Annual Report (iXPEeP D6ic1)

ANNUAL REPORT 年報

(Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司)

Stock Code 股份代號: 813

Hui Sai Tan, Jason (Chairman and President)

Xie Kun Zhao Jun

Hui Mei Mei, Carol Shao Liang

Lyu Hong Bing Lam Ching Kam Fung Tze Wa

Fung Tze Wa (Committee Chairman)

Lyu Hong Bing Lam Ching Kam

Lyu Hong Bing (Committee Chairman)

Lam Ching Kam Fung Tze Wa

Lam Ching Kam (Committee Chairman)

Lyu Hong Bing Fung Tze Wa

Hui Mei Mei, Carol

Lam Yee Mei, Katherine

ZHONGHUI ANDA CPA Limited

38th Floor, Tower One Lippo Centre

89 Queensway Hong Kong

Telephone: (852) 2511 9968

Facsimile: (852) 2511 0287 Website: https://www.shimaogroup.hk

Cricket Square Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111 Cayman Islands

Tricor Investor Services Limited 17/F, Far East Finance Centre 16 Harcourt Road

Hong Kong

Conyers Trust Company (Cayman) Limited Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111 Cayman Islands

The Stock Exchange of Hong Kong Limited Stock code: 813

Investor Relations Department Email: ir@shimaogroup.com

Annual General Meeting: 25 June 2026 11:00 a.m. Record date for

Annual General Meeting: 18 June 2026

3

Dear shareholders,

I hereby represent Shimao Group Holdings Limited ("Shimao Group", "Shimao" or the "Company") and its subsidiaries (collectively, the "Group") to present the annual results of the Group for the year ended 31 December 2025.

In 2025, the property market of China continued its deep adjustment in general. Policywise, the central and local governments established a long-term coordinated mechanism for regulation. It had been centering on "precise policy implementation and categorized guidance" and improving the policy system of "demand stimulation + supply optimization + risk mitigation" throughout the year. Such trends were reflected in the market. As shown in the data from the National Bureau of Statistics, in 2025, nationwide investment in property development totaled RMB8,278.8 billion, representing a year-on-year decrease of 17.2%; the gross floor area under construction by property developers amounted to 6,598.90 million square meters, representing a year-on-year decrease of 10.0%; and the sales area of newly-built commodity properties reached 881.01 million sq.m., representing a year-on-year decrease of 8.7%. As market demand remained subdued and the industry landscape became more divergent, property developers were generally facing dual challenges from liquidity and recovery.

At the start of 2026, an article titled "Improve and Stabilize the Expectations in the Property Market" in the journal "Qiushi" clarified the importance of the property industry in the national economy and emphasized the need to prioritize stability while seeking progress. It called for stabilizing market expectations, unleashing the potential of both rigid and upgraded housing demand, and promoting the transition toward high-quality development, to accelerate the formation of a new model for property development. This has charted a clear course for the industry's development in 2026 and provided fundamental guidance for real estate companies seeking breakthroughs and growth. Looking ahead to 2026, adjustment and transformation of the property market will continue. While the recovery path may still be bumpy, positive factors that signal an overall upward trend are mounting. "Control the amount of new housing, reduce inventory, and optimize supply" will become the main direction of regulatory measures. The construction of "quality houses" and urban renewal are set to be new driving forces behind supply and demand.

Under policy guidance and regulatory support, the Group made remarkable progress in debt resolution as the offshore debt restructuring scheme officially took effect on 21 July 2025, involving total principal amounts of approximately US$11.5 billion. Such successful implementation of the offshore debt restructuring has optimized the Group's debt structure and substantially alleviated its future debt obligations pressure, creating more favorable conditions for the Group's sound operations and sustainable development ahead.

As debt reduction efforts proceed, the Group's balance sheet has been further strengthened and improved. As of 31 December 2025, the Group's total borrowings amounted to approximately RMB182.266 billion, representing a significant decrease of approximately RMB69.785 billion compared to the end of the last year, a year-on-year decline of 28%. During the reporting period, the Group posted a profit of approximately RMB4.477 billion, with net cash flow from operating activities turning from negative to positive, signaling that financial operations have entered a more sustainable trajectory. Going forward, the Group will continue to uphold a prudent and pragmatic business philosophy. A multi-pronged approach will be employed to consolidate debt resolution gains and lay a solid financial foundation for sound operations.

CHAIRMAN'S STATEMENT

Based on actual operating conditions and future development plans, the Group did not acquire any land in 2025. Instead, we focused on core business objectives, with an accurate grasp of market and customer needs by prioritizing refined development, sales, and high-quality delivery of existing projects. During the reporting period, the Group's contracted sales amounted to RMB23.953 billion, with a total contracted area of 1.9646 million sq.m.. The average selling price for the year was RMB12,192 per sq.m.. The Group seized, with precision, market opportunities from the ongoing recovery and strong momentum in the Hong Kong property market. Its residential project in the city, BEACON PEAK, achieved outstanding performance this year, fully demonstrating the Group's product competitiveness and brand appeal in the local residential market. In the future, the Group will continue to flexibly seize market opportunities, striving for steady growth in sales performance.

With respect to production and operation, the Group adhered to the business policy of seeking progress while maintaining stability, and coordinated resource allocation to ensure the gradual advancement of all business operations. Against the backdrop of a slowdown in property sales in recent years, the Group actively raised funds through various means such as asset revitalization and price adjustment for higher sales volume, making every effort to ensure project completion and delivery. From 2022 to 2025, the Group has delivered approximately 281,000 units of 278 projects in 93 cities, protecting the rights and interests of owners and fulfilling its corporate responsibility with concrete actions.

In 2025, under the development model of "One Core with Two Wings", Shimao fully leveraged its advantage of distribution in diverse industries, strengthened synergy across business segments, and fostered common growth in boosting the comprehensive development.

In respect of property management business, Shimao Services has maintained steady operations while improving quality and efficiency. In 2025, Shimao Services deepened engagement in the existing property market by proactively expanding its service offerings. It expanded into the non-residential property sector, capturing the market-oriented and professional development trend, and upgraded services through the development of digital and intelligent systems. Shimao Services also developed community value-added services by rebranding itself as comprehensive integrated service providers for large communities. During the reporting period, Shimao Services achieved revenue of RMB7,880.0 million, gross profit of RMB1,400.1 million, net profit of RMB134.6 million and core net profit of RMB572.1 million. As at 31 December 2025, Shimao Services had businesses presence in 145 cities and provided a wide variety of services for 1,428 projects, with gross floor area ("GFA") under management of 221.2 million sq.m. and contracted GFA of 334.6 million sq.m.. In 2026, premium services will serve as the cornerstone, upon which Shimao Services will deepen its commitment to core sectors, including residential properties, universities and colleges and industrial parks. By enhancing project fulfilment capabilities, increasing customer satisfaction and strengthening customer loyalty, thereby solidifying the foundations for healthy growth in the long run.

In terms of hotel business, Shimao hotels anchored medium- to long-term growth through product innovation and quality enhancement. On 30 September 2025, Le Méridien Shanghai Sheshan reopened after a renovation to offer global travellers with premium service and creative experiences, writing a new chapter of "upscale lifestyle" hospitality experience. In terms of digital marketing innovations, Shimao hotels kept pace with changing consumer demands by continuously upgrading its online marketing platform, "Shi You Pin (世有品)". Through collaboration among the Group's diversified business segments, which span commercial, office, cultural and entertainment spaces, Shimao hotels have been optimizing its membership ecosystem, thereby building long-term competitive edges.

CHAIRMAN'S STATEMENT

In terms of commercial and entertainment business, amidst an environment of oversupply in the national commercial market and evolving consumer trends, Shimao commercial closely followed trends of consumption upgrading and scenario innovation, continuously optimizing its business mix and operational services, and actively collaborating with tenants to conduct joint marketing and customer acquisition, demonstrating a degree of operational resilience. Footfalls of commercial projects under management increased by 3% year-over-year during the reporting period. Shimao commercial recorded nearly 90% for the overall occupancy rate of commercial projects under management, which was approximately the same as that of the previous year. In the office sector, Shimao commercial leveraged its prime locations' advantages to continuously improve occupancy rates through flexible leasing policies, enhanced customer service, and refined operations. During the reporting period, Shimao commercial recorded an overall occupancy rate of 73% for office buildings under management, a slight increase from the end of the previous year. In the future, Shimao commercial will seize the opportunities arising from government policies to revitalize existing resources, strengthen internal coordination and resource integration, continuously enhance operational efficiency and facilitate business transformation.

The Group has been actively responding to the national policy by persisting with the idea of green and low-carbon development and is dedicated to fulfilling its corporate environmental responsibilities, so as to continuously promote the high-quality development of green buildings. In 2025, the Group added 438,900 sq.m. of green building area in aggregate, comprising 224,900 sq.m. of basic level, 95,000 sq.m. of one-star, and 119,000 sq.m. of two-star.

Adhering to the concept of low-carbon development, the Group focuses on increasing efficiency and reducing energy consumption. Through improved processes and technological innovation, the Group minimizes waste of resources and drives the transformation of its operational model toward green sustainability. The Group also applies green and low-carbon principles to all stages in the lifecycle of project design, development and construction, operations management, and asset renewal. The Group proactively aligns with the national goal of "Peak Carbon by 2030 and Carbon Neutral by 2060" by adhering to all environmental laws, regulations, and standards, and responding to international sustainability initiatives. By doing so, the Group endeavors to ensure that every building serves as a vehicle for green practices and every community becomes a model of ecological livability.

On behalf of the Board, I would like to thank our shareholders, customers, partners and government departments at all levels for their unwavering support. I would also like to extend my sincerest gratitude and deepest respect to our directors, management and staff who have stood shoulder to shoulder with Shimao through thick and thin, and for all their understanding and assistance and walking with Shimao. In 2026, the Group will keep focused on the three core tasks of debt resolution, cash flow management, and asset revitalization. Upholding strategic resolve and adhering to the "One Core with Two Wings" business strategy, we will remain down-to-earth and diligent in our efforts. With renewed enthusiasm, a more pragmatic approach and unwavering belief, we will live up to the trust and expectations of all parties as we embark together on a new journey toward high-quality development in the industry.

