Kingwell : Annual Report 2019

(Incorporated in the Cayman Islands with limited liability) Stock Code: 1195

ANNUAL REPORT 2019

Contents

Corporate Information	02
Financial Results	03
Chairman's Statement	04
Management Discussion and Analysis	06
Biographical Information of Directors and Senior Management	13
Corporate Governance Report	15
Report of the Directors	27
Independent Auditor's Report	41
Consolidated Statement of Profit or Loss and Other Comprehensive Income	48
Consolidated Statement of Financial Position	50
Consolidated Statement of Changes in Equity	52
Consolidated Statement of Cash Flows	53
Notes to Financial Statements	55
Five Year Financial Summary	135

Kingwell Group Limited ANNUAL REPORT 2019

01

Corporate Information

DIRECTORS

Mu Dongsheng (Chairman and Chief Executive Officer)

Sze Ming Yee

Cheung Chuen*

Ling Aiwen*

Lu Lin* (appointed on 30 April 2019)

Han Hongwei* (resigned on 30 April 2019)

• Independent Non-executive Director

COMPANY SECRETARY

Poon Yan Wai

AUTHORISED REPRESENTATIVES

Mu Dongsheng

Poon Yan Wai

AUDIT COMMITTEE

Ling Aiwen (Chairman)

Cheung Chuen

Lu Lin (appointed on 30 April 2019)

Han Hongwei (resigned on 30 April 2019)

REMUNERATION COMMITTEE

Ling Aiwen (Chairman)

Mu Dongsheng

Cheung Chuen

NOMINATION COMMITTEE

Mu Dongsheng (Chairman)

Ling Aiwen

Lu Lin (appointed on 30 April 2019)

Han Hongwei (resigned on 30 April 2019)

CORPORATE GOVERNANCE COMMITTEE

Lu Lin (Chairman) (appointed on 30 April 2019) Ling Aiwen

Cheung Chuen

Han Hongwei (Chairman) (resigned on 30 April 2019)

LEGAL ADVISOR FOR CAYMAN ISLANDS LAW

Conyers Dill & Pearman

AUDITOR

Ernst & Young

REGISTERED OFFICE

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman

KY1-1111

Cayman Islands

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS

Units 314-315

Wing On Plaza

62 Mody Road

Tsim Sha Tsui East

Kowloon, Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

SMP Partners (Cayman) Limited 3rd Floor, Royal Bank House 24 Shedden Road

P.O. Box 1586

Grand Cayman KY1-1110 Cayman Islands

HONG KONG BRANCH REGISTRAR AND TRANSFER OFFICE

Hong Kong Registrars Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen's Road East

Wanchai, Hong Kong

TRADING CODE ON THE STOCK EXCHANGE OF HONG KONG LIMITED

1195

WEBSITE

http://kingwell.todayir.com

02 Kingwell Group Limited ANNUAL REPORT 2019

Financial Results

• Revenue for the Year increased to approximately RMB43.2 million.
• Gross profit for the Year was approximately RMB14.6 million.
• Loss before tax for the Year decreased to approximately RMB3.9 million.
• Loss for the Year attributable to owners of the Company was approximately RMB8.5 million.
• Total comprehensive loss for the Year attributable to owners of the Company was approximately RMB6.7 million.
• Basic loss per share attributable to ordinary equity holders of the Company was RMB0.29 cent.
• Total equity of the Group decreased to RMB183.8 million.

Kingwell Group Limited ANNUAL REPORT 2019

03

Chairman's Statement

Dear Shareholders,

On behalf of the board (the "Board") of directors (the "Directors") of Kingwell Group Limited ("Kingwell" or the "Company"), I am presenting the financial report of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 30 June 2019 (the "Year").

The Group would like to expand the existing real estate business to include the provision of property management services. Therefore, on 25 June 2018, the Group entered into a conditional sale and purchase agreement with the Foshan Tianan Hongji Property Services Co., Ltd*（佛山天安鴻基物業服務有限公司）to acquire the property management business in Xuzhou City, Jiangsu Province, the PRC. The acquisition was completed on 1 November 2018. The business that operated is the current main business layout sector, and generate significant income and positive cashflow of the Group. Through the property management company platform, the Group plans to explore more derived businesses and value-add services relevant to the property management sector, including but not limited to undertaking projects such as landscaping projects construction, property leisure facilities construction, property agency services and commercial advertising, with significant results seen in both the businesses and contribution. The Group will constantly accumulate and enhance the property management service standard in Mainland China, comprehensively improve the service quality of the Group, actively expand the line of relevant business, strive to improve management qualifications of the Group and continue to enhance our comprehensive strengths for the purpose of getting well prepared for the Group to undertake more quality property management projects in future.

In addition, the Group has completed the acquisition of 700 carpark spaces in Xuzhou City. This acquisition is a good opportunity for the Group to expand the Group's participation in the PRC property market which also contribute significant income to the Group.

As for the gold mining business, since the mining area is too large and the rock composition in the northern Molchan region is complex, the Russia gold mining company planned to conduct small scale production prior to large scale exploitation, which is common for all the mining exercise. The gold mining company submitted the plan of exploitation to the local government in October 2017. However, due to the increase in number of wildfire and environmental destruction incidents caused by mining activities in 2017, the Russian authority raised the environment protection requirements on exploitation applications at the beginning of 2018. As the Group signed an outsourcing contract with a third party which modified the original submitted plan, the Group was required to re-submit a new plan of exploitation which satisfies the tightened regulation. The Group has filed the reschedules in November 2018 and expected to obtain the exploitation approval within the year of 2019. According to the new legal requirements in Russia, it is very difficult to get the working visa for the PRC workers. In this case, the outsourcing contractor had employed the local Russian workers for this project. The Group and the outsourcing contractor had started the foundation work for the exploitation process in May 2019. The outsourcing contractor had set up their mining equipment in the mining area and started the exploitation process. However, due to the heavy raining and flooding in the Molchan region, the outsourcing contractor was in the process to remove the stagnant water in the mining area in August 2019. The exploitation process was restarted in early September 2019. The Group expects the exploitation process has to be suspended from late October 2019 to March 2020 due to the severe winter in the Molchan region and restarted the exploitation process in April 2020.

• For identification purpose only

04 Kingwell Group Limited ANNUAL REPORT 2019