ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LTD. FIRST QUARTER REPORT 2019 (Announcement No. 2019-19) April 2019 1 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Part I Important Notes The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of ShenZhen Properties & Resources Development (Group) Ltd. (hereinafter referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions therein. All the Company’s directors have attended the Board meeting for the review of this Report and its summary. Liu Shengxiang, the Company’s legal representative, Cai Lili, the Company’s head of financial affairs, and Liu Qiang, head of the Company’s financial department (equivalent to financial manager) hereby guarantee that the Financial Statements carried in this Report are factual, accurate and complete. This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail. 2 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Part II Key Corporate Information I Key Financial Information Indicate by tick mark whether there is any retrospectively restated datum in the table below. □ Yes √ No Q1 2019 Q1 2018 Change (%) Operating revenue (RMB) 385,944,107.52 544,366,414.09 -29.10% Net profit attributable to the listed 78,431,920.59 53,456,824.88 46.72% company’s shareholders (RMB) Net profit attributable to the listed company’s shareholders before exceptional 77,831,706.94 53,039,124.57 46.74% items (RMB) Net cash generated from/used in operating -64,518,467.02 -96,704,935.74 106.71% activities (RMB) Basic earnings per share (RMB/share) 0.1316 0.0897 46.71% Diluted earnings per share (RMB/share) 0.1316 0.0897 46.71% Weighted average return on equity (%) 2.32% 1.81% 0.51% 31 March 2019 31 December 2018 Change (%) Total assets (RMB) 8,714,873,623.91 5,820,202,137.54 49.73% Equity attributable to the listed company’s 3,417,510,089.05 3,337,949,324.64 2.38% shareholders (RMB) Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item Q1 2019 Note Gain or loss on disposal of non-current assets (inclusive of Scrapping disposal of -25,657.07 impairment allowance write-offs) miscellaneous assets Sporadic penalty and liquidated Non-operating income and expense other than the above 688,828.91 damages income Less: Income tax effects 62,958.19 Total 600,213.65 -- Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items: □ Applicable √ Not applicable 3 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 No such cases for the Reporting Period. II Total Number of Shareholders and Holdings of Top 10 Shareholders at 31 March 2019 1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as Holdings of Top 10 Shareholders Unit: share Number of preferred shareholders Number of ordinary shareholders at 44,082 with resumed voting rights at the 0 the period-end period-end (if any) Top 10 shareholders Name of Nature of Shareholding Restricted shares Shares in pledge or frozen Total shares held shareholder shareholder percentage held Status Shares Shenzhen Investment State-owned legal 63.82% 380,378,897 350,579,943 Holdings person Corporation Shenzhen Duty-Free Domestic Commodity non-state-owned 0.29% 1,730,300 1,730,300 Enterprises Co., legal person Ltd. Domestic natural Yang Yaochu 0.24% 1,410,620 person Domestic natural Li Jing 0.20% 1,176,740 person Domestic natural Su Zhifen 0.19% 1,150,000 person Domestic natural Mai Furong 0.19% 1,130,500 person Hong Kong Securities Foreign legal Clearing 0.17% 1,047,565 person Company Limited Wuhan Xingkaiyuan Domestic Electric Power non-state-owned 0.16% 950,000 Engineering Co., legal person Ltd 4 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Domestic natural Wang Hui 0.15% 880,000 person Domestic natural Zhang Shaoming 0.14% 853,400 person Top 10 unrestricted shareholders Shares by type Name of shareholder Unrestricted shares held Type Shares Shenzhen Investment Holdings RMB-denominate 29,798,954 29,798,954 Corporation d ordinary stock Domestically Yang Yaochu 1,410,620 listed foreign 1,410,620 stock Domestically Li Jing 1,176,740 listed foreign 1,176,740 stock RMB-denominate Su Zhifen 1,150,000 1,150,000 d ordinary stock Domestically Mai Furong 1,130,500 listed foreign 1,130,500 stock Hong Kong Securities Clearing RMB-denominate 1,047,565 1,047,565 Company Limited d ordinary stock Wuhan Xingkaiyuan Electric Power RMB-denominate 950,000 950,000 Engineering Co., Ltd d ordinary stock Domestically Wang Hui 880,000 listed foreign 880,000 stock RMB-denominate Zhang Shaoming 853,400 853,400 d ordinary stock Domestically Cao Yifan 780,000 listed foreign 780,000 stock The first largest shareholder, Shenzhen Investment Holding Corporation, is the actual Related or acting-in-concert parties controlling shareholder of the Company. And the Company does not know whether there are among the shareholders above related parties or acting-in-concert parties among the other 9 shareholders. Top 10 ordinary shareholders involved in securities margin trading N/A (if any) Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the 5 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Company conducted any promissory repo during the Reporting Period. □ Yea √ No No such cases in the Reporting Period. 