Hui Sai Tan, Jason

Chairman and President

Hong Kong, 27 March 2026

In 2025, the property market of China continued its overall adjustment. Policywise, the central and local governments established a long-term coordinated mechanism for regulation. It had been centering on "precise policy implementation and categorized guidance" and improving the policy system of "demand stimulation + supply optimization + risk mitigation" throughout the year. The policies regarding supply and timely delivery of properties continued to take effect for the long run, and the industry, as a whole, maintained a rational development pace marked by "sales-driven production". In the land market, as leading real estate companies focused on high-quality plots in core cities, the market was characterized by "higher quality, lower quantity, and scattered hot spots" in general, with competition for high-quality plots continued to intensify. Faced with this complex industry environment, the Group adhered to prudent operations and a steady, progressive approach, comprehensively promoting the smooth operation of its core businesses.

1. Recognized Sales Revenue

   Shimao Group Holdings Limited ("Shimao Group", "Shimao" or the "Company") and its subsidiaries (collectively the "Group") generates its revenue primarily from sales of properties, property management, hotel operation and commercial properties operation business. For the year ended 31 December 2025, revenue of the Group reached RMB28.418 billion. During the year, revenue from property sales amounted to RMB16.539 billion, accounting for 58.2% of the total revenue and the recognized sales area was 1.652 million sq.m..

2. Contracted Sales Performance

   As the overall size of the real estate industry continued to shrink, product competitiveness and refined operations have become core drivers of development. Insisted on accurate grasp of market and customer needs, the Group focused on improving product quality and creating customer value. It continuously strengthened the refined management throughout the entire process and kept up sales momentum through multi-dimensional promotion and efficient implementation. The Group's contracted sales for 2025 amounted to RMB23.953 billion, with a total contracted area of 1.9646 million sq.m.. The average selling price for the year was RMB12,192 per sq.m..

   The Group seized, with precision, market opportunities from the ongoing recovery and strong momentum in Hong Kong property market. Its residential project in the city, BEACON PEAK, achieved outstanding performance this year. By the end of the year, the cumulative sales have reached approximately RMB1 billion since its launch in September 2025, fully demonstrating the Group's product competitiveness and brand appeal in the local residential market. The Group remains prudently optimistic about the outlook of Hong Kong market and will continue to flexibly seize market opportunities, striving for steady growth in sales performance.

3. Ensuring delivery, stabilizing operation, and restoring financial structure

   Adhering to the business policy of seeking progress while maintaining stability, the Group coordinated resource allocation to ensure the gradual advancement of all business operations. Against the backdrop of a slowdown in property sales in recent years, the Group actively raised funds through various means such as asset revitalization and price adjustment for higher sales volume, making every effort to ensure project completion and delivery. From 2022 to 2025, the Group has delivered approximately 281,000 units of 278 projects in 93 cities, protecting the rights and interests of owners and fulfilling its corporate responsibility with concrete actions. Benefiting from the orderly progress of delivery work and the successful implementation of offshore debt restructuring, the Group's net cash flow from operating activities recorded a turnaround during the reporting period, its gearing structure was also optimized and restored, and its overall financial condition steadily improved.

4. Ensuring future supply through prudent land reserve management

As of the end of 2025, the Group had an area under construction of approximately 9.18 million sq.m. and an area completed of approximately 2.46 million sq.m. for the year. As at 31 December 2025, the Group had about 192 projects and a total area of approximately 34.16 million sq.m. (before interests) land bank, providing necessary support for the future supply of salable resources. Having taken into account the market conditions, current land bank, and operating liquidity, the Group did not acquire any land in 2025. Going forward, the Group will adhere to prudent and rational investment criteria, focusing on core resources to consolidate the foundation for its business development.

MANAGEMENT DISCUSSION AND ANALYSIS

In respect of property management business, Shimao Group engaged in property management business through its subsidiary, Shimao Services Holdings Limited ("Shimao Services").

Over the past few years, the real estate industry in China underwent profound adjustment, transitioning gradually towards a new phase characterized by "improving the quality of existing capacity and fostering sustainable development". Against this backdrop, players in the property management services industry have also repositioned themselves as lifetime property managers and comprehensive urban services providers, rather than merely community stewards, and are poised for transformation of the traditional property management towards modern services.

In 2025, Shimao Services achieved revenue of RMB7,880.0 million, gross profit of RMB1,400.1 million, net profit of RMB134.6 million, and core net profit of RMB572.1 million. As of 31 December 2025, the operations of Shimao Services covered 145 cities, providing a wide range of services for 1,428 projects, and the gross floor area (GFA) under management amounted to 221.2 million sq.m. and the contracted GFA reached 334.6 million sq.m..

Looking ahead to 2026, Shimao Services will adhere to the principle of "pragmatism and innovation-driven development", strengthen operational capabilities, boost efficiency, and fortify the foundation for growth; enhance cost control, strengthen the supply chain, and deepen strategic supplier partnerships; increase management effectiveness and invigorate digital intelligence management; and increase brand promotion to elevate brand influence. With premium service offerings serving as the cornerstone, Shimao Services will deepen its commitment to core sectors, including residential properties, universities and colleges and industrial parks. By enhancing project fulfilment capabilities, increasing customer satisfaction and strengthening customer loyalty, thereby solidifying the foundations for healthy growth in the long run.

As of 31 December 2025, the Group had a total of 23 hotels in operation, including Conrad Shanghai, InterContinental Shanghai Wonderland, Sheraton Hong Kong Tung Chung Hotel, Conrad Xiamen, Hilton Wuhan Riverside, Le Méridien Shanghai Sheshan, InterContinental Fuzhou, Hilton Nanjing Riverside, Hilton Shenyang, Hilton Changsha Riverside and Yuluxe Hotel Chengdu, offering nearly 8,000 hotel guest rooms. In addition, the Group has three directly managed leased hotels, offering more than 600 hotel guest rooms.

In 2025, demand in the hotel market in China was relatively weak. Overall occupancy rate index declined by 3% year-on-year, and the Average Daily Rate (ADR) index fell by 1%. Although faced with industry pressures, with flexible pricing strategies, enhanced holiday operations and expansion of overseas customer base, Shimao hotels has taken proactive measures to mitigate the impact of market fluctuations. Shimao hotels achieved an occupancy rate of 68% and total revenue of RMB2.18 billion for the year.

While improving service quality, Shimao hotels also anchored medium- to long-term growth through product innovation. On 30 September 2025, Le Méridien Shanghai Sheshan reopened after a renovation to offer global travellers with premium service and creative experiences, writing a new chapter of "upscale lifestyle" hospitality experience. In terms of digital marketing innovations, Shimao hotels kept pace with changing consumer demands by continuously upgrading its online marketing platform, "Shi You Pin (世有品)". Through collaboration among the Group's diversified business segments, which span commercial, office, cultural and entertainment spaces, Shimao hotels have been optimizing its membership ecosystem, thereby building long-term competitive edges.

MANAGEMENT DISCUSSION AND ANALYSIS

In respect of commercial properties operation, Shimao Group is principally engaged in the development of commercial properties through its subsidiary, Shanghai Shimao Co., Ltd. ("Shanghai Shimao"). Shanghai Shimao is determined to develop premium commercial complexes, and regards fulfilling the growing public demand for a better life as its impetus for development.

In 2025, amidst an environment of oversupply in the national commercial market and evolving consumer trends, Shimao commercial closely followed trends of consumption upgrading and scenario innovation, continuously optimizing its business mix and operational services, and actively collaborating with tenants to conduct joint marketing and customer acquisition, demonstrating a degree of operational resilience. Sales to tenants of commercial projects under management increased by 3% year-over-year during the reporting period. Shimao commercial recorded nearly 90% for the overall occupancy rate of commercial projects under management, which was approximately the same as that of the previous year. In the office sector, against a backdrop of intensifying "price-for-volume" competition in the office market and sustained pressure on Grade A office rents in major cities nationwide, Shimao commercial leveraged its prime locations' advantages to stabilize occupancy rates through flexible leasing policies, enhanced customer service, and refined operations. During the reporting period, Shimao commercial recorded an overall occupancy rate of 73% for office buildings under management, a slight increase from the end of the previous year.

Looking ahead to 2026, Shimao commercial will seize the opportunities arising from government policies to revitalize existing resources, strengthen internal coordination and resource integration, continuously enhance operational efficiency and facilitate business transformation.

Looking ahead to 2026, China's real estate industry has entered a new cycle of high-quality development, with the underlying logic of industry development shifting from scale expansion to quality enhancement and value creation. The Group will actively embrace market changes, adhere to the development model of "One Core with Two Wings", and continue to return to the essence of its products and services. The Group will promote the collaborative development of diversified businesses, including property development, property management, hotel operation and commercial properties operation. In the future, the Group will remain steadfast in focusing on customer needs, consolidating its operational fundamentals, and striking balance between asset-heavy and asset-light businesses. By integrating online and offline platforms for mutual empowerment, the Group will place efforts on exploring new areas and unlocking new growth drivers, and be dedicated to achieving high-quality and sustainable development for the Group's businesses.

MANAGEMENT DISCUSSION AND ANALYSIS

Key consolidated statement of profit or loss figures are set out below:

For the year ended 31 December 2025, the revenue of the Group was approximately RMB28,418 million (2024: RMB59,975 million), representing a decrease of 52.6% over 2024. The decrease in revenue was mainly due to the decrease in revenue from sales of properties. New sales in properties have decreased in recent years, and construction paces of properties have slowed down due to the Group's liquidity pressures, collectively leading to a decline in delivered floor area. And 58.2% (2024: 79.9%) of the revenue was generated from the sales of properties and 41.8% (2024: 20.1%) from hotel operation, commercial properties operation, property management and others.

The components of the revenue are set out as follows:

* The income does not include revenue from the Group.

