Zhenro Properties Group Limited — Annual Report 2017

Mar 28, 2018

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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Zhenro Properties Group Limited 正榮地產集團有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock code: 6158)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED DECEMBER 31, 2017

HIGHLIGHTS

• Contracted sales for the year ended December 31, 2017 was RMB70,153.4 million, an increase of 78.5% as compared to RMB39,291.9 million for the year ended December 31, 2016

• Revenue for the year ended December 31, 2017 was RMB19,995.1 million, an increase of 36.9% as compared to RMB14,603.5 million for the year ended December 31, 2016

• Gross profit for the year ended December 31, 2017 was RMB4,217.4 million, an increase of approximately 33.1% as compared to RMB3,169.7 million for the year ended December 31, 2016

• Profit and total comprehensive income for the year ended December 31, 2017 was RMB1,521.4 million, an increase of 22.4% as compared to RMB1,243.2 million for the year ended December 31, 2016

• Core net profit for the year ended December 31, 2017 was RMB1,256.0 million, an increase of 57.5% as compared to RMB797.6 million for the year ended December 31, 2016

• Earnings per share attributable to ordinary equity holders of the Company was RMB0.47 per share for the year ended December 31, 2017, an increase of 20.5% from RMB0.39 per share for the year ended December 31, 2016

FINAL DIVIDEND

Proposed final dividend of HK$0.10 per share (equivalent to RMB0.08 per share), amounting to approximately a total of HK$412.3 million (or approximately RMB329.9 million) for the year ended December 31, 2017 and representing approximately 21.7% of the Group’s net profit for the year ended December 31, 2017.

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ANNUAL RESULTS

The board of director (the “ Board ”) of Zhenro Properties Group Limited (the “ Company ”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (the “ Group ”) for the year ended December 31, 2017. The annual results have been prepared in accordance with International Financial Reporting Standards (the “ IFRS ”). In addition, the annual results have also been reviewed by the audit committee of the Company (the “ Audit Committee ”).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2017

Notes REVENUE 4 Cost of sales Gross profit Other income and gains 4 Selling and distribution expenses Administrative expenses Other expenses Fair value gains on investment properties Finance costs 5 Share of profits and losses of: Joint ventures Associates PROFIT BEFORE TAX Income tax expense 6 PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR	2017 RMB’000 19,995,061 (15,777,701) 4,217,360 154,221 (641,043) (664,519) (40,873) 353,798 (551,539) (65,557) (12,269) 2,749,579 (1,228,185) 1,521,394	2016 RMB’000 14,603,520 (11,433,831) 3,169,689 48,642 (587,476) (477,292) (19,528) 594,150 (356,072) (7,205) — 2,364,908 (1,121,686) 1,243,222

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) Year ended 31 December 2017

Notes Attributable to: Owners of the Company Non-controlling interests EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY Basic and diluted 8	2017 RMB’000 1,408,876 112,518 1,521,394 RMB0.47	2016 RMB’000 1,183,256 59,966
		1,243,222
		RMB0.39

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2017

Notes NON-CURRENT ASSETS Property, plant and equipment Investment properties Prepaid land lease payments Other Intangible assets Investments in joint ventures Investments in associates Deferred tax assets Total non-current assets CURRENT ASSETS Available-for-sale investments Properties under development Completed properties held for sale Trade receivables 9 Due from related companies Due from a shareholder Prepaid land lease payments Prepayments, deposits and other receivables 10 Tax recoverable Restricted cash Pledged deposits Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade and bills payables 11 Other payables and accruals 12 Advances from customers Due to related companies Due to shareholders Corporate bond	2017 RMB’000 74,702 8,542,700 125,360 7,130 1,404,370 207,587 1,059,807 11,421,656 5,000 40,802,768 16,103,145 15,605 2,677,975 — 2,926,996 11,815,558 986,699 3,931,480 1,195,303 14,539,485 95,000,014 5,539,852 4,471,244 39,324,143 801,280 — 2,002,359	2016 RMB’000 50,194 7,421,860 387,435 5,238 46,894 — 821,090
		8,732,711
		— 37,524,366 9,526,678 10,205 1,462,879 8,210 6,941,396 3,091,874 953,569 2,984,436 832,654 14,689,689
		78,025,956
		5,506,441 968,033 32,612,783 7,648 79,856 —

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) 31 December 2017

Notes Interest-bearing bank and other borrowings Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank and other borrowings Corporate bond Deferred tax liabilities Total non-current liabilities Net assets EQUITY Equity attributable to owners of the Company Share capital Reserves Perpetual capital securities Non-controlling interests Total equity	2017 RMB’000 20,981,757 1,429,557 74,550,192 20,449,822 31,871,478 19,079,421 — 567,756 19,647,177 12,224,301 3 8,178,781 8,178,784 2,974,443 1,071,074 12,224,301	2016 RMB’000 10,319,155 1,011,813
		50,505,729
		27,520,227
		36,252,938
		24,714,906 1,988,777 559,324
		27,263,007
		8,989,931
		— 7,974,754
		7,974,754 — 1,015,177
		8,989,931

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NOTES TO FINANCIAL STATEMENTS 31 December 2017

1. CORPORATE AND GROUP INFORMATION

The Company was incorporated as an exempted company with limited liability in the Cayman Islands on July 21, 2014. The Company’s shares were listed on the Main Board of the Stock Exchange of Hong Kong on January 16, 2018. The registered office of the Company is located at 27 Hospital Road, George Town, Grand Cayman KY 1-9008, Cayman Islands.

During the year, the Group was principally involved in property development, property leasing and commercial property management.

In the opinion of the Directors, the ultimate holding company of the Company is RoYue Limited, which is incorporated in the British Virgin Islands.

2.1 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following revised IFRSs for the first time for the current year’s financial statements.

Amendments to IAS 7 Disclosure Initiative Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses Amendments to IFRS Disclosure of Interests in Other Entities: Clarification of the Scope 12 included in of IFRS 12 Annual Improvements to IFRSs 2014-2016 Cycle

The adoption of the above revised standards has had no significant financial effect on the financial statements.

2.2 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised IFRSs, that have been issued but not yet effective, in these financial statements. The Group intends to adopt them, if applicable, when they become effective.

Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions[1] Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts[1] IFRS 9 Financial Instruments[1] Amendments to IFRS 9 Prepayment Features with Negative Compensation[2]

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• 2.2 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED)

Amendments to IFRS Sale or Contribution of Assets between an Investor and its 10 and IAS 28 Associate or Joint Venture[3] IFRS 15 Revenue from Contracts with Customers[1] Amendments to IFRS Clarifications to IFRS 15 Revenue from Contracts with Customers[1] 15 IFRS 16 Leases[2] IFRS 17 Insurance Contracts[3] Amendments to IAS 19 Plan Amendment, Curtailment or Settlement[2] Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures[2] Amendments to IAS 40 Transfers of Investment Property[1] IFRIC 22 Foreign Currency Transactions and Advance Consideration[1] IFRIC 23 Uncertainty over Income Tax Treatments[2] Annual Improvements Amendments to the following standards: to IFRSs 2014-2016 � IFRS 1 First-time Adoption of International Financial Cycle Reporting Standards[1] � IAS 28 Investments in Associates and Joint Ventures[1] Annual Improvements Amendments to the following standards: to IFRSs 2015-2017 � IFRS 3 Business Combinations[2] Cycle � IFRS 11 Joint Arrangements[2] � IAS 12 Income Taxes[2] � IAS 23 Borrowing Costs[2]

• 1 Effective for annual period beginning on or after 1 January 2018

• 2 Effective for annual period beginning on or after 1 January 2019

• 3 Effective for annual period beginning on or after 1 January 2021

• 4 No mandatory effective date yet determined but available for adoption

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3 OPERATING SEGMENT INFORMATION

Management monitors the operating results of the Group’s business which includes property development and leasing and commercial property management by project locations for the purpose of making decisions about resource allocation and performance assessment, while no single location’s revenue, net profit or total assets exceeds 10% of the Group’s consolidated revenue, net profit or total assets. As all the locations have similar economic characteristics and are similar in the nature of property development and leasing and management, the nature of the aforementioned business processes, the type or class of customer for the aforementioned business and the methods used to distribute the properties or provide the services, thus all locations were aggregated as one reportable operating segment.

Geographical information

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

Information about major customers

No sales to a single customer or a group of customers under common control accounted for 10% or more of the Group’s revenue at the end of each reporting period.

4 REVENUE, OTHER INCOME AND GAINS

Revenue represents income from the sale of properties, property management service income, and rental income during the reporting year.

An analysis of revenue, other income and gains is as follows:

Revenue Sale of properties Rental income Property management service income Others	2017 RMB’000 19,882,015 71,354 38,816 2,876 19,995,061	2016 RMB’000 14,534,660 49,227 18,772 861
		14,603,520

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4 REVENUE, OTHER INCOME AND GAINS (CONTINUED)

Other income and gains Gain on disposal of items of property, plant and equipment Gain on disposal of subsidiaries Interest income Forfeiture of deposits Others	2017 RMB’000 438 1,708 138,182 10,257 3,636 154,221	2016 RMB’000 961 — 36,538 8,644 2,499
		48,642

5. FINANCE COSTS

An analysis of finance costs is as follows:

Interest on bank and other borrowings Interest on corporate bond Less: Interest capitalised	2017 RMB’000 2,806,763 141,582 (2,396,806) 551,539	2016 RMB’000 2,965,111 30,987 (2,640,026)
		356,072

6. INCOME TAX

The Group is subject to income tax on an entity basis on profits arising in or derived from the tax jurisdictions in which members of the Group are domiciled and operate. Pursuant to the rules and regulations of the Cayman Islands and British Virgin Islands, the Group’s subsidiaries incorporated in the Cayman Islands and British Virgin Islands are not subject to any income tax. The Group’s subsidiaries incorporated in Hong Kong are not liable for income tax as they did not have any assessable profits currently arising in Hong Kong for the year ended 31 December 2017.

Subsidiaries of the Group operating in Mainland China are subject to PRC corporate income tax rate at a of 25% for the year.

LAT is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds from sale of properties less deductible expenditures including land costs, borrowing costs and other property development expenditures. The Group has estimated, made

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and included in taxation a provision for LAT according to the requirements set forth in the relevant Mainland China tax laws and regulations. The LAT provision is subject to the final review and approval by the local tax bureau.