2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them □ Applicable √ Not applicable 6 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Part III Significant Events I Changes in Key Financial Statement Line Items and Explanation of why √ Applicable □ Not applicable 1. Other receivables stood at RMB1,434,865,553.97 as at 31 March 2019, rising 5773.76% compared to 31 December 2018, primarily driven by the combination scope increase of Shenzhen Rongyao Real Estate Development Co., Ltd. 2. Inventories stood at RMB2,876,085,552.05 as at 31 March 2019, rising 143.37% compared to 31 December 2018, primarily driven by the combination scope increase of Shenzhen Rongyao Real Estate Development Co., Ltd. 3. Other current assets stood at RMB6,803,999.98 as at 31 March 2019, declining 59.24% compared to 31 December 2018, primarily driven by the decrease in debit balance of taxes payable needing to be reclassified. 4. Construction in progress stood at RMB6,510,626.40 as at 31 March 2019 and that of 31 March 2018 was RMB0.00, primarily driven by the expense for house decoration and replacement of elevator equipment during Q1 2019. 5. Other non-current assets stood at RMB4,667,065.00 as at 31 March 2019, declining 95.72% compared to 31 December 2018, primarily driven by the offset of payments for M&A of shares in Shenzhen Rongyao Real Estate Development Co., Ltd. by advance stock payment of RMB0.1 billion. 6. Other payables stood at RMB553,881,529.46 as at 31 March 2019, rising 392.33% compared to 31 December 2018, primarily driven by the increase of spare money of RMB406 million for stock transfer payable. 7. Long-term borrowings stood at RMB2,194,000,000.00 as at 31 March 2019, rising 219300.00% compared to 31 December 2018, primarily driven by the combination scope increase of Shenzhen Rongyao Real Estate Development Co., Ltd. 8. Other comprehensive income stood at RMB-657,337.87 as at 31 March 2019, declining 63.20% compared to 31 December 2018, primarily driven by the decrease in the differences arising from translation of foreign currency-denominated financial statements caused by changes in foreign exchange rates. 9. Operating revenue stood at RMB385,944,107.52 during Q1 2019, declining 29.10% compared to Q1 2018, primarily driven by the decrease in income from real estate business caused by decrease of project settlement area. 10. Cost of sales stood at RMB197,403,666.57 during Q1 2019, declining 57.60% compared to Q1 2018, primarily driven by the decrease in project settlement area and reduction in real estate business cost caused by relatively low unit cost of main projects carried over during Q1 2019. 11. Taxes and surtaxes stood at RMB55,927,909.35 during Q1 2019, rising 1199.14% compared to Q1 2018, primarily driven by the increase of increment tax on land value caused by relatively high appreciation rate of main real estate projects carried over during Q1 2019. 12. Selling expense stood at RMB3,702,598.12 during Q1 2019, rising 65.46% compared to Q1 2018, primarily driven by increase of charges for sales agency and services. 13. Finance costs stood at RMB7,377.66 during Q1 2019 and that of Q1 2018 was RMB-18,923,710.87, rising 100.04% compared to that of Q1 2018, primarily driven by increase of interest expense. 14. Investment income stood at RMB473,204.19 during Q1 2019 and that of Q1 2018 was RMB-280,948.37, 7 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 rising 268.43% compared to that of Q1 2018, primarily driven by changes caused by revenues realized by joint ventures of the Company. 15. Income tax expense stood at RMB30,904,783.38 during Q1 2019, rising 72.09% compared to that of Q1 2018, primarily driven by increase in profits realized by the Company. 16. Operating profit, profit before tax and net profit (attributable to the Company as the parent) respectively stood at RMB103,889,652.96, RMB104,552,824.80 and RMB78,431,920.59 during Q1 2019, respectively rising 46.61%, 46.40% and 46.72% compared to those of Q1 2018, primarily driven by increase in gross margin of real estate projects carried over during Q1 2019. 17. Net profit attributable to non-controlling interests stood at RMB-4,783,879.17 during Q1 2019 and that of Q1 2018 was RMB0.00, primarily driven by addition of ―net profit attributable to non-controlling interests‖ of Shenzhen Rongyao Real Estate Development Co., Ltd. 18. Other comprehensive income, net of tax, stood at RMB1,128,843.82 during Q1 2019, declining 47.00% compared that of Q1 2018, primarily driven by changes in differences arising from translation of foreign currency-denominated financial statements caused by changes in foreign exchange rates. 19. Net cash generated from/used in operating activities during Q1 2019 stood at RMB-64,518,467.02 and the net cash used in operating activities during Q1 2019, reducing 33.28% compared to that of Q1 2018, primarily driven by increase in recoup funds of housing sales accounts during Q1 2019. 20. Net cash generated from/used in investing activities during Q1 2019 stood at RMB-2,442,304.07, and that of Q1 2018 was RMB75,616,212.09, declining 103.23% compared to that of Q1 2018, primarily driven by receipt of share transfer payments from two motor companies during Q1 2018. 