.

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Since our inception, we have been dedicated to serving the communities where we operate, and have implemented the following measures to fulfill our social responsibilities.

Combat of the COVID-19 pandemic. Since the outbreak of the COVID-19 pandemic, we have been on the frontline of preventing the spread of the pandemic, with our employees working around the clock in 280 cities across China to safeguard the health and safety of property owners and residents. We closely verify the identities and monitor the health status of every person entering properties under our management, and offered comprehensive community living services to residents under quarantine, such as delivery of food, water and medicine.
Poverty relief. We actively participate in various poverty relief measures in cooperation with local communities and local governments. For example, in collaboration with the Evergrande Group, we offered career training to people living in poverty conditions to increase their competitiveness in the labor market. We also actively participate in various poverty relief events hosted by China Property Management Institute (中國物業管理協會) and China Poverty Relief Volunteer Associations (中國扶貧志願者服務促進會).
Environmental protection. We have established various policies to save energy and achieve a low carbon footprint, which guide the performance of our employees. We also actively guide property owners and residents to participate in efforts to save energy and improve the environment. For example, we have been introducing energy-saving LED lights and reclaimed waters for garden irrigation in several properties under our management. We have also actively promoted waste recycling in various communities and increased our efforts in introducing professional subcontractors to recycle and separate waste from the properties under our management.
Employee benefits. We truly appreciate the services of our employees, and care about their wellbeing. To that end, we offer employee benefits such as free housing, shuttle and meal services, vacation packages, group trips, and birthday parties. We have organized various employee affinity groups where employees can explore their personal interests. We also offer targeted financial assistance to employees in serious financial needs.

EMPLOYEES

We believe that the expertise, experience and professional development of our employees is critical to our growth. Our human resources department manages, trains and hires employees.

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As of June 30, 2020, we had a total of 46,529 full-time employees. The following table sets forth the number and breakdown of our full-time employees by function as of June 30, 2020.

Corporate level Corporate headquarters Regional headquarters Onsite staff	Function Management Subtotal Management Administrative staff Operations management Quality control Engineering management Subtotal Security staff Sales cooperation Customer service Engineering, repair and maintenance Integrated management Recreation center staff Middle management Project managers Others Subtotal Total	Number of employees
		223
		223
		263 497 276 246 271
		1,553
		11,384 11,353 6,445 5,962 2,541 2,416 2,130 458 2,064
		44,753
		46,529

During the Track Record Period and up to the Latest Practicable Date, our employees did not negotiate their terms of employment through any labor union or by way of collective bargaining agreements nor did we experience any material labor disputes or shortages that may have a material adverse effect on our business, financial position and results of operations.

We endeavor to hire competent and qualified employees in the market by offering competitive wages and benefits, systematic training opportunities and internal upward mobility. We provide systematic and extensive training programs to our employees to improve and enhance their technical and service skills, as well as to supplement their knowledge of industry quality standards and work place safety standards.

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Social Insurance and Housing Provident Fund Contributions

According to the relevant PRC laws and regulations, we are required to make contributions to social insurance fund (including pension fund, medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance) and housing provident fund for the benefit of our employees in China. During the Track Record Period, some of our PRC subsidiaries did not make full contribution to the social insurance and housing provident funds for some of our employees as required under PRC laws and regulations.

As confirmed by our Directors, we did not make full social insurance and housing provident fund contributions during the Track Record Period, primarily because some of our employees, especially our onsite personnel providing cleaning, greening and gardening, security, repair and maintenance services as well as canteen staff who typically demonstrate high mobility, prefer not to contribute to social insurance and housing provident funds.

As advised by our PRC Legal Advisors, according to the relevant PRC laws and regulations in respect of social insurance contributions, if we do not pay the full amount of social insurance contributions as required, the relevant authorities may demand us to pay the outstanding social insurance contributions within the deadline stipulated by them, and we may be liable to a late payment fee equal to 0.05% of the outstanding amount for each day of delay. We may be liable to a fine from one to three times the amount of the outstanding contributions if we fail to make such payments. In respect of outstanding housing provident fund contributions, we may be ordered to pay the outstanding housing provident fund contributions within the time period stipulated by relevant authorities. If payment is not made within such stipulated time period, we may be subject to a fine of RMB10,000 to RMB50,000 in addition to compulsory enforcement by the court.

Our Directors have considered the following in assessing our exposures relating to social insurance and housing provident fund contributions: (i) as of the Latest Practicable Date, we had not received any notification from relevant government authorities requiring us to pay shortfalls or penalties with respect to social insurance and housing provident funds; (ii) during the Track Record Period and up to the Latest Practicable Date, we had not been subject to any administrative penalties, material litigations and legal proceedings, nor were we aware of any material employee complaints nor involved in any material labor disputes with our employees with respect to social insurance and housing provident funds; (iii) a majority of our PRC subsidiaries have obtained written confirmations from competent local government authorities which confirmed that no penalties had been imposed on us with respect to social insurance and housing provident funds during the Track Record Period; (iv) we made provisions for social insurance and housing provident fund contributions of RMB1.1 million, RMB2.4 million, RMB3.9 million and RMB2.3 million, respectively, in 2017, 2018, 2019 and the six months ended June 30, 2020; (v) we will make full contributions or pay any shortfall within a prescribed time period if demanded by the relevant government authorities; and (vi) certain of our Controlling Shareholders have undertaken that in the event that we receive requests from the relevant authorities to pay the overdue social insurance and housing provident funds

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contributions, or that we are required to pay any late charges or penalties as a result of such overdue contributions, they will indemnify us the overdue contributions and any late charges and penalties imposed by the relevant authorities to the extent the provisions we made are insufficient to cover such overdue contributions, late charges and penalties. Some of our employees actively sought to avoid full or any contributions to the social insurance and housing provident funds in order to retain more immediate cash. On September 21, 2018, the Ministry of Human Resources and Social Security of the PRC issued the Urgent Notice on Enforcing the Requirement of the General Meeting of the State Council and Stabilization the Levy of Social Insurance Payment (《關於貫徹落實國務院常務會議精神切實做好穩定社保費徵收工作的緊急通知》), which promotes the reduction in the amount of social insurance contributions by companies to avoid overburdening enterprises, and prohibits local authorities from requiring enterprises to make up for historically underpaid or unpaid social insurance contributions in one go. We believe that our provisions for social insurance and housing provident fund contributions are sufficient, having considered the reasons aforementioned.

Based on the foregoing, our PRC Legal Advisors are of the view that the risk that our failure to make full contributions to the social insurance and housing provident funds for our employees would not have a material adverse effect on our business operations or financial performance.

Remedial Measures

We will issue an internal notice, pursuant to which our human resources department shall strictly follow and promote our employee benefit policies and relevant laws and regulations on social insurance and housing provident fund contributions. We have strengthened our internal policies, which include (i) regular review of payments of social insurance and housing provident fund by our legal compliance and risk management department; and (ii) timely rectification to ensure the protection of our employees’ interests.

OUR CASH MANAGEMENT POLICY

We have a bank account and cash management system to manage our cash inflows and outflows, applicable to all of our subsidiaries and branch offices in their ordinary course of business. Generally, we encourage our subsidiaries and branch offices to settle transactions through bank transfers to lower the risks relating to managing cash. Our employees are required to deposit cash received into the relevant bank accounts in the day of receipt, and must seek approval for withdrawal and usage of such cash.

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Cash handling policies and internal control Cash flow transactions measures Cash inflow in relation to We typically have designated cashiers or customer payments of property service personnel specifically responsible for cash management fees, deposits, collection who verify that the amount of cash rent or service fees from our collected is correct prior to issuing receipts. customers

Payment made to suppliers, Payments by our subsidiaries and branches to their service providers and suppliers, service providers and subcontractors subcontractors of our must be pre-approved by the responsible subsidiaries and branches supervising personnel at a higher level. Once approved, such payments must be made directly from the bank accounts of our subsidiaries and branches.

Cash inventories and deposits Our subsidiaries and branch offices are typically not allowed to keep more than RMB50,000 in cash on hand. We typically require that excess amounts be deposited into the bank accounts of our subsidiaries and branch offices on the day they are received. Cash transfers to the bank We receive cash through methods such as online accounts of our subsidiaries payment, credit or debit card payments and bank and branch offices transfers, and cash collected from these methods are directly deposited into the bank accounts of our subsidiaries and branch offices.

Opening and managing bank Our subsidiaries and branch offices must adhere to accounts of our subsidiaries our internal policies and procedures in relation to and branch offices the opening of bank accounts. They are typically required to complete an application form before opening any bank accounts. Our subsidiaries and branch offices are typically required to reconcile and check bank balances on a monthly basis.

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INSURANCE

We believe that our insurance coverage is in line with the industry practice in the PRC. However, our insurance coverage may not adequately protect us against certain operating risks and other hazards, which may result in adverse effects on our business. For more details, see “Risk Factors—Risks Relating to Our Business and Industry—Our insurance coverage may not sufficiently cover the risks related to our business.”

CERTIFICATES, LICENSES AND PERMITS

We are required to obtain and maintain various certificates, licenses and permits in relation to our operations. As advised by our PRC Legal Advisors, save as the certificates, licenses and permits that were being renewed as of the Latest Practicable Date, we obtained all material certificates, licenses and permits from relevant regulatory authorities for our main business lines as of Latest Practicable Date. We are required to renew such certificates, licenses and permits from time to time. As to the certificates, licenses and permits that were being renewed as of the Latest Practicable Date, we do not expect any difficulties in such renewals so long as we meet the applicable requirements and conditions set by the relevant government agencies and adhere to procedures set forth in relevant laws and regulations.

PROPERTIES

As of the Latest Practicable Date, we owned one property in China with an aggregated GFA of approximately 296 sq.m., and had obtained the relevant ownership certificate. As of the Latest Practicable Date, we also leased 908 properties in various locations in the PRC with an aggregated GFA of approximately 109,000 sq.m. for use primarily as office spaces, canteens and employee dormitories.

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As of the Latest Practicable Date, we had not filed the lease agreements for 875 of our leased properties with the local housing administration authorities as required under PRC law, primarily due to lack of cooperation from the landlords in registering the relevant lease agreements, which was beyond our control, or due to the nature of the properties which render them unregisterable under relevant laws and regulations. We were advised by our PRC Legal Advisors, that such non-filing of lease agreements would not affect the validity of such leases, but we might be ordered to rectify this non-compliance by competent authorities and if we do not rectify within a prescribed period, a penalty of RMB1,000 to RMB10,000 per agreement may be imposed on us as a result of such non-filing. See “Risk Factors—Risks Relating to Our Business and Industry—Some of our lease agreements have not been filed with the relevant PRC authorities and, as a result, we might be subject to administrative fines.” As of the Latest Practicable Date, our Directors confirm that we had not received any notice from any regulatory authority with respect to potential administrative penalties or enforcement actions as a result of our failure to file the lease agreements described above. Our Directors do not expect any practical difficulty in identifying alternative premises subject to the lease agreements that have not been filed, and are of the view that such non-filing would not have a material impact on our business operations.

The lessors of one of our leased properties could not provide relevant title certificates or proof of property rights. As advised by our PRC Legal Advisors, if third parties are able to prove that they have valid titles to or valid leasehold interests in these properties and refuse to acknowledge our lease of such properties, we may not be able to enforce the lease agreement in relation to the leased property. In the event that we are required to relocate from the leased property as a result of the foregoing, given the nature of our operation, we do not believe that any relocation would result in material disruptions to our business. Moreover, replacement premises for the leased property without title certificate and proof of property right are readily available. Although we may incur additional relocation costs, our Directors are of the view that this would not have any material impact on our business, financial position and results of operations.

We had no single property with a carrying amount of 15% or more of our total assets as of the Latest Practicable Date and, therefore, we did not need to prepare a valuation report with respect to our property interests in reliance upon the exemption provided by section 6(2) of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

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RISK MANAGEMENT AND INTERNAL CONTROL

We have implemented various risk management policies and measures to identify, assess and manage risks arising from our operations. Details on risk categories identified by our management, internal and external reporting mechanism, remedial measures and contingency management have been codified in our policies. For details of the major risks identified by our management, see “Risk Factors—Risks Relating to Our Business and Industry.” In addition, we face various financial risks, including interest rate, price, credit and liquidity risks that arise during our ordinary course of business. See “Financial Information—Quantitative and Qualitative Analysis about Market Risk.”

To monitor the ongoing implementation of our risk management policies and corporate governance measures after the [ REDACTED ], we have adopted or will adopt, among others, the following risk management and internal control measures:

the establishment of an audit committee responsible for overseeing our financial records, internal control procedures and risk management systems. See “Directors and Senior Management—Board Committees—Audit Committee” for the qualifications and experience of these committee members as well as a detailed description of the responsibility of our audit committee;
the appointment of Mr. Fong Kar Chun, Jimmy as our company secretary to ensure the compliance of our operation with relevant laws and regulations. For their biographical details, see “Directors and Senior Management”;
the appointment of Huatai Financial Holdings (Hong Kong) Limited as our compliance advisor upon the [ REDACTED ] to advise us on compliance with the Listing Rules; and
the engagement of external legal advisors to advise us on compliance with the Listing Rules and to ensure our compliance with relevant regulatory requirements and applicable laws, where necessary.

We embed a culture of compliance in the daily work routine of our employees through regular compliance trainings, and set various expectations for our employees’ work performances in terms of compliance.

Finally, we adopt before the [ REDACTED ], various internal regulations against corrupt and fraudulent activities, which includes measures against receiving bribes and kickbacks, and misuse of company assets. Major measures and procedures to implement such regulations include:

authorizing our audit department to assume responsibility for daily execution of our anti-corruption and anti-fraud measures, including handling complaints, ensuring protection for the whistleblower and conducting internal investigations;

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providing anti-corruption compliance training periodically to our senior management and employees to enhance their knowledge and compliance with applicable laws and regulations, and including relevant policies and express prohibitions against non-compliance in staff handbooks; and
undertaking rectification measures with respect to any identified corrupt or fraudulent activities, evaluating the identified corrupt or fraudulent activities and proposing and establishing preventative measures to avoid future non-compliance.

Our Directors are of the view that such controls and measures are effective to avoid the occurrence of corruption, bribery, or other improper conduct of our employees. During the Track Record Period and up to the Latest Practicable Date, we were not subject to any government investigation or litigation with respect to claims or allegations of monetary and non-monetary bribery activities.

LEGAL PROCEEDINGS AND COMPLIANCE

Legal Proceedings

We have been involved in legal proceedings or disputes from time to time in the ordinary course of business, such as contract disputes with our customers, suppliers or disputes with other third parties at properties under our management. As of the Latest Practicable Date, there were no litigation or arbitration proceedings or administrative proceedings pending against us or any of our Directors which would have a material adverse effect on our business, financial position or results of operations.

Historical Non-Compliance Incidents

As advised by our PRC Legal Advisors, we had not been subject to significant fines or legal actions involving non-compliances with any PRC laws or regulations relating to our business which would have a material adverse effect on our business during the Track Record Period and up to the Latest Practicable Date.

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

OVERVIEW

Immediately upon completion of the Capitalization Issue and the [ REDACTED ] (assuming the [ REDACTED ] under the [ REDACTED ] are not taken up by our Controlling Shareholders who are [ REDACTED ] and without taking into account any Shares which may be issued or [ REDACTED ] pursuant to the exercise of the [ REDACTED ]), our Company will, in aggregate, be owned as to [ REDACTED ]% by CEG Holdings. CEG Holdings is directly held as to 50% by China Evergrande Group and 50% by Shengjian (BVI), a direct wholly-owned company of Anji (BVI), which in turn is wholly owned by China Evergrande Group. As of the Latest Practicable Date, China Evergrande Group was indirectly owned as to 71.74% by Dr. Hui through Xin Xin (BVI) (a company wholly owned company by Dr. Hui) and 6.06% by Mrs. Hui, the spouse of Dr. Hui, through Even Honour which is in turn wholly owned by Yaohua (a company wholly owned company by Mrs. Hui). Accordingly, Dr. Hui, Mrs. Hui, Xin Xin (BVI), Even Honour, Yaohua, China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings together constitute a group of our Controlling Shareholders.

Each of CEG Holdings, Shengjian (BVI), Anji (BVI), Xin Xin (BVI), Even Honour and Yaohua is an investment holding company.

DELINEATION OF BUSINESS

The Retained Business

The Evergrande Group is primarily engaged in (i) property development business; (ii) the development and operation of large-scale cultural and tourism development projects and theme parks for tourists and vacation house owners; (iii) health and wellbeing management and new energy vehicle business through Evergrande Auto (stock code: 708.HK), a subsidiary of China Evergrande Group listed on the Main Board; (iv) internet community and investment business through HengTen Networks (stock code: 136.HK), a subsidiary of China Evergrande Group listed on the Main Board; (v) property and cinema business through Calxon Group Holdings Co., Ltd. (stock code: SZ.000918), a subsidiary of China Evergrande Group which is an A-share company listed on the Shenzhen Stock Exchange; (vi) banking business through a controlling interest held in Shengjing Bank Co., Ltd. (stock code: 2066.HK), the H-shares of which are listed on the Main Board; (vii) investments in the financial services sector, including shareholding interests in a PRC insurance company, a securities and brokerage firm and a futures firm; and (viii) football club business through a jointly controlled entity quoted on the over-the-counter electronic equity system operated by the National Equities Exchange and Quotations System Co., Ltd. (全國中小企業股份轉讓系統) (collectively, the “ Retained Businesses ”).

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

Excluded Business

Pursuant to a strategic cooperation agreement dated September 21, 2018 (the “ Cooperation Agreement ”), Evergrande Real Estate, a subsidiary of China Evergrande Group, acquired a 40.964% equity interest in Xinjiang Guanghui Industrial Investment Group Co., Ltd. (新疆廣匯實業投資(集團)有限責任公司) (“ Guanghui Industrial ”). The remaining equity interests of Guanghui Industrial are held as to 50.057% by an individual and as to 8.979% by other third parties, all of which are independent of and unrelated to our Company or the Evergrande Group. Given that China Evergrande Group is not the majority shareholder and does not have control over the board of Guanghui Industrial, Guanghui Industrial is not regarded as a subsidiary of China Evergrande Group and its financial information has not been consolidated with that of China Evergrande Group.

To the best knowledge of our Directors, Guanghui Industrial is a PRC conglomerate which is engaged in energy, automobile, logistics and real estate businesses. To complement its real estate business, Xinjiang Guanghui Property Management Co., Ltd. (新疆廣匯物業管理有限公司) (“ Guanghui Property Management ”), a subsidiary of Guanghui Industrial, provides property management services to the property projects developed by Guanghui Industrial and its subsidiaries (the “ Guanghui Group ”). As of June 30, 2020, Guanghui Property Management had a total GFA under management of approximately 18.0 million sq.m., covering 143 projects located mainly in its major operation base of Ürümqi, Xinjiang. In contrast, as of June 30, 2020, we were contracted to provide property management services, value-added services to non-property owners and/or community value-added services to 1,354 projects in over 280 cities in 22 provinces, five autonomous regions, four municipalities and Hong Kong, with a total GFA under management of approximately 254.0 million sq.m. Our Directors are of the view that as (a) Guanghui Property Management has a much smaller scale of operation as compared with our Group; (b) Guanghui Property Management provides property management services predominantly for the projects developed by Guanghui Industrial, which are mainly located in its major operation base of Ürümqi, Xinjiang; (c) China Evergrande Group is only a passive investor in Guanghui Industrial and is not involved in the day-to-day operations and management of Guanghui Property Management, which is carried out by its own management and operation team; (d) the management and operational decisions of our Group are made by our executive Directors and senior management independently from China Evergrande Group; (e) none of the directors of Guanghui Industrial appointed by China Evergrande Group overlaps with our Directors or is otherwise involved in the day-to-day operations of our Group; and (f) there are adequate corporate governance measures in place to

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

manage existing and potential conflicts of interest between our Group and our Controlling Shareholders if such circumstances arise, the interests of China Evergrande Group in Guanghui Property Management will not constitute substantive competing interest with our Group.

Since China Evergrande Group is not the majority shareholder and does not have control over the board of Guanghui Industrial, it is unable to make major decisions unilaterally for Guanghui Industrial, including any disposal of interest in Guanghui Property Management. Accordingly, it is practically impossible to include Guanghui Property Management in our Group as part of the Reorganization. In addition, given that (a) apart from the business carried out by Guanghui Property Management, Guanghui Industrial is also engaged in other businesses such as energy, automobile, logistics and real estate businesses; and (b) other shareholders of Guanghui Industrial are entitled to a right of first refusal to acquire the equity interest in Guanghui Industrial according to the PRC Company Law, and we believe it is unlikely that they would waive their respective right of first refusal if China Evergrande Group intends to transfer its equity interest in Guanghui Industrial to our Group, our Directors are of the view that it is neither possible nor in the interests of our interest to include Guanghui Industrial, as it may cause us to engage in business that may be in competition with the business of our Controlling Shareholder or be involved in business that is not in line with our core business of the provision of property management services. As such, Guanghui Industrial was also not included in our Group as part of the Reorganization.

Save as disclosed above, upon completion of the [ REDACTED ], China Evergrande Group will not be engaged in any property management business, including ancillary value-added services, other than through our Group.

Based on the foregoing, we believe that (i) there is a clear delineation between our business and the Retained Business; and (ii) save as disclosed above, there will be no direct or material competition between our Group and the Evergrande Group upon completion of the [ REDACTED ].

Other businesses of our Controlling Shareholders

Apart from our Controlling Shareholders’ interest in the Evergrande Group, Dr. Hui and Mrs. Hui, our ultimate Controlling Shareholders, are interested in other investments outside of our Group. These investments do not form part of our Group and, as the principal businesses of such investments are separate and distinct from our business, there is no competition with the businesses of our Group.

Save as disclosed above, as of the Latest Practicable Date, none of our Controlling Shareholders and our Directors had any interest in any other business which competes or is likely to compete, either directly or indirectly with our Company’s business which would require disclosure under Rule 8.10 of the Listing Rules.

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To ensure that competition will not exist in the future, Dr. Hui, Xin Xin (BVI), China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings [have entered] into the Deed of Non-Competition in favor of our Group to the effect that each of them will not, and will procure each of their respective close associates not to, directly or indirectly participate in, or hold any right or interest, or otherwise be involved in any business which may be in competition with our business, further details of which are set out in “—Deed of Non-Competition” in this section.

OUR RELATIONSHIP WITH THE EVERGRANDE GROUP

Our Group has a well-established and ongoing business relationship with the Evergrande Group.

China Evergrande Group ranked first among the “Top 100 Real Estate Companies in China” in 2020 in terms of overall strength, according to China Real Estate Top 10 Research Group, and ranked first among property developers in China in terms of attributable contracted sales for three consecutive years starting from 2017, according to CRIC. We believe China Evergrande Group’s vast land bank provides us with a large potential pipeline of high-quality projects. According to its 2020 interim results announcement, China Evergrande Group had residential land reserves of approximately 240 million sq.m. as of June 30, 2020.

Our Group and the Evergrande Group have a long and close working relationship. The development of our Group matches that of the development of the property development business of the Evergrande Group, which comprises primarily of residential properties across the PRC. Jinbi Property has provided property management services to the projects of the Evergrande Group since 1997. During the Track Record Period, we provided property management services to substantially all of the properties developed by the Evergrande Group or its joint ventures and associates, and our Group had achieved a 100% success rate in all of the tenders bids submitted for properties developed by the Evergrande Group. During the Track Record Period, revenue generated from the Evergrande Group as well as the joint ventures and associates of China Evergrande Group amounted to 44.2%, 42.8%, 37.5% and 35.9%, respectively. As of June 30, 2020, approximately 99.6% of our total GFA under management was developed by the Evergrande Group as well as the joint ventures and associates of China Evergrande Group.

We consider our close business relationship between our Group and the Evergrande Group to be mutually beneficial and complementary, which is common among property management service providers and their parent companies in the PRC. Over years of cooperation, both our Group and the Evergrande Group have developed a mutual and deep understanding of their respective business operations. Given the long and close relationship between our Group and the Evergrande Group, our Group is familiar with the Evergrande Group’s specific requirements and expected deliverables, which helped to reduce communication costs, accumulate tacit knowledge of service provisions to the Evergrande Group, build mutual trust and has enabled us to constantly provide the high-quality property management services that met the Evergrande Group’s specific requirements. In addition, our Group has always provided tailored quality services, which helped to enhance the Evergrande Group’s brand image, thereby attracting more customers to purchase properties from the Evergrande Group, and will in turn likely bring more business to our Group. Going forward, based on our mutual and complementary business relationship, we consider that it may also not be in the best interest

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of the Evergrande Group to engage a new service provider in place of our Group, considering the time required and the uncertainties involved for the Evergrande Group to engage a new service provider which is able to provide equally satisfactory services. We consider we have competitive advantage which distinguishes us from our competitors and we believe we will continue to secure future engagements from the Evergrande Group.

Having considered the abovementioned factors, including (a) the long standing cooperation relationship between our Group and the Evergrande Group; (b) our Group’s familiarity with the Evergrande Group’s requirements and our Group’s capability to provide services with quality; and (c) the mutual benefits for both our Group and the Evergrande Group to maintain such reciprocal relationship, our Directors are of the view that the current relationship between our Group and the Evergrande Group is unlikely to be materially adversely changed or terminated.

INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS

We believe that we are capable of carrying on our business independently of our Controlling Shareholders and their respective close associates (other than our Group) after the [ REDACTED ] for the following reasons:

Management Independence

Our Board comprises four executive Directors, namely Mr. Zhao Changlong, Mr. Hu Liang, Mr. Wang Zhen and Ms. An Lihong and three independent non-executive Directors, namely Mr. Chan Chun Hung, Vincent, Mr. Victor Huang and Mr. Guo Zhaohui. Upon [ REDACTED ], save as (i) one of our executive Directors, Mr. Zhao Changlong, will concurrently hold directorship in Evergrande Real Estate, a subsidiary of China Evergrande Group, which, apart from Mr. Zhao Changlong who is not involved in its day-to-day management and operations, has its own separate and independent board and senior management team; and (ii) one of our independent non-executive Directors, Mr. Guo Zhaohui, also serves as an independent director at Calxon Group Holdings Co., Ltd., a subsidiary of China Evergrande Group, none of our Directors holds any directorship or senior management role in our Controlling Shareholders or their respective close associates. In addition, save as disclosed above, there is no overlap of the senior management members between our Group and our Controlling Shareholders and their respective close associates. Our senior management team will carry out the business operations of our Group independently from our Controlling Shareholders and their respective close associates.

Each of the Directors is aware of his/her fiduciary duties as a Director, which require, among other things, that he/she acts for the benefit and in the best interests of our Company and does not allow any conflict between his/her duties as a Director and his/her personal interests. In the event that there is any potential conflict of interest arising out of any transaction to be entered into between our Group and any of the Directors or their respective close associates, the interested Directors shall abstain from voting at the relevant board meetings of our Company in respect of such transactions and shall not be counted in the quorum.

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Based on the reasons above, our Directors are of the view that our Group is capable of managing our business independently from our Controlling Shareholders and their respective close associates following the completion of the [ REDACTED ].

Operational Independence

We have full rights, hold and enjoy the benefit of all relevant licenses material to the operation of our business. We are of the view that we have sufficient capital and employees necessary to make all decisions on, and to carry out, our own business operation independent from our Controlling Shareholders and their respective close associates and will continue to do so after the [ REDACTED ].

At the pre-delivery stage, our preliminary management contracts for properties developed by the Evergrande Group were secured primarily through standard tender and bidding processes, in which tender bids would be evaluated by tender evaluation committees established by the Evergrande Group (in accordance with the Interim Measures for Tender and Bidding Management for Preliminary Property Management (《前期物業管理招標投標管理暫行辦法》). The tendering process is a well-established, competitive and fairly structured process where neither the Evergrande Group nor our Group is able to exert influence on the selection process. Tender evaluation committees must consist of an odd number of no less than five members, including at least a two-thirds majority of property management experts who are independent of our Group. The experts are selected on a random basis from a list compiled by the local real estate administrative department. In evaluating the bids, the tender evaluation committee would consider a number of factors, including reputation, quality of service, management system, human resources management and the proposed management plan. We do not enjoy a preferential right to be engaged as the preliminary property management service provider for projects developed by the Evergrande Group and we are not given extra weighting in the selection process and will not be automatically awarded property management contracts simply due to our relationship with the Evergrande Group, and our tender bids are considered on the same basis as tender bids submitted by other property management service providers during the tender and bidding process. We undergo the same tender and bidding process to secure preliminary management contracts for properties developed by independent third-party property developers. For more information, see “Business—Property Management Services—Property Management Service Agreements” in this Document.

We consider that our ability to continuously secure contracts with the Evergrande Group successfully through tenders is attributable to our reputation and recognition in the property management industry, our rich experience in providing service solution and our resources and execution ability to meet the requirements of the project that excel over the other bidders:

(a) we are one of the leading comprehensive property management companies in the PRC with more than 20 years of experience. We possess the qualification certificate of first class Property Management Enterprise in the PRC (中國一級物業服務企業資質) and have received many awards and honors over the years for its service quality. We are highly recognized by homeowners with satisfactory level of over 90% and retention rate of property management contracts of over 99.8%;

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(b) with more than 20 years of property management experience and a service footprint covering more than 280 cities in the PRC, we have rich service experience and the understanding of the regional characteristics and local customs in providing service solutions to property projects of different categories of the Evergrande Group;
(c) with our resources and expertise accumulated over 20 years of experience in the industry, we have the execution ability and a proven track record of delivery of high-quality property management services.

After properties are delivered by property developers, we provide property management services directly to independent individual property owners, who may be represented by property owners’ associations. The property owners’ association, once formed, will be operated by the property owners, and will be entitled to enter into the property management contract with the property management service provider selected by the general meeting on behalf of the property owners. The property owners’ association, which is independent of the Evergrande Group, has the right to engage or dismiss us as the property management service provider after reviewing and evaluating our performance. According to the Regulation on Property Management (《物業管理條例》) of the PRC, a general meeting of the property owners of a property can engage or dismiss a property management service provider with affirmative votes of property owners who own more than half of the total construction area of the property and who account for more than half of the total number of the property owners. The general meeting can select a new property management service provider through a public tender procedure or enter into contract with a specific property management service provider directly, based on certain selection criteria, including the term of the services, the overall service quality and the service fee. After obtaining the approval from the general meeting of the property owners, the property owners’ association will enter into a contract with the selected property management service provider. The Evergrande Group does not have any decisive influence over the decisions of property owners or their property owners’ associations to engage or dismiss property management service providers. We have to provide quality services to the residents/owners of the properties in order to secure our continuous appointment by the property owners’ association. We have not experienced any early termination of our property management contracts due to the establishment of property owners’ associations or our Group failing to be engaged as the property management services provider after the establishment of the property owners’ associations.

With regards to the selection of property management service providers, the choice of the property owners to not enter into a new management contract with another property management service provider could be perceived as a testament that the property owners are satisfied with the services provided under the initial property management company. During the Track Record Period, we had terminated two property management contracts due to our own commercial consideration and we had been retained by independent third-party customers for all of the contracts after having won the preliminary management contracts from the Evergrande Group through the tendering process.

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Our proven track record of being retained by the property owners after the expiry of the preliminary management contracts is a good testament to the quality of the management services being provided by our Group and our ability to operate independently of the Evergrande Group. Save for the two above mentioned property management contracts terminated by us, we did not have any residential or commercial property management services contract terminated or not renewed during the Track Record Period. In light of the above, our Directors are of the view that our Group has a strong ability in retaining the contracts for property management services.

As of June 30, 2020, approximately 99.6% of our total GFA under management was developed by the Evergrande Group and the joint ventures and associates of China Evergrande Group. Despite the above, we have been able to maintain a diversified customer base, primarily by continuing our property management services to property owners or property owners’ associations after the delivery of residential properties, by participating in tender and bidding processes conducted by property developers, and by providing value-added services to other property developers and household service providers. Accordingly, the majority of our customers are independent individual property owners and independent third-party property developers. Our revenue generated from customers other than the Evergrande Group (and its associates) accounted for approximately 64.1% of our total revenue for the six months ended June 30, 2020.

We believe that our GFA under management and revenue attributable to independent third-party property developers will continue to increase. We began to proactively source projects from independent third-party property developers in 2019. Despite the short history, we have been able to secure contracts for the provision of management services for properties developed by independent third-party property developers. As of June 30, 2020, the GFA under management of properties developed by independent third-party property developers was 1.0 million sq.m. Subsequent to June 30, 2020 and as of the Latest Practicable Date, we had been contracted to manage additional properties with an aggregated contracted GFA of approximately 13.4 million sq.m., out of which an aggregate contracted GFA of approximately 0.5 million sq.m. was attributable to properties developed by independent third-party property developers.

In addition, we have been actively pursuing cooperation opportunities and exploring acquisitions of quality targets with considerable business scale, diversified property management portfolio and regional competitive strength. Subsequent to the Track Record Period and as of the Latest Practicable Date, we had entered into two property management service agreements for projects developed by independent third-party property developers with an aggregated contracted GFA of 0.5 million sq.m. We had also signed five framework agreements with independent third-party property developers with a total GFA of 4.4 million sq.m. (including a framework agreement for strategic cooperation with an independent third-party property developer with projects in various parts of the PRC, the shares of which are listed on the Main Board (the “ Framework Agreement ”)). Under the Framework Agreement, we will be accorded priority consideration in projects developed by the developer in respect of multiple pre-delivery value-added services, as well as the provision of property management services to delivered properties, subject to the public tendering and bidding

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process. The scope of the cooperation is for an initial term of ten years and covers initially ten projects under development and one project that has been completed and delivered. We have also entered into agreements to acquire five regional property management companies which engaged in the provision of property management services for properties developed by independent third-party property developers with an aggregate GFA under management of 7.72 million sq.m. See “Waivers from Strict Compliance with the Listing Rules—Equity Interests Acquired after the Track Record Period.” We believe that the aforesaid strategic cooperation and acquisitions have solidified our market position, contributed to our enlarged scale and increased variety of managed properties, and helped enhance our market development capabilities for obtaining service engagements from different sources.

Going forward, we intend to increase our business scale and market share through means such as (i) continuing to participate in tender and bidding processes organized by property owners’ associations and independent third-party property developers; and (ii) selectively pursuing acquisition and investment opportunities. For more information, see “Business— Business Strategies—Solidify our Leadership Position by Expanding the Scale of Our Business Operations” in this Document. We believe that we will not have difficulties expanding our third-party developers’ portfolio given that smaller independent property developers would be in need of property management services from a reputable property management services provider such as our Group. We are also confident that with our business scale, brand recognition and nation-wide operating platform, we will be well positioned to acquire more suitable targets given that (a) there are ample acquisition opportunities in the property management market. Independent property management companies in the PRC with no operational support from their related property developers are interested to team up with property management companies with strong support from top property developer; and (b) the property management industry has begun to experience a trend of consolidation. According to the Industry Consultant, the property management industry in the PRC is highly fragmented, with the Top 100 Property Management Companies accounting for only approximately 43.6% of the total property management GFA in 2019, an increase of 4.8% from the previous year.

Over the years, we have received a number of awards and honors from various organizations in recognition of our property management business and, among other things, our brand and overall reputation in the property management industry. We believe that, as the one of the leading comprehensive property management service providers in the PRC with more than 20 years of experience in providing property management services, our revenue attributable to independent property owners and property developers will continue to increase due to the increment in revenue derived from (i) independent individual property owners of the residential property projects currently under development by the Evergrande Group, for which we have been engaged to provide property management services and is expected to account for the majority of our Group’s revenue; and (ii) property developers other than the Evergrande Group, as a result of our Group’s increased efforts in participating in tender and bidding processes conducted by other property developers and potential customers which are Independent Third Parties, as well as acquisitions of property management projects.

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Licenses required for operation

We hold and enjoy the benefit of all relevant licenses and permits material to the operation of our business.

Access to customers, suppliers and business partners

We have a large and diversified base of customers that are unrelated to our Controlling Shareholders and/or their respective close associates. We have independent access to such customers, our suppliers as well as our other business partners.

Employees

As of the Latest Practicable Date, all of our full-time employees were recruited independently from our Controlling Shareholders and their respective close associates and primarily through both internal referrals and external sources such as recruiting websites.

Continuing connected transactions with our Controlling Shareholders

The section headed “Connected Transactions” in this Document sets out the continuing connected transactions between our Group and our Controlling Shareholders or their associates which will continue after the completion of the [ REDACTED ]. All such transactions are determined after arm’s length negotiations and on normal commercial terms.

As such, we expect that we will be able to maintain the aggregate amounts of the continuing connected transactions with our Controlling Shareholders or their associates at a reasonable percentage with respect to our total revenues after [ REDACTED ]. Accordingly, such continuing connected transactions are not expected to affect our operational independence as a whole.

Financial Independence

All loans, advances and balances due to or from the Controlling Shareholders or their close associates which were not arising out of the ordinary course of business will be fully settled before [ REDACTED ]. As of the Latest Practicable Date, there were no bank borrowings of our Group for which any of our Controlling Shareholders or their close associates had provided guarantee or security.

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In addition, we have our own internal control and accounting systems, accounting and finance department, independent treasury function for cash receipts and payment and independent access to third party financing. Accordingly, we believe we are able to maintain financial independence from our Controlling Shareholders and their respective close associates.

DEED OF NON-COMPETITION

Each of Dr. Hui, Xin Xin (BVI), China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings (the “ Undertaking Controlling Shareholders ”) [has unconditionally and irrevocably undertaken] to us in the Deed of Non-Competition that he/it will not, and will procure his/its close associates (save for members of our Group) not to, directly or indirectly conduct or be involved in any business (other than our business) that directly or indirectly competes, or may compete, with our business, being the provision of property management services, value-added services to non-property owners and value-added services to property owners and residents (collectively referred to as the “ Restricted Businesses ”), or hold shares or interest in any companies or business that compete directly or indirectly with the business engaged by our Group, except where the Undertaking Controlling Shareholders and their close associates hold (i) less than 30% of the total issued share capital of any company (whose shares are listed on the Stock Exchange or any other stock exchange); or (ii) less than 50% of interest of any private company, which is engaged in any business that is or may be in competition with any business engaged by any member of our Group and they do not possess the right to control the board of directors of such company. The above restrictions do not apply (i) when our Group engages in a new business that is not a Restricted Business and at the time of commencement of such new business, any of the Undertaking Controlling Shareholders had already been conducting or been involved in, or otherwise been interested in, the relevant business; and (ii) to the investment in Guanghui Industrial described in “Delineation of Business – The Retained Business” above.

Further, each of the Undertaking Controlling Shareholders [has undertaken] that if any new business investment or other business opportunity relating to the Restricted Businesses (the “ Competing Business Opportunity ”) is identified by or made available to him/it or any of his/its close associates (save for members of our Group), he/it shall, and shall procure that his/its close associates shall, refer such Competing Business Opportunity to our Company on a timely basis by giving written notice (the “ Offer Notice ”) to our Company within 30 business days of identifying such Competing Business Opportunity, the nature of the Competing Business Opportunity, the investment or acquisition costs and all other details reasonably necessary for our Company to consider whether to pursue such Competing Business Opportunity.

Upon receiving the Offer Notice, our Company shall seek approval from a board committee comprising only our independent non-executive Directors who do not have an interest in the Competing Business Opportunity (the “ Independent Board Committee ”) as to whether to pursue or decline the Competing Business Opportunity (any Director who has actual or potential interest in the Competing Business Opportunity shall abstain from attending

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(unless their attendance is specifically requested by the Independent Board Committee) and voting at, and shall not be counted in the quorum for, any meeting convened to consider such Competing Business Opportunity). The Independent Board Committee shall consider the financial impact of pursuing the Competing Business Opportunity offered, whether the nature of the Competing Business Opportunity is consistent with our Group’s strategies and development plans and the general market conditions of our business. If appropriate, the Independent Board Committee may appoint independent financial advisors and legal advisors to assist in the decision making process in relation to such Competing Business Opportunity. The Independent Board Committee shall, within 30 days of receipt of the Offer Notice, inform the Undertaking Controlling Shareholders in writing on behalf of our Company its decision whether to pursue or decline the Competing Business Opportunity.

The relevant Undertaking Controlling Shareholder shall be entitled but not obliged to pursue such Competing Business Opportunity if he/it receives a notice from the Independent Board Committee declining such Competing Business Opportunity, or if the Independent Board Committee fails to respond within the 30-day period as mentioned above. If there is any material change in the nature, terms or conditions of such Competing Business Opportunity, the relevant Undertaking Controlling Shareholder shall refer or procure the referral of such revised Competing Business Opportunity to our Company as if it were a new Competing Business Opportunity.

The Deed of Non-Competition will lapse automatically if the Undertaking Controlling Shareholders cease to hold, whether directly or indirectly, 50% or above of our Shares with voting rights or if our Shares cease to be listed on the Stock Exchange. In the event we cease to conduct any of the Restricted Businesses, the Undertaking Controlling Shareholders will no longer be prohibited under the Deed of Non-Competition from conducting such business.

In order to promote good corporate governance practices and to improve transparency, the Deed of Non-Competition also includes the following provisions:

each of the Undertaking Controlling Shareholders has undertaken to us that he/it will provide and procure his/its close associates (save for members of our Group) to provide on best endeavor basis, all information necessary for the annual review by our independent non-executive Directors on the compliance status of the Deed of Non-Competition; and
the Undertaking Controlling Shareholders will make a declaration in each of our annual reports on the compliance with the Deed of Non-Competition in accordance with the principle of voluntary disclosure in the corporate governance report.

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In addition, our Company [has taken], or will take, the following measures to safeguard good corporate governance standards in respect of the Deed of Non-Competition:

our independent non-executive Directors shall review on an annual basis the Deed of Non-Competition and compliance with the Deed of Non-Competition by the Undertaking Controlling Shareholders;
we will disclose in our annual report or by way of announcement in accordance with the requirements of the Listing Rules, the decisions on matters reviewed by the Independent Board Committee (including the reasons for not taking up any Competing Business Opportunity referred to our Company) and the review by our independent non-executive Directors on the compliance with, and the enforcement of, the Deed of Non-Competition; and
in the event that any of our Directors and/or their respective close associates has material interests in any matter to be deliberated by our Board in relation to the compliance and enforcement of Deed of Non-Competition, he/she may not vote on the resolutions of our Board approving the matter and shall not be counted towards the quorum for the voting pursuant to the applicable provisions in the Articles of Association.

CORPORATE GOVERNANCE MEASURES

Each of our Controlling Shareholders has confirmed that he/she/it fully comprehends his/her/its obligations to act in our Shareholders’ best interests as a whole. Our Directors believe that there are adequate corporate governance measures in place to manage existing and potential conflicts of interest. In order to further avoid potential conflicts of interest, we have implemented the following measures:

(a) as part of our preparation for the [ REDACTED ], we have amended our Articles of Association to comply with the Listing Rules. In particular, our Articles of Association provided that, unless otherwise provided, a Director shall not vote on any resolution approving any contract or arrangement or any other proposal in which such Director or any of his/her close associates have a material interest nor shall such Director be counted in the quorum present at the meeting;
(b) a Director with material interests shall make full disclosure in respect of matters that may have conflict or potentially conflict with any of our interest and abstain from the board meetings on matters in which such Director or his/her associates have a material interest, unless the attendance or participation of such Director at such meeting of the Board is specifically requested by a majority of the independent non-executive Directors;

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(c) we are committed that our Board should include a balanced composition of executive Directors and independent non-executive Directors. We [have appointed] independent non-executive Directors and we believe our independent non-executive Directors possess sufficient experience and they are free of any business or other relationship which could interfere in any material manner with the exercise of their independent judgment and will be able to provide an impartial, external opinion to protect the interests of our public Shareholders. For details of our independent non-executive Directors, see “Directors and Senior Management—Board of Directors—Independent non-executive Directors” in this Document;
(d) we will appoint Huatai Financial Holdings (Hong Kong) Limited as our compliance advisor to provide advice and guidance to us in respect of compliance with the applicable laws and the Listing Rules including various requirements relating to Directors’ duties and corporate governance;
(e) as required by the Listing Rules, our independent non-executive Directors shall review any continuing connected transactions annually and confirm in our annual report that such transactions have been entered into in our ordinary and usual course of business, are either on normal commercial terms or on terms no less favorable to us than those available to or from independent third parties and on terms that are fair and reasonable and in the interests of our Shareholders as a whole;
(f) on an annual basis, our independent non-executive Directors will review the non-compete undertakings provided by the Undertaking Controlling Shareholders pursuant to the Deed of Non-competition and their compliance with such undertakings;
(g) on an annual basis, our independent non-executive Directors will review the compliance of Rule 8.10 of the Listing Rules by our Controlling Shareholders; and
(h) our Company will disclose in its annual report each year the compliance status of the Deed of Non-Competition.

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CONNECTED TRANSACTIONS

Our Group has entered into a number of agreements with parties who will, upon completion of the [ REDACTED ], become our connected persons, and the transactions disclosed in this section will constitute continuing connected transactions of our Company under the Listing Rules upon the [ REDACTED ].

(A) CONTINUING CONNECTED TRANSACTION FULLY EXEMPT FROM THE REPORTING, ANNUAL REVIEW, ANNOUNCEMENT AND INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENTS

1. Trademark Licensing

On August 12, 2020, a trademark license agreement was entered into between Jinbi Property and Evergrande Real Estate (the “ PRC Trademark License Agreement ”), pursuant to which Evergrande Real Estate agreed to irrevocably and unconditionally grant to Jinbi Property, its subsidiaries and branches, its controlling shareholders and its controlling shareholders’ subsidiaries an exclusive license to use certain trademarks (the “ PRC Trademarks ”) on a royalty-free basis. The PRC Trademark License Agreement is a transitional arrangement between Jinbi Property and Evergrande Real Estate to allow our Group to use the PRC Trademarks while the parties are in the process of completing the transfer of the PRC Trademarks to Jinbi Property pursuant to a trademark transfer agreement dated August 12, 2020, upon completion of which Jinbi Property will be the owner of the PRC Trademarks. The PRC Trademark License Agreement has a term commencing from the date of the PRC Trademark License Agreement until the completion date of the transfer of the PRC Trademarks.

On [●] 2020, a deed of trademark licensing was entered into between our Company and China Evergrande Group (the “ Hong Kong Trademark License Deed ”), pursuant to which China Evergrande Group agreed to irrevocably and unconditionally grant to our Company and other members of our Group a non-transferrable and non-exclusive license to use the trademark (the “ Hong Kong Trademark ”), being a trademark registered in Hong Kong, on a royalty-free basis, for a perpetual term commencing from the date of the Hong Kong Trademark License Deed. China Evergrande Group has undertaken in the Hong Kong Trademark License Deed to maintain the registration of the Hong Kong Trademark throughout the term of the Hong Kong Trademark License Deed.

For details of the PRC Trademarks and the Hong Kong Trademark, see “B. Information about Our Business – 2. Intellectual property rights of our Group” in Appendix IV to this Document.

We believe that the entering into of the PRC Trademark License Agreement with a term which ends on the completion date of the transfer of the PRC Trademarks and the entering into of the Hong Kong Trademark License Deed with a term of more than three years can ensure the stability of our operations, and is beneficial to us and the Shareholders as a whole. The Joint Sponsors are of the view that it is normal business practice for agreements of this type to be of duration of more than three years.

China Evergrande Group is one of our Controlling Shareholders and therefore a connected person of our Company for the purpose of the Listing Rules. As of the Latest Practicable Date, Evergrande Real Estate was indirectly owned as to 63.46% by China Evergrande Group. Evergrande Real Estate is therefore a connected person of our Company for the purpose of the

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Listing Rules. Accordingly, the transactions under the PRC Trademark License Agreement and the Hong Kong Trademark License Deed will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [ REDACTED ].

As the rights to use the PRC Trademarks and the Hong Kong Trademark are granted on a royalty-free basis, the transactions under the PRC Trademark License Agreement and the Hong Kong Trademark License Deed will be within the de minimis threshold provided under Rule 14A.76 of the Listing Rules and will be exempt from the reporting, annual review, announcement and independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

(B) CONTINUING CONNECTED TRANSACTIONS SUBJECT TO THE REPORTING, ANNUAL REVIEW AND ANNOUNCEMENT REQUIREMENTS BUT EXEMPT FROM INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENT

1. Car Parking Space Leasing

On [●], 2020, our Company entered into a master car parking space leasing agreement (the “ Master Car Parking Space Leasing Agreement ”) with China Evergrande Group, pursuant to which our Group will lease from the Evergrande Group certain car parking spaces (the “ Car Parking Spaces ”) situated in the residential and commercial properties developed by the Evergrande Group and managed by us for subleasing to residents and tenants in such residential and commercial properties. The Master Car Parking Space Leasing Agreement has a term commencing from the [ REDACTED ] until December 31, 2022.

For each of the three years ended December 31, 2019 and the six months ended June 30, 2020, the total amount of rent payable by our Group to the Evergrande Group for the lease of the Car Parking Spaces amounted to approximately RMB33.2 million, RMB48.6 million, RMB59.7 million and RMB40.5 million, respectively.

The rent to be paid by our Group for the lease of the Car Parking Spaces will be determined after arm’s length negotiations with reference to, among others, the prevailing market rent of car parking spaces in similar locations and similar properties and the number and occupancy rate of the Car Parking Spaces leased by our Group from the Evergrande Group.

It is estimated that the maximum amounts of rent fee payable by our Group for the leasing of the Car Parking Spaces for each of the three years ending December 31, 2022 will not exceed RMB121.8 million, RMB146.2 million and RMB175.4 million, respectively. The increase in the annual caps for the lease of Car Parking Spaces as compared to the historical transaction amounts for the Track Record Period is primarily due to the expected increase in the demand for car parking spaces, taking into account the estimated GFA of residential and commercial properties to be delivered by the Evergrande Group and managed by us and the expected increase in vehicles possessed by the owners and occupants of the managed properties in the three years ending December 31, 2022. In addition, with the introduction of user-charging car parking spaces at certain properties of the Evergrande Group in 2019, our lease of such car parking spaces increased more significantly for sub-leasing purposes. The

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rapid increase in the demand for car parking spaces in the second half of 2020 has been estimated with reference to our understanding of the total GFA to be delivered and time of delivery in the second half of 2020 pursuant to the scheduled delivery plan of the Evergrande Group.