Current tax: PRC corporate income tax PRC LAT Deferred tax Total tax charge for the year	2017 RMB’000 848,245 610,225 (230,285) 1,228,185	2016 RMB’000 741,022 548,426 (167,762
		1,121,686

7. DIVIDENDS

Proposed final - HK0.10 (2016: Nil) per ordinary share	2017 RMB’000 329,918	2016 RMB’000 —

The proposed final dividend for the year is subject to the approval of the Company’s shareholders at the forthcoming annual general meeting.

8. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

The calculation of the basic earnings per share amount is based on the profit for the year attributable to ordinary equity holders of the Company, and the weighted average number of ordinary shares of 2,999,974,584 (2016: 2,999,950,001) in issue during the year.

The weighted average number of ordinary shares used to calculate the basic earnings per share amounts for the years ended 31 December 2016 and 2017 was based on 1 share of the Company as at 1 January 2016, 49,999 shares of the Company issued in the year ended 31 December 2017, and 2,999,950,000 ordinary shares of the Company issued under the capitalisation issue occurred after the reporting period, as if these additional shares issued under the capitalisation issue had been in issue throughout the years ended 31 December 2017 and 2016.

No adjustment has been made to the basic earnings per share amounts presented for the years ended 31 December 2017 and 2016 in respect of a dilution as the Group had no potentially dilutive ordinary shares in issue during the years ended 31 December 2017 and 2016.

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The calculations of the basic and diluted earnings per share amounts are based on:

Earnings Profit attributable to ordinary equity holders of the Company Shares Weighted average number of ordinary shares in issue during the year Earnings per share Basic and diluted 9. TRADE RECEIVABLES Trade receivables Impairment	2017 RMB’000 1,408,876 2,999,974,584 RMB0.47 2017 RMB’000 15,605 — 15,605	2016 RMB’000 1,183,256	2016 RMB’000 1,183,256
		2,999,950,001
			RMB0.39
			2016 RMB’000 10,205 —
			10,205

Trade receivables mainly represent rentals receivable from tenants. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk.

Trade receivables are unsecured and non-interest-bearing. The carrying amounts of trade receivables approximate to their fair values. An aging analysis of the trade receivables as at the end of the reporting period, based on the invoice date, is as follows:

		2017	2016
		RMB’000	RMB’000
Less	than 1 year	11,693	10,205
Over	1 year	3,912	—
		15,605	10,205

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9. TRADE RECEIVABLES (CONTINUED)

Receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, the directors of the Company are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

10. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

Prepayments related to land use rights Deposits Prepayments for acquisition of land use rights Other tax recoverable Due from non-controlling shareholders of the subsidiaries Prepayments for construction cost Prepayments for investment in a joint venture Other receivables	2017 RMB’000 4,919,534 2,653,754 2,252,435 1,336,866 479,138 85,362 — 88,469 11,815,558	2016 RMB’000 — 696,731 305,786 1,280,497 571,270 49,283 116,141 72,166
		3,091,874

Prepayments, deposits and other receivables are unsecured, non-interest-bearing and have no fixed terms of repayment. There was no provision made for impairment of prepayments, deposits and other receivables during the reporting period.

11. TRADE AND BILLS PAYABLES

An aging analysis of the Group’s trade and bills payables as at the end of the reporting period, based on the invoice date, is as follows:

Within 1 year Over 1 year	2017 RMB’000 5,461,411 78,441 5,539,852	2016 RMB’000 5,428,244 78,197
		5,506,441

Trade payables are unsecured and interest-free and are normally settled based on the progress of construction.

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12. OTHER PAYABLES AND ACCRUALS

Deposits related to land use rights Advances from non-controlling shareholders of subsidiaries Retention deposits related to construction Interest payable Payroll and welfare payable Deposits related to sales of properties Business tax and surcharges Maintenance fund Advances from employees Others	2017 RMB’000 2,737,349 851,470 351,086 161,731 112,288 78,950 69,405 61,970 145 46,850 4,471,244	2016 RMB’000 — 68,600 512,420 102,067 74,463 37,329 43,390 78,520 697 50,547
		968,033

Other payables and advances from non-controlling shareholders of subsidiaries are unsecured, non-interest-bearing and repayable on demand. The fair values of other payables at the end of the reporting period approximated to their corresponding carrying amounts.

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CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of the Board, I am pleased to present you the annual results of Zhenro Properties Group Limited for the year ended December 31, 2017.

RESULTS

The Group completed its initial public offering (“ IPO ”) in early 2018 and was successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) on January 16, 2018. The Group has been widely recognized by the capital market since its IPO for its sound performance during the past year of 2017.

In 2017, the Group achieved a rapid growth. The Group’s revenue increased by approximately 36.9% from RMB14,603.5 million for the year ended December 31, 2016 to RMB19,995.1 million for the year ended December 31, 2017. Profit and total comprehensive income attributable to owners of the Company increased by approximately 19.1% from RMB1,183.3 million for the year ended December 31, 2016 to RMB1,408.9 million for the year ended December 31, 2017. Core net profit increased by 57.5% from RMB797.6 million for the year ended December 31, 2016 to RMB1,256.0 million for the year ended December 31, 2017. In addition, the Group issued unsecured perpetual bonds in the aggregate principal amount of RMB3.0 billion in 2017, which further provided it with additional access to external financing.

BUSINESS REVIEW of 2017

During the past year, the real estate market in China remained significantly unsure and fluctuating. The PRC government has continued to implement stringent control measures. In particular, in overheated cities, tightened policies restricting purchases, mortgages and sales have been implemented. However, given the entire sizable PRC real estate market, housing demand in most second- and third-tier cities remains strong.

The Group has established a nationwide presence with primary focuses on four core business regions, namely Yangtze River Delta Economic Region, Midwest China Economic Region, Bohai Economic Rim and Western Taiwan Straits Economic Zone. Its existing market position and the strategic locations it has secured have well positioned the Group to continue to capitalize on the great growth potential of the PRC real estate market.

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In 2017, the Group continued its nationwide expansion and entered into five new cities, including Zhengzhou, Hefei, Jinan, Jiaxing and Chuzhou. It acquired a total of 23 new land parcels in 2017, mainly in Hefei, Suzhou, Putian, Pingtan, Jinan and Jiaxing. It also cooperated with third-party business partners to jointly acquire 18 new land parcels in cities including Suzhou, Hefei, Tianjin, Nanjing, Shanghai, Nanchang and Wuhan.

As of December 31, 2017, the Group’s total land bank was over 12 million sq.m. on an attributable basis, strategically locating in 18 cities in four core business regions, including Shanghai, Nanjing, Suzhou, Hefei, Wuhan, Changsha, Xi’an, Tianjin, Fuzhou, Nanchang and Zhengzhou.

Outlook for 2018

The Group believes that the PRC government’s control measures have been proved effective, evidenced by the slowing down of housing price growth nationwide in 2017, especially in those overheated cities. It is unlikely that more extreme control measures would be imposed in the near future. Nevertheless, the current control environment may continue for a prolonged term before efficient long-term control mechanism is well established, such as rental homes currently promoted by the PRC government.

It is believed that large-scale urbanization and the rise and relocation of middle-class in China, rather than the financing or administrative policies, are the fundamental growth drivers of the PRC real estate market.

As such, the Group upholds its brand position of “home upgrade master (改善大師)” with a vision of introducing quality residences with a gross floor area (“ GFA ”) ranging from 90 sq.m. to 200 sq.m. to affluent mid- to high-end customers with home-upgrade demand. The Group believes these customers have relatively high disposable income and strong purchasing power and place higher priority on quality rather than price in their property purchase decision making process. To implement its market positioning strategy, the Group has developed four product series of residential property projects, namely the “優家 (Great Home)” series, the “精工 (Craftsman)” series, the “大師 (Masterpiece)” series and the “典藏 (Collection)” series, each targeting different segments of our target customers. “Great Home” series targets mainly first-time home buyers and “Craftsman” series focuses primarily on the demand of first-time home upgraders and middle class first-time home buyers, who represent a majority of the Group’s target customers. “Masterpiece” series mainly targets mid-to-high home upgraders for their second and subsequent home upgrades. “Collection” series is positioned as luxury home collection for the Group’s target high-end customers.

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Similarly, the Group’s commercial property portfolios comprised of three product lines, the “財富中心 (Fortune Center)” series, the “時代廣場 (Times Plaza)” series and “正榮街 (Zhenro Street)” series, each with its own positioning and floor size. The Group believes such market positioning strategy best leverages its property development capabilities and helps it maintain sustainable growth in current market conditions.

Since its IPO, the Group has endeavored to further optimize its debt structure, broaden financing channels and continue to enhance financial strengths.

Success lies in the ability to understand and leverage market trends. In 2018, the Group is ready to face the challenges and changes. To support a sustainable development, it will closely monitor and adapt to the evolving market trends and will strive to achieve recognition by the real estate industry and capital market and capture opportunities taking advantage of its integrity, quality and responsibility.

Appreciation

Finally, on behalf of the Board, I would like to express our sincere appreciation to all shareholders for their support, and all employees for their dedication and hard work in the past year. In 2018, we will continue to uphold our core value of “prosperity from integrity” and achieve a sustainable and healthy growth, so as to bring our shareholders economic returns and develop ourselves into a respectful and sustainable competitive enterprise.

Zhenro Properties Group Limited

HUANG Xianzhi Chairman

Shanghai, China March 28, 2018

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MANAGEMENT DISCUSSION AND ANALYSIS

PERFORMANCE HIGHLIGHTS

Contracted sales (1) Contracted sales (RMB millions) Contracted GFA sold (sq.m.) Contracted ASP (RMB/sq.m.) Selected financial information (RMB millions) Revenue Cost of sales Gross profit Profit before tax Profit and total comprehensive income for the year Attributable to: Owners of the Company Non-controlling interest Gross profit margin (%) Core net profit (2) Total assets (RMB millions) Total liabilities (RMB millions) Total equity (RMB millions) Equity attributable to owners of the Company (RMB millions) Current ratio (3) Net gearing ratio (4)	For the Year Ended December 31, 2017 2016 70,153 39,292 3,795,355 1,875,953 18,484 20,945 19,995 14,604 15,778 11,434 4,217 3,170 2,750 2,365 1,521 1,243 1,409 1,183 112 60 21.1% 21.7% 1,256 798 As of December 31, 2017 2016 106,422 86,759 94,198 77,769 12,224 8,990 8,179 7,975 1.3 1.5 183.2% 206.0%	Year-over- Year Change
		78.5% 102.3% (11.7)% 36.9% 38.0% 33.1% 16.3% 22.4% 19.1% 87.6% (0.6)% 57.5% Year-over- Year Change
	2017 106,422 94,198 12,224 8,179 1.3 183.2%
		22.7% 21.1% 36.0% 2.6%

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Notes:

• (1) Includes contracted sales by the Group’s subsidiaries, joint ventures and associated companies. Contracted sales data is unaudited and is based on internal information of the Group. Contracted sales data may be subject to various uncertainties during the process of collating such sales information and is provided for investors’ reference only.