21. Net cash generated from/used in financing activities during Q1 2019 stood at RMB-60,321,156.25, and that of Q1 2018 was RMB0.00, primarily driven by increase in interest paid for loans during the Q1 2019. 22. Net increase in cash and cash equivalents stood at RMB-128,395,389.69 during Q1 2019, and the net outflow of Q1 2019 increased 454.11% compared to that of Q1 2018, primarily driven by receipt of share transfer payments during Q1 2018 and increase in interest paid during Q1 2019. II Progress, Influence and Solutions with regard to Significant Events □ Applicable √ Not applicable Progress of any share repurchases: □ Applicable √ Not applicable Progress of any reduction of the repurchased shares through centralized bidding: □ Applicable √ Not applicable III Commitments that the Company’s Actual Controller, Shareholders, Related Parties, Acquirers, the Company Itself or Other Parties, Failed to Fulfill on Time during the Reporting Period □ Applicable √ Not applicable 8 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 No such cases in the Reporting Period. IV Operating Performance Forecast for H1 2019 Warning of a forecast loss on or a forecast significant year-on-year change in the net profit of H1 2019, as well as explanation of why: □ Applicable √ Not applicable V Securities Investments √ Applicable □ Not applicable Gain/los Accumu s of lative Account changes Purchas Sold in Beginni changes Gain/los Variety Symbol Initial ing in fair ed in the Ending the Name of ng in fair s in Account Capital of of investm measure value in Reporti Reporti Reporti carrying security carrying value ng ing title source security security ent cost ment the ng ng value value recorde Period model Reporti Period Period d into ng equities Period Availabl Obtaine Domesti e-for-sal Gintian 2,991,9 Fair 2,991,9 2,991,9 d in debt c/overse 400016 0.00 e A 75.03 method 75.03 75.03 restructu as stock financia ring l asset Availabl Obtaine Domesti e-for-sal Gintian 573,881 Fair 629,406 629,406 d in debt c/overse 420016 0.00 e B .03 method .08 .08 restructu as stock financia ring l asset 3,565,8 3,621,3 3,621,3 Total -- 0.00 0.00 0.00 0.00 0.00 -- -- 56.06 81.11 81.11 Disclosure date of announcement on Board’s consent for securities investment Disclosure date of announcement on shareholders’ meeting’s consent for securities 9 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 investment (if any) VI Investments in Derivative Financial Instruments □ Applicable √ Not applicable No such cases in the Reporting Period. VII Communications with the Investment Community such as Researches, Inquiries and Interviews during the Reporting Period √ Applicable □ Not applicable Type of communication Index to main information Date Way of communication party communicated Inquired of stock price and business 22 February 2019 By phone Individual development of the Company Inquired of stock price and the 27 February 2019 By phone Individual information of Bangling Project and Qianhai golden collar project Inquired of the progress of acquisition 5 March 2019 By phone Individual for properties with investment holding Inquired of the progress of projects of 8 March 2019 By phone Individual the Company Inquired of stock price and business 14 March 2019 By phone Individual development of the Company Inquired of the progress of acquisition 25 March 2019 By phone Individual for properties with investment holding of the Company VIII Irregularities in the Provision of Guarantees □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 10 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Part IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by ShenZhen Properties & Resources Development (Group) Ltd. 31 March 2019 Unit: RMB Item 31 March 2019 31 December 2018 Current assets: Monetary capital 3,260,838,968.03 3,389,234,357.72 Settlement reserve Interbank loans granted Trading financial assets Financial assets at fair value through profit or loss Derivative financial assets Notes and accounts receivable 79,973,193.40 64,231,267.94 Including: Notes receivable Accounts receivable 79,973,193.40 64,231,267.94 Prepayments 40,306,062.36 35,913,164.32 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 1,434,865,553.97 24,428,411.19 Including: Interest receivable 1,852,004.00 8,293,317.33 Dividends receivable Financial assets purchased under resale agreements Inventories 2,876,085,552.05 1,181,762,531.67 Contractual assets Assets classified as held for sale Current portion of non-current assets Other current assets 6,803,999.98 16,694,408.12 11 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Total current assets 7,698,873,329.79 4,712,264,140.96 Non-current assets: Loans and advances to customers Investments in debt obligations Available-for-sale financial assets 3,621,381.11 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 40,472,487.43 39,999,283.24 Investments in other equity instruments Other non-current financial assets 3,621,381.11 Investment property 394,619,908.79 400,550,689.90 Fixed assets 32,912,928.75 32,612,592.40 Construction in progress 6,510,626.40 Productive living assets Oil and gas assets Right-of-use assets Intangible assets R&D expense Goodwill Long-term