The following factors were considered in arriving at the above annual caps:

the historical transaction amounts in relation to the lease of the Car Parking Spaces during the Track Record Period;
the terms and conditions, in particular, the rent, under the existing lease agreements;
the prevailing market rent of the car parking spaces in similar locations and similar properties and the estimated increase for the three years ending December 31, 2022;
the estimated number and occupancy rate of the Car Parking Spaces leased by our Group from the Evergrande Group for the three years ending December 31, 2022; and
the expected increase in rental fee and demand for the Car Parking Spaces taking into account the estimated GFA of residential and commercial properties to be developed by the Evergrande Group and managed by our Group based on the properties under development and the land bank held by the Evergrande Group as of June 30, 2020 and its development plan for the three years ending December 31, 2022. According to the 2020 interim results announcement of China Evergrande Group, as of June 30, 2020, it had residential land reserves of approximately 240 million sq.m., which covered 817 projects located in 229 cities across China. In addition, it had a total GFA under construction of 123 million sq.m. It also held investment properties including commercial podiums in living communities and office buildings with GFA of approximately 8.97 million sq.m. and approximately 359,000 car parking spaces.

China Evergrande Group is one of our Controlling Shareholders and therefore a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions under the Master Car Parking Space Leasing Agreement will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [ REDACTED ].

Since each of the applicable percentage ratios under the Listing Rules in respect of the annual caps under the Master Car Parking Space Leasing Agreement is expected to be more than 0.1% but less than 5% on an annual basis, the transactions under the Master Car Parking Space Leasing Agreement constitute continuing connected transactions for our Company which are subject to the reporting, annual review and announcement requirements but exempt from the circular and independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

2. Procurement of Goods and Services

On [●], 2020, our Company entered into a master procurement agreement (the “ Master Procurement Agreement ”) with China Evergrande Group, pursuant to which our Group agreed to procure from the Evergrande Group certain goods and services, including but not

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limited to (i) maintenance materials and parts for use in our operations; (ii) office and communication equipment; (iii) staff uniforms and other consumables; and (iv) gardening services (the “ Procurement ”). The Master Procurement Agreement has a term commencing from the [ REDACTED ] until December 31, 2022.

For each of the three years ended December 31, 2019 and the six months ended June 30, 2020, the total amount of fees payable by our Group to the Evergrande Group for the Procurement amounted to approximately RMB103.5 million, RMB139.8 million, RMB111.6 million and RMB63.5 million, respectively. The decrease in the total amount of fees payable for the Procurement in 2019 was primarily due to the decrease in the procurement of consumables from the Evergrande Group as a result of the destocking measures implemented in such year which increased the rate of consumption of earlier procurement. Such stock had been largely consumed by the end of 2019 and the demand for the procurement of consumables increased in 2020.

The fees to be paid by our Group for the Procurement will be determined after arm’s length negotiations with reference to (i) the catalog prices (if available) of goods from the Evergrande Group and other independent third party suppliers; and (ii) the prevailing market price of similar goods and services (taking into account the scope of services and the anticipated operational costs including but not limited to labor costs and costs of materials).

It is estimated that the maximum amounts of fees payable by our Group for the Procurement for each of the three years ending December 31, 2022 will not exceed RMB146.1 million, RMB169.0 million and RMB193.6 million, respectively. The increase in the annual caps for the Procurement as compared to the historical transaction amounts for the Track Record Period is primarily due to the estimated increase in demand for the Procurement, taking into account the expected increase in the GFA to be managed by our Group and our business development in the three years ending December 31, 2022.

The following factors were considered in arriving at the above annual caps:

the historical transaction amounts in relation to the Procurement during the Track Record Period;
the estimated transaction amounts in relation to the Procurement for the three years ending December 31, 2022 based on existing signed contracts;
the estimated GFA of properties under development or to be delivered by the Evergrande Group and the land bank held by the Evergrande Group as of June 30, 2020 and its development plan for the three years ending December 31, 2022. According to the 2020 interim results announcement of China Evergrande Group, as of June 30, 2020, it had residential land reserves of approximately 240 million sq.m., which covered 817 projects located in 229 cities across China. In addition, it had a total GFA under construction of 123 million sq.m.;

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the estimated demand for the Procurement for the three years ending December 31, 2022 based on our business development plan.

China Evergrande Group is one of our Controlling Shareholders and is therefore a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions under the Master Procurement Agreement will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [ REDACTED ].

Since each of the applicable percentage ratios under the Listing Rules in respect of the annual caps under the Master Procurement Agreement is expected to be more than 0.1% but less than 5% on an annual basis, the transactions under the Master Procurement Agreement constitute continuing connected transactions for our Company which are subject to the reporting, annual review and announcement requirements but exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

3. Recreation Center Operational Management Services

On [●], 2020, our Company entered into a master recreation center operational management services agreement (the “ Master Recreation Center Operational Management Services Agreement ”) with China Evergrande Group, pursuant to which our Group agreed to provide operational management services (the “ Recreation Center Operational Management Services ”) with respect to recreation centers situated in the residential and commercial properties developed and owned by the subsidiaries, joint ventures, and associates of China Evergrande Group (the “ Evergrande Associates ”). The Master Recreation Center Operational Management Services Agreement has a term commencing from the [ REDACTED ] until December 31, 2022.

For each of the three years ended December 31, 2019 and the six months ended June 30, 2020, the total service fee payable to our Group in respect of the Recreation Center Operational Management Services amounted to approximately RMB2.3 million, RMB6.6 million, RMB11.0 million and RMB0.9 million, respectively. The decrease in the total amount of service fee for the Recreation Center Operational Management Services for the six months ended June 30, 2020 was primarily due to the fact that many recreation centers were not in operation for the corresponding period as a result of the COVID-19 pandemic and no operational management services were rendered.

The fees to be charged for the Recreation Center Operational Management Services will be determined after arm’s length negotiations with reference to the prevailing market price (taking into account the location and condition of the recreation centers, the scope of services and the anticipated operational costs including but not limited to labor costs, administrative costs and costs of materials).

It is estimated that the maximum amounts of service fee payable to our Group in relation to the Recreation Center Operational Management Services for each of the three years ending December 31, 2022 will not exceed RMB4.2 million, RMB20.1 million and RMB26.2 million, respectively. The rapid increase in the expected total amount of service fee for the Recreation

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Center Operational Management Services between 2020 and 2021 has been estimated primarily in view of the resumption of operation of recreation centers after the COVID-19 pandemic and the estimated increase in the GFA and number of recreation centers to be managed by our Group.

The following factors were considered in arriving at the above annual caps:

the historical transaction amounts in relation to the Recreation Center Operational Management Services during the Track Record Period;
the costs incurred for the Recreation Center Operational Management Services during the Track Record Period;
the estimated revenue from the provision of the Recreation Center Operational Management Services for the three years ending December 31, 2022 based on existing signed contracts with the Evergrande Associates; and
the estimated size and number of recreation centers to be developed by the Evergrande Associates for the three years ending December 31, 2022 pursuant to the development plan of the Evergrande Associates which will require our operational management services and the opening time of such recreation centers.

China Evergrande Group is one of our Controlling Shareholders and therefore a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions under the Master Recreation Center Operational Management Services Agreement will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [ REDACTED ].

Since each of the applicable percentage ratios under the Listing Rules in respect of the annual caps under the Master Recreation Center Operational Management Services Agreement is expected to be more than 0.1% but less than 5% on an annual basis, the transactions under the Master Recreation Center Operational Management Services Agreement constitute continuing connected transactions for our Company which are subject to the reporting, annual review and announcement requirements but exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

4. Property Transaction Assistance Services

On [●], 2020, our Company entered into a master property transaction assistance services agreement (the “ Master Property Transaction Assistance Services Agreement ”) with China Evergrande Group, pursuant to which our Group agreed to provide transaction assistance services in respect of (i) the leasing to third parties of properties (excluding car parking spaces) owned by the Evergrande Associates for commercial use; and (ii) the sales to third parties of the car parking spaces situated in residential and commercial properties developed by the

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Evergrande Associates (the “ Property Transaction Assistance Services ”). The Master Property Transaction Assistance Services Agreement has a term commencing from the [ REDACTED ] until December 31, 2022.

For each of the three years ended December 31, 2019 and the six months ended June 30, 2020, the total service fee payable to our Group in respect of the Property Transaction Assistance Services amounted to nil, approximately RMB3.2 million, RMB54.8 million and RMB42.5 million. We started providing property assistance services in respect of the leasing of unsold properties (excluding car parking spaces) developed by the Evergrande Associates from 2018 and assistance services in respect of the sales of the car parking spaces situated in properties developed by the Evergrande Associates from 2019.

The fees to be charged for the Property Transaction Assistance Services will be determined after arm’s length negotiations with reference to (i) the rental and GFA of the properties to be leased through our Property Transaction Assistance Services, (ii) the selling price and number of car parking spaces to be sold through our Property Transaction Assistance Services; (iii) the scope of our Property Transaction Assistance Services; and (iv) a certain service fee calculated as a rate which is comparable to the prevailing market rate paid by the Evergrande Associates to other independent property transaction assistance service providers for similar services.

It is estimated that the maximum amounts of service fee payable to our Group in relation to the Property Transaction Assistance Services for each of the three years ending December 31, 2022 will not exceed RMB121.7 million, RMB157.6 million and RMB192.3 million, respectively.

The following factors were considered in arriving at the above annual caps:

the historical transaction amounts in relation to the Property Transaction Assistance Services during the Track Record Period;
the estimated revenue from the provision of the Property Transaction Assistance Services for the three years ending December 31, 2022 based on existing signed contracts with the Evergrande Associates;
the estimated GFA of units and car parking spaces to be sold by the Evergrande Associates based on its existing projects available for sale, projects under development and land bank as of June 30, 2020 which will require the Property Transaction Assistance Services for the three years ending December 31, 2022 with reference to the historical proportion of sales which was procured by our Group. According to the 2020 interim results announcement of China Evergrande Group, as of June 30, 2020, it had residential land reserves of approximately 240 million sq.m., which covered 817 projects located in 229 cities across China. In addition, it had a total GFA under construction of 123 million sq.m. It also held investment properties including commercial podiums in living communities and office buildings with GFA of approximately 8.97 million sq.m. and approximately 359,000 car parking spaces; and
the estimated increase of our capacity in providing the Property Transaction Assistance Services.

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China Evergrande Group is one of our Controlling Shareholders and therefore a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions under the Master Property Transaction Assistance Services Agreement will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [ REDACTED ].

Since each of the applicable percentage ratios under the Listing Rules in respect of the annual caps under the Master Property Transaction Assistance Services Agreement is expected to be more than 0.1% but less than 5% on an annual basis, the transactions under the Master Property Transaction Assistance Services Agreement constitute continuing connected transactions for our Company which are subject to the reporting, annual review and announcement requirements but exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

(C) CONTINUING CONNECTED TRANSACTIONS SUBJECT TO THE REPORTING, ANNUAL REVIEW, ANNOUNCEMENT AND INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENTS

1. Property Management and Related Services

On [●], 2020, our Company entered into a master property management and related services agreement (the “ Master Property Management and Related Services Agreement ”) with China Evergrande Group, pursuant to which our Group agreed to provide to the Evergrande Associates property management and related services, including but not limited to (i) property management services for unsold properties and properties owned by the Evergrande Associates; (ii) pre-delivery services including (a) management services for construction sites, show flats and property sales centers and preliminary planning and design consultancy services at the pre-delivery stage, (b) pre-delivery cleaning services, and (c) pre-delivery inspection services; and (iii) repair and maintenance services during the warranty period of residential and commercial properties developed by the Evergrande Associates (the “ Property Management and Related Services ”). The Master Property Management and Related Services Agreement has a term commencing from the [ REDACTED ] until December 31, 2022.

For each of the three years ended December 31, 2019 and the six months ended June 30, 2020, the total service fee payable to our Group in respect of the Property Management and Related Services amounted to approximately RMB1,937.3 million, RMB2,512.4 million, RMB2,663.6 million and RMB1,588.8 million, respectively.

The fees to be charged for the Property Management and Related Services will be determined after arm’s length negotiations with reference to the prevailing market price (taking into account the location and condition of the property, the scope of services and the anticipated operational costs including but not limited to labor costs, administrative costs and costs of materials), historical transaction amounts and the prices charged by our Group for providing comparable services to Independent Third Parties.

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It is estimated that the maximum amounts of service fee payable to our Group in relation to the Property Management and Related Services for each of the three years ending December 31, 2022 will not exceed RMB3,945.3 million, RMB5,305.7 million and RMB6,534.3 million, respectively. The increase in the annual caps for the Property Management and Related Services as compared to the historical transaction amounts for the Track Record Period is primarily due to the expected increase in demand for Property Management and Related Services, taking into account the expected GFA to be delivered by the Evergrande Associates for the three years ending December 31, 2022 as estimated with reference to our understanding of its future property development plans.

The following factors were considered in arriving at the above annual caps:

the historical transaction amounts in relation to the Property Management and Related Services during the Track Record Period;
the estimated transaction amount for the three years ending December 31, 2022 based on existing signed contracts with the Evergrande Associates;
the costs incurred for the related services during the Track Record Period;
the estimated size and number of properties to be delivered by the Evergrande Associates in the three years ending December 31, 2022, which is based on the properties under development and the land bank held by the Evergrande Associates as of June 30, 2020. According to the 2020 interim results announcement of the China Evergrande Group, as of June 30, 2020, it had residential land reserves of approximately 240 million sq.m., which covered 817 projects located in 229 cities across China. In addition, it had a total GFA under construction of 123 million sq.m.;
the estimated monthly management fee to be charged in respect of residential and commercial properties owned by the Evergrande Associates, which is based on the same average monthly management fee charged for the year ended December 31, 2019. Such estimated fee is considered by CIA to be in line with the expected prevailing market rate trend;
the estimated service fee to be charged in respect of residential and commercial properties to be delivered by the Evergrande Associates which will require our pre-delivery services. Such estimated fee is considered by CIA to be in line with the expected prevailing market rate trend;
the estimated service fee to be charged in respect of residential and commercial properties to be sold by the Evergrande Associates which will require our repair and maintenance services during the warranty period and is based on the average service fee charged during the Track Record Period. Such estimated fee is considered by CIA to be in line with the expected prevailing market rate trend; and

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the demand for our Property Management and Related Services, which has been estimated based on the expected volume of sale, number of sales centers, size and number of the properties of the Evergrande Associates which will require our Property Management and Related Services, taking into account the total GFA of properties developed by the Evergrande Associates under our management during the Track Record Period, the properties held by China Evergrande Group with a total GFA of approximately 8.97 million sq.m. as of June 30, 2020 according to its 2020 interim results announcement and our estimation of the time of pre-sales and delivery with reference to its historical pre-sale and delivery schedule.

China Evergrande Group is one of our Controlling Shareholders and therefore a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions under the Master Property Management and Related Services Agreement will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [ REDACTED ].

Since each of the applicable percentage ratios under the Listing Rules in respect of the annual caps under the Master Property Management and Related Services Agreement is expected to be more than 5% on an annual basis, the transactions under the Master Property Management and Related Services Agreement constitute continuing connected transactions for our Company which are subject to the reporting, annual review, announcement and independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

(D) APPLICATION FOR WAIVER

The transactions described in “—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but exempt from Independent Shareholders’ Approval Requirement” in this section constitutes our continuing connected transactions under the Listing Rules, which are subject to the reporting, annual review and announcement requirements but exempt from independent shareholders’ approval requirement of the Listing Rules.

The transactions described in “—(C) Continuing Connected Transactions subject to the Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements” in this section constitute our continuing connected transactions under the Listing Rules which are subject to the reporting, annual review, announcement and independent shareholders’ approval requirements of the Listing Rules. In respect of these continuing connected transactions, pursuant to Rule 14A.105 of the Listing Rules, we have applied for, and the Stock Exchange [has granted] us, waivers exempting us from strict compliance with the announcement requirement under Chapter 14A of the Listing Rules in respect of the continuing connected transaction as disclosed in “—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but exempt from Independent Shareholders’ Approval Requirement”; and the announcement and independent shareholders’ approval requirements

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under Chapter 14A of the Listing Rules in respect of the continuing connected transactions as disclosed in “—(C) Continuing Connected Transactions subject to the Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements” in this section, subject to the condition that the aggregate amounts of the continuing connected transactions for each financial year shall not exceed the relevant amounts set forth in the respective annual caps (as stated above).

(E) DIRECTORS’ VIEWS

Our Directors (including our independent non-executive Directors) consider that all the continuing connected transactions described in “—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but exempt from Independent Shareholders’ Approval Requirement” and “—(C) Continuing Connected Transactions subject to the Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements” in this section have been and will be carried out: (i) in the ordinary and usual course of our business; (ii) on normal commercial terms; and (iii) in accordance with the respective terms that are fair and reasonable and in the interests of our Company and our Shareholders as a whole.

Our Directors (including our independent non-executive Directors) are also of the view that the annual caps of the continuing connected transactions in “—(B) Continuing Connected Transaction subject to the Reporting, Annual Review and Announcement Requirements but exempt from Independent Shareholders’ Approval Requirement” and “—(C) Continuing Connected Transactions subject to the Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements” in this section are fair and reasonable and are in the interests of our Shareholders as a whole.

(F) JOINT SPONSORS’ VIEW

Based on the due diligence findings of the Joint Sponsors, information provided by us, confirmation by our Directors (including independent non-executive Directors), discussion with CIA on the prevailing market rate (where available) of the underlying services, and review of the terms of the relevant framework agreements the Joint Sponsors are of the view (i) that the continuing connected transactions described in “—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but exempt from Independent Shareholders’ Approval Requirement” and “—(C) Continuing Connected Transactions subject to the Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements” in this section have been and will be entered into in the ordinary and usual course of our business, on normal commercial terms, that are fair and reasonable and in the interests of our Company and our Shareholders as a whole, and (ii) that the proposed annual caps (where applicable) of such continuing connected transactions are fair and reasonable and in the interests of our Company and our Shareholders as a whole.

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DIRECTORS AND SENIOR MANAGEMENT

BOARD OF DIRECTORS

Our Board of Directors comprises four executive Directors and three independent non-executive Directors. The powers and duties of our Board include determining our business and investment plans, preparing our annual financial budgets and final reports, and exercising other powers, functions and duties as conferred by the Articles. We [have entered] into a service agreement with each of our executive Directors and a letter of appointment with each of our independent non-executive Directors.

The table below set out certain information in respect of our Directors:

Name Age Executive Directors Mr. Zhao Changlong (趙長龍) 55 Mr. Hu Liang (胡亮) 33 Mr. Wang Zhen (王震) 36 Ms. An Lihong (安麗紅) 50	Date of joining our Group *(Note)* August 20, 2007 July 14, 2008 January 28, 2015 April 6, 2015	Date of appointment as Director September 23, 2020 September 23, 2020 September 23, 2020 September 23, 2020	Existing position(s) in our Group Executive Director and chairman of our Board Executive Director and general manager Executive Director and deputy general manager Executive Director and deputy general manager	Roles and responsibilities Responsible for the overall management and operation of our Group Responsible for the formulation of group policies and the business operation of our Group Responsible for human resources and administrative management of our Group Responsible for finance and cost management of our Group	Relationship with other Directors or senior management
					None None None None

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DIRECTORS AND SENIOR MANAGEMENT

Name Age Date of joining our Group *(Note)* Independent non-executive Directors Mr. Chan Chun Hung, Vincent (陳鎮洪) 57 [●] Mr. Victor Huang (黃偉德) 49 [●] Mr. Guo Zhaohui (郭朝暉) 41 [●]	Date of appointment as Director [●] [●] [●]	Existing position(s) in our Group Independent non-executive Director Independent non-executive Director Independent non-executive Director	Roles and responsibilities Responsible for providing independent advice on the operations and management of our Group Responsible for providing independent advice on the operations and management of our Group Responsible for providing independent advice on the operations and management of our Group	Relationship with other Directors or senior management
				None None None

Note: Denotes the time from which the relevant Director first became involved in matters relating to the business of our Group while under the employment of the Evergrande Group or our Group (where applicable).

Executive Directors

Mr. Zhao Changlong (趙長龍) , aged 55, was appointed as our executive Director and chairman of our Board on September 23, 2020. He is primarily responsible for the overall operation and management of our Group. Mr. Zhao joined our Group in August 2007 and has been serving as the chairman of the board of Jinbi Property since July 2020, where he is responsible for its overall management.

Mr. Zhao has over 20 years of experience in the property development and property management industries. Mr. Zhao joined the Evergrande Group in September 2003 and has served in various positions in subsidiaries of the Evergrande Group. From September 2003 to February 2005, Mr. Zhao served as the general manager of Maoming Evergrande Steel Group Co., Ltd. (茂名恒大鋼鐵集團有限公司), a metal materials manufacturer, where he was primarily responsible for its overall operations. From February 2005 to August 2007, Mr. Zhao successively served as a vice president, an assistant to the president and the general manager of the development center of Evergrande Real Estate, where he was primarily responsible for

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its development management. From August 2007 to July 2020, Mr. Zhao served various positions in district companies including the chairman of the board and the general manager of Evergrande Real Estate Group (Xi’an) Co., Ltd (恒大地產集團西安有限公司), the chairman of the board of Evergrande Real Estate Group (Jiangxi) Co., Ltd (恒大地產集團江西有限公司) and the chairman of the board of Evergrande Real Estate Group (Shanxi) Co., Ltd (恒大地產集團山西有限公司), where he was primarily responsible for the operations and management of district companies including their property management business. Mr. Zhao has also been serving as a director of Evergrande Real Estate since November 2017.

Prior to joining the Evergrande Group, from March 1998 to July 2003, Mr. Zhao served as an assistant president and later as an assistant to the president and the general manager of the development center of Guangzhou Evergrande Industrial Group Co., Ltd. (廣州恒大實業集團有限公司), a property developer, where he was primarily responsible for its development management.

Mr. Zhao graduated from the Shenyang Metallurgical Machinery School (沈陽冶金機械專科學校) with a diploma in metallurgy and heat treatment in the PRC in July 1986. Mr. Zhao graduated from the Zhengzhou University of Technology (鄭州工業大學) with a major in industrial engineering in the PRC in December 1997.

Mr. Hu Liang (胡亮) , aged 33, was appointed as our executive Director on September 23, 2020. Mr. Hu joined our Group in July 2008 and has been serving as the general manager of Jinbi Property since March 2020. He is primarily responsible for the formulation of group policies and the business operation of our Group. He currently holds directorships in a number of subsidiaries of our Group.

Mr. Hu has over 12 years of experience in the property management industry. Mr. Hu joined the Evergrande Group in July 2008 and has served in various positions in subsidiaries of the Evergrande Group. From July 2008 to November 2009, Mr. Hu served as a quality management staff of Evergrande Real Estate, where he was primarily responsible for its quality management work. From November 2009 to November 2010, Mr. Hu served as a project deputy general manager of the Guangzhou branch of Jinbi Property, where he was primarily responsible for property management services for such project. From November 2010 to March 2014, Mr. Hu served as an assistant to the general manager of the Nanning branch of Jinbi Property and as a deputy general manager of Qinzhou Evergrande Lvzhou Customer Services Center (欽州恒大綠洲客服中心), where he was primarily responsible for the quality management of its operations as well as the management of the customer services center. From March 2014 to April 2015, Mr. Hu served as an assistant to the general manager of Evergrande Real Estate Group (Nanning) Co., Ltd. (恒大地產集團南寧有限公司), where he was primarily responsible for the management of its property management services. From April 2015 to July 2015, Mr. Hu served as the chairman of the board of the Shijiazhuang branch of Jinbi Property, where he was responsible for its overall management. From July 2015 to December 2016, Mr. Hu served as a deputy general manager of Evergrande Real Estate Group (Beijing) Co., Ltd. (恒大地產集團北京有限公司), where he was primarily responsible for the management of its property management services. From January 2017 to July 2017, Mr. Hu served as the general

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manager of property operational management center of Evergrande Group Co., Ltd. (恒大集團有限公司), where he was primarily responsible for the management of its property management services. From July 2017 to March 2020, Mr. Hu successively served as an executive deputy general manager of the property management center and the general manager of the property management center of Evergrande Real Estate, where he was primarily responsible for the management of its property management services.

Mr. Hu obtained a bachelor’s degree in sociology from the Northwest A&F University (西北農林科技大學) in the PRC in July 2008.

Mr. Wang Zhen (王震) , aged 36, was appointed as our executive Director on September 23, 2020. Mr. Wang joined our Group in January 2015 and has been serving as the deputy general manager of Jinbi Property since March 2020. He is primarily responsible for human resources and administrative management of our Group.

Mr. Wang has over 12 years of experience in human resources and administrative management. Mr. Wang joined the Evergrande Group in July 2008 and has served in various positions in subsidiaries of the Evergrande Group. From July 2008 to January 2015, Mr. Wang successively served as a personnel management staff, a deputy manager of the administration and personnel department, a manager of the administration and personnel department and a deputy general manager of Evergrande Yuanlin Group Co., Ltd. (恒大園林集團有限公司) (“ Evergrande Yuanlin ”), a company principally engaged in the provision of landscape engineering and design services, and was primarily responsible for its human resources, administrative management, legal and internal control management. From January 2015 to July 2017, Mr. Wang successively served as an assistant to the general manager and a deputy general manager of the property management center of Evergrande Real Estate, where he was primarily responsible for its human resources, administrative management and training management. Mr. Wang served as a deputy general manager of the Beijing branch of Evergrande Real Estate and chairman of the board of the Beijing branch of Jinbi Property in July 2017, and was responsible for the management of the property management services. From July 2017 to March 2020, Mr. Wang served as an executive deputy general manager of the property management center of Evergrande Real Estate, where he was primarily responsible for human resources, administrative management and training management.

Mr. Wang obtained a bachelor’s degree in English from Tianjin University of Commerce (天津商業大學) in the PRC in June 2008 and a master’s degree in project management from Wuhan University of Science and Technology (武漢科技大學) in the PRC in June 2017.

Ms. An Lihong (安麗紅) , aged 50, was appointed as our executive Director on September 23, 2020. Ms. An joined our Group in April 2015 and has been serving as a deputy general manager of Jinbi Property since March 2020. She is primarily responsible for finance and costs management of our Group.

Ms. An has over 27 years of experience in accounting and financial management. Ms. An joined the Evergrande Group in August 2003. From August 2003 to December 2006, Ms. An served as an accountant at Evergrande Real Estate, where she was responsible for its revenue and cost management. From December 2006 to February 2009, Ms. An served as a deputy financial manager of Guangzhou Yuexiu Residential Construction Engineering Co., Ltd. (廣州市越秀住宅建築工程有限公司), a company principally engaged in real estate related business,

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where she was primarily responsible for its financial management. From February 2009 to January 2020, Ms. An served various positions in the finance center of the Evergrande Real Estate, including a deputy manager of the finance department two, a manager of the finance department two, a manager of the finance department one, a deputy general manager and a district financial manager of the finance center. From January 2020 to March 2020, Ms. An served as a deputy general manager of the property management center of Evergrande Real Estate, where she was primarily responsible for the financial management.

Prior to joining the Evergrande Group, from July 1993 to March 2001, Ms. An served as an accountant at Harbin Zhengda Construction Enterprise Group Co., Ltd. (哈爾濱正大建築企業集團有限公司), a company principally engaged in real estate and construction related business, where she was responsible for its financial accounting. From March 2001 to August 2003, Ms. An served as a director of the accounting and finance department of Xinheng Group Co., Ltd. (信恆集團有限公司), a company principally engaged in real estate and construction related business, where she was primarily responsible for its financial accounting management.

Ms. An obtained a bachelor’s degree in accounting from Northeast Agricultural University (東北農業大學) in the PRC in July 2004. Ms. An was admitted as a certified public accountant granted by the Harbin Finance Bureau (哈爾濱市財政局) in April 1998 and an intermediate accountant by the MOF in May 2000.

Independent non-executive Directors

Mr. Chan Chun Hung, Vincent (陳鎮洪) , aged 57, was appointed as our independent non-executive Director on [●], 2020. Mr. Chan is responsible for providing independent advice on the operations and management of our Board.

Mr. Chan has over 25 years of experience in private equity management. Mr. Chan was the senior manager of HSBC Private Equity Management Limited, a company principally engaged in investment management, from October 1991 to October 1994, the director of Suez Asia Holdings (Hong Kong) Limited, a company principally engaged in investment management, from February 1997 to November 2000, the managing director and corporate director of JAFCO Investment (Asia Pacific) Ltd., a company principally engaged in private equity investment, from November 2000 to November 2007, and the chief executive officer of Spring Capital Asia, Limited, a company principally engaged in private equity investment, from October 2007 to December 2015. Mr. Chan has been the senior managing director of Samena Capital Hong Kong Limited, a company principally engaged in private equity investment, since January 2016.

Mr. Chan was a member of the Public Shareholders Group of the SFC from July 2005 to March 2011 and a member of the Main Board and GEM Listing Committee of the Stock Exchange from May 2007 to May 2012. Mr. Chan is currently the president and executive director of the Hong Kong Venture Capital and Private Equity Association. Mr. Chan is currently a committee member of the 15th election of the Chinese People’s Political Consultative Conference in Chengdu (中國人民政治協商會議成都市委員會). Mr. Chan has been a member of the Main Board and GEM Listing Review Committees of the Stock Exchange since July 2020.

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Mr. Chan obtained a bachelor’s degree in arts from The University of Hong Kong in November 1986 and a master’s degree in business administration from The Victoria University of Manchester in the United Kingdom in July 1988. He was admitted as a chartered financial analyst of The Institute of Chartered Financial Analysts in September 1993.

Mr. Chan was a director of Apex Strategy Limited, a company incorporated in Hong Kong which was solvent prior to its dissolution and was deregistered on January 30, 2014 as it had ceased to conduct business. Mr. Chan was a director of Smart Command Limited, a company incorporated in Hong Kong which was solvent prior to its dissolution and was deregistered on January 30, 2014 as it had ceased to conduct business. Mr. Chan confirmed that, as of the Latest Practicable Date, no claims have been made against him and he was not aware of any threatened or potential claims made against him and there are no outstanding claims and/or liabilities as a result of the dissolution of Apex Strategy Limited and Smart Command Limited.

Mr. Victor Huang (黃偉德) , aged 49, was appointed as our independent non-executive Director on [●], 2020. Mr. Huang is responsible for providing independent advice on the operations and management of our Board.

Mr. Huang has over 27 years of experience in finance, accounting and transaction services. He joined PricewaterhouseCoopers in Hong Kong in January 1993 and became its partner in July 2005 and served this role up to June 2014. From July 2014 to August 2017, he served as a partner at KPMG in Hong Kong. Mr. Huang has served as an independent non-executive director of LBX Pharmacy Chain Co., Ltd. (老百姓大藥房連鎖股份有限公司), a company listed on the Shanghai Stock Exchange (stock code: 603883), and Trinity Limited (利邦控股有限公司), a company listed on the Main Board of the Stock Exchange (stock code: 891), since February 2018 and December 2018, respectively. He has been an independent non-executive director of Qingdao Haier Biomedical Co., Ltd. (青島海爾生物醫療股份有限公司), a company listed on the Sci-Tech Innovation Board of the Shanghai Stock Exchange (stock code: 688139), since August 2018. He has been an independent non-executive director of Manpowergroup Greater China Limited (萬寶盛華大中華有限公司), a company listed on the Main Board of the Stock Exchange (stock code: 2180), since March 2019. He has been an independent non-executive director of Scholar Education Group (思考樂教育集團), a company listed on the Main Board of the Stock Exchange (stock code: 1769), since June 2019. He has been an independent non-executive director of Topsports International Holdings Limited (滔博國際控股有限公司), a company listed on the Main Board of the Stock Exchange (stock code: 6110), since September 2019. He has been an independent non-executive director of China Bright Culture Group (煜盛文化集團), a company listed on the Main Board of the Stock Exchange (stock code: 1859), since February 2020. He has been an independent non-executive director of Cosco Shipping Energy Transportation Co., Ltd. (中遠海運能源運輸股份有限公司), a company listed on the Main Board of the Stock Exchange (stock code: 1138), and an independent non-executive Director of New Times Energy Corporation Limited (新時代能源有限公司), a company listed on the Main Board of the Stock Exchange (stock code: 166) since June 2020.

While Mr. Huang is currently holding directorships in the aforesaid listed companies, our Directors are of the view that Mr. Huang will be able to devote sufficient time to discharge his duties and responsibilities as an independent non-executive Director given that: (i) his roles in other listed companies primarily require him to oversee their management independently,

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rather than to allocate substantial time on the participation of the day-to-day management and operations of their respective businesses; (ii) he has demonstrated that he is capable of devoting sufficient time to discharge his duties owed to each of these listed companies by attending board meetings and board committee meetings of these listed companies, as disclosed in the latest annual reports of the relevant listed companies (if applicable); (iii) he has acquired extensive management experience and developed substantial knowledge on corporate governance through his directorships in other listed companies, which is expected to facilitate the proper discharge of his duties and responsibilities as an independent non-executive Director; and (iv) he has confirmed that he will have sufficient time to fulfill his duties as an independent non-executive Director notwithstanding his existing independent non-executive directorships in other listed companies.

Mr. Huang obtained a bachelor’s degree of arts in economics and business from University of California, Los Angeles in the United States in September 1992. He was admitted as an associate of the Hong Kong Institute of Certified Public Accountants (formerly known as the Hong Kong Society of Accountants) in June 1996. He was also certified as a qualified independent director of the Shanghai Stock Exchange in June 2018.

Mr. Huang was a director of Orient Spread Investment Limited (東翔投資有限公司), a company incorporated in Hong Kong which was solvent prior to its dissolution and was deregistered on February 24, 2006 as it had ceased to conduct business. Mr. Huang confirmed that, as of the Latest Practicable Date, no claims have been made against him and he was not aware of any threatened or potential claims made against him and there are no outstanding claims and/or liabilities as a result of the dissolution of Orient Spread Investment Limited.

Mr. Guo Zhaohui (郭朝暉) , aged 41, was appointed as our independent non-executive Director on [●], 2020. Mr. Guo is responsible for providing independent advice on the operations and management of our Board.

Since October 2004, Mr. Guo has been working at Wuhan University of Science and Technology (武漢科技大學), where he successively served various positions including a tutor, lecturer, associate professor and master instructor, primarily responsible for human resources management related teaching and research work. Mr. Guo has been serving as an independent director at Calxon Group Holdings Co., Ltd. (嘉凱城集團股份有限公司), a company principally engaged in the property and cinema business whose shares are listed on the Shenzhen Stock Exchange (stock code: 000918) and a subsidiary of China Evergrande Group, since October 2019.

Mr. Guo obtained a bachelor’s degree in human resources management from Wuhan University of Science and Technology (武漢科技大學) in the PRC in June 2001 and a master’s degree in administrative management from Zhongnan University of Economics and Law (中南財經政法大學) in the PRC in June 2004. Mr. Guo received the Associate Professor (Economics and Management) Professional Technical Qualification Certificate (副教授(經濟及管理)專業技術資格證書) issued by Hubei Title Reform Work Leading Group Office (湖北省職稱改革工作領導小組辦公室) in June 2011 and the Qualification Certificate of Independent Director of Listed Company (上市公司獨立董事資格證書) issued by the Shenzhen Stock Exchange in December 2019.

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Save as disclosed above, none of our Directors have held any other directorships in listed companies during the three years immediately preceding the date of this Document. There is no other information relating to the relationship of any of our Directors with other Directors and senior management officers that should be disclosed pursuant to Rule 13.51(2) or paragraph 41(3) of Appendix 1A of the Listing Rules.

Save as disclosed herein, to the best of the knowledge, information and belief of our Directors having made all reasonable inquiries, there was no other matter with respect to the appointment of our Directors that needed to be brought to the attention of our Shareholders and there was no information relating to our Directors that was required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules as of the Latest Practicable Date.

SENIOR MANAGEMENT

Our executive Directors and other members of our senior management are responsible for the day-to-day operations and management of the business of our Group.

For the biographical details of Mr. Zhao Changlong, Mr. Hu Liang, Mr. Wang Zhen and Ms. An Lihong, see “Executive Directors” in this section. Member of the senior management of our Group also include the following:

Name Mr. Fang Shun (方舜) Mr. Chen Xiang (陳相) Mr. Ge Xiao (葛曉) Mr. Han Chao (韓超)	Age 32 35 34 31	Date of joining our Group November 23, 2015 August 7, 2012 August 5, 2019 January 20, 2015	Existing position(s) in our Group Deputy general manager Deputy general manager Deputy general manager Assistant to the general manager	Roles and responsibilities
				Responsible for procurement, value-added services to homeowners and comprehensive business supervision and management Responsible for investment and external business development Responsible for property management business in Pearl River Delta Responsible for quality management of property management services

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Mr. Fang Shun (方舜) , aged 32, joined our Group in November 2015 and has been serving as a deputy general manager of Jinbi Property since March 2020. He is primarily responsible for procurement, value-added services to homeowners and comprehensive business supervision and management.

Mr. Fang joined the Evergrande Group in July 2011. From July 2011 to June 2013, Mr. Fang served as the procurement chief of Guangzhou Evergrande Material and Equipment Co., Ltd. (廣州恒大材料設備有限公司), a materials and equipment supplier, where he was primarily responsible for the procurement and delivery. From July 2013 to November 2015, Mr. Fang worked at Evergrande Yuanlin with his last position as a quality supervision manager of its planning and supervision center, where he was primarily responsible for its business supervision and plan management. From November 2015 to March 2020, Mr. Fang served various positions at Evergrande Real Estate, with his last position as a deputy general manager of the property management center, where he was primarily responsible for its procurement, value-added services to homeowners and comprehensive business supervision.

Mr. Fang obtained a bachelor’s degree in polymer materials and engineering from Sun Yat-sen University (中山大學) in the PRC in June 2011.

Mr. Chen Xiang (陳相) , aged 35, joined our Group in August 2012 and has been serving as a deputy general manager of Jinbi Property in March 2020. He is primarily responsible for investment and external business development.

Mr. Chen joined the Evergrande Group in August 2012. From August 2012 to October 2015, Mr. Chen first served as a deputy general manager and project general manager of the Wuhan branch of Jinbi Property, and later served as its deputy general manager where he was primarily responsible for management of property management projects and quality management of its operations. From October 2015 to February 2016, Mr. Chen served as an assistant to the general manager of the property management center of Evergrande Real Estate, where he was primarily responsible for its property business supervision and planning management. From February 2016 to August 2016, Mr. Chen served as a deputy general manager of Evergrande Real Estate Guangdong Real Estate Development Co., Ltd. (恒大地產集團廣東房地產開發有限公司) (“ Evergrande Guangdong Real Estate ”), where he was primarily responsible for its property management business. From August 2016 to July 2017 Mr. Chen worked at Evergrande Real Estate, with his last position as an assistant to the general manager of its property management center, where he was primarily responsible for the quality management of property management services. From July 2017 to March 2020, Mr. Chen served as a deputy general manager of the Evergrande Real Estate Chongqing Co., Ltd. (恒大地產集團重慶有限公司), where he was responsible for its property management business.

Prior to joining the Evergrande Group, from April 2007 to August 2012, Mr. Chen worked at Wuhan Vanke Property Services Co., Ltd. (武漢市萬科物業服務有限公司), a property developer and a subsidiary of China Vanke Co., Ltd. (萬科企業股份有限公司) whose shares are listed on the Shenzhen Stock Exchange (stock code: 000002) and the Stock Exchange (stock code: 2202), with his last position as a department manager.

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Mr. Chen graduated from the Military Economy School of the People’s Liberation Army (中國人民解放軍軍事經濟學院) with a diploma in logistics management in the PRC in June 2005 and a bachelor’s degree in computer sciences and technology from the Artillery School of the People’s Liberation Army (中國人民解放軍炮兵學院) in the PRC in June 2007 through online learning.

Mr. Ge Xiao (葛曉) , aged 34, joined our Group in August 2019. Mr. Ge has been serving as a deputy general manager of Jinbi Property since August 2020 and the chairman of the board of the Guangzhou branch of Jinbi Property since March 2020. He is primarily responsible for property management business in Pearl River Delta.

Mr. Ge joined the Evergrande Group in July 2009. From July 2009 to August 2019, Mr. Ge worked at Evergrande Yuanlin with his last position as a deputy general manager of Evergrande Yuanlin, where he was primarily responsible for the design management and investment development. From August 2019 to November 2019, Mr. Ge served as a deputy general manager of Evergrande Guangdong Real Estate, where he was primarily responsible for the management of property management services. From November 2019 to March 2020, Mr. Ge served as a deputy general manager of Evergrande Real Estate Pearl River Delta Real Estate Development Co., Ltd. (恒大地產集團珠三角房地產開發有限公司), where he was primarily responsible for the management of property management services.

Mr. Ge obtained a bachelor’s degree in landscape gardening from the Northwest A&F University (西北農林科技大學) in the PRC in July 2009.

Mr. Han Chao (韓超) , aged 31, joined our Group in January 2015 and has been serving as an assistant to the general manager of Jinbi Property since March 2020. He is primarily responsible for quality management of property management services.

Mr. Han joined the Evergrande Group in July 2011. From July 2011 to July 2013, Mr. Han served as an inspector of the supervision center of Evergrande Real Estate, where he was primarily responsible for its internal discipline supervision. From July 2013 to January 2015, Mr. Han successively served as a deputy manager of the procurement department and a deputy manager of the engineering service center of Evergrande Yuanlin, where he was primarily responsible for its procurement and engineering management. From January 2015 to May 2015, Mr. Han served as an assistant to the project general manager of the Guangzhou branch of Jinbi Property, where he was primarily responsible for the management of its property management projects. From May 2015 to November 2015, Mr. Han successively served as an assistant to the manager of the planning and supervision center and a staff of the property management center of Evergrande Real Estate, where he was primarily responsible for assisting in the supervision and procurement management. From November 2015 to May 2016, Mr. Han served as a quality management staff of the Changsha branch of Jinbi Property, where he was primarily responsible for assisting in improving the quality of property management services. From May 2016 to March 2017, Mr. Han worked at the property management center of Evergrande Real Estate, where he was primarily responsible for assisting in improving the quality of property management services. From March 2017 to May 2018, Mr. Han served as an assistant to the

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project general manager of the Guangzhou branch of Jinbi Property, where he was primarily responsible for property management of such project. From May 2018 to March 2020, Mr. Han successively served as a deputy director of the quality management department of the property management center and an assistant to the general manager of the property management center of Evergrande Real Estate, where he was primarily responsible for the quality management of property management services.

Mr. Han obtained a bachelor’s degree in museology from Fudan University (復旦大學) in the PRC in July 2011.

COMPANY SECRETARY

Mr. Fong Kar Chun, Jimmy (方家俊) , aged 45, was appointed as our company secretary on September 23, 2020 and is responsible for company secretarial matters of our Group.

Mr. Fong has extensive experience in mergers, acquisitions and capital markets. Mr. Fong worked at DLA Piper, an international law firm in Hong Kong, from September 1999 to September 2001, and Sidley Austin, a global law firm in Hong Kong, from September 2001 to July 2006. From July 2006 to March 2009, Mr. Fong served as a director in the investment banking division of Royal Bank of Scotland (previously known as ABN AMRO Bank N.V.) where he was primarily responsible for mergers and acquisitions and equity capital market fund raising. He has joined China Evergrande Group since June 2009 and is now serving as the company secretary and vice president. He has also served as the company secretary of Evergrande Auto since March 2015 and the company secretary of HengTen Networks since October 2015.

Mr. Fong obtained his bachelor’s degree in laws and a postgraduate certificate in laws from The University of Hong Kong in December 1997 and September 1998, respectively. He also obtained his master’s degree in banking and finance laws from the London School of Economics and Political Science, University of London in November 2000. Mr. Fong was admitted as a solicitor in Hong Kong in December 2001.

BOARD COMMITTEES

Our Board [has established] the audit committee, the remuneration committee and the nomination committee and delegated various responsibilities to these committees, which assist our Board in discharging its duties and overseeing particular aspects of our Group’s activities.

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Audit Committee

Our Group has established an audit committee on [●], 2020 with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraphs C.3 of the Corporate Governance Code (“ CG Code ”) as set out in Appendix 14 to the Listing Rules. The audit committee consists of Mr. Victor Huang, Mr. Chan Chun Hung, Vincent and Mr. Guo Zhaohui. Mr. Victor Huang is the chairperson of the audit committee.

The primary duties of the audit committee are to (i) review and supervise our financial reporting process and internal control system of our Group, risk management and internal audit; (ii) provide advice and comments to our Board in respect of financial, risk management and internal control matters; and (iii) perform other duties and responsibilities as may be assigned by the Board.

Remuneration Committee

Our Group has established a remuneration committee on [●], 2020 with written terms of reference in compliance with Rule 3.25 of the Listing Rules and paragraph B.1 of the CG Code as set out in Appendix 14 to the Listing Rules. The remuneration committee consists of Mr. Guo Zhaohui, Mr. Victor Huang and Mr. Hu Liang. Mr. Guo Zhaohui is the chairperson of the remuneration committee.

The primary duties of the remuneration committee include, but not limited to (i) establishing, reviewing and providing advices to our Board on our policy and structure concerning remuneration of our Directors and senior management and on the establishment of a formal and transparent procedure for developing policies concerning such remuneration; (ii) determining the terms of the specific remuneration package of each Director and senior management; and (iii) reviewing and approving performance-based remuneration by reference to corporate goals and objectives resolved by our Directors from time to time.

Nomination Committee

Our Group has also established a nomination committee on [●], 2020 with written terms of reference in compliance with paragraph A.5 of the CG Code as set out in Appendix 14 to the Listing Rules. The nomination committee consists of Mr. Zhao Changlong, Mr. Chan Chun Hung, Vincent and Mr. Victor Huang. Mr. Zhao Changlong is the chairperson of the nomination committee.

The primary duties of the nomination committee are to (i) review the structure, size and composition of our Board on a regular basis and make recommendations to the Board regarding any proposed changes to the composition of our Board; (ii) identify, select or make recommendations to our Board on the selection of individuals nominated for directorship, and ensure the diversity of our Board members; (iii) assess the independence of our independent non-executive Directors; and (iv) make recommendations to our Board on relevant matters relating to the appointment, re-appointment and removal of our Directors and succession planning for our Directors.

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DIRECTORS AND SENIOR MANAGEMENT

BOARD DIVERSITY POLICY

Our Board [has adopted] a board diversity policy which sets out the approach to achieve diversity on our Board. Our Company recognizes and embraces the benefits of having a diverse Board and sees increasing diversity at the Board level as an essential element in supporting the attainment of our Company’s strategic objectives and sustainable development. Our Company seeks to achieve Board diversity through the consideration of a number of factors, including but not limited to talent, skills, gender, age, cultural and educational background, ethnicity, professional experience, independence, knowledge and length of service. We will select potential Board candidates based on merit and his/her potential contribution to our Board while taking into consideration our own business model and specific needs from time to time. All Board appointments will be based on meritocracy and candidates will be considered against objective criteria, having due regard to the benefits of diversity on our Board.

Our Board has a balanced mix of knowledge, skills and experience, including but without limitation to property development, property management, financial management, human resources and administrative management. They obtained degrees in various majors including but without limitation to industrial engineering, sociology, accounting, language, economics and business, project management and business administration. We have three independent non-executive Directors who have different industry backgrounds, including private equity management, finance, accounting and transaction services and academia. Furthermore, our Directors are of a wide range of age, from [33] years old to [55] years old. Taking into account our business model and specific needs as well as the presence of one female Director out of a total of seven Board members, we consider that the composition of our Board satisfies our board diversity policy.

With regards to gender diversity on the Board, we recognize the particular importance of gender diversity. Our Board currently comprises seven Directors, including one female Director. We have taken and will continue to take steps to promote and enhance gender diversity at all levels of our Company, including but without limitation at our Board and senior management levels. Our board diversity policy provides that our Board shall take opportunities when selecting and making recommendations on suitable candidates for Board appointments with the aim to increase the proportion of female members over time after [ REDACTED ]. We will also ensure that there is gender diversity when recruiting staff at mid to senior level so that we will have a pipeline of female senior management and potential successors to our Board going forward. It is our objective to maintain an appropriate balance of gender diversity with reference to the stakeholders’ expectation and international and local recommended best practices.

Our nomination committee is responsible for ensuring the diversity of our Board members. After [ REDACTED ], our nomination committee will review our board diversity policy and its implementation from time to time to monitor its continued effectiveness and we will disclose the implementation of our board diversity policy, including any measurable objectives set for implementing the board diversity policy and the progress on achieving these objectives, in our corporate governance report on an annual basis.

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DIRECTORS AND SENIOR MANAGEMENT

COMPLIANCE ADVISOR

We will appoint Huatai Financial Holdings (Hong Kong) Limited as our compliance advisor pursuant to Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, our compliance advisor will advise our Company in the following circumstances:

before the publication of any regulatory announcement, circular and financial report;
where a transaction, which might be notifiable or connected transaction, is contemplated including shares issues and share repurchases;
where our Company proposes to use the proceeds from the [ REDACTED ] in a manner different from that detailed in this Document or where our business activities, developments or results deviate from any forecast, estimate or other information in this Document; and
where the Stock Exchange makes an inquiry of our Company regarding unusual movements in the price or trading volume of our Shares.

The term of the appointment shall commence on the [ REDACTED ] and end on the date on which our Company distribute our annual report in respect of our financial results for the first full financial year commencing after the [ REDACTED ].

COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

Our Directors and members of our senior management receive compensation from our Group in the form of fees, salaries and other benefits and contribution to pension scheme.

The aggregate remuneration (including salaries, bonuses and other benefits and contribution to pension scheme) paid to our Directors for each of the three years ended December 31, 2019 and the six months ended June 30, 2020 was approximately RMB5.1 million, RMB6.7 million, RMB6.8 million and RMB2.8 million, respectively. Save as disclosed above, no other amounts have been paid or are payable by any member of our Group to our Directors for each of the three years ended December 31, 2019 and the six months ended June 30, 2020.

The aggregate amount of salaries, bonuses and other benefits and contribution to pension paid to our five highest paid individuals in respect of each of the three years ended December 31, 2019 and the six months ended June 30, 2020 was approximately RMB7.0 million, RMB10.1 million, RMB10.6 million and RMB4.4 million, respectively.

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DIRECTORS AND SENIOR MANAGEMENT

No remuneration was paid by us to our Directors or the five highest paid individuals as an inducement to join or upon joining us or as a compensation for loss of office in respect of each of the three years ended December 31, 2019 and the six months ended June 30, 2020. Further, none of our Directors had waived or agreed to waive any remuneration during the same periods.

Under the arrangement currently in force, the aggregate remuneration (including salaries, bonuses and other benefits and contribution to pension scheme) of our Directors for the year ending December 31, 2020 is estimated to be no more than approximately RMB30.0 million.