1. Sales of Properties

   Sales of properties for the years ended 31 December 2025 and 2024 are set out below:

   	2025 Area (sq.m.)	RMB million	2024 Area (sq.m.)	RMB million
   South and North Region	531,816	4,980	819,439	16,644
   Zhejiang District	231,061	4,406	416,198	7,689
   Midwest Region	570,714	3,888	1,460,324	13,593
   Fujian District	214,303	2,020	628,450	6,212
   Jiangsu and Shanghai Region	103,628	1,245	254,850	3,773
   Total	1,651,522	16,539	3,579,261	47,911

   MANAGEMENT DISCUSSION AND ANALYSIS

2. Hotel Income

   Hotel operation income slightly decreased by approximately 1.8% to RMB2,185 million in 2025 from RMB2,225 million in 2024.

   Hotel operation income is set out as follows:

   Date of Commencement		2025 RMB million	2024 RMB million
   Conrad Shanghai	September 2006	362	334
   Four Points by Sheraton Hong Kong	January 2021	280	264
   Tung Chung
   Sheraton Hong Kong Tung Chung Hotel	December 2020	216	210
   Conrad Xiamen	August 2016	137	131
   InterContinental Shanghai Wonderland	November 2018	136	138
   Le Méridien Shanghai Sheshan	November 2005	100	103
   Hilton Changsha Riverside	July 2021	99	102
   Hilton Wuhan Riverside	July 2016	94	106
   InterContinental Fuzhou	January 2014	90	92
   Hilton Nanjing Riverside	December 2011	85	92
   Hilton Shenyang	January 2018	85	87
   Hilton Yantai	August 2017	70	75
   Crowne Plaza Shaoxing	March 2014	62	77
   Yuluxe Hotel Chengdu	August 2018	54	60
   Le Méridien Hangzhou Binjiang	September 2018	54	53
   DoubleTree by Hilton Ningbo Beilun	December 2016	45	50
   DoubleTree by Hilton Ningbo Chunxiao	December 2015	28	25
   Holiday Inn Mudanjiang	December 2010	21	25
   Yuluxe Hotel Taizhou	August 2014	20	26
   Minimax Hotel Chengdu Longquanyi	October 2021	12	13
   Others		135	162
   Total		2,185	2,225

   MANAGEMENT DISCUSSION AND ANALYSIS

3. Commercial Properties Operation Income

   Commercial properties operation income decreased by approximately 10.4% to RMB1,493 million in 2025 from RMB1,667 million in 2024. The decrease in commercial properties operation income was primarily due to the challenges facing the overall economy and the slowdown in consumer market growth, which led to a drop in average rental levels, complied with a reduction in leasable area in certain office buildings and shopping malls as a result of indebtedness settlement with assets.

   Commercial properties operation income is analysed as follows:

   Date of Commencement		2025 RMB million	2024 RMB million
   Rental Income
   Shanghai Shimao Festival City	December 2004	250	245
   Jinan Shimao Festival City	May 2014	170	146
   Chengdu Shimao Festival City	April 2021	143	132
   Beijing Shimao Tower	July 2009	104	132
   Shanghai Shimao Tower	December 2018	80	91
   Kunshan Shimao Plaza	April 2012	63	59
   Changsha Shimao Global Financial Center	September 2020	62	72
   Shenzhen Shimao Qianhai Center	July 2020	46	101
   Nanjing Yuhua Shimao (Commercial)	December 2018	40	51
   Shaoxing Shimao Dear Town (Commercial)	May 2010	37	51
   Nanjing Straits City (Commercial)	December 2014	37	50
   Xiamen Shimao Straits Mansion	January 2017	32	38
   Xiamen Jimei Shimao Festival City	April 2021	31	36
   Suzhou Shimao Canal Scene (Commercial)	June 2010	25	25
   Quanzhou Shishi Shimao Skyscraper City	January 2017	21	23
   Wuhu Shimao Riviera Garden (Commercial)	September 2009	9	8
   Miscellaneous rental income		52	46
   Rental income sub-total		1,202	1,306
   Commercial properties operation related		291	361
   service income
   Total		1,493	1,667

4. Property Management Income, and Others

Property management income, and others slightly increased by approximately 0.4% to RMB8,201 million in 2025 from RMB8,172 million in 2024.

MANAGEMENT DISCUSSION AND ANALYSIS

Cost of sales decreased by 13.1% to approximately RMB57,194 million in 2025 from RMB65,844 million in 2024, which was in line with the decrease in recognized revenue. This decrease was partially offset by the increase in provision for impairment losses on properties.

For the year ended 31 December 2025, the Group's gross loss was approximately RMB28,776 million (2024: RMB5,869 million). The increase in gross loss was due to provision for impairment losses on properties increased, which was affected by the continuous downturn in the real estate industry.

For the year ended 31 December 2025, the Group recorded aggregate fair value losses of approximately RMB4,491 million (2024: RMB2,813 million), mainly caused by the decrease in fair value of most investment properties due to the sustained slump in the commercial property market.

For the year ended 31 December 2025, the Group recognized net other income and gains of approximately RMB63,349 million (2024: net other losses of RMB13,609 million), which mainly comprised gain on offshore debt restructuring of approximately RMB69,520 million, loss of approximately RMB3,558 million from the liquidation of several subsidiaries which were adjudged bankrupt and under receivership procedures.

For the year ended 31 December 2025, the Group's selling and marketing costs increased by 15.1% to approximately RMB1,037 million from approximately RMB901 million for the year ended 31 December 2024. This increase was mainly due to rising channel cost led by heighted sales challenge amid the market downturn.

For the year ended 31 December 2025, the Group's administrative expenses decreased by 14.1% to approximately RMB3,370 million from approximately RMB3,922 million for the year ended 31 December 2024, benefiting from the Group's continuous focus on organization and business efficiency improvement.

Given the combined impact of multiple unfavourable factors in macroeconomic, industry and financing environments, the Group made further provisions for expected credit losses of approximately RMB6,095 million during the year ended 31 December 2025.

For the year ended 31 December 2025, impairment losses on property and equipment and right-of use were approximately RMB2,323 million (2024: RMB8 million) and RMB235 million (2024: Nil) respectively. The losses mainly compromised the impairment losses on hotel assets of the Group which was mainly due to the downturn of demand in the hotel market in China.

MANAGEMENT DISCUSSION AND ANALYSIS

For the year ended 31 December 2025, net finance costs decreased by 39.8% to approximately RMB7,274 million (2024: RMB12,075 million), which was mainly due to the following reasons: some of the borrowings achieved reduction of effective interest rate; some high-interest-cost borrowings were settled by disposal of assets or restructuring; and foreign exchange gains of borrowings was recorded due to the appreciation of RMB against USD in 2025 instead of foreign exchange losses recognized in 2024.

For the year ended 31 December 2025, share of results of associated companies and joint ventures was losses of approximately RMB1,049 million, representing an increase in loss of approximately RMB415 million compared with the year ended 31 December 2024, which was mainly due to the decrease in gross margin of recognized sales of properties and fair value losses on investment properties of certain of the Group's associated companies and joint ventures.

The Group's tax provisions amounted to approximately RMB2,659 million for the year ended 31 December 2025, in which PRC land appreciation tax ("LAT") was RMB3,349 million (2024: RMB1,648 million, in which LAT was RMB990 million). The increase in LAT was mainly due to additional provisions made for multiple projects that have reached liquidation, together with a change in estimates arising from the re-measurement of project final costs and value added.

Profit attributable to equity holders of the Company for the year ended 31 December 2025 was approximately RMB14.473 billion, as compared to loss of RMB35.905 billion last year. The increase in profit was mainly due to the following reasons: gross loss increased by approximately RMB22.908 billion; and other income and gains increased by approximately RMB76.958 billion mainly due to gain on offshore debt restructuring in 2025.

As at 31 December 2025, the Group had aggregate cash and bank balances (including restricted cash) of approximately RMB12,070 million, representing a decrease of approximately RMB3,682 million as compared to approximately RMB15,752 million at 31 December 2024, of which restricted cash of approximately RMB3,622 million (31 December 2024: RMB4,399 million) and guarantee deposits for construction of pre-sale properties with an amount of approximately RMB3,590 million (31 December 2024: RMB5,318 million) were included.

As at 31 December 2025, the total amount of borrowings was approximately RMB182.266 billion, representing a significant decrease of approximately RMB69.785 billion as compared to approximately RMB252.051 billion at 31 December 2024. The decrease of amount of borrowings was mainly due to the accomplishment of offshore debt restructuring.

The Group's borrowings-to-assets ratio (total borrowings divided by total assets) was approximately 51.0% as at 31 December 2025 (31 December 2024: 57.8%). The Group's current ratio (current assets divided by current liabilities) was approximately 1.0 as at 31 December 2025 (31 December 2024: 0.9).

MANAGEMENT DISCUSSION AND ANALYSIS

The Group's foreign exchange exposure is mainly derived from the borrowings denominated in USD and HKD.

The Group has been paying closely attention to the fluctuation of the foreign exchange rate and will be taking measures to mitigate the risk of exchange rate fluctuation if necessary.

As at 31 December 2025, the Group's total secured borrowings of approximately RMB159.460 billion were secured by its property and equipment, investment properties, land use rights, properties under development, completed properties held for sale and restricted cash (with a total carrying amount of RMB112.251 billion), and/or secured by the pledge of the shares of certain subsidiaries of the Group.

As of 31 December 2025, the Group had contracted capital and property development expenditure but not provided for amounted to RMB26.583 billion.

As of 31 December 2025, the Group employed a total of 41,335 employees, among whom 621 were engaged in property development. Total remuneration for the year amounted to approximately RMB4.295 billion. The Group has adopted a performance-based rewarding system to motivate its staff. The board of directors of the Company (the "Board") adopted a share award scheme (the "Share Award Scheme") of the Company on 30 December 2011. The purpose of the Share Award Scheme is to recognize the contributions by certain selected employees of the Group and to provide them with incentives in order to retain them for the continual operation and development of the Group and to attract suitable personnel for further development of the Group. Further information regarding the Share Award Scheme is set out in the section headed "Share Award Schemes" of the Report of Directors in this annual report. In relation to staff training, the Group also provides different types of programs for its staff to improve their skills and develop their respective expertise.