prepaid expense 2,300,575.94 2,398,576.29 Deferred income tax assets 530,895,320.70 519,783,531.64 Other non-current assets 4,667,065.00 108,971,942.00 Total non-current assets 1,016,000,294.12 1,107,937,996.58 Total assets 8,714,873,623.91 5,820,202,137.54 Current liabilities: Short-term borrowings Borrowings from central bank Interbank loans obtained Trading financial liabilities Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes and accounts payable 329,970,361.07 398,429,855.96 Advances from customers 332,463,520.29 265,338,215.34 12 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Financial assets sold under repurchase agreements Customer deposits and interbank deposits Payables for acting trading of securities Payables for underwriting of securities Payroll payable 83,795,418.74 96,069,521.54 Taxes payable 1,570,635,045.12 1,552,720,630.59 Other payables 553,881,529.46 112,502,146.69 Including: Interest payable 7,372,585.77 1,669.10 Dividends payable 29,642.40 29,642.40 Handling charges and commissions payable Reinsurance payables Contractual liabilities Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 2,870,745,874.68 2,425,060,370.12 Non-current liabilities: Insurance contract reserve Long-term borrowings 2,194,000,000.00 1,000,000.00 Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term payroll payable Provisions Deferred income Deferred income tax liabilities 5,275.60 5,275.60 Other non-current liabilities 51,206,650.67 52,937,180.81 Total non-current liabilities 2,245,211,926.27 53,942,456.41 Total liabilities 5,115,957,800.95 2,479,002,826.53 Owners’ equity: 13 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Share capital 595,979,092.00 595,979,092.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 118,938,132.89 118,938,132.89 Less: Treasury stock Other comprehensive income -657,337.87 -1,786,181.69 Special reserves Surplus reserves 299,569,569.96 299,569,569.96 General reserve Retained earnings 2,403,680,632.07 2,325,248,711.48 Total equity attributable to owners of the 3,417,510,089.05 3,337,949,324.64 Company as the parent Non-controlling interests 181,405,733.91 3,249,986.37 Total owners’ equity 3,598,915,822.96 3,341,199,311.01 Total liabilities and owners’ equity 8,714,873,623.91 5,820,202,137.54 Legal representative: Liu Shengxiang Head of financial affairs: Cai Lili Head of the financial department: Liu Qiang 2. Balance Sheet of the Company as the Parent Unit: RMB Item 31 March 2019 31 December 2018 Current assets: Monetary capital 2,507,846,833.37 2,520,788,994.16 Trading financial assets Financial assets at fair value through profit or loss Derivative financial assets Notes and accounts receivable 4,378,868.48 1,853,494.72 Including: Notes receivable Accounts receivable 4,378,868.48 1,853,494.72 Prepayments 553,494.63 829,683.68 Other receivables 1,163,198,695.89 1,306,715,826.93 Including: Interest receivable 3,532,559.56 8,229,503.58 Dividends receivable 14 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Inventories 81,655,144.26 105,840,115.24 Contractual assets Assets classified as held for sale Current portion of non-current assets Other current assets 35,835.80 Total current assets 3,757,668,872.43 3,936,028,114.73 Non-current assets: Investments in debt obligations Available-for-sale financial assets 3,851,881.11 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 747,975,160.36 239,501,956.17 Investments in other equity instruments Other non-current financial assets 3,851,881.11 Investment property 312,734,638.70 317,313,917.65 Fixed assets 8,847,625.90 9,121,637.65 Construction in progress 6,510,626.40 Productive living assets Oil and gas assets Right-of-use assets Intangible assets R&D expense Goodwill Long-term prepaid expense 735,148.50 778,392.57 Deferred income tax assets 325,394,629.71 315,888,967.26 Other non-current assets 500,000,000.00 104,132,920.00 Total non-current assets 1,906,049,710.68 990,589,672.41 Total assets 5,663,718,583.11 4,926,617,787.14 Current liabilities: Short-term borrowings Trading financial liabilities Financial liabilities at fair value through profit or loss Derivative financial liabilities 15 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Notes and accounts payable 89,333,590.28 124,501,464.28 Advances from customers 109,224,739.00 75,895,087.75 Contractual liabilities Payroll payable 26,130,839.78 31,224,455.28 Taxes payable 1,442,701,710.87 1,402,388,742.76 Other payables 858,544,343.51 224,875,980.31 Including: Interest payable Dividends payable 29,642.40 29,642.40 Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 2,525,935,223.44 1,858,885,730.38 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term payroll payable Provisions Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 2,525,935,223.44 1,858,885,730.38 Owners’ equity: Share capital 595,979,092.00 595,979,092.