Our Board will review and determine the remuneration and compensation packages of our Directors and senior management and will, following the [ REDACTED ], receive recommendation from the remuneration committee which will take into account salaries paid by comparable companies, time commitment and responsibilities of our Directors and performance of our Group.

CORPORATE GOVERNANCE

Our Company aims to achieve high standards of corporate governance which are crucial to the development and safeguard the interests of our Shareholders. To accomplish this, our Company expects to comply with the CG Code and the associated Listing Rules after the [ REDACTED ].

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SHARE CAPITAL

The following is a description of the authorized and issued share capital of our Company in issue and to be issued as fully paid or credited as fully paid immediately before and following the completion of the Capitalization Issue and the [ REDACTED ] (without taking into account any Shares which may be issued pursuant to the exercise of the [ REDACTED ]):

Authorized share capital: [100,000,000,000] Shares of US$0.0001 each Issued and to be issued, fully paid or credited as fully paid: 10,000,000 Shares in issue immediately prior to the [REDACTED] [REDACTED] Shares to be issued pursuant to the [REDACTED] [REDACTED] Shares to be issued under the [REDACTED] [REDACTED] Total	Nominal value
	(US$) [10,000,000] 1,000 [REDACTED] [REDACTED]
	[REDACTED]

ASSUMPTIONS

The above table assumes that the [ REDACTED ] becomes unconditional and the Shares are issued pursuant to the [ REDACTED ]. It takes no account of any Shares which may be allotted and issued pursuant to the exercise of the [ REDACTED ] or any Shares which may be issued or repurchased by us pursuant to the general mandates granted to our Directors to issue or repurchase Shares as described below.

RANKINGS

The [ REDACTED ] will be ordinary shares in the share capital of our Company and will carry the same rights in all respects with all Shares in issue or to be issued as mentioned in this Document and, in particular, will rank in full for all dividends or other distributions declared, made or paid on the Shares in respect of a record date which falls after the date of this Document save for the entitlement under the [ REDACTED ].

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SHARE CAPITAL

GENERAL MANDATES TO ALLOT AND ISSUE AND TO REPURCHASE SHARES

Subject to the [ REDACTED ] becoming unconditional, general mandates have been granted to our Directors to allot and issue Shares and to repurchase Shares. For details of such general mandates, please see “Appendix IV—Statutory and General Information—A. Further Information about our Company—3. Written resolution of our Shareholders passed on [●], 2020” to this Document.

CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING ARE REQUIRED

Our Company has only one class of shares, namely ordinary shares, each of which carries the same right as with the other shares.

As a matter of the Companies Law, an exempted company is not required by law to hold any general meeting or class meeting. The holding of general meeting or class meeting is prescribed for under the articles of association of a company. Accordingly, our Company will hold general meetings as prescribed for under the Articles, a summary of which is set out in “Summary of the constitution of the Company and Cayman Islands Company Law” in Appendix III to this Document.

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SUBSTANTIAL SHAREHOLDERS

So far as our Directors are aware, the following persons will, immediately prior to and following the completion of the Capitalization Issue and [ REDACTED ] (assuming the [ REDACTED ] under the [ REDACTED ] are not taken up by our Controlling Shareholders who are [ REDACTED ] and without taking into account any Shares which may be issued or [ REDACTED ] pursuant to the exercise of the [ REDACTED ]), have interests or short positions in our Shares or underlying Shares which would be required to be disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the issued voting shares of any other member of our Group:

LONG POSITIONS IN SHARES OF OUR COMPANY

Name of Shareholder CEG Holdings Shengjian (BVI)(1) Anji (BVI)(1) China Evergrande Group(1) Xin Xin (BVI)(2) Dr. Hui Mrs. Hui Ms. Chan Hoi Wan Mr. Lau Luen Hung	Nature of Interest Beneficial owner Interest of controlled corporation Interest of controlled corporation Interest of controlled corporation Interest of controlled corporation Interest of controlled corporation(3) Interest of spouse(4) Beneficial owner, interest of controlled corporation and interest of children under 18(5) Interest of spouse and interest of children under 18(6)	Shares held immediately prior to the completion of the Capitalization Issue and the [REDACTED] Number Approximate Percentage 7,193,885 71.94% 7,193,885 71.94% 7,193,885 71.94% 7,193,885 71.94% 7,193,885 71.94% 7,193,885 71.94% 7,193,885 71.94% 537,342 5.37% 537,342 5.37%	Shares held immediately following the completion of the Capitalization Issue and the [REDACTED]
			Number Approximate Percentage [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Notes:

CEG Holdings is directly owned as to 50% by China Evergrande Group and 50% by Shengjian (BVI). Shengjian (BVI) is wholly owned by Anji (BVI), which is wholly owned by China Evergrande Group. By virtue of the SFO, Shengjiang (BVI), Anji (BVI) and China Evergrande Group are deemed to be interested in the Shares in which CEG Holdings is interested.
As of the Latest Practicable Date, Xin Xin (BVI) was interested in 71.74% of the total number of issued shares of China Evergrande Group. By virtue of the SFO, Xin Xin (BVI) is deemed to be interested in the Shares in which China Evergrande Group is interested.

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SUBSTANTIAL SHAREHOLDERS

Xin Xin (BVI) is wholly owned by Dr. Hui. By virtue of the SFO, Dr. Hui is deemed to be interested in the Shares in which Xin Xin (BVI) is interested.
Mrs. Hui is the spouse of Dr. Hui. By virtue of the SFO, Mrs. Hui is deemed to be interested in the Shares in which Dr. Hui is interested.
Including the [ REDACTED ] which Ms. Chan Hoi Wan and the companies under her control as trustee for her children under 18 will be entitled to apply for under the [ REDACTED ] based on their shareholdings in China Evergrande Group as of the Latest Practicable Date. By virtue of the SFO, Ms. Chan Hoi Wan is deemed to be interested in which her controlled corporations and her children under 18 are interested.
Mr. Lau Luen Hung is the spouse of Ms. Chan Hoi Wan. By virtue of the SFO, Mr. Lau Luen Hung is deemed to be interested in which Ms. Chan Hoi Wan and their children under 18 are interested.

Save as disclosed above, our Directors are not aware of any person who will, immediately following the completion of the Capitalization Issue and the [ REDACTED ] (assuming the [ REDACTED ] under the [ REDACTED ] are not taken up by our Controlling Shareholders who are [ REDACTED ] and without taking into account any Shares which may be issued or [ REDACTED ] pursuant to exercise of the [ REDACTED ]), have beneficial interests or short positions in any Shares or underlying Shares, which would be required to be disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly interested in 10% or more of the issued voting shares of any member of our Group. Our Directors are not aware of any arrangement which may at a subsequent date result in a change of control of our Company.

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FINANCIAL INFORMATION

You should read the following discussion and analysis in conjunction with our combined financial information set forth in the Accountants’ Report included as Appendix I to this Document. Our combined financial information has been prepared in accordance with HKFRS.

The following discussion and analysis contain certain forward-looking statements that reflect our current views with respect to future events and financial performance. These statements are based on assumptions and analysis made by us in light of our experiences and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual outcome and developments will meet our expectations and predictions depends on a number of risks and uncertainties over which we do not have control. See “Risk Factors” and “Forward-looking Statements” in this Document.

OVERVIEW

We are one of the largest and fastest-growing comprehensive property management service providers in China. Among the Top 100 Property Management Companies in China, we ranked second in number of cities covered by our projects; third in each of total revenue, total gross profit and total net profit; third in contracted GFA and fourth in GFA under management, as of or for the year ended December 31, 2019, according to CIA. Our net profit increased at a CAGR of 195.5% from 2017 to 2019, which was the highest among the Top 20 Property Management Companies in China, according to CIA.

We are an all-round property manager and manage a diverse portfolio of properties, including mid- to high-end residential properties, commercial properties, theme parks, industrial parks, healthcare complexes, themed towns and schools, among others. As of June 30, 2020, we were contracted to provide property management services, value-added services to non-property owners and/or community value-added services to 1,354 projects in over 280 cities in 22 provinces, five autonomous regions, four municipalities and Hong Kong, with a total GFA under management of approximately 254.0 million sq.m. and contracted GFA of 513.3 million sq.m., serving nearly two million households. Our quality services generated robust results of operations during the Track Record Period. In 2017, 2018, 2019 and the six months ended June 30, 2020, our revenue was RMB4,399.4 million, RMB5,903.2 million, RMB7,332.7 million and RMB4,563.9 million, respectively; our net profit amounted to RMB106.6 million, RMB239.0 million, RMB930.5 million and RMB1,147.7 million, respectively.

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FINANCIAL INFORMATION

BASIS OF PRESENTATION

Our Company was incorporated in Cayman Islands with limited liability on March 13, 2020. In preparation for the [ REDACTED ], we underwent the Reorganization, as detailed in the section headed “History, Reorganization and Corporate Structure” in this Document. Following the Reorganization, our Company became the holding company of all the subsidiaries currently constituting our Group. See the Accountants’ Report in Appendix I to this Document for more information on the basis of preparation of our financial information included herein.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our results of operations and financial position have been and will continue to be affected by a number of factors, including those set out in the section headed “Risk Factors” in this Document and those discussed below:

Ability to Respond to Regulatory and Market Conditions of the Property Development and Property Management Industries

Our business and results of operations are affected by our ability to obtain new service engagements from property developers for their new property development projects. The number of new property development projects is dependent on the performance of the real estate market in China, which is subject to the general economic conditions in China, the rate of urbanization and, consequently, the demand for properties in the PRC. Any economic downturn in the PRC could adversely affect our business, results of operations and financial position. The regulatory environment in the PRC and policies and measures taken by the PRC Government have also affected the development of the real estate market and property management market, which in turn affects our business and results of operations. See “Risk Factors—Risks Relating to Our Business and Industry—Our business is significantly influenced by various factors affecting our industry and general economic conditions and may be adversely affected by fluctuations in the global economy and financial markets.” and “Risk Factors—Risks Relating to Doing Business in China” in this Document.

The PRC Government has issued a series of favorable laws and policies to incentivize the development of the property management industry. These policies, such as the Guide issued by the Ministry of Housing and Urban Development in 2014, have encouraged property management companies like us to expand and modernize their business and have fostered the growth and development of the industry. See “Industry Overview—Growth Drivers of PRC Property Management Industry—Favorable Policies for the Property Management Industry” in this Document. However, we cannot guarantee that the PRC Government will continue to issue favorable laws, regulations and policies. Moreover, we cannot guarantee that the PRC Government will not suspend or terminate the current favorable laws, regulations and policies, or that the PRC Government will not introduce laws or policies that directly or indirectly discourage the development of the property management industry. Any such changes in the PRC governmental policies may adversely affect our business.

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FINANCIAL INFORMATION

GFA under Management

During the Track Record Period, we generated a majority of our revenue from our property management services, which contributed 57.7%, 58.7%, 62.9%, 62.2% and 61.9%, respectively, of our total revenue in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020. Accordingly, our business, financial position and results of operations depend on our ability to maintain and increase our GFA under management, which in turn is affected by our ability to secure new and renew existing service contracts. In addition, our community value-added service business is also affected by our GFA under management. During the Track Record Period, we experienced a steady growth in our total GFA under management, which was 138.3 million sq.m., 185.4 million sq.m., 237.9 million sq.m. and 254.0 million sq.m., respectively, as of December 31, 2017, 2018 and 2019 and June 30, 2020.

During the Track Record Period, substantially all of properties we managed were developed by the Evergrande Group. As of December 31, 2017, 2018 and 2019 and June 30, 2020, GFA under management of the properties developed by the Evergrande Group accounted for 99.6%, 98.8%, 98.4% and 98.9%, respectively, of our total GFA under management. As of the same dates, GFA under management of the properties developed by joint ventures and associates of the Evergrande Group and independent third-party property developers accounted for 0.4%, 1.2%, 1.6% and 1.1%, respectively, of our total GFA under management. We have also taken efforts to expand our property management services to properties developed by third-party property developers, with a view to gaining additional revenue sources and diversifying our property management portfolio.

Business Mix

Our results of operations are affected by our business mix. During the Track Record Period, our profit margins varied across our three business lines: (i) property management services, (ii) value-added services to non-property owners and (iii) community value-added services. Our profit margins of different business lines generally depend on types of services provided, fees received and costs borne by us under different contractual arrangements. Any change in the structure of revenue contribution from our three business lines or change in profit margin of any business line may have a corresponding impact on our overall profit margin.

The table below sets forth our revenue by business line for the periods indicated.

Property management services . . . . . . . . . Value-added services to non-property owners . . . Community value-added services . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 2,538,392 57.7 1,609,865 36.6 251,099 5.7 4,399,356 100.0	2018 (RMB’000) (%) 3,464,390 58.7 2,103,431 35.6 335,405 5.7 5,903,226 100.0	2019 (RMB’000) (%) (unaudited) 2,154,683 62.2 1,056,069 30.5 255,008 7.3 3,465,760 100.0	2020
				(RMB’000) (%) 2,824,261 61.9 1,231,480 27.0 508,114 11.1 4,563,855 100.0

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FINANCIAL INFORMATION

The table below sets forth our gross profit margin by business line for the periods indicated.

Property management services . . . . . Value-added services to non-property owners . . . . . . . . . . . . . . . . Community value-added services . . . . Overall. . . . . . . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (%) 8.7 9.1 17.7 5.0 11.1 28.4 52.2 52.2 57.4 9.8 12.2 23.9	For the year ended December 31, 2017 2018 2019 (%) 8.7 9.1 17.7 5.0 11.1 28.4 52.2 52.2 57.4 9.8 12.2 23.9	For the six months ended June 30,	For the six months ended June 30,
	2017 8.7 5.0 52.2 9.8	2018 9.1 11.1 52.2 12.2	2019 16.8 27.8 55.8 23.0	2020
				33.6 37.3 65.0 38.1

In general, the gross profit margin of our community value-added services is higher than those of our property management services and value-added services to non-property owners as the provision of community value-added services is less labor-intensive than the other two business lines. See “—Description of Selected Combined Statements of Comprehensive Income Line Items—Gross Profit and Gross Profit Margin” in this section for further discussions.

Brand Positioning and Pricing Ability

As we operate in a highly competitive and fragmented industry, our results of operations and financial position are affected by our ability to maintain or increase the fee rates we charge for our services. We generally price our services by taking into account a number of factors, including (i) the types and locations of the communities, (ii) our estimated costs and target profit margins, (iii) the profiles of property owners and residents, (iv) the required scope and quality of our services, and (v) the prices charged by our competitors for comparable properties. We may be subject to pricing control under the PRC laws and regulations with respect to our residential property management services. We strive to balance competitive pricing, quality service and an attractive profit margin. Failure to balance various factors in determining our pricing could materially and adversely affect our financial condition and results of operations. To strengthen our pricing power, we make efforts to diversify our services by offering more value-added services and further improving our service quality.

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FINANCIAL INFORMATION

Ability to Mitigate the Impact of Rising Employee Benefit Expenses and Subcontracting Costs

Since property management is labor-intensive, employee benefit expenses constitute a substantial portion of our cost of sales and administrative expenses. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our total employee benefit expenses recorded in cost of sales and administrative expenses amounted to RMB3,024.6 million, RMB3,981.3 million, RMB4,133.1 million, RMB2,003.1 million and RMB1,948.1 million, respectively, accounting for 68.8%, 67.4%, 56.4%, 57.8% and 42.7% of our total revenue. The increases in employee benefit expenses were mainly due to the expansion of our business and the general increase in labor cost in China. To cope with rising employee benefit expenses, we have implemented a number of cost control measures. See “—Description of Selected Combined Statements of Comprehensive Income Line Items—Gross Profit and Gross Profit Margin.” As a result, our employee benefit expenses as a percentage of our total revenue decreased during the Track Record Period. The decrease in the first half of 2020 was also attributable to the deduction in, or exemption of, payment of social insurance contributions as a result of the regulatory supportive policies issued by the local government in response to the COVID-19 outbreak.

We have also outsourced certain services, such as cleaning, greening, repair and maintenance services, to Independent Third Parties while maintaining close supervision over their services to ensure service quality. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, we incurred subcontracting cost, recorded mainly as greening and cleaning expenses, of RMB486.0 million, RMB720.0 million, RMB909.6 million, RMB417.7 million and RMB514.2 million, respectively, representing 12.3%, 13.9%, 16.3%, 15.6% and 18.2%, respectively, of our cost of sales. Our subcontracting cost as a percentage of our total cost of sale increased during the Track Record Period, primarily attributable to our business expansion and an increase in the proportion of labor-intensive services outsourced to subcontractors, which is in line with the industry trend.

For illustration purposes only, we set out below a sensitivity analysis of our cost of sales and profit for the periods indicated with reference to the fluctuation of employee benefit expenses during the Track Record Period. The following table demonstrates the impact of the hypothetical increase in employee benefit expenses on our cost of sales and profit for the year or period, while all other factors remain unchanged.

Total profit for the year/period . . . . . . . . . Assuming 5% increase in our employee benefit expenses Impact on cost of sales . . . . . . . . . . . . Impact on profit for the year/period(1) . . . . Assuming 10% increase in our employee benefit expenses Impact on cost of sales . . . . . . . . . . . . Impact on profit for the year/period(1) . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) 106,564 239,008 930,524 142,439 184,382 188,002 (106,829) (138,287) (141,002) 284,877 368,764 376,005 (213,658) (276,573) (282,004)	For the year ended December 31, 2017 2018 2019 (RMB’000) 106,564 239,008 930,524 142,439 184,382 188,002 (106,829) (138,287) (141,002) 284,877 368,764 376,005 (213,658) (276,573) (282,004)	For the six months ended June 30,	For the six months ended June 30,
	2017 106,564 142,439 (106,829) 284,877 (213,658)	2018 239,008 184,382 (138,287) 368,764 (276,573)	2019 (unaudited) 407,326 92,073 (69,055) 184,147 (138,110)	2020
				1,147,693 89,241 (66,931) 178,481 (133,861)

Note:

(1) Impact on profit for the year or period was calculated assuming an EIT of 25%.

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FINANCIAL INFORMATION

Competition

According to CIA, we are a leading property management company with a large and rapidly growing business operations, ranking third among Top 100 Property Management Companies in terms of contracted GFA, revenue and net profit, and fourth in terms of GFA under management as of December 31, 2019. As a property management company with national presence, we compete with both national and regional property management companies in terms of property management companies, and with other providers of similar services in terms of our value-added services. See “Business—Competition” and “Industry Overview—Competition” in this Document. Our ability to compete effectively with our competitors and maintain or improve our market position is therefore crucial and depends on our ability to solidify our competitive strengths. If we fail to effectively compete with market players and expand our GFA under management, we may lose market position in our principal business lines and our revenue and profitability may be adversely impacted.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES

We have identified certain accounting policies and critical accounting judgments and estimates that are significant to the preparation of our financial statements. Our significant accounting policies and critical accounting judgments and estimates, which are important for an understanding of our financial position and results of operations, are set forth in details in note 2 and note 4 of the Accountants’ Report in Appendix I to this Document. All effective standards, amendments to standards and interpretations, which are mandatory for the financial year beginning January 1, 2020 were consistently applied to our Group throughout the Track Record Period.

Some of our accounting policies involve subjective assumptions and estimates, as well as complex judgements relating to accounting items. In each case, the determination of these items requires management to make subjective and complex judgements based on information and financial data that may change in future periods. When reviewing our financial statements, you should consider (i) our significant accounting policies, (ii) the judgements and other uncertainties affecting the application of such policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions, where applicable. We set out below those accounting policies that we believe are of critical importance to us or involve the most significant estimates and judgements used in the preparation of our financial statements.

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FINANCIAL INFORMATION

Revenue Recognition

We provide property management services, value-added services to non-property owners and community value-added services. Revenue is recognized when the control of services or goods is transferred to the customer. Depending on the terms of the contracts and the laws that apply to the contract, control of services and goods may be transferred over time or at a point in time. We distinguish whether we are a principal or an agent in the transactions with our customer. When we are acting as a principal, the associated revenue is recognized in gross amount and when we are acting as a agent, the associated revenue is recognized in net amount.

For property management services, we bill a fixed amount for services provided on a monthly basis and recognize as revenue in the amount to which we have a right to bill and that corresponds directly with the value of performance completed. For property management services income from properties managed under a lump sum basis, we are entitled to revenue at the value of property management services fee received or receivable.

Value-added services to non-property owners mainly include (i) preliminary property management services and repair and maintenance services, which are billed on monthly basis and are recognized as revenue over time when such services are rendered; (ii) pre-delivery inspection and cleaning services to property developers which are recognized as revenue when such services are rendered and accepted by the customer; and (iii) property transaction assistance services for sales of the use rights of carpark spaces and rental of properties owned by property developers, which are recognized on a net basis when the underlying sales and rental contract is signed, respectively.

Community value-added services revenue mainly include (i) group purchase facilitation service income arising from promotion and facilitation for third parties, which is recognized over time according to the services rendered; (ii) service fee income from group purchase facilitation in sales of products from third parties, which is recognized on a net basis when the products are transferred; (iii) rental income from parking space rental services for leasing of the use right of carpark spaces; (iv) income from community space management services for management of advertising and other miscellaneous activities in the public areas in the properties managed by us, which is recognized over the time when the services are rendered; (v) revenue from second-hand property transaction assistance services for leasing of properties for property owners; and (vi) revenue from community living services charged for each service provided and recognized when the relevant services are rendered.

If a contract contains multiple services, the transaction price is allocated to each performance obligation based on their relative stand-alone selling prices. If the stand-alone selling prices are not directly observable, they are estimated based on expected cost plus a margin or adjusted market assessment approach, depending on the availability of observable information.

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FINANCIAL INFORMATION

When either party to a contract has performed, we present the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between our performance and the customer’s payment.

A contract asset is our right to consideration in exchange for services that we have transferred to a customer.

If a customer pays consideration or we have a right to an amount of consideration that is unconditional, before we transfer services to the customer, we present the contract as a contract liability when the payment is received or a receivable is recorded (whichever is earlier). A contract liability is our obligation to transfer services to a customer for which we have received consideration (or an amount of consideration is due) from the customer.

A receivable is recorded when we have an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.

Incremental costs incurred to obtain a contact, if recoverable, are capitalized and presented as assets and subsequently amortized when the related revenue is recognized.

When the difference between the transfer of the promised goods or services to customer and the payment by the customer is considered significant and implied financing components contained in certain contracts, we adjust the transaction price for the time value of money.

Impairment of Non-Financial Assets

Assets that are subject to depreciation or amortization such as property and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (“cash-generating unit”). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

Investments and Other Financial Assets

Classification

We classify our financial assets in the following measurement categories:

those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
those to be measured at amortized cost.

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FINANCIAL INFORMATION

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether we have made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

We reclassify debt investments when and only when its business model for managing those assets changes.

Recognition and Derecognition

Regular way purchases and sales of financial assets are recognized on trade-date, the date on which we commit to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and we have transferred substantially all the risks and rewards of ownership.

Measurement

At initial recognition, we measure 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 that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on our business model for managing the asset and the cash flow characteristics of the asset. We only held debt instruments classified as financial assets at amortized costs.

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in the combined statement of comprehensive income when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

Impairment

We assess on a forward looking basis the expected credit losses associated with its debt instruments carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

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FINANCIAL INFORMATION

Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial assets.

For trade receivables, we apply the simplified approach permitted by HKFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the assets. The provision matrix is determined based on historical observed default rates over the expected life of the trade receivables with similar credit risk characteristics and is adjusted for forwardlooking estimates. At every reporting date the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

Impairment of other receivables are measured as either 12-month expected credit losses or lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial recognition. If a significant increase in credit risk of a receivable has occurred since initial recognition, then impairment is measured as lifetime expected credit losses.

Current and Deferred Income Tax

The tax expense for the period comprises current and deferred tax. Tax is recognized as “income tax expense” in the combined statements of comprehensive income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Current Income Tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where our subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred Income Tax

Inside Basis Differences

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the combined financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. The deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

FINANCIAL INFORMATION

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Outside Basis Differences

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by us and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognized on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilized.

Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Current and Deferred Income Tax

We are subject to corporate income taxes in the PRC. Judgement is required in determining the amount of the provision for taxation and the timing of payment of the related taxations. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Deferred tax assets relating to certain temporary differences and tax losses are recognized when management considers to be probable that future taxable profit will be available against which the temporary differences or tax losses can be utilized. The outcome of their actual utilization may be different.

Provisions

Provisions for legal claims, service warranties and make good obligations are recognized when we have a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.

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FINANCIAL INFORMATION

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.

Leases

A lease is recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by us.

Contracts may contain both lease and non-lease components. We allocate the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

fixed payments (including in-substance fixed payments), less any lease incentives receivable,
variable lease payments that are based on an index or a rate,
amounts expected to be payable by the lessee under residual value guarantees,
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or our incremental borrowing rate.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

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FINANCIAL INFORMATION

Right-of-use assets are measured at cost comprising the following:

the amount of the initial measurement of lease liability,
any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs, and
restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise small items of office equipments.

Rental income from operating leases where we are a lessor is recognized on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as rental income. The respective leased assets are included in the balance sheet based on their nature.

Allowance on Doubtful Receivables

We make allowances on receivables based on assumptions about risk of default and expected loss rates. We used judgment in making these assumptions and selecting the inputs to the impairment calculation, based on our past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Where the expectation is different from the original estimate, such difference will impact the carrying amount of trade and other receivables and doubtful debt expenses in the periods in which such estimate has been changed. See note 3.1.2 of the Accountants’ Report in Appendix I to this Document for the key assumptions and inputs used.

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FINANCIAL INFORMATION

DESCRIPTION OF SELECTED COMBINED STATEMENTS OF COMPREHENSIVE INCOME LINE ITEMS

The following table sets forth a summary of our combined statements of comprehensive income for the periods indicated. Our historical results presented below may not be indicative of the results that may be expected for any future period.

For theyear ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0 (3,966,496) (90.2) (5,180,226) (87.8) (5,577,739) (76.1) 432,860 9.8 723,000 12.2 1,754,983 23.9 (257,310) (5.8) (401,245) (6.8) (515,061) (7.0) (43,800) (1.0) (18,206) (0.3) (48,210) (0.7) 17,901 0.4 19,984 0.3 66,550 0.9 (47) (0.0) (119) (0.0) (194) (0.0) 149,604 3.4 323,414 5.5 1,258,068 17.2 (12,662) (0.3) (13,122) (0.2) (28,883) (0.4) 136,942 3.1 310,292 5.3 1,229,185 16.8 (30,378) (0.7) (71,284) (1.2) (298,661) (4.1) 106,564 2.4 239,008 4.0 930,524 12.7 106,564 2.4 239,075 4.0 930,232 12.7 – – (67) (0.0) 292 0.0	For theyear ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0 (3,966,496) (90.2) (5,180,226) (87.8) (5,577,739) (76.1) 432,860 9.8 723,000 12.2 1,754,983 23.9 (257,310) (5.8) (401,245) (6.8) (515,061) (7.0) (43,800) (1.0) (18,206) (0.3) (48,210) (0.7) 17,901 0.4 19,984 0.3 66,550 0.9 (47) (0.0) (119) (0.0) (194) (0.0) 149,604 3.4 323,414 5.5 1,258,068 17.2 (12,662) (0.3) (13,122) (0.2) (28,883) (0.4) 136,942 3.1 310,292 5.3 1,229,185 16.8 (30,378) (0.7) (71,284) (1.2) (298,661) (4.1) 106,564 2.4 239,008 4.0 930,524 12.7 106,564 2.4 239,075 4.0 930,232 12.7 – – (67) (0.0) 292 0.0	For theyear ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0 (3,966,496) (90.2) (5,180,226) (87.8) (5,577,739) (76.1) 432,860 9.8 723,000 12.2 1,754,983 23.9 (257,310) (5.8) (401,245) (6.8) (515,061) (7.0) (43,800) (1.0) (18,206) (0.3) (48,210) (0.7) 17,901 0.4 19,984 0.3 66,550 0.9 (47) (0.0) (119) (0.0) (194) (0.0) 149,604 3.4 323,414 5.5 1,258,068 17.2 (12,662) (0.3) (13,122) (0.2) (28,883) (0.4) 136,942 3.1 310,292 5.3 1,229,185 16.8 (30,378) (0.7) (71,284) (1.2) (298,661) (4.1) 106,564 2.4 239,008 4.0 930,524 12.7 106,564 2.4 239,075 4.0 930,232 12.7 – – (67) (0.0) 292 0.0	For the six months ended June 30,	For the six months ended June 30,	For the six months ended June 30,
2017 (RMB’000) (%) 4,399,356 100.0 (3,966,496) (90.2) 432,860 9.8 (257,310) (5.8) (43,800) (1.0) 17,901 0.4 (47) (0.0) 149,604 3.4 (12,662) (0.3) 136,942 3.1 (30,378) (0.7) 106,564 2.4 106,564 2.4 – –	2018 (RMB’000) (%) 5,903,226 100.0 (5,180,226) (87.8) 723,000 12.2 (401,245) (6.8) (18,206) (0.3) 19,984 0.3 (119) (0.0) 323,414 5.5 (13,122) (0.2) 310,292 5.3 (71,284) (1.2) 239,008 4.0 239,075 4.0 (67) (0.0)		2019 (RMB’000) (%) (unaudited) 3,465,760 100.0 (2,669,140) (77.0) 796,620 23.0 (232,087) (6.7) (25,669) (0.7) 16,508 0.5 (31) (0.0) 555,341 16.0 (16,728) (0.5) 538,613 15.5 (131,287) (3.8) 407,326 11.8 407,480 11.8 (154) (0.0)	2020
(RMB’000) 4,399,356 (3,966,496) 432,860 (257,310) (43,800) 17,901 (47) 149,604 (12,662) 136,942 (30,378) 106,564 106,564 –	(RMB’000) 5,903,226 (5,180,226) 723,000 (401,245) (18,206) 19,984 (119) 323,414 (13,122) 310,292 (71,284) 239,008 239,075 (67)	(RMB’000) 7,332,722 (5,577,739) 1,754,983 (515,061) (48,210) 66,550 (194) 1,258,068 (28,883) 1,229,185 (298,661) 930,524 930,232 292		(RMB’000) 4,563,855 (2,826,168) 1,737,687 (224,360) (46,919) 46,379 (97) 1,512,690 (12,449) 1,500,241 (352,548) 1,147,693 1,148,735 (1,042)	(%) 100.0 (61.9)
					38.1 (4.9) (1.0) 1.0 (0.0)
					33.1 (0.3)
					32.9 (7.7)
					25.1

					25.2 (0.0)

Revenue

During the Track Record Period, we derived our revenue from the following three business lines:

(i) property management services, including butler services, security services, cleaning and greening services, as well as common area facility repair and maintenance services;
(ii) value-added services to non-property owners, including preliminary property management services, pre-delivery services, repair and maintenance services, as well as property transaction assistance services; and
(iii) community value-added services, including community operation services, community asset management services, as well as community living services.

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FINANCIAL INFORMATION

The following table sets forth a breakdown of our revenue by business line for the periods indicated.

Property management services . . . . . . . . . Value-added services to non-property owners . . . Community value-added services . . . . . . . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,538,392 57.7 3,464,390 58.7 4,612,212 62.9 1,609,865 36.6 2,103,431 35.6 2,147,527 29.3 251,099 5.7 335,405 5.7 572,983 7.8 4,399,356 100.0 5,903,226 100.0 7,332,722 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 2,538,392 57.7 1,609,865 36.6 251,099 5.7 4,399,356 100.0	2018 (RMB’000) (%) 3,464,390 58.7 2,103,431 35.6 335,405 5.7 5,903,226 100.0	2019 (RMB’000) (%) (unaudited) 2,154,683 62.2 1,056,069 30.5 255,008 7.3 3,465,760 100.0	2020
				(RMB’000) (%) 2,824,261 61.9 1,231,480 27.0 508,114 11.1 4,563,855 100.0

Property Management Services

Revenue from property management services increased during the Track Record Period, primarily driven by (i) the increase in the total GFA under management as a result of our business expansion, (ii) the increase in our average property management fee and (iii) our enhanced effort to charge property management fees for parking spaces since 2019. During the Track Record Period, we experienced fast growth in our GFA under management, which was approximately 138.3 million sq.m., 185.4 million sq.m., 237.9 million sq.m. and 254.0 million sq.m., respectively, as of December 31, 2017, 2018 and 2019 and June 30, 2020. In 2017, 2018, 2019 and the six months ended June 30, 2020, our average property management fee was RMB2.05 per sq.m. per month, RMB2.14 per sq.m. per month, RMB2.18 per sq.m. per month and RMB2.22 per sq.m. per month, respectively.

Under PRC laws, property management fees may be charged either on a lump-sum basis or on a commission basis. During the Track Record Period, we charged substantially all of our managed properties on a lump-sum basis, which is the dominant fee model for property management services in China, according to CIA. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our revenue from property management services generated on a lump-sum basis accounted for 99.3%, 99.4%, 99.5%, 99.5% and 99.6% of our revenue from property management services, respectively.

During the Track Record Period, we derived substantially all of our revenue from property management services for properties developed by the Evergrande Group, which accounted for 99.8%, 98.9%, 98.4%, 98.4% and 98.8%, respectively, of our total revenue from property management services in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020.

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FINANCIAL INFORMATION

The following table sets forth our GFA under management as of the dates indicated, and revenue generated from property management services	for the periods indicated, each by type of property developer.	As of or for the six months	As of or for the year ended December 31, ended June 30,	2017 2018 2019 2020	GFA under GFA under GFA under GFA under	management Revenue management Revenue management Revenue management Revenue	(sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%)	Properties developed by:	The Evergrande Group(1). . . . . 137,836 2,532,597 99.8 183,121 3,425,456 98.9 233,969 4,538,996 98.4 251,339 2,790,733 98.8	Joint ventures and associates of	the Evergrande Group(2) . . . . 312 1,699 0.1 1,886 33,099 1.0 3,064 58,589 1.3 1,656 20,067 0.7	Independent third-party property	developers(3). . . . . . . . . . . 200 4,096 0.1 401 5,835 0.1 822 14,627 0.3 1,024 13,461 0.5	Total . . . . . . . . . . . . . . . . 138,348 2,538,392 100.0 185,408 3,464,390 100.0 237,855 4,612,212 100.0 254,019 2,824,261 100.0		Notes:	(1) Refers to properties developed solely by the Evergrande Group or jointly by the Evergrande Group and independent third-party property developers in which project the	Evergrande Group held a controlling interest.	(2) Refers to properties developed by joint ventures and associates of the Evergrande Group, in which the Evergrande Group did not hold a controlling interest.	(3) Refers to properties developed solely by independent third-party property developers.

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FINANCIAL INFORMATION

During the Track Record Period, substantially all of our revenue from property management services was derived from residential properties,	which accounted for 96.6%, 98.1%, 98.1%, 97.9% and 97.9%, respectively, of our total revenue from property management services in 2017, 2018,	2019 and the six months ended June 30, 2019 and 2020. As of December 31, 2017, 2018 and 2019 and June 30, 2020, the GFA of residential	properties under our management was 137.0 million sq.m., 183.8 million sq.m., 235.8 million sq.m. and 251.4 million sq.m., respectively. The	increases in GFA of residential properties under our management during the Track Record Period were generally in line with our overall business	expansion.	The following table sets forth a breakdown of our GFA under management as of the dates indicated, and our revenue generated from property	management services for the periods indicated, each by property type.	As of or for the six months	As of or for the year ended December 31, ended June 30,	2017 2018 2019 2020	GFA under GFA under GFA under GFA under	management Revenue management Revenue management Revenue management Revenue	(sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%)	Residential properties . . . . . . . 136,966 2,452,466 96.6 183,753 3,398,385 98.1 235,788 4,524,308 98.1 251,355 2,763,869 97.9 Non-residential properties . . . . 1,382 85,926 3.4 1,655(1) 66,005(1) 1.9 2,067 87,904 1.9 2,664 60,392 2.1	Total . . . . . . . . . . . . . . . . 138,348 2,538,392 100.0 185,408 3,464,390 100.0 237,855 4,612,212 100.0 254,019 2,824,261 100.0		Note:	(1) Guilin Evergrande Square (桂林恒大廣場) project, a commercial complex which we managed in 2017, was temporarily managed by a related party engaging mainly in	commercial property operations, between February 2018 and late December 2018. As such, it contributed only a limited amount of revenue to us in 2018 and resulted	in a decrease in revenue derived from non-residential properties in 2018. As of December 31, 2017, 2018 and 2019 and June 30, 2020, approximately 0.3 million sq.m.	of our GFA under management was related to this project.	During the Track Record Period, non-residential properties to which we provided property management services and from which we generated	revenue from property management services included China Evergrande Centre (中國恒大中心), Guangzhou Evergrande Center (廣州恒大中心),	Guilin Evergrande Plaza (桂林恒大廣場), Ningbo Evergrande City Light (寧波恒大城市之光), Yichang Evergrande Pedestrian Street (宜昌恒大步	行街), Shenzhen Jianshe Building (深圳建設大廈), Hefei Evergrande Center (合肥恒大中心), Hefei Evergrande Plaza (合肥恒大廣場), Fushun	Evergrande International Financial Center (撫順恒大國際金融中心), Harbin Evergrande International Center (哈爾濱恒大國際中心), Ji’nan	Evergrande Times Fortune Center (濟南恒大時代財富中心), Shijiazhuang Evergrande Center (石家莊恒大中心), Guiyang Evergrande Center (貴陽	恒大中心) and Nanchang Evergrande Famous City (南昌恒大名都). Save for these properties, all other properties from which we generated revenue	from property management services during the Track Record Period were classified as residential properties.

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FINANCIAL INFORMATION

The following table sets forth a breakdown of our total GFA under management as of the dates indicated, and our revenue from property	management services for periods indicated, in absolute amount and as a percentage of our revenue from property management services, by	geographic region.	As of or for the six months	As of or for the year ended December 31, ended June 30,	2017 2018 2019 2020	GFA under GFA under GFA under GFA under	management Revenue management Revenue management Revenue management Revenue	(sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%) (sq.m.’000) (RMB’000) (%)	Eastern China(1) . . . . . . . . . . 34,577 533,688 21.0 48,595 739,114 21.3 62,271 1,033,728 22.4 67,248 635,907 22.5 Northern China(2) . . . . . . . . . 14,206 254,276 10.0 19,328 429,776 12.4 23,071 537,303 11.7 25,074 301,495 10.7 Northwestern China(3). . . . . . . 7,077 123,671 4.9 8,553 159,898 4.6 10,930 205,003 4.4 11,329 118,933 4.2 Southern China(4) . . . . . . . . . 19,042 423,294 16.7 28,909 586,882 16.9 39,934 834,704 18.1 42,948 558,827 19.8 Southwestern China(5). . . . . . . 23,476 449,687 17.7 29,177 562,931 16.3 36,971 706,765 15.3 39,914 449,995 15.9 Central China(6) . . . . . . . . . . 23,408 374,232 14.7 31,178 521,149 15.1 39,968 721,754 15.7 42,548 428,243 15.2 Northeastern China(7) . . . . . . . 16,562 379,544 15.0 19,668 464,640 13.4 24,710 572,955 12.4 24,958 330,861 11.7	Total . . . . . . . . . . . . . . . . 138,348 2,538,392 100.0 185,408 3,464,390 100.0 237,855 4,612,212 100.0 254,019 2,824,261 100.0		Notes:	(1) Includes Anhui, Fujian, Jiangsu, Jiangxi, Shandong, Shanghai and Zhejiang.	(2) Includes Beijing, Hebei, Shanxi and Tianjin.	(3) Includes Gansu, Ningxia, Qinghai, Shaanxi and Xinjiang.	(4) Includes Guangdong, Guangxi, Hainan and Hong Kong.	(5) Includes Guizhou, Sichuan, Tibet, Yunnan and Chongqing.	(6) Includes Henan, Hubei and Hunan.	(7) Includes Heilongjiang, Jilin, Liaoning and Inner Mongolia.

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FINANCIAL INFORMATION

Value-added Services to Non-property Owners

We provide value-added services to non-property owners, which mainly consisted of property developers during the Track Record Period. Such services primarily include (i) preliminary property management services, which comprise (a) construction site management services, (b) sales office management services and (c) consulting services; (ii) pre-delivery services; (iii) repair and maintenance services; and (iv) property transaction assistance services. The following table sets forth the components of our revenue from value-added services to non-property owners for the periods indicated.

Preliminary property management services . . Pre-delivery services . . . Repair and maintenance services . . . . . . . . . Property transaction assistance services . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 1,597,021 99.2 1,906,198 90.6 1,605,862 74.8 – – 176,789 8.4 463,586 21.6 9,158 0.6 13,633 0.7 6,570 0.3 3,686 0.2 6,811 0.3 71,509 3.3 1,609,865 100.0 2,103,431 100.0 2,147,527 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 1,597,021 99.2 1,906,198 90.6 1,605,862 74.8 – – 176,789 8.4 463,586 21.6 9,158 0.6 13,633 0.7 6,570 0.3 3,686 0.2 6,811 0.3 71,509 3.3 1,609,865 100.0 2,103,431 100.0 2,147,527 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 1,597,021 99.2 – – 9,158 0.6 3,686 0.2 1,609,865 100.0	2018 (RMB’000) (%) 1,906,198 90.6 176,789 8.4 13,633 0.7 6,811 0.3 2,103,431 100.0	2019 (RMB’000) (%) (unaudited) 790,724 74.9 233,385 22.1 4,677 0.4 27,283 2.6 1,056,069 100.0	2020
				(RMB’000) (%) 710,944 57.7 312,753 25.4 159,435 13.0 48,348 3.9 1,231,480 100.0

Community Value-added Services

We generate revenue from providing community value-added services primarily to property owners and residents, comprising (i) community operation services, such as community space management services and group purchase facilitation; (ii) community asset management services, including parking space rental services, second-hand property transaction assistance services and recreation center operations; and (iii) community living services, such as household services and repair and maintenance.

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FINANCIAL INFORMATION

The following table sets forth the components of our revenue from community value-added services for the periods indicated.

Community asset management. . . . . . . Community operations services . . . . . . . . . Community living services . . . . . . . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 174,317 69.4 234,034 69.8 302,846 52.9 25,675 10.2 36,657 10.9 202,239 35.3 51,107 20.4 64,714 19.3 67,898 11.8 251,099 100.0 335,405 100.0 572,983 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 174,317 69.4 234,034 69.8 302,846 52.9 25,675 10.2 36,657 10.9 202,239 35.3 51,107 20.4 64,714 19.3 67,898 11.8 251,099 100.0 335,405 100.0 572,983 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 174,317 69.4 25,675 10.2 51,107 20.4 251,099 100.0	2018 (RMB’000) (%) 234,034 69.8 36,657 10.9 64,714 19.3 335,405 100.0	2019 (RMB’000) (%) (unaudited) 135,967 53.3 96,177 37.7 22,864 9.0 255,008 100.0	2020
				(RMB’000) (%) 165,975 32.7 305,757 60.2 36,382 7.1 508,114 100.0

Cost of Sales

Our cost of sales represents costs and expenses directly attributable to the provision of our services, which mainly consisted of (i) employee benefit expenses; (ii) greening and cleaning expenses; (iii) maintenance costs; (iv) utility expenses and (v) short-term and low-value lease expenses. The increase in cost of sales during the Track Record Period generally corresponded to our business growth, which was primarily attributable to the increase in our GFA under management resulting from the expansion of our property management services business.

The following table sets forth the components of our cost of sales for the periods indicated.

Employee benefit expenses . . . . . . . . . Greening and cleaning expenses . . . . . . . . . Maintenance costs . . . . . Utility expenses . . . . . . Short-term and low-value lease expenses . . . . . . Others(1) . . . . . . . . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,848,770 71.8 3,687,640 71.2 3,760,047 67.4 418,145 10.5 632,066 12.2 790,194 14.2 254,729 6.4 270,754 5.2 304,640 5.5 213,090 5.4 300,630 5.8 393,522 7.1 68,176 1.7 90,504 1.7 112,850 2.0 163,586 4.2 198,632 3.9 216,486 3.8 3,966,496 100.0 5,180,226 100.0 5,577,739 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 2,848,770 71.8 3,687,640 71.2 3,760,047 67.4 418,145 10.5 632,066 12.2 790,194 14.2 254,729 6.4 270,754 5.2 304,640 5.5 213,090 5.4 300,630 5.8 393,522 7.1 68,176 1.7 90,504 1.7 112,850 2.0 163,586 4.2 198,632 3.9 216,486 3.8 3,966,496 100.0 5,180,226 100.0 5,577,739 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 2,848,770 71.8 418,145 10.5 254,729 6.4 213,090 5.4 68,176 1.7 163,586 4.2 3,966,496 100.0	2018 (RMB’000) (%) 3,687,640 71.2 632,066 12.2 270,754 5.2 300,630 5.8 90,504 1.7 198,632 3.9 5,180,226 100.0	2019 (RMB’000) (%) (unaudited) 1,841,467 69.0 354,601 13.3 155,029 5.8 162,481 6.1 49,762 1.9 105,800 3.9 2,669,140 100.0	2020
				(RMB’000) (%) 1,784,813 63.2 430,203 15.2 258,032 9.1 190,871 6.8 53,836 1.9 108,413 3.8 2,826,168 100.0

Note:

(1) Others primarily include office and related expenses, depreciation and amortization, taxes and surcharges and community activity expenses.

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FINANCIAL INFORMATION

During the Track Record Period, employee benefit expenses contributed a majority of our cost of sales. The increase in employee benefit expenses from 2017 to 2019 was mainly due to the increases in the average employee compensation, partially offset by slight decreases in the number of our employees. However, the percentage of employee benefit expenses in our cost of sales decreased slightly from 71.8% in 2017 to 71.2% in 2018 and further to 67.4% in 2019, and decreased from 69.0% in the six months ended June 30, 2019 to 63.2% in the six months ended June 30, 2020, while the absolute amount of employee benefit expenses decreased from RMB1,841.5 million in the six months ended June 30, 2019 to RMB1,784.8 million in the same period in 2020. Such decreases were primarily due to economies of scale achieved during our business expansion and our improved employee productivity and efficiency through the implementation of a series of cost control measures, such as centralizing headcount and salary management at headquarters level, implementing standardized employee responsibilities and work process, as well as adoption of smart information platform. The decrease in the first half of 2020 was also attributable to the deduction in or exemption of payment of social insurance contributions as a result of the regulatory supportive policies issued by the local government in response to the COVID-19 outbreak.

Greening and cleaning expenses mainly include the subcontracting costs for greening and cleaning services provided to the property projects under our management. Maintenance costs were mainly related to repair and maintenance of elevators, fire safety equipment and central air-conditioning systems. Our maintenance costs and the percentage of maintenance costs in our cost of sales increased significantly from RMB155.0 million and 5.8% in the six months ended June 30, 2019 to RMB258.0 million and 9.1% in the six months ended June 30, 2020 mainly because more elevators, fire safety equipment and central air-conditioning systems for the property projects delivered in 2017 and 2018 became due for major maintenance in the first half of 2020. Short-term and low-value lease expenses mainly include expenses incurred for leases with terms of less than one year.

The following table sets forth a breakdown of our cost of sales by business line for the periods indicated.

	For the year ended	For the year ended	December 31,	December 31,	For the six months ended June 30,	For the six months ended June 30,	For the six months ended June 30,
2017	(%) 58.4 38.5 3.1 100.0	2018	(%) 60.8 36.1 3.1 100.0	2019	2019 (RMB’000) (%) (unaudited) 1,793,870 67.2 762,430 28.6 112,840 4.2 2,669,140 100.0	2020
(RMB’000) 2,317,601 1,528,744 120,151 3,966,496		(RMB’000) 3,150,583 1,869,315 160,328 5,180,226		(RMB’000) 3,795,752 1,537,825 244,162 5,577,739		(RMB’000) 1,875,682 772,496 177,990 2,826,168	(%) 66.4 27.3 6.3
							100.0

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FINANCIAL INFORMATION

Gross Profit and Gross Profit Margin

Our gross profit margin in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020 was 9.8%, 12.2%, 23.9%, 23.0% and 38.1%, respectively. Our overall gross profit margin increased during the Track Record Period, primarily attributable to (i) economies of scale as a result of our continuous business growth; (ii) the significant growth in the gross profit margins of our property management services, attributable to, among others, (a) increased percentage of newly delivered property management projects with relatively high property management fees and (b) our enhanced effort to charge property management fees for parking spaces since 2019; and (iii) the continuous implementation of cost control measures. These measures included, among other things, (1) measures aiming at improving employee productivity and efficiency, such as centralizing headcount and salary management at headquarters level and implementing standardized employee responsibilities and work process; (2) adoption of smart information platform; (3) centralizing procurement management; (4) measures to reduce waste and energy costs; and (5) streamlining decision-making process and improving management efficiency. In addition, the increase in our gross profit margin for the first half of 2020 was also attributable to the deduction in, or exemption of, payment of social insurance contributions as a result of the regulatory supportive policies issued by the local governments in response to the COVID-19 pandemic.

The following table sets forth our gross profit and gross profit margin by business line for the periods indicated.

For the year ended December 31, 2017 2018 2019 Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 220,791 8.7 313,807 9.1 816,460 17.7 81,121 5.0 234,116 11.1 609,702 28.4 130,948 52.2 175,077 52.2 328,821 57.4 432,860 9.8 723,000 12.2 1,754,983 23.9	For the year ended December 31, 2017 2018 2019 Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 220,791 8.7 313,807 9.1 816,460 17.7 81,121 5.0 234,116 11.1 609,702 28.4 130,948 52.2 175,077 52.2 328,821 57.4 432,860 9.8 723,000 12.2 1,754,983 23.9	For the year ended December 31, 2017 2018 2019 Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 220,791 8.7 313,807 9.1 816,460 17.7 81,121 5.0 234,116 11.1 609,702 28.4 130,948 52.2 175,077 52.2 328,821 57.4 432,860 9.8 723,000 12.2 1,754,983 23.9	For the six months ended June 30,	For the six months ended June 30,	For the six months ended June 30,
2017 Gross profit Gross profit margin (RMB’000) (%) 220,791 8.7 81,121 5.0 130,948 52.2 432,860 9.8	2018 Gross profit Gross profit margin (RMB’000) (%) 313,807 9.1 234,116 11.1 175,077 52.2 723,000 12.2		2019 Gross profit Gross profit margin (RMB’000) (%) (unaudited) 360,813 16.8 293,639 27.8 142,168 55.8 796,620 23.0	2020
Gross profit (RMB’000) 220,791 81,121 130,948 432,860	Gross profit (RMB’000) 313,807 234,116 175,077 723,000	Gross profit (RMB’000) 816,460 609,702 328,821 1,754,983		Gross profit (RMB’000) 948,579 458,984 330,124 1,737,687	Gross profit margin
					(%) 33.6 37.3 65.0 38.1

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FINANCIAL INFORMATION

Property Management Services

The gross profit margin for this business line increased from 8.7% in 2017 to 9.1% in 2018, and further to 17.7% in 2019, and further increased from 16.8% in the six months ended June 30, 2019 to 33.6% in the six months ended June 30, 2020, primarily due to (i) greater economies of scale achieved during our business expansion; (ii) increased percentage of newly delivered property management projects with relatively high property management fees; (iii) our enhanced effort to charge property management fees for parking spaces since 2019; and (iv) our cost control measures. The increase in the first half of 2020 was also attributable to the deduction in or exemption of payment of social insurance contributions as a result of the regulatory supportive policies issued by the local government in response to the COVID-19 pandemic.

