untitled

Transcription

1 Sansheng Holdings (Group) Co. Ltd. 三盛控股 ( 集團 ) 有限公司 ( 股份代號 :2183) 截至二零一九年六月三十日止六個月的中期業績公告 本公司 董事會 聯交所 ( ( 三盛控股 ( 集團 ) 有限公司 林榮濱

2 CONTENTS 2 Corporate Information 4 Management Discussion and Analysis 18 Other Information 22 Review Report 24 Consolidated Statement of Profit or Loss 25 Consolidated Statement of Profit or Loss and Other Comprehensive Income 26 Consolidated Statement of Financial Position 28 Consolidated Statement of Changes in Equity 29 Condensed Consolidated Statement of Cash Flows 30 Notes to the Unaudited Interim Financial Report

3 Corporate Information Board of Directors Executive Directors Mr. Lin Rongbin (Chairman) Ms. Cheng Xuan (Chief Executive Officer) Non-executive Directors Mr. Xiao Zhong Mr. Xu Jianwen Independent Non-executive Directors Mr. Pan Dexiang Mr. Yuan Chun Mr. Zhong Bin Company Secretary Mr. Cheng Ching Kit Authorised Representatives Mr. Lin Rongbin Mr. Cheng Ching Kit Audit Committee Mr. Yuan Chun (Chairman) Mr. Pan Dexiang Mr. Zhong Bin Remuneration Committee Mr. Pan Dexiang (Chairman) Ms. Cheng Xuan Mr. Zhong Bin Nomination Committee Mr. Lin Rongbin (Chairman) Mr. Pan Dexiang Mr. Yuan Chun Registered Office Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY Cayman Islands Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY Cayman Islands 2 Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

4 Corporate Information (continued) Head Office and Principal Place of Business in Hong Kong Room 3207 The Gateway Tower 6 Tsim Sha Tsui Kowloon, Hong Kong Principal Bankers Hong Kong Bank of China (Hong Kong) Limited Industrial Bank Co., Ltd. Hong Kong Branch Bank of Communications Co., Ltd. Hong Kong Branch Standard Chartered Bank (Hong Kong) Limited China China Minsheng Banking Corp., Ltd Auditor KPMG Certified Public Accountants Hong Kong Share Registrar and Transfer Office Computershare Hong Kong Investor Services Limited Shops , 17th Floor, Hopewell Centre 183 Queen s Road East, Wanchai, Hong Kong Cayman Islands Share Registrar and Transfer Office SMP Partners (Cayman) Limited Royal Bank House, 3rd Floor 24 Shedden Road P. O. Box 1586 Grand Cayman, KY Cayman Islands Stock Information Place of listing: The Stock Exchange of Hong Kong Limited Main Board Stock code: 2183 Board lot: 2,000 shares Financial year end: 31 December Website SMP Partners (Cayman) Limited Royal Bank House, 3rd Floor 24 Shedden Road P.O. Box 1586 Grand Cayman, KY Cayman Islands ,

5 Management Discussion and Analysis FINANCIAL REVIEW Contracted sales For the six months ended 30 June 2019, the contracted but unrecognised sales of Sansheng Holdings (Group) Co. Ltd. (the Company ) and its subsidiaries (collectively referred to as the Group ) amounted to approximately RMB2,117.8 million and the estimated contracted gross floor area ( GFA ) of the Group was approximately 189,912 square meters ( sq.m. ). Cities in Fujian Province contributed contracted sales of approximately RMB1,151.6 million, representing approximately 54% of total contracted sales. Details of the contracted sales of the projects are set out below: Details of contracted sales for the six months ended 30 June , ,912 1, % Contracted Contracted sales GFA Location/Project (Note) (RMB 000) (sq.m.) Zhangqiu Jinan Shandong/The Puyue Bay 101,797 10,498 Pingtan Fuzhou Fujian/Sansheng International Coast (Phase 1) 867,421 73,663 Xiapu Ningde Fujian/Binjiang International 215,438 24,413 Langqi Fuzhou Fujian/Future City 68,696 5,572 Rudong Nantong Jiangsu/Puyue Mansion 450,286 45,769 Pingyang Wenzhou Zhejiang/Yuefu Garden 213,140 15,278 Pingyang Wenzhou Zhejiang/Jiangcheng Town 200,980 14,719 Total 2,117, ,912 Note: Contracted sales include contracted sales by the Group s subsidiaries and joint ventures. 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 collecting such sales information and is provided for shareholders and investors reference only. Revenue Total revenue of the Group for the six months ended 30 June 2019 amounted to approximately RMB13.0 million (for the six months ended 30 June 2018: approximately RMB680.8 million) Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

6 Management Discussion and Analysis (continued) The following table sets forth certain details of the revenue: Six months ended 30 June Percentage of revenue Percentage of revenue RMB 000 (%) RMB 000 (%) (%) (%) Revenue from sales of properties 677, Investment properties rental income 12, , Total 12, , The Group did not record any revenue from sales of properties for the six months ended 30 June 2019 (for the six months ended 30 June 2018: approximately RMB677.3 million), which was due to the fact that the majority of the development projects explored by the Group were under construction or pre-sale stage and conditions to recognise revenue were not satisfied during the period. The Group s investment properties rental income recorded approximately RMB13.0 million for the six months ended 30 June 2019 (for the six months ended 30 June 2018: approximately RMB3.6 million), representing an increase of approximately 263% as compared to the amount in the corresponding period in It was derived from commercial investment properties in Harbin and commercial investment properties in Qingdao, which were leased out in January and August 2018 respectively. Cost of sales Cost of sales mainly represents the cost directly related to the development of the Group s properties. It comprises cost of land use rights, acquisition premium, construction costs, decoration costs, capitalised interest expenses and finance cost of advance payment. For the six months ended 30 June 2019, the Group did not record any cost of sales accordingly (for the six months ended 30 June 2018: approximately RMB647.1 million), which was due to the pre-sale properties have not been delivered during period under review. Gross profit For the six months ended 30 June 2019, gross profit was approximately RMB13.0 million (for the six months ended 30 June 2018: approximately RMB33.7 million). Valuation gain on investment properties For the six months ended 30 June 2019, the Group recorded unrealised fair value gain on investment properties in Qingdao and Harbin of approximately RMB3.8 million (for the six months ended 30 June 2018: Nil) %

7 Management Discussion and Analysis (continued) Other income Other income mainly comprised net exchange gain/(loss), bank interest income, fair value changes on derivative financial instruments, mark-to-market realised fair value changes and mark-to-market unrealised fair value changes on financial assets. The Group s other income increased from approximately RMB3.1 million for the six months ended 30 June 2018 to approximately RMB5.6 million for the six months ended 30 June Such increases were mainly due to the turnaround of Group s mark-to-market fair value loss on the financial assets from the prior period of approximately RMB4.3 million to gain of approximately RMB8.4 million during the period. The turnaround of the fair value gain on the derivative financial instruments from the prior period of approximately RMB8.8 million to a loss of approximately RMB5.8 million during the period. In addition, exchange difference changed from exchange loss of approximately RMB 3.7 million in the corresponding period in 2018 to exchange gain of approximately RMB 2.6 million in current period. The exchange gain was recorded mainly because of the decreased USD exchange rate when the Company was paying the USD bond interest in current period, which was recognised at the beginning of the period (the functional currency of the Company is RMB and the exchange rate of USD against RMB had depreciated up to 3% during the period). Exchange loss recorded in the corresponding period in 2018 was mainly due to the continued increase in exchange rate of USD against RMB in the first half of last year, which resulting in a net exchange loss arising from the US$135 million bond and US dollar deposits held by the Company. Selling and marketing expenses and administrative expenses For the six months ended 30 June 2019, selling and marketing expenses and administrative expenses amounted to approximately RMB77.0 million (for the six months ended 30 June 2018: approximately RMB35.8 million), representing an increase of approximately 115% as compared with the corresponding period in The increase in selling and marketing expenses and administrative expenses was mainly due to the increase in overall sales and marketing expenses owing to the increase in contracted sales amount during the period, boosted by the Group s new launches of property projects available for pre-sale in 2019 and continued expansion in business scale of the Group, resulting in increases in staff costs and administrative expenses accordingly. Share of losses of joint ventures For the six months ended 30 June 2019, the Group s share of losses of joint ventures amounted to approximately RMB2.2 million (for the six months ended 30 June 2018: Nil) % % Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

8 Management Discussion and Analysis (continued) Income tax For the six months ended 30 June 2019, the Group s income tax credit was approximately RMB12.8 million. The income tax credit of the Group was mainly included the deferred tax assets arising from the recognition of tax losses of approximately RMB16.1 million and the deferred income tax expenses arising from the adoption of fair value measurement for the investment properties in Harbin and Qingdao and temporary difference on depreciation were amounted to approximately RMB2.1 million, and the deferred income tax expenses arising from the recognition of capitalised sales commission was approximately RMB1.7 million. Loss for the period attributable to equity shareholders of the Company For the six months ended 30 June 2019, the Group recorded a loss attributable to equity shareholders of the Company of approximately RMB41.1 million (for the six months ended 30 June 2018: approximately RMB18.0 million). For the six months ended 30 June 2019, basic loss per share was approximately RMB9.81 cents (for the six months ended 30 June 2018: approximately RMB4.30 cents). The higher loss for the current period was mainly due to substantial increase in the number of projects and continued expansion in business scale of the Group, resulting in increase in selling and marketing expenses and administrative expenses. In addition, the Group did not record any revenue from sales of properties as the properties of the Group were under pre-sale and no properties were delivered during the period. Liquidity and Financial Resources Cash position As at 30 June 2019, the Group s cash and cash equivalents (including restricted deposits) amounted to approximately RMB484.6 million (31 December 2018: approximately RMB406.2 million). The Group had unutilised credit facilities amounting to approximately RMB4,279.2 million as at 30 June 2019 (31 December 2018: approximately RMB3,522.6 million). The unutilised credit facilities from banks and financial institutions of the Group amounted to approximately RMB1,438.0 million as at 30 June 2019 (31 December 2018: approximately RMB723.7 million). Following the completion of exchange offer of new bonds in the amount of USD135.0 million by the Group in November 2018, it has sufficient financial resources and flexible financial management policy in place to meet the needs of its business development in the coming years , , ,