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 92,326,467.62 92,326,467.62 Less: Treasury stock Other comprehensive income 16 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Special reserves Surplus reserves 298,912,759.52 298,912,759.52 Retained earnings 2,150,565,040.53 2,080,513,737.62 Total owners’ equity 3,137,783,359.67 3,067,732,056.76 Total liabilities and owners’ equity 5,663,718,583.11 4,926,617,787.14 3. Consolidated Income Statement Unit: RMB Item Q1 2019 Q1 2018 1. Revenue 385,944,107.52 544,366,414.09 Including: Operating revenue 385,944,107.52 544,366,414.09 Interest income Premium income Handling charge and commission income 2. Costs and expenses 282,527,658.75 473,226,448.55 Including: Cost of sales 197,403,666.57 465,535,043.55 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 55,927,909.35 4,305,000.94 Selling expense 3,702,598.12 2,237,799.47 Administrative expense 25,486,107.05 20,075,315.46 R&D expense Finance costs 7,377.66 -18,926,710.87 Including: Interest expense 13,494,997.51 Interest income 13,671,269.39 19,076,827.28 Asset impairment loss Credit impairment loss Add: Other income 17 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Return on investment (―-‖ for loss) 473,204.19 -280,948.37 Including: Share of profit or loss of joint 473,204.19 -280,948.37 ventures and associates Foreign exchange gain (―-‖ for loss) Net gain on exposure hedges (―-‖ for loss) Gain on changes in fair value (―-‖ for loss) Asset disposal income (―-‖ for loss) 3. Operating profit (―-‖ for loss) 103,889,652.96 70,859,017.17 Add: Non-operating income 1,220,292.90 649,272.29 Less: Non-operating expense 557,121.06 92,659.13 4. Profit before tax (―-‖ for loss) 104,552,824.80 71,415,630.33 Less: Income tax expense 30,904,783.38 17,958,805.45 5. Net profit (―-‖ for net loss) 73,648,041.42 53,456,824.88 5.1 By operating continuity 5.1.1 Net profit from continuing operations 73,648,041.42 53,456,824.88 (―-‖ for net loss) 5.1.2 Net profit from discontinued operations (―-‖ for net loss) 5.2 By ownership 5.2.1 Net profit attributable to owners of the 78,431,920.59 53,456,824.88 Company as the parent 5.2.1 Net profit attributable to -4,783,879.17 non-controlling interests 6. Other comprehensive income, net of tax 1,128,843.82 2,130,029.88 Attributable to owners of the Company as the 1,128,843.82 2,130,029.88 parent 6.1 Items that will not be reclassified to profit or loss 6.1.1 Changes caused by remeasurements on defined benefit pension schemes 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 6.1.3 Changes in the fair value of investments in other equity instruments 6.1.4 Changes in the fair value of the company’s credit risks 6.1.5 Other 6.2 Items that will be reclassified to profit 1,128,843.82 2,130,029.88 18 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 or loss 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 6.2.2 Changes in the fair value of investments in other debt obligations 6.2.3 Gain/Loss on changes in the fair value of available-for-sale financial assets 6.2.4 Other comprehensive income arising from the reclassification of financial assets 6.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets 6.2.6 Allowance for credit impairments in investments in other debt obligations 6.2.7 Reserve for cash flow hedges 6.2.8 Differences arising from the translation of foreign currency-denominated 1,128,843.82 2,130,029.88 financial statements 6.2.9 Other Attributable to non-controlling interests 7. Total comprehensive income 74,776,885.24 55,586,854.76 Attributable to owners of the Company as the 79,560,764.41 55,586,854.76 parent Attributable to non-controlling interests -4,783,879.17 0.00 8. Earnings per share 8.1 Basic earnings per share 0.1316 0.0897 8.2 Diluted earnings per share 0.1316 0.0897 Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the combinations was RMBXXX, with the amount for the same period of last year being RMBXXX. Legal representative: Liu Shengxiang Head of financial affairs: Cai Lili Head of the financial department: Liu Qiang 4. Income Statement of the Company as the Parent Unit: RMB Item Q1 2019 Q1 2018 1. Operating revenue 170,999,874.89 17,488,936.09 19 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Less: Cost of sales 32,647,485.77 5,558,855.29 Taxes and surcharges 46,678,135.05 1,066,152.79 Selling expense 1,563,480.03 251,069.50 Administrative expense 11,124,847.45 6,879,508.35 R&D expense Finance costs -12,118,735.77 -17,920,181.87 Including: Interest expense Interest income 12,177,082.31 17,924,431.07 Asset impairment loss Credit impairment loss Add: Other income Return on investment (―-‖ for 2,306,537.53 -280,948.37 loss) Including: Share of profit or 473,204.19 -280,948.37 loss of joint ventures and associates Net gain on exposure hedges (―-‖ for loss) Gain on changes in fair value (―-‖ for loss) Asset disposal income (―-‖ for loss) 2. Operating profit (―-‖ for loss) 93,411,199.89 21,372,583.66 Add: Non-operating income 160,000.00 117,516.67 Less: Non-operating expense 319,808.09 9,233.27 3. Profit before tax (―-‖ for loss) 93,251,391.80 21,480,867.06 Less: Income tax expense 23,200,088.89 5,422,817.71 4. Net profit (―-‖ for net loss) 70,051,302.91 16,058,049.35 4.1 Net profit from continuing 70,051,302.91 16,058,049.35 operations (―-‖ for net loss) 4.2 Net profit from discontinued operations (―-‖ for net loss) 5. Other comprehensive income, net of tax 5.1 Items that will not be reclassified to profit or loss 5.1.1 Changes caused by remeasurements on defined benefit 20 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 pension schemes 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 5.1.3 Changes in the fair value of investments in other equity instruments 5.1.4 Changes in the fair value of the company’s credit risks 5.1.5 Other 5.2 Items that will be reclassified to profit or loss 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 5.2.2 Changes in the fair value of investments in other debt obligations 5.2.3 Gain/Loss on changes in the fair value of available-for-sale financial assets 5.2.4 Other comprehensive income arising from the reclassification of financial assets 5.