Gross profit margin for our property management services is also affected by the average property management fees per sq.m. per month we charge for our property management services and our cost of sales per sq.m. per month for providing such services. The overall average property management fees we charged per sq.m. per month was approximately RMB2.05, RMB2.14, RMB2.18, RMB2.17 and RMB2.22 in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively. The following table sets forth a breakdown of average property management fees for the periods indicated by property developer.

The Evergrande Group(1) . . . . . Joint ventures and associates of the Evergrande Group(2) . . . . Independent third-party property developers(3) . . . . . Overall . . . . . . . . . . . . . . . .	For the year ended December 31, For the six months ended June 30, 2017 2018 2019 2019 2020 (RMB per sq.m. per month) 2.02 2.11 2.13 2.13 2.18 2.66 2.83 2.97 2.93 2.57 2.16 2.31 2.32 2.28 2.52 2.05 2.14 2.18 2.17 2.22	For the six months ended June 30,	For the six months ended June 30,
	2017 2.02 2.66 2.16 2.05		2020
			2.18 2.57 2.52 2.22

Notes:

(1) Refer to properties developed solely by the Evergrande Group or jointly by the Evergrande Group and independent third-party property developers in which project the Evergrande Group held a controlling interest.
(2) Refer to properties developed by joint ventures and associates of the Evergrande Group, in which the Evergrande Group did not hold a controlling interest.
(3) Refer to properties developed solely by independent third-party property developers.

We only had a limited number of properties under management that were developed by joint ventures and associates of the Evergrande Group and independent third-party property developers. The average property management fees of properties developed by joint ventures and associates of the Evergrande Group were higher than those of properties developed by the Evergrande Group and independent third-party property developers during the Track Record Period, mainly because properties developed by joint ventures and associates of the Evergrande Group were relatively new and high-end properties primarily located in provincial capitals and major regional cities such as Shenyang, Hohhot, Chengdu and Dalian. The monthly property

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FINANCIAL INFORMATION

management service fees for properties developed by independent third-party property developers were higher than those for properties developed by the Evergrande Group during the Track Record Period, primarily because properties developed by independent third-party property developers were mainly located in tier-one and tier-two cities while properties developed by the Evergrande Group cover a wide range of cities across different tiers of cities in China.

The following table sets forth a breakdown of our average property management fee per sq.m. per month for the periods indicated by property type.

Residential properties . . . . . . Non-residential properties . . . Overall. . . . . . . . . . . . . . . .	For the year ended December 31, For the six months ended June 30, 2017 2018 2019 2019 2020 (RMB per sq.m. per month) 2.02 2.11 2.14 2.14 2.19 5.05 5.18 6.11 5.84 5.94 2.05 2.14 2.18 2.17 2.22	For the six months ended June 30,	For the six months ended June 30,
	2017 2.02 5.05 2.05		2020
			2.19 5.94 2.22

The increase in the average property management fees of non-residential properties in 2019 was primarily due to the increased proportion of high-end commercial properties under our management with relatively high property management fees, such as Shijiazhuang Evergrande Center (石家莊恒大中心), a high-end office building, and Ningbo Evergrande City Light (寧波恒大城市之光), a high-end commercial complex.

Value-added Services to Non-property Owners

Gross profit margin for our value-added services to non-property owners was 5.0%, 11.1%, 28.4%, 27.8% and 37.3%, respectively, in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020. The gross profit margin for our value-added services to non-property owners experienced an upward trend during the Track Record Period, primarily due to (i) economies of scale as a result of our continuous business growth; (ii) introduction of pre-delivery services and property transaction assistance services, which had higher gross profit margins; and (iii) our cost control measures.

Community Value-added Services

Gross profit margin for our community value-added services was 52.2%, 52.2%, 57.4%, 55.8% and 65.0%, respectively, in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020. The gross profit margin for community value-added services increased during the Track Record Period, primarily reflecting (i) economies of scale as a result of our continuous business growth; (ii) additional revenue from car parks under our management as a result of our enhanced efforts to charge temporary parking fees or monthly rental fees for our parking space rental services; (iii) introduction of diversified value-added services to property owners and residents, mainly community space management services and group purchase facilitation that had higher gross profit margins; and (iv) our cost control measures.

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FINANCIAL INFORMATION

Administrative Expenses

Our administrative expenses mainly consist of (i) employee benefit expenses for our administrative staff, (ii) tax and other levies, (iii) travelling and entertainment expenses, (iv) office expenses, (v) bank charges, (vi) short-term and low-value lease expenses related to dormitory for our administrative staff and offices, (vii) depreciation and amortization, and (viii) other miscellaneous administrative expenses, such as professional fees, telecommunication and training expenses.

During the Track Record Period, employee benefit expenses contributed the majority of our administrative expenses. Our employee benefit expenses increased mainly due to the increase in the number of our administrative staff and the average employee compensation.

The following table sets forth the components of our administrative expenses for the periods indicated.

Employee benefit expenses. Tax and other levies . . . . Travelling and entertainment expenses. . Office expenses. . . . . . . Bank charges . . . . . . . . Short-term and low-value lease expenses . . . . . . Depreciation and amortization charges . . . Others. . . . . . . . . . . . Total . . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 175,831 68.3 293,667 73.2 373,048 72.4 18,310 7.1 23,220 5.8 30,005 5.8 22,647 8.8 27,151 6.8 37,322 7.2 7,166 2.8 9,055 2.3 8,015 1.6 19,409 7.5 23,163 5.8 16,025 3.1 2,091 0.8 7,780 1.9 11,160 2.2 2,638 1.0 3,072 0.8 4,256 0.8 9,218 3.7 14,137 3.4 35,230 6.9 257,310 100.0 401,245 100.0 515,061 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 175,831 68.3 293,667 73.2 373,048 72.4 18,310 7.1 23,220 5.8 30,005 5.8 22,647 8.8 27,151 6.8 37,322 7.2 7,166 2.8 9,055 2.3 8,015 1.6 19,409 7.5 23,163 5.8 16,025 3.1 2,091 0.8 7,780 1.9 11,160 2.2 2,638 1.0 3,072 0.8 4,256 0.8 9,218 3.7 14,137 3.4 35,230 6.9 257,310 100.0 401,245 100.0 515,061 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 175,831 68.3 18,310 7.1 22,647 8.8 7,166 2.8 19,409 7.5 2,091 0.8 2,638 1.0 9,218 3.7 257,310 100.0	2018 (RMB’000) (%) 293,667 73.2 23,220 5.8 27,151 6.8 9,055 2.3 23,163 5.8 7,780 1.9 3,072 0.8 14,137 3.4 401,245 100.0	2019 (RMB’000) (%) (unaudited) 161,649 69.8 14,243 6.1 15,894 6.8 7,319 3.2 7,091 3.1 5,506 2.4 2,298 1.0 18,087 7.6 232,087 100.0	2020
				(RMB’000) (%) 163,277 72.8 14,954 6.7 12,674 5.6 7,345 3.3 6,842 3.0 6,454 2.9 3,229 1.4 9,585 4.3 224,360 100.0

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FINANCIAL INFORMATION

Net Impairment Losses on Financial Assets

Our net impairment losses on financial assets are provisions for losses arising from potential bad debts in respect of our trade receivables and other receivables in the ordinary course of business. We assess impairment losses on financial assets based on a number of factors, including historical payment records and forward-looking information. See note 3.1.2 to the Accountants’ Report in Appendix I to this Document. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our impairment losses on financial assets was RMB43.8 million, RMB18.2 million, RMB48.2 million, RMB25.7 million and RMB46.9 million, respectively. We recorded relatively low net impairment losses on financial assets in 2018, primarily due to the increased settlement of overdue property management fees by property owners in connection with a promotional activity we held in late 2018 to encourage settlement and advance payments of property management fees.

Other Income

Our other income mainly consisted of (i) government grants which mainly included (a) government subsidies to support local corporate and economic development and to encourage our effort of stabilizing employment, as well as (b) value-added tax refund as a result of implementation of Announcement on Policies for Deepening the VAT Reform, the newly issued tax regulations on value-added tax deductions in April 2019 which allows the taxpayers engaged in production or livelihood services to enjoy additional 10% input value-added tax deduction in the current period from the tax amount payable; (ii) other income from overdue fine mainly as a result of compensation from property owners and residents for overdue property management fees; and (iii) interest income on bank deposit.

The following table sets forth the components of our other income for the periods indicated.

Government grants . . . . Income from overdue fine . . . . . . Interest income . . . . . . Others(1) . . . . . . . . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 5,436 30.4 7,730 38.7 50,887 76.5 4,250 23.7 4,608 23.1 8,110 12.2 6,514 36.4 5,130 25.7 3,590 5.4 1,701 9.5 2,516 12.5 3,963 5.9 17,901 100.0 19,984 100.0 66,550 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 5,436 30.4 7,730 38.7 50,887 76.5 4,250 23.7 4,608 23.1 8,110 12.2 6,514 36.4 5,130 25.7 3,590 5.4 1,701 9.5 2,516 12.5 3,963 5.9 17,901 100.0 19,984 100.0 66,550 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 5,436 30.4 4,250 23.7 6,514 36.4 1,701 9.5 17,901 100.0	2018 (RMB’000) (%) 7,730 38.7 4,608 23.1 5,130 25.7 2,516 12.5 19,984 100.0	2019 (RMB’000) (%) (unaudited) 10,573 64.0 2,244 13.6 1,973 12.0 1,718 10.4 16,508 100.0	2020
				(RMB’000) (%) 37,920 81.8 5,974 12.9 1,463 3.2 1,022 2.1 46,379 100.0

Note:

(1) Others mainly include revenue derived from disposal of waste materials.

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FINANCIAL INFORMATION

Other Losses—net

Our net other losses mainly consisted of (i) losses on disposal of property and equipment and (ii) net foreign exchange gains or losses. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our net other losses amounted to RMB47,000, RMB0.1 million, RMB0.2 million, RMB31,000 and RMB0.1 million, respectively.

Finance Costs

Our finance costs consisted of (i) interest expenses on borrowings, (ii) interests paid or payable for lease liabilities which mainly represents interests charged to profit or loss over the lease period under certain lease arrangements for properties under HKFRS 16; and (iii) other finance costs deemed to be incurred as a result of the discount offered by us to the individual property owners for their prepayments of property management fees.

The following table sets forth the components of our net finance cost for the years indicated.

Interest expenses on borrowings . . . . . . . Interests on lease liabilities . . . . . . . . Other finance costs . . . . Total. . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 11,745 92.8 11,610 88.5 4,856 16.8 917 7.2 1,512 11.5 1,574 5.4 – – – – 22,453 77.8 12,662 100.0 13,122 100.0 28,883 100.0	For the year ended December 31, 2017 2018 2019 (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) 11,745 92.8 11,610 88.5 4,856 16.8 917 7.2 1,512 11.5 1,574 5.4 – – – – 22,453 77.8 12,662 100.0 13,122 100.0 28,883 100.0	For the six months ended June 30,	For the six months ended June 30,
	2017 (RMB’000) (%) 11,745 92.8 917 7.2 – – 12,662 100.0	2018 (RMB’000) (%) 11,610 88.5 1,512 11.5 – – 13,122 100.0	2019 (RMB’000) (%) (unaudited) 4,849 29.0 813 4.9 11,066 66.1 16,728 100.0	2020
				(RMB’000) (%) 110 0.9 756 6.1 11,583 93.0 12,449 100.0

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FINANCIAL INFORMATION

Income Tax Expenses

Income tax expense consisted of current and deferred income taxes payable by us in the PRC.

Current income tax – PRC corporate income tax . . . . Deferred income tax – PRC corporate income tax . . . . Total tax charged for the year/ period. . . . . . . . . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) 7,332 88,447 309,367 23,046 (17,163) (10,706) 30,378 71,284 298,661	For the year ended December 31, 2017 2018 2019 (RMB’000) 7,332 88,447 309,367 23,046 (17,163) (10,706) 30,378 71,284 298,661	For the six months ended June 30, 2019 2020 (unaudited) 137,940 365,311 (6,653) (12,763) 131,287 352,548
	2017 7,332 23,046 30,378	2018 88,447 (17,163) 71,284	2019 (unaudited) 137,940 (6,653) 131,287

Income tax provision in respect of our operations in the PRC has been calculated at the applicable tax rate on the estimated assessable profits for the year or period, based on existing legislation and interpretations and practices in respect thereof. The statutory tax rate was 25% for the Track Record Period. Certain of our subsidiaries and branches are located in western China, which enjoyed a preferential income tax rate of 15% during the Track Record Period. Our subsidiary and branches located in Hainan Province enjoy a preferential income tax rate of 15% from January 1, 2020 to December 31, 2024.

Our Company is incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands and, accordingly, is exempted from Cayman Islands income tax. Our subsidiaries in the BVI was incorporated under the International Business Companies Act of the BVI and accordingly, is exempted from British Virgin Island income tax. Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profit for the current period in respect of operations in Hong Kong. Except for Fortune Ascent, our other subsidiaries incorporated in Hong Kong did not have assessable profit in Hong Kong during the Track Record Period.

In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our effective income tax rates, calculated as income tax expenses divided by profit before income tax, remained relatively stable at 22.2%, 23.0%, 24.3%, 24.4% and 23.5%, respectively, which are lower than the PRC statutory corporate income tax rate of 25% primarily because of the preferential income tax rate of 15% enjoyed by certain of our subsidiaries located in western China and Hainan Province. During the Track Record Period and up to the Latest Practicable Date, we had paid all applicable taxes when due and there were no matters in dispute or unresolved with any tax authorities.

See note 23 to the Accountants’ Report in Appendix I to this Document for more information on the deferred tax assets.

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FINANCIAL INFORMATION

RESULTS OF OPERATIONS

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Revenue

Our revenue increased by 31.7% to RMB4,563.9 million in the six months ended June 30, 2020 from RMB3,465.8 million in the six months ended June 30, 2019. The increase in our revenue was primarily attributable to the increases in revenue from our property management services, value-added services to non-property owners and community value-added services, as we continuously expanded our business scale.

Property management services . Revenue from property management services increased by 31.1% to RMB2,824.3 million in the six months ended June 30, 2020 from RMB2,154.7 million in the six months ended June 30, 2019, primarily attributable to (i) an increase in our total GFA under management from 202.0 million sq.m. as of June 30, 2019 to 254.0 million sq.m. as of June 30, 2020, mainly as a result of our business expansion in Eastern China, Southern China and Southwestern China; (ii) an increase of average property management service fee from RMB2.17 per sq.m per month for the six months ended June 30, 2019 to RMB2.22 per sq.m. per month for the six months ended June 30, 2020; and (iii) our enhanced efforts to charge property management fees for parking spaces since 2019.
Value-added services to non-property owners . Revenue from value-added services to non-property owners increased by 16.6% to RMB1,231.5 million in the six months ended June 30, 2020 from RMB1,056.1 million in the six months ended June 30, 2019, primarily attributable to the increased revenue from (i) repair and maintenance services driven by the higher GFA within the quality warranty periods and (ii) pre-delivery services mainly due to the expanded pre-delivery cleaning services arising from the higher volume of properties being developed and delivered during the period.
Community value-added services . Revenue from community value-added services to property owners increased by 99.3% to RMB508.1 million in the six months ended June 30, 2020 from RMB255.0 million in the six months ended June 30, 2019, primarily driven by (i) an increase in the number of communities under our management and the residents whom we served, as a result of our business expansion; (ii) increased demand for our group purchase facilitation services due to the COVID-19 pandemic; and (iii) increased revenue from community operations services as we provided more advertising services.

Cost of Sales

Our cost of sales increased by 5.9% to RMB2,826.2 million in the six months ended June 30, 2020 from RMB2,669.1 million in the six months ended June 30, 2019, primarily due to our increased GFA under management mainly resulting from the expansion of our property management services business, partially offset by a decrease in employee benefit expenses as a result of (i) our improved employee productivity and efficiency attributable to our cost

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FINANCIAL INFORMATION

control measures and (ii) the deduction in, or exemption of, payment of social insurance contributions as a result of the regulatory supportive policies issued by the local government in response to the COVID-19 pandemic.

Gross Profit and Gross Profit Margin

As a result of the foregoing, our gross profit increased significantly to RMB1,737.7 million in the six months ended June 30, 2020 from RMB796.6 million in the six months ended June 30, 2019. Our gross profit margin increased to 38.1% in the six months ended June 30, 2020 from 23.0% in the six months ended June 30, 2019.

Property management services . Our gross profit margin for property management services increased to 33.6% in the six months ended June 30, 2020 from 16.8% in the six months ended June 30, 2019, primarily as a result of (i) greater economies of scale achieved during our business expansion; (ii) increased percentage of newly delivered property management projects with relatively high property management fees; (iii) our enhanced effort to charge property management fees for parking spaces; (iv) the continuous implementation of our cost control measures as described in “—Description of Selected Combined Statements of Comprehensive Income Line Items—Gross Profit and Gross Profit Margin;” and (v) the deduction in, or exemption of, payment of social insurance contributions as a result of the regulatory supportive policies issued by the local governments in response to the COVID-19 pandemic.
Value-added services to non-property owners . Our gross profit margin for value-added services to non-property owners increased to 37.3% in the six months ended June 30, 2020 from 27.8% in the six months ended June 30, 2019, primarily as a result of (i) economies of scale as a result of our continuous business growth; (ii) the expanded scale of our repair and maintenance services within their quality warranty periods; (iii) our expanded pre-delivery services and property transaction assistance services with relatively high gross profit margins; and (iv) the continuous implementation of our cost control measures as described in “—Description of Selected Combined Statements of Comprehensive Income Line Items—Gross Profit and Gross Profit Margin.”
Community value-added services . Our gross profit margin for community value-added services increased to 65.0% in the six months ended June 30, 2020 from 55.8% in the six months ended June 30, 2019, primarily as a result of (i) economies of scale as a result of our continuous business growth; (ii) the growing demand for our group purchase facilitation, which had relatively high gross profit margins due to the COVID-19 pandemic; (iii) the continuous implementation of our cost control measures as described in “—Description of Selected Combined Statements of Comprehensive Income Line Items—Gross Profit and Gross Profit Margin;” and (iv) increased revenue from community operations services as we provided more advertising services.

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FINANCIAL INFORMATION

Administrative Expenses

Our administrative expenses decreased slightly to RMB224.4 million in the six months ended June 30, 2020 from RMB232.1 million in the six months ended June 30, 2019. Administrative expenses in the six months ended June 30, 2019 was relatively high as we recorded a one-off compensation in relation to the early termination of a contract with a heating supplier.

Net Impairment Losses on Financial Assets

Our net impairment losses on financial assets increased by 82.8% to RMB46.9 million in the six months ended June 30, 2020 from RMB25.7 million in the six months ended June 30, 2019, primarily due to the increase in allowance for impairment of trade and notes receivables due from third parties for our property management services.

Other Income

Our other income increased significantly to RMB46.4 million in the six months ended June 30, 2020 from RMB16.5 million in the six months ended June 30, 2019, primarily attributable to (i) increased government subsidies for our active participation in epidemic prevention, employment of retired soldier and additional deduction of input tax and (ii) an increase in other income from overdue fine mainly related to overdue payment of property management fees.

Other Losses—net

Our net other losses amounted to RMB0.03 million and RMB0.1 million, respectively, in the six months ended June 30, 2019 and 2020.

Finance Costs

Our finance costs decreased by 25.6% to RMB12.4 million in the six months ended June 30, 2020 from RMB16.7 million in the six months ended June 30, 2019, primarily due to our decreased interest expenses on bank and other borrowings.

Profit before Income Tax

As a result of the foregoing, our profit before income tax increased significantly to RMB1,500.2 million in the six months ended June 30, 2020 from RMB538.6 million in the six months ended June 30, 2019.

Income Tax Expenses

Our income tax expenses increased significantly to RMB352.5 million in the six months ended June 30, 2020 from RMB131.3 million in the six months ended June 30, 2019, primarily due to the increase in taxable income.

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FINANCIAL INFORMATION

Profit for the Period

As a result of the foregoing, our profit for the period increased significantly to RMB1,147.7 million in the six months ended June 30, 2020 from RMB407.3 million in the six months ended June 30, 2019. Our net profit margin was 11.8% and 25.1% in the six months ended June 30, 2019 and 2020, respectively.

2019 Compared to 2018

Revenue

Our revenue increased by 24.2% to RMB7,332.7 million in 2019 from RMB5,903.2 million in 2018. The increase in our revenue was primarily attributable to the increases in revenue from property management services and, to a lesser extent, revenue from community value-added services, as a result of an increase in our total GFA under management.

Property management services . Revenue from property management services increased by 33.1% to RMB4,612.2 million in 2019 from RMB3,464.4 million in 2018, primarily attributable to (i) an increase in our total GFA under management from 185.4 million sq.m. as of December 31, 2018 to 237.9 million sq.m. as of December 31, 2019, mainly as a result of our business expansion in Eastern China, Southern China and Central China; (ii) an increase of average property management service fee from RMB2.14 per sq.m per month for 2018 to RMB2.18 per sq.m. per month for 2019; and (iii) our enhanced efforts to charge property management fees for parking spaces since 2019.
Value-added services to non-property owners . Revenue from value-added services to non-property owners increased slightly to RMB2,147.5 million in 2019 from RMB2,103.4 million in 2018, primarily attributable to (i) our continued efforts to diversify our service offerings such as by introducing pre-delivery cleaning services to further solidify our relationship with property developers and (ii) the increased revenue from property transaction assistance services for parking spaces, as such business became more mature in 2019. The increase was partially offset by a decrease in revenue from preliminary property management services, as our customer requested for a smaller, yet efficient, team to perform the services for each project. Our service fees for preliminary property management services are linked to the size of the team deployed for the relevant project. We increased our average service fee per person accordingly, which partially offset the effect of the reduced team size.
Community value-added services . Revenue from community value-added services increased by 70.8% to RMB573.0 million in 2019 from RMB335.4 million in 2018, primarily due to (i) increased revenue from community operations services, as we started to facilitate group purchase and sale of agricultural products in 2019; (ii) increased revenue from community asset management services as a result of our enhanced efforts to charge temporary parking fees or monthly rental fees for our parking space rental services; and (iii) an increase in the number of communities under our management and the residents whom we served.

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FINANCIAL INFORMATION

Cost of Sales

Our cost of sales increased by 7.7% to RMB5,577.7 million in 2019 from RMB5,180.2 million in 2018, primarily due to increases in (i) employee benefit expenses because of our improved employee benefits and (ii) utilities and greening and cleaning expenses as a result of our increased GFA under management.

Gross Profit and Gross Profit Margin

As a result of the foregoing, our gross profit increased significantly to RMB1,755.0 million in 2019 from RMB723.0 million in 2018. Our overall gross profit margin increased to 23.9% in 2019 from 12.2% in 2018, primarily attributable to increases in the gross profit margin for each of our three business lines.

Property management services . Our gross profit margin for property management services increased to 17.7% in 2019 from 9.1% in 2018, primarily attributable to (i) greater economies of scale achieved during our business expansion; (ii) increased percentage of newly delivered property management projects with relatively high gross profit margins due to higher property management fees; (iii) our enhanced efforts to charge property management fees for parking spaces since 2019; and (iv) our continuous implementation of cost control measures and introduction of new measures such as the adoption in 2019 of standardized performance review procedures based on gross profit margin and net profit to closely monitor performance of each project and effectively control costs.
Value-added services to non-property owners . Our gross profit margin for value-added services to non-property owners increased to 28.4% in 2019 from 11.1% in 2018, primarily due to (i) greater economies of scale achieved during our business expansion; and (ii) introduction of pre-delivery cleaning service and expansion of our property transaction assistance services for facilitating sales of parking spaces which had higher gross profit margin; and (iii) our continuous implementation of cost control measures and introduction of new measures such as the adoption in 2019 of standardized performance review procedures based on gross profit margin and net profit to closely monitor performance of each project and effectively control costs.
Community value-added services . Our gross profit margin for community valueadded services increased to 57.4% in 2019 from 52.2% in 2018, primarily attributable to (i) economies of scale achieved during our business expansion; (ii) introduction of community space management services and group purchase facilitation that had higher gross profit margins; and (iii) our continuous implementation of cost control measures, such as utilizing online and offline platforms to expand our service channels.

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FINANCIAL INFORMATION

Administrative Expenses

Our administrative expenses increased by 28.4% to RMB515.1 million in 2019 from RMB401.2 million in 2018, primarily due to an increase in employee benefit expenses as a result of increased headcount of our administrative staff, which was in line with our business expansion, and the increase in the average employee compensation.

Net Impairment Losses on Financial Assets

Our net impairment losses on financial assets increased significantly to RMB48.2 million in 2019 from RMB18.2 million in 2018, primarily due to the increase in allowance for impairment of trade receivables due from third parties for our property management services, generally in line with our business expansion.

Other Income

Our other income increased significantly to RMB66.6 million in 2019 from RMB20.0 million in 2018, primarily due to the increases in (i) government grants as a result of (a) financial subsidies from local government to support local corporate and economic development and to encourage our effort of stabilizing employment, as well as (b) value-added tax refund as a result of implementation of Announcement on Policies for Deepening the VAT Reform, the newly issued tax regulations on value-added tax deductions in April 2019 which allows the taxpayers engaged in production or livelihood services to enjoy additional 10% input value-added tax deduction in the current period from the tax amount payable; and (ii) other income from overdue fine for late payment of property management fees in 2019, which was generally in line with our business growth.

Other Losses—net

Our net other losses remained relatively stable at RMB0.1 million and RMB0.2 million in 2018 and 2019, respectively.

Finance Costs

Our finance costs increased significantly to RMB28.9 million in 2019 from RMB13.1 million in 2018, primarily attributable to other finance costs deemed to be incurred as a result of the discount offered by us to the individual property owners for their advanced payments of property management fees.

Profit before Income Tax

As a result of the foregoing, our profit before income tax increased significantly to RMB1,229.2 million in 2019 from RMB310.3 million in 2018.

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FINANCIAL INFORMATION

Income Tax Expenses

Our income tax expenses increased significantly to RMB298.7 million in 2019 from RMB71.3 million in 2018, primarily due to the increase in taxable income.

Profit for the Year

As a result of the foregoing, our profit for the year increased significantly to RMB930.5 million in 2019 from RMB239.0 million in 2018, and our net profit margin for the year increased to 12.7% in 2019 from 4.0% in 2018.

2018 Compared to 2017

Revenue

Our revenue increased by 34.2% to RMB5,903.2 million in 2018 from RMB4,399.4 million in 2017. The increase in our revenue was primarily attributable to the increases in the revenue from our property management services, value-added services to non-property owners and community value-added services as a result of our overall business growth.

Property management services . Revenue from property management services increased by 36.5% to RMB3,464.4 million in 2018 from RMB2,538.4 million in 2017, primarily attributable to (i) an increase in our total GFA under management from 138.3 million sq.m. as of December 31, 2017 to 185.4 million sq.m. as of December 31, 2018, as a result of our business expansion in Eastern China, Northern China and Central China; and (ii) an increase of average property management service fee from RMB2.05 per sq.m per month for 2017 to RMB2.14 per sq.m. per month for 2018.
Value-added services to non-property owners . Revenue from value-added services to non-property owners increased by 30.7% to RMB2,103.4 million in 2018 from RMB1,609.9 million in 2017, primarily attributable to (i) the increased revenue from our expanded preliminary property management services mainly due to the increased number of sales offices delivered to us for management; and (ii) our continued efforts to diversify our service offerings such as by introducing pre-delivery inspection services in 2018.
Community value-added services . Revenue from value-added services to community increased by 33.6% to RMB335.4 million in 2018 from RMB251.1 million in 2017, primarily due to (i) an increase in the number of communities under our management and the residents whom we served, as a result of our expansion of business scale across the PRC; and (ii) the increased revenue from community asset management services, as a result of our enhanced efforts to charge temporary parking fees or monthly rental fees for our parking space rental services, and our expanded community space management services.

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FINANCIAL INFORMATION

Cost of Sales

Our cost of sales increased by 30.6% to RMB5,180.2 million in 2018 from RMB3,966.5 million in 2017, primarily due to (i) the increase in employee benefit expenses as a result of the increase in the average employee compensation, and (ii) the increase in greening and cleaning expenses, utility expenses, as well as repair and maintenance expenses as a result of the increase in our GFA under management resulting from the expansion of our property management services business.

Gross Profit and Gross Profit Margin

As a result of the foregoing, our gross profit increased by 67.0% to RMB723.0 million in 2018 from RMB432.9 million in 2017. Our overall gross profit margin increased to 12.2% in 2018 from 9.8% in 2017, primarily attributable to greater economies of scale and our continued efforts to reduce costs and improve operating efficiency.

Property management services . Our gross profit margin for property management services increased to 9.1% in 2018 from 8.7% in 2017, primarily attributable to greater economies of scale achieved during our business expansion.
Value-added services to non-property owners . Our gross profit margin for value-added services to non-property owners increased to 11.1% in 2018 from 5.0% in 2017, primarily due to (i) greater economies of scale achieved during our business expansion; (ii) our introduction of pre-delivery inspection service and, to a lesser extent, expansion of our property transaction assistance services for facilitating lease of parking spaces, which had higher gross profit margin; and (iii) our cost control measures, such as centralizing headcount and salary management at headquarters level and utilizing smart information platform to improve customer experience, reduce reliance on manual labor, and lower operating costs starting from 2018.
Community value-added services . Our gross profit margin for value-added services to community was 52.2% and 52.2% in 2017 and 2018, respectively.

Administrative Expenses

Our administrative expenses increased by 55.9% to RMB401.2 million in 2018 from RMB257.3 million in 2017, primarily due to the increase in employee benefit expenses as a result of increased headcount of our administrative staff, which was in line with our business expansion, and the increase in the average employee compensation.

Net Impairment Losses on Financial Assets

Our net impairment losses on financial assets decreased by 58.4% to RMB18.2 million in 2018 from RMB43.8 million in 2017, primarily due to the increased settlement of overdue property management fees by property owners because of a promotional activity we held in late 2018 to encourage settlement and advance payments of property management fees.

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FINANCIAL INFORMATION

Other Income

Our other income increased by 11.6% to RMB20.0 million in 2018 from RMB17.9 million in 2017, primarily due to the increase in government grants and other income from overdue fine for late payment of property management fees, which was in line with our business expansion.

Other Losses—net

We recorded net other losses of RMB47,000 and RMB0.1 million in 2017 and 2018, respectively.

Finance Costs

Our finance costs remained relatively stable at RMB12.7 million and RMB13.1 million, respectively, in 2017 and 2018.

Profit before Income Tax

As a result of the foregoing, our profit before income tax increased significantly to RMB310.3 million in 2018 from RMB136.9 million in 2017.

Income Tax Expenses

Our income tax expenses increased significantly to RMB71.3 million in 2018 from RMB30.4 million in 2017, primarily due to the increase in taxable income.

Profit for the Year

As a result of the foregoing, our profit for the year increased significantly to RMB239.0 million in 2018 from RMB106.6 million in 2017, and our net profit margin for the year increased to 4.0% in 2018 from 2.4% in 2017.

DESCRIPTION OF CERTAIN COMBINED BALANCE SHEET ITEMS

Property and Equipment

Our property and equipment during the Track Record Period mainly consisted of furniture, fitting and equipment, transportation equipment, machinery and properties. Our property and equipment increased by 56.7% from RMB39.0 million as of December 31, 2017 to RMB61.1 million as of December 31, 2018 mainly in relation to our purchase of furniture, fitting and equipment, transportation equipment and machinery for business operations and further business expansion. Our property and equipment decreased by 6.4% from RMB61.1 million as of December 31, 2018 to RMB57.2 million as of December 31, 2019 and further by 8.1% to RMB52.5 million as of June 30, 2020, mainly due to depreciation recognized during the periods, partially offset by the purchase of furniture, fitting and equipment, transportation equipment, machinery and properties in 2019 for our business operations.

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FINANCIAL INFORMATION

Deferred Income Tax Assets

Our deferred income tax assets increased by 44.7% from RMB38.4 million as of December 31, 2017 to RMB55.6 million as of December 31, 2018, by 19.3% to RMB66.3 million as of December 31, 2019, and further by 19.3% from RMB66.3 million as of December 31, 2019 to RMB79.0 million as of June 30, 2020. Such increases were primarily due to the deferred tax credited to the combined statements of comprehensive income during the respective year or period, which mainly comprised recoverable tax losses and allowance on doubtful debts.

Trade and Notes Receivables

Trade and notes receivables are amounts due from customers for goods sold or services provided in the ordinary course of business. Trade receivables mainly arise from property management and value-added services provided to the Evergrande Group, third-party property developers and property owners and residents. We charge service fees in accordance with the relevant service agreements, which is due for payment by the property owners upon our rendering of services. We also recorded notes receivables during the Track Record Period, which represents commercial acceptance bill used to settle our service fees.

The following table sets out the breakdown of trade and notes receivables as of the dates indicated.

Trade receivables – Related parties. . . . . . . . . . . . . . . – Third parties . . . . . . . . . . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . Notes receivables – Related parties. . . . . . . . . . . . . . . Less: allowance for impairment of trade and notes receivables . . . . . . Total trade and notes receivables . . . .	As	of December 31, 2018 2019 (RMB’000) 1,971,430 3,515,642 905,028 1,398,424 2,876,458 4,914,066 31,809 32,116 (111,554) (153,764) 2,796,713 4,792,418	As of June 30, 2020 3,912,621 2,098,332 6,010,953 106,929 (197,566) 5,920,316
	2017 988,434 894,303 1,882,737 1,128 (98,105) 1,785,760

Our trade and notes receivables increased significantly during the Track Record Period which was in line with our business expansion. Our trade and notes receivables due from third parties were primarily related to property management fees for our property management services and services fees for value-added services to non-property owners. The increase in our trade and notes receivables due from third parties was mainly attributable to an increase in our revenue. Our trade and notes receivables due from related parties were primarily related to value-added services to non-property owners. The balances of trade and notes receivables due from related parties increased during the Track Record Period along with the increase in revenue from our value-added services to non-property owners.

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FINANCIAL INFORMATION

The following table sets forth our trade receivable turnover days for the periods indicated.

Average trade receivables turnover days(1) . . . . . . . . . . . . . . . . . . . . . – Related parties. . . . . . . . . . . . . . . – Third parties . . . . . . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (days) 116 147 194 130 214 365 104 97 92	For the six months ended June 30, 2020
	2017 116 130 104
		218 413 109

Note:

(1) Trade receivable turnover days for a period equals the average of the opening and closing trade receivables before allowance for impairment of trade receivables divided by revenue for the same period and multiplied by 365 days for a full-year period or 182 for a six-month period.

The increases in our trade receivable turnover days during the Track Record Period were primarily due to (i) the increased percentage of trade receivables from preliminary property management services, pre-delivery inspection services and property transaction assistance services which require longer time for settlement as we typically get paid after we finish performing the relevant services; and (ii) in the case of the six months ended June 30, 2020, seasonal factor as settlement of trade receivables is typically slower in the first half of a year, and the impact from the COVID-19 pandemic.

During the Track Record Period, our trade receivable turnover days of related parties were longer than those of third parties, primarily because we were a subsidiary of the Evergrande Group before the [ REDACTED ] and in light of the Evergrande Group’s good credit history, we consider credit risk related to trade receivables due from companies in the Evergrande Group is low. We have increased our efforts to settle related party receivables. We have also formulated and implemented various measures to expedite the recovery of our trade receivables. See “Business—Payment and Credit Terms.”

Our collection rate of property management fees, calculated by dividing payments of property management fees received during a period (including any such fees received for previous period(s) and any prepaid fees for future period(s), except for adjustments for the prepayment received in connection with a one-off large-scale promotional activity we held in late 2018 to encourage advance payments of property management fees for 2019 and 2020) by the corresponding total property management fees receivable for the same period during the same period, was 94.4%, 91.7%, 95.0% and 81.3%, respectively, in 2017, 2018, 2019 and the six months ended June 30, 2020. The relatively low collection rate in the first half of 2020 was mainly attributable to seasonal factor as settlement of trade receivables is typically slower in the first half of a year, and the impact from the COVID-19 pandemic. During the Track Record Period and up to the Latest Practicable Date, we did not experience any significant difficulty in collecting trade receivables from both related parties and third parties.

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FINANCIAL INFORMATION

We seek to maintain strict control over our outstanding receivables. Overdue balances are reviewed regularly by management. Our trade and notes receivables are interest-free. The following is an aging analysis of the trade and notes receivables, before allowance for impairment of trade and notes receivables, as of the dates indicated, based on the date of revenue recognition.

Related parties – Within six months . . . . . . . . . . . . . . – Six to twelve months . . . . . . . . . . . . – One to two years. . . . . . . . . . . . . . . – Two to three years. . . . . . . . . . . . . . – Over three years . . . . . . . . . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . Third parties – Within six months . . . . . . . . . . . . – Six to twelve months . . . . . . . . . . – One to two years . . . . . . . . . . . . – Two to three years . . . . . . . . . . . . – Over three years . . . . . . . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 1,050,960 1,633,930 259,728 427,866 575,905 852,836 82,944 544,006 33,702 89,120 2,003,239 3,547,758 333,892 575,611 187,368 353,957 199,676 228,417 87,518 113,919 96,574 126,520 905,028 1,398,424 2,908,267 4,946,182	As of June 30, 2020
	2017 632,361 200,576 89,626 52,173 14,826 989,562 349,975 197,086 173,975 93,488 79,779 894,303 1,883,865
			1,990,557 892,865 646,694 249,017 240,417
			4,019,550
			1,109,832 384,471 300,812 142,527 160,690
			2,098,332
			6,117,882

We assessed the loss allowance of trade and notes receivables (excluding prepayments) based on an assessment of the expected credit losses to be incurred, including an assessment of the historical collection rate and forward looking adjustments when applicable.

To expedite the recovery of our trade and notes receivables, we have formulated and implemented various measures. See “Business—Property Management Services—Payment and Credit Terms” in this Document.

We apply the simplified approach to provide for expected credit losses prescribed by HKFRS 9 which uses a lifetime expected loss allowance for all trade and notes receivables and requires expected lifetime losses to be recognized from initial recognition of the receivables. To measure the expected credit losses, trade and notes receivables have been grouped based on shared credit risk characteristics and the days past due. The expected credit losses also incorporate forward looking information. As of December 31, 2017, 2018 and 2019 and June

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FINANCIAL INFORMATION

30, 2020, we made provision of RMB98.1 million, RMB111.6 million, RMB153.8 million and RMB197.6 million, respectively, against the gross amounts of trade and notes receivables. See note 3.1.2 and note 15 to the Accountants’ Report in Appendix I to this Document.

As of the Latest Practicable Date, approximately RMB2,179.8 million, or 35.6%, of our total trade and notes receivables as of June 30, 2020 had been settled, among which approximately RMB1,448.3 million was collected from related parties and approximately RMB731.5 million was collected from third parties.

Other Receivables

Other receivables mainly arise from (i) payments made on behalf of property owners and residents of the property projects under our management mainly in relation to utility fees; (ii) deposits which represent performance guarantees placed by us with third-parties for business contracts and deposits for participating in tender and bidding process; and (iii) other miscellaneous receivables such as advance payments of compensation and other fees to employees for business purposes. The following table sets forth a breakdown of our other receivables as of the dates indicated.

Other receivables – Payments on behalf of property owners. . . . . . . . . . . . . . – Deposits . . . . . . . . . . . . . . . . . . . – Others . . . . . . . . . . . . . . . . . . . . Sub-total . . . . . . . . . . . . . . . . . . . . . Less: allowance for impairment of other receivables. . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 306,580 423,802 24,390 24,012 20,783 29,012 351,753 476,826 (11,517) (17,517) 340,236 459,309	As of June 30, 2020 392,547 24,386 45,417 462,350 (20,634) 441,716
	2017 231,611 22,054 16,525 270,190 (6,760) 263,430

Our other receivables increased by 29.2% from RMB263.4 million as of December 31, 2017 to RMB340.2 million as of December 31, 2018 and further increased by 35.0% to RMB459.3 million as of December 31, 2019, primarily attributable to the increase in the number of projects we manage. Our other receivables decreased slightly from RMB459.3 million as of December 31, 2019 to RMB441.7 million as of June 30, 2020 primarily due to a decrease of receivables relating to utility fees due from property owners and residents in relation to our prepayments made on their behalf.

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FINANCIAL INFORMATION

Amounts due from Related Parties

Amounts due from related parties were non-trade advances due from related parties, which are unsecured and interest-free. See “—Related Party Transactions and Balances” in this section and note 27 to the Accountants’ Report in Appendix I to this Document for further details.

Prepayments

Our prepayments primarily comprise prepayments in relation to prepayments to suppliers for materials for repair and maintenance services and prepayments for rental fees. Our prepayments decreased during the Track Record Period, from RMB21.2 million as of December 31, 2017 to RMB18.7 million as of December 31, 2018, to RMB16.0 million as of December 31, 2019 and further to RMB12.0 million as of June 30, 2020. The decreases were primarily due to the decreased prepayments to suppliers as we negotiated better prepayment terms with some of them.

Trade and Notes Payables

Our trade and notes payables primarily represent our obligations to pay for goods and services such as materials, carparks, utilities, cleaning, repair and maintenance services used in the ordinary course of business, including subcontracting expenses and cost of materials.

As of December 31, 2017, 2018 and 2019 and June 30, 2020, our trade and notes payables amounted to RMB431.9 million, RMB820.4 million, RMB1,096.3 million and RMB1,240.9 million, respectively. The increases in trade and other payables during the Track Record Period were mainly due to increases in purchases of goods and services, which were in line with our business expansion.

The following table sets forth our trade payable turnover days for the periods indicated.

Average trade payables turnover days(1) . . . . . . . . . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (days) 30 36 45	For the six months ended June 30, 2020
	2017 30
		50

Note:

(1) Trade payable turnover days for a period equals the average of the opening and closing trade payable balances divided by cost of sales for the same period and multiplied by 365 days for a full-year period or 182 for a six-month period.

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FINANCIAL INFORMATION

The increase in our trade payable turnover days during the Track Record Period was mainly due to the increase in purchases of goods and services and the longer credit terms granted by some of our suppliers considering our good credit history and long-term relationship with them.

The following table sets forth an aging analysis of our trade and notes payables based on the invoice date as of the dates indicated.

Up to one year . . . . . . . . . . . . . . . . . One to two years . . . . . . . . . . . . . . . . Two to three years . . . . . . . . . . . . . . . More than three years . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 810,762 1,066,737 9,309 20,429 253 8,990 29 166 820,353 1,096,322	As of June 30, 2020
	2017 428,424 3,464 58 1 431,947
			1,220,275 9,892 10,445 252
			1,240,864

As of the Latest Practicable Date, approximately RMB474.6 million, or 38.2%, of our total trade and notes payables as of June 30, 2020 had been settled, among which approximately RMB56.0 million was related to related parties and approximately RMB418.6 million was related to third parties.

Other Payables

Our other payables mainly represent (i) temporary receipts of payments for utilities expenses temporarily collected from the property owners to be paid to related service providers and rental income collected from leases to be returned to the property owners during provision of property management services; (ii) deposits received from property owners such as performance bond, retention deposits, decoration deposits and tender bond; (iii) other tax payables mainly relating to value-added tax and tax surcharges; (iv) accrued payroll; (v) dividend payable which will be fully settled before the [ REDACTED ]; and (vi) others such as reimbursement to be paid to employees, employment guarantee for the disabled and accrued interest payable.

Other payables – Temporary receipts on-behalf during provision of property management services . . . . . . . . . . . . . . . . . . . – Deposit . . . . . . . . . . . . . . . . . . . – Other tax payables . . . . . . . . . . . . Accrued payroll. . . . . . . . . . . . . . . . . Dividend payable . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 571,489 780,833 279,183 307,011 82,900 161,242 438,066 531,201 – – 93,522 92,506 1,465,160 1,872,793	As of June 30, 2020
	2017 482,700 231,226 43,271 355,896 – 69,505 1,182,598
			732,039 313,396 230,077 259,394 7,329 97,818
			1,640,053

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FINANCIAL INFORMATION

Our other payables increased by 23.9% from RMB1,182.6 million as of December 31, 2017 to RMB1,465.2 million of December 31, 2018, and further by 27.8% to RMB1,872.8 million as of December 31, 2019 generally in line with our business expansion. Our other payables decreased slightly from RMB1,872.8 million as of December 31, 2019 to RMB1,640.1 million of June 30, 2020, primarily because the accrued payroll as of December 31, 2019 included year-end bonuses.

Contract Liabilities

Our contract liabilities primarily arise from the advance payments received from customers of our property management services while the underlying services are yet to be provided by us. As of December 31, 2017, 2018 and 2019, our contract liabilities amounted to RMB1,397.1 million, RMB2,491.1 million and RMB2,285.3 million, respectively. The overall increase was mainly due to our business expansion. Our contract liabilities were relatively high as of December 31, 2018 and 2019, mainly due to a promotional activity we held in late 2018 to encourage advance payments of property management fees for 2019 and 2020. Our contract liabilities decreased by 11.5% from RMB2,285.3 million as of December 31, 2019 to RMB2,023.4 million as of June 30, 2020, primarily as a result of a decrease in prepayments during the six months ended June 30, 2020 due to the COVID-19 pandemic.

NET CURRENT ASSETS AND NET CURRENT LIABILITIES

As of December 31, 2017 2018 2019 (RMB’000) 2,054,486 3,141,022 5,256,799 569,639 1,489,103 1,349,686 21,172 18,713 15,968 964,060 1,054,138 684,348 1,884 102 102 3,611,241 5,703,078 7,306,903 1,614,545 2,285,513 2,969,115 1,397,116 2,491,067 2,285,276 10,540 96,471 398,383 8,826 13,690 13,724 110,000 150,000 2,950 3,141,027 5,036,741 5,669,448 470,214 666,337 1,637,455	As of December 31, 2017 2018 2019 (RMB’000) 2,054,486 3,141,022 5,256,799 569,639 1,489,103 1,349,686 21,172 18,713 15,968 964,060 1,054,138 684,348 1,884 102 102 3,611,241 5,703,078 7,306,903 1,614,545 2,285,513 2,969,115 1,397,116 2,491,067 2,285,276 10,540 96,471 398,383 8,826 13,690 13,724 110,000 150,000 2,950 3,141,027 5,036,741 5,669,448 470,214 666,337 1,637,455	As of August 31, 2020
2017 2,054,486 569,639 21,172 964,060 1,884 3,611,241 1,614,545 1,397,116 10,540 8,826 110,000 3,141,027 470,214	2018 3,141,022 1,489,103 18,713 1,054,138 102 5,703,078 2,285,513 2,491,067 96,471 13,690 150,000 5,036,741 666,337
		(unaudited) 5,861,074 11,155 35,892 3,089,384 488
		8,997,993
		3,113,689 2,680,346 67,919 11,627 –
		5,873,581
		3,124,412

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FINANCIAL INFORMATION

Our net current assets increased by 41.7% from RMB470.2 million as of December 31, 2017 to RMB666.3 million as of December 31, 2018, mainly due to an increase in trade and other receivables and amounts due from related parties, partially offset by an increase in trade and other payables and contract liabilities. The increases in trade and other receivables, trade and other payables and contract liabilities were in line with our business expansion.

Our net current assets increased significantly from RMB666.3 million as of December 31, 2018 to RMB1,637.5 million as of December 31, 2019, mainly due to an increase in trade and other receivables, partially offset by a decrease in cash and cash equivalents and an increase in trade and other payables. The increases in trade and other receivables and trade and other payables were in line with our business expansion.

Our net current assets increased from RMB1,637.5 million as of December 31, 2019 to RMB2,738.7 million as of June 30, 2020, mainly due to an increase in trade and other receivables. The increase in trade and other receivables was in line with our business expansion.

Our net current assets increased by 15.3% from RMB2,738.7 million as of June 30, 2020 to RMB3,156.6 million as of August 31, 2020, mainly due to an increase in cash and cash equivalents, partially offset by decreases in trade and other receivables and amounts due from related parties and an increase in contract liabilities. The increase in cash and cash equivalents and the decrease in trade and other receivables and amounts due from related parties were due to our continuing effort to settle trade and other receivables and amounts due from related parties. The increase in contract liabilities was mainly related to the advance payments of property management fees from property owners driven by our business growth.

LIQUIDITY AND CAPITAL RESOURCES

Our principal use of cash has been for working capital purposes. Our main source of liquidity has been generated from cash flow from operations. In the foreseeable future, we expect such source to continue to be our principal sources of liquidity and we may use a portion of the proceeds from the [ REDACTED ] to finance some of our capital requirements.

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FINANCIAL INFORMATION

Cash Flow

The following table sets forth a summary of our cash flows for the periods indicated.

Operating cash flow before change in working capital . . . . . . . . . . . . . . . Net cash generated from/(used in) operating activities . . . . . . . . . . . . . Net cash generated from/(used in) investing activities . . . . . . . . . . . . . Net cash (used in)/generated from financing activities . . . . . . . . . . . . . Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . Cash and cash equivalents at beginning of year/period . . . . . . . . . . . . . . . . Cash and cash equivalents at end of year/period. . . . . . . . . . . . . . . . . .	For the year ended December 31, 2017 2018 2019 (RMB’000) 212,230 372,762 1,321,990 193,125 1,035,792 (368,237) 787,984 (957,511) 122,276 (869,412) 11,797 (123,829) 111,697 90,078 (369,790) 852,363 964,060 1,054,138 964,060 1,054,138 684,348	For the six months ended June 30, 2020 1,566,283 36,374 51,311 (35,909) 51,776 684,348 736,124
	2017 212,230 193,125 787,984 (869,412) 111,697 852,363 964,060

Net Cash Flows Generated from/(Used in) Operating Activities

Our cash generated from operating activities primarily consisted of fees received from provision of property management services, value-added services to non-property owners and value-added services to property owners. Cash flow from operating activities reflects: (i) profit before income tax adjusted for non-cash and non-operating items and finance costs, such as depreciation and amortization and impairment losses; (ii) the effects of movements in working capital; and (iii) income tax paid.