MANAGEMENT DISCUSSION AND ANALYSIS

1. Disclaimer of Opinion - Scope limitation relating to the assessment on the appropriateness of the going concern basis of preparing the Consolidated Financial Statements

   1. Details of audit modification

      The basis for the disclaimer of opinion on the going concern assumption is set out in the "Basis for Disclaimer of Opinion" section of the independent auditor's report included in this annual report. The cash flow forecast ("Cash Flow Forecast") prepared by management is dependent upon three key assumptions, each of which was addressed below.

      1. In respect of the forecasted sales proceeds from pre-sale and sale of properties:

         In assessing the appropriateness of the key assumption relating to the forecasted sales proceeds from pre-sale and sale of properties in the Cash Flow Forecast, ZHONGHUI ANDA CPA Limited (the "Auditor") requested the management to provide, among other things:

         1. the detailed Cash Flow Forecast covering a period of not less than 12 months from 31 December 2025, including the underlying project-by-project budgeted sales;

         2. supporting evidence for the key assumptions used in formulating the forecasted sales proceeds, including but not limited to market comparable data, recent transacted prices in the relevant cities, and management's assessment of the expected selling prices for individual property projects;

         3. historical pre-sale and sales data for the Group's property projects for recent years (including the financial year 2024 and the financial year 2025), together with an analysis of the trends observed and management's explanation for any significant variances between actual results and prior forecasts; and

         4. details of the Group's current sales pipeline, including the status of unsold inventory, the estimated saleable area and the expected timeline for obtaining pre-sale permits for projects not yet launched.

            The management provided the Auditor with the Cash Flow Forecast and the historical pre-sale data for recent years. However, the management was unable to provide concrete evidence to form a proper basis for the reasonableness of the expected sales and pre-sales of the property projects underpinning the Cash Flow Forecast. In particular:

            1. The Group's revenue from the property development segment declined from approximately RMB47.9 billion for the financial year 2024 to approximately RMB16.5 billion for the financial year 2025. Contracted sales also declined from approximately RMB34.0 billion for the financial year 2024 to approximately RMB24.0 billion for the financial year 2025. The historical pre-sale data provided by the management showed a continuous declining trend over recent years, and no material rebound has been observed;

            2. The prevailing conditions in the PRC property market continued to exhibit persistent contraction throughout 2025, and the Group's overall pre-sales continued to decline. Given these market conditions and the inherent uncertainties associated with forecasting property sales, the management's representations and the historical data alone did not provide the Auditor with a sufficient basis to conclude on the appropriateness of the forecasted sales proceeds; and

            3. Accordingly, the Auditor was unable to obtain sufficient appropriate audit evidence to conclude on the appropriateness of the assumptions underlying the forecasted sales proceeds.

            MANAGEMENT DISCUSSION AND ANALYSIS

      2. In respect of the continued forbearance by creditors:

         In assessing the appropriateness of the key assumption relating to the continued forbearance by creditors, the Auditor requested the management to provide, among other things:

         1. a comprehensive schedule of all outstanding borrowings (both offshore and onshore), including the original contractual repayment dates, the amounts in default, and the current status of negotiations with each creditor or creditor group;

         2. copies of any signed extension agreements, standstill agreements, forbearance letters, or memoranda of understanding ("MOUs") with individual creditors or creditor groups;

         3. details of the onshore debt restructuring plan (for the PRC corporate bonds, including the medium-term notes issued by Shanghai Shimao Co., Ltd. and the long-term bonds issued by Shanghai Shimao Jianshe Co., Ltd.) and other project-level borrowings, including the proposed terms, timetable and the status of negotiations;

         4. the basis and supporting evidence for the assumption in the Cash Flow Forecast that the forecasted payments of borrowings would be substantially lower than the contractual repayment obligations during the forecast period; and

         5. any written confirmation or indication from creditors that they would continue to forbear from demanding repayment within the next 12 months from 31 December 2025.

            The Auditor noted the following:

            1. While the Group's offshore debt restructuring was completed on 21 July 2025 pursuant to a Court-sanctioned Scheme of Arrangement, resulting in the discharge of existing offshore debts of approximately US$12.6 billion (equivalent to approximately RMB89.2 billion) in exchange for new financial instruments, this restructuring related solely to the offshore indebtedness. The onshore debt position remains substantially unresolved;

            2. As at 31 December 2025, the Group had total borrowings of approximately RMB182.3 billion, of which approximately RMB118.6 billion was due for repayment within the next twelve months. The Group had not repaid borrowings of approximately RMB92.5 billion in aggregate according to their scheduled repayment dates;

            3. The restructuring or extension plans for the onshore debts, including the medium-term notes (with an outstanding principal of RMB3.04 billion) and the long-term bonds (with an outstanding principal of approximately RMB18.9 billion) issued by PRC subsidiaries, as well as other individual project-level borrowings, had not yet commenced substantially as at 31 December 2025;

               
               
               

            4. The management expected the forecasted payments of borrowings in the Cash Flow Forecast to be substantially lower than the contractual repayment obligations. However, formal extension or restructuring agreements had not been signed for the majority of these onshore liabilities, and no written confirmation of forbearance had been obtained from the relevant creditors. The management's expectation alone did not provide a proper basis for the Auditor to conclude on the reasonableness of this assumption; and

            5. Accordingly, the Auditor was unable to obtain sufficient appropriate audit evidence to conclude that creditors would continue to forbear from demanding repayment within the next 12 months from 31 December 2025.

            MANAGEMENT DISCUSSION AND ANALYSIS

      3. In respect of the deferral of supplier payments:

         In assessing the appropriateness of the key assumption relating to the successful negotiation with suppliers to defer settlement of outstanding payables, the Auditor requested the management to provide, among other things:

         1. a summary of the Group's outstanding trade payables as at 31 December 2025 and the ageing profile thereof;

         2. the basis and supporting evidence for the assumption in the Cash Flow Forecast that the forecasted payments to suppliers during the forecast period would be substantially lower than the outstanding trade payables balance;

         3. copies of any written confirmations, MOUs, or formal agreements with major suppliers regarding the deferral of settlement of outstanding payables; and

         4. details of any discussions or negotiations with major suppliers regarding payment deferrals, including the proposed terms and the status of such negotiations.

            The Auditor noted the following:

            1. As at 31 December 2025, the Group had outstanding trade payables of approximately RMB29.4 billion, of which approximately RMB17.3 billion was aged over 90 days. The management assumed in the Cash Flow Forecast that the forecasted payments to suppliers during the forecast period would be substantially lower than the current trade payables balance;

            2. Similar to the assumption for the forecasted payments to creditors discussed in section (ii) above, no written confirmation, MOU or formal agreement from the suppliers was provided to support the assumption that payments could be deferred or that the forecasted payment amounts were achievable;

            3. In the absence of formal agreements with suppliers regarding payment deferrals, the Auditor had no independent basis upon which to evaluate whether the Group would be able to successfully negotiate the deferrals assumed in the Cash Flow Forecast; and

            4. Accordingly, the Auditor was unable to obtain sufficient appropriate audit evidence to conclude that the Group would be able to successfully negotiate deferrals of payments to its suppliers as assumed in the Cash Flow Forecast.

            Conclusion:

            In view of the above scope limitations in respect of the three key assumptions underlying the Cash Flow Forecast, there were no other alternative audit procedures that the Auditor could perform to satisfy themselves that the Group would be able to implement its plans and measures. As a result, the Auditor was unable to obtain sufficient appropriate audit evidence considered necessary to conclude whether the use of the going concern basis of accounting to prepare the consolidated financial statements is appropriate, and accordingly issued a disclaimer of opinion on the consolidated financial statements of the Group for the year ended 31 December 2025.

            MANAGEMENT DISCUSSION AND ANALYSIS

   2. Management's position and basis on major judgmental areas

      The management considered the going concern basis was appropriate due to the following reasons:

      1. In respect of the forecasted sales proceeds from pre-sale and sale of properties:

         1. The Company has provided the targets of year 2026 in respect of contracted sales, and construction payment by projects. However, due to the significant influence and frequent changes of various factors such as macroeconomic conditions, government policies, and housebuyer sentiment on the domestic real estate consumer market, it is difficult for the Company to provide very accurate forecasts. The Company will provide updated forecast data to the Auditor in due course during 2026.

         2. Although due to the ongoing downturn in the domestic real estate market, contracted sales and cash inflows from contracted sales in 2025 fell short of expectations, the Group reduced cash outflows and achieved net positive cash flow from operating activities through measures such as debt restructuring, "debt-for-asset" settlement, extension of debt maturities, and interest reductions, thereby sustaining its going concern capability.

      2. In respect of the continued forbearance by creditors:

         1. The Company has provided the 2026 plans for onshore public market debt restructuring and for the extension or restructuring of certain other onshore debts. However, these plans have not yet been formally launched to the market or formal agreements signed. The Company will continuously update the information to the Auditor during 2026 based on the progress of the debt restructuring.

         2. Although formal extension agreements have not yet been signed for some of the current borrowings, the Group's debt restructuring is progressing steadily. Breakthroughs have been achieved in the debt restructuring of the Group in 2025. As a result, the structure of the consolidated statement of financial position as at 31 December 2025 has been improved during the past 12 months. The borrowings recorded in current liabilities amounted to RMB118.6 billion, representing a significant decrease of approximately RMB91.6 billion as compared to approximately RMB210.2 billion at 31 December 2024. The decrease amount accounted for 44% of the borrowings recorded in current liabilities amounted to RMB210.2 billion and accounted for 24% of current liabilities amounted to RMB383.0 billion as at 31 December 2024. These circumstances demonstrate that the Group's efforts with its creditors to defer or resolve debts are progressing as planned and achieving results.