9 Management Discussion and Analysis (continued) Borrowings As at 30 June 2019, the Group s bank loans and borrowings from financial institutions were approximately RMB3,301.8 million (31 December 2018: approximately RMB2,502.4 million) and bond payable was approximately RMB898.9 million (31 December 2018: approximately RMB894.1 million) for the Group s development purpose and as general working capital, and refinance the Group s existing indebtedness. Out of the total borrowings, RMB1,248.9 million was repayable within one year (31 December 2018: approximately RMB1,164.4 million), while approximately RMB2,951.8 million was repayable after one year (31 December 2018: approximately RMB2,232.1 million). 3, , , , , ,232.1 Finance cost The Group s finance costs mainly included interest arising from corporate bonds, bank loans, borrowings from financial institutions and loans from a related party, it decreased from approximately RMB32.5 million for the six months ended 30 June 2018 to approximately RMB8.9 million for the six months ended 30 June The decrease was contributed by the increase of interest expense which satisfied the conditions of capitalisation and did not recognise as expense in current period. The Group s weighted average interest rate was 10.93% for the six months ended 30 June 2019 (for the six months ended 30 June 2018: 8.09%), and the total borrowing costs of the Group has been capitalised at a rate of 10.49% for the six months ended 30 June 2019 (for the six months ended 30 June 2018: 7.21%). Gearing ratio The Group s gearing ratio (total indebtedness divided by total assets) was approximately 89.7% (31 December 2018: approximately 87.6%) and the gearing ratio excluding receipts in advance and contract liabilities was approximately 79.1% (31 December 2018: approximately 85.7%). The Group s current ratio (current assets divided by current liabilities) was approximately 1.8 times as at 30 June 2019 and 31 December Pledge of assets As at 30 June 2019, the Group s inventories with carrying amount of approximately RMB5,114.7 million were pledged to secure the bank loans and borrowings from financial institutions of the Group (31 December 2018: approximately RMB2,850.5 million) Material acquisition and disposal of subsidiaries, associates and joint ventures During the six months ended 30 June 2019, there was no material acquisition or disposal of subsidiaries, associates and joint ventures by the Group % 8.09% 10.49% 7.21% 89.7% 87.6% 79.1% 85.7% 1.8 5, , Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

10 Management Discussion and Analysis (continued) Future plans for material investments or capital assets Save for the business plans as disclosed in the section headed Outlook and Plans in this interim report, there were no other future plans for material investments or acquisition of capital assets as at 30 June Contingent liabilities As at 30 June 2019, the Group has issued guarantees to banks to secure the mortgage arrangement of property buyers. The outstanding guarantees to the banks amounted to approximately RMB291.0 million (31 December 2018: approximately RMB0.1 million), which will be terminated upon the completion of the transfer procedures with the buyers in respect of the legal title of the properties. The directors of the Company (the Directors ) do not consider it probable that the Group will sustain a loss under these guarantees as the bank has the right to sell the property and recovers the outstanding loan balance from the sale proceeds if the property buyer defaults payment. The Group has not recognised any deferred income in respect of these guarantees as its fair value is considered to be minimal by the directors. Foreign exchange risk The functional currency of the Company and its major subsidiaries is RMB, in which most of their transactions and assets are denominated. The Group has exposure to USD exchange risk arising from its bonds in the amount of USD135.0 million issued during the prior year. The Group has not taken any measures to hedge the existing foreign currency exposure but will monitor closely the situation and review such a need from time to time. REVIEW OF OPERATIONS The Group s principal activities are property development and sale, and property investment. The board of directors of the Company (the Board ) is of the view that the overall operation of the Group was satisfactory and its financial position remained stable and healthy in the current period, while substantial contracted sales of approximately RMB2,117.8 million were achieved during the six months ended 30 June 2019, forming a solid basis for the Group s future growth in recognised revenue. With the support from Sansheng Group, the Group has smoothly implemented its strategic plan during the period under review, it has proactively selected property development projects from those cities with a robust economy and avoided the projects from areas where stringent real estate policies such as restrictions on purchases and prices were in effect. The Group has obtained a quality project through acquisition, which has contributed to its land bank and has laid a cornerstone for its property development business in the future. Property investment The Group s portfolio of investment properties comprises certain properties in Hong Kong and mainland China. During the year 2018, the Group s investment properties in Harbin and Qingdao have been leased out. The Group is proactively considering leasing or selling its industrial building units in Hong Kong. The Group will from time to time review its property portfolio and make every endeavour to increase its rental income ,

11 Management Discussion and Analysis (continued) Property development and land bank As at 30 June 2019, the Group had a total of 15 property projects under development or held for future development, total site area of its land bank was approximately 796,554 sq.m. and the estimated total GFA of the land bank was approximately 2,513,901 sq.m. The table below sets forth the breakdown of property development projects: ,554 2,513,901 Equity interest held by the Total Estimated Location/Project Primary intended use Group site area aggregate GFA (%) (sq.m.) (sq.m.) 1. Zhangqiu Jinan Shandong/The Puyue Bay Residential 80 60, , Pingtan Fuzhou Fujian/Sansheng International Coast Residential/Commercial , ,507 (Phase 1) 3. Pingtan Fuzhou Fujian/Sansheng International Coast Residential/Commercial 90 75, ,900 (Phase 2) 4. Xiapu Ningde Fujian/Binjiang International Residential/Commercial 55 23,861 66, Langqi Fuzhou Fujian/Future City Residential/Commercial , , Tingjiang Fuzhou Fujian/The Puyue Bay City Residential/Commercial 28 70, , Rudong Nantong Jiangsu/Puyue Mansion Residential/Commercial 92 77, , Wuxi Jiangsu/Sansheng Galaxy City Commercial/Office , , Longhai Zhangzhou Fujian/Sansheng Puyue Sea Residential/Commercial ,457 49, Changle Fuzhou Fujian/Puyue Mansion (Phase I) Residential/Commercial 30 48, , Changle Fuzhou Fujian/Puyue Mansion (Phase II) Residential/Commercial 30 44, , Pingyang Wenzhou Zhejiang/Yuefu Garden Residential , , Pingyang Wenzhou Zhejiang/Jiangcheng Town Residential , , Gulou Fuzhou Fujian/Sheng Mansion Residential ,882 43, Shenyang Liaoning/Yifu Project Residential/Commercial/ , ,065 Office Total 796,554 2,513, Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

12 Management Discussion and Analysis (continued) Project Profiles Zhangqiu Jinan Shandong The Puyue Bay The Puyue Bay ( ) is located in Zhangqiu district, Jinan City. It is west of Shiji East Road, south of Shanquan East Road, north of Tiedao North Road and east of Shihe Street with well-established infrastructure in the vicinity and good access to transportation. This is a residential property project with planning construction area of approximately 60,032 sq.m., estimated total planned GFA of approximately 207,144 sq.m. of which aboveground construction area is approximately 150,080 sq.m. and underground construction area is approximately 57,064 sq.m. The project mainly consists of high-rise residential buildings which comprise one 34-storey building, five 33-storey buildings, two 18-storey buildings, one 14-storey building and one 17-storey building, and four 6-storey low-rise western-style houses, and involves partial construction of a one-totwo storey commercial podium and ancillary public facilities, and the construction of one waste transfer station and heat exchange station. The project is developed in three phases. Construction of the first phase of the demonstration zone commenced in April Pre-sale of four western-style houses commenced in December 2018, and the area available for pre-sale is approximately 20,049 sq.m. as at 30 June The five-party check of first phase of the western-style houses (buildings 8, 9, 12, 17 and 18) was completed. The external facade construction, window frame installation and elevator construction of second phase of the high-rise buildings (buildings 1, 7, 13 and 16) have been completed. The earthwork excavation of the third phase of the Dagao area () (buildings 2, 3, 4, 5, 6, 10, 11, 14 and 15) is basically completed and preparing for the footing construction. Pingtan Fuzhou Fujian Sansheng International Coast (Phase 1) Sansheng International Coast ( ) (Phase 1) comprises villas, high-rise residential building, underground parking lots and shops. The pre-sale of the high-rise residential building commenced in October The estimated GFA of the high-rise residential building is approximately 292,249 sq.m., and the estimated selling price per sq.m. is approximately RMB11,500. The pre-sale of the townhouses commenced in December 2018 covering an estimated GFA of approximately 13,520 sq.m. and is expected to be sold at approximately RMB20,000 per sq.m. The estimated GFA of commercial space is 24,742 sq.m. and is expected to be sold at approximately RMB20,000 per sq.m. The estimated GFA of the kindergarten is approximately 4,900 sq.m. The estimated GFA of the other ancillary public facilities is approximately 6,531 sq.m., and estimated GFA of the basement and empty space is approximately 101,565 sq.m. 60, , ,080 57, , ,249 11,500 13,520 20,000 24,742 20,000 4,900 6, ,565 11