In the six months ended June 30, 2020, we had net cash flows generated from operating activities of RMB36.4 million, which was the result of cash generated from operations of RMB51.9 million and income tax paid of RMB15.5 million. We had operating cash flows, before movements in working capital, of RMB1,566.3 million. The change of RMB1,514.4 million in working capital was primarily due to an increase in trade and other receivables in the amount of RMB1,152.0 million, a decrease in contract liabilities in the amount of RMB261.9 million, and a decrease in trade and other payables in the amount of RMB95.5 million. The increase in trade and other receivables was in line with our business expansion. Our contract liabilities decreased because the customers were less willing to make advance payments during the six months ended June 30, 2020 due to the COVID-19 pandemic.

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FINANCIAL INFORMATION

In 2019, we had net cash flows used in operating activities of RMB368.2 million, which was the result of cash used in operations of RMB360.8 million and income tax paid of RMB7.5 million. We had operating cash flows before movements in working capital of RMB1,322.0 million. The change of RMB1,682.8 million in working capital was primarily due to an increase in trade and other receivables in the amount of RMB2,160.6 million and a decrease in contract liabilities in the amount of RMB205.8 million mainly because in late 2018, we collected a significant amount of prepayments of property management fees that would otherwise be collected in 2019 and 2020 in connection with a promotional activity we held in late 2018, which resulted in a lower level of cash inflow from operating activities in 2019, partially offset by an increase in trade and other payables in the amount of RMB683.6 million.

In 2018, we had net cash flows generated from operating activities of RMB1,035.8 million, which was the result of cash generated from operations of RMB1,038.3 million and income tax paid of RMB2.5 million. We had operating cash flows, before movements in working capital, of RMB372.8 million. The change of RMB665.5 million in working capital was primarily due to an increase in trade and other receivables in the amount of RMB1,101.2 million and partially offset by an increase in contract liabilities in the amount of RMB1,094.0 million and an increase in trade and other payables in the amount of RMB671.0 million. The increase in trade and other receivables and trade and other payables was in line with our business expansion. Our contract liabilities increased primarily due to prepayments received in connection with the promotional activity we held in late 2018.

In 2017, we had net cash flows generated from operating activities of RMB193.1 million, which was the result of cash generated from operations of RMB195.5 million and income tax paid of RMB2.3 million. We had operating cash flows, before movements in working capital, of RMB212.2 million. The change of RMB16.8 million in working capital was primarily due to an increase in trade and other receivables in the amount of RMB924.6 million, partially offset by an increase in contract liabilities in the amount of RMB366.2 million and an increase in trade and other payables in the amount of RMB543.5 million. The increases in trade and other receivables, contract liabilities and trade and other payables were in line with our business expansion.

Net Cash Flows Generated from/(Used in) Investing Activities

In the six months ended June 30, 2020, net cash flows generated from investing activities was RMB51.3 million, primarily reflecting a decrease in amounts due from related parties in the amount of RMB57.7 million, partially offset by payments for purchases of property and equipment in the amount of RMB6.4 million.

In 2019, net cash flows generated from investing activities was RMB122.3 million, primarily reflecting a decrease in amounts due from related parties in the amount of RMB139.4 million, partially offset by payments for purchases of property and equipment in the amount of RMB17.1 million.

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FINANCIAL INFORMATION

In 2018, net cash flows used in investing activities was RMB957.5 million, primarily reflecting an increase in amounts due from related parties in the amount of RMB919.5 million and payments for purchases of property and equipment in the amount of RMB37.7 million.

In 2017, net cash flows generated from investing activities was RMB788.0 million, primarily reflecting a decrease in amounts due from related parties in the amount of RMB814.1 million, partially offset by payments for purchases of property and equipment in the amount of RMB25.7 million.

Net Cash Flows Generated from/(Used in) Financing Activities

In the six months ended June 30, 2020, net cash flows used in financing activities was RMB35.9 million, primarily reflecting transaction with the then shareholder of a subsidiary in the amount of RMB28.1 million and lease payments in the amount of RMB7.7 million.

In 2019, net cash flows used in financing activities was RMB123.8 million primarily reflecting repayments from related parties in the amount of RMB150.0 million and lease payments in the amount of RMB18.4 million, partially offset by contribution from the then shareholder of a subsidiary in the amount of RMB50.0 million.

In 2018, net cash flows generated from financing activities was RMB11.8 million, primarily reflecting proceeds from bank and other borrowings in the amount of RMB150.0 million, partially offset by repayments of bank and other borrowings in the amount of RMB110.0 million.

In 2017, net cash flows used in financing activities was RMB869.4 million primarily reflecting repayments of bank and other borrowings of RMB123.0 million and dividends paid in the amount of RMB836.3 million, partially offset by proceeds from bank and other borrowings in the amount of RMB110.0 million.

Working Capital

Our Directors are of the opinion that, after taking into account the financial resources available to us including the estimated net proceeds received by our Company of the [ REDACTED ] and our internally generated funds, we have sufficient working capital to satisfy our requirements for at least the next 12 months following the date of this Document.

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FINANCIAL INFORMATION

INDEBTEDNESS

As of December 31, 2017, 2018 and 2019, June 30, 2020 and August 31, 2020, our total borrowings were all secured and guaranteed, and amounted to RMB110.0 million, RMB150.0 million, RMB3.0 million, RMB3.0 million and nil, respectively. As of August 31, 2020, we did not have any unutilized banking facilities. The following table sets forth the components of our total borrowings as of the dates indicated.

As of December 31, 2017 2018 2019 (RMB’000) 4,704 8,304 12,750 50,000 150,000 2,950 60,000 – – 8,826 13,690 13,724 123,530 171,994 29,424	As of December 31, 2017 2018 2019 (RMB’000) 4,704 8,304 12,750 50,000 150,000 2,950 60,000 – – 8,826 13,690 13,724 123,530 171,994 29,424	As of August 31, 2020
2017 4,704 50,000 60,000 8,826 123,530	2018 8,304 150,000 – 13,690 171,994
		(unaudited) 9,082 – – 11,627
		20,709

Contingent Liabilities

As of December 31, 2017, 2018 and 2019, June 30, 2020 and August 31, 2020, we did not have any outstanding guarantees or other material contingent liabilities.

During the Track Record Period and up to the date of this Document, our Directors confirm that they are not aware of any material defaults in payment of our trade and other payables and interest-bearing borrowings. Except as disclosed herein and apart from intra-group liabilities, we did not have any outstanding loan capital, bank overdrafts and liabilities under acceptances or other similar indebtedness, debentures, mortgages, charges or loans, or acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities or any covenant in connection therewith as of August 31, 2020, being the latest practicable date for the purpose of the indebtedness statement. Our Directors have confirmed that there had not been any material change in the indebtedness and contingent liabilities of our Group since the latest date for liquidity disclosure and up to the Latest Practicable Date.

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FINANCIAL INFORMATION

COMMITMENTS

Capital Commitments

Capital commitments represent our payment for acquisition of vehicles as stipulated in contract. Our capital commitments of up to one year amounted to RMB5.6 million as of December 31, 2017 and were nil as of December 31, 2018 and 2019 and June 30, 2020.

Capital Expenditures

During the Track Record Period, we incurred capital expenditures mainly for purchase of property and equipment, as well as intangible assets such as software. The table below sets forth the amount of capital expenditures incurred during the Track Record Period.

Addition to: Property and equipment . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 37,673 17,135 428 92 38,101 17,227	As of June 30, 2020
	2017 25,716 476 26,192
			6,422 –
			6,422

The total estimated capital expenditure to be incurred for 2020 is approximately RMB14.5 million, which will mainly be used for purchases of property and equipment and upgrade of information technology infrastructure and smart management systems for properties under our management. We expect to fund these capital expenditures with our available cash resources, mainly including cash from our business operations.

Our actual capital expenditures may differ from the amounts set forth above due to various factors, including our future cash flows, results of operations and financial condition, economic conditions in the PRC, the availability of financing on terms acceptable to us, technical or other problems in obtaining or installing equipment, changes in the regulatory environment in the PRC and other factors.

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FINANCIAL INFORMATION

OFF-BALANCE SHEET ARRANGEMENTS

We had no material off-balance sheet arrangements as of June 30, 2020, being the date of our most recent financial statement, and as of the Latest Practicable Date.

SUMMARY OF KEY FINANCIAL RATIOS

The following table sets forth certain of our key financial ratios as of the dates and for the periods indicated.

Current ratio(1) (times) . . . . . . . . . . . Gearing ratio(2) (%) . . . . . . . . . . . . . Net profit margin (%) . . . . . . . . . . . . Return on total assets(3) (%). . . . . . . . Return on equity(4) (%) . . . . . . . . . . .	As of or for the Year Ended December 31, 2017 2018 2019 1.1 1.1 1.3 22.2 21.6 1.7 2.4 4.0 12.7 2.9 4.1 12.5 19.1 30.0 52.4	As of or for the Year Ended December 31, 2017 2018 2019 1.1 1.1 1.3 22.2 21.6 1.7 2.4 4.0 12.7 2.9 4.1 12.5 19.1 30.0 52.4	As of or for the Six Months Ended June 30, 2020
	2017 1.1 22.2 2.4 2.9 19.1	2018 1.1 21.6 4.0 4.1 30.0
			1.5 0.9 25.1 26.8 79.6

Notes:

(1) Current ratio is calculated based on our total current assets divided by our total current liabilities as of the respective dates.
(2) Gearing ratio is calculated as dividing total borrowings and lease liabilities by our total equity as of the respective dates.
(3) Return on total assets is calculated based on our profit for the period divided by total assets at the end of the period and multiplied by 100.0%. Return on assets in the six months ended June 30, 2020 was annualized by multiplying by two. Accordingly, the annualized return on assets may not be indicative of that for the full year ending December 31, 2020. Investors are cautioned not to place any undue reliance on such information.
(4) Return on equity is calculated based on our profit for the period divided by total equity as of the end of the period and multiplied by 100.0%. Return on equity in the six months ended June 30, 2020 was annualized by multiplying by two. Accordingly, the annualized return on equity may not be indicative of that for the full year ending December 31, 2020. Investors are cautioned not to place any undue reliance on such information.

Current Ratio

Our current ratio was 1.1 times, 1.1 times, 1.3 times and 1.5 times as of December 31, 2017, 2018 and 2019 and June 30, 2020, respectively. Our current ratio increased from 1.1 times as of December 31, 2018 to 1.3 times as of December 31, 2019 to 1.5 times as of June 30, 2020, which was mainly due to an increase in current assets primarily due to an increase in trade and other receivables resulting from our business growth.

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FINANCIAL INFORMATION

Gearing Ratio

Our gearing ratio was 22.2%, 21.6%, 1.7% and 0.9% as of December 31, 2017, 2018 and 2019 and June 30, 2020, respectively. The decrease was mainly due to our repayment of bank and other borrowings and the increase in total equity as a result of the improvement in our profitability.

Net Profit Margin

Our net profit margin increased during the Track Record Period. See “—Results of Operations” for further discussions.

Return on Total Assets

Our return on total assets increased from 2.9% in 2017 to 4.1% in 2018, to 12.5% in 2019 and further to 26.8% in the first half of 2020, mainly as a result of increases in our profit for the year or period.

Return on Equity

Our return on total equity increased from 19.1% in 2017 to 30.0% in 2018, to 52.4% in 2019 and further to 79.6% in the first half of 2020, mainly as a result of increases in our profit for the year or period.

QUANTITATIVE AND QUALITATIVE ANALYSIS ABOUT MARKET RISK

Our activities expose us to a variety of financial risks: market risk, credit risk and liquidity risk. Our exposure to these risks and the financial risk management policies and practices used by us to manage these risks are described below.

Market Risk

Foreign Exchange Risk

Our normal operating activities are principally conducted in RMB since most of our operating entities are based in the PRC. Our foreign exchange risk mainly arises from monetary assets and liabilities of certain subsidiaries denominated in foreign currencies other than their functional currencies. Our Directors consider that the foreign exchange risk is not significant to us as the balance of foreign currency denominated monetary assets or liabilities were immaterial as of each period end of the Track Record Period. See note 3.1.1(i) set out in the Accountants’ Report in Appendix I to this Document for more details on our exposure to foreign currency risks.

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FINANCIAL INFORMATION

Cash Flow and Fair Value Interest Risk

We are exposed to interest rate risk for certain interest-bearing cash at bank borrowings. Cash at banks at variable rates expose us to cash flow interest rate risk. Borrowings obtained at fixed rates expose us to fair value interest rate risk. See note 3.3.3(ii) set out in the Accountants’ Report in Appendix I to this Document.

As of December 31, 2017, 2018 and 2019 and June 30, 2020, if the interest rate on cash at banks and restricted cash increased/decreased by 0.5% with all other variables held constant, our post-tax profits for the year/period would have been RMB3,571,000, RMB3,902,000, RMB2,552,000 and RMB1,373,000, as a result of the increase/decrease in interests derived from cash at banks and restricted cash at variable rates.

Credit Risk

We are exposed to credit risk in relation to our trade and notes receivable, other receivables, amounts due from related parties and cash deposits at banks. The carrying amounts of trade and notes receivable, other receivables and cash and cash equivalents represent our maximum exposure to credit risk in relation to financial assets.

For trade and notes receivable, other receivables, our management has monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, we review the recoverability of these receivables at the end of each reporting period to ensure that adequate impairment losses are made for doubtful debts. In this regard, our Directors consider that our credit risk is significantly reduced.

We consider the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk we compare the risk of default occurring on the asset as of the reporting date with the risk of default as of the date of initial recognition. We consider available reasonable and supportive forwarding-looking information. Especially the following indicators are incorporated:

internal credit rating;
external credit rating;
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligations;
actual or expected significant changes in the operating results of individual property owner or the debtor; and
significant changes in the expected performance and behavior of the debtor, including changes in the payment status of the debtor and individual property owner in our Group and changes in the operating results of the debtor and individual property owner.

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the company.

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FINANCIAL INFORMATION

A summary of the assumptions underpinning our expected credit loss model is as follows:

Category Performing Underperforming Non-performing	Group definition of category Customers have a low risk of default and a strong capacity to meet contractual cash flows Receivables for which there is a significant increase in credit risk; as significant increase in credit risk is presumed if interest and principal repayments are 180 days past due Interest and principal repayments are 365 days past due	Basis for recognition of expected credit loss provision
		12 months expected losses. Where the expected lifetime of an asset is less than 12 months, expected losses are measured at its expected lifetime Lifetime expected losses Lifetime expected losses

We account for our credit risk by appropriately providing for expected credit losses on a timely basis. In calculating the expected credit loss rates, we consider historical loss rates for each category of receivables and adjusts for forward looking macroeconomic data.

Cash Deposits at Banks

We expect that there is no significant credit risk associated with cash deposits at banks since they are substantially deposited at banks with high credit rating. Our management does not expect that there will be any significant losses from non-performance by these counterparties.

Trade and Notes Receivable

We apply the simplified approach to provide for expected credit losses prescribed by HKFRS 9, which permits the use of the lifetime expected loss provision for trade and notes receivable. To measure the expected credit losses, trade and notes receivable have been grouped based on shared credit risk characteristics and aging. The expected credit losses also incorporate forward looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. We have identified the GDP and the unemployment rate of the PRC to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.

We assessed that the expected loss rate of trade and notes receivables from related parties, which are property developers, was low considering their financial capacity and payment history with us. The directors believe that there is no significant credit risk inherent in trade receivables from them.

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FINANCIAL INFORMATION

Other Receivables and Amounts Due from the Related Parties

We use the expected credit loss model above to determine the expected loss provision for other receivables and amounts due from related parties. As of December 31, 2017, 2018 and 2019 and June 30, 2020, we have assessed the expected credit loss for other receivables and amounts due from related parties for each category.

For amounts due from related parties, we expected that the credit risk associated to be low since the related parties has a strong capacity to repay the amounts in the near term. We have assessed that the ECL rate for the amounts due from the related parties and considered it is low and thus the loss allowance is immaterial. Deposits represented performance guarantees held by relevant government authorities and will be refunded according to regulations. The directors considered that there was no significant impairment risk.

See note 3.1.2 set out in the Accountants’ Report in Appendix I to this Document for more details.

Liquidity Risk

To manage the liquidity risk, we monitor and maintain a level of cash and cash equivalents deemed adequate by the management to finance our operations and mitigate the effects of fluctuations in cash flows.

The table below analyzes our financial liabilities into relevant maturity grouping based on the remaining period at the end of each reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

As of December 31, 2017 Borrowings. . . . . . . . . . . . . . Lease Liabilities . . . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable) . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . .	Less than one year 111,775 9,150 1,215,378 1,336,303	Between one and two years – 4,532 – 4,532	Between two and five years (RMB’000) – 640 – 640	Over five years – – – –	Total
					111,775 14,322 1,215,378
					1,341,475

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FINANCIAL INFORMATION

As of December 31, 2018 Borrowings. . . . . . . . . . . . . . Lease Liabilities . . . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable) . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . As of December 31, 2019 Borrowings. . . . . . . . . . . . . . Lease Liabilities . . . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable) . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . . As of June 30, 2020 Borrowings. . . . . . . . . . . . . . Lease Liabilities . . . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable) . . . . . . . . . . . . . . Total. . . . . . . . . . . . . . . . . .	Less than one year 154,756 14,163 1,764,547 1,933,466 3,161 14,209 2,276,672 2,294,042 3,052 12,885 2,391,446 2,407,383	Between one and two years – 6,377 – 6,377 – 8,061 – 8,061 – 6,093 – 6,093	Between two and five years (RMB’000) – 2,709 – 2,709 – 6,756 – 6,756 – 5,158 – 5,158	Over five years – 331 – 331 – 262 – 262 – 228 – 228	Total
					154,756 23,580 1,764,547
					1,942,883

					3,161 29,288 2,276,672
					2,309,121

					3,052 24,364 2,391,446
					2,418,862

RELATED PARTY TRANSACTIONS AND BALANCES

Our ultimate holding company is China Evergrande Group. Parties are considered to be related if one party has the ability, directly or indirectly, control the other party or exercise significant influence over the other party in making financial and operation decisions. Parties are also considered to be related if they are subject to common control. Members of key management and their close family member of us are also considered as related parties. See note 27 to the Accountants’ Report in Appendix I to this Document for a detailed discussion of related party transactions.

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FINANCIAL INFORMATION

Significant Related Party Transactions

During the Track Record Period, we entered into a number of related party transactions, pursuant to which: (i) we provided services such as property management services, valueadded services to non-property owners and community value-added services to certain related parties; (ii) we purchased goods and services from certain related parties; (iii) we leased parking spaces from certain related parties; and (iv) we had unsecured, interest-free and payable-on-demand cash advances to or from our related parties from time to time, including payments on behalf of related parties, among other things.

The related party transactions were conducted in accordance with terms as agreed between us and the respective related parties. Our Directors believe that our transactions with related parties during the Track Record Period were conducted on normal commercial terms and on an arm’s length basis and would not distort our results of operations or make our historical results not reflective of our future performance. During the Track Record Period, we had the following significant transactions with related parties.

For the year ended December 31, 2017 2018 2019 (RMB’000) 1,935,397 2,439,682 2,658,346 7,908 86,099 87,514 1,943,305 2,525,781 2,745,860 103,475 139,783 111,614 33,219 48,576 59,659	For the year ended December 31, 2017 2018 2019 (RMB’000) 1,935,397 2,439,682 2,658,346 7,908 86,099 87,514 1,943,305 2,525,781 2,745,860 103,475 139,783 111,614 33,219 48,576 59,659	For the six months ended June 30,	For the six months ended June 30,
2017 1,935,397 7,908 1,943,305 103,475 33,219	2018 2,439,682 86,099 2,525,781 139,783 48,576	2019 (unaudited) 1,316,549 32,963 1,349,512 45,056 30,153	2020
			1,597,434 40,176
			1,637,610

			63,516

			40,498

Provision of Services

In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, we had provided services, mainly including property management services and value-added services to non-property owners, to related parties, in an aggregate amount of RMB1,943.3 million, RMB2,525.8 million, RMB2,745.9 million, RMB1,349.5 million and RMB1,637.6 million, respectively. See “Connected Transactions—(B) Continuing Connected Transactions Subject to the Reporting, Annual Review and Announcement Requirements but Exempt from Independent Shareholders’ Approval Requirement.”

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FINANCIAL INFORMATION

Purchase of Goods and Services

In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, we had purchased certain goods and services from the Evergrande Group of RMB103.5 million, RMB139.8 million, RMB111.6 million, RMB45.1 million and RMB63.5 million, respectively, including but not limited to (i) maintenance materials and parts; (ii) office and communication equipment; (iii) staff uniforms and other consumables; and (iv) gardening services. See “Connected Transactions—(B) Continuing Connected Transactions Subject to the Reporting, Annual Review and Announcement Requirements but Exempt from Independent Shareholders’ Approval Requirement” for more details.

Lease of Parking Spaces

During the Track Record Period, we leased from the Evergrande Group certain parking spaces situated in the residential and commercial properties developed by the Evergrande Group and managed the parking spaces for subleasing to residents and tenants in such residential and commercial properties. Our cost from leasing parking spaces from related parties amounted to approximately RMB33.2 million, RMB48.6 million, RMB59.7 million, RMB30.2 million and RMB40.5 million, respectively, in 2017, 2018, 2019 and the six months ended June 30, 2020. See “Connected Transactions—(B) Continuing Connected Transactions Subject to the Reporting, Annual Review and Announcement Requirements but Exempt from Independent Shareholders’ Approval Requirement” for more details.

Guarantees from the Related Parties

As of December 31, 2017, our bank borrowing of RMB50.0 million was guaranteed by a subsidiary of the Evergrande Group and our other borrowing of RMB60.0 million was guaranteed by accounts receivable of RMB333.4 million provided by a subsidiary of the Evergrande Group. As of December 31, 2018, our bank borrowings of RMB150.0 million were guaranteed by a subsidiary of the Evergrande Group. As of December 31, 2019, our bank borrowing of RMB3.0 million was guaranteed by accounts receivable of RMB10.0 million provided by a subsidiary of the Evergrande Group. As of June 30, 2020, our bank borrowing of RMB3.0 million was guaranteed by accounts receivable of RMB10.0 million provided by a subsidiary of the Evergrande Group. As of August 31, 2020, our bank and other borrowings were nil and all guarantees from the related parties were released. See note 27 set out in the Accountants’ Report as Appendix I to this document.

Related Party Balances

The table below sets forth the balances with related parties as of the dates indicated.

Trade receivables – Controlled by our ultimate holding company . . . . . . . . . . . . . . . . . . – Joint ventures and associates of us . Total. . . . . . . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 1,910,364 3,418,277 61,066 97,365 1,971,430 3,515,642	As of June 30, 2020
	2017 984,248 4,186 988,434
			3,812,858 99,763
			3,912,621

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FINANCIAL INFORMATION

Notes receivable – Controlled by our ultimate holding company . . . . . . . . . . . . . . . . . . – Joint ventures of us . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . Prepayments – Controlled by our ultimate holding company . . . . . . . . . . . . . . . . . . Trade payables – Controlled by our ultimate holding company . . . . . . . . . . . . . . . . . . – Joint ventures and associates of us . Total . . . . . . . . . . . . . . . . . . . . . . . Notes payable – Controlled by the Group’s ultimate holding company . . . . . . . . . . . . . Amounts due from related parties – Controlled by our ultimate holding company . . . . . . . . . . . . . . . . . .	As	of December 31, 2018 2019 (RMB’000) 31,283 24,900 526 7,216 31,809 32,116 5,113 5,756 112,527 176,523 258 7,093 112,785 183,616 – 530 1,489,103 1,349,686	As of June 30, 2020
	2017 1,128 – 1,128 8,748 53,695 – 53,695 707 569,639
			103,953 2,976
			106,929

			6,030

			56,925 881
			57,806

			4,095

			1,287,300

Trade and note receivables, prepayments and trade and notes payables from or to related parties during the Track Record Period were trade in nature, interest-free and repayable according to terms in contracts. Amounts due from related parties during the Track Record Period were non-trade in nature and were unsecured, interest-free and payable on demand.

Our amounts due from related parties as of June 30, 2020 were mainly related to (i) receivables for the disposal of a subsidiary of RMB677.0 million and (ii) prepayments and receipts on behalf of related parties such as for employee compensation. Our amounts due from related parties arose when the Evergrande Group was the parent company of our business prior to the Reorganization. At that time, the Evergrande Group centralized all the funding needs of its subsidiaries and affiliates, and allocated funds among them based on a centralized fund management mechanism. The foregoing balances were subsequently classified as related party balances of a non-trade nature following the Reorganization. In order to meet the requirement for financial independence, we will not continue such centralized fund management mechanism going forward, and all of the outstanding non-trade related party balances as of June 30, 2020 that were not arising from ordinary business had been fully settled by September 8, 2020.

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FINANCIAL INFORMATION

DIVIDEND POLICY AND DISTRIBUTABLE RESERVES

Any declaration of dividends is subject to our results of operations, working capital and cash position, future business and earnings, capital requirements, contractual restrictions, if any, as well as any other factors which our Directors may consider relevant from time to time. In addition, any declaration and payment as well as the amount of the dividends will be subject to the provisions of (i) our Articles of Association, which require any final dividends to be approved by our Shareholders at a general meeting, and (ii) the Companies Law, which provides that dividends may be paid out of sums standing to the credit of its share premium account provided that immediately following the payment of dividend, our Company shall be able to pay its debts as they fall due in the ordinary course of business. Any future declarations and payments of dividends will be at the discretion of our Directors and may require the approval of our Shareholders. Under applicable PRC laws, each of our subsidiaries in the PRC may only distribute after-tax profits after it has made allocations or allowances for recovery of accumulated losses and allocations to the statutory reserves. We intend to adopt an annual dividend payout ratio of no less than 25% of our annual net profit available for distribution generated in each financial year beginning from the year ending December 31, 2020. However, there can be no assurance that dividends of any amount will be declared or distributed in any year.

As of June 30, 2020, the retained earnings of our Group amounted to RMB2,526.0 million.

DISCLOSURE PURSUANT TO RULES 13.13 TO 13.19 OF THE LISTING RULES

Except as otherwise disclosed in this Document, we confirm that, as of the Latest Practicable Date, we were not aware of any circumstances that would give rise to a disclosure requirement under Rules 13.13 to Rules 13.19 of the Listing Rules.

[ REDACTED ] EXPENSES

The total [ REDACTED ] expenses (including but not limited to [ REDACTED ] commissions) for the [ REDACTED ] are estimated to be HK$[ REDACTED ], representing approximately [ REDACTED ]% of the gross proceeds received by our Company from the [ REDACTED ] (based on the mid-point of the indicative [ REDACTED ] Range), among which

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FINANCIAL INFORMATION

approximately HK$[ REDACTED ] is directly attributable to the issuance of Shares and will be charged to equity upon completion of the [ REDACTED ], and approximately HK$[ REDACTED ] will be charged to our combined statements of comprehensive income for the year ending December 31, 2020. The [ REDACTED ] expenses above are the latest practicable estimates and are provided for reference only and actual amounts may differ. Our Directors do not expect such expenses to have a material adverse impact on our financial results for the year ending December 31, 2020.

UNAUDITED PRO FORMA ADJUSTED COMBINED NET TANGIBLE ASSETS

See Appendix II to this Document for the unaudited pro forma statement of adjusted net tangible assets of our Group, and is set out therein to illustrate the effect of the [ REDACTED ] on the net tangible assets of our Group attributable to the equity holders of our Company as of June 30, 2020 as if the [ REDACTED ] had taken place on June 30, 2020 and assuming the [ REDACTED ] is not exercised.

DIRECTORS’ CONFIRMATION ON NO MATERIAL ADVERSE CHANGE

After due and careful consideration, our Directors confirm that, up to the date of this Document, there has been no material adverse change in our financial or trading position since June 30, 2020, and there has been no events since June 30, 2020 and up to the date of this Document which would materially affect the information shown in the Accountants’ Report, the text of which is set out in Appendix I to this Document.

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FUTURE PLANS AND USE OF PROCEEDS

FUTURE PLANS AND PROSPECTS

See “Business—Our Business Strategies” for a detailed description of our future plans.

USE OF PROCEEDS

Major Categories Strategic acquisition and investment	% of Total Proceeds Amount (HK$ in millions) [REDACTED]% [REDACTED]	Sub-categories Acquire and invest in other property management companies	Specific Plans We expect to further expand our business and diversify the property portfolio and further solidify our leading position by acquiring or investing in other property management companies that focus on residential properties and/or non- residential properties such as office buildings, commercial complexes, hospitals, schools, industrial parks, government buildings and public facilities	% of Total Proceeds [REDACTED]%

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FUTURE PLANS AND USE OF PROCEEDS

Major Categories Develop our value- added services	% of Total Proceeds Amount (HK$ in millions) [REDACTED]% [REDACTED]	Sub-categories Acquire and invest in companies providing property management related services Acquire and invest in companies with business that are complementary to our community value- added services Further develop our existing value-added services	Specific Plans We expect to acquire or invest in companies offering cleaning services, gardening services, security services, repair and maintenance services and technology companies in order to achieve synergy effects and further expand our business scale We expect to integrate upstream and downstream services into our existing community value-added services to further diversify our value-added service offerings and improve customer satisfaction. We expect to acquire or invest in companies offering insurance brokerage, real estate agency, educational services, health-related and home decoration services We expect to further develop (i) our existing community value-added services, including housekeeping and home furnishing services, community space management services, and (ii) our existing value-added services to non-property owners, including repair and maintenance services	% of Total Proceeds [REDACTED]% [REDACTED]% [REDACTED]%

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FUTURE PLANS AND USE OF PROCEEDS

Major Categories Upgrade information system and equipment	% of Total Proceeds Amount (HK$ in millions) [REDACTED]% [REDACTED]	Sub-categories Procure and upgrade software and intelligent hardware to improve our smart community solutions Upgrade and maintain our existing mobile applications, smart community management system and other internal information systems Upgrade and improve equipment and facilities in the communities under our management	Specific Plans We expect to invest in developing or enhancing our smart entrance management using facial recognition, smart equipment management system using IoT and AI technologies, smart parking system, safety alert system to improve customer satisfaction and operating efficiency We expect to optimize our internal information database, smart community management system, ERP system, human resource system, recreation center management system and other internal information systems to improve operating efficiencies We expect to improve the equipment and facilities in the communities under our management to optimize energy conservation, to improve the community environment, repair and maintain utility and heating facilities and upgrade parking lots in order to achieve better and efficient management for our services and save costs	% of Total Proceeds [REDACTED]% [REDACTED]% [REDACTED]%

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FUTURE PLANS AND USE OF PROCEEDS

Major Categories Recruit and cultivate talent Working capital	% of Total Proceeds Amount (HK$ in millions) [REDACTED]% [REDACTED] [REDACTED]% [REDACTED]	Sub-categories Recruit and cultivate talent Working capital and other general corporate purposes	Specific Plans We expect to cooperate with higher education institutions to prepare a pipeline of talent for our recruitment, to improve training programs and to incentivize employees to obtain relevant professional certificates and higher education degrees We expect to have increasing needs for working capital as a result of our expected rapid and organic expansion as well as diversifying service offerings and property portfolio under management	% of Total Proceeds [REDACTED]% [REDACTED]%

Plans for Strategic Acquisitions and Investments

We had entered into relevant acquisition agreements for five third-party target property management service companies as of the Latest Practicable Date. See “Business—Relationship with the Evergrande Group—Our Efforts to Explore Market Opportunities with Independent Third Parties.” As of the Latest Practicable Date, we had not identified or committed to any acquisition targets for our use of net proceeds received by our Company from the [ REDACTED ]. The allocation of proceeds among the different types of targets above is subject to adjustments based on market conditions.

Criteria for Strategic Acquisitions and Investments

We plan to strategically acquire or invest in property management companies that focus on residential properties and/or nonresidential properties such as office buildings, commercial complexes, hospitals, schools, industrial parks, government buildings and public facilities. We will prioritize property management companies located in cities or areas where we already have a presence in order to optimize management efficiency and facilitate the sharing of resources. We will focus on suitable targets that have: (i) an annual revenue not less than RMB10.0 million; (ii) the capability of sustaining profitability; (iii) a good mix of property

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FUTURE PLANS AND USE OF PROCEEDS

management portfolios of residential properties and/or non-residential properties; and (iv) reputable brand and good corporate creditworthiness. We will also consider other risk factors, including indebtedness, administrative penalties, outstanding legal proceedings and disputes.

We also plan to strategically acquire or invest in companies offering cleaning services, gardening services, security services, repair and maintenance services and technology companies in order to improve our customer satisfaction. We will also prioritize property management companies located in cities or areas where we already have a presence. We will focus on suitable target that: (i) can sustain its business and can generate net profits or can generate net profits without incurring unnecessary costs for business management and corporate governance within one year after being acquired; (ii) are not involved in major non-compliance issues or pending legal proceedings; and (iii) can provide us with the opportunities to expand into new markets, enhance our brand value and diversify our service offerings.

Implementation of Acquisition Plan

We plan to acquire or invest in quality property management companies with the property portfolio that meets our plans for strategic acquisitions and investments. We intend to primarily target residential property management companies that have solid market share, growth potential and profitability, and non-residential property companies whose businesses are complementary to our current property portfolio under management. For more criteria for potential targets, see “—Criteria for Strategic Acquisitions and Investments” above. CIA has identified increasing market concentration and selectivity in merger and acquisition activities as a key trend in the highly competitive and fragmented PRC property management industry. See “Industry Overview—Trends in the PRC Property Management Industry” in this document. According to CIA, though approximately 80% of the 2019 Top 100 Property Management Companies were owned by or associated with property development companies, there were approximately 130,000 property management companies with a total market size of approximately RMB23.9 billion in the PRC as of December 31, 2019, as compared to around 90,000 property developers in the PRC. Thus, most property management companies are not affiliated with property developers. We believe that there should be a variety of potential targets available for our consideration in such fragmented property management service industry.

In June 2020, we set up an external business development team and in September 2020, we began to expand our external business development scope by strategic acquisitions and investment. We direct our regional subsidiaries to conduct preliminary researches on the sizes, business operations, indebtedness, financial condition, and legal compliance statuses of potential acquisition and cooperation targets, and submit research reports for review and approval by our headquarters. If approved, our headquarters will instruct and supervise our regional companies to complete the bidding, contract negotiation and signing, and subsequent ramp-up processes.

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FUTURE PLANS AND USE OF PROCEEDS

Valuation Basis

We determine the amount of consideration for a potential target primarily with reference to factors such as the price to earning ratio of comparable companies and its net profit in the preceding year. Our final price range may be determined on the basis of, or adjusted depending on, the target’s size and our evaluation of its potential. In the event that the net proceeds received by our Company from the [ REDACTED ] are less than the capital expenditure needed, we intend to use our internal funds.

Basis and Assumptions

Our future plans and business strategies are based on the following general assumptions:

there will be no material change in the funding requirement for each of our future plans described in this Document from the amount as estimated by our Directors;
we will have sufficient financial resources to meet the planned capital expenditures and business development requirements during the period to which our future plans relate;
the [ REDACTED ] will be completed in accordance with and as described in the section entitled “Structure and Conditions of the [ REDACTED ]” in this document;
there will be no material changes in existing accounting policies from those stated in the audited combined financial statements of our Group for the Track Record Period;
our operations including our future plans will not be interrupted by any force majeure , unforeseeable factors, extraordinary items or economic changes in respect of inflation, interest rate and tax rate in the PRC and elsewhere;
there will be no material changes in the bases or rates of taxation applicable to our activities;
we will not be materially affected by the risk factors as set out in the section headed “Risk Factors” in this Document;
we will continue our operation including but not limited to retaining our key staff and maintaining our customers, suppliers and subcontractors in the same manner as we did during the Track Record Period;

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FUTURE PLANS AND USE OF PROCEEDS

there will be no material change in existing laws and regulations, or other governmental policies relating to our Group and our business, or in the political or market conditions in which we operate; and
there will be no epidemic or disasters, natural, political or otherwise, which would materially disrupt our businesses or operations.

The above allocation of the proceeds will be adjusted on a pro rata basis in the event that the [ REDACTED ] is fixed at a higher or lower level compared to the mid-point of the estimated [ REDACTED ] Range.

If the [ REDACTED ] is exercised in full, we estimate that the additional net proceeds received by our Company from the [ REDACTED ] of these additional Shares will be approximately HK$[ REDACTED ], after deducting the [ REDACTED ] commissions and other estimated expenses payable by us in connection with the [ REDACTED ], assuming an [ REDACTED ] of HK$[ REDACTED ] per Share, being the mid-point of the indicative [ REDACTED ] range. We intend to apply such additional net proceeds to the purposes stated above in the same proportions.

If the [ REDACTED ] is determined at HK$[ REDACTED ] per [ REDACTED ], being the high end of the indicative [ REDACTED ] range stated in this Document, we will receive additional net proceeds of approximately HK$[ REDACTED ]. If the [ REDACTED ] is fixed at HK$[ REDACTED ] per [ REDACTED ], being the low end of the indicative [ REDACTED ] range stated in this Document, the net proceeds we receive will be reduced by approximately HK$[ REDACTED ]. If the [ REDACTED ] is set above the mid-point of the indicative [ REDACTED ] range, we intend to apply the additional amounts to the purposes stated above in the same proportions. If the [ REDACTED ] is set below the mid-point of the indicative [ REDACTED ] range, we intend to reduce the allocation of the net proceeds to the purposes stated above on a pro rata basis.

To the extent that the net proceeds received by our Company from the [ REDACTED ] are not immediately applied to the purposes stated above, and to the extent permitted by applicable laws and regulations, we intend to deposit the proceeds into accounts with licensed financial institutions. We will make a formal announcement in the event that there is any change in our use of net proceeds from the purposes stated above or in our allocation of the net proceeds in the proportions stated above.

[ REDACTED ]

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[ REDACTED ]

(A) Undertakings by the Company

Pursuant to Rule 10.08 of the Listing Rules, the Company has undertaken to the Stock Exchange that it will not exercise its power to issue any further Shares, or securities convertible into Shares (whether or not of a class already listed) or enter into any agreement to such an issue within six months from the [ REDACTED ] (whether or not such issue of Shares or securities will be completed within six months from the [ REDACTED ]), except (a) pursuant to the [ REDACTED ] or (b) under any of the circumstances provided under Rule 10.08 of the Listing Rules.

[ REDACTED ]

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HOW TO APPLY FOR [ REDACTED ] AND [ REDACTED ]

[ REDACTED ]

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HOW TO APPLY FOR [ REDACTED ] AND [ REDACTED ]

[ REDACTED ]

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HOW TO APPLY FOR [ REDACTED ] AND [ REDACTED ]

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

HOW TO APPLY FOR [ REDACTED ] AND [ REDACTED ]

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

The following is the text of a report set out on pages I-[1] to I-[3], received from the Company’s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this Document. It is prepared and addressed to the directors of the Company and to the Joint Sponsors pursuant to the requirements of HKSIR 200 Accountants’ Reports on Historical Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants.

[Letterhead of PricewaterhouseCoopers]

[Draft]

ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF EVERGRANDE PROPERTY SERVICES GROUP LIMITED AND HUATAI FINANCIAL HOLDINGS (HONG KONG) LIMITED, UBS SECURITIES HONG KONG LIMITED, ABCI CAPITAL LIMITED, CCB INTERNATIONAL CAPITAL LIMITED, CLSA CAPITAL MARKETS LIMITED AND HAITONG INTERNATIONAL CAPITAL LIMITED

Introduction

We report on the historical financial information of Evergrande Property Services Group Limited (the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-[4] to I-[54], which comprises the combined balance sheets as at December 31, 2017, 2018 and 2019 and June 30, 2020, the Company’s balance sheet as at June 30, 2020 and the combined statements of comprehensive income, the combined statements of changes in equity and the combined statements of cash flows for each of the years ended December 31, 2017, 2018 and 2019 and the six months ended June 30, 2020 (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages I-[4] to I-[54] forms an integral part of this report, which has been prepared for inclusion in the Document of the Company dated [ REDACTED ] (the “Document”) in connection with the [ REDACTED ] of shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

ACCOUNTANT’S REPORT

APPENDIX I

Reporting accountant’s responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200, Accountants’ Reports on Historical Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountant’s judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountant considers internal control relevant to the entity’s preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountant’s report, a true and fair view of the financial position of the Company as at June 30, 2020 and the combined financial position of the Group as at December 31, 2017, 2018 and 2019 and June 30, 2020 and of its combined financial performance and its combined cash flows for the Track Record Period in accordance with the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information.

Review of stub period comparative financial information

We have reviewed the stub period comparative financial information of the Group which comprises the combined statement of comprehensive income, the combined statement of changes in equity and the combined statement of cash flows for the six months ended June 30, 2019 and other explanatory information (the “Stub Period Comparative Financial Information”). The directors of the Company are responsible for the presentation and preparation of the Stub Period Comparative Financial Information in accordance with the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountant’s report, is not prepared, in all material respects, in accordance with the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information.

REPORT ON MATTERS UNDER THE RULES GOVERNING THE LISTING OF SECURITIES ON THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “LISTING RULES”) AND THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page I-4 have been made.

Dividends

We refer to Note [13] to the Historical Financial Information which contains information about the dividends paid by the companies now comprising the Group in respect of the Track Record Period and states that no dividend has been paid by the Company in respect of the Track Record Period.

No statutory financial statements for the Company

No statutory financial statements have been prepared for the Company since its date of incorporation.

[PricewaterhouseCoopers]

Certified Public Accountants

Hong Kong

[ REDACTED ]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANT’S REPORT

I HISTORICAL FINANCIAL INFORMATION OF THE GROUP

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountant’s report.

The financial statements of the Group for the Track Record Period, on which the Historical Financial Information is based, were audited by PricewaterhouseCoopers in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (“RMB’000”) except when otherwise indicated.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Combined statements of comprehensive income

Note Revenue . . . . . . . . . . . . . 6 Cost of sales. . . . . . . . . . . 8 Gross profit. . . . . . . . . . . Administrative expenses. . . . 8 Net impairment losses on financial assets . . . . . . . . 8 Other income . . . . . . . . . . 7 Other losses-net . . . . . . . . . Operating profit. . . . . . . . Finance costs . . . . . . . . . . 10 Profit before income tax. . . Income tax expense . . . . . . 11 Profit for the year/period . . Profit attributable to: – Owners of the Company . . – Non-controlling interests . . Other comprehensive income Items that may be reclassified to profit or loss Currency translation differences. . . . . . . . . . . Total comprehensive income for the year/period. . . . . Total comprehensive income attributable to: – Owners of the Company . . – Non-controlling interests . . Earnings per share – Basic and diluted. . . . . . . 12	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 4,399,356 5,903,226 7,332,722 (3,966,496) (5,180,226) (5,577,739) 432,860 723,000 1,754,983 (257,310) (401,245) (515,061) (43,800) (18,206) (48,210) 17,901 19,984 66,550 (47) (119) (194) 149,604 323,414 1,258,068 (12,662) (13,122) (28,883) 136,942 310,292 1,229,185 (30,378) (71,284) (298,661) 106,564 239,008 930,524 106,564 239,075 930,232 – (67) 292 106,564 239,008 930,524 (19) 93 160 106,545 239,101 930,684 106,545 239,168 930,392 – (67) 292 106,545 239,101 930,684 N/A N/A N/A	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 4,399,356 5,903,226 7,332,722 (3,966,496) (5,180,226) (5,577,739) 432,860 723,000 1,754,983 (257,310) (401,245) (515,061) (43,800) (18,206) (48,210) 17,901 19,984 66,550 (47) (119) (194) 149,604 323,414 1,258,068 (12,662) (13,122) (28,883) 136,942 310,292 1,229,185 (30,378) (71,284) (298,661) 106,564 239,008 930,524 106,564 239,075 930,232 – (67) 292 106,564 239,008 930,524 (19) 93 160 106,545 239,101 930,684 106,545 239,168 930,392 – (67) 292 106,545 239,101 930,684 N/A N/A N/A	Six months ended June 30, 2019 2020 RMB’000 RMB’000 (Unaudited) 3,465,760 4,563,855 (2,669,140) (2,826,168) 796,620 1,737,687 (232,087) (224,360) (25,669) (46,919) 16,508 46,379 (31) (97) 555,341 1,512,690 (16,728) (12,449) 538,613 1,500,241 (131,287) (352,548) 407,326 1,147,693 407,480 1,148,735 (154) (1,042) 407,326 1,147,693 22 207 407,348 1,147,900 407,502 1,148,942 (154) (1,042) 407,348 1,147,900 N/A N/A
	2017 RMB’000 4,399,356 (3,966,496) 432,860 (257,310) (43,800) 17,901 (47) 149,604 (12,662) 136,942 (30,378) 106,564 106,564 – 106,564 (19) 106,545 106,545 – 106,545 N/A	2018 RMB’000 5,903,226 (5,180,226) 723,000 (401,245) (18,206) 19,984 (119) 323,414 (13,122) 310,292 (71,284) 239,008 239,075 (67) 239,008 93 239,101 239,168 (67) 239,101 N/A	2019 RMB’000 (Unaudited) 3,465,760 (2,669,140) 796,620 (232,087) (25,669) 16,508 (31) 555,341 (16,728) 538,613 (131,287) 407,326 407,480 (154) 407,326 22 407,348 407,502 (154) 407,348 N/A

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Combined balance sheets

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 38,998 61,098 57,195 13,211 21,411 25,844 508 657 433 38,411 55,574 66,280 91,128 138,740 149,752 2,054,486 3,141,022 5,256,799 21,172 18,713 15,968 569,639 1,489,103 1,349,686 964,060 1,054,138 684,348 1,884 102 102 3,611,241 5,703,078 7,306,903 3,702,369 5,841,818 7,456,655 62,376 67,876 105,751 182,259 204,881 267,885 312,003 524,083 1,387,971 556,638 796,840 1,761,607 – (67) 12,850 556,638 796,773 1,774,457 4,704 8,304 12,750 1,397,116 2,491,067 2,285,276 1,614,545 2,285,513 2,969,115 10,540 96,471 398,383 8,826 13,690 13,724 110,000 150,000 2,950 3,141,027 5,036,741 5,669,448 3,145,731 5,045,045 5,682,198 3,702,369 5,841,818 7,456,655	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 38,998 61,098 57,195 13,211 21,411 25,844 508 657 433 38,411 55,574 66,280 91,128 138,740 149,752 2,054,486 3,141,022 5,256,799 21,172 18,713 15,968 569,639 1,489,103 1,349,686 964,060 1,054,138 684,348 1,884 102 102 3,611,241 5,703,078 7,306,903 3,702,369 5,841,818 7,456,655 62,376 67,876 105,751 182,259 204,881 267,885 312,003 524,083 1,387,971 556,638 796,840 1,761,607 – (67) 12,850 556,638 796,773 1,774,457 4,704 8,304 12,750 1,397,116 2,491,067 2,285,276 1,614,545 2,285,513 2,969,115 10,540 96,471 398,383 8,826 13,690 13,724 110,000 150,000 2,950 3,141,027 5,036,741 5,669,448 3,145,731 5,045,045 5,682,198 3,702,369 5,841,818 7,456,655	As at June 30,
2017 RMB’000 38,998 13,211 508 38,411 91,128 2,054,486 21,172 569,639 964,060 1,884 3,611,241 3,702,369 62,376 182,259 312,003 556,638 – 556,638 4,704 1,397,116 1,614,545 10,540 8,826 110,000 3,141,027 3,145,731 3,702,369	2018 RMB’000 61,098 21,411 657 55,574 138,740 3,141,022 18,713 1,489,103 1,054,138 102 5,703,078 5,841,818 67,876 204,881 524,083 796,840 (67) 796,773 8,304 2,491,067 2,285,513 96,471 13,690 150,000 5,036,741 5,045,045 5,841,818	2020
		RMB’000 52,548 21,403 267 79,043
		153,261
		6,366,137 11,962 1,287,300 736,124 5,016
		8,406,539
		8,559,800

		42,375 302,066 2,525,988
		2,870,429

		11,808
		2,882,237

		9,714
		2,023,363 2,880,917 748,183 12,436 2,950
		5,667,849
		5,677,563
		8,559,800

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

The Company’s balance sheet
Note
Current assets
Amounts due from related parties . . . . . . . . . . . . . . . . . . . . . . .
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity
Equity attributable to owners of the Company
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity and liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . .

As at
June 30,
2020
RMB’000
–
–
–
–
–*

Less than RMB1,000

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Combined statements of changes in equity

Attributable to own	Attributable to own	ers of the Company Retained earnings Subtotal RMB’000 RMB’000 206,268 439,189 106,564 106,564 – (19) – 10,904 (829) – 312,003 556,638 – – 312,003 556,638 239,075 239,075 – 93 – 1,034 (26,995) – 524,083 796,840 524,083 796,840 930,232 930,232 – 160 – 37,500 – 375 (62,844) – (3,500) (3,500) 1,387,971 1,761,607	Total
Combined capital RMB’000 (Note 19) 60,376 – – 2,000 – 62,376 – 62,376 – – 5,500 – 67,876 67,876 – – 37,500 375 – – 105,751	Reserves RMB’000 (Note 20) 172,545 – (19) 8,904 829 182,259 – 182,259 – 93 (4,466) 26,995 204,881 204,881 – 160 – – 62,844 – 267,885	Retained earnings RMB’000 206,268 106,564 – – (829) 312,003 – 312,003 239,075 – – (26,995) 524,083 524,083 930,232 – – – (62,844) (3,500) 1,387,971
			RMB’000 439,189 106,564 (19) 10,904 –
			556,638

			– 556,638

			239,008 93 1,034 –
			796,773

			796,773 930,524 160 50,000 500 – (3,500)
			1,774,457

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Attributable to own	Attributable to own	ers of the Company Retained earnings Subtotal RMB’000 RMB’000 1,387,971 1,761,607 1,148,735 1,148,735 – 207 – (32,791) (3,389) – (7,329) (7,329) 2,525,988 2,870,429 524,083 796,840 407,480 407,480 – 22 (40,281) – 891,282 1,204,342	Total
Combined capital RMB’000 (Note 19) 105,751 – – (63,376) – – 42,375 67,876 – – – 67,876	Reserves RMB’000 (Note 20) 267,885 – 207 30,585 3,389 – 302,066 204,881 – 22 40,281 245,184	Retained earnings RMB’000 1,387,971 1,148,735 – – (3,389) (7,329) 2,525,988 524,083 407,480 – (40,281) 891,282
			RMB’000 1,774,457 1,147,693 207 (32,791) – (7,329)
			2,882,237

			796,773 407,326 22 –
			1,204,121

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Combined statements of cash flows

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 195,474 1,038,307 (360,782) (2,349) (2,515) (7,455) 193,125 1,035,792 (368,237) (25,716) (37,673) (17,135) 40 54 86 (476) (428) (92) 814,136 (919,464) 139,417 787,984 (957,511) 122,276 110,000 150,000 2,950 (123,000) (110,000) (150,000) (11,745) (11,610) (4,856) (8,379) (16,593) (18,423) – – 50,000 (836,288) – (3,500) – – – (869,412) 11,797 (123,829) 111,697 90,078 (369,790) 852,363 964,060 1,054,138 964,060 1,054,138 684,348	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 195,474 1,038,307 (360,782) (2,349) (2,515) (7,455) 193,125 1,035,792 (368,237) (25,716) (37,673) (17,135) 40 54 86 (476) (428) (92) 814,136 (919,464) 139,417 787,984 (957,511) 122,276 110,000 150,000 2,950 (123,000) (110,000) (150,000) (11,745) (11,610) (4,856) (8,379) (16,593) (18,423) – – 50,000 (836,288) – (3,500) – – – (869,412) 11,797 (123,829) 111,697 90,078 (369,790) 852,363 964,060 1,054,138 964,060 1,054,138 684,348	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 195,474 (2,349) 193,125 (25,716) 40 (476) 814,136 787,984 110,000 (123,000) (11,745) (8,379) – (836,288) – (869,412) 111,697 852,363 964,060	2018 RMB’000 1,038,307 (2,515) 1,035,792 (37,673) 54 (428) (919,464) (957,511) 150,000 (110,000) (11,610) (16,593) – – – 11,797 90,078 964,060 1,054,138	2019 RMB’000 (Unaudited) (499,511) (6,502) (506,013) (6,520) 10 (17) 337,618 331,091 – (150,000) (4,849) (8,893) – – – (163,742) (338,664) 1,054,138 715,474	2020
			RMB’000 51,885 (15,511)
			36,374
			(6,422) 38 – 57,695
			51,311
			– – (110) (7,699) – – (28,100)
			(35,909)
			51,776 684,348
			736,124

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

ACCOUNTANT’S REPORT

APPENDIX I

II NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 GENERAL INFORMATION, REORGANISATION AND BASIS OF PRESENTATION

1.1 General information

Evergrande Property Services Group Limited (the “Company”) was incorporated in the Cayman Islands on March 13, 2020 as an exempted company with limited liability under the Companies Law (Cap. 22. Law 3 of 1961 as consolidated and revised) of the Cayman Islands. The address of the Company’s registered office is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands.

The Company is an investment holding company, and its subsidiaries (collectively referred to as the “Group”) are primarily engaged in the provision of property management services and related value-added services (the “[ REDACTED ] Business”) in the People’s Republic of China (the “PRC”).

The Company’s ultimate holding company is China Evergrande Group, an exempted company incorporated in the Cayman Islands with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Company’s intermediate holding company is CEG Holdings Limited (“CEG Holdings”), whose equity interests are wholly held by China Evergrande Group.

The [ REDACTED ] of the Company’s shares on the Main Board of the Stock Exchange (the “[ REDACTED ]”) will constitute a [ REDACTED ] from China Evergrande Group (the “[ REDACTED ]”). China Evergrande Group and its subsidiaries excluding the Group, are collectively referred to as the “Remaining Group” in this accountant’s report.

1.2 Reorganisation

Prior to the incorporation of the Company and the completion of the reorganisation as described below (the “Reorganisation”), the [ REDACTED ] Business was operated through Jinbi Property Management Company Limited (“Jinbi Property Management”), a wholly-owned subsidiary of Success Will Group Limited (“Success Will”), the subsidiaries of Jinbi Property Management, and certain other entities formerly under the Remaining Group (collectively, the “Operating Entities”) in the PRC during the Track Record Period.

In preparation for the [ REDACTED ] (“[ REDACTED ]”) of the Company’s shares on the Main Board of the Stock Exchange, the Reorganisation was undertaken and the Operating Entities engaged in the [ REDACTED ] Business were transferred to the Company. The Reorganisation included mainly the following steps:

(a) During May to September 2020, Jinbi Property Management acquired the entire equity interests of the entities which are engaged in the [ REDACTED ] Business from the Remaining Group.
(b) On May 22, 2020, Jinbi Property Management disposed of its entire interests in Zuolin Youshe Membership Service (Shenzhen) Co., Ltd. (“Zuolin Youshe”), which has not commenced formal commercial operation to Evergrande Insurance Brokers Co., Ltd. at a nominal consideration of RMB1. The financial information of Zuolin Youshe was excluded from the combined financial statements of the Group during the Track Record Period.
(c) On July 30, 2020, Jinbi Property Management disposed of its entire equity interests in Foshan Nanhai Xinzhongjian Real Estate Development Co., Ltd. (“Xinzhongjian”), which is engaged in property development business to Hengda (Guangdong) Real Estate Company Limited at a cash consideration of RMB684,000,000. The financial information of Xinzhongjian was excluded from the combined financial statements of the Group during the Track Record Period.
(d) On March 13, 2020, the Company was incorporated in the Cayman Islands with an authorised share capital of USD50,000 divided into 5,000,000 ordinary shares of USD0.01 each. Upon the incorporation of the Company, one share was issued at par to an independent initial subscriber. On July 20, 2020, the share was transferred to CEG Holdings, a subsidiary of China Evergrande Group, at a consideration of USD0.01 and only since then, the Company became part of the Reorganisation forming the Group engaged in the [ REDACTED ] Business.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANT’S REPORT

(e) On July 20, 2020, Eagle Investment (BVI) Limited (“Eagle Investment”) was incorporated in the British Virgin Islands (“BVI”) with limited liability. As the date of incorporation, one share was issued to the Company.
(f) In August 2020, through a series of transactions with the Remaining Group, Eagle Investment acquired the entire equity interests of Success Will through its wholly owned subsidiary. The [ REDACTED ] Business was therefore transferred to and held by the Company. The consideration was satisfied by one subscribed share of CEG Holdings.
(g) On August 6, 2020, Oriental Joy Group Limited (“Oriental Joy”), a wholly-owned subsidiary of Eagle Investment acquired the entire issued share capital of Fortune Ascent Management Limited (“Fortune Ascent”) from the Remaining Group, at a cash consideration of HKD9,939,000.

Upon the completion of the Reorganisation, the Company became the holding company of the companies now comprising the Group. Particulars of the principal subsidiaries of the Group are set out in Note 28.

1.3 Basis of presentation

Immediately prior to and after the Reorganisation, the [ REDACTED ] Business is conducted through the Operating Entities, which are controlled by China Evergrande Group. Pursuant to the Reorganisation, the [ REDACTED ] Business are transferred to and held by the Company. The Company has not been involved in any other business prior to the Reorganisation and does not meet the definition of a business. The Reorganisation is merely a recapitalisation of the [ REDACTED ] Business with no change in management of such business and the ultimate owner of the [ REDACTED ] Business remain the same. Accordingly, the Group resulting from the Reorganisation is regarded as a continuation of the [ REDACTED ] Business and, for the purpose of this report, the Historical Financial Information has been prepared and presented as a continuation of the combined financial statements of the Operating Entities, with the assets and liabilities of the Group recognised and measured at the carrying amounts of the [ REDACTED ] Business under the combined financial statements of the Operating Entities for all periods presented.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of the Historical Financial Information. These policies have been consistently applied to all the years presented, unless otherwise stated. HKFRS 9 “Financial Instruments” and HKFRS 15 “Revenue from Contracts with Customers” which are effective for the accounting period beginning on January 1, 2018 and HKFRS 16 “Leases” which is effective for the accounting period beginning on January 1, 2019, have been consistently applied by the Group throughout the Track Record Period.

2.1 Basis of preparation

The Historical Financial Information has been prepared in accordance with the Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The Historical Financial Information has been prepared under the historical cost convention.

The preparation of Historical Financial Information in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Historical Financial Information are disclosed in Note 4.

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ACCOUNTANT’S REPORT

APPENDIX I

(i) New standards and amendments to standards that have been issued but are not effective

Standards and amendments that have been issued but not yet effective for the Track Record Period and not been early adopted by the Group are as follows:

Effective for annual periods beginning on or after

HKFRS 17 . . . . . . . . . . . . . . . .	Insurance contract	January 1, 2023
Amendments to HKAS 1 . . . . . . . .	Classification of liabilities as current or	January 1, 2023
	non-current
Amendments to HKFRS 3 . . . . . . .	Update reference to the conceptual	January 1, 2022
	framework
Amendments to HKAS 16 . . . . . . .	Proceeds before intended use	January 1, 2022
Amendments to HKAS 37 . . . . . . .	Onerous contracts – costs of fulfilling a	January 1, 2022
	contract
Annual Improvements. . . . . . . . . .	Annual improvements to HKFRS standards	January 1, 2022
	2018-2020 cycle
Amendments to HKFRS 16 . . . . . .	COVID-19 related rent concession	June 1, 2020
Amendments to HKFRS 10 and	Sale or contribution of assets between an	To be determined
HKAS 28 . . . . . . . . . . . . . . . .	investor and its associate or joint ventures

The Group has already commenced an assessment of the impact of these new or revised standards and amendments. According to the preliminary assessment made by the Group, no significant impact on the financial performance and position of the Group is expected when they become effective.

2.2 Principles of consolidation and equity accounting

2.2.1 Subsidiaries

Subsidiaries are entities (including a structured entity) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the combined statements of comprehensive income, combined statements of changes in equity and combined balance sheet respectively.

2.2.2 Changes in ownership interests in subsidiaries without change of control

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the Group.

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ACCOUNTANT’S REPORT

APPENDIX I

2.3 Business combination

Except for the Reorganisation, the acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
equity interests issued by the Group, if any
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.

Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquired entity, and the acquisition date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

2.4 Separate financial statements

In the Company’s statement of financial position, the investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the combined financial statements of the investee’s net assets including goodwill.

2.5 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (“CODM”). The CODM who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors that makes strategic decisions.

2.6 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). Historical Financial Information are presented in RMB, which is the Company’s functional and the Group’s presentation currency.

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ACCOUNTANT’S REPORT

APPENDIX I

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings are presented as finance income/(costs). All other foreign exchange gains and losses are presented on a net basis with in other gains/(losses).

(c) Group entities

The results and financial positions of the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities of each balance sheet of the group entities are translated at the closing rate at the date of that balance sheet;
income and expenses of each statement of comprehensive income of the group entities are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken into equity holders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the statement of comprehensive income as part of the gain or loss on sale.

2.7 Property and equipment

Property and equipment is stated at historical cost less depreciation and any impairment loss. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss during the period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives or, in case of leasehold improvements, and certain leased properties, the shorter lease term, as follows:

–	Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20 years
–	Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3-10 years
–	Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3-10 years
–	Furniture, fitting and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3-10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within “other gains—net” in the statement of comprehensive income.

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ACCOUNTANT’S REPORT

APPENDIX I

2.8 Intangible assets

Computer software

Acquired computer software programmes are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 2 to 3 years on a straight-line basis.

2.9 Impairment of non-financial assets

Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (“cash-generating unit”). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.10 Investments and other financial assets

2.10.1 Classification

The Group classifies its financial assets in the following measurement categories:

those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

2.10.2 Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

2.10.3 Measurement

At initial recognition, the Group 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 that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. The Group only held debt instruments classified as financial assets at amortised costs.

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ACCOUNTANT’S REPORT

APPENDIX I

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in the combined statement of comprehensive income when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

2.10.4 Impairment

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial assets.

For trade receivables, the Group applies the simplified approach permitted by HKFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the assets. The provision matrix is determined based on historical observed default rates over the expected life of the trade receivables with similar credit risk characteristics and is adjusted for forward-looking estimates. At every reporting date the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

2.11 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the combined balance sheets when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the assets and settle the liabilities simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.

2.12 Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds trade receivables with the objective of collecting the contractual cash floes and therefore measures them subsequently at amortised cost using the effective interest method.

2.13 Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand and at banks.

2.14 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

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ACCOUNTANT’S REPORT

APPENDIX I

2.15 Trade and other payables

Trade and other payables represent liabilities for goods or services that have been acquired in the ordinary course of business from suppliers and amounts to be repaid from the Group to its counterparties. These amounts are classified as current liabilities if payment is due within 12 months or less. If not, they are presented as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.16 Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid to the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that part or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

2.17 Borrowing costs

All borrowing costs are recognised in the combined statements of comprehensive income in the period in which they incurred.

2.18 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised as “income tax expense” in the combined statements of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the combined financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. The deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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APPENDIX I ACCOUNTANT’S REPORT

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

(c) Offsetting

2.19 Employee benefits

(a) Pension obligations

The Group only operates defined contribution pension plans. In accordance with the rules and regulations in the PRC, the PRC based employees of the Group participate in various defined contribution retirement benefit plans organised by the relevant municipal and provincial governments in the PRC under which the Group and the PRC based employees are required to make monthly contributions to these plans calculated as a percentage of the employees’ salaries. The municipal and provincial governments undertake to assume the retirement benefit obligations of all existing and future retired PRC based employees’ payable under the plans described above. Other than the monthly contributions, the Group has no further obligation for the payment of retirement and other post-retirement benefits of its employees. The assets of these plans are held separately from those of the Group in independently administrated funds managed by the governments.

The Group’s contributions to the defined contribution retirement scheme are expensed as incurred.

(b) Housing funds, medical insurances and other social insurances

Employees of the Group in the PRC are entitled to participate in various government-supervised housing funds, medical insurances and other social insurance plan. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The Group’s liability in respect of these funds is limited to the contributions payable in each year. Contributions to the housing funds, medical insurances and other social insurances are expensed as incurred.

(c) Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of HKAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

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ACCOUNTANT’S REPORT

APPENDIX I

(d) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the statement of financial position.

2.20 Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

2.21 Revenue recognition

The Group provides property management services, value-added services to non-property owners and community value-added services. Revenue is recognised when the control of services or goods is transferred to the customer. Depending on the terms of the contracts and the laws that apply to the contract, control of services and goods may be transferred over time or at a point in time. The Group distinguishes whether the Group is a principal or an agent in the transactions with its customers. When the Group is acting as a principal, the associated revenue is recognised in gross amount and when the Group is acting as an agent, the associated revenue is recognised in net amount.

For property management services, the Group bills a fixed amount for services provided on a monthly basis and recognises as revenue in the amount to which the Group has a right to bill and that corresponds directly with the value of performance completed. The Group primarily generate revenue from property management services income from properties managed under lump sum basis, the Group entitles to revenue at the value of property managements services fee received or receivable.

Value-added services to non-property owners mainly include (i) preliminary property management services, which include cleaning, greening and repair and maintenance services and are billed on monthly basis and are recognised as revenue over time when such services are rendered; (ii) property inspection and pre-delivery cleaning services to property developers which are recognised as revenue when such services are rendered and accepted by the customer; and (iii) sales of the use rights of carpark spaces and rental of properties owned by property developers, which are recognised on a net basis when the underlying sales and rental contracts are signed, respectively.

Community value-added services revenue mainly include (i) promotion and facilitation for third parties, which is recognised over time according to the services rendered; (ii) income from the provision of assistance in sales of products to third parties, which is recognised on a net basis when the products are transferred; (iii) rental income from carpark spaces leased from the Remaining Group; (iv) income from management of advertising and other miscellaneous activities in the public areas in the properties managed by the Group, which is recognised over the time when the services are rendered; (v) revenue from services provided to the property owners during leasing of their properties; and (vi) revenue from other community convenience services charged for each service provided and recognised when the relevant services are rendered.

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APPENDIX I ACCOUNTANT’S REPORT

When either party to a contract has performed, the Group presents the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s payment.

A contract asset is the Group’s right to consideration in exchange for services that the Group has transferred to a customer.

If a customer pays consideration or the Group has a right to an amount of consideration that is unconditional, before the Group transfers services to the customer, the Group presents the contract as a contract liability when the payment is received or a receivable is recorded (whichever is earlier). A contract liability is the Group’s obligation to transfer services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

A receivable is recorded when the Group has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.

Incremental costs incurred to obtain a contact, if recoverable, are capitalised and presented as assets and subsequently amortised when the related revenue is recognised.

When the difference between the transfer of the promised goods or services to customer and the payment by the customer is considered significant and implied financing components contained in certain contracts, the Group adjust the transaction price for the time value of money.

2.22 Interest income

Interest income is recognised on a time-proportion basis using the effective interest method.

2.23 Leases

A lease is recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

fixed payments (including in-substance fixed payments), less any lease incentives receivable,
variable lease payments that are based on an index or a rate,
amounts expected to be payable by the lessee under residual value guarantees,
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group’s incremental borrowing rate.

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APPENDIX I ACCOUNTANT’S REPORT

Right-of-use assets are measured at cost comprising the following:

the amount of the initial measurement of lease liability,
any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs, and
restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise small items of office equipment.

Rental income from operating leases where the Group is a lessor is recognised on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as rental income. The respective leased assets are included in the balance sheet based on their nature.

2.24 Dividend distribution

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

2.25 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the combined statement of comprehensive income over the period necessary to match them with the costs that they are intended to compensate.

3 FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

3.1 Financial risk factors

3.1.1 Market risk

(i) Foreign exchange risk

The Group’s normal operating activities are principally conducted in RMB since most of the operating entities are based in the PRC. The foreign exchange risk mainly arises from monetary assets and liabilities of certain subsidiaries denominated in foreign currencies other than their functional currencies. The directors consider that the foreign exchange risk is not significant to the Group as the balance of foreign currency denominated monetary assets and liabilities was immaterial as at each period end of the Track Record Period.

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ACCOUNTANT’S REPORT

APPENDIX I

(ii) Cash flow and fair value interest rate risk

The Group is exposed to interest rate risk for certain interest-bearing cash at banks and borrowings. Cash at banks at variable rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.

As at December 31, 2017 and 2018 and 2019 and June 30, 2020, if the interest rate on cash at banks and restricted cash increased/decreased by 0.5% with all other variables held constant, the Group’s post-tax profits for the year/period would have been RMB3,571,000, RMB3,902,000, RMB2,552,000 and RMB1,373,000 higher/lower, as a result of the increase/decrease in interests derived from cash at banks and restricted cash at variable rates.

3.1.2 Credit risk

The Group is exposed to credit risk in relation to its trade and notes receivable, other receivables, amounts due from related parties and cash deposits at banks. The carrying amounts of trade and notes receivable, other receivables, amounts due from related parties and cash and cash equivalents represent the Group’s maximum exposure to credit risk in relation to financial assets.

(i) Risk management

For trade and notes receivable, other receivables, the management of the Group has monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverability of these receivables at the end of each reporting period to ensure that adequate impairment losses are made for doubtful debts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

(ii) Impairment

The Group considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Group compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. Especially the following indicators are incorporated:

internal credit rating
external credit rating
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligations
actual or expected significant changes in the financial situation of individual property owner or the debtor
significant changes in the expected performance and behaviour of the debtor, including changes in the payment status of the debtor and individual property owner

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the company.

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ACCOUNTANT’S REPORT

APPENDIX I

A summary of the assumptions underpinning the Group’s expected credit loss model is as follows:

Category Performing . . . . . . . . Underperforming. . . . . Non-performing . . . . .	Group definition of category Customers have a low risk of default and a strong capacity to meet contractual cash flows Receivables for which there is a significant increase in credit risk; as significant increase in credit risk is presumed if interest and principal repayments are 180 days past due Interest and principal repayments are 365 days past due	Basis for recognition of expected credit loss provision
		12 months expected losses. Where the expected lifetime of an asset is less than 12 months, expected losses are measured at its expected lifetime Lifetime expected losses Lifetime expected losses

The Group accounts for its credit risk by appropriately providing for expected credit losses on a timely basis. In calculating the expected credit loss rates, the Group considers historical loss rates for each category of receivables and adjusts for forward looking macroeconomic data.

Cash deposits at banks

The Group expects that there is no significant credit risk associated with cash deposits at banks since they are substantially deposited at banks with high credit rating. Management does not expect that there will be any significant losses from non-performance by these counterparties.

Trade and notes receivable

The Group applies the simplified approach to provide for expected credit losses prescribed by HKFRS 9, which permits the use of the lifetime expected loss provision for trade and notes receivable. To measure the expected credit losses, trade and notes receivable have been grouped based on shared credit risk characteristics and aging. The expected credit losses also incorporate forward looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identified the GDP and the unemployment rate to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.

The Group assessed that the expected loss rate of trade and notes receivable from related parties, which are property developers, was low considering their financial capacity and payment history with the Group. The directors believe that there is no significant credit risk inherent in trade and notes receivables from them.

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APPENDIX I

ACCOUNTANT’S REPORT

As of December 31, 2017, 2018 and 2019 and June 30, 2020, the loss allowance provision for the trade and notes receivables was determined as follows. The expected credit losses below also incorporated forward looking information. As there is no significant change in the business operation of property management service, actual loss rates for trade and notes receivables, customer profile and the adjustments for forward looking macroeconomic data during the Track Record Period, the change in the expected credit loss rates for the provision matrix is insignificant throughout the Track Record Period.

Trade and notes receivables (excluding trade and notes receivables from related parties) At December 31, 2017 Expected loss rate . . . . . . Gross carrying amount (RMB’000) . . . . . . . . Loss allowance provision (RMB’000) . . . . . . . . At December 31, 2018 Expected loss rate . . . . . . Gross carrying amount (RMB’000) . . . . . . . . Loss allowance provision (RMB’000) . . . . . . . . At December 31, 2019 Expected loss rate . . . . . . Gross carrying amount (RMB’000) . . . . . . . . Loss allowance provision (RMB’000) . . . . . . . . At June 30, 2020 Expected loss rate . . . . . . Gross carrying amount (RMB’000) . . . . . . . . Loss allowance provision (RMB’000) . . . . . . . . At June 30, 2019 Expected loss rate . . . . . . Gross carrying amount (RMB’000) . . . . . . . . Loss allowance provision (RMB’000) . . . . . . . .	Up to 180 days 1% 349,975 3,500 1% 333,892 3,339 1% 575,611 5,756 1% 1,109,831 11,098 1% 451,062 4,511	180 to 365 days 5% 197,086 9,854 5% 187,368 9,368 5% 353,957 17,697 5% 384,471 19,224 5% 252,856 12,643	1 to 2 years 10% 173,975 17,397 10% 199,676 19,968 10% 228,417 22,842 10% 300,812 30,081 10% 222,030 22,203	2 to 3 years 20% 93,488 18,698 20% 87,518 17,504 20% 113,919 22,784 20% 142,527 28,505 20% 105,071 21,014	3 to 4 years 50% 42,258 21,129 50% 48,223 24,111 50% 56,785 28,392 50% 75,117 37,558 50% 52,253 26,126	4 to 5 years 50% 21,969 10,985 50% 26,180 13,090 50% 33,980 16,990 50% 36,988 18,494 50% 30,425 15,212	Over 5 years 100% 15,552 15,552 100% 22,171 22,171 100% 35,755 35,755 100% 48,586 48,586 100% 29,914 29,914	Total
								894,303 97,115

								905,028 109,551

								1,398,424 150,216

								2,098,332 193,546

								1,143,611 131,623

As of December 31, 2017, 2018 and 2019 and June 30, 2020, the ECL rate was 0.1% for the trade and notes receivables from related parties. The loss allowance provision as at December 31, 2017, 2018, 2019 and June 30, 2020 was RMB990,000, RMB2,003,000, RMB3,548,000 and RMB4,020,000.

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ACCOUNTANT’S REPORT

APPENDIX I

Other receivables and amounts due from the related parties

The Group uses the expected credit loss model above to determine the expected loss provision for other receivables and amounts due from related parties. As at December 31, 2017, 2018 and 2019 and June 30, 2020, the Group has assessed the expected credit loss for other receivables and amounts due from related parties for each category.

For amounts due from related parties, the Group expected that the credit risk associated to be low since the related parties have a strong capacity to repay the amounts in the near term. The Group has assessed the ECL rate for the amounts due from the related parties and considered it is low and thus the loss allowance is immaterial. Other receivables mainly comprise deposits which represented performance guarantees held by relevant government authorities and will be refunded according to regulations. The directors considered that there was no significant impairment risk.

To measure the expected credit losses of other receivables other than deposits, other receivables excluding deposits have been grouped based on shared credit risk characteristics and the days past due.

As at December 31, 2017, 2018 and 2019 and June 30, 2020, the loss allowance provision for trade and other receivables reconciles to the opening loss allowance for that provision as follows:

At January 1, 2017 . . . . . . . . . . . . Net impairment losses on financial assets . . . . . . . . . . . . . At December 31, 2017 . . . . . . . . . . At January 1, 2018 . . . . . . . . . . . . Net impairment losses on financial assets . . . . . . . . . . . . . At December 31, 2018 . . . . . . . . . . At January 1, 2019 . . . . . . . . . . . . Net impairment losses on financial assets . . . . . . . . . . . . . At December 31, 2019 . . . . . . . . . . At January 1, 2020 . . . . . . . . . . . . Net impairment losses on financial assets . . . . . . . . . . . . . At June 30, 2020 . . . . . . . . . . . . . (Unaudited) At January 1, 2019 . . . . . . . . . . . . Net impairment losses on financial assets . . . . . . . . . . . . . At June 30, 2019 . . . . . . . . . . . . .	Trade and notes receivables RMB’000 56,758 41,347 98,105 98,105 13,449 111,554 111,554 42,210 153,764 153,764 43,802 197,566 111,554 22,836 134,390	Other receivables (excluding deposits) RMB’000 4,307 2,453 6,760 6,760 4,757 11,517 11,517 6,000 17,517 17,517 3,117 20,634 11,517 2,833 14,350	Total
			RMB’000 61,065 43,800
			104,865

			104,865 18,206
			123,071

			123,071 48,210
			171,281

			171,281 46,919
			218,200

			123,071 25,669
			148,740

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANT’S REPORT

3.1.3 Liquidity risk

To manage the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows.

The table below analyses the Group’s financial liabilities into relevant maturity grouping based on the remaining period at the end of each reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

At December 31, 2017 Borrowings . . . . . . . . . . . Lease liabilities . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable). . . . . . . . . . . . At December 31, 2018 Borrowings . . . . . . . . . . . Lease liabilities . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable). . . . . . . . . . . . At December 31, 2019 Borrowings . . . . . . . . . . . Lease liabilities . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable). . . . . . . . . . . . At June 30, 2020 Borrowings . . . . . . . . . . . Lease liabilities . . . . . . . . Trade and other payables (excluding accrued payroll liabilities and other tax payable). . . . . . . . . . . .	Less than 1 year RMB’000 111,775 9,150 1,215,378 1,336,303 154,756 14,163 1,764,547 1,933,466 3,161 14,209 2,276,672 2,294,042 3,052 12,885 2,391,446 2,407,383	Between 1 and 2 years RMB’000 – 4,532 – 4,532 – 6,377 – 6,377 – 8,061 – 8,061 – 6,093 – 6,093	Between 2 and 5 years RMB’000 – 640 – 640 – 2,709 – 2,709 – 6,756 – 6,756 – 5,158 – 5,158	Over 5 years RMB’000 – – – – – 331 – 331 – 262 – 262 – 228 – 228	Total
					RMB’000 111,775 14,322 1,215,378
					1,341,475

					154,756 23,580 1,764,547
					1,942,883

					3,161 29,288 2,276,672
					2,309,121

					3,052 24,364 2,391,446
					2,418,862

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ACCOUNTANT’S REPORT

APPENDIX I

3.2 Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Allowance on doubtful receivables

The Group makes allowances on receivables based on assumptions about risk of default and expected loss rates. The Group used judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Where the expectation is different from the original estimate, such difference will impact the carrying amount of trade and other receivables and doubtful debt expenses in the periods in which such estimate has been changed. For details of the key assumptions and inputs used, see Note 3.1.2 above.

(b) Current and deferred income tax

The Group is subject to corporate income taxes in the PRC. Judgement is required in determining the amount of the provision for taxation and the timing of payment of the related taxations. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Deferred tax assets relating to certain temporary differences and tax losses are recognised when management considers to be probable that future taxable profit will be available against which the temporary differences or tax losses can be utilised. The outcome of their actual utilisation may be different.

5 SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the CODM. The CODM, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the executive directors of the Company.

During the Track Record Period, the Group is principally engaged in the provision of property management services and related value-added services in the PRC. Management reviews the operating results of the business as a single operating segment as the nature of services, the type of customers for services, the method used to provide their services and the nature of regulatory environment is same in different regions.

The principal operating entities of the Group are domiciled in the PRC and majority of revenue is derived in the PRC during the Track Record Period.

As at December 31, 2017, 2018 and 2019 and June 30, 2020, majority of the non-current assets of the Group were located in the PRC.

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APPENDIX I

ACCOUNTANT’S REPORT

6 REVENUE

Revenue mainly comprises of proceeds from property management services and related value-added services. An analysis of the Group’s revenue by category for the years ended December 31, 2017, 2018 and 2019 and the six months ended June 30, 2019 and 2020 is as follows:

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 2,538,392 3,464,390 4,612,212 1,609,865 2,103,431 2,147,527 251,099 335,405 572,983 4,399,356 5,903,226 7,332,722 4,397,674 5,725,387 6,784,732 1,682 177,839 547,990 4,399,356 5,903,226 7,332,722	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 2,538,392 3,464,390 4,612,212 1,609,865 2,103,431 2,147,527 251,099 335,405 572,983 4,399,356 5,903,226 7,332,722 4,397,674 5,725,387 6,784,732 1,682 177,839 547,990 4,399,356 5,903,226 7,332,722	Six months ended 30 June,	Six months ended 30 June,
2017 RMB’000 2,538,392 1,609,865 251,099 4,399,356 4,397,674 1,682 4,399,356	2018 RMB’000 3,464,390 2,103,431 335,405 5,903,226 5,725,387 177,839 5,903,226	2019 RMB’000 (Unaudited) 2,154,683 1,056,069 255,008 3,465,760 3,198,339 267,421 3,465,760	2020
			RMB’000 2,824,261 1,231,480 508,114
			4,563,855

			4,175,344 388,511
			4,563,855

For the years ended December 31, 2017, 2018 and 2019 and the six months ended June 30, 2019 and 2020, revenue provided by the Group to the Remaining Group and its joint ventures and associates contributed 44%, 43%, 37%, 39% and 36% of the Group’s revenue, respectively. Other than the Remaining Group and its joint ventures and associates, the Group has a large number of customers, none of whom contributed 10% or more of the Group’s revenue during the Track Record Period.

For the years ended December 31, 2017, 2018 and 2019 and the six months ended June 30, 2019 and 2020, community value-added services include rental income from leasing the car parking spaces of RMB172,031,000, RMB227,419,000, RMB291,808,000, RMB131,490,000 and RMB163,964,000, respectively.

(a) Contract liabilities

(i) The Group has recognised the following revenue-related contract liabilities:

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,391,601 2,466,160 2,239,527 5,515 24,907 45,749 1,397,116 2,491,067 2,285,276	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,391,601 2,466,160 2,239,527 5,515 24,907 45,749 1,397,116 2,491,067 2,285,276	As at June 30,
2017 RMB’000 1,391,601 5,515 1,397,116	2018 RMB’000 2,466,160 24,907 2,491,067	2020
		RMB’000 1,955,013 68,350
		2,023,363

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ACCOUNTANT’S REPORT

APPENDIX I

(ii) Significant changes in contract liabilities

Contract liabilities of the Group mainly arise from the advance payments made by customers while the underlying services are yet to be provided.

(iii) Revenue recognised in relation to contract liabilities

The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities.

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,038,332 1,301,529 2,257,496 4,115 5,515 24,907 1,042,447 1,307,044 2,282,403	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,038,332 1,301,529 2,257,496 4,115 5,515 24,907 1,042,447 1,307,044 2,282,403	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 1,038,332 4,115 1,042,447	2018 RMB’000 1,301,529 5,515 1,307,044	2019 RMB’000 (Unaudited) 1,287,225 24,907 1,312,132	2020
			RMB’000 1,327,704 45,749
			1,373,453

(b) Unsatisfied performance obligations

For property management services and value-added services to non-property owners, the Group recognises revenue in the amount that equals to the right to invoice which corresponds directly with the value to the customer of the Group’s performance to date, on a monthly basis or settlement cycle. The Group has elected the practical expedient for not to disclose the remaining performance obligations for these type of contracts. The majority of the property management services contracts do not have a fixed term. The term of the contracts with non-property owners is generally set to expire when the counterparties notify the Group that the services are no longer required.

For community value-added services, they are rendered in short period of time, which is generally less than a year, and the Group has elected the practical expedient for not to disclose the remaining performance obligations for these type of contracts.

(c) Assets recognised from incremental costs to obtain a contract

During the Track Record Period, there was no significant incremental costs to obtain a contract.

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ACCOUNTANT’S REPORT

APPENDIX I

7 OTHER INCOME

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 5,436 7,730 50,887 4,250 4,608 8,110 6,514 5,130 3,590 1,701 2,516 3,963 17,901 19,984 66,550	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 5,436 7,730 50,887 4,250 4,608 8,110 6,514 5,130 3,590 1,701 2,516 3,963 17,901 19,984 66,550	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 5,436 4,250 6,514 1,701 17,901	2018 RMB’000 7,730 4,608 5,130 2,516 19,984	2019 RMB’000 (Unaudited) 10,573 2,244 1,973 1,718 16,508	2020
			RMB’000 37,920 5,974 1,463 1,022
			46,379

(a) Government grants which mainly consisted of subsidies of input value-added tax deduction and refund of paid unemployment insurance.

8 EXPENSES BY NATURE

Expenses included in cost of sales, administrative expenses and net impairment losses on financial assets are analysed as follows:

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 3,024,601 3,981,307 4,133,095 418,145 632,066 790,194 254,729 270,754 304,640 213,090 300,630 393,522 70,267 98,284 124,010 43,800 18,206 48,210 53,352 57,259 67,828 51,443 58,009 66,236 18,789 31,023 37,971 37,497 48,417 62,972 10,650 17,241 24,671 19,409 23,163 16,025 10,461 8,693 8,459 17,168 23,925 11,853 1,724 1,264 4,758 283 290 274 22,198 29,146 46,292 4,267,606 5,599,677 6,141,010	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 3,024,601 3,981,307 4,133,095 418,145 632,066 790,194 254,729 270,754 304,640 213,090 300,630 393,522 70,267 98,284 124,010 43,800 18,206 48,210 53,352 57,259 67,828 51,443 58,009 66,236 18,789 31,023 37,971 37,497 48,417 62,972 10,650 17,241 24,671 19,409 23,163 16,025 10,461 8,693 8,459 17,168 23,925 11,853 1,724 1,264 4,758 283 290 274 22,198 29,146 46,292 4,267,606 5,599,677 6,141,010	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 3,024,601 418,145 254,729 213,090 70,267 43,800 53,352 51,443 18,789 37,497 10,650 19,409 10,461 17,168 1,724 283 22,198 4,267,606	2018 RMB’000 3,981,307 632,066 270,754 300,630 98,284 18,206 57,259 58,009 31,023 48,417 17,241 23,163 8,693 23,925 1,264 290 29,146 5,599,677	2019 RMB’000 (Unaudited) 2,003,116 354,601 155,029 162,481 55,268 25,669 32,052 31,329 18,319 26,659 14,160 7,091 4,115 5,986 1,957 46 29,018 2,926,896	2020
			RMB’000 1,948,090 430,203 258,032 190,871 60,290 46,919 46,162 36,675 18,160 17,583 10,598 6,842 6,601 5,490 1,672 219 13,040
			3,097,447

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APPENDIX I

ACCOUNTANT’S REPORT

9 EMPLOYEE BENEFIT EXPENSES

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 2,678,150 3,531,436 3,726,829 346,451 449,871 406,266 3,024,601 3,981,307 4,133,095	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 2,678,150 3,531,436 3,726,829 346,451 449,871 406,266 3,024,601 3,981,307 4,133,095	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 2,678,150 346,451 3,024,601	2018 RMB’000 3,531,436 449,871 3,981,307	2019 RMB’000 (Unaudited) 1,806,194 196,922 2,003,116	2020
			RMB’000 1,899,172 48,918
			1,948,090

(a) Employees in the Group’s PRC subsidiaries are required to participate in a defined contribution retirement scheme administrated and operated by the local municipal government. The Group’s PRC subsidiaries contribute funds which are calculated on certain percentage of the prior year employee salary as agreed by local municipal government to the scheme to fund the retirement benefits of the employees.

(b) Directors’ and chief executive’s emoluments

The remuneration of each director for the year ended December 31, 2017 is set out below:

Name Executive directors Mr. Zhao Changlong (i) . . . . . . . . . . . . . . . . Mr. Hu Liang . . . . . . . . . . . . . . . . . . . . . . . Mr. Wang Zhen. . . . . . . . . . . . . . . . . . . . . . Ms. An Lihong . . . . . . . . . . . . . . . . . . . . . . Non-executive directors Mr. Chan Chun Hung (ii) . . . . . . . . . . . . . . . Mr. Victor Huang (ii) . . . . . . . . . . . . . . . . . . Mr. Guo Zhaohui (ii) . . . . . . . . . . . . . . . . . .	Salaries, bonuses and other benefits RMB’000 – 2,157 1,891 940 – – – 4,988	Contribution to pension scheme RMB’000 – 31 29 29 – – – 89	Total
			RMB’000 – 2,188 1,920 969 – – –
			5,077

The remuneration of each director for the year ended December 31, 2018 is set out below:

Name Executive directors Mr. Zhao Changlong (i) . . . . . . . . . . . . . . . . Mr. Hu Liang . . . . . . . . . . . . . . . . . . . . . . . Mr. Wang Zhen. . . . . . . . . . . . . . . . . . . . . . Ms. An Lihong . . . . . . . . . . . . . . . . . . . . . . Non-executive directors Mr. Chan Chun Hung (ii) . . . . . . . . . . . . . . . Mr. Victor Huang (ii) . . . . . . . . . . . . . . . . . . Mr. Guo Zhaohui (ii) . . . . . . . . . . . . . . . . . .	Salaries, bonuses and other benefits RMB’000 – 2,866 2,833 937 – – – 6,636	Contribution to pension scheme RMB’000 – 32 32 32 – – – 96	Total
			RMB’000 – 2,898 2,865 969 – – –
			6,732

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APPENDIX I

ACCOUNTANT’S REPORT

The remuneration of each director for the year ended December 31, 2019 is set out below:

Name Executive directors Mr. Zhao Changlong (i) . . . . . . . . . . . . . . . . Mr. Hu Liang . . . . . . . . . . . . . . . . . . . . . . . Mr. Wang Zhen. . . . . . . . . . . . . . . . . . . . . . Ms. An Lihong . . . . . . . . . . . . . . . . . . . . . . Non-executive directors Mr. Chan Chun Hung (ii) . . . . . . . . . . . . . . . Mr. Victor Huang (ii) . . . . . . . . . . . . . . . . . . Mr. Guo Zhaohui (ii) . . . . . . . . . . . . . . . . . .	Salaries, bonuses and other benefits RMB’000 – 2,996 2,639 1,083 – – – 6,718	Contribution to pension scheme RMB’000 – 32 32 32 – – – 96	Total
			RMB’000 – 3,028 2,671 1,115 – – –
			6,814

The remuneration of each director for the six months ended June 30, 2020 is set out below:

Name Executive directors Mr. Zhao Changlong (i) . . . . . . . . . . . . . . . . Mr. Hu Liang . . . . . . . . . . . . . . . . . . . . . . . Mr. Wang Zhen. . . . . . . . . . . . . . . . . . . . . . Ms. An Lihong . . . . . . . . . . . . . . . . . . . . . . Non-executive directors Mr. Chan Chun Hung (ii) . . . . . . . . . . . . . . . Mr. Victor Huang (ii) . . . . . . . . . . . . . . . . . . Mr. Guo Zhaohui (ii) . . . . . . . . . . . . . . . . . .	Salaries, bonuses and other benefits RMB’000 – 1,165 1,147 489 – – – 2,801	Contribution to pension scheme RMB’000 – 3 3 3 – – – 9	Total
			RMB’000 – 1,168 1,150 492 – – –
			2,810

The remuneration of each director for the six months ended June 30, 2019 is set out below:

Name Executive directors Mr. Zhao Changlong (i) . . . . . . . . . . . . . . . . Mr. Hu Liang . . . . . . . . . . . . . . . . . . . . . . . Mr. Wang Zhen. . . . . . . . . . . . . . . . . . . . . . Ms. An Lihong . . . . . . . . . . . . . . . . . . . . . . Non-executive directors Mr. Chan Chun Hung (ii) . . . . . . . . . . . . . . . Mr. Victor Huang (ii) . . . . . . . . . . . . . . . . . . Mr. Guo Zhaohui (ii) . . . . . . . . . . . . . . . . . .	Salaries, bonuses and other benefits RMB’000 – 1,389 1,212 542 – – – 3,143	Contribution to pension scheme RMB’000 – 16 16 16 – – – 48	Total
			RMB’000 – 1,405 1,228 558 – – –
			3,191

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ACCOUNTANT’S REPORT

APPENDIX I

(i) Mr. Zhao Changlong is the chairman of the board of directors of the Group. The emoluments of Mr. Zhao Changlong in relation to his services rendered for the Group for the Track Record Period were borne by China Evergrande Group and not allocated to the Group as management of the Company considers there is no reasonable basis for such allocation.
(ii) Mr. Chan Chun Hung, Mr. Victor Huang and Mr. Guo Zhaohui were appointed as the non-executive directors of the Group on [●].

(c) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year ended December 31, 2017, 2018 and 2019 and the six months June 30, 2019 and 2020 included 3, 3, 3, 3 and 3 directors, respectively, whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining individuals during the Relevant Periods are as follows:

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,884 3,318 3,699 58 67 64 1,942 3,385 3,763	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,884 3,318 3,699 58 67 64 1,942 3,385 3,763	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 1,884 58 1,942	2018 RMB’000 3,318 67 3,385	2019 RMB’000 (Unaudited) 1,847 34 1,881	2020
			RMB’000 1,556 13
			1,569

The emoluments of these remaining individuals of the Group fell within the following bands:

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 – – – 2 – – – 1 1 – 1 1 2 2 2	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 – – – 2 – – – 1 1 – 1 1 2 2 2	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 – 2 – – 2	2018 RMB’000 – – 1 1 2	2019 RMB’000 (Unaudited) 1 1 – – 2	2020
			RMB’000 2 – – –
			2

(d) Directors’ retirement and termination benefits

No retirement benefits were paid to or receivable by any directors in respect of their other services in connection with the management of the affairs of the Company or its subsidiaries’ undertaking during the Track Record Period.

No payment was made to the directors as compensation for early termination of appointment during the Track Record Period.

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ACCOUNTANT’S REPORT

APPENDIX I

(e) Consideration provided to their parties for making available directors’ services

No payment was made to any former employers of the directors for making available the services of them as a director of the Company during the Track Record Period.

(f) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors

There were no other loans, quasi-loans and other dealings in favour of the directors, controlled bodies corporate by and connected entities with such directors during the Track Record Period.

(g) Directors’ material interests in transactions, arrangements or contracts

No significant transactions, arrangements and contracts in relation to the Group’s business to which the Group was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the Track Record Period.

10 FINANCE COSTS

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 11,745 11,610 4,856 917 1,512 1,574 – – 22,453 12,662 13,122 28,883	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 11,745 11,610 4,856 917 1,512 1,574 – – 22,453 12,662 13,122 28,883	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 11,745 917 – 12,662	2018 RMB’000 11,610 1,512 – 13,122	2019 RMB’000 (Unaudited) 4,849 813 11,066 16,728	2020
			RMB’000 110 756 11,583
			12,449

(a) Other finance costs represented the finance expenses contained in the discount offered by the Group to the individual property owners for their advanced payments of property management fees.

11 INCOME TAX EXPENSES

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 7,332 88,447 309,367 23,046 (17,163) (10,706) 30,378 71,284 298,661	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 7,332 88,447 309,367 23,046 (17,163) (10,706) 30,378 71,284 298,661	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 7,332 23,046 30,378	2018 RMB’000 88,447 (17,163) 71,284	2019 RMB’000 (Unaudited) 137,940 (6,653) 131,287	2020
			RMB’000 365,311 (12,763)
			352,548

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of Cayman Islands and accordingly, is exempted from Cayman Islands income tax. The Company’s subsidiaries in the BVI were incorporated under the International Business Companies Act of the BVI and accordingly, are exempted from British Virgin Island income tax.

Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profit for the current period in respect of operations in Hong Kong. Except for Fortune Ascent, the Group’s other subsidiaries incorporated in Hong Kong did not have assessable profit in Hong Kong during the Track Record Period.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANT’S REPORT

Income tax provision of the Group in respect of operations in the PRC has been calculated at the applicable tax rate on the estimated assessable profits for the years/periods, based on the existing legislation, interpretations and practices in respect thereof. The statutory tax rate is 25% for the Track Record Period. Certain subsidiaries and branches of the Group in the PRC are located in western cities, and they are subject to a preferential income tax rate of 15% during the Track Record Period. The subsidiary and branches of the Group located in Hainan Province are qualified to enjoy the preferential income tax rate of 15% from January 1, 2020.

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the group entities as follows:

Profit before income tax . . . . . . Tax calculated at applicable corporate income tax rate of 25% . . . . . . . . . . . . . . . Tax effects of: – Expenses not deductible for tax purposes. . . . . . . . . . . . . . . – Effect of different tax rates applicable to certain subsidiaries and branches . . . .	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 136,942 310,292 1,229,185 34,236 77,573 307,296 1,338 2,384 3,314 (5,196) (8,673) (11,949) 30,378 71,284 298,661	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 136,942 310,292 1,229,185 34,236 77,573 307,296 1,338 2,384 3,314 (5,196) (8,673) (11,949) 30,378 71,284 298,661	Six months ended June 30, 2019 2020 RMB’000 RMB’000 (Unaudited) 538,613 1,500,241 134,653 375,060 1,070 1,027 (4,436) (23,539) 131,287 352,548
	2017 RMB’000 136,942 34,236 1,338 (5,196) 30,378	2018 RMB’000 310,292 77,573 2,384 (8,673) 71,284	2019 RMB’000 (Unaudited) 538,613 134,653 1,070 (4,436) 131,287

12 EARNINGS PER SHARE

No earnings per share information is presented as its inclusion, for the purpose of this report, is not considered meaningful due to the Reorganisation and the preparation of the results for each years ended December 31, 2017, 2018, 2019 and six months ended June 30, 2019 and 2020 on a combined basis as disclosed in Note 1.3.

13 DIVIDENDS

No dividend has been paid or declared by the Company since its incorporation and up to the date of this report.

During the year ended December 31, 2019 and the six months ended June 30, 2020, dividends of RMB3,500,000 and RMB7,329,000, respectively, were declared by the subsidiaries now comprising the Group to their then shareholders.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

14 PROPERTY AND EQUIPMENT

As at January 1, 2017 Cost. . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . Net book amount . . . . . . . . . . Year ended December 31, 2017 Opening net book amount . . . . . Additions . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Depreciation charge . . . . . . . . . Closing net book amount. . . . . As at December 31, 2017 Cost. . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . Net book amount . . . . . . . . . . Year ended December 31, 2018 Opening net book amount . . . . . Additions . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Depreciation charge . . . . . . . . . Closing net book amount. . . . . As at December 31, 2018 Cost. . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . Net book amount . . . . . . . . . . Year ended December 31, 2019 Opening net book amount . . . . . Additions . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Depreciation charge . . . . . . . . . Closing net book amount. . . . . As at December 31, 2019 Cost. . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . Net book amount . . . . . . . . . .	Property RMB’000 – – – – – – – – – – – – – – – – – – – – 2,276 – – 2,276 2,276 – 2,276	Machinery RMB’000 16,794 (11,805) 4,989 4,989 6,400 – (2,121) 9,268 23,192 (13,924) 9,268 9,268 8,668 (4) (3,913) 14,019 31,790 (17,771) 14,019 14,019 3,950 (11) (5,880) 12,078 35,574 (23,496) 12,078	Vehicles RMB’000 5,956 (3,728) 2,228 2,228 972 (5) (803) 2,392 6,894 (4,502) 2,392 2,392 11,799 (15) (1,344) 12,832 18,456 (5,624) 12,832 12,832 1,989 (27) (3,406) 11,388 19,923 (8,535) 11,388	Furniture, fitting and equipment RMB’000 54,793 (37,789) 17,004 17,004 18,344 (72) (7,938) 27,338 72,382 (45,044) 27,338 27,338 17,206 (154) (10,143) 34,247 88,605 (54,358) 34,247 34,247 8,920 (242) (11,472) 31,453 94,865 (63,412) 31,453	Total RMB’000 77,543 (53,322) 24,221 24,221 25,716 (77) (10,862) 38,998 102,468 (63,470) 38,998 38,998 37,673 (173) (15,400) 61,098 138,851 (77,753) 61,098 61,098 17,135 (280) (20,758) 57,195 152,638 (95,443) 57,195

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Six months ended June 30, 2020 Opening net book amount . . . . . Additions . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Depreciation charge . . . . . . . . . Closing net book amount. . . . . As at June 30, 2020 Cost. . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . Net book amount . . . . . . . . . . (Unaudited) Six months ended June 30, 2019 Opening net book amount . . . . . Additions . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Depreciation charge . . . . . . . . . Closing net book amount. . . . . As at June 30, 2019 Cost. . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . Net book amount . . . . . . . . . .	Property RMB’000 2,276 – – (54) 2,222 2,276 (54) 2,222 – – – – – – – –	Machinery RMB’000 12,078 1,158 (6) (3,031) 10,199 36,607 (26,408) 10,199 14,019 1,194 (6) (2,461) 12,746 32,846 (20,100) 12,746	Vehicles RMB’000 11,388 838 (25) (1,754) 10,447 20,274 (9,827) 10,447 12,832 882 (3) (1,622) 12,089 19,285 (7,196) 12,089	Furniture, fitting and equipment RMB’000 31,453 4,426 (104) (6,095) 29,680 97,987 (68,307) 29,680 34,247 4,444 (32) (6,076) 32,583 92,491 (59,908) 32,583	Total
					RMB’000 57,195 6,422 (135) (10,934)
					52,548
					157,144 (104,596)
					52,548

					61,098 6,520 (41) (10,159)
					57,418
					144,622 (87,204)
					57,418

Depreciation expenses were charged to the following categories in the combined statements of comprehensive income:

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 8,486 12,339 15,360 2,376 3,061 5,398 10,862 15,400 20,758	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 8,486 12,339 15,360 2,376 3,061 5,398 10,862 15,400 20,758	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 8,486 2,376 10,862	2018 RMB’000 12,339 3,061 15,400	2019 RMB’000 (Unaudited) 7,440 2,719 10,159	2020
			RMB’000 8,159 2,775
			10,934

(a) No property and equipment is restricted or pledged as security for liabilities as at December 31, 2017, 2018 and 2019 and June 30, 2020.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

15 TRADE AND OTHER RECEIVABLES

Trade receivables – Related parties (Note 27(c)) . . . . . . – Third parties . . . . . . . . . . . . . . . Notes receivable – Related parties (Note 27(c)) . . . . . . Less: allowance for impairment of trade and notes receivables (Note 3.1.2) . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . Other receivables – Payments on behalf of property owners (c). . . . . . . . . . . . . . . . . – Deposits . . . . . . . . . . . . . . . . . . – Others . . . . . . . . . . . . . . . . . . . Less: allowance for impairment of other receivables (Note 3.1.2) . . Value added tax recoverable . . . . . . .	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 988,434 1,971,430 3,515,642 894,303 905,028 1,398,424 1,128 31,809 32,116 (98,105) (111,554) (153,764) 1,785,760 2,796,713 4,792,418 231,611 306,580 423,802 22,054 24,390 24,012 16,525 20,783 29,012 270,190 351,753 476,826 (6,760) (11,517) (17,517) 263,430 340,236 459,309 5,296 4,073 5,072 2,054,486 3,141,022 5,256,799	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 988,434 1,971,430 3,515,642 894,303 905,028 1,398,424 1,128 31,809 32,116 (98,105) (111,554) (153,764) 1,785,760 2,796,713 4,792,418 231,611 306,580 423,802 22,054 24,390 24,012 16,525 20,783 29,012 270,190 351,753 476,826 (6,760) (11,517) (17,517) 263,430 340,236 459,309 5,296 4,073 5,072 2,054,486 3,141,022 5,256,799	As at June 30, 2020 RMB’000 3,912,621 2,098,332 106,929 (197,566) 5,920,316 392,547 24,386 45,417 462,350 (20,634) 441,716 4,105 6,366,137
	2017 RMB’000 988,434 894,303 1,128 (98,105) 1,785,760 231,611 22,054 16,525 270,190 (6,760) 263,430 5,296 2,054,486	2018 RMB’000 1,971,430 905,028 31,809 (111,554) 2,796,713 306,580 24,390 20,783 351,753 (11,517) 340,236 4,073 3,141,022

(a) Trade receivables mainly arise from property management services income under lump sum basis and value-added service. Property management service income is received in accordance with the terms of the relevant services agreements. Value-added service income is usually due for payment upon the issuance of document of settlement.