      3. In respect of the deferral of supplier payments:

         1. Because the supplier payments runs through the entire construction process of each project and involves numerous construction stages and contracts, the Company is unable to sign agreements with suppliers to delay construction payments. The Company has provided the Auditor with the 2026 construction payment targets by projects, as well as the principles for the refined management and control of construction payments.

            
            
            

         2. The Group's sales collections are regulated to ensure reasonable payments to suppliers. The Group's efforts in ensuring property deliveries have been recognized by local governments and regulatory authorities, laying a solid foundation for its continued stable operations. From 2022 to 2024, the Group prioritized housing delivery assurance for three consecutive years, completing the delivery of over 260,000 housing units. Besides, in terms of funding for delivery assurance, the Group also drew down over RMB450 million in aggregate under special financing arrangements included in the government's white list. These circumstances indicate that the Group has no issues with supplier payments that would affect its ability to continue as a going concern.

            Since some of the major onshore debt restructuring is yet to be completed, and the overall economic

            MANAGEMENT DISCUSSION AND ANALYSIS

   3. Audit committee's view towards the modification

      The audit committee of the Company ("Audit Committee") understood from the Auditor that they could not form an opinion on the Company's consolidated financial statements due to the significance of multiple uncertainties relating to the going concern basis. After careful consideration, the Audit Committee was of the view that the management has been actively implementing a number of plans and actions in order to mitigate the liquidity pressure and improve the Group's financial position. Notably, the Company has completed the offshore debt restructuring as planned in 2025, which materially improved its balance sheet structure.

      The Audit Committee has quarterly assessed the Company's actions to improve its going concern since 2025, in order to understand whether there is any material deviations from the plan and the reasons for such deviations. The Audit Committee has no objection to the management's position while the Audit Committee also understood that the Auditor might have a different view on the Group's going concern basis.

   4. Management's plans to address the modification

      The Company is taking the following actions to improve its operation and financial conditions:

      1. The Company's onshore public debt amounts to approximately RMB25.2 billion. The Company is currently assessing available resources and has discussed its onshore public debt restructuring plan with relevant regulatory authorities. A relatively comprehensive restructuring plan with high market acceptance is expected to be formally introduced in 2026.

      2. The Company will progressively address its other onshore debt through measures such as extension of debt maturities and "debt-for-asset" settlement with its creditors. It is planned to settle or extend debts exceeding RMB30.0 billion in 2026.

      3. The Group will continuously achieve net cash inflow from operating activities:

         1. As the domestic real estate sales market has not yet recovered, the Group expects its contracted sales in 2026 to decline further compared to 2025.

         2. As of the end of 2025, the Group had completed the vast majority of its guaranteed delivery tasks, and therefore expects construction payments in 2026 to decrease significantly. The Group will, through reasonable payment planning, control the ratio of construction payments to sales collections within 40%.

         3. The Group has continued to optimise and integrate its organisational structure, effectively enhancing operational efficiency and management precision. These initiatives have not only facilitated a more rational allocation of resources, but also achieved further cost reductions, thereby laying a more solid foundation for the Company's sustainable development. The Group's administrative expenses in 2025 decreased by approximately 14% as compared with 2024.

         4. The Group has implemented a targeted incentive scheme to collect and revitalize various receivables. The Group has also actively responded to various supportive policies of the national and local governments, revitalized resources through all kinds of acquisition and reserve policies, in order to improve cash flow. Those resources mainly include funds in government-regulated accounts, land prepayments and various types of deposits. The revitalized funds are used to settle or offset project construction costs, taxes payables and other expenses in accordance with the existing financing agreements of the Group.

2. Limitation of scope on the comparative figures - loss on settlement of debts relating to a property project This audit issue was resolved in 2024. The Auditor qualified the comparative figures of consolidated financial statements of 2025, and it had no impact on the Group's consolidated financial position as at 31 December 2025 or the profit or loss for the year then ended. There is no different views between the Auditor and management in respect of the financial influence of this audit issue on the Group's consolidated financial position at the end of 2025 or the profit or loss for the year then ended. The Audit Committee agrees with the management's position and basis.

   REPORT OF THE DIRECTORS

   The directors (the "Directors") of Shimao Group Holdings Limited (the "Company") present their report and the audited consolidated financial statements of the Company and its subsidiaries (together the "Group") for the year ended 31 December 2025.

   Principal Activities

   The Company is an investment holding company. The Group is principally engaged in property development, commercial properties operation, property management and hotel operation in the People's Republic of China (the "PRC"). The principal activities of its principal subsidiaries are set out in note 37 to the consolidated financial statements.

   Results and Dividends

   The results of the Group for the year ended 31 December 2025 are set out on pages 54 to 158 of this annual report.

   The board of Directors (the "Board") did not recommend the payment of any final dividend for the year ended 31 December 2025 (2024: Nil).

   Business Review

   A business review of the Group for the year ended 31 December 2025, a discussion of the Group's future business development and principal risks and uncertainties that the Group may encounter are provided in the Chairman's Statement on pages 4 to 6 and the Management Discussion and Analysis on pages 7 to 20 of this annual report. The financial risk management objectives and policies of the Group are shown in note 5 to the consolidated financial statements. An analysis of the Group's performance during the year using key financial performance indicators is set out in the Five Years Financial Summary on page 3 of this annual report. Particulars of important events affecting the Group that have occurred after the reporting period are set out in the Corporate Governance Report on page 47 and note 42 to the consolidated financial statements on page 156 of this annual report. Discussions on the Group's environmental policies and performance and compliance with the relevant laws and regulations and an account of the Group's key relationships with its employees, suppliers and customers that have a significant impact on the Group are shown in the "Sustainability Report" published on the Company's website. The above discussions form part of this Report of the Directors.

   Reserves

   Details of movements in the reserves of the Company and the Group during the year are set out in notes 44 and 23 to the consolidated financial statements.

   Major Customers and Suppliers

   The aggregate sales and purchases attributable to the Group's five largest customers and suppliers were less than 30% of the Group's total revenue and 30% of the Group's total purchases respectively during the year.

   None of the Directors, their close associates or any shareholders (which to the knowledge of the Directors owns more than 5% of the number of shares of the Company (the "Shimao Group Shares") in issue) had any interest in the major suppliers noted above.

   Bank and Other Borrowings
   
   

   Particulars of bank and other borrowings of the Group as at 31 December 2025 are set out in note 24 to the consolidated financial statements. The net proceeds are for refinancing the indebtedness, business development and other general corporate requirements of the Group.

   Donations

   During the year, the Group made no charitable and other donations (2024: RMB5,135,000).

   REPORT OF THE DIRECTORS

   Property and Equipment

   Details of property and equipment of the Group are set out in note 7 to the consolidated financial statements.

   Share Capital

   Details of movements in the share capital of the Company for the year ended 31 December 2025 are set out in note 22 to the consolidated financial statements.

   Financial Highlights

   A summary of the results and of the assets and liabilities of the Group for the last five financial years is set out on page 3 of this annual report.

   Pre-Emptive Rights

   There are no provisions for pre-emptive rights over the Shimao Group Shares under the Company's articles of association (the "Articles of Association") or the laws of the Cayman Islands where the Company is incorporated.

   Directors

   The Directors during the year and up to the date of this report are as follows:

   Executive Directors

   Mr. Hui Sai Tan, Jason (Chairman and President)

   Mr. Xie Kun Mr. Zhao Jun

   Non-executive Directors Ms. Hui Mei Mei, Carol Mr. Shao Liang

   Independent Non-executive Directors

   Mr. Lyu Hong Bing Mr. Lam Ching Kam Mr. Fung Tze Wa

   In accordance with Article 84 of the Articles of Association, three Directors, namely, Mr. Hui Sai Tan, Jason, Mr. Lyu Hong Bing and Mr. Lam Ching Kam shall retire from office by rotation respectively at the forthcoming annual general meeting of the Company (the "AGM") and, all being eligible, have offered themselves for re-election as Directors at the forthcoming AGM.

   None of the Directors, including Directors being proposed for re-election at the forthcoming AGM, has a service contract with the Company or any of its subsidiaries which is not determinable by the Group within one year without payment of compensation other than statutory compensation.

   The Company has received, from each of the Independent Non-executive Directors, a confirmation of his independence pursuant to Rule 3.13 of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited ("HKEx"). The Company considers that all the Independent Non-executive Directors are independent.

   REPORT OF THE DIRECTORS

   Directors' Interests in Transactions, Arrangements and Contracts

   Save as disclosed in this report, no transactions, arrangements and contracts of significance in relation to the Group's business to which the Company, any of its subsidiaries or its holding company was a party and in which a Director or his/ her connected entity had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

   Management Contracts

   No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or subsisted during the year.

   Share Award Schemes

   The Group and Shimao Services Holdings Limited ("Shimao Services", together with its subsidiaries, the "Shimao Services Group"), a subsidiary of the Company, have adopted three share award schemes. The purpose of the share award schemes is to recognize the contributions by certain selected employees of the Group and Shimao Services Group and to provide them with incentives in order to retain them for the continual operation and development of the Group and Shimao Services Group and to attract suitable personnel for further development of the Group and Shimao Services Group.

   No acceptance price of awarded shares will be payable upon acceptance of the said award and no purchase price is payable by the selected employees upon acceptance of awards granted under each share award scheme.

   Details of each of the share award schemes are set out below:

   1. 2011 Shimao Group Share Award Scheme

      A share award scheme of the Company (the "2011 Shimao Group Share Award Scheme") was initially adopted by the Board on 30 December 2011 (the "Adoption Date I"), with subsequent amendments thereafter. On 26 March 2019, the Board approved the 2011 Shimao Group Share Award Scheme to be valid and effective until 30 December 2027. The participants of the 2011 Shimao Group Share Award Scheme include an employee (including directors, supervisors or senior management) of any member of the Group.