13 Management Discussion and Analysis (continued) Pingtan Fuzhou Fujian Sansheng International Coast (Phase 2) Sansheng International Coast (Phase 2) comprises townhouses, high-rise residential buildings, apartment buildings and shops. The townhouses covering an estimated GFA of approximately 12,236 sq.m. are scheduled for pre-sale in 2020, and are expected to be sold at approximately RMB25,000 per sq.m. The estimated GFA of the high-rise residential buildings is approximately 91,484 sq.m. and is expected to be sold at approximately RMB12,500 per sq.m. The presale of commercial soho is to commence in early 2021 which covers an estimated GFA of approximately 44,948 sq.m. and is expected to be sold at approximately RMB9,500 per sq.m. The estimated GFA of the ancillary public facilities is approximately 2,332 sq.m., and estimated GFA of the basement and empty space is approximately 45,900 sq.m. Xiapu Ningde Fujian Binjiang International Binjiang International () is a residential development project comprising villas and high-rise residential units. It is situated in the south of Zhangqian Road of Songgang Sub-district Railway Station, Xiapu County, and adjacent to Luohanxi Park, railway station and the new bus terminal. The whole project consists of 14 buildings, namely Sansheng Binjiang International Building Numbers 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15 and 16, and planned facilities such as leisure rooms, healthcare stations and others. The total site area is approximately 23,861 sq.m. and the estimated planned total GFA is approximately 66,082 sq.m. The master layout plan for the project was approved in June 2018 and the pre-sale of the project commenced in September Construction for the entire project is expected to be completed in January At at 30 June 2019, the total area of the project approved for pre-sale is approximately 49,666 sq.m. Langqi Fuzhou Fujian Future City Future City ( ) is located on the western part of Langqi Island, Mawei District, south of the island-entering section of Langqi Minjiang River Bridge, to the west is Duting River, north is a planned green area, and is west of Area A of Xianghai Xincheng ( ) and at the northern side of the Yanhang River. The land area is approximately 69,505 sq.m. and the estimated total GFA is 166,777 sq.m. The main buildings of the project include residential space, commercial space, and space for ancillary facility (kindergarten). The relevant master layout plan was approved in September The first batch for pre-sale is scheduled in January 2019 and construction of the project is expected to be completed in ,236 25,000 91,484 12,500 soho 44,948 9,500 2,332 45, ,861 66,082 49,666 A 69, , Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

14 Management Discussion and Analysis (continued) Tingjiang Fuzhou Fujian The Puyue Bay City The Puyue Bay City () is located between Roads No. 5 and No. 6 in the eastern part of the Yanleiding Mountain Area, Tingjiang Area, Mawei District. Situated in the old town and backed by mountains, Minting Lot in Tingjiang Town, Mawei District is adjacent to China National Highway 104 and boasts quick access to Dongjiangbin. In spite of relatively fewer commercial facilities, it is surrounded by Tingjiang Central Primary School, Tingjiang Middle School and other facilities. It is a suitable homestead location along the riverside surrounded by mountains with a charming scenery of Minjiang. The main buildings are for residential and commercial use. The estimated GFA of high-rise residential buildings, commercial and residential area, ancillary public facilities and basements is approximately 180,707 sq.m., 9,888 sq.m., 7,043 sq.m. and 93 sq.m. respectively, the estimated GFA not included in the plot ratio calculation is approximately 61,026 sq.m., and the estimated total GFA is approximately 258,757 sq.m. The first batch for presale is scheduled in October 2019 and construction of the project is expected to be completed by Rudong Nantong Jiangsu Puyue Mansion Puyue Mansion ( ) is located in the north of Longteng Road and west of Jiefang Road in Rudong County, Jiangsu Province. The project consists of residential and commercial developments, mainly including six 26-storey high rise buildings (Blocks 1-6), three 11-storey western-style apartments (Blocks 7-9) and fifteen 3-storey villas (Houses 10-24), together with a commercial podium of one-to-two storey and ancillary public facilities such as a kindergarten. The total site area is approximately 77,481 sq.m. and the estimated planned total GFA is approximately 185,944 sq.m. The project is planned to be developed in two phases. The construction of the first phase of the demonstration zone commenced in September As at 30 June 2019, six high-rise buildings (Blocks 1 to 6) and fifteen villas (Houses 10-24) are now under construction, and the pre-saleable GFA is approximately 124,377 sq.m.. Construction of the project is expected to be completed by December ,707 9,888 7, , , , , ,377 13

15 Management Discussion and Analysis (continued) Wuxi Jiangsu Sansheng Galaxy City Galaxy City ( ) comprises service apartments, offices and commercial area located at the south of Taihu Avenue, Wuxi City. Pre-sale of the service apartments will commence in September 2019 with estimated GFA of approximately 66,924 sq.m., and the estimated selling price is RMB11,375 per sq.m. Pre-sale of the office units will commence in September 2019 with estimated GFA of approximately 17,676 sq.m., and the estimated selling price per sq.m. is RMB9,500. Pre-sale of the commercial building will commence in September The estimated GFA is approximately 5,069 sq.m., and the estimated selling price is RMB18,000 per sq.m. The project is estimated to have 661 car parking spaces for sale, and the estimated selling price per parking space is RMB80,000. The estimated GFA of other ancillary space is approximately 676 sq.m., and the estimated GFA of basements, empty space and insulating layers is approximately 37,353 sq.m. The project is expected to be completed for delivery in May Longhai Zhangzhou Fujian Sansheng Puyue Sea Located in Binhai New Town Area of Longhai City, northwest to the intersection of Yingbin Avenue and Binhuwei 6th Road, the project has a planned site area of approximately 23,457 sq.m., a total GFA of approximately 49,046 sq.m., and GFA included in the plot ratio calculation of approximately 30,484 sq.m. Surrounded by magnificent natural landscape resources of mountains, lakes and seas, the project is positioned as a pleasant real estate development in the modern Minnan architectural style and ideal for investment, retirement and vacation. The project planning comprises 22 shops, eight courtyard houses with 84 units in total, five western-style houses with 233 units, the pre-saleable GFA is approximately 29,645 sq.m. as at 30 June The project commenced construction in September 2018, and is expected to start pre-sale in September 2019 and be completed in January 2021 and delivered in August Changle Fuzhou Fujian Puyue Mansion (Phase I) Located in the east of Square South Road and north of Kaige Road in Longmen Village, Hangcheng Street, Changle District, Fuzhou City, the land is for residential and commercial use. The project consists of nine high-rise buildings, together with a commercial podium of one-to-two storey. Pre-sale of the project is estimated to start by the end of September 2019, and delivery of commercial and residential buildings is expected to be in May The estimated total GFA is approximately 136,783 sq.m. Changle Fuzhou Fujian Puyue Mansion (Phase II) Located on Hangcheng Street, Changle District, Fuzhou, east of Huitang South Road and north of Kaige Road, the land is for residential and commercial use. The project consists of 14 highrise buildings. Pre-sale is estimated to be started in the middle of December 2019, and the delivery of commercial and residential buildings is expected to be in August The estimated total GFA is approximately 136,841 sq.m. 66,924 11,375 17,676 9,500 5,069 18, , ,353 23,457 49,046 30, , , , Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

16 Management Discussion and Analysis (continued) Pingyang Wenzhou Zhejiang Yuefu Garden Located in the Binjiang Section, City Central District, Aojiang Town, Pingyang County, Wenzhou City, Zhejiang Province, Yuefu Garden ( ) is adjacent to Wanda Plaza () and Yintai Center (). Binjiang Section is a high-end residential segment in Aojiang Town in the heart of the new city with great development potential and well-developed facilities, which is highly recognised by customers in Aojiang and Longgang. Sophisticated living facilities, comprehensive commercial facilities and excellent educational resources are located within three kilometers from the lot. The Jiudie River Park which is under planning and construction is in the east. Located along the trunk roads, namely the Station Avenue, Kun ao Avenue, China National Highway 104 and Wenwei Road, it is four kilometers away from the Pingyang Aojiang Railway Station. The Aojiang Fourth Bridge nearby is an essential linkage for the integration of Aojiang and Longgang. The plot has a total site area of approximately 52,181 sq.m. and an estimated total GFA of approximately 156,900 sq.m., of which the saleable area of nine residential buildings is approximately 116,430 sq.m. with 933 saleable units in total as at 30 June Pre-sale of the project started in November 2018 and construction is expected to be completed in April Pingyang Wenzhou Zhejiang Jiangcheng Town Located in the Binjiang Section, City Central District, Aojiang Town, Pingyang County, Wenzhou City, Zhejiang Province, Jiangcheng Town ( ) is adjacent to Wanda Plaza () and Yintai Center ( ). Binjiang Section is a high-end residential segment in Aojiang Town in the heart of new city with great development potential and welldeveloped facilities, which is highly recognised by customers in Aojiang and Longgang. Sophisticated living facilities, comprehensive commercial facilities and excellent educational resources are located within three kilometers from the lot. The Jiudie River Park which is under planning and construction is in the east. Located along the trunk roads, namely the Station Avenue, Kun ao Avenue, China National Highway 104 and Wenwei Road, it is four kilometers away from the Pingyang Aojiang Railway Station. The Aojiang Fourth Bridge nearby is an essential linkage for the integration of Aojiang and Longgang. The plot has a total site area of approximately 50,746 sq.m. and an estimated total GFA of approximately 151,955 sq.m., of which the saleable area of nine residential buildings is approximately 112,977 sq.m. with 900 saleable units in total as at 30 June Pre-sale of the project started in November 2018 and construction is expected to be completed in April , , , , , ,