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APPENDIX I

ACCOUNTANT’S REPORT

(b) As at December 31, 2017, 2018 and 2019 and June 30, 2020, the ageing analysis of the trade and notes receivables based on date of revenue recognition were as follows:

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 982,336 1,384,852 2,209,541 397,662 447,096 781,823 263,601 775,581 1,081,253 145,661 170,462 657,925 94,605 130,276 215,640 1,883,865 2,908,267 4,946,182	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 982,336 1,384,852 2,209,541 397,662 447,096 781,823 263,601 775,581 1,081,253 145,661 170,462 657,925 94,605 130,276 215,640 1,883,865 2,908,267 4,946,182	As at June 30,
2017 RMB’000 982,336 397,662 263,601 145,661 94,605 1,883,865	2018 RMB’000 1,384,852 447,096 775,581 170,462 130,276 2,908,267	2020
		RMB’000 3,100,389 1,277,336 947,506 391,544 401,107
		6,117,882

(c) Payments on behalf of property owners mainly represented utilities costs of properties.
(d) As at December 31, 2017, 2018 and 2019 and June 30, 2020, trade and other receivables were denominated in RMB and the fair value of trade and other receivables approximate their carrying amounts.
(e) As at December 31, 2017, 2018 and 2019 and June 30, 2020, the net book value of trade and other receivables (excluding value-added tax recoverable) of RMB2,049,190,000, RMB3,136,949,000, RMB5,251,727,000 and RMB6,362,032,000 represented the Group’s maximum exposure to credit losses.

16 PREPAYMENTS

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 8,748 5,113 5,756 12,424 13,600 10,212 21,172 18,713 15,968	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 8,748 5,113 5,756 12,424 13,600 10,212 21,172 18,713 15,968	As at June 30,
2017 RMB’000 8,748 12,424 21,172	2018 RMB’000 5,113 13,600 18,713	2020
		RMB’000 6,030 5,932
		11,962

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

17 CASH AND CASH EQUIVALENTS

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 950,502 1,040,413 680,329 13,558 13,725 4,019 964,060 1,054,138 684,348	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 950,502 1,040,413 680,329 13,558 13,725 4,019 964,060 1,054,138 684,348	As at June 30, 2020
2017 RMB’000 950,502 13,558 964,060	2018 RMB’000 1,040,413 13,725 1,054,138
		RMB’000 732,101 4,023
		736,124

The carrying amounts of cash and cash equivalents were denominated in the following currencies:

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 963,550 1,049,425 676,377 481 4,692 7,950 29 21 21 964,060 1,054,138 684,348	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 963,550 1,049,425 676,377 481 4,692 7,950 29 21 21 964,060 1,054,138 684,348	As at June 30, 2020
2017 RMB’000 963,550 481 29 964,060	2018 RMB’000 1,049,425 4,692 21 1,054,138
		RMB’000 725,615 10,488 21
		736,124

Cash and cash equivalents held in the PRC are subject to local exchange control regulations. These regulations provide for restriction on exporting capital from the PRC, other than through normal dividend.

18 RESTRICTED CASH

Restricted cash mainly represented cash deposits in relation to certain law suits and deposits which were held as securities according to the requirements of local government authorities.

19 COMBINED CAPITAL

The Reorganisation has not been completed as at June 30, 2020. As mentioned in Note 1.3, the Historical Financial Information has been prepared on a combined basis. Combined capital as at each balance sheet date represented the combined capital of the companies now comprising the Group after the elimination of the inter-company investments.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

20 RESERVES

Balance at January 1, 2017 . . . . . Transfer to statutory reserve (a) . . . Acquisition of subsidiaries by the Remaining Group and deemed as contribution to the Group (b-1) . . Currency translation differences . . . Balance at December 31, 2017 . . . Balance at January 1, 2018 . . . . . Transfer to statutory reserve (a) . . . Acquisition of subsidiaries by the Remaining Group and deemed as contribution to the Group (b-1) . . Currency translation differences . . . Balance at December 31, 2018 . . . Balance at January 1, 2019 . . . . . Transfer to statutory reserve (a) . . . Currency translation differences . . . Balance at December 31, 2019 . . . Balance at January 1, 2020 . . . . . Transfer to statutory reserve (a) . . . Effect of group reorganisation in acquiring subsidiaries from the then shareholder of the Group (b-2). . . . . . . . . . . . . . . . . . . Currency translation differences . . . Balance at June 30, 2020. . . . . . . (Unaudited) Balance at January 1, 2019 . . . . . Transfer to statutory reserve (a) . . . Currency translation differences . . . Balance at June 30, 2019. . . . . . .	Statutory reserves RMB’000 1,302 829 – – 2,131 2,131 26,995 – – 29,126 29,126 62,844 – 91,970 91,970 3,389 – – 95,359 29,126 40,281 – 69,407	Recapitalisation reserves (b) RMB’000 171,243 – 8,904 – 180,147 180,147 – (4,466) – 175,681 175,681 – – 175,681 175,681 – 30,585 – 206,266 175,681 – – 175,681	Exchange reserves RMB’000 – – – (19) (19) (19) – – 93 74 74 – 160 234 234 – – 207 441 74 – 22 96	Total RMB’000 172,545 829 8,904 (19) 182,259 182,259 26,995 (4,466) 93 204,881 204,881 62,844 160 267,885 267,885 3,389 30,585 207 302,066 204,881 40,281 22 245,184

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

ACCOUNTANT’S REPORT

APPENDIX I

(a) Statutory reserves

In accordance with relevant rules and regulations in the PRC and the Company’s Articles of Association, companies incorporated in PRC are required to transfer no less than 10% of their profit after taxation calculated under PRC accounting standards and regulations to the statutory reserve fund, until the accumulated total of the fund reaches 50% of their registered capital. The statutory reserve fund can only be used, upon approval by the relevant authority, to offset previous years’ losses or to increase the capital of respective companies.

(b) Recapitalisation reserves

(b-1) During the years ended December 31, 2017, 2018 and 2019, the Remaining Group acquired the entire equity interests of five subsidiaries engaged in the [ REDACTED ] Business, from third parties. The net assets of these acquired subsidiaries amounted to RMB10,904,000, RMB1,034,000 and RMB500,000 for the years ended December 31, 2017, 2018 and 2019, respectively. These subsidiaries have been combined in the Historical Financial Information upon the acquisition by the Remaining Group and accounted for as deemed as contribution from the Remaining Group. The difference between the consideration paid by the Remaining Group and the share capital of the acquired subsidiaries were recognised as recapitalisation reserve.
(b-2) As disclosed in Note 1.2(a), the Group acquired the entire equity interests of certain subsidiaries engaged in [ REDACTED ] Business at a cash consideration of RMB32,791,000 from the Remaining Group during the Reorganisation. The difference between the cash consideration paid and the acquired net assets is deemed as distribution to the Remaining Group, the share capital and non-controlling interests of the acquired subsidiaries were eliminated against the recapitalisation reserves.

As at June 30, 2020, consideration of RMB28,100,000 was paid and RMB4,691,000 was subsequently paid in August.

21 TRADE AND OTHER PAYABLES

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 53,695 112,785 183,616 343,410 507,461 578,841 397,105 620,246 762,457 707 – 530 34,135 200,107 333,335 34,842 200,107 333,865	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 53,695 112,785 183,616 343,410 507,461 578,841 397,105 620,246 762,457 707 – 530 34,135 200,107 333,335 34,842 200,107 333,865	As at June 30, 2020
2017 RMB’000 53,695 343,410 397,105 707 34,135 34,842	2018 RMB’000 112,785 507,461 620,246 – 200,107 200,107
		RMB’000 57,806 726,413
		784,219
		4,095 452,550
		456,645

– I-43 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 482,700 571,489 780,833 231,226 279,183 307,011 43,271 82,900 161,242 69,505 93,522 92,506 826,702 1,027,094 1,341,592 355,896 438,066 531,201 – – – 1,614,545 2,285,513 2,969,115	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 482,700 571,489 780,833 231,226 279,183 307,011 43,271 82,900 161,242 69,505 93,522 92,506 826,702 1,027,094 1,341,592 355,896 438,066 531,201 – – – 1,614,545 2,285,513 2,969,115	As at June 30, 2020
2017 RMB’000 482,700 231,226 43,271 69,505 826,702 355,896 – 1,614,545	2018 RMB’000 571,489 279,183 82,900 93,522 1,027,094 438,066 – 2,285,513
		RMB’000 732,039 313,396 230,077 97,818
		1,373,330
		259,394 7,329
		2,880,917

(a) As at December 31, 2017, 2018 and 2019 and June 30, 2020, the ageing analysis of the trade and notes payables based on goods and services received were are follows:

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 428,424 810,762 1,066,737 3,464 9,309 20,429 58 253 8,990 1 29 166 431,947 820,353 1,096,322	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 428,424 810,762 1,066,737 3,464 9,309 20,429 58 253 8,990 1 29 166 431,947 820,353 1,096,322	As at June 30,
2017 RMB’000 428,424 3,464 58 1 431,947	2018 RMB’000 810,762 9,309 253 29 820,353	2020
		RMB’000 1,220,275 9,892 10,445 252
		1,240,864

(b) The amounts mainly represented utilities expenses temporarily collected from the property owners to be paid to related service providers and rental income collected from leasees to be returned to the property owners.
(c) As at December 31, 2017, 2018 and 2019 and June 30, 2020, trade and other payables were denominated in RMB and the carrying amounts of trade and other payables approximate their fair values.

– I-44 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

ACCOUNTANT’S REPORT

APPENDIX I

22 LEASES

(a) Right-of-use assets

As at January 1, 2017
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2017
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at December 31, 2017
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2018
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at December 31, 2018
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2019
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at December 31, 2019
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Properties
RMB’000
7,356
–
7,356
7,356
13,636
(7,781)
13,211
20,992
(7,781)
13,211
13,211
23,544
(15,344)
21,411
36,543
(15,132)
21,411
21,411
21,330
(16,897)
25,844
45,113
(19,269)
25,844

– I-45 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

Six months ended June 30, 2020 Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Closing net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . As at June 30, 2020 Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Unaudited) Six months ended June 30, 2019 Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Closing net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . As at June 30, 2019 Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net book amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Properties
	RMB’000 25,844 2,619 (7,060)
	21,403
	41,506 (20,103)
	21,403

	21,411 9,473 (8,008)
	22,876
	40,690 (17,814)
	22,876

(b) Lease liabilities

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 8,826 13,690 13,724 4,704 8,304 12,750 13,530 21,994 26,474	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 8,826 13,690 13,724 4,704 8,304 12,750 13,530 21,994 26,474	As at June 30, 2020
2017 RMB’000 8,826 4,704 13,530	2018 RMB’000 13,690 8,304 21,994
		RMB’000 12,436 9,714
		22,150

– I-46 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

(c) Amounts recognised in the combined statement of comprehensive income

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 7,781 15,344 16,897 917 1,512 1,574 70,267 98,284 124,010	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 7,781 15,344 16,897 917 1,512 1,574 70,267 98,284 124,010	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 7,781 917 70,267	2018 RMB’000 15,344 1,512 98,284	2019 RMB’000 (Unaudited) 8,008 813 55,268	2020
			RMB’000 7,060

			756

			60,290

The total cash outflow for leases during the year ended 31 December 2017, 2018 and 2019 and the six months ended June 30, 2019 and 2020 amounted to RMB78,646,000, RMB114,876,000, RMB142,434,000, RMB64,161,000 and RMB67,989,000, respectively.

23 DEFERRED INCOME TAX

The analysis of deferred tax assets is as follows:

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 7,281 26,948 21,222 31,130 28,626 45,058 38,411 55,574 66,280	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 7,281 26,948 21,222 31,130 28,626 45,058 38,411 55,574 66,280	As at June 30, 2020
2017 RMB’000 7,281 31,130 38,411	2018 RMB’000 26,948 28,626 55,574
		RMB’000 22,089 56,954
		79,043

– I-47 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

The movement in deferred income tax assets during the Track Record Period is as follows:

As at January 1, 2017. . . . . . . . . Credited/(charged) to the combined statements of comprehensive income . . . . . . . . . . . . . . . . . At December 31, 2017. . . . . . . . . As at January 1, 2018. . . . . . . . . Credited to the combined statements of comprehensive income . . . . . . At December 31, 2018. . . . . . . . . As at January 1, 2019. . . . . . . . . Credited/(charged) to the combined statements of comprehensive income . . . . . . . . . . . . . . . . . At December 31, 2019. . . . . . . . . As at January 1, 2020. . . . . . . . . Credited to the combined statements of comprehensive income . . . . . . As at June 30, 2020 . . . . . . . . . . (Unaudited) As at January 1, 2019. . . . . . . . . Credited/(charged) to the combined statements of comprehensive income . . . . . . . . . . . . . . . . . As at June 30, 2019 . . . . . . . . . .	Impairment Provision RMB’000 15,266 10,703 25,969 25,969 4,298 30,267 30,267 11,666 41,933 41,933 11,612 53,545 30,267 6,226 36,493	Tax losses RMB’000 46,191 (33,830) 12,361 12,361 12,800 25,161 25,161 (973) 24,188 24,188 1,124 25,312 25,161 445 25,606	Others RMB’000 – 81 81 81 65 146 146 13 159 159 27 186 146 (18) 128	Total RMB’000 61,457 (23,046) 38,411 38,411 17,163 55,574 55,574 10,706 66,280 66,280 12,763 79,043 55,574 6,653 62,227

According to CIT Law, a withholding income tax of 10% will be levied on the immediate holding companies outside the PRC when their PRC subsidiaries declare dividends out of profits earned after 1 January 2008. A lower 5% withholding income tax rate may be applied when the immediate holding companies of the PRC subsidiaries are established in Hong Kong and fulfil requirements under the tax treaty agreements between the relevant authorities of the PRC and Hong Kong.

As at December 31, 2017, 2018 and 2019 and 30 June 2020, the Group has unrecognised deferred income tax liabilities arising from undistributed profits from the Group’s subsidiary in the PRC to its immediate holding company in Hong Kong. No provision has been made in respect of such withholding tax as the directors have confirmed that such profits will not be distributed in the foreseeable future. Unremitted earnings in this respect amounted to RMB1,548,000, RMB28,808,000, RMB121,631,000, and RMB235,175,000, respectively.

– I-48 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

24 BORROWINGS

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 50,000 150,000 2,950 60,000 – – 110,000 150,000 2,950	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 50,000 150,000 2,950 60,000 – – 110,000 150,000 2,950	As at June 30, 2020
2017 RMB’000 50,000 60,000 110,000	2018 RMB’000 150,000 – 150,000
		RMB’000 2,950 –
		2,950

(a) As at December 31, 2017, the Group’s bank borrowing was guaranteed by a fellow subsidiary and the Group’s other borrowing was guaranteed by trade receivables of the Remaining Group of RMB333,388,000.

As at December 31, 2018, the Group’s bank borrowings were guaranteed by a fellow subsidiary.

As at December 31, 2019 and June 30, 2020, the Group’s bank borrowing was guaranteed by completed properties held for sale of the Remaining Group of RMB10,000,000.

Guarantees from related parties were subsequently released in August 2020 upon the repayment of the borrowings.

(b) Other borrowings represented loans from financial institutions.
(c) The weighted average effective interest rate for the years ended 31 December 2017, 2018 and 2019 and the six months ended June 30, 2019 and 2020 were 8.86%, 8.57%, 8.01%, 8.95%, and 7.48%, respectively.

25 CASH FLOW INFORMATION

(a) Cash generated from/(used in) operations

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 136,942 310,292 1,229,185 12,662 13,122 6,430 10,862 15,400 20,758 7,781 15,344 16,897 146 279 316 37 119 194 43,800 18,206 48,210 212,230 372,762 1,321,990 (924,611) (1,101,156) (2,160,583) 366,227 1,093,951 (205,791) 543,512 670,968 683,602 (1,884) 1,782 – 195,474 1,038,307 (360,782)	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 136,942 310,292 1,229,185 12,662 13,122 6,430 10,862 15,400 20,758 7,781 15,344 16,897 146 279 316 37 119 194 43,800 18,206 48,210 212,230 372,762 1,321,990 (924,611) (1,101,156) (2,160,583) 366,227 1,093,951 (205,791) 543,512 670,968 683,602 (1,884) 1,782 – 195,474 1,038,307 (360,782)	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 136,942 12,662 10,862 7,781 146 37 43,800 212,230 (924,611) 366,227 543,512 (1,884) 195,474	2018 RMB’000 310,292 13,122 15,400 15,344 279 119 18,206 372,762 (1,101,156) 1,093,951 670,968 1,782 1,038,307	2019 RMB’000 (Unaudited) 538,613 5,662 10,159 8,008 152 31 25,669 588,294 (1,046,548) (273,249) 231,992 – (499,511)	2020
			RMB’000 1,500,241 866 10,934 7,060 166 97 46,919
			1,566,283
			(1,152,044) (261,913) (95,527) (4,914)
			51,885

– I-49 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

(b) Net debt reconciliation

As at January 1, 2017 . . . . . . . . . . . . . . . . . Additions of leases . . . . . . . . . . . . . . . . . . . Accrued interest expenses . . . . . . . . . . . . . . . Cash flows . . . . . . . . . . . . . . . . . . . . . . . . As at December 31, 2017 . . . . . . . . . . . . . . . As at January 1, 2018 . . . . . . . . . . . . . . . . . Additions of leases . . . . . . . . . . . . . . . . . . . Accrued interest expenses . . . . . . . . . . . . . . . Cash flows . . . . . . . . . . . . . . . . . . . . . . . . As at December 31, 2018 . . . . . . . . . . . . . . . As at January 1, 2019 . . . . . . . . . . . . . . . . . Additions of leases . . . . . . . . . . . . . . . . . . . Accrued interest expenses . . . . . . . . . . . . . . . Cash flows . . . . . . . . . . . . . . . . . . . . . . . . As at December 31, 2019 . . . . . . . . . . . . . . . As at January 1, 2020 . . . . . . . . . . . . . . . . . Additions of leases . . . . . . . . . . . . . . . . . . . Accrued interest expenses . . . . . . . . . . . . . . . Cash flows . . . . . . . . . . . . . . . . . . . . . . . . As at June 30, 2020 . . . . . . . . . . . . . . . . . . . (Unaudited) As at January 1, 2019 . . . . . . . . . . . . . . . . . Additions of leases . . . . . . . . . . . . . . . . . . . Accrued interest expenses . . . . . . . . . . . . . . . Cash flows . . . . . . . . . . . . . . . . . . . . . . . . As at June 30, 2019 . . . . . . . . . . . . . . . . . . . 26 COMMITMENTS (a) Capital commitments	Borrowings RMB’000 123,000 – – (13,000) 110,000 110,000 – – 40,000 150,000 150,000 – – (147,050) 2,950 2,950 – – – 2,950 150,000 – – (150,000) –	Lease liabilities RMB’000 7,356 13,636 917 (8,379) 13,530 13,530 23,544 1,512 (16,592) 21,994 21,994 21,330 1,574 (18,424) 26,474 26,474 2,619 756 (7,699) 22,150 21,994 9,473 813 (8,893) 23,387	Total
			RMB’000 130,356 13,636 917 (21,379)
			123,530

			123,530 23,544 1,512 23,408
			171,994

			171,994 21,330 1,574 (165,474)
			29,424

			29,424 2,619 756 (7,699)
			25,100

			171,994 9,473 813 (158,893)
			23,387

Up to 1 year . . . . . . . . . . . . . . .	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 5,641 – –	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 5,641 – –	As at June 30, 2020
	2017 RMB’000 5,641	2018 RMB’000 –
			RMB’000 –

Capital commitment represent the Group’s payment for acquisition of vehicles as stipulated in contract.

– I-50 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

ACCOUNTANT’S REPORT

APPENDIX I

27 RELATED PARTY TRANSACTIONS

(a) Transactions with related parties

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,935,397 2,439,682 2,658,346 7,908 86,099 87,514 1,943,305 2,525,781 2,745,860 103,475 139,783 111,614 33,219 48,576 59,659	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,935,397 2,439,682 2,658,346 7,908 86,099 87,514 1,943,305 2,525,781 2,745,860 103,475 139,783 111,614 33,219 48,576 59,659	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 1,935,397 7,908 1,943,305 103,475 33,219	2018 RMB’000 2,439,682 86,099 2,525,781 139,783 48,576	2019 RMB’000 (Unaudited) 1,316,549 32,963 1,349,512 45,056 30,153	2020
			RMB’000 1,597,434 40,176
			1,637,610

			63,516

			40,498

All of the transactions above were carried out in the normal course of the Group’s business and on terms as agreed between the transacting parties.

(b) Guarantees from the related parties

Guarantees provided by the companies controlled by the Group’s ultimate holding company are disclosed in Note 24.

(c) Balances with related parties

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 984,248 1,910,364 3,418,277 4,186 61,066 97,365 988,434 1,971,430 3,515,642	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 984,248 1,910,364 3,418,277 4,186 61,066 97,365 988,434 1,971,430 3,515,642	As at June 30, 2020
2017 RMB’000 984,248 4,186 988,434	2018 RMB’000 1,910,364 61,066 1,971,430
		RMB’000 3,812,858 99,763
		3,912,621

– I-51 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANT’S REPORT

As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,128 31,283 24,900 – 526 7,216 1,128 31,809 32,116 8,748 5,113 5,756 As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 53,695 112,527 176,523 – 258 7,093 53,695 112,785 183,616 707 – 530	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 1,128 31,283 24,900 – 526 7,216 1,128 31,809 32,116 8,748 5,113 5,756 As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 53,695 112,527 176,523 – 258 7,093 53,695 112,785 183,616 707 – 530	As at June 30, 2020
		RMB’000 103,953 2,976
		106,929
		6,030

		As at June 30, 2020
2017 RMB’000 53,695 – 53,695 707	2018 RMB’000 112,527 258 112,785 –
		RMB’000 56,925 881
		57,806

		4,095

(i) The above trade and notes receivable, prepayments and trade and notes payable are trade in nature, interest-free and repayable according to terms in contracts.

Amounts due from related parties (ii) – Controlled by the Group’s ultimate holding company . . . . . . . . . . .	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 569,639 1,489,103 1,349,686	As at December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 569,639 1,489,103 1,349,686	As at June 30, 2020
	2017 RMB’000 569,639	2018 RMB’000 1,489,103
			RMB’000 1,287,300

(ii) Amounts due from related parties are non-trade in nature and the amounts have been fully settled in September 2020. The amounts are unsecured, interest-free and payable on demand.

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ACCOUNTANT’S REPORT

APPENDIX I

(d) Key management compensation

Compensations for key management other than those for directors as disclosed in Note 9 is set out below:

Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 2,084 3,475 4,545 96 112 120 2,180 3,587 4,665	Year ended December 31, 2017 2018 2019 RMB’000 RMB’000 RMB’000 2,084 3,475 4,545 96 112 120 2,180 3,587 4,665	Six months ended June 30,	Six months ended June 30,
2017 RMB’000 2,084 96 2,180	2018 RMB’000 3,475 112 3,587	2019 RMB’000 2,274 59 2,333	2020
			RMB’000 2,256 10
			2,266

28 SUBSIDIARIES

Particulars of the principal subsidiaries of the Group as at December 31, 2017,2018 and 2019 and June 30, 2020 and as at date of this report, are set out as follows;

Name of the Subsidiaries Place and date of incorporation Directly held by the Company Eagle Investment BVI, July 20, 2020 Indirectly held by the Company Knight Honour BVI November 5, 2019 Oriental Joy BVI November 5, 2019 Success Will Hong Kong July 5, 2007 Fortune Ascent Hong Kong October 6, 2017 Jinbi Property Management The PRC, September 10, 1997 Wuhan Jinbi Jiayuan Property Management Co., Ltd. The PRC, March 3, 2006 Guiyang Zhongyu Property Management Co., Ltd. The PRC, June 28, 2011 Chongqing Tongjing Property Services Co., Ltd. The PRC, April 29, 2007	Registered/ issued and paid-up capital USD1 USD1 USD1 HKD1,000 HKD1 RMB177,600,000/ RMB177,600,000 RMB3,000,000/ RMB3,000,000 RMB3,000,000/ RMB600,000 RMB5,000,000/ RMB5,000,000	Principal activities and place of operation Investment holding in BVI Investment holding in BVI Investment holding in BVI Investment holding in Hong Kong Property management services in Hong Kong Property management services in the PRC Property management services in the PRC Property management services in the PRC Property management services in the PRC	Equity interest held as at December 31, June 30, 2020 Date of this report 2017 2018 2019 Note N/A N/A N/A N/A 100% (i) N/A N/A N/A N/A 100% (i) N/A N/A N/A N/A 100% (i) 100% 100% 100% 100% 100% (ii) 100% 100% 100% 100% 100% (ii) 100% 100% 100% 100% 100% (iii) 100% 100% 100% 100% 100% (iii) 100% 100% 100% 100% 100% (iv) 100% 100% 100% 100% 100% (iv)	Equity interest held as at December 31, June 30, 2020 Date of this report 2017 2018 2019 Note N/A N/A N/A N/A 100% (i) N/A N/A N/A N/A 100% (i) N/A N/A N/A N/A 100% (i) 100% 100% 100% 100% 100% (ii) 100% 100% 100% 100% 100% (ii) 100% 100% 100% 100% 100% (iii) 100% 100% 100% 100% 100% (iii) 100% 100% 100% 100% 100% (iv) 100% 100% 100% 100% 100% (iv)
			December 31, 2017 2018 2019 N/A N/A N/A N/A N/A N/A N/A N/A N/A 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	June 30, 2020 N/A N/A N/A 100% 100% 100% 100% 100% 100%

(i) No audited statutory financial statements have been prepared for these companies as they were newly incorporated and there are no statutory audit requirements under the applicable law in the place of incorporation of the entity.

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ACCOUNTANT’S REPORT

APPENDIX I

(ii) The financial statements of Success Will for years ended December 31, 2017, 2018 and 2019 and of Fortune Ascent for the years ended December 31, 2018 and 2019 were prepared in accordance with Hong Kong Financial Reporting Standards and audited by PricewaterhouseCoopers.
(iii) The financial statements of these companies for the two years ended December 31, 2017 and 2018 were prepared in accordance with Chinese Accounting Standards and audited by various certified public accountants registered in the PRC.
(iv) The financial statements of these companies for the three years ended December 31, 2017, 2018 and 2019 were prepared in accordance with Chinese Accounting Standards and audited by various certified public accountants registered in the PRC.

29 EVENT AFTER THE BALANCE SHEET DATE

Saved as disclosed elsewhere in this report, subsequent to June 30, 2020, the following subsequent events took

place:

(a) Pursuant to a resolution passed by the directors of the Group’s subsidiary, Success Will, dividend to the Remaining Group of RMB355,008,000 was declared and settled in August 2020.
(b) In September 2020, the Group entered into agreements to acquire 100% equity interests of four property management companies and 51% equity interests of one property management company at consideration of RMB118,700,000 in total.
(c) Pursuant to the written resolutions of Shareholders passed on [●], 2020, conditional on the share premium account of our Company being credited as a result of the [ REDACTED ], the directors are authorised to capitalise an amount of US$[ REDACTED ] standing to the credit of the share premium account of the Company by applying such sum towards the paying up in full at par a total of [ REDACTED ] shares for issue and allotment to holders of shares whose names appear on the register of members of the Company on the date of passing such resolutions in proportion (as near as possible without involving fractions so that no fraction of a share shall be issued and allotted) to their then existing respective shareholdings in our Company.

III SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company or any of the companies now comprising the Group in respect of any period subsequent to June 30, 2020 and up to the date of this report. Save for the distribution of dividends disclosed in Note 29(a), no dividend or distribution has been declared or made by the Company or any of the companies now comprising the Group in respect of any period subsequent to June 30, 2020.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

The information set out in this Appendix II does not form part of the “Accountant’s Report” from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, the reporting accountant of the Company, as set forth in Appendix I to this Document, and is included herein for illustrative purpose only.

The unaudited pro forma financial information should be read in conjunction with the section entitled “Financial Information” in this Document and the “Accountant’s Report” set out in Appendix I to this Document.

A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

The following is an illustrative and unaudited pro forma statement of adjusted net tangible assets of the Group which has been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the [ REDACTED ] and the Capitalization Issue on the combined net tangible assets of the Group attributable to owners of the Company as at June 30, 2020 as if the [ REDACTED ] and the Capitalization Issue had taken place on that date.

This unaudited pro forma adjusted net tangible assets of the Group has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the net combined tangible assets of the Group had the [ REDACTED ] and the Capitalization Issue been completed as at June 30, 2020 or at any future date.

Based on an [REDACTED] of HK$[REDACTED] per [REDACTED] Based on an [REDACTED] of HK$[REDACTED] per [REDACTED]	Audited combined net tangible assets attributable to owners of the Company as at June 30, 2020(1) Estimated net proceeds from the [REDACTED](2) RMB’000 RMB’000 [2,870,162] [REDACTED] [2,870,162] [REDACTED]	Audited combined net tangible assets attributable to owners of the Company as at June 30, 2020(1) Estimated net proceeds from the [REDACTED](2) RMB’000 RMB’000 [2,870,162] [REDACTED] [2,870,162] [REDACTED]	Effect of the Reorganization(3)	Unaudited pro forma adjusted net tangible assets attributable to owners of the Company as at June 30, 2020	Unaudited pro forma adjusted net tangible assets per Share
	RMB’000 [2,870,162] [2,870,162]	RMB’000 [REDACTED] [REDACTED]	RMB’000 [REDACTED] [REDACTED]	RMB’000 [REDACTED] [REDACTED]	RMB(3) HK$(4) [REDACTED] [REDACTED] [REDACTED] [REDACTED]

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Notes:

(1) The audited combined net tangible assets attributable to owners of the Company as at June 30, 2020 is extracted from the Accountant’s Report set out in Appendix I to this Document, which is based on the audited combined net assets of the Group attributable to owners of the Company as at June 30, 2020 of RMB[2,870,429,000] with adjustments for intangible assets as at June 30, 2020 of RMB[267,000] respectively.
(2) The estimated net proceeds from the [ REDACTED ] of [ REDACTED ] (excluding [ REDACTED ]) are based on the indicative [ REDACTED ] of HK$[ REDACTED ] and HK$[ REDACTED ] per [ REDACTED ] after deduction of the estimated [ REDACTED ] fees and other related expenses payable by the Company, and takes no account of any Shares which may be issued pursuant to the exercise of the [ REDACTED ], any Shares which may be issued or repurchased by the Company pursuant to the general mandates granted to the Directors to issue or repurchase Shares as described in the section headed “Share Capital” in this Document.
(3) As part of the Reorganization, the Group acquired certain subsidiaries from and disposed certain subsidiaries to the Remaining Group after June 30, 2020 for cash. The difference between the cash consideration paid to and received from the Remaining Group and the underlying subsidiaries acquired and disposed is accounted for as deemed distribution to and contribution from the Remaining Group, respectively, and has been reflected as an adjustment to this unaudited pro forma financial information.
(4) The unaudited pro forma adjusted net tangible assets per Share is arrived at after the adjustments referred to in the preceding paragraphs and on the basis that [ REDACTED ] Shares were in issue assuming that the [ REDACTED ] and the Capitalization Issue have been completed on June 30, 2020 but takes no account of any Shares which may be issued pursuant to the exercise of the [ REDACTED ], any Shares which may be issued or repurchased by the Company pursuant to the general mandates granted to the Directors to issue or repurchase Shares as described in the section headed “Share Capital” in this document.
(5) For the purpose of this unaudited pro forma statement of adjusted net tangible assets, the balance stated in Renminbi are converted into Hong Kong dollars at the rate of RMB1.00 to HK$[0.8722]. No representation is made that Renminbi amounts have been, could have been or may be converted into Hong Kong dollars, or vice versa, at that rate.
(6) The unaudited pro forma statement of adjusted net tangible assets has not taken into account the dividend of RMB355,008,000 which was declared by other companies comprising the Group in August 2020. Had the dividends been taken into account, the unaudited pro forma adjusted net tangible assets per share would have been RMB[ REDACTED ] (HK$[ REDACTED ]) and RMB[ REDACTED ] (HK$[ REDACTED ]) per Share based on the [ REDACTED ] of HK$[ REDACTED ] and HK$[ REDACTED ] per Share, respectively.
(7) Except as disclosed above, no adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to June 30, 2020.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

[ REDACTED ]

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

[ REDACTED ]

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

[ REDACTED ]

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

Set out below is a summary of certain provisions of the Memorandum and Articles of Association of the Company and of certain aspects of Cayman company law.

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 13 March 2020 under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands (the “Companies Law”). The Company’s constitutional documents consist of its Memorandum of Association (the “Memorandum”) and its Articles of Association (the “Articles”).

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum states, inter alia, that the liability of members of the Company is limited to the amount, if any, for the time being unpaid on the shares respectively held by them and that the objects for which the Company is established are unrestricted (including acting as an investment company), and that the Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided in section 27(2) of the Companies Law and in view of the fact that the Company is an exempted company that the Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands.
(b) The Company may by special resolution alter its Memorandum with respect to any objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were conditionally adopted on [●] with effect upon [ REDACTED ]. The following is a summary of certain provisions of the Articles:

(a) Shares

(i) Classes of shares

The share capital of the Company consists of ordinary shares.

(ii) Variation of rights of existing shares or classes of shares

Subject to the Companies Law, if at any time the share capital of the Company is divided into different classes of shares, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

holders of the shares of that class. To every such separate general meeting the provisions of the Articles relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or by proxy (whatever the number of shares held by them) shall be a quorum. Every holder of shares of the class shall be entitled to one vote for every such share held by him.

Any special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(iii) Alteration of capital

The Company may by ordinary resolution of its members:

(i) increase its share capital by the creation of new shares;
(ii) consolidate all or any of its capital into shares of larger amount than its existing shares;
(iii) divide its shares into several classes and attach to such shares any preferential, deferred, qualified or special rights, privileges, conditions or restrictions as the Company in general meeting or as the directors may determine;
(iv) subdivide its shares or any of them into shares of smaller amount than is fixed by the Memorandum; or
(v) cancel any shares which, at the date of passing of the resolution, have not been taken and diminish the amount of its capital by the amount of the shares so cancelled.

The Company may reduce its share capital or any capital redemption reserve or other undistributable reserve in any way by special resolution.

(iv) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form prescribed by The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) or in such other form as the board may approve and which may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the board may approve from time to time.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Notwithstanding the foregoing, for so long as any shares are listed on the Stock Exchange, titles to such listed shares may be evidenced and transferred in accordance with the laws applicable to and the rules and regulations of the Stock Exchange that are or shall be applicable to such listed shares. The register of members in respect of its listed shares (whether the principal register or a branch register) may be kept by recording the particulars required by Section 40 of the Companies Law in a form otherwise than legible if such recording otherwise complies with the laws applicable to and the rules and regulations of the Stock Exchange that are or shall be applicable to such listed shares.

The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect of that share.

The board may, in its absolute discretion, at any time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

The board may decline to recognise any instrument of transfer unless a fee (not exceeding the maximum sum as the Stock Exchange may determine to be payable) determined by the Directors is paid to the Company, the instrument of transfer is properly stamped (if applicable), it is in respect of only one class of share and is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

The registration of transfers may be suspended and the register closed on giving notice by advertisement in any newspaper or by any other means in accordance with the requirements of the Stock Exchange, at such times and for such periods as the board may determine. The register of members must not be closed for periods exceeding in the whole thirty (30) days in any year.

Subject to the above, fully paid shares are free from any restriction on transfer and free of all liens in favour of the Company.

(v) Power of the Company to purchase its own shares

The Company is empowered by the Companies Law and the Articles to purchase its own shares subject to certain restrictions and the board may only exercise this power on behalf of the Company subject to any applicable requirements imposed from time to time by the Stock Exchange.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender must be limited to a maximum price determined by the Company in general meeting. If purchases are by tender, tenders must be made available to all members alike.

The board may accept the surrender for no consideration of any fully paid share.

(vi) Power of any subsidiary of the Company to own shares in the Company

There are no provisions in the Articles relating to ownership of shares in the Company by a subsidiary.

(vii) Calls on shares and forfeiture of shares

The board may from time to time make such calls upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium). A call may be made payable either in one lump sum or by installments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding twenty per cent. (20%) per annum as the board may agree to accept from the day appointed for the payment thereof to the time of actual payment, but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the monies uncalled and unpaid or installments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) as the board may decide.

If a member fails to pay any call on the day appointed for payment thereof, the board may serve not less than fourteen (14) clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until the date of actual payment at such rate not exceeding twenty per cent. (20%) per annum as the board determines.

(b) Directors

(i) Appointment, retirement and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then 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. The Directors to retire by rotation shall include any Director who wishes to retire and not offer himself for re-election. Any further Directors so to retire shall be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

Neither a Director nor an alternate Director is required to hold any shares in the Company by way of qualification. Further, there are no provisions in the Articles relating to retirement of Directors upon reaching any age limit.

The Directors have the power to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director appointed 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 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 re-election.

A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) and members of the Company may by ordinary resolution appoint another in his place. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

The office of director shall be vacated if:

(aa) he resigns by notice in writing delivered to the Company;
(bb) he becomes of unsound mind or dies;
(cc) without special leave, he is absent from meetings of the board for six (6) consecutive months, and the board resolves that his office is vacated;
(dd) he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;
(ee) he is prohibited from being a director by law; or
(ff) he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles.

The board may appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period and upon such terms as the board may determine and the board may revoke or terminate any of such appointments. The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed must, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(ii) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Law and the Memorandum and Articles and to any special rights conferred on the holders of any shares or class of shares, any share may be issued (a) with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Directors may determine, or (b) on terms that, at the option of the Company or the holder thereof, it is liable to be redeemed.

The board may issue warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may determine.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Subject to the provisions of the Companies Law and the Articles and, where applicable, the rules of the Stock Exchange and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in the Company are at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount to their nominal value.

Neither the Company nor the board is obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(iii) Power to dispose of the assets of the Company or any of its subsidiaries

There are no specific provisions in the Articles relating to the disposal of the assets of the Company or any of its subsidiaries. The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Articles or the Companies Law to be exercised or done by the Company in general meeting.

(iv) Borrowing powers

The board may exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets and uncalled capital of the Company and, subject to the Companies Law, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

(v) Remuneration

The ordinary remuneration of the Directors is to be determined by the Company in general meeting, such sum (unless otherwise directed by the resolution by which it is voted) to be divided amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. The Directors are also entitled to be prepaid or repaid all travelling, hotel and incidental

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

expenses reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration and such other benefits and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or past Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex-employees of the Company and their dependents or any class or classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependents are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

The board may resolve to capitalise all or any part of any amount for the time being standing to the credit of any reserve or fund (including a share premium account and the profit and loss account) whether or not the same is available for distribution by applying such sum in paying up unissued shares to be allotted to (i) employees (including directors) of the Company and/or its affiliates (meaning any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the Company) upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

been adopted or approved by the members in general meeting, or (ii) any trustee of any trust to whom shares are to be allotted and issued by the Company in connection with the operation of any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the members in general meeting.

(vi) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(vii) Loans and provision of security for loans to Directors

The Company must not make any loan, directly or indirectly, to a Director or his close associate(s) if and to the extent it would be prohibited by the Companies Ordinance (Chapter 622 of the laws of Hong Kong) as if the Company were a company incorporated in Hong Kong.

(viii) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company (except that of the auditor of the Company) in conjunction with his office of Director for such period and upon such terms as the board may determine, and may be paid such extra remuneration therefor in addition to any remuneration provided for by or pursuant to the Articles. A Director may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. The board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

No Director or proposed or intended Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company must declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board approving any contract or arrangement or other proposal in which he or any of his close associates is materially interested, but this prohibition does not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving to such Director or his close associate(s) any security or indemnity in respect of money lent by him or any of his close associates or obligations incurred or undertaken by him or any of his close associates at the request of or for the benefit of the Company or any of its subsidiaries;
(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his close associate(s) has himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;
(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director or his close associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;
(dd) any contract or arrangement in which the Director or his close associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company; or
(ee) any proposal or arrangement concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors, his close associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his close associate(s), as such any privilege or advantage not accorded generally to the class of persons to which such scheme or fund relates.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

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(c) Proceedings of the Board

The board may meet for the despatch of business, adjourn and otherwise regulate its meetings as it considers appropriate. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an additional or casting vote.

(d) Alterations to constitutional documents and the Company’s name

The Articles may be rescinded, altered or amended by the Company in general meeting by special resolution. The Articles state that a special resolution shall be required to alter the provisions of the Memorandum, to amend the Articles or to change the name of the Company.

(e) Meetings of members

(i) Special and ordinary resolutions

A special resolution of the Company must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice has been duly given in accordance with the Articles.

Under the Companies Law, a copy of any special resolution must be forwarded to the Registrar of Companies in the Cayman Islands within fifteen (15) days of being passed.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice has been duly given in accordance with the Articles.

(ii) Voting rights and right to demand a poll

Subject to any special rights or restrictions as to voting for the time being attached to any shares, at any general meeting on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share. A member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

At any general meeting a resolution put to the vote of the meeting is to be decided by way of a poll save that the chairman of the meeting may in good faith, allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands in which case every member present in person (or being a corporation, is present by a duly authorized representative), or by proxy(ies) shall have one vote provided that where more than one proxy is appointed by a member which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands.

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorise such person or persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised pursuant to this provision shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) as if such person was the registered holder of the shares of the Company held by that clearing house (or its nominee(s)) including, where a show of hands is allowed, the right to vote individually on a show of hands.

Where the Company has any knowledge that any shareholder is, under the rules of the Stock Exchange, required to abstain from voting on any particular resolution of the Company or restricted to voting only for or only against any particular resolution of the Company, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.

(iii) Annual general meetings and extraordinary general meetings

The Company must hold an annual general meeting of the Company every year within a period of not more than fifteen (15) months after the holding of the last preceding annual general meeting or a period of not more than eighteen (18) months from the date of adoption of the Articles, unless a longer period would not infringe the rules of the Stock Exchange.

Extraordinary general meetings may be convened on the requisition of one or more shareholders holding, at the date of deposit of the requisition, not less than one-tenth of the paid up capital of the Company having the right of voting at general meetings. Such requisition shall be made in writing to the board or the secretary for the purpose of requiring an extraordinary general meeting to be called by the board for the transaction of any business specified in such requisition. Such meeting shall be held within 2 months after the deposit of such requisition. If within 21 days of such deposit, the board fails to

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

proceed to convene such meeting, the requisitionist(s) himself/herself (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.

(iv) Notices of meetings and business to be conducted

An annual general meeting must be called by notice of not less than twenty-one (21) clear days and not less than twenty (20) clear business days. All other general meetings must be called by notice of at least fourteen (14) clear days and not less than ten (10) clear business days. The notice is exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and must specify the time and place of the meeting and particulars of resolutions to be considered at the meeting and, in the case of special business, the general nature of that business.

In addition, notice of every general meeting must be given to all members of the Company other than to such members as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, and also to, among others, the auditors for the time being of the Company.

Any notice to be given to or by any person pursuant to the Articles may be served on or delivered to any member of the Company personally, by post to such member’s registered address or by advertisement in newspapers in accordance with the requirements of the Stock Exchange. Subject to compliance with Cayman Islands law and the rules of the Stock Exchange, notice may also be served or delivered by the Company to any member by electronic means.

All business that is transacted at an extraordinary general meeting and at an annual general meeting is deemed special, save that in the case of an annual general meeting, each of the following business is deemed an ordinary business:

(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers; and
(ee) the fixing of the remuneration of the directors and of the auditors.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(v) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

The quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

(vi) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company and is entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy is entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise as if it were an individual member. Votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

(f) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Companies Law or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records must be kept at the registered office or at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting. However, an exempted company must make available at its registered office in electronic form or any other medium, copies of its books of account or parts thereof as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Law of the Cayman Islands.

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APPENDIX III

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

A copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before the Company at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall not less than twenty-one (21) days before the date of the meeting and at the same time as the notice of annual general meeting be sent to every person entitled to receive notices of general meetings of the Company under the provisions of the Articles; however, subject to compliance with all applicable laws, including the rules of the Stock Exchange, the Company may send to such persons summarised financial statements derived from the Company’s annual accounts and the directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to summarised financial statements, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

At the annual general meeting or at a subsequent extraordinary general meeting in each year, the members shall appoint an auditor to audit the accounts of the Company and such auditor shall hold office until the next annual general meeting. Moreover, the members may, at any general meeting, by special resolution remove the auditor at any time before the expiration of his terms of office and shall by ordinary resolution at that meeting appoint another auditor for the remainder of his term. The remuneration of the auditors shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards which may be those of a country or jurisdiction other than the Cayman Islands. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor must be submitted to the members in general meeting.

(g) Dividends and other methods of distribution

The Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board.

The Articles provide dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the directors determine is no longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Companies Law.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to any member or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit.

The Company may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the holder whose name stands first in the register of the Company in respect of the shares at his address as appearing in the register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest against the Company.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

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(h) Inspection of corporate records

Pursuant to the Articles, the register and branch register of members shall be open to inspection for at least two (2) hours during business hours by members without charge, or by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at the registered office or such other place at which the register is kept in accordance with the Companies Law or, upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the office where the branch register of members is kept, unless the register is closed in accordance with the Articles.

(i) Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles relating to rights of minority shareholders in relation to fraud or oppression. However, certain remedies are available to shareholders of the Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.

(j) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares:

(i) if the Company is wound up and the assets available for distribution amongst the members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively; and
(ii) if the Company is wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

If the Company is wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Law divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(k) Subscription rights reserve

The Articles provide that to the extent that it is not prohibited by and is in compliance with the Companies Law, if warrants to subscribe for shares have been issued by the Company and the Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of a share on any exercise of the warrants.

3. CAYMAN ISLANDS COMPANY LAW

The Company is incorporated in the Cayman Islands subject to the Companies Law and, therefore, operates subject to Cayman Islands law. Set out below is a summary of certain provisions of Cayman company law, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of Cayman company law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar:

(a) Company operations

As an exempted company, the Company’s operations must be conducted mainly outside the Cayman Islands. The Company is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised share capital.

(b) Share capital

The Companies Law provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those shares shall be transferred to an account, to be called the “share premium account.” At the option of a company, these provisions may not apply to premiums on shares of that company allotted pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any other company and issued at a premium.

The Companies Law provides that the share premium account may be applied by the company subject to the provisions, if any, of its memorandum and articles of association in (a) paying distributions or dividends to members; (b) paying up unissued shares of the company to be issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(subject to the provisions of section 37 of the Companies Law); (d) writing-off the preliminary expenses of the company; and (e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.

No distribution or dividend may be paid to members out of the share premium account unless immediately following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay its debts as they fall due in the ordinary course of business.

The Companies Law provides that, subject to confirmation by the Grand Court of the Cayman Islands (the “ Court ”), a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, by special resolution reduce its share capital in any way.

(c) Financial assistance to purchase shares of a company or its holding company

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company to another person for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a company may provide financial assistance if the directors of the company consider, in discharging their duties of care and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be on an arm’s-length basis.

(d) Purchase of shares and warrants by a company and its subsidiaries

A company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder and the Companies Law expressly provides that it shall be lawful for the rights attaching to any shares to be varied, subject to the provisions of the company’s articles of association, so as to provide that such shares are to be or are liable to be so redeemed. In addition, such a company may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. However, if the articles of association do not authorise the manner and terms of purchase, a company cannot purchase any of its own shares unless the manner and terms of purchase have first been authorised by an ordinary resolution of the company. At no time may a company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any issued shares of the company other than shares held as treasury shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Shares purchased by a company is to be treated as cancelled unless, subject to the memorandum and articles of association of the company, the directors of the company resolve to hold such shares in the name of the company as treasury shares prior to the purchase. Where shares of a company are held as treasury shares, the company shall be entered in the register of members as holding those shares, however, notwithstanding the foregoing, the company is not be treated as a member for any purpose and must not exercise any right in respect of the treasury shares, and any purported exercise of such a right shall be void, and a treasury share must not be voted, directly or indirectly, at any meeting of the company and must not be counted in determining the total number of issued shares at any given time, whether for the purposes of the company’s articles of association or the Companies Law.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Cayman Islands law that a company’s memorandum or articles of association contain a specific provision enabling such purchases and the directors of a company may rely upon the general power contained in its memorandum of association to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances, may acquire such shares.