• (2) Defined as net profit excludes fair value gains/losses and net of deferred taxes.

• (3) Current ratio equals to current assets divided by current liabilities as of the end of the year.

• (4) Net gearing ratio equals to total borrowings less cash and bank balances divided by total equity as of the end of the year and multiplied by 100.

Property Development

Contracted Sales

For the year ended December 31, 2017, the Group recorded contracted sales of RMB70,153.4 million, representing a 78.5% year-over-year increase from 2016, which was primarily due to the increase in salable GFA accumulated by the Group in first- and second-tier cities in the past several years by executing the Group’s development strategies.

For the year ended December 31, 2017, total contracted GFA sold amounted to approximately 3.8 million sq.m., representing an increase of approximately 102.3% from approximately 1.9 million sq.m. for the year ended December 31, 2016. Contracted average selling price (“ ASP ”) for the year ended December 31, 2017 was approximately RMB18,484 per sq.m., compared with RMB20,945 per sq.m. for the year ended December 31, 2016. The decrease was primarily due to the increase in the proportion of GFA with a relatively lower ASP among total contracted GFA in 2017.

Contracted sales from Yangtze River Delta Economic Region, Midwest China Economic Region, Bohai Economic Rim and Western Taiwan Straits Economic Zone contributed to approximately 45.2%, 5.9%, 6.8% and 42.1%, respectively, of the Group’s total contracted sales in 2017.

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The following table sets out the geographic breakdown of the Group’s contracted sales in 2017.

Yangtze River Delta Economic Region Midwest China Economic Region Bohai Economic Rim Western Taiwan Straits Economic Zone Total	Contracted GFA Sold sq.m. 1,192,184 383,828 191,443 2,027,901 3,795,355	Contracted Sales RMB’000 31,706,344 4,161,566 4,754,747 29,530,733 70,153,390	Contracted ASP RMB/sq.m. 26,595 10,842 24,836 14,562 18,484	% of Contracted Sales	% of Contracted Sales
					% 45.2% 5.9% 6.8% 42.1%
					100.0%

Advances from customers amounted to approximately RMB39,324.1 million for the year ended December 31, 2017, representing an increase of 20.6% from approximately RMB32,612.8 million for the year ended December 31, 2016. Such advances from customers represents the proceeds received from customers in connection with our pre-sale of properties, which formed a solid basis for the Group’s future growth in recognized revenue.

Revenue Recognized from Sales of Properties

Revenue recognized from sales of properties increased by approximately 36.8% from RMB14,534.7 million for the year ended December 31, 2016 to RMB19,882.0 million for the year ended December 31, 2017, accounting for 99.4% of the Group’s total revenue. Total completed and delivered GFA amounted to 1.5 million sq.m. in 2017, representing a 21.2% from 2016. The Group’s recognized ASP from sales of properties was approximately RMB13,116 per sq.m. in 2017, representing a 12.9% increase from RMB11,617 per sq.m. in 2016, primarily due to the Group’s further penetration in Yangtze River Delta Economic Region and Bohai Economic Rim, where prevailing market prices of properties are relatively higher.

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The increase in revenue recognized from sales of properties was primarily due to (i) more GFA completed and delivered as a result of the Group’s continuing expansion, and (ii) an overall increase in the ASP recognized in 2017.

During the year of 2017, the properties delivered by the Group included Tianjin Zhenro Jade Bay (天津正榮•潤璟灣), Shanghai Hongqiao Zhenro Center (上海虹橋•正榮中心) and Nanjing Zhenro Splendid Land 2 (南京正榮•潤錦城) and others. The following table sets forth the details of the revenue recognized from the sales of properties of the Group by geographical location for the periods indicated.

Yangtze River Delta Economic Region Western Taiwan Straits Economic Zone Bohai Economic Rim Midwest China Economic Region Total	Recognized Revenue from Sales of Properties	Recognized Revenue from Sales of Properties	Recognized Revenue from Sales of Properties	% of Recognized Revenue from Sale of Properties	% of Recognized Revenue from Sale of Properties	% of Recognized Revenue from Sale of Properties		**Total GFA **	Delivered		Recognized ASP	Recognized ASP
		RMB’000 2017 10,087,757 7,373,677 2,294,750 125,831 19,882,015	RMB’000 2016 5,560,628 8,502,426 — 471,606		% 2017 50.8 37.1 11.5 0.6 100.0	% 2016 58.5 38.3 — 3.2		sq.m. 2017 474,639 849,565 171,606 20,075 1,515,885	sq.m. 2016 290,755 849,790 — 110,572		RMB/ Sq.m. 2017 21,254 8,679 13,372 6,268 13,116	RMB/ Sq.m. 2016 19,125 10,005 — 4,265
			14,534,660			100.0			1,251,117			11,617

Completed Properties Held for Sale

Properties held for sale represent completed properties remaining unsold at the end of each financial period and are stated at the lower of cost and net realizable value. Cost of properties held for sale is determined by an apportionment of related costs incurred attributable to the unsold properties.

As of December 31, 2017, the Group had completed properties held for sale of RMB16,103.1 million, representing a 69.0% increase from RMB9,526.7 million as of December 31, 2016. The increase was primarily due to the increased number of completed properties in 2017. The Group has obtained the construction completion certificates in respect of all completed properties held for sale.

— 20 —

Properties Under Development

Properties under development are intended to be held for sale after completion. Properties under development are stated at the lower of cost comprising land costs, construction costs, capitalized interests and other costs directly attributable to such properties incurred during the development period and net realizable value. Upon completion, the properties are transferred to completed properties held for sale.

As of December 31, 2017, the Group had properties under development of RMB40,802.8 million, representing an 8.7% increase from RMB37,524.4 million as of December 31, 2016. The increase was primarily because the Group continued to accelerate its property development activities which resulted in an increase in properties under development in 2017.

PROPERTY INVESTMENT

Rental Income

The Group’s rental income for the year ended December 31, 2017 was approximately RMB71.4 million, representing a 44.9% increase from 2016. The increase was primarily due to the continued growth of our investment properties completed and put in operation, in particular, the commencement of operation of Fuzhou Zhenro Fortune Center in late 2016.

Investment Properties

As of December 31, 2017, the Group had 11 investment properties with a total GFA of approximately 761,722 sq.m. Out of such investment properties portfolio of the Group, 6 investment properties with a total GFA of approximately 469,193 sq.m. had commenced leasing.

LAND BANK

In 2017, the Group continued its nationwide expansion and entered into five new cities. It acquired a total of 41 new land parcels with a total site area of approximately 2.6 million sq.m. and an aggregate estimated GFA of approximately 7.1 million sq.m. The following table sets forth details of the Group’s newly acquired land parcels during the year ended December 31, 2017.

— 21 —

Properties developed by the Group and its subsidiaries

City Land Parcel/Project Name Yangtze River Delta Economic Region Jiaxing Jiaxing No. 2017 Jiaxiuzhou-044 Jiaxing Jiaxing No.2017-101 Chuzhou Chuzhou Zhenro Mansion Suzhou Suzhou No. Sudi 2016-WG-77 Parcel B Suzhou Suzhou No. Sudi 2016-WG-77 Parcel C Suzhou Suzhou No. Sudi 2016-WG-77 Parcel A Suzhou Suzhou Miles Splendid Garden Suzhou Suzhou Tian Qin Elegance Garden Suzhou Suzhou Zhengro Xiangshan Piedmont Garden Heifei Hefei Cpital Yue Hefei Hefei City 1907 Hefei Hefei Zhenro Mansion Midwest China Economic Region Xi’an Xi’an Zhenro Mansion Phase I Parcel A Xi’an Xi’an Zhenro Mansion Phase I Parcel A Western Taiwan Straits Economic Zone Fuzhou Fuzhou Zhenro Yuejingtai Fuzhou Mawei No. Mazhongdi 2017-07 Fuzhou Mawei Zhenro Yue Jiang Bay Pingtan Pingtan Zhenro Mansion Phase 1 Pingtan Pingtan Zhenro Mansion Phase 2 Putian Putian No. PS Pai-2017-10 Putian Putian Binxi Zhenro Mansion Putian Putian Shishi Zhenro Mansion Putian Putian No. PS Pai-2017-11 Nanchang Nanchang No. DBA2017077 Bohai Economic Rim Jinan Jinan No. 2017-G121 Jinan Jinan No. 2017-G122 Sub-total	Land Use Residential/retail Residential Residential/retail Residential Residential Retail/SOHO and office Residential/retail Residential/retail Residential Residential/retail/SOHO and office Residential/SOHO and office Residential Residential Retail/SOHO and office Residential Residential Residential Residential/retail Residential/retail Residential Residential/retail Residential Residential/retail/SOHO and office Residential/retail Residential/retail Residential/retail	Site Area sq.m. 72,100 39,984 80,867 24,583 30,760 7,239 98,783 21,638 39,098 120,705 111,380 38,221 24,150 15,172 35,164 36,014 47,200 66,560 52,321 79,698 23,926 33,942 39,848 60,732 57,785 23,013 1,280,881	Estimated Total GFA sq.m. 183,878 68,156 189,809 77,799 94,636 52,493 170,241 48,960 58,084 358,892 192,568 103,391 108,002 103,091 154,554 46,583 144,409 239,620 195,704 159,487 65,850 115,598 101,703 162,760 199,867 72,789 3,468,925	Land Premium RMB millions 878 268 413 2,398(1) / / 459 119 182 1,954 1,805 850 175 149 385 478 393 1,100 1,066 980 359 363 478 403 683 816 17,154	Average Land Cost (Based on the Estimated Total GFA)	Average Land Cost (Based on the Estimated Total GFA)
					RMB/sq.m. 4,776 3,935 2,176 10,661 10,661 10,661 2,699 2,426 3,130 5,444 9,373 8,221 1,620 1,449 2,488 10,253 2,721 4,591 5,447 6,145 5,452 3,140 4,700 2,476 3,418 11,210 4,945
						4,945