17 Management Discussion and Analysis (continued) Gulou Fuzhou Fujian Sheng Mansion Sheng Mansion ( ) is located at the intersection of Wushan West Road and Baima North Road, Gulou District, Fuzhou City, adjacent to the municipal government in the heart of the city central district. Surrounded by high standard education, administration, healthcare and commercial facilities, it offers a cultural, artistic and high-end living atmosphere. The project mainly consists of four 14- to-17 storey buildings and commercial podium of one-to-five storeys together with ancillary public facilities. The total planned GFA is estimated to be approximately 43,502 sq.m., of which the residential construction area, the commercial construction area, the ancillary public facilities area, the underground construction area and the empty space are approximately 28,062 sq.m., 3,500 sq.m., 1,754 sq.m., 10,126 sq.m. and 60 sq.m., respectively. The plot ratio is approximately 2.4. The project commenced construction in February 2019 and building of the demonstration area and basement is currently in progress. Pre-sale is expected to start in November 2019 and construction is expected to be completed in December 2020 and delivered in December Shenyang Liaoning Yifu Project The Yifu Land located in Shenyang is currently the Group s property project under development. Based on the master layout plan submitted to the relevant Planning Bureau in 2013, the Group planned to develop a commercial complex with a three-level basement consisting of retail shops, offices, service apartments and car parking spaces with an estimated aggregate GFA of approximately 186,065 sq.m. on the Yifu Land. As of the date of this interim report, the final approval for the master layout plan has not yet been obtained, mainly due to a number of issues which the Group and the local government are still working together for a resolution. The market research and consultancy company engaged by the Group has submitted a report expressing its recommendations and advice on the market and product positioning of the Yifu Land. The Group has started communication with local government authorities, and strive to obtain approvals on project adjustment and construction permits from the local government as soon as practicable ,502 28,062 3,500 1,754 10, , Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

18 Management Discussion and Analysis (continued) OUTLOOK AND PLANS The Group will closely monitor the changes in macroeconomic policies of the China s real estate industry, accelerate the innovation, actively adjust the strategic plan and achieve the development targets with its competitive strengths. Riding on the substantial experience and professionalism of Sansheng Group, and adhering to the aim of developing high quality residential products and services to customers, the Group has won market recognition and achieved its performance target. The Group intends to actively seek for new opportunities in property development while enlarging the income from the existing investment properties, and to conduct more land acquisitions, especially to commence the development of the residential properties in the Mainland China market. The Group will actively expand its reserve of new high-quality land resources and build on the foundation of future business development through a combination of various land acquisition methods. In the future, the Group will deepen the development of the core areas of China s economy, expand its business scale in the steady and rapid developing zones such as The Western Straits Economic Zone, The Yangtze River Delta Economic Zone and Circum- Bohai Sea Economic Zone and actively seek to enter China s other economic hotspots such as The Guangdong-Hong Kong-Macao Greater Bay Area and The Yangtze River Economic Zone at the same time. While optimizing the overall strategic plan, the Group will continue to adhere to its strategy of precise investment, high caliber team superior product () to achieve two objectives of excellent operational efficiency and outstanding profitability in order to deliver satisfactory returns to its shareholders. 17

19 Other Information Directors and Chief Executive s Interests As at 30 June 2019, the Directors and the Company s chief executive s interests and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ( SFO )), as recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the Stock Exchange ) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers ( Model Code ) as set out in Appendix 10 to The Rules Governing the Listing of Securities on the Stock Exchange (the Listing Rules ), were as follows: Long position in shares of the Company XV 352 Number of Percentage of Name of director/chief executive Nature of interest shares held issued shares Mr. Lin Rongbin Interest of controlled corporation 296,348, % Ms. Cheng Xuan Interest of spouse 296,348, % Notes: 1. Mega Regal Limited ( Mega Regal ) is the beneficial owner of these Shares and is wholly-owned by Modern Times Development Limited ( Modern Times ), which is in turn wholly-owned by Mr. Lin Rongbin ( Mr. Lin ). By virtue of the SFO, Mr. Lin is deemed to be interested in the same parcel of Shares in which Mega Regal is interested in. 2. Ms. Cheng Xuan ( Ms. Cheng ) is the spouse of Mr. Lin. By virtue of the SFO, Ms. Cheng is deemed to be interested in the same parcel of Shares in which Mr. Lin is interested in. 3. As at 30 June 2019, the total number of Shares in issue was 419,114,000. Save as disclosed above, as at 30 June 2019, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code. Nor any of the Directors and chief executive had any interests in, or had been granted any right to subscribe for the securities of the Company and its associated corporations (within the meaning of Part XV of the SFO) or had exercised any such right during the period under review. 1. Mega Regal LimitedMega Regal Modern Times Development LimitedModern Times Modern Times Mega Regal ,114, XV XV 18 Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

20 Other Information (continued) Interests of Shareholders Discloseable under the SFO As at 30 June 2019, the following persons (other than a Director or the chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO or notified to the Company: Long position in shares of the Company 336 Number of Percentage of Name Nature of interest shares held issued shares Mega Regal Beneficial owner 296,348, % Modern Times Interest of controlled corporation 296,348, % Dongxing Securities Person having a security interest in shares 234,231, % (Hong Kong) Financial Holdings Limited Beneficial owner 17,236, % Dongxing Securities Co., Ltd Interest of controlled corporation 251,468, % China Orient Asset Interest of controlled corporation 251,468, % Management Corporation Springboard Holdings Limited Beneficial owner 41,784, % Mr. Lau Luen Hung, Thomas Interest of controlled corporation 41,784, % Notes: 1. Mega Regal is wholly-owned by Modern Times. By virtue of the SFO, Modern Times is deemed to be interested in the same parcel of Shares in which Mega Regal is interested in. 2. Dongxing Securities (Hong Kong) Financial Holdings Limited ( DSHK ) is the chargee of these Shares. 3. DSHK is wholly-owned by Dongxing Securities Co., Ltd ( DSCL ), which is in turn owned as to 52.74% by China Orient Asset Management Corporation ( China Orient ). By virtue of the SFO, DSCL and China Orient are deemed to be interested in the same parcel of Shares in which DSHK is interested in. 4. Springboard Holdings Limited is wholly-owned by Mr. Lau Luen Hung, Thomas ( Mr. Lau ). By virtue of the SFO, Mr. Lau is deemed to be interested in the same parcel of Shares in which Springboard Holdings Limited is interested in. 5. As at 30 June 2019, the total number of Shares in issue was 419,114, Mega Regal Modern Times Modern Times Mega Regal % 4. Springboard Holdings Limited Springboard Holdings Limited ,114,000 19

21 Other Information (continued) Save as disclosed above, the Company has not been notified by any person (other than a director or the chief executive of the Company) who had an interest or short position in the shares or underlying shares of the Company as at 30 June 2019 which were recorded in the register required to be kept under Section 336 of the SFO or notified to the Company. Review of Interim Results The Audit Committee has reviewed the Company s unaudited condensed consolidated interim results and financial report for the period, and confirms that the applicable accounting principles, standards and requirements have been complied with, and that adequate disclosures have been made. The interim financial report for the period is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410 Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants. Purchase, Sale or Redemption of the Company s Listed Securities Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any listed securities of the Company during the six months ended 30 June Employees As at 30 June 2019, the Group employed a total of 408 employees, 404 of them were based in Mainland China. Staff costs (excluding directors emoluments) for the six months ended 30 June 2019 amounted to approximately RMB23.5 million (for the six months ended 30 June 2018: approximately RMB5.4 million). The Group ensures that the pay levels of its employees are competitive and in line with the market trend and its employees are rewarded on a performance related basis within the general framework of its own salary and bonus system. Corporate Governance Code The Company has complied with all the applicable code provisions of the Corporate Governance Code ( CG Code ) as set out in Appendix 14 to the Listing Rules during the six months ended 30 June Code for Securities Transactions by Directors The Company has adopted a code of conduct regarding securities transactions by directors on terms no less exacting than the required standard set out in the Model Code. After specific enquiries by the Company, all directors confirmed that they have complied with the required standard set out in the Model Code and the Company s own code during the six months ended 30 June Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

22 Other Information (continued) Changes in Information of Directors There is no change in the Directors information, which is required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules. Interim Dividend The Board does not recommend the payment of interim dividend for the six months ended 30 June Events After The Reporting Period On 6 August 2019, the Company entered into the Master Agreement with Fujian Bo En Property Management Company Limited* ( ) ( Fujian BE ), pursuant to which the Company agreed to engage Fujian BE and/or its subsidiaries to provide the Group the supporting services in showrooms, including customer services, sales activities assistance, visiting arrangement, catering services, security and order maintenance, cleaning services and equipment maintenance for a term from 6 August 2019 to 31 December 2021 (both days inclusive). For details, please refer to the announcement of the Company dated 6 August On 16 August 2019, Rudong Sansheng Real Estate Development Limited* ( ) ( Rudong Sansheng ), an indirect non-wholly-owned subsidiary of the Company, received a transaction notice issued by the State-owned Land Resources Bureau of Wujin District, Changzhou City, Jiangsu Province, China ( ), pursuant to which Rudong Sansheng successfully bid for a parcel of land located in Changzhou City. The land is located in Wujin District, Changzhou City ( ) with a land area of approximately 39,787 sq.m., and an estimated plot ratio-based floor area of approximately 79,574 sq.m.. The total consideration of the land is RMB458,000,000, the payment of which will be made to the State-owned Land Resources Bureau of Wujin District, Changzhou City in accordance with the relevant transaction confirmation. Acknowledgement I would like to thank the Board, the management and all of our staff for their hard work and dedication, as well as our shareholders for their continuous support to the Group B(1) 39,787 79, ,000,000 Lin Rongbin Chairman 28 August

23 Review Report TO THE BOARD OF DIRECTORS OF SANSHENG HOLDINGS (GROUP) CO. LTD. (Incorporated in the Cayman Islands with limited liability) Introduction We have reviewed the interim financial report set out on pages 24 to 56 which comprises the consolidated statement of financial position of Sansheng Holdings (Group) Co. Ltd. (the Company ) as of 30 June 2019 and the related consolidated statement of profit or loss, statement of profit or loss and other comprehensive income and statement of changes in equity and condensed consolidated statement of cash flows for the six month period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants. The directors are responsible for the preparation and presentation of the interim financial report in accordance with Hong Kong Accounting Standard 34. Our responsibility is to form a conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Scope of review We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants. A review of the interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

24 Review Report (continued) Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2019 is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34, Interim financial reporting. 34 KPMG Certified Public Accountants 8th Floor, Prince s Building 10 Chater Road Central, Hong Kong 28 August