(e) Dividends and distributions

The Companies Law permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account. With the exception of the foregoing, there are no statutory provisions relating to the payment of dividends. Based upon English case law, which is regarded as persuasive in the Cayman Islands, dividends may be paid only out of profits.

No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of a treasury share.

(f) Protection of minorities and shareholders’ suits

The Courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company, and (c) an irregularity in the passing of a resolution which requires a qualified (or special) majority.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

In the case of a company (not being a bank) having a share capital divided into shares, the Court may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Court shall direct.

Any shareholder of a company may petition the Court which may make a winding up order if the Court is of the opinion that it is just and equitable that the company should be wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of the company’s affairs in the future, (b) an order requiring the company to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the shareholder petitioner has complained it has omitted to do, (c) an order authorising civil proceedings to be brought in the name and on behalf of the company by the shareholder petitioner on such terms as the Court may direct, or (d) an order providing for the purchase of the shares of any shareholders of the company by other shareholders or by the company itself and, in the case of a purchase by the company itself, a reduction of the company’s capital accordingly.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s memorandum and articles of association.

(g) Disposal of assets

The Companies Law contains no specific restrictions on the power of directors to dispose of assets of a company. However, as a matter of general law, every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(h) Accounting and auditing requirements

A company must cause proper books of account to be kept with respect to (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

An exempted company must make available at its registered office in electronic form or any other medium, copies of its books of account or parts thereof as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Law of the Cayman Islands.

(i) Exchange control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

(j) Taxation

Pursuant to the Tax Concessions Law of the Cayman Islands, the Company has obtained an undertaking:

(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shall apply to the Company or its operations; and
(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or in respect of the shares, debentures or other obligations of the Company.

The undertaking for the Company is for a period of twenty years from 31 July 2020.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.

(k) Stamp duty on transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

(l) Loans to directors

There is no express provision in the Companies Law prohibiting the making of loans by a company to any of its directors.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(m) Inspection of corporate records

The notice of registered office is a matter of public record. A list of the names of the current directors and alternate directors (if applicable) is made available by the Registrar of Companies for inspection by any person on payment of a fee. The register of mortgages is open to inspection by creditors and members.

Members of the Company have no general right under the Companies Law to inspect or obtain copies of the register of members or corporate records of the Company. They will, however, have such rights as may be set out in the Company’s Articles.

(n) Register of members

An exempted company may maintain its principal register of members and any branch registers at such locations, whether within or without the Cayman Islands, as the directors may, from time to time, think fit. The register of members shall contain such particulars as required by Section 40 of the Companies Law. A branch register must be kept in the same manner in which a principal register is by the Companies Law required or permitted to be kept. The company shall cause to be kept at the place where the company’s principal register is kept a duplicate of any branch register duly entered up from time to time.

There is no requirement under the Companies Law for an exempted company to make any returns of members to the Registrar of Companies of the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection. However, an exempted company shall make available at its registered office, in electronic form or any other medium, such register of members, including any branch register of members, as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Law of the Cayman Islands.

(o) Register of Directors and Officers

The Company is required to maintain at its registered office a register of directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the Cayman Islands and any change must be notified to the Registrar within thirty (30) days of any change in such directors or officers.

(p) Beneficial Ownership Register

An exempted company is required to maintain a beneficial ownership register at its registered office that records details of the persons who ultimately own or control, directly or indirectly, 25% or more of the equity interests or voting rights of the company or have rights to appoint or remove a majority of the directors of the company. The beneficial ownership register is not a public document and is only accessible by a designated competent authority of the Cayman Islands. Such requirement does not, however, apply to an exempted company with its shares listed on an approved stock exchange, which includes the Stock Exchange. Accordingly, for so long as the shares of the Company are listed on the Stock Exchange, the Company is not required to maintain a beneficial ownership register.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

(q) Winding up

A company may be wound up (a) compulsorily by order of the Court, (b) voluntarily, or (c) under the supervision of the Court.

The Court has authority to order winding up in a number of specified circumstances including where the members of the company have passed a special resolution requiring the company to be wound up by the Court, or where the company is unable to pay its debts, or where it is, in the opinion of the Court, just and equitable to do so. Where a petition is presented by members of the company as contributories on the ground that it is just and equitable that the company should be wound up, the Court has the jurisdiction to make certain other orders as an alternative to a winding-up order, such as making an order regulating the conduct of the company’s affairs in the future, making an order authorising civil proceedings to be brought in the name and on behalf of the company by the petitioner on such terms as the Court may direct, or making an order providing for the purchase of the shares of any of the members of the company by other members or by the company itself.

A company (save with respect to a limited duration company) may be wound up voluntarily when the company so resolves by special resolution or when the company in general meeting resolves by ordinary resolution that it be wound up voluntarily because it is unable to pay its debts as they fall due. In the case of a voluntary winding up, such company is obliged to cease to carry on its business (except so far as it may be beneficial for its winding up) from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above.

For the purpose of conducting the proceedings in winding up a company and assisting the Court therein, there may be appointed an official liquidator or official liquidators; and the court may appoint to such office such person, either provisionally or otherwise, as it thinks fit, and if more persons than one are appointed to such office, the Court must declare whether any act required or authorised to be done by the official liquidator is to be done by all or any one or more of such persons. The Court may also determine whether any and what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the custody of the Court.

As soon as the affairs of the company are fully wound up, the liquidator must make a report and an account of the winding up, showing how the winding up has been conducted and how the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. This final general meeting must be called by at least 21 days’ notice to each contributory in any manner authorised by the company’s articles of association and published in the Gazette.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

(r) Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in number representing seventy-five per cent. (75%) in value of shareholders or class of shareholders or creditors, as the case may be, as are present at a meeting called for such purpose and thereafter sanctioned by the Court. Whilst a dissenting shareholder would have the right to express to the Court his view that the transaction for which approval is sought would not provide the shareholders with a fair value for their shares, the Court is unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management.

(s) Take-overs

Where an offer is made by a company for the shares of another company and, within four (4) months of the offer, the holders of not less than ninety per cent. (90%) of the shares which are the subject of the offer accept, the offeror may at any time within two (2) months after the expiration of the said four (4) months, by notice in the prescribed manner require the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the Court within one (1) month of the notice objecting to the transfer. The burden is on the dissenting shareholder to show that the Court should exercise its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority shareholders.

(t) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Court to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a crime).

(u) Economic Substance Requirements

Pursuant to the International Tax Cooperation (Economic Substance) Law, 2018 of the Cayman Islands (“ES Law”) that came into force on 1 January 2019, a “relevant entity” is required to satisfy the economic substance test set out in the ES Law. A “relevant entity” includes an exempted company incorporated in the Cayman Islands as is the Company; however, it does not include an entity that is tax resident outside the Cayman Islands. Accordingly, for so long as the Company is a tax resident outside the Cayman Islands, including in Hong Kong, it is not required to satisfy the economic substance test set out in the ES Law.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

4. GENERAL

Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law, have sent to the Company a letter of advice summarising certain aspects of Cayman Islands company law. This letter, together with a copy of the Companies Law, is available for inspection as referred to in the paragraph headed “Documents available for inspection” in Appendix [V] to this Document. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

A. FURTHER INFORMATION ABOUT OUR COMPANY

1. Incorporation of our Company

Our Company was incorporated in the Cayman Islands under the Companies Law as an exempted company with limited liability on March 13, 2020. Our Company has established its principal place of business in Hong Kong at 23rd Floor, China Evergrande Centre, 38 Gloucester Road, Wanchai, Hong Kong and was registered with the Registrar of Companies in Hong Kong as a non-Hong Kong company under Part 16 of the Companies Ordinance on August 18, 2020. Mr. Fong Kar Chun, Jimmy has been appointed as the authorized representative of our Company for the acceptance of service of process and notices in Hong Kong.

As our Company was incorporated in the Cayman Islands, its operations are subject to the Companies Law and to its constitution, which comprises of the Memorandum and Articles of Association. A summary of certain provisions of the Memorandum and Articles of Association and relevant aspects of the Companies Law is set out in “Appendix III – Summary of the Constitution of the Company and Cayman Islands Company Law” to this Document.

2. Changes in the share capital of our Company

As of the date of incorporation of our Company, the authorized share capital of our Company was US$50,000 divided into 5,000,000 ordinary shares with a par value of US$0.01 each. Upon its incorporation, one share of par value US$0.01 was allotted and issued at par to an initial subscriber, being an Independent Third Party, on March 13, 2020, which was transferred to CEG Holdings at a consideration of US$0.01 on July 20, 2020.

Pursuant to the written resolution of our Shareholder passed on July 27, 2020, each of our issued and unissued shares of US$0.01 each was subdivided into 100 Shares of US$0.0001 each. On the same date, an additional 9,999,900 Shares of US$0.0001 each were issued and allotted to CEG Holdings at par.

Pursuant to the written resolutions of our Shareholders passed on [●], 2020, the authorized share capital of our Company was increased from US$50,000 divided into 500,000,000 Shares of a par value of US$0.0001 each to US$[10,000,000] divided into [100,000,000,000] Shares of a par value of US$0.0001 each by the creation of additional [99,500,000,000] Shares.

Immediately following completion of the Capitalization Issue and the [ REDACTED ] and without taking into account any Shares which may be issued upon the exercise of the [ REDACTED ], the issued share capital of our Company will be US$[ REDACTED ] divided into [ REDACTED ] Shares, all fully paid or credited as fully paid, and [ REDACTED ] Shares will remain unissued.

Save for the aforesaid and as mentioned in the paragraph headed “– 3. Written resolutions of our Shareholders passed on [●], 2020” below in this Appendix, there has been no alteration in the share capital of our Company since its incorporation.

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

3. Written resolutions of our Shareholders passed on [ ● ], 2020

Pursuant to written resolutions of our Shareholders passed on [●], 2020, among other matters:

(i) our Company approved and adopted the Memorandum of Association with immediate effect;
(ii) our Company approved and conditionally adopted the Articles of Association which will become effective upon [ REDACTED ];
(iii) the authorized share capital of our Company was increased from US$50,000 divided into 500,000,000 Shares to US$[10,000,000] divided into [100,000,000,000] Shares by creation of an additional [99,500,000,000] Shares. Such Shares shall rank pari passu in all aspects;
(iv) conditional on (i) the Listing Committee granting the [ REDACTED ] of, and permission to [ REDACTED ], the Shares in issue and Shares to be issued and allotted pursuant to the Capitalization Issue and the [ REDACTED ] and Shares to be issued as mentioned in this Document (including any additional Shares which may be allotted and issued pursuant to the exercise of the [ REDACTED ]); (ii) the entering into of the agreement on the [ REDACTED ] between the [ REDACTED ] (for themselves and on behalf of the [ REDACTED ]) and our Company (for ourselves and on behalf of the [ REDACTED ]) on the [ REDACTED ]; (iii) the obligations of the [ REDACTED ] under the [ REDACTED ] becoming unconditional and not being terminated in accordance with the terms therein or otherwise, in each case on or before such dates as may be specified in the [ REDACTED ]:
(1) the [ REDACTED ] was approved and our Directors were authorized to issue and allot the [ REDACTED ] and approve the transfer of the [ REDACTED ] pursuant to the [ REDACTED ];
(2) the [ REDACTED ] was approved and our Directors were authorized to issue and allot the [ REDACTED ] and approve the transfer of the [ REDACTED ] pursuant to the exercise of the [ REDACTED ]; and
(3) conditional on the share premium account of our Company being credited as a result of the Shares by our Company pursuant to the [ REDACTED ], our Directors were authorized to capitalize an amount of US$[ REDACTED ] standing to the credit of the share premium account of our Company by applying such sum in paying up in full at par [ REDACTED ] Shares.
(v) a general unconditional mandate was given to our Directors to issue, allot and deal with (including the power to make an offer or agreement, or grant securities which would or might require Shares to be issued and allotted), otherwise than pursuant to a rights issue or pursuant to any scrip dividend schemes or similar arrangements providing for the allotment and issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the Articles of Association or other similar

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APPENDIX IV

STATUTORY AND GENERAL INFORMATION

arrangements or pursuant to a specific authority granted by the Shareholders in general meeting, unissued Shares not exceeding the aggregate of 20% of the number of issued Shares immediately following the completion of the Capitalization Issue and the [ REDACTED ] (but taking no account of any Shares which may be issued and allotted pursuant to the exercise of the [ REDACTED ]), such mandate to remain in effect until the conclusion of the next annual general meeting of our Company, or the expiration of the period within which the next annual general meeting of our Company is required by the Articles of Association or any applicable laws to be held, or until revoked or varied by an ordinary resolution of the Shareholders in general meeting, whichever occurs first;

(vi) a general unconditional mandate was given to our Directors authorizing them to exercise all powers of our Company to repurchase on the Stock Exchange or on any other approved stock exchange on which the securities of our Company may be [ REDACTED ] and which is recognized by the SFC and the Stock Exchange for this purpose such number of Shares as will represent up to 10% of the number of issued Shares immediately following the completion of the Capitalization Issue and the [ REDACTED ] (but taking no account of any Shares which may be issued and allotted pursuant to the exercise of the [ REDACTED ]), such mandate to remain in effect until the conclusion of the next annual general meeting of our Company, or the expiration of the period within which the next annual general meeting of our Company is required by the Articles of Association or any applicable laws to be held, or until revoked or varied by an ordinary resolution of the Shareholders in general meeting, whichever occurs first; and
(vii) the general unconditional mandate mentioned in paragraph (v) above was extended by the addition to the number of issued Shares which may be issued and allotted or agreed conditionally or unconditionally to be issued and allotted by our Directors pursuant to such general mandate of an amount representing the total number of issued Shares repurchased by our Company pursuant to the mandate to repurchase Shares referred to in paragraph (vi) above.

4. Corporate Reorganization

In preparation for the [ REDACTED ] of our Shares on the Stock Exchange, the companies comprising our Group underwent the Reorganization and our Company became the holding company of our Group. For information with regard to the Reorganization, see the section headed “History, Reorganization and Corporate Structure” in this Document.

5. Changes in Share Capital of Our Subsidiaries

Our Company’s subsidiaries are referred to in the Accountant’s Report in Appendix I to this Document. Save as the subsidiaries mentioned in the Accountant’s Report and “History, Reorganization and Corporate Structure”, our Company has no other subsidiaries.

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

Save as disclosed in the section headed “History, Reorganization and Corporate Structure”, there are no other changes in registered capital of our subsidiaries within the two years immediately preceding the date of this Document.

6. Repurchases of our Shares

(a) Provisions of the Listing Rules

The Listing Rules permit companies with a primary listing on the Stock Exchange to repurchase their securities on the Stock Exchange subject to certain restrictions, the more important of which are summarized below:

(i) Shareholders’ approval

All proposed repurchases of securities (which must be fully paid up in the case of shares) by a company listed on the Stock Exchange must be approved in advance by an ordinary resolution of the shareholders, either by way of general mandate or by specific approval of a particular transaction.

Note: Pursuant to the written resolutions passed by the Shareholders of our Company on [●], 2020, a general unconditional mandate (the “ Buyback Mandate ”) was granted to our Directors authorizing the repurchase of shares by our Company on the Stock Exchange, or on any other stock exchange on which the securities of our Company may be listed and which is recognized by the SFC and the Stock Exchange for this purpose, with the total number of Shares not exceeding 10% of the total number of Shares in issue and to be issued as mentioned herein, at any time until the conclusion of the next annual general meeting of our Company, the expiration of the period within which the next annual general meeting of our Company is required by an applicable law or the Articles to be held or when such mandate is revoked or varied by an ordinary resolution of our Shareholders in general meeting, whichever occurs first.

(ii) Source of funds

Repurchases must be funded out of funds legally available for the purpose in accordance with the Articles of Association, the Listing Rules, the laws of Cayman Islands and other applicable laws and regulations. A listed company may not repurchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange in effect from time to time.

(iii) Core connected persons

A listed company is prohibited from knowingly repurchasing its securities on the Stock Exchange from a “core connected person”, that is, a director, chief executive or substantial shareholder of the company or any of its subsidiaries or their close associates and a core connected person is prohibited from knowingly selling his securities to the company.

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APPENDIX IV

(b) Reasons for Repurchases

Our Directors believe that it is in the best interests of our Company and Shareholders for our Directors to have general authority from the Shareholders to enable our Directors to repurchase Shares in the market. Repurchases of Shares will only be made when our Directors believe that such repurchases will benefit our Company and its members. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of our Company and its assets and/or its earnings per Share.

(c) Funding of Repurchases

In repurchasing securities, our Company may only apply funds legally available for such purpose in accordance with the Articles of Association, the Listing Rules and the applicable laws of the Cayman Islands.

It is presently proposed that any repurchase of Shares will be made out of the profits of our Company, the share premium amount of our Company or the proceeds of a fresh issue of Shares made for the purpose of the repurchase and, in the case of any premium payable on the purchase over the par value of the Shares to be repurchased, must be provided for out of either or both of the profits of our Company or from sums standing to the credit of the share premium account of our Company. Subject to the Companies Law, a repurchase of Shares may also be paid out of capital.

Our Directors do not propose to exercise the Buyback Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of our Company or its gearing levels which, in the opinion of our Directors, are from time to time appropriate for our Company. However, there might be a material adverse impact on the working capital or gearing level as compared with the position disclosed in this Document in the event that the Buyback Mandate is exercised in full.

(d) Share Capital

Exercise in full of the Buyback Mandate, on the basis of [ REDACTED ] Shares in issue immediately after the [ REDACTED ] (without taking into account the Shares which may be issued pursuant to the exercise of the [ REDACTED ]), could accordingly result in up to [ REDACTED ] Shares being repurchased by our Company during the period until:

(i) the conclusion of the next annual general meeting of our Company;
(ii) the expiration of the period within which the next annual general meeting of our Company is required by any applicable law or the Articles of Association to be held; or
(iii) the date on which the Buyback Mandate is revoked or varied by an ordinary resolution of our Shareholders in general meeting, whichever occurs first.

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APPENDIX IV

(e) General

None of our Directors nor, to the best of their knowledge, information and belief, having made all reasonable enquiries, any of their close associates, currently intends to sell any Shares to our Company or our subsidiaries.

Our Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Buyback Mandate in accordance with the Listing Rules, the Memorandum and Articles of Association, the applicable laws of the Cayman Islands.

If, as a result of a securities repurchase pursuant to the Buyback Mandate, a Shareholder’s proportionate interest in the voting rights of our Company is increased, such increase will be treated as an acquisition for the purpose of the Code on Takeovers and Mergers (the “ Takeovers Code ”). Accordingly, a Shareholder or a group of Shareholders acting in concert, depending on the level of increase of the Shareholders’ interest, could obtain or consolidate control of our Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code as a result of any such increase. Save for the foregoing, our Directors are not aware of any consequences which would arise under the Takeovers Code as a consequence of any repurchases pursuant to the Buyback Mandate.

Any repurchase of Shares that results in the number of Shares held by the public being reduced to less than 25% of our Shares then in issue (or such other percentage as may be prescribed as the minimum public shareholding under the Listing Rules) could only be implemented if the Stock Exchange agreed to waive the Listing Rules requirements regarding the public shareholding referred to above. It is believed that a waiver of this provision would not normally be given other than in exceptional circumstances.

No core connected person of our Company has notified our Company that he/she/it has any present intention to sell Shares to our Company, or has undertaken not to do so if the Buyback Mandate is exercised.

B. INFORMATION ABOUT OUR BUSINESS

1. Summary of Material Contracts

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by our Company or any of its subsidiaries within the two years preceding the date of this Document that are or may be material:

(a) an equity transfer agreement dated May 14, 2020 entered into between Hainan Lingshui Palm Springs Property Co., Ltd. (海南陵水棕櫚泉置業有限公司) and Jinbi Property pursuant to which Hainan Lingshui Palm Springs Property Co., Ltd. (海南陵水棕櫚泉置業有限公司) agreed to transfer the entire equity interest in Hainan Lingshui to Jinbi Property at a consideration of RMB952,900;

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STATUTORY AND GENERAL INFORMATION

APPENDIX IV

(b) an equity transfer agreement dated May 14, 2020 entered into between Evergrande Property (Shenzhen) Co., Ltd. (恒大地產集團(深圳)有限公司) and Jinbi Property pursuant to which Evergrande Property (Shenzhen) Co., Ltd. (恒大地產集團(深圳) 有限公司) agreed to transfer the entire equity interest in Shenzhen Jianshe Jiayuan to Jinbi Property at a consideration of RMB1;
(c) an equity transfer agreement dated May 22, 2020 entered into between Evergrande Real Estate Group Chengdu Co., Ltd. (恒大地產集團成都有限公司) and Jinbi Property pursuant to which Evergrande Real Estate Group Chengdu Co., Ltd. (恒大地產集團成都有限公司) agreed to transfer the entire equity interest in Chengdu Jinbi to Jinbi Property at a consideration of RMB4,225,700;
(d) an equity transfer agreement dated May 15, 2020 entered into between Evergrande Real Estate and Jinbi Property pursuant to which Evergrande Real Estate agreed to transfer the entire equity interest in Guangzhou Jinbi Shijia to Jinbi Property at a consideration of RMB8,779,100;
(e) an equity transfer agreement dated May 15, 2020 entered into between Evergrande Real Estate and Jinbi Property pursuant to which Evergrande Real Estate agreed to transfer the entire equity interest in Guangzhou Jinbi Hengying to Jinbi Property at a consideration of RMB5,480,600;
(f) an equity transfer agreement dated May 15, 2020 entered into between Xi’an Zhongyu Land Co., Ltd. (西安中渝置地有限公司) and Jinbi Property pursuant to which Xi’an Zhongyu Land Co., Ltd. (西安中渝置地有限公司) agreed to transfer the entire equity interest in Xi’an Hongze to Jinbi Property at a consideration of RMB1;
(g) an equity transfer agreement dated June 17, 2020 entered into between Trend Rich Investment Limited (毅富投資有限公司) and Jinbi Property pursuant to which Trend Rich Investment Limited (毅富投資有限公司) agreed to transfer the entire equity interest in Chengdu Leju to Jinbi Property at a consideration of RMB4,151,600;
(h) an equity transfer agreement dated May 20, 2020 entered into between Wuhan Badengcheng Investment Co., Ltd. (武漢巴登城投資有限公司) and Jinbi Property pursuant to which Wuhan Badengcheng Investment Co., Ltd. (武漢巴登城投資有限公司) agreed to transfer the entire equity interest in Wuhan Jinbi to Jinbi Property at a consideration of RMB1;
(i) an equity transfer agreement dated May 22, 2020 entered into between Guiyang Xinshijie Real Estate Co., Ltd. (貴陽新世界房地產有限公司) and Jinbi Property pursuant to which Guiyang Xinshijie Real Estate Co., Ltd. (貴陽新世界房地產有限公司) agreed to transfer the entire equity interest in Guiyang Xinshenghuo to Jinbi Property at a consideration of RMB1;

– IV-7 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

STATUTORY AND GENERAL INFORMATION

APPENDIX IV

(j) an equity transfer agreement dated May 24, 2020 entered into between Chongqing Tongjing Property Co., Ltd. (重慶同景置業有限公司) and Jinbi Property pursuant to which Chongqing Tongjing Property Co., Ltd. (重慶同景置業有限公司) agreed to transfer the entire equity interest in Chongqing Tongjing to Jinbi Property at a consideration of RMB5,099,500;
(k) an equity transfer agreement dated May 26, 2020 entered into between Wuhan Evergrande Jinbi Real Estate Development Co., Ltd. (武漢恒大金碧房地產開發有限公司) and Jinbi Property pursuant to which Wuhan Evergrande Jinbi Real Estate Development Co., Ltd. (武漢恒大金碧房地產開發有限公司) agreed to transfer the entire equity interest in Wuhan Jinbi Jiayuan to Jinbi Property at a consideration of RMB3,562,500;
(l) an equity transfer agreement dated May 26, 2020 entered into between Zhejiang Dawei Real Estate Development Co., Ltd. (浙江大衛房地產開發有限公司) and Jinbi Property pursuant to which Zhejiang Dawei Real Estate Development Co., Ltd. (浙江大衛房地產開發有限公司) agreed to transfer the entire equity interest in Xianju Dawei to Jinbi Property at a consideration of RMB1;
(m) an equity transfer agreement dated June 12, 2020 entered into between Sichuan Desheng Group Cultural Tourism Investment Development Co., Ltd. (四川德勝集團文化旅遊投資發展有限公司) and Jinbi Property pursuant to which Sichuan Desheng Group Cultural Tourism Investment Development Co., Ltd. (四川德勝集團文化旅遊投資發展有限公司) agreed to transfer the entire equity interest in Sichuan Zhongjia to Jinbi Property at a consideration of RMB1;
(n) an equity transfer agreement dated June 12, 2020 entered into between City Faith Limited (都信有限公司) and Jinbi Property pursuant to which City Faith Limited (都信有限公司) agreed to transfer the entire equity interest in Sichuan Zhongxin to Jinbi Property at a consideration of RMB4,691,000;
(o) an equity transfer agreement dated July 15, 2020 entered into between Guangzhou Jinbi Huafu and Evergrande Real Estate Group Guangdong Real Estate Development Co., Ltd. (恒大地產集團廣東房地產開發有限公司) pursuant to which Guangzhou Jinbi Huafu agreed to transfer the entire equity interest in Foshan Xinzhongjian to Evergrande Real Estate Group Guangdong Real Estate Development Co., Ltd. (恒大地產集團廣東房地產開發有限公司) at a consideration of RMB683,643,000;
(p) a share transfer agreement dated August 6, 2020 entered into between Ever Grace Group Limited (恆善集團有限公司) and Knight Honour pursuant to which Ever Grace Group Limited (恆善集團有限公司) agreed to transfer the entire issued share capital of Success Will to Knight Honour at a consideration of Knight Honour issuing two shares to Flying Bloom;

– IV-8 –

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STATUTORY AND GENERAL INFORMATION

APPENDIX IV

(q) a share transfer agreement dated August 6, 2020 entered into between Tianji Holding Limited (天基控股有限公司) and Oriental Joy pursuant to which Tianji Holding Limited (天基控股有限公司) agreed to transfer the entire issued share capital of Fortune Ascent to Oriental Joy at a consideration of HK$9,939,000.00;
(r) a trademark transfer agreement dated August 12, 2020 entered into between Evergrande Real Estate and Jinbi Property pursuant to which Evergrande Real Estate agreed to transfer certain trademarks to Jinbi Property at nil consideration;
(s) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Chan Hoi Wan (陳凱韻), CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 537,342 Shares to Chan Hoi Wan (陳凱韻) at a consideration of HK$4,500,000,000;
(t) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Huatai International Greater Bay Area Investment Limited (華泰國際大灣區投資有限公司), CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 477,637 Shares to Huatai International Greater Bay Area Investment Limited (華泰國際大灣區投資有限公司) at a consideration of HK$4,000,000,000;
(u) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among SCC Growth VI 2020 B, L.P., CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 411,962 Shares to SCC Growth VI 2020 B, L.P. at a consideration of HK$3,450,000,000;
(v) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among CC Eagle Investments Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 358,228 Shares to CC Eagle Investments Limited at a consideration of HK$3,000,000,000;
(w) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among YF Evergreat Property Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 179,114 Shares to YF Evergreat Property Limited at a consideration of HK$1,500,000,000;
(x) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Image Frame Investment (HK) Limited (意像架構投資(香港)有限公司), Golden Fortune Holding Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 95,527 Shares to Image Frame Investment (HK) Limited (意像架構投資 (香港)有限公司) and 47,764 Shares to Golden Fortune Holding Limited at a consideration of HK$800,000,000 and HK$400,000,000, respectively;

– IV-9 –

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STATUTORY AND GENERAL INFORMATION

APPENDIX IV

(y) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among China Dragon Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 119,409 Shares to China Dragon Limited at a consideration of HK$1,000,000,000;
(z) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Tisé Opportunity Fund I LP, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 119,409 Shares to Tisé Opportunity Fund I LP at a consideration of HK$1,000,000,000;
(aa) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among ABCI Global Opportunities SPC – ABCI China Rising Private Equity 3 Segregated Portfolio, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 119,409 Shares to ABCI Global Opportunities SPC – ABCI China Rising Private Equity 3 Segregated Portfolio at a consideration of HK$1,000,000,000;
(bb) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into, among others, Elite Explorer Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 95,527 Shares to Elite Explorer Limited at a consideration of HK$800,000,000;
(cc) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Super Brilliant Investments Limited (超智投資有限公司), CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 59,704 Shares to Super Brilliant Investments Limited (超智投資有限公司) at a consideration of HK$500,000,000;
(dd) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Well Smart Developments Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 59,704 Shares to Well Smart Developments Limited at a consideration of HK$500,000,000;
(ee) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Treasure Pitcher Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 59,704 Shares to Treasure Pitcher Limited at a consideration of HK$500,000,000;
(ff) an investment agreement dated August 13, 2020 together with a letter dated September 28, 2020 entered into among Advance Power International Limited, CEG Holdings, China Evergrande Group and our Company pursuant to which CEG Holdings agreed to transfer 65,675 Shares to Advance Power International Limited at a consideration of HK$550,000,000;

– IV-10 –

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APPENDIX IV

(gg) an equity transfer agreement dated September 11, 2020 entered into between Kunming Jialize Tourism Culture Co., Ltd. (昆明嘉麗澤旅遊文化有限公司) and Jinbi Property pursuant to which Kunming Jialize Tourism Culture Co., Ltd. (昆明嘉麗澤旅遊文化有限公司) agreed to transfer the entire equity interest in Kunming Jialize to Jinbi Property at a consideration of RMB684,400;
(hh) an equity transfer agreement dated September 11, 2020 entered into between Guangzhou Hengze Health Service Co., Ltd. (廣州恒澤養生服務有限公司) and Jinbi Property pursuant to which Guangzhou Hengze Health Service Co., Ltd. (廣州恒澤養生服務有限公司) agreed to transfer the entire equity interest in Evergrande Hengkang to Jinbi Property at a consideration of RMB46,856,700;
(ii) the Deed of Non-competition;
(jj) the Deed of Indemnity; and
(kk) the [ REDACTED ].

2. Intellectual property rights of our Group

(a) Trademarks

As of the Latest Practicable Date, our Group [had been licensed] to use the following trademarks which, in the opinion of our Directors, are material to our Group’s business:

Trademark 恒大金碧物業恒大金碧物業恒大金碧物業恒大金碧物業	Registration Number 303787480 18994800 18995080 18995466 18995785	Class 3/5/9/14/ 16/19/29/ 30/31/32/ 33/35/36/ 37/39/41/ 43/44 36 37 44 45	Name of Registered Proprietor China Evergrande Group Evergrande Real Estate Evergrande Real Estate Evergrande Real Estate Evergrande Real Estate	Place of Registration Hong Kong PRC PRC PRC PRC	Date of Registration May 25, 2016 June 7, 2017 February 28, 2017 February 28, 2017 February 28, 2017	Expiry Date
						May 24, 2026 June 6, 2027 February 27, 2027 February 27, 2027 February 27, 2027

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APPENDIX IV

STATUTORY AND GENERAL INFORMATION

Trademark 恒大物業恒大物業金碧物業金碧物業金碧物業金碧物業	Registration Number 29282893 29288044 18994614 18995155 18995407 18995767	Class 37 44 36 37 44 45	Name of Registered Proprietor Evergrande Real Estate Evergrande Real Estate Evergrande Real Estate Evergrande Real Estate Evergrande Real Estate Evergrande Real Estate	Place of Registration PRC PRC PRC PRC PRC PRC	Date of Registration June 14, 2019 June 21, 2019 April 14, 2018 May 21, 2017 April 14, 2018 February 28, 2017	Expiry Date
						June 13, 2029 June 20, 2029 April 13, 2028 May 20, 2027 April 13, 2028 February 27, 2027

As of the Latest Practicable Date, our Group was the proprietor of the following copyright which, in the opinion of our Directors, is material to our Group’s business:

Copyright Name Evergrande Smart Community Software (Android) V2.3.0 (恒大智慧社區軟件(android 版) V2.3.0) Evergrande Smart Community Software (iOS) V2.3.0 (恒大智慧社區軟件(iOS版)) V2.3.0	Registration Number 2020SR1501307 2020SR1501305	Name of Proprietor Jinbi Smart Life Jinbi Smart Life	Place of Registration PRC PRC	Date of Completion
				August 2, 2019 August 2, 2019

(c) Domain name

As of the Latest Practicable Date, our Group was the registered proprietor of the following domain name which, in the opinion of our Directors, is material to our Group’s business:

Domain Name evergrandeservice.com	Registrant Jinbi Property	Date of Registration August 11, 2020	Expiry Date
			August 11, 2023

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STATUTORY AND GENERAL INFORMATION

APPENDIX IV

C. FURTHER INFORMATION ABOUT DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

1. Directors

(a) Disclosure of Interests – Interests and short positions of our Directors and chief executives of our Company in the shares, underlying shares and debentures of our Company and our associated corporations

Immediately following completion of the Capitalization Issue and the [ REDACTED ] (assuming the [ REDACTED ] under the [ REDACTED ] are fully taken up by [ REDACTED ] and without taking into account any Shares which may be issued or sold pursuant to the exercise of the [ REDACTED ]), the interests or short positions of our Directors or chief executives of our Company in the shares, underlying shares or debentures of our Company or our associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to our Company and the Stock Exchange, once the Shares are listed will be as follows:

Interest in our Company

Name of Director Mr. Zhao Changlong	Nature of Interest Beneficial owner	Number of Shares interested REDACTED	Approximate percentage of shareholding
			[REDACTED]%

Interest in our Company’s associated corporation

Name of Director Mr. Zhao Changlong Mr. Hu Liang	Name of associated corporation China Evergrande Group HengTen Networks China Evergrande Group Evergrande Auto	Nature of Interest Beneficial owner Beneficial owner Beneficial owner Beneficial owner	Number of shares interested 7,800,000(2) 1,000,000 3,300,000(3) 5,000	Approximate percentage of shareholding
				0.0597% 0.0013% 0.0253% 0.0001%

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APPENDIX IV

STATUTORY AND GENERAL INFORMATION

Name of Director Mr. Wang Zhen Ms. An Lihong	Name of associated corporation China Evergrande Group China Evergrande Group Evergrande Auto	Nature of Interest Beneficial owner Beneficial owner Beneficial owner	Number of shares interested 1,300,000 250,000(3) 20,000	Approximate percentage of shareholding
				0.0100% 0.0019% 0.0002%

Notes:

(1) Representing the number of [ REDACTED ] which Mr. Zhao Changlong will be entitled to apply for under the [ REDACTED ] based on his shareholding in China Evergrande Group as of the Latest Practicable Date.
(2) This includes interest in share options for 6,600,000 shares of China Evergrande Group which have not yet been exercised as of the Latest Practicable Date.
(3) Such interest is in the form of share options of China Evergrande Group which have not yet been exercised as of the Latest Practicable Date.

(b) Particulars of service contracts and letters of appointment

Each of our executive Directors [has entered] into a service agreement with our Company for a term of three years commencing from the [ REDACTED ], which may be terminated by not less than three months’ notice in writing served by either party on the other.

Each of our independent non-executive Directors [has entered] into a letter of appointment with our Company for a term of three years commencing from the [ REDACTED ], which may be terminated by not less than three months’ notice in writing served by either party on the other.

(c) Directors’ remuneration

During each of the three years ended December 31, 2019 and the six months ended June 30, 2020, the aggregate remuneration (including salaries, bonuses and other benefits and contribution to pension scheme) paid to our Directors was approximately RMB5.1 million, RMB6.7 million, RMB6.8 million and RMB2.8 million, respectively. For details, see note 9 of the Accountant’s Report set out in Appendix I to this Document.

Each of our independent non-executive Directors [has been] appointed for a term of three years. Our Company intends to pay a director’s fee of RMB300,000 per annum to each of them. Save for directors’ fees, none of our independent non-executive Directors is expected to receive any other remuneration for holding their office as an independent non-executive Director.

Under the arrangement currently in force, the aggregate remuneration (including fees, salaries and other benefits and contribution to pension scheme) of our Directors for the year ending December 31, 2020 is estimated to be no more than approximately RMB30.0 million.

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APPENDIX IV

2. Substantial Shareholders

Save as disclosed in “Substantial Shareholders” in this Document, so far as our Directors are aware, immediately following the completion of the Capitalization Issue and the [ REDACTED ] (assuming the [ REDACTED ] under the [ REDACTED ] are fully taken up by [ REDACTED ] and without taking into account any Shares which may be [ REDACTED ] pursuant to the exercise of the [ REDACTED ]), no person (other than our Directors and chief executives of our Company) will have an interest and/or short positions in our Shares or underlying Shares which would be required to be disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the issued voting shares of any other member of our Group.

3. Agency Fees or Commissions Received

Save for the [ REDACTED ] commission provided in the [ REDACTED ], no commissions, discounts, brokerages or other special terms were granted in connection with the issue or sale of any capital of any member of our Group within the two years immediately preceding the date of this Document.

4. Disclaimers

Save as disclosed in this Document:

(a) none of our Directors or chief executives of our Company has any interest or short position in our shares, underlying shares or debentures of our Company or any of its associated corporation (within the meaning of the SFO) which will have to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required to be notified to our Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers once the Shares are [ REDACTED ];
(b) none of our Directors or experts referred to under the paragraph headed “—D. Other information—7. Qualification of Experts” in this Appendix has any direct or indirect interest in the promotion of our Company, or in any assets which have within the two years immediately preceding the date of this Document been acquired or disposed of by or leased to any member of our Group, or are proposed to be acquired or disposed of by or leased to any member of our Group;
(c) none of our Directors is materially interested in any contract or arrangement subsisting at the date of this Document which is significant in relation to the business of our Group taken as a whole;
(d) none of our Directors has any existing or proposed service contracts with any member of our Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation));

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APPENDIX IV

(e) taking no account of Shares which may be taken up under the [ REDACTED ], none of our Directors knows of any person (not being a Director or chief executive of our Company) who will, immediately following completion of the [ REDACTED ], have an interest or short position in our Shares or underlying Shares of our Company which would fall to be disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of SFO or be interested, directly or indirectly, in 10% or more of the issued voting shares of any member of our Group;
(f) none of the experts referred to under the paragraph headed “—D. Other information—7. Qualification of Experts” in this Appendix has any shareholding in any member of our Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of our Group; and
(g) so far as is known to our Directors as of the Latest Practicable Date, none of our Directors, their respective close associates (as defined under the Listing Rules) or Shareholders who are interested in more than 5% of the issued share capital of our Company has any interests in the five largest customers or the five largest suppliers of our Group.

D. OTHER INFORMATION

1. Tax and other indemnities

Dr. Hui, Xin Xin (BVI), China Evergrande Group, Anji (BVI), Shengjian (BVI) and CEG Holdings [have entered] into the Deed of Indemnity with and in favor of our Company (for ourselves and as trustees for each of our subsidiaries) (being the contract referred to in paragraph (ii) of “—B. Information about Our Business—1. Summary of Material Contracts” above) to provide indemnities on a joint and several basis in respect of, among other matters, (i) taxation or taxation claims resulting from income, profits or gains earned, accrued or received as well as any estate duty to which any member of our Group may be subject and payable on or before the [ REDACTED ]; and (ii) any claims, penalties or other indebtedness resulting from any insufficient contribution to social insurance and housing provident fund during the Track Record Period as disclosed in “Business—Employees—Social Insurance and Housing Provident Fund Contributions”, save (a) to the extent that specific provision or reserve has been made for such taxation or non-compliance incidents in the audited combined financial statements of our Group as set out in Appendix I; (b) to the extent that the liability for such taxation would not have arisen but for any act or omission of, or delay by, any member of our Group after the [ REDACTED ]; and (c) to the extent such loss arises or is incurred only as a result of a retrospective change in law or regulations or the interpretation or practice thereof by any relevant authority coming into force after the [ REDACTED ].

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STATUTORY AND GENERAL INFORMATION

APPENDIX IV

2. Litigation

As of the Latest Practicable Date, our Company was not aware of any other litigation or arbitration proceedings of material importance pending or threatened against it or any of our Directors that could have a material adverse effect on our financial condition or results of operations.

3. Joint Sponsors

The Joint Sponsors have made an application on behalf of our Company to the Listing Committee for the [ REDACTED ] of, and permission to [ REDACTED ], the Shares in issue and to be issued as mentioned in this Document (including any Shares which may be issued pursuant to the exercise of the [ REDACTED ]).

Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors as set out in Rule 3A.07 of the Listing Rules.

The Joint Sponsors’ fees are US$2.0 million and are payable by our Company.

4. Preliminary expenses

The preliminary expenses relating to the incorporation of our Company are approximately US$6,000 and are payable by our Company.

5. Promoter

Our Company has no promoter for the purpose of the Listing Rules. Within the two years immediately preceding the date of this Document, no cash, securities or other benefit has been paid, allotted or given nor are any proposed to be paid, allotted or given to any promoters in connection with the [ REDACTED ] and the related transactions described in this Document.

6. Taxation of holders of Shares

(a) Hong Kong

The sale, purchase and transfer of Shares registered with our Company’s Hong Kong branch register of members will be subject to Hong Kong stamp duty, the current rate charged on each of the purchaser and seller is 0.1% of the consideration or, if higher, the fair value of the Shares being sold or transferred. Profits from dealings in the Shares arising in or derived from Hong Kong may also be subject to Hong Kong profits tax. Our Directors have been advised that no material liability or estate duty under the laws of China or Hong Kong would be likely to fall upon any member of our Group.

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STATUTORY AND GENERAL INFORMATION

APPENDIX IV

(b) the Cayman Islands

Under the present Cayman Islands law, there is no stamp duty payable in the Cayman Islands on transfers of Shares given that our Company has no interest in land in the Cayman Islands.

(c) Consultation with professional advisors

Intending holders of the Shares are recommended to consult their professional advisors if they are in doubt as to the taxation implications of holding or disposing of or dealing in the Shares. It is emphasized that none of our Company, our Directors or the other parties involved in the [ REDACTED ] can accept responsibility for any tax effect on, or liabilities of, holders of Shares resulting from their subscription for, purchase, holding or disposal of or dealing in Shares or exercise of any rights attaching to them.

7. Qualification of Experts

The following are the qualifications of the experts who have given their opinion or advice which are contained in, or referred to in this Document:

Name Qualifications Huatai Financial Holdings (Hong Kong) Licensed under the SFO to conduct type 1 Limited (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities as defined under the SFO UBS Securities Hong Kong Limited Licensed under the SFO and permitted to carry out type 1 (dealing in securities), type 2 (dealing in futures contracts), type 6 (advising on corporate finance) and type 7 (providing automated trading services) regulated activities (as defined under the SFO)

ABCI Capital Limited Licensed under the SFO to conduct type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO

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APPENDIX IV

STATUTORY AND GENERAL INFORMATION

Name
CCB International Capital Limited
CLSA Capital Markets Limited
Haitong International Capital Limited
PricewaterhouseCoopers
Conyers Dill & Pearman
King & Wood Mallesons
China Index Academy

Qualifications

Licensed
corporation
to
conduct
type
1
(dealing in securities), type 4 (advising on
securities) and type 6 (advising on corporate
finance) regulated activities as defined under
the SFO
Licensed under the SFO to conduct type 4
(advising on securities) and type 6 (advising
on corporate finance) regulated activities as
defined under the SFO
Licensed under the SFO and permitted to
carry out Type 6 (advising on corporate
finance) regulated activities (as defined under
the SFO)
Certified
Public
Accountants
under
Professional Accountant Ordinance (Cap. 50)
and Registered Public Interest Entity Auditor
under Financial Reporting Council Ordinance
(Cap. 588)
Cayman Islands attorneys-at law
PRC legal advisors
Industry consultant

8. Consents of Experts

Each of the experts named in “—D. Other information—7. Qualification of Experts” in this Appendix has given and has not withdrawn its respective written consent to the issue of this Document with the inclusion of its report and/or letter and/or opinion and/or the references to its name included herein in the form and context in which it is respectively included.

9. Interests of experts in our Company

None of the persons named in “—D. Other information—7. Qualification of Experts” in this Appendix is interested beneficially or otherwise in any Shares or shares of any member of our Group or has any right or option (whether legally enforceable or not) to subscribe for or nominate persons to subscribe for any shares or securities in any member of our Group.

– IV-19 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

10. Binding Effect

This Document shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so far as applicable.

11. [ REDACTED ]

12. Miscellaneous

(a) Within the two years immediately preceding the date of this Document:
(i) save as disclosed in the section headed “History, Reorganization and Corporate Structure,” no share or loan capital of our Company or any of our subsidiaries has been issued or agreed to be issued or is proposed to be fully or partly paid either for cash or a consideration other than cash;
(ii) no share or loan capital of our Company or any of our subsidiaries is under option or is agreed conditionally or unconditionally to be put under option;
(iii) no commissions, discounts, brokerages or other special terms have been granted or agreed to be granted in connection with the issue or sale of any share or loan capital of our Company or any of our subsidiaries; and
(iv) no commission has been paid or is payable for subscription, agreeing to subscribe, procuring subscription or agreeing to procure subscription of any share in our Company or any of our subsidiaries;
(b) there are no founder, management or deferred shares nor any debentures in our Company or any of our subsidiaries;

– IV-20 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

STATUTORY AND GENERAL INFORMATION

APPENDIX IV

(c) our Directors confirm that there has been no material adverse change in the financial or trading position or prospects of our Group since June 30, 2020 (being the date which the latest audited combined financial information of our Group were made up);
(d) there has not been any interruption in the business of our Group which may have or has had a significant effect on the financial position of our Group in the 12 months preceding the date of this Document;
(e) the principal register of members of our Company will be maintained in the Cayman Islands by [ REDACTED ] and a branch register of members of our Company will be maintained in Hong Kong by [ REDACTED ]. Unless our Directors otherwise agree, all transfer and other documents of title of Shares must be lodged for registration with and registered by the [ REDACTED ] and may not be lodged in the Cayman Islands. All necessary arrangements have been made to enable the Shares to be admitted to [ REDACTED ];
(f) no company within our Group is presently listed on any stock exchange or traded on any trading system;
(g) our Directors have been advised that under Cayman Islands law the use of a Chinese name by our Company in conjunction with the English name does not contravene Cayman Islands law;
(h) our Company has no outstanding convertible debt securities or debentures;
(i) there is no arrangement under which future dividends are waived or agreed to be waived; and
(j) there is no restriction affecting the remittance of profits or repatriation of capital by our Company into Hong Kong from outside Hong Kong.

13. Bilingual Document

The English and Chinese language versions of this Document are being published separately, in reliance upon the exemption provided by section 4 of the Companies (Exemption from Companies and Prospectuses from Compliance Provisions) Notice (Chapter 32L of the Laws of Hong Kong). In case of any discrepancies between the English language version and Chinese language version of this Document, the English language version shall prevail.

– IV-21 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to the copy of this Document delivered to the Registrar of Companies in Hong Kong for registration were:

(a) a copy of each of the [ REDACTED ];
(b) the written consents referred to in “Appendix IV—D. Other Information—8. Consents of Experts”;
(c) a copy of each of the material contracts referred to in “Appendix IV—B. Information about Our Business—1. Summary of Material Contracts”; and
(d) [ REDACTED ].

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Sidley Austin at Level 39, Two International Finance Centre, 8 Finance Street, Central, Hong Kong during normal business hours from 9:30 a.m. to 5:30 p.m. up to and including the date which is 14 days from the date of this Document:

(a) the Memorandum of Association and the Articles of Association;
(b) the Accountant’s Report from PricewaterhouseCoopers, the text of which is set out in Appendix I to this Document;
(c) the report from PricewaterhouseCoopers in respect of the unaudited pro forma financial information, the text of which is set out in Appendix II to this Document;
(d) the audited combined financial statements of our Group for the financial years ended December 31, 2017, 2018 and 2019 and the six months ended June 30, 2020;
(e) the legal opinion issued by King and Wood Mallesons, the PRC Legal Advisors in respect of our Group’s business operations and property interests in the PRC;
(f) the letter of advice from Conyers Dill & Pearman, our Cayman legal advisors, summarizing certain aspects of the Cayman Islands company law referred to in “Appendix III—Summary of the Constitution of the Company and Cayman Islands Company Law”;
(g) the industry report prepared by China Index Academy, the industry consultant;
(h) the Companies Law;

– V-1 –

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

(i) the material contracts referred to in “Appendix IV—B. Information about Our Business—1. Summary of Material Contracts”;
(j) the service contracts and letters of appointment with each of our Directors referred to in “Appendix IV—C. Further Information about Directors and Substantial Shareholders—1. Directors—(b) Particulars of service contracts and letters of appointment”;
(k) the written consents referred to in “Appendix IV—D. Other Information—8. Consents of Experts”; and
(l) [ REDACTED ].

– V-2 –

AI assistant

Evergrande Property Services Group Limited — Proxy Solicitation & Information Statement 2020

51023_rns_2020-09-29_80a49f0e-d2fc-41f7-8b8f-fcd05a5b0e3b.pdf

Application Proof of

Evergrande Property Services Group Limited 恒大物業集團有限公司

WARNING

IMPORTANT

Evergrande Property Services Group Limited 恒大物業集團有限公司

[ REDACTED ]

Joint Sponsors and [ REDACTED ]

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CONTENTS

IMPORTANT NOTICE TO INVESTORS

CONTENTS

SUMMARY

OVERVIEW

SUMMARY

OUR BUSINESS MODEL

SUMMARY

SUMMARY

OUR COMPETITIVE STRENGTHS

OUR BUSINESS STRATEGIES

CONTROLLING SHAREHOLDERS

SUMMARY

OUR CUSTOMERS AND SUPPLIERS

SUMMARY KEY FINANCIAL INFORMATION

Selected Items of Combined Statements of Comprehensive Income

SUMMARY

Selected Items of Combined Balance Sheets

Selected Items of Combined Statements of Cash Flows

SUMMARY

Summary of Key Financial Ratios

[ REDACTED ] STATISTICS

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SUMMARY

DIVIDEND POLICY

USE OF PROCEEDS

RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE

New Property Management Agreements

Acquisitions

Our Financial Performance Subsequent to the Track Record Period

COVID-19 PANDEMIC

SUMMARY

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RISK FACTORS

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Evergrande Property Services Group Limited Proxy Solicitation & Information Statement 2020