— 22 —

Properties developed by the Group’s joint ventures and associated companies

City Land Parcel/Project Name Land Use Yangtze River Delta Economic Region Shanghai Shanghai No. 201419370776439142 Retail/SOHO and office Jiaxing Jiaxing Zhongnan Zhenro Haishang Mingyue Residential/retail Jiaxing Jiaxing Canal Mansion Residential/retail Nanjing Nanjing No. 320115001022GB00780- GB00784 Residential/retail/SOHO and office Suzhou Suzhou Jinhui Zhenro Four Seasons Residential Suzhou Suzhou No. WJ-J-2017-017 Residential/retail Suzhou Suzhou No. WJ-J-2017-016 Residential Suzhou Suzhou Yuzhou Zhaoshang Shili Residential/retail Suzhou Suzhou Lanxi Bay Garden Residential Hefei Hefei Country Garden Zhenro Jade Yue Residential/SOHO and office Hefei Hefei Century World Residential SOHO and office Midwest China Economic Region Zhengzhou Zhengzhou Xuhui Zhenro Capital Mansion Residential/retail Wuhan Wuhan Qingneng Zhenro Mansion Residential/retail Bohai Economic Rim Tianjin Tianjin No. Jinbinbeitanggua 2017-1-A/B/C/D/ E/F/G/H/I/J Residential/retail Tianjin Tianjin No. Jindongxingua 2016-071 Residential/retail Western Taiwan Straits Economic Zone Fujian Fujian Zhenro Yue Long Bay Residential/retail Nanchang Nanchang Garden Residential/retail Nanchang Nanchang Zhenro Linlong Mansion Residential/retail Sub-total Total	Site Area sq.m. 70,857 33,424 63,568 54,311 32,044 5,759 7,585 128,313 66,738 44,787 130,918 69,439 156,511 149,245 45,511 66,706 90,420 72,103 1,288,241 2,569,122	Estimated Total GFA sq.m. 307,227 84,748 147,768 248,880 82,018 14,386 21,534 312,090 122,638 115,773 379,421 221,307 578,645 219,707 206,300 179,745 240,926 181,797 3,664,909 7,133,833	Land Premium RMB millions 1,430 345 442 1,700 510 33 31 1,418 908 417 2,089 989 1,048 1,974 389 263 728 580 15,356 32,510	Average Land Cost (Based on the Estimated Total GFA) RMB/sq.m. 4,655 4,071 2,994 6,831 6,221 2,260 1,415 4,746 7,401 3,598 5,506 4,468 1,811 8,985 1,884 1,463 3,023 3,190 4,190 4,557	Attributable Interest 20.0% 50.0% 50.0% 20.0% 49.0% 50.0% 50.0% 20.0% 36.0% 49.0% 33.0% 24.0% 5.0% 13.0% 14.0% 36.0% 19.0% 25.0%

Note:

(1) Represents the aggregate site area of Suzhou No. Sudi 2016-WG-77 Parcel A, B and C.

— 23 —

Total contractual land premium for the newly acquired land parcels in 2017 was approximately RMB32,509.6 million. The average cost of land parcels acquired in 2017 was approximately RMB4,557 per sq.m.

As such, as of December 31, 2017, the Group had a total of 91 property projects located in 18 cities. Among these properties, 71 projects were developed and owned by the Group and 20 were developed by the Group’s joint venture and associated companies. The Group had a total land bank of over 15 million sq.m. in GFA, or over 12 million sq.m. on an attributable basis, as of December 31, 2017.

Total land bank represents the sum of (i) total GFA available for sale and total leasable GFA for completed properties, (ii) total GFA for properties under development and (iii) total GFA for properties held for future development.

— 24 —

		% of Total Land	Bank	%			4.8%	7.5%	9.0%	6.5%	1.7%	1.2%	29.7%			1.3%	6.3%	2.2%	9.8%		2.6%	1.8%	4.4%
			Total Land Bank	sq.m.			736,870	1,150,167	1,209,146	991,299	252,033	189,809	4,529,325			196,161	961,115	335,038	1,492,314		397,683	272,656	670,338
	Planned GFA of	Future	Development	sq.m.			233,617	—	368,339	551,460	252,033	143,567	1,549,017			35,656	664,850	—	700,506		113,483	272,656	386,139
		GFA under	Development	sq.m.			257,914	876,602	637,228	439,839	—	46,242	2,257,825			160,505	215,908	335,038	711,451		273,634	—	273,634
Completed GFA	Available for	Number of Sale/Leasable	Regions Projects GFA	sq.m.	Properties developed by the Group and its subsidiaries	Yangtze River Delta Economic Region	1 Shanghai 5 245,339	2 Nanjing 4 273,565	3 Suzhou 9 203,579	4 Hefei 3 —	5 Jiaxing 2 —	6 Chuzhou 1 —	Sub-total 24 722,483	Midwest China Economic Region		7 Wuhan 1 —	8 Changsha 2 80,357	9 Xi’an 2 —	Sub-total 5 80,357	Bohai Economic Rim	10 Tianjin 3 10,566	11 Jinan 2 —	Sub-total 5 10,566

— 25 —

		% of Total Land	Bank	%		6.4%	3.1%	4.4%	3.3%	9.5%	0.5%	27.3%	71.2%			2.0%	1.5%	1.6%	3.7%	3.2%	12.0%
			Total Land Bank	sq.m.		975,246	477,655	669,993	508,486	1,451,994	83,357	4,166,731	10,858,708			307,227	232,514	248,880	552,666	495,194	1,836,481		574,133
	Planned GFA of	Future	Development	sq.m.		345,545	260,076	195,704	281,295	436,959	—	1,519,579	4,155,240			307,227	—	248,880	—	99,922	656,029		144,196
Completed GFA	Available for	Number of Sale/Leasable GFA under	Regions Projects GFA Development	sq.m. sq.m.	Western Taiwan Straits Economic Zone	12 Fuzhou 10 88,878 540,823	13 Nanping 1 29,282 188,297	14 Pingtan 5 97,318 376,971	15 Nanchang 7 47,506 179,685	16 Putian 12 264,720 750,314	17 Yichun 2 5,874 77,484	Sub-total 37 533,578 2,113,574	Sub-total 71 1,346,984 5,356,484	Properties developed by the Group’s joint ventures and associated companies	Yangtze River Delta Economic Region	Shanghai 1 — —	Jiaxing 2 — 232,514	Nanjing 1 — —	Suzhou 5 — 552,666	Heifei 2 — 395,273	Sub-total 11 — 1,180,453	Attributable	sub-total — 429,937

— 26 —

		% of Total Land	Bank	%			1.5%	6.3%	2.3%	10.1%				2.8%		2.8%				1.2%	2.7%	3.9%
			Total Land Bank	sq.m.			221,307	967,776	346,350	1,535,433		449,786		426,007		426,007		56,345		179,745	422,724	602,468		155,933
	Planned GFA of	Future	Development	sq.m.			140,189	967,776	41,359	1,149,324		277,823		426,007		426,007		56,345		114,381	—	114,381		41,177
		GFA under	Development	sq.m.			81,118	—	304,991	386,109		171,964		—		—		—		65,364	422,724	488,088		114,756
Completed GFA	Available for	Sale/Leasable	GFA	sq.m.			—	—	—	—		—		—		—		—		—	—	—		—
		Number of	Regions Projects		Midwest China Economic Region		18 Zhengzhou 1	Wuhan 2	Changsha 1	Sub-total 4	Attributable	sub-total	Bohai Economic Rim	Tian jin 2		Sub-total 2	Attributable	sub-total	Western Taiwan Straits Economic Zone	Fuzhou 1	Nanchng 2	Sub-total 3	Attributable	sub-total

— 27 —

		% of Total Land	Bank	%					28.8%								100.0%
			Total Land Bank	sq.m.					4,400,389							1,236,198	15,259,098		12,094,906
	Planned GFA of	Future	Development	sq.m.					2,345,740							519,541	6,500,981		4,674,781
		GFA under	Development	sq.m.					2,054,649							716,657	7,411,133		6,073,141
Completed GFA	Available for	Sale/Leasable	GFA	sq.m.					—							—	1,346,984		1,346,984
		Number of	Projects						20								91
			Regions		Properties developed by	the Group’s joint		ventures and	associated companies	Properties developed by	the Group’s joint		ventures and	associated companies	on an attributable	basis	Total land bank	Total land bank on an	attributable basis

— 28 —

		Total Land Bank(1)	sq.m.			32,146		32,459		106,112		66,371		89,625		30,036		59,276		2,500			111,603
Actual/Estimated	Construction	Completion Date				June 2017		December 2017		May 2021		December 2016		November 2018		May 2016		November 2017		June 2016			July 2018
		Site Area	sq.m.			35,759		22,564		24,039		50,585		23,110		55,274		54,748		60,692			43,045
Primary	Intended Use of	the Project				Residential/retail		Residential		Retail		Retail/SOHO and	office	Retail/SOHO and	office	Residential/retail		Residential		Residential			Residential
Interest	Attributable to	Project Names City the Group		Properties developed by the Group and its subsidiaries	Yangtze River Delta Economic Region	1 Shanghai Hongqiao Shanghai 100.0%	Zhenro Mansion Phase I	Shanghai Hongqiao Shanghai 100.0%	Zhenro Mansion Phase I	2 Shanghai Hongqiao Shanghai 100.0%	Fortune Center	3 Shanghai Hongqiao Shanghai 100.0%	Zhenro Center Phase I	Shanghai Hongqiao Shanghai 100.0%	Zhenro Center Phase II	4 Shanghai Zhenro Royal Shanghai 100.0%	Kingdom Phase I	Shanghai Zhenro Royal Shanghai 100.0%	Kingdom Phase II	5 Shanghai Zhenro The Shanghai 100.0%	Capital of Jinshan Phase	I	Shanghai Zhenro The Shanghai 100.0%	Capital of Jinshan Phase	II

— 29 —

		Total Land Bank(1)	sq.m.	127,505			530		22,022		56,686		736,870	183,878		68,156	252,033	118,806		268,051		304,366
Actual/Estimated	Construction	Completion Date		May 2021			December 2016		November 2017		February 2019			August 2020		October 2020		December 2018		January 2019		May 2019
		Site Area	sq.m.	41,948			33,008		32,000		37,798		514,570	72,100		39,984	112,084	71,345		105,353		84,545
Primary	Intended Use of	the Project		Retail/SOHO and	office		Residential/retail		Residential/retail		Residential			Residential/retail		Residential		Residential/retail		Residential/retail		Residential/retail
Interest	Attributable to	the Group		100.0%			100.0%		100.0%		100.0%			100.0%		100.0%		100.0%		100.0%		100.0%
		City		Shanghai			Shanghai		Shanghai		Shanghai			Jiaxing		Jiaxing		Nanjing		Nanjing		Nanjing
		Project Names		Shanghai Zhenro The	Capital of Jinshan Phase	III	6 Shanghai Zhenro	Fontainebleau Phase I	Shanghai Zhenro	Fontainebleau Phase II	Shanghai Zhenro	Fontainebleau Phase III	Shanghai sub-total	6 Jiaxing No.2017	Jiaxiuzhou-044	7 JiaxingNo.2017-101	Jiaxing sub-total	8 Nanjing Zhenro	Riverside Wonderland	9 Nanjing Zhenro	Splendid Land	10 Nanjing Zhenro Royal	Fame