25 Consolidated Statement of Profit or Loss for the six months ended 30 June 2019 unaudited (expressed in Renminbi) Six months ended 30 June (Note) Note RMB 000 RMB 000 Revenue 3 12, ,846 Cost of sales (647,132) Gross profit 12,952 33,714 Valuation gain on investment properties 8(b) 3,800 Other income 4 5,646 3,093 Selling and marketing expenses (40,187) (11,135) Administrative expenses (36,798) (24,640) Other operating expenses (491) (Loss)/profit from operations (55,078) 1,032 Finance costs 5(a) (8,858) (32,489) Share of losses of joint ventures (2,232) Loss before taxation (66,168) (31,457) Income tax 6 12,777 11,951 Loss for the period (53,391) (19,506) Attributable to: Equity shareholders of the Company (41,125) (18,024) Non-controlling interests (12,266) (1,482) Loss for the period (53,391) (19,506) Loss per share Basic (RMB cents) 7 (9.81) (4.30) Note: The Company and its subsidiaries (the Group ) have initially applied HKFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note The notes on pages 30 to 56 form part of these financial statements Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

26 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the six months ended 30 June 2019 unaudited (expressed in Renminbi) Six months ended 30 June (Note) RMB 000 RMB 000 Loss for the period (53,391) (19,506) Other comprehensive income for the period (after tax and reclassification adjustments): Item that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of foreign operations Other comprehensive income for the period Total comprehensive income for the period (3,774) (7,266) (3,774) (7,266) (57,165) (26,772) Attributable to: Equity shareholders of the Company (44,899) (25,290) Non-controlling interests (12,266) (1,482) Total comprehensive income for the period (57,165) (26,772) Note: The Group has initially applied HKFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note The notes on pages 30 to 56 form part of these financial statements

27 Consolidated Statement of Financial Position at 30 June 2019 unaudited (expressed in Renminbi) At 30 June 2019 At 31 December 2018 (Note) Note RMB 000 RMB 000 Non-current assets Investment properties 8(b) 605, ,067 Other property, plant and equipment 2,8 19,115 13,682 Properties under development 110, ,312 Prepaid lease payments 456, ,979 Interests in joint ventures 288, ,921 Deferred tax assets 20,409 3,817 1,501,211 1,469,778 Current assets Inventories and other contract costs 9 9,076,499 7,783,515 Prepaid lease payments 14,499 14,499 Trade and other receivables , ,482 Financial assets at fair value through profit or loss 18 10,307 62,686 Restricted deposits 11 16,210 9,162 Cash and cash equivalents , ,075 9,966,589 8,398,419 Current liabilities Bank loans and borrowings from financial institutions 13 1,248,850 1,164,440 Trade and other payables 15 2,868,856 3,063,929 Lease liabilities 2(d) 1,182 Contract liabilities 1,219, ,147 Current taxation 220, ,035 5,559,203 4,600,551 Net current assets 4,407,386 3,797,868 Total assets less current liabilities 5,908,597 5,267,646 Non-current liabilities Bank loans and borrowings from financial institutions 13 2,052,900 1,338,000 Bond payable , ,078 Derivative financial liabilities 25,022 18,660 Loans from a related party 16 1,658,784 1,701,092 Lease liabilities 2(d) 978 Deferred tax liabilities 94,259 90,459 4,730,797 4,042,289 NET ASSETS 1,177,800 1,225, Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

28 Consolidated Statement of Financial Position (continued) at 30 June 2019 unaudited (expressed in Renminbi) At 30 June 2019 RMB 000 At 31 December 2018 (Note) RMB 000 CAPITAL AND RESERVES Share capital 33,184 33,184 Reserves 1,079,689 1,124,588 Total equity attributable to equity shareholders of the Company 1,112,873 1,157,772 Non-controlling interests 64,927 67,585 TOTAL EQUITY 1,177,800 1,225,357 Note: The Group has initially applied HKFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note The notes on pages 30 to 56 form part of these financial statements

29 Consolidated Statement of Changes in Equity for the six months ended 30 June 2019 unaudited (expressed in Renminbi) Attributable to equity shareholders of the Company Statutory Non- Share Share Capital surplus Exchange Retained controlling Total capital Premium reserve reserve reserve profits Total interests equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance at 1 January , ,543 18, (59,971) 413,020 1,316,077 82,587 1,398,664 Changes in equity for the six months ended 30 June 2018: Loss for the period (18,024) (18,024) (1,482) (19,506) Other comprehensive income (7,266) (7,266) (7,266) Total comprehensive income (7,266) (18,024) (25,290) (1,482) (26,772) Balance at 30 June 2018 and 1 July , ,543 18, (67,237) 394,996 1,290,787 81,105 1,371,892 Changes in equity for the six months ended 31 December 2018 Loss for the period (148,438) (148,438) (18,520) (166,958) Other comprehensive income 15,423 15,423 15,423 Total comprehensive income 15,423 (148,438) (133,015) (18,520) (151,535) Acquisitions of subsidiaries 5,000 5,000 Balance at 31 December , ,543 18, (51,814) 246,558 1,157,772 67,585 1,225,357 Balance at 1 January , ,543 18, (51,814) 246,558 1,157,772 67,585 1,225,357 Changes in equity for the six months ended 30 June 2019: Loss for the period (41,125) (41,125) (12,266) (53,391) Other comprehensive income (3,774) (3,774) (3,774) Total comprehensive income (3,774) (41,125) (44,899) (12,266) (57,165) Capital contribution from non-controlling interests 9,608 9,608 Balance at 30 June , ,543 18, (55,588) 205,433 1,112,873 64,927 1,177,800 Note: The Group has initially applied HKFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note The notes on pages 30 to 56 form part of these financial statements Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

30 Condensed Consolidated Statement of Cash Flows for the six months ended 30 June 2019 unaudited (expressed in Renminbi) Operating activities Six months ended 30 June (Note) Note RMB 000 RMB 000 Cash used in operations (312,504) (1,143,064) Tax paid (7,197) (4,325) Net cash used in operating activities (319,701) (1,147,389) Investing activities Purchase of property, plant and equipment (6,145) (684) Purchase of financial assets at fair value through profit or loss (3,464) (6,637) Disposal of property, plant and equipment 77 Disposal of financial assets at fair value through profit or loss 64,384 Withdrawal of fixed deposits held at banks with maturity over three months 26,000 Investment in joint ventures (15,090) Payment for acquisition of a subsidiary, 21 net of cash acquired (95,764) Interest received 302 1,429 Dividend received 147 1,154 Net cash (used in)/generated from investing activities Financing activities (55,553) 21,262 Proceeds from bank loans and borrowings from financial institutions 1,741,100 1,176,190 Repayment of bank loans and borrowings (941,790) (101,308) from financial institutions Proceeds from loans from a related party 2,305,006 3,690,604 Repayment of loans from a related party (2,405,995) (3,818,580) Interest paid (257,069) (105,249) Capital contribution from non-controlling interests 9,608 Capital element of lease rentals paid 2(e) (304) Interest element of lease rentals paid 2(e) (78) Net cash generated from financing activities 450, ,657 Net increase/(decrease) in cash and cash equivalents 75,224 (284,470) Cash and cash equivalents at 1 January 397, ,023 Effect of foreign exchange rates changes (3,950) 2,909 Cash and cash equivalents at 30 June , ,462 Note: The Group has initially applied HKFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note The notes on pages 30 to 56 form part of these financial statements

31 Notes to the Unaudited Interim Financial Report (Expressed in Renminbi unless otherwise indicated) 1. Basis of preparation This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with Hong Kong Accounting Standard (HKAS) 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). It was authorised for issue on 28 August The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2018 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2019 annual financial statements. Details of any changes in accounting policies are set out in note 2. The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2018 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs). The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the HKICPA. KPMG s independent review report to the Board of Directors is included on pages 22 and Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

32 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies The HKICPA has issued a new HKFRS, HKFRS 16, Leases, and a number of amendments to HKFRSs that are first effective for the current accounting period of the Group. Except for HKFRS 16, Leases, none of the developments have had a material effect on how the Group s results and financial position for the current or prior periods have been prepared or presented in this interim financial report. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period, except for the early adoption of Amendments to HKFRS 3, Definition of a business, which is effective for the accounting period beginning on or after 1 January Amendments to HKFRS 3, Definition of a business The amendments: clarify that a business must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs; remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; add guidance and illustrative examples to help entities assess whether a substantive process has been acquired; narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs; and add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. These amendments are mandatory for transactions occurring in annual reporting period beginning on or after 1 January 2020 and earlier application is permitted. These amendments are expected to primarily impact the accounting by the Group for acquisitions of property projects in particular whether they should be treated as business acquisitions. The Group has early adopted these amendments, prospectively to transactions for which the acquisition date is on or after 1 January 2019, and concluded that the adoption of them does not have a significant impact on the interim financial report

33 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies HKFRS 16, Leases HKFRS 16 replaces HKAS 17, Leases, and the related interpretations, HK(IFRIC) 4, Determining whether an arrangement contains a lease, HK(SIC) 15, Operating leases incentives, and HK(SIC) 27, Evaluating the substance of transactions involving the legal form of a lease. It introduces a single accounting model for lessees, which requires a lessee to recognise a right-of-use asset and a lease liability for all leases, except for leases that have a lease term of 12 months or less ( short-term leases ) and leases of low value assets. The lessor accounting requirements are brought forward from HKAS 17 substantially unchanged. The Group has initially applied HKFRS 16 as from 1 January The Group has elected to use the modified retrospective approach and has therefore recognised the cumulative effect of initial application as an adjustment to the opening balance of equity at 1 January Comparative information has not been restated and continues to be reported under HKAS 17. Further details of the nature and effect of the changes to previous accounting policies and the transition options applied are set out below: Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