      The maximum number of shares which can be awarded under the 2011 Shimao Group Share Award Scheme is 2% of the Shimao Group Shares in issue as at the Adoption Date I (i.e. 69,319,016 Shimao Group Shares). The maximum number of Shimao Group Shares which may be subject to an award or awards to a selected employee under the 2011 Shimao Group Share Award Scheme must not exceed 1% of the total number of issued Shimao Group Shares as at the Adoption Date I (i.e. 34,659,508 Shimao Group Shares).

      The number of Shimao Group Shares granted is determined based on the grantee's position, experience, years of service, performance and contribution to the Group. The Shimao Group Shares granted will automatically lapse if the grantee, among other things, terminates his/her service or employment relationship with the Group and other circumstances as provided in accordance with the rules of the 2011 Shimao Group Share Award Scheme.

      During the year ended 31 December 2025, no Shimao Group Share was granted, vested or cancelled under the 2011 Shimao Group Share Award Scheme. Details of the movement of Shimao Group Shares granted under the 2011 Shimao Group Share Award Scheme during the year ended 31 December 2025 are set out below:

      REPORT OF THE DIRECTORS

      Number of Shimao Group Shares

      Name of grantees Date of grant	Outstanding as at 1 January 2025	Granted during the year	Vested during the year	Lapsed/ cancelled during the year	Outstanding as at 31 December 2025
      Directors (Note 1) Hui Sai Tan, Jason 15 April 2020 (Note 2)	64,168	-	-	-	64,168
      15 April 2021 (Note 3)	55,325	-	-	-	55,325
      	119,493	-	-	-	119,493
      Xie Kun 15 April 2020 (Note 2)	48,445	-	-	-	48,445
      15 April 2021 (Note 3)	208,059	-	-	-	208,059
      	256,504	-	-	-	256,504
      Shao Liang 15 April 2020 (Note 2)	32,680	-	-	-	32,680
      15 April 2021 (Note 3)	28,708	-	-	-	28,708
      	61,388	-	-	-	61,388
      Sub-total	437,385	-	-	-	437,385
      Two highest paid 15 April 2020 (Note 2)	45,718	-	-	-	45,718
      individual (excluding 15 April 2021 (Note 3) Directors as disclosed above) (Note 1) Other Employees of 15 April 2020 (Note 2)	200,254 300,222	- -	- -	- (17,070)	200,254 283,152
      the Group 15 April 2021 (Note 3)	1,529,511	-	-	(139,209)	1,390,302
      Sub-total	2,075,705	-	-	(156,279)	1,919,426

      Total 2,513,090 - - (156,279) (Note 4) 2,356,811

      Notes:

      1. The five highest paid individuals of the Group for the year include three Directors and two individuals. For details, please refer to notes 31(c) and 32 to the consolidated financial statements. Therefore, the Shimao Group Shares granted under the 2011 Shimao Group Share Award Scheme to the five highest paid individuals in aggregate are not disclosed separately.

      2. Subject to the satisfaction of the vesting criteria and conditions of the 2011 Shimao Group Share Award Scheme, 60% of awarded Shimao Group Shares will be vested after 12 months from the date of grant and 40% of awarded Shimao Group Shares will be vested after 24 months from the date of grant. The closing price of the Shimao Group Shares immediately before the date on which the awards were granted was HK$30.00 per share. The fair value of the awards at the date of grant was HK$29.56 per share, based on the closing price of the Shimao Group Shares on that date.

      3. Subject to the satisfaction of the vesting criteria and conditions of the 2011 Shimao Group Share Award Scheme, 60% of awarded Shimao Group Shares will be vested after 12 months from the date of grant and 40% of awarded Shimao Group Shares will be vested after 24 months from the date of grant. The closing price of the Shimao Group Shares immediately before the date on which the awards were granted was HK$23.10 per share. The fair value of the awards at the date of grant was HK$23.35 per share, based on the closing price of the Shimao Group Shares on that date.

      4. 156,279 Shimao Group Shares were lapsed during the year.

         Since the Adoption Date I and up to the date of this report, a total of 48,751,338 Shimao Group Shares had been granted under the 2011 Shimao Group Share Award Scheme, representing approximately 1.41% of the total number of issued Shimao Group Shares as at Adoption Date I. The number of Shimao Group Shares available for future grant under the 2011 Shimao Group Share Award Scheme was 20,567,678 Shimao Group Shares, representing approximately 0.22% of the total number of issued Shimao Group Shares as at the date of this report.

         REPORT OF THE DIRECTORS

   2. 2021 Shimao Group Share Award Scheme

      Another share award scheme of the Company (the "2021 Shimao Group Share Award Scheme") was adopted by the Board on 3 May 2021 (the "Adoption Date II"). Unless terminated earlier by the Board, the 2021 Shimao Group Share Award Scheme is valid and effective for a term of three years commencing on the Adoption Date II. The participants of the 2021 Shimao Group Share Award Scheme include an employee (including directors, supervisors or senior management) of any member of the Group and Shimao Services Group.

      The maximum number of shares which can be awarded under the 2021 Shimao Group Share Award Scheme is 0.3% of the shares of Shimao Services (the "Shimao Services Shares") in issue as at the Adoption Date II (i.e. 7,091,919 Shimao Services Shares). The maximum number of Shimao Services Shares which may be subject to an award or awards to a selected employee under the 2021 Shimao Group Share Award Scheme must not exceed 0.3% of the total number of issued Shimao Services Shares as at the Adoption Date II (i.e. 7,091,919 Shimao Services Shares).

      The number of Shimao Services Shares granted is determined based on the grantee's position, experience, years of service, performance and contribution to the Group and Shimao Services Group. The Shimao Services Shares granted will automatically lapse if the grantee, among other things, terminates his/her service or employment relationship with the Group or Shimao Services Group and other circumstances as provided in accordance with the rules of the 2021 Shimao Group Share Award Scheme.

      During the year ended 31 December 2025, no Shimao Services Share was granted, vested or cancelled under the 2021 Shimao Group Share Award Scheme. Details of the movement of the Shimao Services Shares granted under the 2021 Shimao Group Share Award Scheme during the year ended 31 December 2025 are set out below:

      Number of Shimao Services Shares

      		Outstanding as at	Granted	Vested	Lapsed/ cancelled	Outstanding as at
      Name of grantees	Date of grant (Note 1)	1 January 2025	during the year	during the year	during the year	31 December 2025
      Employees of the Group	10 May 2021	33,381	-	-	(33,381) (Note 2)	-

      (including the employees of Shimao Services Group)

      Notes:

      1. Subject to the satisfaction of the vesting criteria and conditions of the 2021 Shimao Group Share Award Scheme, 60% of awarded Shimao Services Shares will be vested after 12 months from the date of grant and 40% of awarded Shimao Services Shares will be vested after 24 months from the date of grant. The closing price of the Shimao Services Shares immediately before the date on which the awards were granted was HK$19.74 per share. The fair value of the awards at the date of grant was HK$19.80 per share, based on the closing price of the Shimao Services Shares on that date.

      2. 33,381 Shimao Services Shares were lapsed during the year.

   Since the Adoption Date II and up to the date of this report, a total of 6,865,821 Shimao Services Shares had been granted under the 2021 Shimao Group Share Award Scheme, representing approximately 0.29% of the total number of issued Shimao Services Shares as at Adoption Date II. As the 2021 Shimao Group Share Award Scheme was terminated on 3 May 2024, no further grant of Shimao Services Shares shall be made.

   REPORT OF THE DIRECTORS

3. Shimao Services Shares Award Scheme

A share award scheme of Shimao Services (the "Shimao Services Share Award Scheme") was adopted by the Board of Shimao Services on 28 June 2021 (the "Adoption Date III"). The Shimao Services Share Award Scheme shall be valid and effective for a term of ten years commencing on the Adoption Date III. The participants of the Shimao Services Share Award Scheme include any employee of any member of the Shimao Services Group.

The maximum number of Shimao Services Shares which can be awarded under the Shimao Services Share Award Scheme is 3% of the Shimao Services Shares in issue as at the Adoption Date III (i.e. 70,919,190 Shimao Services Shares). The maximum number of Shimao Services Shares which may be subject to an award or awards to a selected employee under the Shimao Services Share Award Scheme must not exceed 3% of the total number of issued Shimao Services Shares as at the Adoption Date III (i.e. 70,919,190 Shimao Services Shares).

The number of Shimao Services Shares granted is determined based on the grantee's position, experience, years of service, performance and contribution to the Shimao Services Group. The Shimao Services Shares granted will automatically lapse if the grantee, among other things, terminates his/her service or employment relationship with the Shimao Services Group and other circumstances as provided in accordance with the rules of the Shimao Services Share Award Scheme.

During the year ended 31 December 2025, no Shimao Services Share was granted, vested or cancelled under the Shimao Services Share Award Scheme. Details of the movement of Shimao Services Shares granted under the Shimao Services Share Award Scheme during the year ended 31 December 2025 are set out below:

Number of Shimao Services Shares

Total 3,625,719 - - (280,242) (Note 4) 3,345,477

REPORT OF THE DIRECTORS

Notes:

1. Subject to the satisfaction of the vesting criteria and conditions of the Shimao Services Share Award Scheme, 60% of awarded Shimao Services Shares will be vested after 6 months from the date of grant and 40% of awarded Shimao Services Shares will be vested after 18 months from the date of grant. The closing price of the Shimao Services Shares immediately before the date on which the awards were granted was HK$2.65 per Shimao Services Share. The fair value of the awards at the date of grant was HK$2.29 per share, based on the closing price of the Shimao Services Shares on that date.

2. Subject to the satisfaction of the vesting criteria and conditions of the Shimao Services Share Award Scheme, 60% of awarded Shimao Services Shares will be vested after 12 months from the date of grant and 40% of awarded Shimao Services Shares will be vested after 24 months from the date of grant. The closing price of the Shimao Services Shares immediately before the date on which the awards were granted was HK$1.74 per Shimao Services Share. The fair value of the awards at the date of grant was HK$1.68 per share, based on the closing price of the Shimao Services Shares on that date.

3. One of the five highest paid individuals for the financial year ended 31 December 2025 is an executive director of Shimao Services, namely, Mr. Shao Liang. However, no Shimao Services Shares were granted to him.