— 30 —

		Total Land Bank(1)	sq.m.	163,056			295,890			1,150,167	189,809		189,809	45,836		128,730		31,389			133,632		56,389		310,956
Actual/Estimated	Construction	Completion Date		December 2020			December				April 2021			December 2018		August 2017		August 2017			May 2018		December 2018		September 2020
		Site Area	sq.m.	83,048			/			344,291	80,867		80,867	107,542		48,866		35,812			65,679		29,531		105,210
Primary	Intended Use of	the Project		Residential/retail			Retail/SOHO and	office			Residential/retail			Residential/retail		Residential/retail		Residential/retail			Residential		Residential/retail		Residential
Interest	Attributable to	the Group		100.0%			100.0%				100.0%			100.0%		100.0%		100.0%			100.0%		100.0%		100.0%
		City		Nanjing			Nanjing				Chuzhou			Suzhou		Suzhou		Suzhou			Suzhou		Suzhou		Suzhou
		Project Names		11 Nanjing Zhenro	Riverside Violet	Mansion Parcel A	Nanjing Zhenro	Riverside Violet	Mansion Parcel B	Nanjing sub-taoal	12 Chuzhou Zhenro	Mansion	Chuzhou sub-total	13 Suzhou Zhenro Royal	Kingdom	14 Suzhou Zhenro	Happiness Town Phase I	Suzhou Zhenro	Happiness Town Phase	II	15 Suzhou Zhenro Top	Mountain	16 Suzhou Zhenro Majestic	Garden	17 Suzhou Yue Tang Bay	Garden House

— 31 —

		Total Land Bank(1)	sq.m.	77,799			94,636			52,493			170,241		48,960		58,084			1,209,146	598,397		289,511		103,391	991,299
Actual/Estimated	Construction	Completion Date		November 2019			May 2019			March 2020			December 2019		November 2019		December 2019				May 2020		July 2020		October 2020
		Site Area	sq.m.	24,583			30,760			7,239			98,783		21,638		39,098			614,741	120,705		111,380		38,221	270,305
Primary	Intended Use of	the Project		Residential			Residential			Retail/SOHO and	office		Residential/retail		Residential/retail		Residential				Residential/retail/SOHO	and office	Residential/SOHO	and office	Residential
Interest	Attributable to	the Group		100.0%			100.0%			100.0%			100.0%		100.0%		100.0%				100.0%		100.0%		100.0%
		City		Suzhou			Suzhou			Suzhou			Suzhou		Suzhou		Suzhou				Hefei		Hefei		Hefei
		Project Names		18 Suzhou No.	Sudi2016-WG-77 Parcel	B	Suzhou No.	Sudi2016-WG-77 Parcel	C	Suzhou No.	Sudi2016-WG-77 Parcel	A	19 Suzhou Miles Splendid	Garden	20 Suzhou Tian Qin	Elegance Garden	21 Suzhou Zhenro	Xiangshan Piedmont	Garden	Suzhou sub-total	22 Hefei Capital Yue		23 Hefei City 1907		24 Hefei Zhenro Mansion	Hefei sub-total

— 32 —

		Total Land Bank(1)	sq.m.		160,505		35,656		196,161	123,945		108,002			103,091			335,038	47,085		99,908
Actual/Estimated	Construction	Completion Date			September 2019		September 2018			March 2018		April 2020			May 2020				February 2018		May 2018
		Site Area	sq.m.		39,235		9,501		48,736	30,422		24,150			15,172			69,743	48,021		/
Primary	Intended Use of	the Project			Residential/retail		SOHO and office			Retail/SOHO and	office	Residential			Retail/SOHO and	office			Residential/retail		Residential/retail
Interest	Attributable to	the Group			100.0%		100.0%			100.0%		100.0%			100.0%				100.0%		100.0%
		Project Names City		Midwest China Economic Region	25 Wuhan Zhenro Mansion Wuhan	Parcel A	Wuhan Zhenro Mansion Wuhan	Parcel B	Wuhan sub-total	26 Xi’an Zhenro Rainbow Xi’an	Valley	27 Xi’an Zhenro Mansion Xi’an	Phase I (Parcel	QJ10-8-484)	Xi’an Zhenro Mansion Xi’an	Phase I (Parcel	QJ10-8-485)	Xi’an sub-total	28 Changsha Zhenro Changsha	Fortune Center (1-5#)	Changsha Zhenro Changsha	Fortune Center (6-10#)

— 33 —

		Total Land Bank(1)	sq.m.	115,742				362,861			335,519		961,115		2,491		11,062		270,646		14,228			99,255		397,683
Actual/Estimated	Construction	Completion Date		March 2020				October 2019			May 2021				December 2016		June 2018		November 2019		November 2019			September 2021
		Site Area	sq.m.	97,199				/			106,652		251,872		66,955		60,742		111,524		17,785			18,190		275,196
Primary	Intended Use of	the Project		Retail/SOHO and	office			Residential/retail			Residential/retail/SOHO	and office			Residential/retail		Residential/retail		Residential/retail		N/A			Residential/retail/SOHO	and office
Interest	Attributable to	the Group		100.0%				100.0%			100.0%				100.0%		100.0%		100.0%		100.0%			100.0%
		City		Changsha				Changsha			Changsha				Tianjin		Tianjin		Tianjin		Tianjin			Tianjin
		Project Names		Changsha Zhenro	Fortune Center	(Commercial and	Office)	Changsha Zhenro	Fortune Center	(Residential)	29 Changsha Binjiang	Zhenro Mansion	Changsha sub-total	Bohai Economic Rim	30 Tianjin Zhenro Jade Bay	Phase I	Tianjin Zhenro Jade Bay	Phase II	31 Tianjin Zhenro Zhenro	Mansion Phase I	Tianjin Zhenro Zhenro	Mansion Phase II (with	School)	32 Tianjin No.	Jinnanhonggua 2016-099	Tianjin sub-total

— 34 —

		Total Land Bank(1)	sq.m.	7,325			77,199			849			106,760		80,885		1,227			—			600		69,584		143,982
Actual/Estimated	Construction	Completion Date		April 2018			December 2017			December 2017			September 2018		January 2019		October 2015			October 2015			December 2019		December 2019		December 2019
		Site Area	sq.m.	66,667			46,667			/			67,032				51,447			/			6,290		19,434		41,149
Primary	Intended Use of	the Project		Residential/retail			Retail			Retail/SOHO and	office		Residential/retail		Residential/retail/SOHO	and office	Residential			Residential			N/A		Residential/retail		Residential/retail
Interest	Attributable to	the Group		100.0%			100.0%			100.0%			100.0%		100.0%		100.0%			100.0%			100.0%		100.0%		100.0%
		City		Fuzhou			Fuzhou			Fuzhou			Fuzhou		Fuzhou		Fuzhou			Fuzhou			Fuzhou		Fuzhou		Fuzhou
		Project Names		33 Fuzhou Zhenro Fortune	Center Phase I	(Residential)	Fuzhou Zhenro Fortune	Center Phase II (1#, 2#,	7#)	Fuzhou Zhenro Fortune	Center Phase III (3#,	4#, 5#, 6#)	34 Fuzhou Mawei Zhenro	Fortune Center Phase I	Fuzhou Mawei Zhenro	Fortune Center Phase II	35 Fuzhou Zhenro Rivage	Garden Phase I	(excluding 3# and 5#)	Fuzhou Zhenro Rivage	Garden Phase II (3# and	5#)	36 Fuzhou Zhenro Mansion	Parcel I	Fuzhou Zhenro Mansion	Parcel II	Fuzhou Zhenro Mansion	Parcel III

— 35 —

		Total Land Bank(1)	sq.m.	—		43,400		97,891		154,554		46,583		975,247	144,409		121,408		159,856		196,392		477,655	6,626		3,800
Actual/Estimated	Construction	Completion Date		August 2012		April 201		April 2019		November 2020		September 2020			August 2020		November 2019		November 2020		April 2019			September 2018		June 2018
		Site Area	sq.m.	22,778		25,027		29,160		35,164		36,014		494,027	47,200		87,546		42,231		76,050		205,827	48,282		37,935
Primary	Intended Use of	the Project		Residential/SOHO	and office	Residential/retail/SOHO	and office	Residential/retail		Residential		Residential			Residential		Residential/retail		Retail/SOHO and	office	Residential			Residential/retail		Residential/retail
Interest	Attributable to	the Group		100.0%		100.0%		100.0%		100.0%		100.0%			100.0%		100.0%		100.0%		100.0%			100.0%		100.0%
		City		Fuzhou		Fuzhou		Fuzhou		Fuzhou		Fuzhou			Fuzhou		Nanping		Nanping		Nanping			Pingtan		Pingtan
		Project Names		37 Fuzhou Zhenro Rivage	City	38 Mawei Zhenro Top	Mountain	39 Fuzhou Zhenro Yue Lan	Bay	40 Fuzhou Zhenro	Yuejingtai	41 Mawei No.	Mazhongdi2017-07	Fuzhou sub-total	42 Mawei Zhenro Yue	Jiang Bay	43 Nanping Zhenro Fortune	Center Parcel I Phase I	Nanping Zhenro Fortune	Center Parcel I Phase II	Nanping Zhenro Fortune	Center Parcel II	Nanping sub-totbal	44 Pingtan Zhenro Smooth	Sea Phase I	Pingtan Zhenro Smooth	Sea Phase II