34 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies (continued) (a) Changes in the accounting policies (i) New definition of a lease The change in the definition of a lease mainly relates to the concept of control. HKFRS 16 defines a lease on the basis of whether a customer controls the use of an identified asset for a period of time, which may be determined by a defined amount of use. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use. The Group applies the new definition of a lease in HKFRS 16 only to contracts that were entered into or changed on or after 1 January For contracts entered into before 1 January 2019, the Group has used the transitional practical expedient to grandfather the previous assessment of which existing arrangements are or contain leases. Accordingly, contracts that were previously assessed as leases under HKAS 17 continue to be accounted for as leases under HKFRS 16 and contracts previously assessed as non-lease service arrangements continue to be accounted for as executory contracts. 2. (a) (i) (ii) Lessee accounting HKFRS 16 eliminates the requirement for a lessee to classify leases as either operating leases or finance leases, as was previously required by HKAS 17. Instead, the Group is required to capitalise all leases when it is the lessee, including leases previously classified as operating leases under HKAS 17, other than those short-term leases and leases of lowvalue assets. As far as the Group is concerned, these newly capitalised leases are primarily in relation to property, plant and equipment as disclosed in note 19(b). (ii) (b) Where the contract contains lease component(s) and non-lease component(s), the Group has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases. 33

35 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies (continued) (a) Changes in the accounting policies (continued) (ii) Lessee accounting (continued) When the Group enters into a lease in respect of a low-value asset, the Group decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term. Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred. The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the rightof-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses, except for the following types of right-of-use asset: 2. (a) (ii) right-of-use assets that meet the definition of investment property are carried at fair value; right-of-use assets related to interests in leasehold land where the interest in the land is held as inventory are carried at the lower of cost and net realisable value. 34 Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

36 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies (continued) (a) Changes in the accounting policies (continued) (ii) Lessee accounting (continued) The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Group s estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Group will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-ofuse asset has been reduced to zero. 2. (a) (ii) (iii) Lessor accounting The Group leases out a number of items of properties as the lessor of operating leases. The accounting policies applicable to the Group as a lessor remain substantially unchanged from those under HKAS 17 and no any adjustments are required on transition to HKFRS 16. (iii) (b) Critical accounting judgements and sources of estimation uncertainty in applying the above accounting policies (i) Determining the lease term As explained in the above accounting policies, the lease liability is initially recognised at the present value of the lease payments payable over the lease term. In determining the lease term at the commencement date for leases that include renewal options exercisable by the Group, the Group evaluates the likelihood of exercising the renewal options taking into account all relevant facts and circumstances that create an economic incentive for the Group to exercise the option, including favourable terms, leasehold improvements undertaken and the importance of that underlying asset to the Group s operation. The lease term is reassessed when there is a significant event or significant change in circumstance that is within the Group s control. Any increase or decrease in the lease term would affect the amount of lease liabilities and right-of-use assets recognised in future years. (b) (i) (c) Transitional impact At the date of transition to HKFRS 16 (i.e. 1 January 2019), the Group determined the length of the remaining lease terms and measured the lease liabilities for the leases previously classified as operating leases at the present value of the remaining lease payments, discounted using the relevant incremental borrowing rates at 1 January The weighted average of the incremental borrowing rates used for determination of the present value of the remaining lease payments was 11.6%. (c) % 35

37 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies (continued) (c) Transitional impact (continued) To ease the transition to HKFRS 16, the Group applied the following recognition exemption and practical expedients at the date of initial application of HKFRS 16: (i) (ii) the Group elected not to apply the requirements of HKFRS 16 in respect of the recognition of lease liabilities and right-of-use assets to leases for which the remaining lease term ends within 12 months from the date of initial application of HKFRS 16, i.e. where the lease term ends on or before 31 December 2019; and when measuring the lease liabilities at the date of initial application of HKFRS 16, the Group applied a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment). The following table reconciles the operating lease commitments as disclosed in note 19(b) as at 31 December 2018 to the opening balance for lease liabilities recognised as at 1 January 2019: 2. (c) (i) (ii) (b) 1 January 2019 RMB 000 Operating lease commitments at 31 December ,783 Less: commitments relating to leases exempt from capitalisation: leases of low-value assets (315) Add: lease payments for the additional periods where the Group considers it reasonably certain that it will exercise the extension options 4,154 Less: total future interest expenses (142) Present value of remaining lease payments, discounted using the incremental borrowing rate at 1 January 2019 and total lease liabilities recognised at 1 January , Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

38 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies (continued) (c) Transitional impact (continued) The right-of-use assets in relation to leases previously classified as operating leases have been recognised at an amount equal to the amount recognised for the remaining lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the consolidated statement of financial position at 31 December The Group presents right-of-use assets that do not meet the definition of investment property in property, plant and equipment and presents lease liabilities separately in the consolidated statement of financial position. The following table summarises the impacts of the adoption of HKFRS 16 on the Group s consolidated statement of financial position: 2. (c) 16 Carrying amount at 31 December 2018 Capitalisation of operating lease contracts Carrying amount at 1 January 2019 RMB 000 RMB 000 RMB 000 Line items in the consolidated statement of financial position impacted by the adoption of HKFRS 16: 16 Other property, plant and equipment 13,682 8,480 22,162 Total non-current assets 1,469,778 8,480 1,478,258 Lease liabilities (current) 3,784 3,784 Current liabilities 4,600,551 3,784 4,604,335 Net current assets 3,797,868 (3,784) 3,794,084 Total assets less current liabilities 5,267,646 4,696 5,272,342 Lease liabilities (non-current) 4,696 4,696 Total non-current liabilities 4,042,289 4,696 4,046,985 Net assets 1,225,357 1,225,357 37

39 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies (continued) (c) Transitional impact (continued) The analysis of the net book value of the Group s rightof-use assets by class of underlying asset at the end of the reporting period and at the date of transition to HKFRS 16 is as follows: 2. (c) 16 Included in other property, plant and equipment : Properties leased for own use, carried at depreciated cost At At 30 June 1 January RMB 000 RMB 000 2,139 8,480 Included in Investment Properties : Ownership interests in leasehold investment properties, at fair value 605, ,067 Included in Prepaid lease payments : Ownership interests in leasehold land, at amortised cost 471, ,478 Included in Inventories and other contract costs : Leasehold land held for development for sale 568,691 Property held for/under development for sale 5,712,878 4,978,352 Completed properties for sale 27,886 25,786 5,740,764 5,572,829 6,819,998 6,661,854 (d) Lease liabilities The remaining contractual maturities of the Group s lease liabilities at the end of the reporting period and at the date of transition to HKFRS 16 are as follows: (d) 16 Present value of the minimum lease payments At 30 June 2019 At 1 January 2019 Present value of the minimum lease payments Total minimum lease payments Total minimum lease payments RMB 000 RMB 000 RMB 000 RMB 000 Within 1 year After 1 year but within 1,182 1,569 3,784 5,022 2 years 978 1,451 4,696 6,968 Less: total future interest expenses Present value of lease liabilities 2,160 3,020 8,480 11,990 (860) (3,510) 2,160 8, Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

40 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 2. Changes in accounting policies (continued) (e) Impact on the financial result and cash flows of the Group After the initial recognition of right-of-use assets and lease liabilities as at 1 January 2019, the Group as a lessee is required to recognise interest expense accrued on the outstanding balance of the lease liability, and the depreciation of the right-of-use asset, instead of the previous policy of recognising rental expenses incurred under operating leases on a straight-line basis over the lease term. This results in a positive impact on the reported profit from operations in the Group s consolidated statement of profit or loss, as compared to the results if HKAS 17 had been applied during the year. In the cash flow statement, the Group as a lessee is required to split rentals paid under capitalised leases into their capital element and interest element. These elements are classified as financing cash outflows, similar to how leases previously classified as finance leases under HKAS 17 were treated, rather than as operating cash outflows, as was the case for operating leases under HKAS 17. Although total cash flows are unaffected, the adoption of HKFRS 16 therefore results in a change in presentation of cash flows within the cash flow statement. As set out in note 2(c) above, the amounts of capitalisation of operating lease contracts are not material, the impact of adoption of HKFRS 16 on the Group s financial results and cash flows was not significant for the six months ended 30 June (e) (c) 16 39

41 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 3. Revenue and segment reporting The Group s operating activities are attributable to a single operating segment focusing on property development and property investment. This operating segment has been identified on the basis of internal management reports prepared in accordance with accounting policies conform with HKFRS 8, that are regularly reviewed by the chief operating decision maker ( CODM ). The CODM regularly reviews property portfolio by locations and considers them as one single operating segment since all properties, including those situated in Hong Kong and Mainland China, are held by the Group for earning rental income and development. No revenue analysis, operating results or other discrete financial information is available for the assessment of performance of the respective locations. Revenue are net of sales related taxes and discounts allowed. All the revenue are generated in Mainland China Six months ended 30 June RMB 000 RMB 000 Revenue from contracts with customers 15 within the scope of HKFRS 15 Sale of properties 677,274 Revenue from other sources Gross rentals from investment properties 12,952 3,572 12, , Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

42 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 4. Other income 4. Six months ended 30 June RMB 000 RMB 000 Net exchange gain/(loss) 2,602 (3,697) Interest income on bank deposits 302 1,152 Dividend income from financial assets at fair value through profit or loss 147 1,154 Fair value changes on listed equity securities 8,362 (4,318) Fair value changes on derivative financial instruments (5,767) 8,802 5,646 3, Loss before taxation Loss before taxation is arrived at after charging/(crediting): 5. (a) Finance costs (a) Six months ended 30 June (Note) RMB 000 RMB 000 Interest on bank loans and borrowings from financial institutions 165,017 87,612 Interest on bond payable 63,173 36,343 Interest on loans from a related party 57,080 21,592 Interest on lease liabilities , ,547 Less: Interest expense capitalised into inventories* * (276,490) (113,058) 8,858 32,489 * The borrowing costs have been capitalised at a rate of 10.49% per annum (six months ended 30 June 2018: 7.21%) * 10.49% 7.21% 41