4. 280,242 Shimao Services Shares were lapsed during the year.

Since the Adoption Date III and up to the date of this report, a total of 7,542,551 Shimao Services Shares had been granted under the Shimao Services Share Award Scheme, representing approximately 0.32% of the total number of issued Shimao Services Shares as at Adoption Date III. The number of Shimao Services Shares available for future grant under the Shimao Services Share Award Scheme was 63,376,639 Shimao Services Shares, representing approximately 2.57% of the total number of issued Shimao Services Shares as at the date of this report.

Further details of the above three share award schemes are set out in note 22(b) to the consolidated financial statement.

Save for the convertible bonds issued in connection with the offshore debt restructuring of the Company as set out in note 24 to the consolidated financial statements, no equity-linked agreements that will or may result in the Company issuing shares or that require the Company to enter into any agreements that will or may result in the Company issuing shares were entered into by the Company during the year or subsisted at the end of the year.

REPORT OF THE DIRECTORS

As at 31 December 2025, the interests and short position of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporation (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO")) as recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise to be notified to the Company and HKEx pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix C3 of the Listing Rules were as follows:

1. Long position in the shares of the Company

   Name of Directors

   Capacity/Nature of interests

   Number of ordinary shares held

   Approximate percentage of issued share capital

   Hui Sai Tan, Jason Beneficial owner 3,682,198 (Note 1) 0.043%

   Xie Kun Beneficial owner 332,804 (Note 2) 0.004%

   Shao Liang Beneficial owner 61,388 (Note 3) 0.001%

   Notes:

   1. The interests disclosed include deemed interests in 119,493 Shimao Group Shares granted under the 2011 Shimao Group Share Award Scheme.

   2. The interests disclosed include deemed interests in 256,504 Shimao Group Shares granted under the 2011 Shimao Group Share Award Scheme.

   3. The interests disclosed include deemed interests in 61,388 Shimao Group Shares granted under the 2011 Shimao Group Share Award Scheme.

2. Long position in the shares of associated corporation - Shimao Services

   Name of Directors	Capacity/Nature of interests	Number of ordinary shares held	Approximate percentage of issued share capital
   Hui Sai Tan, Jason	Beneficial owner	57,129	0.002%
   Xie Kun	Beneficial owner	95,215	0.004%
   Zhao Jun	Beneficial owner	37,945	0.002%
   Shao Liang	Beneficial owner	35,016	0.001%

   Save as disclosed above, no other interests or short position in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) were recorded in the register.

   REPORT OF THE DIRECTORS

   Directors' Right to Acquire Shares or Debentures

   Save as disclosed above, at no time during the year was the Company, any of its subsidiaries, or its holding company a party to any arrangement to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

   Interests of Substantial Shareholders

   As at 31 December 2025, the interests and short position of substantial shareholders in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under section 336 of the SFO were as follows:

   Long/short position in the shares or underlying shares of the Company

   Name	Nature of interests	Number of shares or underlying shares held	Approximate percentage of issued share capital
   Long position
   Hui Wing Mau	Note 1	2,941,252,584	34.191%
   Gemfair Investments Limited ("Gemfair")	Beneficial owner	2,564,158,314	29.808%
   Overseas Investment Group International Limited	Note 2	2,564,158,314	29.808%
   ("Overseas Investment")
   GIC Private Limited ("GIC")	Note 3	634,880,159	7.380%
   Deltavest Pte. Ltd. ("Deltavest")	Note 4	480,522,044	5.586%
   Eurovest Pte Ltd ("Eurovest")	Note 5	480,522,044	5.586%
   Gamstar Pte. Ltd.	Beneficial owner	480,522,044	5.586%

   Notes:

   1. The interests disclosed represent 2,564,158,314 Shimao Group Shares held by Gemfair and 377,094,270 Shimao Group Shares held by Shiying Finance Limited ("Shiying Finance"). Both Gemfair and Shiying Finance are directly wholly-owned by Mr. Hui Wing Mau. By virtue of the SFO, Mr. Hui Wing Mau is deemed to be interested in Shimao Group Shares held by Gemfair and Shiying Finance.

   2. The interests disclosed represent the right of Overseas Investment to vote on behalf of Gemfair as a shareholder at general meetings of the Company, pursuant to a deed dated 12 June 2006 between Gemfair and Overseas Investment, as long as Mr. Hui Wing Mau or his close associates (directly or indirectly) hold not less than 30% interest in the Company.

   3. The interests disclosed represent 154,358,115 Shimao Group Shares held by GIC as an investment manager and 480,522,044 Shimao Group Shares held by GIC through its controlled corporation.

   4. The interests disclosed represent the interest in the Company held by Deltavest through its controlled corporation.

   5. The interests disclosed represent the interest in the Company held by Eurovest through its controlled corporation.

Save as disclosed above, no other interests and short position in the shares and underlying shares of the Company were recorded in the register.

REPORT OF THE DIRECTORS

The Articles of Association provides that the Directors, secretary or other officers of the Company shall be entitled to be indemnified out of the assets and profit of the Company from and against all actions, costs, charges, losses, damages and expenses which he or she may incur or sustain or about the execution of their duties in their respective offices.

During the year ended 31 December 2025:

1. The Company decreased its holdings of 110,000,000 Shimao Services Shares through its wholly-owned subsidiary, with an average consideration of HK$0.76 per share; and

2. The Company decreased its holdings of 85,500,000 Shimao Services Shares through its wholly-owned subsidiary, with services as consideration.

Save as disclosed above, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of its listed securities during the year ended 31 December 2025.

The Company's offshore debt restructuring scheme (the "Offshore Debt Restructuring") became effective on 21 July 2025 (the "Scheme Effective Date").

On 21 July 2025, the Company issued zero coupon mandatory convertible bonds due 2026 ("MCB") in the aggregate principal amount of US$4,999,668,072, including the Controlling Shareholder MCB (as defined below), as part of the consideration for the Offshore Debt Restructuring. Further details of the Offshore Debts Restructuring and the MCB are set out in the announcements and circular of the Company from 25 March 2024 to 21 July 2025.

During the period from 21 July 2025 to 31 December 2025, MCB in the aggregate principal amount of US$3,686,323,700, was converted at the conversion price of HK$6.00 per Shimao Group Share, and the agreed exchange rate of US$1 = HK$7.82. A total of 4,804,508,201 Shimao Group Shares were allotted and issued to the holders of the MCB upon conversion.

As at 31 December 2025, US$1,313,344,372 in aggregate principal amount of the MCB remained outstanding. Assuming there is full conversion of the MCB, based on the conversion price of HK$6.00 per Shimao Group Share, and the agreed exchange rate of US$1 = HK$7.82, the MCB can be converted into a maximum aggregate of 1,711,725,498 Shimao Group Shares, representing approximately 19.898% of the total number of Shimao Group Shares in issue as at 31 December 2025 (i.e. 8,602,340,089 shares) and approximately 16.596% of the total number of Shimao Group Shares in issue as enlarged by the allotment and issue of such conversion shares (i.e. 10,314,065,587 shares) (assuming no other change in the issued share capital of the Company).

REPORT OF THE DIRECTORS

Set out below is the dilutive impact on the respective shareholdings of the substantial shareholders (within the meaning of the Listing Rule) of the Company if there had been full conversion of the MCB as at 31 December 2025:

As at 31 December 2025

Assume upon full conversion of the outstanding MCB as at

31 December 2025

Note: Details of the nature of the shareholding of the substantial shareholder are set out in the "Interests of Substantial Shareholders" section of this report.

As calculated based on the profit attributable to the equity holders of the Company of approximately RMB14,473 million for the year ended 31 December 2025, basic earnings per Shimao Group Share amounted to RMB2.61, and diluted earnings per Shimao Group Share amounted to RMB1.92 on the assumption of full conversion of the MCB. The MCB will be mandatorily convertible into Shimao Group Shares upon maturity and will not be redeemed by cash.

Mr. Hui Wing Mau and his associates, the controlling shareholder of the Company (the "Controlling Shareholder"), holding approximately 32.065% of the issued share capital of the Company as at the date of this report. The Controlling Shareholder, through companies wholly owned by him, provided loans in the aggregate principal amount of HK$3,963 million to the Company (including unreceived dividend), and loans in the aggregate principal amount of HK$3,839 million to subsidiaries of the Company.

On the Scheme Effective Date, such shareholder loans have been exchanged as to US$600 million of the outstanding principal amount into long-term notes (the "Controlling Shareholder Notes"), and the balance of the aggregate principal amount of outstanding shareholder loans into zero coupon mandatory convertible bonds (the "Controlling Shareholder MCB").

The Controlling Shareholder Notes have a tenor of 9.5 years and interest will be accrued and payable semi-annually in arrears on the outstanding principal amount entirely in kind at 2.0% per annum. The Controlling Shareholder Notes have shared (i) the guarantees provided by certain subsidiaries of the Group on the obligations of the Company; and (ii) the collateral provided by the Company under the short term instruments and the long term instruments.

REPORT OF THE DIRECTORS

On 4 September 2025, Controlling Shareholder MCB in the total principal amount of US$397,758,567 was converted in full at the conversion price of HK$6.00 per Shimao Group Share, and the agreed exchange rate of US$1 = HK$7.82. A total of 518,411,998 Shimao Group Shares were allotted and issued to the Controlling Shareholder upon conversion.

The Controlling Shareholder is a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the issuance of the Controlling Shareholder Notes and the Controlling Shareholder MCB to the Controlling Shareholder constitute connected transactions for the Company and are subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

At the extraordinary general meeting of the Company held on 15 January 2025, the Independent Shareholders approved the issues of the Controlling Shareholder Notes and the Controlling Shareholder MCB to the Controlling Shareholder.

Further details of the issues of the Controlling Shareholder Notes and Controlling Shareholder MCB are set out in the announcement of the Company dated 13 December 2024 and the circular of the Company dated 30 December 2024.