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.6 Allowance for credit impairments in investments in other debt obligations 5.2.7 Reserve for cash flow hedges 5.2.8 Differences arising from the translation of foreign currency-denominated financial statements 5.2.9 Other 6. Total comprehensive income 70,051,302.91 16,058,049.35 7. Earnings per share 7.1 Basic earnings per share 0.1175 0.0269 7.2 Diluted earnings per share 0.1175 0.0269 5. Consolidated Cash Flow Statement Unit: RMB 21 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Item Q1 2019 Q1 2018 1. Cash flows from operating activities: Proceeds from sale of commodities 470,757,472.88 216,591,435.86 and rendering of services Net increase in customer deposits and interbank deposits Net increase in borrowings from the central bank Net increase in loans from other financial institutions Premiums received on original insurance contracts Net proceeds from reinsurance Net increase in deposits and investments of policy holders Net increase in proceeds from disposal of financial assets at fair value through profit or loss Interest, handling charges and commissions received Net increase in interbank loans obtained Net increase in proceeds from repurchase transactions Net proceeds from acting trading of securities Tax rebates Cash generated from other operating 20,774,451.11 21,197,134.81 activities Subtotal of cash generated from 491,531,923.99 237,788,570.67 operating activities Payments for commodities and 342,434,913.82 133,596,754.45 services Net increase in loans and advances to customers Net increase in deposits in the central bank and in interbank loans granted Payments for claims on original insurance contracts Net increase in financial assets held for trading purposes 22 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Net increase in interbank loans granted Interest, handling charges and commissions paid Policy dividends paid Cash paid to and for employees 102,816,115.63 89,960,097.04 Taxes paid 92,294,854.14 86,751,844.14 Cash used in other operating 18,504,507.42 24,184,810.78 activities Subtotal of cash used in operating 556,050,391.01 334,493,506.41 activities Net cash generated from/used in -64,518,467.02 -96,704,935.74 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment Return on investment Net proceeds from the disposal of fixed assets, intangible assets and other 970.00 42,563.50 long-lived assets Net proceeds from the disposal of 76,797,409.69 subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 970.00 76,839,973.19 investing activities Payments for the acquisition of fixed assets, intangible assets and other 888,001.82 1,223,761.10 long-lived assets Payments for investments Net increase in pledged loans granted Net payments for the acquisition of 1,555,272.25 subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 2,443,274.07 1,223,761.10 activities Net cash generated from/used in -2,442,304.07 75,616,212.09 investing activities 3. Cash flows from financing activities: Capital contributions received 23 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Including: Capital contributions by non-controlling interests to subsidiaries Borrowings obtained Net proceeds from the issuance of bonds Cash generated from other financing activities Subtotal of cash generated from financing activities Repayments of borrowings Payments for interest and dividends 60,321,156.25 Including: Dividends paid by subsidiaries to non-controlling interests Cash used in other financing activities Subtotal of cash used in financing 60,321,156.25 activities Net cash generated from/used in -60,321,156.25 financing activities 4. Effect of foreign exchange rate -1,113,462.35 -2,082,768.44 changes on cash and cash equivalents 5. Net increase in cash and cash -128,395,389.69 -23,171,492.09 equivalents Add: Cash and cash equivalents, 3,375,714,690.09 2,464,626,655.21 beginning of the period 6. Cash and cash equivalents, end of 3,247,319,300.40 2,441,455,163.12 the period 6. Cash Flow Statement of the Company as the Parent Unit: RMB Item Q1 2019 Q1 2018 1. Cash flows from operating activities: Proceeds from sale of commodities 210,768,021.48 17,090,227.35 and rendering of services Tax rebates Cash generated from other operating 438,941,608.53 119,562,559.76 activities Subtotal of cash generated from 649,709,630.01 136,652,787.11 operating activities Payments for commodities and 37,404,275.70 1,142,839.51 services 24 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Cash paid to and for employees 10,964,754.93 6,924,081.61 Taxes paid 48,051,017.73 17,919,486.85 Cash used