— 36 —

		Total Land Bank(1)	sq.m.	86,893		69,558		67,793		239,620		195,704		669,993	233,135		176,552		109,919		16,992		20,718		—		819
Actual/Estimated	Construction	Completion Date		December 2018		April 2020		October 2020		October 2021		September 2021			May 2018		January 2017		December 2020		January 2016		November 2016		April 2014		June 2010
		Site Area	sq.m.	23,228		19,275		19,275		66,560		52,321		266,876	70,655		199,941		/		/		/		30,844		35,268
Primary	Intended Use of	the Project		Residential/retail		Residential/retail		Residential/retail		Residential/retail		Residential/retail			Residential/retail		Retail/SOHO and	office	SOHO and office		Residential/retail		Residential/retail		Residential/retail		Residential/retail
Interest	Attributable to	the Group		100.0%		100.0%		100.0%		100.0%		100.0%			100.0%		100.0%		100.0%		100.0%		100.0%		100.0%		100.0%
		City		Pingtan		Pingtan		Pingtan		Pingtan		Pingtan			Putian		Putian		Putian		Putian		Putian		Putian		Putian
		Project Names		45 Pingtan Zhenro Royal	Lake Bay	46 Pingtan Zhenro Yue	Lake Bay Phase I	Pingtan Zhenro Yue	Lake Bay Phase II	47 Pingtan Zhenro Mansion	Phase I	48 Pingtan Zhenro Mansion	Phase II	Pingtan sub-total	49 Putian Zhenro Smooth	Jade	50 Putian Zhenro Fortune	Center Parcel A1	Putian Zhenro Fortune	Center Parcel A2	Putian Zhenro Fortune	Center Parcel B1	Putian Zhenro Fortune	Center Parcel B2	51 Putian Zhenro Royal	Orchid Bay	52 Putian Zhenro Litchi	Garden

— 37 —

		Total Land Bank(1)	sq.m.	44,310		5,328		293,673	107,909		159,487		65,850		115,598		101,703		1,451,994	5,485		2,264				230
Actual/Estimated	Construction	Completion Date		March 2014		October 2016		December 2019	November 2019		October 2020		April 2020		March 2020		April 2020			August 2017		September 2016				November 2013
		Site Area	sq.m.	118,943		42,431		94,108	33,283		79,698		23,926		33,942		39,848		802,885	59,558		68,313				27,715
Primary	Intended Use of	the Project		Residential/retail		Residential/retail		Residential/retail	Residential/retail		Residential		Residential/retail		Residential		Residential/retail/SOHO	and office		Residential/retail		Residential/retail				Residential/retail
Interest	Attributable to	the Group		100.0%		100.0%		100.0%	100.0%		100.0%		100.0%		100.0%		100.0%			100.0%		100.0%		100.0%		100.0%
		City		Putian		Putian		Putian	Putian		Putian		Putian		Putian		Putian			Nanchang		Nanchang		Nanchang		Nanchang
		Project Names		53 Putian Zhenro Times	Plaza	54 Putian Zhenro Royal	Family	55 Putian Zhenro Mansion	56 Putian Zhenro Royal	Mansion	57 Putian No.	PSPai-2017-10	58 Putian Binxi Zhenro	Mansion	59 Putian Shishi Zhenro	Mansion	60 Putian No.	PSPai-2017-11	Putian sub-total	61 Nanchang Zhenro First	Mansion	62 Nanchang Zhenro	Embellish City	63 Nanchang Zhenro Royal	Sunrise	Nanchang Zhenro	Royal Garden

— 38 —

		Total Land Bank(1)	sq.m.	599		2,181		1,715		1,959		33,073		277,498		20,721		162,760		508,485	26		—		1,014		3,899
Actual/Estimated	Construction	Completion Date		May 2015		September 2015		June 2016		February 2016		June 2017		November 2020		November 2019		February 2020			September 2013		April 2013		December 2013		August 2015
		Site Area	sq.m.	22,185		46,986		44,387		36,488		872,794		103,413		7,049		60,732		1,349,620	138,667		171,791		/		/
Primary	Intended Use of	the Project		Residential/retail		Residential/retail		Residential/retail		Residential/retail		Residential/retail		Residential/retail		Residential		Residential/retail			Residential/retail		Residential		Residential/retail		Residential/retail
Interest	Attributable to	the Group		100.0%		100.0%		100.0%		100.0%		100.0%		100.0%		100.0%		100.0%			100.0%		100.0%		100.0%		100.0%
		City		Nanchang		Nanchang		Nanchang		Nanchang		Nanchang		Nanchang		Nanchang		Nanchang			Yichun		Yichun		Yichun		Yichun
		Project Names		Nanchang Zhenro	Royal Statue	Nanchang Zhenro	Royal Quality	Nanchang Zhenro	Royal Summit	Nanchang Zhenro The	Country	64 Nanchang Zhenro The	Capital of Great Loch	65 Nanchang Zhenro	Mansion	66 Nanchang West Lake	Violet Mansion	67 Nanchang No.	DBA2017077	Nanchang sub-total	68 Yichun Zhenro	Landscape Riverside	69 Yichun Zhenro Royal	Riverside South 1	Yichun Zhenro Royal	Riverside South 2	Yichun Zhenro Royal	Riverside North 1

— 39 —

		Total Land Bank(1)	sq.m.	14,698		63,720		83,357	199,867	72,789	272,656			10,858,708			307,227		84,746			147,768	248,880		82,018
Actual/Estimated	Construction	Completion Date		June 2018		August 2018			May 2021	December 2021							November 2020		December 2019			October 2019	June 2021		March 2019
		Site Area	sq.m.	/		/		310,458	57,785	23,013	80,798			6,092,898			70,857		33,424			63,568	54,311		32,044
Interest Primary	Attributable to Intended Use of	Project Names City the Group the Project		Yichun Zhenro Royal Yichun 100.0% Residential/retail/SOHO	Riverside North 2 and office	Yichun Zhenro Royal Yichun 100.0% Residential	Riverside North 3	Yichun sub-total	70 Jinan No. 2017-G121 Jinan 100.0% Residential/retail	71 Jinan No.2017-G122 Jinan 100.0% Residential/retail	Jinan sub-total	Sub-total of land bank	developed by the Group	and its subsidiaries	Properties developed by the Group’s joint ventures and associated companies	Yangtze River Delta Economic Region	1 Shanghai No. Shanghai 20% Retail/SOHO and	201419370776439142 office	2 Jiaxing Zhongnan Jiaxing 50% Residential/retail	Zhenro Haishang	Mingyue	3 Jiaxing Canal Mansion Jiaxing 50% Residential/retail	4 Nanjing No. Nanjing 20% Residential/retail/SOHO	320115001022GB00780-GB00784 and office	5 Suzhou Jinhui Zhenro Suzhou 49% Residential	Four Seasons

— 40 —

		Total Land Bank(1)	sq.m.	14,386		21,534		312,090		122,638		115,773		379,421				1,836,481	574,133
Actual/Estimated	Construction	Completion Date		March 2019		March 2019		November 2019		November 2018		June 2020		October 2019
		Site Area	sq.m.	5,759		7,585		128,313		66,738		44,787		130,918				638,305	210,740
Primary	Intended Use of	the Project		Residential/retail		Residential		Residential/retail		Residential		Residential/SOHO	and office	Residential/SOHO	and office
Interest	Attributable to	the Group		50%		50%		20%		36%		49%		33%
		City		Suzhou		Suzhou		Suzhou		Suzhou		Hefei		Hefei
		Project Names		6 Suzhou	No.WJ-J-2017-017	7 Suzhou	No.WJ-J-2017-016	8 Suzhou Yuzhou	Zhaoshang Shili	9 Suzhou Lanxi Bay	Garden	10 Hefei Country Garden	Zhenro Jade Yue	11 Hefei Century World		Yangtze River Delta	Economic Region	sub-total

— 41 —

		Total Land Bank(1)	sq.m.		221,307		192,806		196,325		578,645		193,602		152,747				1,535,433	449,786
Actual/Estimated	Construction	Completion Date			March 2019		January 2020		June 2021		November 2021		September 2018		April 2020
		Site Area	sq.m.		69,439		136,139		/		156,511		108,221		/				470,311	146,671
Primary	Intended Use of	the Project			Residential/retail		Residential/retail		Residential		Residential/retail		Residential/retail		Residential
Interest	Attributable to	the Group			24%		50%		50%		5%		50%		50%
		Project Names City		Midwest China Economic Region	12 Zhengzhou Xuhui Zhengzhou	Zhenro Capital Mansion	13 Wuhan Zhenro Royal Wuhan	Summit Phase I	Wuhan Zhenro Royal Wuhan	Summit Phase II	14 Wuhan Qingneng Wuhan	Zhenro Mansion	15 Changsha Meixi Zhenro Changsha	Mansion Phase I	Changsha Meixi Zhenro Changsha	Mansion Phase II	Midwest China	Economic Region	sub-total

— 42 —

		Total Land Bank(1)	sq.m.		219,707		206,300			426,007	56,345		179,745		240,926	181,797				602,468	155,933
Actual/Estimated	Construction	Completion Date			December 2020		August 2020						May 2020		September 2019	November 2019
		Site Area	sq.m.		149,245		45,511			194,756	25,027		66,706		90,420	72,103				229,229	59,220
Primary	Intended Use of	the Project			Residential/retail		Residential/retail/SOHO	and office					Residential/retail		Residential/retail	Residential/retail
Interest	Attributable to	Project Names City the Group		Bohai Economic Rim	16 Tianjin No. Tianjin 13%	Jinbinbeitanggua2017-1-A/B/C/D/E/F/G/H/I/J	17 Tianjin No. Tianjin 14%	Jindongxingua 2016-071	Bohai Economic Rim	sub-total		Western Taiwan Straits Economic Zone	18 Fujian Zhenro Yue Long Fuzhou 36%	Bay	19 Nanchang Garden Nanchang 19%	20 Nanchang Zhenro Nanchang 25%	Linlong Mansion	Western Taiwan Straits	Economic Zone	sub-total

— 43 —

Interest Primary Actual/Estimated	Attributable to Intended Use of Construction	Project Names City the Group the Project Site Area Completion Date Total Land Bank(1)	sq.m. sq.m.	Sub-total of land bank 1,532,601 4,400,389	developed by the	Group’s JV and asso	Sub-total asso on an 441,658 1,236,198	attributable basis	Total land bank 7,625,498 15,259,098	Total land bank on an	attributable basis 6,534,556 12,094,906	Note:	(1) Total GFA of the Group’s land bank includes (i) GFA available for sale and total leasable GFA for completed properties, (ii) total GFA for

— 44 —

Financial Review

Revenue

The Group’s revenue increased by approximately 36.9% from RMB14,603.5 million for the year ended December 31, 2016 to RMB19,995.1 million for the year ended December 31, 2017. Out of the Group’s total recognized revenue in 2017, (i) sales of properties increased by approximately 36.8% to RMB19,882.0 million from 2016, (ii) property leasing increased by approximately 44.9% to RMB71.4 million from 2016, and (iii) provision of commercial property management services increased by approximately 106.8% to RMB38.8 million from 2016. The table below sets forth the Group’s revenue for each of the components described above and the percentage of total revenue represented for the periods indicated.