43 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 5. Loss before taxation (continued) (b) Other items 5. (b) Six months ended 30 June (Note) RMB 000 RMB 000 Amortisation prepaid lease payments 7,250 7,250 others 512 Depreciation charge owned property, plant and equipment 1, right-of-use assets Income tax Note: The Group has initially applied HKFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note Six months ended 30 June RMB 000 RMB 000 Current tax PRC Corporate Income Tax ( PRC CIT ) 16 9,281 Deferred tax Origination and reversal of temporary differences (12,793) (21,232) (12,777) (11,951) Notes: (i) Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands ( BVI ), the Group is not subject to any income tax in the Cayman Islands and the BVI. (i) (ii) (iii) The provision for Hong Kong Profits Tax for the six months ended 30 June 2019 is calculated at 16.5% (six months ended 30 June 2018: 16.5%) of the estimated assessable profit for the period. No provision for Hong Kong Profits Tax has been made in the condensed consolidated financial statements as the Group has no assessable profit for both periods. The provision for PRC CIT is calculated based on the estimated taxable income at the rates applicable to subsidiaries of the Group in Mainland China. The income tax rates applicable are 25% (six months ended 30 June 2018: 25%). 42 Sansheng Holdings (Group) Co. Ltd. Interim Report 2019 (ii) (iii) 16.5% 16.5% 25% 25%

44 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 7. Loss per share The calculation of basic loss per share is based on the loss attributable to equity shareholders of the Company of RMB41,125,000 (six months ended 30 June 2018: RMB18,024,000) and the weighted average number of ordinary shares in issue of 419,114,000 (six months ended 30 June 2018: 419,114,000). No dilutive loss per share is presented as there were no dilutive potential ordinary shares in issue during both periods. 8. Investment properties and other property, plant and equipment (a) Right-of-use assets As discussed in note 2, the Group has initially applied HKFRS 16 using the modified retrospective method and adjusted the opening balances at 1 January 2019 to recognise right-of-use assets relating to leases which were previously classified as operating leases under HKAS 17. Further details on the net book value of the Group s rightof-use assets by class of underlying asset are set out in note ,125,000 18,024, ,114, ,114, (a) (b) Valuation of investment properties (b) RMB 000 Fair Value At 31 December ,067 Increase in fair value recognised in profit or loss 3,800 At 30 June ,867 The valuations of investment properties carried at fair value were updated at 30 June 2019 by the Group s independent valuer Cushman & Wakefield Limited. The fair value of the properties situated in Hong Kong was arrived using the same valuation techniques, direct comparison approach. The fair value of the properties situated in Mainland China was arrived based on investment approach by capitalising the rental derived from the existing tenancies with due provision of the reversionary rental potential of the properties, as were used by this valuer when carrying out the December 2018 valuations. 43

45 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 9. Inventories and other contract costs 9. At At 30 June 31 December RMB 000 RMB 000 Properties held for development for sale and properties under development for sale 8,895,081 7,629,903 Completed properties for sale 174, ,896 9,069,158 7,782,799 Other contract costs 7, ,076,499 7,783,515 Included in the inventories are leasehold land with lease terms ranging from 40 to 70 years, which are located in Mainland China. There is no write-down of inventories to net realisable value nor the reversal of such a write-down during the period (six months ended 30 June 2018: Nil). No inventories were recognised as an expense and included in profit or loss for the six months ended 30 June 2019 (six months ended 30 June 2018: RMB647,132,000). As at 30 June 2019, certain properties under development for sale, completed properties held for sale and properties held for future development for sale were pledged for certain bank loans granted to the Group (note 13) ,132, Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

46 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 10. Trade and other receivables 10. At At 30 June 31 December RMB 000 RMB 000 Trade receivables (note (a)) (a) 8,102 1,158 Other receivables (note (b)) (b) 26,130 62,415 Financial assets measured at amortised cost 34,232 63,573 Prepayments (note (c)) (c) 142,684 6,998 Prepaid tax and surcharges (note (d)) (d) 181,547 52,854 Tender, utility and other deposits (note (d)) (d) 22,262 8, , ,482 Notes: All of the trade and other receivables except for prepaid tax and surcharges mentioned below are expected to be recovered or recognised as expense within one year. (a) As at 30 June 2019, trade receivables are rental receivables with ageing of within 3 months based on the invoice date. (a) Considering no impairment losses has occurred since the initial recognition of trade receivables, the Group expects the credit loss is immaterial at the beginning and at the end of the period. (b) Other receivables as at 30 June 2019 included a past due amount of RMB15,050,000 (31 December 2018: RMB5,000,000) due from certain entities controlled by the non-controlling shareholder, and also the ex-majority shareholder of Zhangqiu Zhengda Tianyuan Development Limited* ( Zhangqiu Zhengda ). Since the Group still has not fully settled the consideration to the non-controlling shareholder in respect of the acquisition of equity interest in Zhangqiu Zhengda in 2017 in accordance with the terms of the acquisition agreement, management considered that the risk of default in repayment from these entities is low. For all remaining other receivables, management considered there is no significant increase in credit risk and no possible default events are expected within the 12 months after the reporting date. Accordingly, no expected credit loss is recorded. (b) 15,050,000 5,000, (c) As at 30 June 2019, prepayment mainly represents payments on the acquisition of land use rights and construction cost. (c) (d) The amount of deposits and prepaid tax and surcharges expected to be recovered or recognised as expense after more than one year is RMB203,809,000 (31 December 2018: RMB60,911,000). (d) 203,809,000 ( : 60,911,000 ) * The English translation of the name is for reference only. The official name of the company is in Chinese. * 45

47 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 11. Restricted deposits Restricted deposits represents guarantee deposits for construction of pre-sold properties. In accordance with the relevant documents issued by the local State-owned Land and Resource Bureau, certain property development companies of the Group are required to place at designated bank accounts the pre-sale proceeds of properties received as the guarantee deposits for constructions of related properties. The deposits can only be used for purchases of construction materials and payments of construction fees of related property projects upon the approval of the local State-owned Land and Resource Bureau. Such guarantee deposits will be released according to the completion stage of the related pre-sold properties. 12. Cash and cash equivalents The cash and cash equivalents in the consolidated statement of financial position and the condensed consolidated statement of cash flows as at 30 June 2019 and 31 December 2018 are all cash at bank and on hand. Remittance of funds out of the Mainland China is subject to exchange restrictions imposed by the PRC government. 13. Bank loans and borrowings from financial institutions At At 30 June 31 December RMB 000 RMB 000 Current Secured Borrowings from financial institutions 1,248,850 1,164,440 Non-current Secured Bank loans 1,767, ,000 Borrowings from financial institutions 285, ,000 2,052,900 1,338,000 3,301,750 2,502, Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

48 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 13. Bank loans and borrowings from financial institutions (continued) At 30 June 2019 and 31 December 2018, all non-current interest-bearing bank loans were as follows: 13. At At 30 June 31 December RMB 000 RMB 000 After 1 year but within 2 years 319, ,900 After 2 years but within 5 years 1,733,900 1,058,100 2,052,900 1,338,000 Bank loans are interest-bearing at 8.50% to 9.31% per annum (31 December 2018: 9.31%). Borrowings from financial institutions are interest-bearing at 10.15% to 16.00% per annum (31 December 2018: 10.34% to 16.00%). All of the Group s banking facilities are subject to the fulfilment of covenants which are commonly found in lending arrangements with financial institutions. If the Group were to breach the covenants the drawn down facilities would become payable on demand. The Group regularly monitors its compliance with these covenants. As at 30 June 2019, none of the covenants relating to drawn down facilities had been breached (31 December 2018: Nil). The secured bank loans and borrowings from financial institutions are secured over share of interest in certain subsidiaries of the Group and other assets as below: 8.50% 9.31% 9.31% 10.15% 16.00% 10.34% 16.00% At At 30 June 31 December RMB 000 RMB 000 Inventories 5,114,693 2,850,493 Certain bank loans and borrowings from financial institutions are also guaranteed by related parties of the Group (see note 22(c)). 22(c) 47

49 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 14. Bond payable On 13 November 2018, the Company exchanged a 3-year new corporate bond with same principal amount issued at par for the abovementioned bond. The new bond is secured over share of interest in certain subsidiaries of the Group and interestbearing at 3-month LIBOR plus 8.59% per annum. As at 30 June 2019 and 31 December 2018, the Company had not breached any covenants of the bond. 15. Trade and other payables % 15. At At 30 June 31 December RMB 000 RMB 000 Trade creditors and accrued charges (note (a)) (a) 487, ,081 Amounts due to non-controlling shareholders (note (b)) (b) 2,117,624 2,239,973 Amount due to a related party 31,672 Consideration payables for acquisition of a subsidiary (note 21) 21 27,000 Contributions from employees (note (c)) (c) 36,196 33,092 Interest payable 17, ,105 Others 41,133 26,434 Financial liabilities measured at amortised cost 2,758,407 3,033,685 Derivative financial liability 1,421 2,016 Value added tax and surcharges payables 106,647 22,824 Receipts in advance 2,381 5,404 2,868,856 3,063,929 Notes: (a) As at 30 June 2019, all trade creditors are with ageing of within 1 year based on the invoice date. (a) (b) The amount represents advance from non-controlling shareholders of certain subsidiaries for the respective property development projects. The amount is unsecured, interest-free and repayable on demand. (b) (c) The amount represents contributions from employees and accrued benefits in certain subsidiaries of the Group. (c) (d) All of the trade and other payables are expected to be settled or recognised as income within one year or are repayable on demand. (d) 48 Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