in other operating 64,533,773.42 58,477,561.44 activities Subtotal of cash used in operating 160,953,821.78 84,463,969.41 activities Net cash generated from/used in 488,755,808.23 52,188,817.70 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment Return on investment 152,777.78 Net proceeds from the disposal of fixed assets, intangible assets and other 690.00 4,563.50 long-lived assets Net proceeds from the disposal of 70,207,999.92 subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 153,467.78 70,212,563.42 investing activities Payments for the acquisition of fixed assets, intangible assets and other 251,436.80 185,610.00 long-lived assets Payments for investments 500,000,000.00 Net payments for the acquisition of 1,600,000.00 subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 501,851,436.80 185,610.00 activities Net cash generated from/used in -501,697,969.02 70,026,953.42 investing activities 3. Cash flows from financing activities: Capital contributions received Borrowings obtained Net proceeds from the issuance of bonds Cash generated from other financing activities Subtotal of cash generated from financing activities 25 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Repayments of borrowings Payments for interest and dividends Cash used in other financing activities Subtotal of cash used in financing activities Net cash generated from/used in financing activities 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash -12,942,160.79 122,215,771.12 equivalents Add: Cash and cash equivalents, 2,520,788,994.16 1,754,272,751.45 beginning of the period 6. Cash and cash equivalents, end of 2,507,846,833.37 1,876,488,522.57 the period II Adjustments to the Financial Statements 1. Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New Standards Governing Financial Instruments, Revenue or Leases √ Applicable □ Not applicable Consolidated Balance Sheet Unit: RMB Item 31 December 2018 1 January 2019 Adjusted Current assets: Monetary capital 3,389,234,357.72 3,389,234,357.72 Notes and accounts receivable 64,231,267.94 64,231,267.94 Accounts receivable 64,231,267.94 64,231,267.94 Prepayments 35,913,164.32 35,913,164.32 Other receivables 24,428,411.19 24,428,411.19 Including: Interest receivable 8,293,317.33 8,293,317.33 Inventories 1,181,762,531.67 1,181,762,531.67 Other current assets 16,694,408.12 16,694,408.12 Total current assets 4,712,264,140.96 4,712,264,140.96 Non-current assets: Available-for-sale financial assets 3,621,381.11 N/A -3,621,381.11 Long-term equity investments 39,999,283.24 39,999,283.24 26 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Other non-current financial assets N/A 3,621,381.11 3,621,381.11 Investment property 400,550,689.90 400,550,689.90 Fixed assets 32,612,592.40 32,612,592.40 Long-term prepaid expense 2,398,576.29 2,398,576.29 Deferred income tax assets 519,783,531.64 519,783,531.64 Other non-current assets 108,971,942.00 108,971,942.00 Total non-current assets 1,107,937,996.58 1,107,937,996.58 Total assets 5,820,202,137.54 5,820,202,137.54 Current liabilities: Notes and accounts payable 398,429,855.96 398,429,855.96 Advances from customers 265,338,215.34 265,338,215.34 Payroll payable 96,069,521.54 96,069,521.54 Taxes payable 1,552,720,630.59 1,552,720,630.59 Other payables 112,502,146.69 112,502,146.69 Including: Interest payable 1,669.10 1,669.10 Dividends payable 29,642.40 29,642.40 Total current liabilities 2,425,060,370.12 2,425,060,370.12 Non-current liabilities: Long-term borrowings 1,000,000.00 1,000,000.00 Deferred income tax liabilities 5,275.60 5,275.60 Other non-current liabilities 52,937,180.81 52,937,180.81 Total non-current liabilities 53,942,456.41 53,942,456.41 Total liabilities 2,479,002,826.53 2,479,002,826.53 Owners’ equity: Share capital 595,979,092.00 595,979,092.00 Capital reserves 118,938,132.89 118,938,132.89 Other comprehensive income -1,786,181.69 -1,786,181.69 Surplus reserves 299,569,569.96 299,569,569.96 Retained earnings 2,325,248,711.48 2,325,248,711.48 Total equity attributable to owners of 3,337,949,324.64 3,337,949,324.64 the Company as the parent Non-controlling interests 3,249,986.37 3,249,986.37 Total owners’ equity 3,341,199,311.01 3,341,199,311.01 Total liabilities and owners’ equity 5,820,202,137.54 5,820,202,137.54 Note for adjustment: 27 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 According to the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments (CK[2017] No. 7), the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets (CK[2017] No. 8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017] No. 9), and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017] No. 14) issued and revised in 2017 by Ministry of Finance, enterprises listed domestically shall implement relevant new accounting standards of financial instruments from 1 January 2019. Notes of Revising and Printing the Format of 2018 General Enterprises Financial Statement (CK [2018] No. 15) (hereinafter referred to as ―CK [2018] No. 15‖) was issued by the Ministry of Finance on 15 June 2018, which required non-financial enterprises implementing accounting standards to prepare the financial statements in accordance with the revised format of general enterprises financial statements (applying to the enterprises who already implemented new standards governing financial instruments and revenue) Adjustments are as follows according to the regulations and requirements of above notes and accounting standards for business enterprise: 1. The Company classified and adjusted the original ―Available-for-sale financial assets‖ to ―Other non-current financial assets‖ according to the regulations of new standards of governing financial instruments. 