Sales of properties Rental income Property management income Others (1) Total	2017 Revenue % of Total Revenue RMB’000 % 19,882,015 99.4 71,354 0.4 38,816 0.2 2,876 0.0 19,995,061 100.0	2017 Revenue % of Total Revenue RMB’000 % 19,882,015 99.4 71,354 0.4 38,816 0.2 2,876 0.0 19,995,061 100.0		2016 Revenue % of Total Revenue RMB’000 % 14,534,660 99.5 49,227 0.3 18,772 0.2 861 0.0 14,603,520 100.0	2016 Revenue % of Total Revenue RMB’000 % 14,534,660 99.5 49,227 0.3 18,772 0.2 861 0.0 14,603,520 100.0		Year- over- Year Change
	Revenue RMB’000 19,882,015 71,354 38,816 2,876 19,995,061			Revenue RMB’000 14,534,660 49,227 18,772 861 14,603,520
							% 36.8 44.9 106.8 234.0
							36.9

Note:

• (1) Primarily includes revenue generated from provision of design consultation services to a joint venture and an associate.

Cost of Sales

The Group’s cost of sales primarily represents the costs it incurs directly for the property development activities as well as its commercial property management and leasing operations. The principal components of cost of sales for property development include cost of properties sold, which represents direct construction costs, land use right costs and capitalized interest costs on related borrowings for the purpose of property development during the period of construction.

— 45 —

The Group’s cost of sales increased by approximately 38.0% from RMB11,433.8 million for the year ended December 31, 2016 to RMB15,777.7 million for the year ended December 31, 2017, primarily attributable to the increase in the number of properties completed and delivered by the Group during the year ended December 31, 2017.

Gross Profit and Gross Profit Margin

As a result of the foregoing, the Group’s gross profit increased by approximately 33.1% from RMB3,169.7 million for the year ended December 31, 2016 to RMB4,217.4 million, for the year ended December 31, 2017.

Gross profit margin was relatively stable at 21.1% for the year ended December 31, 2017, compared with 21.7% in 2016.

Other Income and Gains

The Group’s other income and gains primarily consist of interest income, commercial compensation and others. Interest income primarily consists of interest income on bank deposits. Commercial compensation primarily represents forfeited deposits received from certain potential customers who did not subsequently entered into sales contracts with the Group and penalties received from certain customers due to their breach of sales or pre-sales contracts.

Other income and gains increased by approximately 217.3% from RMB48.6 million for the year ended December 31, 2016 to RMB154.2 million for the year ended December 31, 2017, primarily due to an increase in interest income on bank deposits mainly as a result of the increase in the total amount of bank deposits, as well as an increase in commercial compensation collected by the Group in 2017.

Selling and Distribution Expenses

Selling and distribution expenses primarily consist of advertising, marketing and business development expenses, sales and marketing staff cost, office expenses, fees paid to our third-party sales agents, rental and other expenses relating to sales of our properties and property leasing services.

The Group’s selling and distribution expenses increased by approximately 9.1% from RMB587.5 million for the year ended December 31, 2016 to RMB641.0 million for the year ended December 31, 2017, primarily due to (i) the strengthened selling and marketing efforts to promote newly-launched property projects in new cities and regions in which the Group operates as part of its business expansion; and (ii) the expansion of the Group’s in-house sales and marketing team to support its business expansion in 2017.

— 46 —

Administrative Expenses

Administrative expenses primarily consist of management and administrative staff costs, entertainment expenses, office and meeting expenses, stamped duties and other taxes, rental costs, depreciation of property, plant and equipment, professional fees, travelling expenses, bank charges, listing expenses and other general office expenses and miscellaneous expenses.

The Group’s administrative expenses increased by approximately 39.2% from RMB477.3 million for the year ended December 31, 2016 to RMB664.5 million for the year ended December 31, 2017, primarily due to the continuous increase in the number of property projects under development and planned for future development, which was in line with the Group’s business expansion, resulting in increases in its management and administrative headcount, entertainment expenses, traveling expenses and other miscellaneous expenses.

Other Expenses

Other expenses increased by 109.7% from RMB19.5 million for the year ended December 31, 2016 to RMB40.9 million for the year ended December 31, 2017.

Fair Value Gains on Investment Properties

The Group develops and holds certain commercial properties on a long-term basis for rental income or capital appreciation. Fair value gains on investment properties decreased by approximately 40.5% from RMB594.2 million for the year ended December 31, 2016 to RMB353.8 million for the year ended December 31, 2017, primarily because Putian Zhenro Fortune Center commenced operation since late 2015 which recorded a relatively higher level of appreciation in value for the year ended December 31, 2016 than in the corresponding period in 2017. The fair value gains on investment properties for the year ended December 31, 2017 was also partially attributable to the appreciation in value of Shanghai Hongqiao Zhenro Center in such period.

— 47 —

Finance Costs

Finance costs primarily consist of interest expenses for bank and other borrowings net of capitalized interest relating to properties under development.

The Group’s finance costs increased by approximately 54.9% from RMB356.1 million for the year ended December 31, 2016 to RMB551.5 million for the year ended December 31, 2017, primarily due to an increase in bank borrowings to support business growth and an increase in the level of interest costs that were not capitalized in 2017.

Share of Losses of Joint Ventures and Associated Companies

The Group’s share of losses of joint ventures was RMB65.6 million for the year ended December 31, 2017, increased by 811.1% from RMB7.2 million for the year ended December 31, 2016, primarily due to an increase in the Group’s relevant expenses resulting from the increased property projects held by its new joint ventures.

The Group’s share of losses of associated companies was RMB12.3 million for the year ended December 31, 2017, primarily represented the Group’s relevant expenses resulting from the increased property projects held by its new associated companies. The Group did not have associated companies in 2016.

Income Tax Expenses

Income tax expenses represent corporate income tax and land appreciation tax (“ LAT ”) payable by the Group’s subsidiaries in the PRC.

The Group’s income tax expenses increased by approximately 9.5% from RMB1,121.7 million for the year ended December 31, 2016 to RMB1,228.2 million for the year ended December 31, 2017, primarily due to an increase in the Group’s profit before tax. The effective corporate income tax rate was 28.9% for the year ended December 31, 2017, compared with 31.6% for the year ended December 31, 2016.

Profit and Total Comprehensive Income for the Year

As a result of the foregoing, the Group’s profit and total comprehensive income increased by approximately 22.4% from RMB1,243.2 million for the year ended December 31, 2016 to RMB1,521.4 million, for the year ended December 31, 2017.

— 48 —

LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES

The industry in which the Group engages is a capital-intensive industry. The Group met and expects to continue meeting its operating capital, capital expenditure and other capital needs with proceeds from the IPO, proceeds from pre-sale and sale of properties, loans from commercial banks, proceeds from corporate debts or other securities offerings, and capital injections from shareholders. The Group’s need for short-term liquid capital is mainly associated with loan repayments and capital needs for operation, and the Group’s short-term liquid capital comes from cash balance, proceeds from pre-sale and sale of properties and new bank loans. The Group’s need for long-term liquid capital is associated with capital allocated for new property development projects and repayment of long-term loan.

Cash Positions

As of December 31, 2017, the Group had cash and bank balances of approximately RMB14,539.5 million (December 31, 2016: RMB14,689.7 million), pledged deposits of approximately RMB1,195.3 million (December 31, 2016: RMB832.7 million) and restricted cash of approximately RMB3,931.5 million (December 31, 2016: RMB2,984.4 million)

Indebtedness

As of December 31, 2017, the Group has total outstanding bank and other borrowings of RMB40,061.2 million, compared with RMB35,034.1 million as of December 31, 2016. As of December 31, 2017, the Group also had onshore corporate bond with carrying amounts of approximately RMB2,002.4 million, compared with RMB1,988.8 million as of December 31, 2016. The Group’s borrowings are mainly denominated in Renminbi.

All of the Group’s secured borrowings were secured by its asset portfolio which includes investment properties, prepaid land lease payments, properties under development, completed properties held for sale, and restricted cash.

— 49 —

The following table sets forth the Group’s total borrowings as of the dates indicated.

Current borrowings: Bank borrowings — secured Bank borrowings — unsecured Other borrowings — secured Other borrowings — unsecured Plus: current portion of non-current borrowings Bank borrowings — secured Bank borrowings — unsecured Other borrowings — secured Other borrowings — unsecured Corporate bonds Total current borrowings Non-current borrowings: Bank borrowings — secured Bank borrowings — unsecured Other borrowings — secured Other borrowings — unsecured Corporate bonds Total non-current borrowings Total		As of December 31,	As of December 31,	As of December 31,
		2017 RMB’000 250,000 230,000 4,106,572 688,416 7,032,732 33,400 7,660,637 980,000 2,002,359 22,984,116 7,722,609 1,705,859 9,531,953 119,000 — 19,079,421 42,063,537		2016
				RMB’000 — 120,000 3,474,624 850,000 1,346,701 148,437 4,044,393 335,000 —
				10,319,155 6,310,945 — 17,862,161 541,800 1,988,777
				26,703,683
				37,022,838

— 50 —

The following table sets forth the maturity profiles of the Group’s total borrowings as of the dates indicated.

Repayable within one year Repayable in the second year Repayable within two to five years Sub-total Total		As of December 31,	As of December 31,	As of December 31,
		2017 RMB’000 22,984,116 13,585,642 5,493,779 19,079,421 42,063,537		2016
				RMB’000 10,319,155 19,416,309 7,287,374 26,703,683
				37,022,838

Additionally, as of December 31, 2017, the Group issued the unsecured perpetual bond of RMB3.0 billion through private placement. Please refer to “Bond Offerings” below for more details.

Borrowing Costs

The Group’s weighted average effective interest rates on bank and other borrowings were 7.3% for the year ended December 31, 2017, compared with 8.5% for the year ended December 31, 2016. The decrease was primarily due to the Group’s effective measures to optimize its debt structure, as well as its stronger bargaining power to access to capital at competitive costs as a result of its growing operation scale.

Financial Risks

The Group is not subject to significant credit risk and liquidity risk.