50 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 16. Loans from a related party The balance represents loans drawn by the Group from the revolving facilities of RMB4,500,000,000 granted by Fuzhou Sansheng Property Co., Ltd* () ( Fuzhou Sansheng ), a wholly owned subsidiary of Sansheng Group Limited* ( ) which is controlled by Mr. Lin Rongbin ( Mr. Lin ) and Ms. Cheng Xuan ( Ms. Cheng ), the controlling shareholders of the Company, on 18 August 2017 and 28 September 2017 respectively. The Group entered into a renewal of the finance contract with Fuzhou Sansheng on 15 June 2019 to extend the settlement dates of all the existing loans to 18 August The loans are unsecured, interestbearing at 7% per annum. * The English translation of the names are for reference only. The official names of the companies are in Chinese. 17. Capital, reserves and dividends (a) Dividends The directors do not recommend the payment of an interim dividend in respect of the current interim period (six months ended 30 June 2018: Nil) ,500,000,000 7% * 17. (a) (b) Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group s overall strategy remains unchanged from prior year. (b) The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholders returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions. The Group monitors its capital structure on the basis of adjusted debt-to-assets ratio which deducted contract liabilities and receipts in advance. The Group has initially applied HKFRS 16 using the modified retrospective approach. Under this approach, the Group recognises right-of-use assets and corresponding lease liabilities for almost all leases previously accounted for as operating leases as from 1 January This caused an increase in the Group s adjusted net debt-to-capital ratio. The impact of the application of HKFRS 16 is very limited during In order to maintain or adjust the ratio, the Group may adjust the amount of dividends paid to shareholders, issue new shares, return capital to shareholders, raise new debt financing or sell assets to reduce debt

51 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 17. Capital, reserves and dividends (continued) (b) Capital management (continued) The Group s adjusted debt-to-assets ratio at the end of the current and previous reporting periods and at the date of transition to HKFRS 16 was as follows: 17. (b) June January December 2018 RMB 000 RMB 000 RMB 000 (note) Total liabilities 10,290,000 8,651,320 8,642,840 Less: Contract liabilities and receipts in advance (1,222,209) (186,551) (186,551) Adjusted total liabilities 9,067,791 8,464,769 8,456,289 Total assets 11,467,800 9,876,677 9,868,197 Adjusted debt-to-assets ratio 79.07% 85.70% 85.69% Note: The Group has initially applied HKFRS 16 using the modified retrospective approach and adjusted the opening balances at 1 January 2019 to recognise lease liabilities relating to leases which were previously classified as operating leases under HKAS 17. Under this approach, the comparative information is not restated. See note Fair value measurement of financial instruments (a) Fair value of financial assets and liabilities carried at other than fair value The carrying amounts of the Group s financial instruments carried at cost or amortised cost were not materially different from their fair values as at 30 June 2019 and 31 December (a) (b) Financial assets and liabilities measured at fair value (i) Fair value hierarchy The following table presents the fair value of the Group s financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13, Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows: (b) (i) 13 Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date 50 Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

52 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 18. Fair value measurement of financial instruments (continued) (b) Financial assets and liabilities measured at fair value (continued) (i) Fair value hierarchy (continued) Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available Level 3 valuations: Fair value measured using significant unobservable inputs 18. (b) (i) Fair value at Fair value at 31 December 30 June Fair value measurements as at Fair value measurements as at 30 June 2019 categorised into 31 December 2018 categorised into Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Recurring fair value measurements Assets: Financial assets at fair value through profit or loss: Listed equity securities 50,193 50,193 Unit in trust protection fund 10,307 10,307 12,493 12,493 Liability: Derivative financial instruments: Interest rate swap 26,443 26,443 20,676 20,676 During the six months ended 30 June 2019, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3 (six months ended 30 June 2018: Nil). The Group s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur. 51

53 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 18. Fair value measurement of financial instruments (continued) (b) Financial assets and liabilities measured at fair value (continued) (ii) 19. Commitments (a) Valuation techniques and inputs used in Level 2 fair value measurements The fair value of interest rate swaps is the present value of estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account current interest rates and the current creditworthiness of the swap counterparties. The fair value of unit in trust protection fund is determined by discounting the expected future cash flows at prevailing market interest rates as at the end of the reporting period. The discount rate used is derived from the bank deposit rate as at the end of the reporting period plus an adequate constant credit spread. At the end of the reporting period, the Group s outstanding commitments contracted but not provided for in respect of property development expenditure are as follows: 18. (a) 19. (a) (ii) At At 30 June 31 December RMB 000 RMB 000 Construction and development contracts 2,309,035 1,916,570 Land agreements 405,000 2,714,035 1,916, Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

54 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 19. Commitments (continued) (b) At 31 December 2018, the total future minimum lease payments under non-cancellable operating leases were payable as follows: 19. (b) Properties RMB 000 Within 1 year 3,310 After 1 year but within 5 years 1,473 4,783 The Group is the lessee in respect of a number of properties which were previously classified as operating leases under HKAS 17. The Group has initially applied HKFRS 16 using the modified retrospective approach. Under this approach, the Group adjusted the opening balances at 1 January 2019 to recognise lease liabilities relating to these leases (see note 2). From 1 January 2019 onwards, future lease payments are recognised as lease liabilities in the consolidated statement of financial position in accordance with the policies set out in note Contingent liabilities As at the end of the reporting period, the Group has issued guarantees to banks to secure the mortgage arrangement of property buyers. The outstanding guarantees to the banks amounted to RMB291,047,000 (31 December 2018: RMB100,000), which will be terminated upon the completion of the transfer procedures with the buyers in respect of the legal title of the properties. The directors do not consider it probable that the Group will sustain a loss under these guarantees as the bank has the rights to sell the property and recovers the outstanding loan balance from the sale proceeds if the property buyers default payment. The Group has not recognised any deferred income in respect of these guarantees as its fair value is considered to be minimal by the directors ,047, ,000 53

55 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 21. Acquisitions of subsidiaries During the period, the Group has completed the acquisition of a subsidiary Systech International Industrial Limited ( Systech ) which holds a wholly-owned property development project company Wuxi Xidong Automobile Square Development Company Limited* () ( Wuxi Xidong ) in Mainland China. Acquisitions of the Systech and its subsidiary ( Systech Group ) enable the Group to expand its land banks. Details of the completion of the acquisition of Systech Group by the Group during the period are summarised as follows: On 25 March 2019, the Group completed a proposed acquisition, under which the Group would acquire 100% equity interest in Systech at a consideration of RMB133,297,000. The acquisition of these subsidiaries had the following combined effect on the Group s assets and liabilities upon the dates of acquisitions: ,297, % 2019 RMB 000 Cash and cash equivalents 10,533 Trade and other receivables 34,024 Inventories 243,048 Property, plant and equipment 279 Bank loans and other borrowings (112,368) Trade and other payables (41,555) Current taxation (664) Net assets acquired attributable to the Group 133,297 Consideration of acquisition of equity interest of Systech International Industrial Limited 133,297 Less: Consideration to be paid subsequent to 30 June 2019 (note 15) 15 27,000 Total cash and cash equivalents acquired 10,533 Net cash outflow 95,764 The acquired subsidiary contributed revenue of RMB612,000 and net loss of RMB1,106,000 attributable to the equity shareholders of the Company for the period ended 30 June The acquired subsidiary s major assets are properties under development. The directors consider that the purpose of acquiring those subsidiaries is solely to acquire the underlying properties. * The English translation of the name is for reference only. The official name of the company is in Chinese. 612,000 1,106,000 * 54 Sansheng Holdings (Group) Co. Ltd. Interim Report 2019

56 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 22. Material related party transactions (a) Key management personnel remuneration Remuneration for key management personnel of the Group is as follows: 22. (a) Six months ended 30 June RMB 000 RMB 000 Salaries, wages and other benefits 1,539 1,465 Retirement benefits scheme contributions ,554 1,480 (b) Transactions with other related party For the period, other than those disclosed in note 15 and 16, the Group had entered into the following significant transactions with the following related party: (b) Six months ended 30 June Name of related party Nature of transactions RMB 000 RMB 000 Fuzhou Sansheng Interest expense 57,080 21,592 (c) Bank loans and borrowings from financial institutions guaranteed by related parties (c) At At 30 June 31 December RMB 000 RMB 000 Guaranteed by related parties: Fuzhou Sansheng, Mr. Lin and Ms. Cheng 1,911,850 1,444,340 Fuzhou Sansheng 500, ,000 2,411,850 1,607,340 55

57 Notes to the Unaudited Interim Financial Report (continued) (Expressed in Renminbi unless otherwise indicated) 23. Non-adjusting events after the reporting period On 6 August 2019, the Company entered into the master agreement with Fujian Bo En Property Management Company Limited* ( Fujian BE ), pursuant to which the Company agreed to engage Fujian BE and/or its subsidiaries to provide the Group the supporting services in showrooms, including customer services, sales activities assistance, visiting arrangement, catering services, security and order maintenance, cleaning services and equipment maintenance for a term from 6 August 2019 to 31 December 2021 (both days inclusive). Please refer to the Company s announcement dated 6 August 2019 for details. On 16 August 2019, Rudong Sansheng Real Estate Development Limited* ( Rudong Sansheng ), an indirect non-wholly-owned subsidiary of the Company, received a transaction notice, pursuant to which Rudong Sansheng successfully bid for a parcel of land located in Changzhou City. The total consideration of the land is RMB458,000,000, the payment of which will be made to the State-owned Land Resources Bureau of Wujin District, Changzhou City in accordance with the relevant transaction confirmation. * The English translation of the names are for reference only. The official names of the companies are in Chinese. 24. Comparative figures The Group has initially applied HKFRS 16 at 1 January 2019 using the modified retrospective method. Under this approach, comparative information is not restated. Further details of the changes in accounting policies are disclosed in note ,000,000 * Sansheng Holdings (Group) Co. Ltd. Interim Report 2019