2. The Company changed ―incurred loss method‖ to ―expected loss method‖ for provision for financial assets impairment. 3. According to the regulations of new accounting standards governing financial instruments, the Company did not need to restate the pervious comparative data. The adjustment of discrepancy between with the new standards at the first execution day and original standards shall be recorded into the beginning retained earnings of 2019 or other comprehensive income. Balance Sheet of the Company as the Parent Unit: RMB Item 31 December 2018 1 January 2019 Adjusted Current assets: Monetary capital 2,520,788,994.16 2,520,788,994.16 Notes and accounts receivable 1,853,494.72 1,853,494.72 Accounts receivable 1,853,494.72 1,853,494.72 Prepayments 829,683.68 829,683.68 Other receivables 1,306,715,826.93 1,306,715,826.93 Including: Interest receivable 8,229,503.58 8,229,503.58 Inventories 105,840,115.24 105,840,115.24 Total current assets 3,936,028,114.73 3,936,028,114.73 Non-current assets: Available-for-sale financial assets 3,851,881.11 N/A -3,851,881.11 Long-term equity investments 239,501,956.17 239,501,956.17 Other non-current financial assets N/A 3,851,881.11 3,851,881.11 Investment property 317,313,917.65 317,313,917.65 Fixed assets 9,121,637.65 9,121,637.65 28 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 Long-term prepaid expense 778,392.57 778,392.57 Deferred income tax assets 315,888,967.26 315,888,967.26 Other non-current assets 104,132,920.00 104,132,920.00 Total non-current assets 990,589,672.41 990,589,672.41 Total assets 4,926,617,787.14 4,926,617,787.14 Current liabilities: Notes and accounts payable 124,501,464.28 124,501,464.28 Advances from customers 75,895,087.75 75,895,087.75 Payroll payable 31,224,455.28 31,224,455.28 Taxes payable 1,402,388,742.76 1,402,388,742.76 Other payables 224,875,980.31 224,875,980.31 Dividends payable 29,642.40 29,642.40 Total current liabilities 1,858,885,730.38 1,858,885,730.38 Non-current liabilities: Total liabilities 1,858,885,730.38 1,858,885,730.38 Owners’ equity: Share capital 595,979,092.00 595,979,092.00 Capital reserves 92,326,467.62 92,326,467.62 Surplus reserves 298,912,759.52 298,912,759.52 Retained earnings 2,080,513,737.62 2,080,513,737.62 Total owners’ equity 3,067,732,056.76 3,067,732,056.76 Total liabilities and owners’ equity 4,926,617,787.14 4,926,617,787.14 Note for adjustment: According to the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments (CK[2017] No. 7), the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets (CK[2017] No. 8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017] No. 9), and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017] No. 14) issued and revised in 2017 by Ministry of Finance, enterprises listed domestically shall implement relevant new accounting standards of financial instruments from 1 January 2019. Notes of Revising and Printing the Format of 2018 General Enterprises Financial Statement (CK [2018] No. 15) (hereinafter referred to as ―CK [2018] No. 15‖) was issued by the Ministry of Finance on 15 June 2018, which required non-financial enterprises implementing accounting standards to prepare the financial statements in accordance with the revised format of general enterprises financial statements (applying to the enterprises who already implemented new standards governing financial instruments and revenue) Adjustments are as follows according to the regulations and requirements of above notes and accounting standards for business enterprise: 1. The Company classified and adjusted the original ―Available-for-sale financial assets‖ to ―Other non-current financial assets‖ 29 ShenZhen Properties & Resources Development (Group) Ltd. First Quarter Report 2019 according to the regulations of new standards of governing financial instruments. 2. The Company changed ―incurred loss method‖ to ―expected loss method‖ for provision for financial assets impairment. 3. According to the regulations of new accounting standards governing financial instruments, the Company did not need to restate the pervious comparative data. The adjustment of discrepancy between with the new standards at the first execution day and original standards shall be recorded into the beginning retained earnings of 2019 or other comprehensive income. 2. Retrospective Restatement of Previous Comparative Data due to the First Execution of any New Standards Governing Financial Instruments or Leases □ Applicable √ Not applicable III Independent Auditor’s Report Indicate by tick mark whether the financial statements above have been audited by an independent auditor. □Yes √ No These financial statements have not been audited by such an auditor. 30