The Group primarily operates its business in the PRC. The currency in which the Group denominates and settles substantially all of its transactions is Renminbi. Any depreciation of Renminbi would adversely affect the value of any dividends the Group pays to shareholders outside of the PRC. The Group had cash at banks denominated in foreign currencies, which exposed the Group to foreign exchange risk. The Group currently does not engage in hedging activities designed or intended to manage foreign exchange rate risk. The Group will continue to monitor foreign exchange changes to best preserve the Group’s cash value.

— 51 —

Key Financial Ratios

The Group’s current ratio decreased from 1.5 as of December 31, 2016 to 1.3 as of December 31, 2017, primarily due to (i) an increase in advances from customers resulting from sales increase, and (ii) an increase in current liabilities resulting from the increase in current portion of certain long-term borrowings.

The Group’s net gearing ratio decreased from 206.0% as of December 31, 2016 to 183.2% as of December 31, 2017, primarily due to the Group’s continuous efforts to manage its financial leverage to achieve sustainable growth. The Group completed its IPO in mid-January 2018. Assuming the net proceeds from the IPO were received on December 31, 2017, the net gearing ratio would be approximately 120.2% as of December 31, 2017.

Contingent Liabilities

Mortgage Guarantees

The Group provides mortgage guarantees to banks in respect of the mortgage loans they provided to the Group’s customers in order to secure the repayment obligations of such customers. The mortgage guarantees are issued from the date of grant of the relevant mortgage loans and released upon the earlier of (i) the transfer of the relevant real estate ownership certificates to the customers, or (ii) the settlement of mortgage loans by the customers. If a purchaser defaults on the mortgage loan, the Group is typically required to repurchase the underlying property by paying off the mortgage loan. If it fails to do so, the mortgagee banks will auction the underlying property and recover the balance from the Group if the outstanding loan amount exceeds the net foreclosure sale proceeds.

As of December 31, 2017, the material contingent liabilities incurred for the Group’s provision of guarantees to financial institutions in respect of the mortgage loans they provided to the Group’s customers were approximately RMB21,961.4 million, compared with RMB18,129.5 million as of December 31, 2016.

The Directors confirm that the Group has not encountered defaults by purchasers in which it provided mortgage guarantees that, in aggregate, had a material adverse effect on our financial condition and results of operations.

— 52 —

Legal Contingents

The Group may be involved in lawsuits and other proceedings in its ordinary course of business from time to time. The Group believes that no liabilities resulting from these proceedings will have a material and adverse effect on our business, financial condition or operating results.

Commitments

As of December 31, 2017, the Group’s property development expenditures it had contracted but yet provided for was RMB9,168.6 million, compared with RMB7,146.2 million as of December 31, 2016.

As of December 31, 2017, the Group’s operating lease expenditures was RMB89.6 million, compared with RMB58.3 million as of December 31, 2016.

Off-Balance Sheet Commitments and Arrangements

Except for the contingent liabilities disclosed above, as of December 31, 2017, the Group did not have any outstanding loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities, borrowings or other similar indebtedness, liabilities under acceptances (other than normal trade bills), acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities.

As of the date of announcement, net proceeds not utilized are held in bank deposits and it is intended that they will be applied in the manner consistent with the proposed allocations in the prospectus.

Bond Offerings

The Group continuously looks for financing opportunities to support its business development. These opportunities include the raising of funds through asset-backed securities programs, corporate bonds and other debt offerings.

In October 2017, the Group issued the unsecured perpetual bond of RMB300.0 million through private placement. The perpetual bond has an initial term of two years bearing an annual coupon rate of 7.5% and the first redemption date is October 30, 2019.

In addition, in November 2017, the Group issued another unsecured perpetual bond of RMB2,700.0 million through private placement. The perpetual bond has an initial term of two years bearing an annual coupon rate of 7.5% and the first redemption date is November 8, 2019.

— 53 —

The Group intends to use the proceeds from these bond offerings to repay external borrowings.

In addition, the Group has been approved by the Shanghai Stock Exchange to issue asset-backed securities through a private placement in an aggregate proposed principal amount of approximately RMB2,421.0 million to be listed and traded on the Shanghai Stock Exchange.

The Group has also filed an application to the Shenzhen Stock Exchange for a private placement of corporate bonds to be listed and traded on the Shenzhen Stock Exchange in an aggregate proposed principal amount of up to RMB4,000.0 million to qualified investors only. The application is under review by the relevant stock exchange and there is no certainty that the application will be approved or we will proceed with the issuance of debt securities.

The Group may also consider other debt offering plans in the near future.

Employees

As of December 31, 2017, the Group had a total of 1,899 employees. The Group offers employees competitive remuneration packages that include basic salaries, discretionary bonuses, performance-based payments and year-end bonuses. It contributes to social insurance for its employees, including medical insurance, work-related injury insurance, retirement insurance, maternity insurance, unemployment insurance and housing funds.

Subsequent Events

In connection with the listing of the shares of the Company on the Stock Exchange, in January 2018, 1,000,000,000 new ordinary shares of the Company with a nominal value of US$0.00001 each were issued at a price of HK$3.99 per ordinary share for a total cash consideration of HK$3,990,000,000, before deducting underwriting fees, commissions and related expenses. An addition of 2,999,950,000 shares were concurrently issued by way of capitalization. Trading of the shares of the Company on the Stock Exchange commenced on January 16, 2018.

Subsequently in February 2018, the over-allotment option has been partially exercised and the Company allotted and issued 123,000,000 additional shares at HK$3.99 per share on February 7, 2018.

Other than the abovementioned matters, no material events were undertaken by the Group subsequent to December 31, 2017.

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Use of Proceeds from the Initial Public Offering

The Group completed its IPO and was successfully listed on the Main Board of the Stock Exchange on January 16, 2018. Net proceeds from the IPO (including the exercise of the over-allotment options), after deducting the underwriting commission and other estimated expenses in connection with the Offering which the Company received amounted to approximately HK$4,392.3 million.

During the first three months of 2018, the Group had utilized the proceeds the IPO in the manner consistent with the proposed allocations in the prospectus, comprising approximately RMB158.0 million in repayment of bank borrowings with the remaining borrowings to be repaid upon their respective expiry dates; and the portion of proceeds in construction and development of its property projects and for general working capital purpose had been fully allocated to the relevant project companies for their property development activities for the following years.

OTHER INFORMATION

PURCHASE, SALE AND REDEMPTION OF LISTED SECURITIES OF THE COMPANY

Save for the Company initial public offering as described in the Company’s prospectus dated December 28, 2017, the Company and its subsidiaries did not purchase, sell or redeem any of the listed securities of the Company during the year ended December 31, 2017.

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FINAL DIVIDEND

The Board recommends the payment of a final dividend of HK$0.10 per share (equivalent to RMB0.08 per share), amounting to approximately a total of HK$412.3 million (or approximately RMB329.9 million) for the year ended December 31, 2017 (the “ 2017 Proposed Final Dividend ”), representing approximately 21.7% of our net profit for the year ended December 31, 2017. The 2017 Proposed Final Dividend is subject to the approval of the Company’s shareholders at the forthcoming annual general meeting (the “ AGM ”) to be held on May 18, 2018. The 2017 Proposed Final Dividend will be declared and paid in Hong Kong dollars.

CLOSURE OF REGISTER OF MEMBERS

For the purpose of determination of eligibility to attend and vote at the AGM, the register of members of the Company will be closed from Tuesday, May 15, 2018 to Friday, May 18, 2018 (both days inclusive), during which period no transfer of shares of the Company will be effected. In order to be entitled to attend and vote at the forthcoming AGM to be held on Friday, May 18, 2018, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no later than 4:30 p.m. (Hong Kong time) on Monday, May 14, 2018.

Subject to the approval of the 2017 Proposed Final Dividend at the forthcoming AGM, the register of members of the Company will also be closed from Tuesday, June 5, 2018 to Thursday, June 7, 2018 (both days inclusive), during which period no transfer of shares of the Company will be effected. In order to qualify for the 2017 Proposed Final Dividend, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no later than 4:30 p.m. (Hong Kong time) on Monday, June 4, 2018. The 2017 Proposed Final Dividend, if approved by the Company’s shareholders at the forthcoming AGM, will be paid on or about Thursday, July 19, 2018 to those shareholders whose name appear on the register of member of the Company on Thursday, June 7, 2018.

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COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Company has adopted the corporate governance code (the “ Corporate Governance Code ”) contained in Appendix 14 to the Listing Rules as its own code on corporate governance . As the shares of the Company were not listed on the Stock Exchange until January 16, 2018, the Corporate Governance Code was not applicable to the Directors during the year ended December 31, 2017. Since the listing date, the Company has complied with the Corporate Governance Code.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the “Model Code for Securities Transactions by Directors of Listed Issuers” (the “ Model Code ”) as set out in Appendix 10 to the Listing Rules as its code of conduct regarding Directors’ securities transactions. As the shares of the Company were not listed on the Stock Exchange until January 16, 2018, the Model Code was not applicable to the Directors during the year ended December 31, 2017. All Directors have confirmed, following specific enquiry by the Company, that they have complied with the Model Code since the listing date.

AUDIT COMMITTEE

The Company established the Audit Committee with written terms of reference in compliance with the Corporate Governance Code. As at the date of this announcement, the Audit Committee comprises three members, namely Mr. Loke Yu, Mr. Wang Chuanxu, two of our independent non-executive Directors, and Mr. Ou Guowei. Mr. Loke Yu is the chairman of the Audit Committee, and is our independent non-executive Director processing the appropriate professional qualifications.

The Audit Committee has reviewed and discussed the annual results for the year ended December 31, 2017. The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of comprehensive income and the related notes thereto for the year ended December 31, 2017 as set out in this announcement have been agreed by the Group’s auditor, Ernst & Young, Certified Public Accountants of Hong Kong (“ Ernst & Young ”), to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by Ernst & Young in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Ernst & Young on this announcement.

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PUBLICATION OF ANNUAL RESULTS AND ANNUAL REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY

The annual results announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and that of the Company (www.zhenrodc.com). The annual report will be dispatched to the shareholders of the Company and will be available on the website of the Stock Exchange and that of the Company in due course.

By order of the Board Zhenro Properties Group Limited HUANG Xianzhi Chairman

Hong Kong, March 28, 2018

As at the date of this announcement, Mr. Huang Xianzhi, Mr. Lin Zhaoyang and Mr. Wang Benlong are the executive directors of the Company; Mr. Ou Guoqiang and Mr. Ou Guowei are the non-executive directors of the Company; and Mr. Loke Yu, Mr. Shen Guoquan amd Mr. Wang Chuanxu are the independent non-executive directors of the Company.

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