The major related party transactions which were undertaken in the normal course of business of the Group are set out in note 41 to the consolidated financial statements. Save as disclosed in this annual report, none of these related party transactions constituted connected transactions or continuing connected transactions for the Company which is discloseable pursuant to Chapter 14A of the Listing Rules.

On 16 October 2020, the Company and Mr. Hui Wing Mau, the ultimate controlling shareholder of the Company (collectively the "Undertaking Controlling Shareholders") entered into a deed of non-competition (the "Deed of Non-Competition") in favour of Shimao Services.

Each of the Undertaking Controlling Shareholders has unconditionally and irrevocably undertaken to Shimao Services in the Deed of Non-Competition that it/he will not, and will procure its/his close associates (save for members of Shimao Services Group) not to, directly or indirectly conduct or be involved in any business (other than the business of Shimao Services Group) that directly or indirectly competes, or may compete, with the business of Shimao Services Group, being the provision in the PRC of property management services for residential and other properties (including but not limited to governmental and public facilities), value-added services to non-property owners and community value-added services, or hold shares or interest in any companies or business that compete directly or indirectly with the business engaged by Shimao Services Group from time to time, except where the Undertaking Controlling Shareholders and their close associates hold (i) less than 30% of the total issued share capital of any company (whose shares are listed on HKEx or any other stock exchange); or (ii) less than 30% of interest of any private company, which is engaged in any business that is or may be in competition with any business engaged by any member of Shimao Services Group and they do not possess the right to control the board of directors of such company.

The Deed of Non-Competition will lapse automatically if the Undertaking Controlling Shareholders cease to hold, whether directly or indirectly, 50% or above of the Shimao Services Shares with voting rights or if the Shimao Services Shares cease to be listed on HKEx.

The Company has confirmed to Shimao Services that during the year ended 31 December 2025, the Group and its close associates (save for members of Shimao Services Group) have complied with the terms of the Deed of Non-Competition.

REPORT OF THE DIRECTORS

Based on the information that is publicly available to the Company and within the knowledge of the Directors, throughout the year ended 31 December 2025 and up to the date of this report, the Company has maintained a sufficient public float of more than 25% of the issued Shimao Group Shares as required under the Listing Rules.

The consolidated financial statements for the year ended 31 December 2025 have been audited by ZHONGHUI ANDA CPA Limited who will retire and, being eligible, offer themselves for re-appointment as auditor of the Company at the forthcoming AGM.

On behalf of the Board Hui Sai Tan, Jason Chairman and President

Hong Kong, 27 March 2026

1. Corporate Governance Practices

   Shimao Group Holdings Limited (the "Company") is committed to achieving and maintaining high standards of business ethics and corporate governance. It believes that, in the achievement of long-term objectives of the Company and its subsidiaries (together the "Group"), it is of utmost importance to conduct business with accountability, transparency and fairness. The Group's interests as well as those of its shareholders will be maximized in the long run by adhering to these principles.

   The Company complied with the code provisions set out in the Corporate Governance Code (the "CG Code") contained in Appendix C1 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") throughout the financial year ended 31 December 2025, except for the following deviations:

   1. Code provision C.1.7 sets out that the Company should arrange appropriate insurance cover for legal action against its directors (the "Directors"). The Company has not yet made this insurance arrangement as director liability insurance with a reasonable insurance premium while providing adequate suitable security to the Directors has not yet been identified on the market.

   2. Under code provision C.2.1, the roles of chairman and chief executive should be separate and should not be performed by the same individual. The Company believes that Mr. Hui Sai Tan, Jason's ("Mr. Hui") dual roles as Chairman of the board of Directors (the "Board") and President of the Company will enable the Group to execute its business strategies effectively and facilitate daily operations. Although the responsibilities of the Chairman and the President are vested in one person, all major decisions are made in consultation with the management and the Board. The Board considers that there is a sufficient balance of power and enhances the efficiency of the operation of the Group. The Board currently comprises three Executive Directors, two Non-executive Directors and three Independent Non-executive Directors and, therefore, has a strong independent element in its composition.

   3. Under code provision F.1.3, the Chairman of the Board should attend the annual general meeting. Mr. Hui did not attend the annual general meeting of the Company held on 12 June 2025 (the "2025 AGM") due to other commitments.

2. Corporate Culture

   The Company has formulated a corporate culture that is consistent with long-term development goals, values and strategies. The Company will focus on the consolidation of the development model of "One Core with Two Wings" to build up its customers-oriented core competitiveness under the new circumstances. The Company will also ensure sound operation and management by prioritizing products, quality services and professional asset management, and fully enhance our agility to strive for sustainable development under the guidance of our corporate culture of "Together we fulfill responsibility, make breakthroughs and attain achievements".

   Details of the corporate culture, long-term goals, business strategies and business models of the Company are set out in the "Chairman's Statement" and "Management Discussion and Analysis" sections of this annual report and 2025 Sustainability Report which is published separately from this annual report.

3. Directors' Securities Transactions

   The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") set out in Appendix C3 to the Listing Rules as the code of conduct regarding securities transactions by the Directors. The Company has made specific enquiry of all Directors and all Directors confirmed that they had complied with the required standard set out in the Model Code throughout the financial year.

   CORPORATE GOVERNANCE REPORT

4. Directors
   1. The Board

      The Board, which is accountable to the shareholders of the Company (the "Shareholders"), is responsible for the leadership and control of the Company and oversees the Group's businesses, strategic decisions and performances. The management is entrusted by the Board with the authority and responsibility for the day-to-day management of the Group and assumes full accountability to the Board for the operation of the Group. Major corporate matters that are specifically delegated by the Board to the management include the preparation of interim and annual reports and announcements for the Board's approval before publication, execution of business strategies and initiatives adopted by the Board, implementation of adequate systems of internal controls and risk management procedures, and compliance with relevant statutory and regulatory requirements, rules and regulations. It is the responsibility of the Board to determine the appropriate corporate governance practices applicable to the Company's circumstances and to ensure processes and procedures are in place to achieve the Company's corporate governance objectives.

      The Company has established internal policies, including but not limited to the articles of association (the "Articles"), and terms of reference of the audit committee (the "Audit Committee"), the remuneration committee (the "Remuneration Committee") and the nomination committee (the "Nomination Committee") of the Company, to ensure that the Board has access to independent views and opinions. These policies cover the Company's procedures and selection criteria for the election and appointment of Directors, the mechanism for Directors to abstain from voting on relevant proposals considered by the Board, and the authority of the independent board committee to engage independent financial advisors or other professional consultants. The Company has reviewed the implementation and effectiveness of the aforesaid mechanisms and considers that the aforesaid mechanisms can ensure the independent views and opinions of the Board.

      As at the date of this report, the Board consisted of eight Directors, comprising three Executive Directors, two Non-executive Directors together with three Independent Non-executive Directors who all possess appropriate academic and professional qualifications or related financial management expertise and have brought a wide range of business and financial experience to the Board.

      The Board has four scheduled meetings a year at approximately quarterly interval and meets as and when required. During the financial year ended 31 December 2025, four Board meetings were held. The Directors attended Board meetings in person or through electronic means of communication during the year. Details of the attendance records of the Directors are set out in the table on page 39. Apart from formal meetings, matters requiring the Board approval were dealt with by way of written resolutions.

      The Board is responsible for performing the corporate governance duties set out in code provision A.2.1 of the CG Code. This corporate governance report has been reviewed by the Board in discharge of its corporate governance function.

   2. Chairman and President

      The responsibilities of the Chairman and the President of the Company are vested in one person, Mr. Hui Sai Tan, Jason, but all major decisions are made in consultation with the management and the Board. The Board considers that there is a sufficient balance of power and enhances the efficiency of the operation of the Group.

      The other Executive Directors are delegated with responsibilities to oversee and monitor the operations of specific business areas and to implement the strategies and policies formulated by the Board.

      CORPORATE GOVERNANCE REPORT

   3. Board Composition

      The Board has a balance of skills and experience appropriate for the Company's businesses. Given below are names of Directors during the financial year ended 31 December 2025 and up to the date of this report:

      Executive Directors

      Mr. Hui Sai Tan, Jason (Chairman and President)

      Mr. Xie Kun Mr. Zhao Jun

      Non-executive Directors Ms. Hui Mei Mei, Carol Mr. Shao Liang

      Independent Non-executive Directors

      Mr. Lyu Hong Bing Mr. Lam Ching Kam Mr. Fung Tze Wa

      Brief biographical particulars of all existing Directors, together with information relating to the relationship among them, are set out in the "Directors and Senior Management Profiles" section under this annual report.

      The Board currently comprises three Executive Directors, two Non-executive Directors and three Independent Non-executive Directors. The Independent Non-executive Directors, who represent more than one-third of the Board, bring independent advice and judgment, scrutiny of executives and review of performance and risks. Mr. Fung Tze Wa, an Independent Non-executive Director, possesses accounting and related financial management expertise. Therefore, the Company has complied with the requirements under Rules 3.10 and 3.10A of the Listing Rules.

      The Board considers that all the Independent Non-executive Directors are independent in character and judgment and meet the guidelines for assessment of independence as set out in Rule 3.13 of the Listing Rules. Confirmation has been received from all the Independent Non-executive Directors that they are independent as set out in Rule 3.13 of the Listing Rules.

      Independent Non-executive Directors are identified as such in all corporate communications containing the names of the Directors.

   4. Appointments, Re-election and Removal

      During the financial year ended 31 December 2025, other than Mr. Xie Kun, Ms. Hui Mei Mei, Carol, Mr. Shao Liang and Mr. Fung Tze Wa, each of the Directors has entered into a service contract with the Company for a specific term. However, such term is subject to his re-appointment by the Company at annual general meeting upon retirement by rotation pursuant to the Articles. The Articles state that each Director shall retire from office by rotation at least once every three years after he/she was last elected or re-elected. Accordingly, the term of appointment of all Directors is effectively not more than about three years. The Articles also provide that any Director appointed by the Board, either to fill a casual vacancy on the Board or as an addition to the existing Board, shall hold office only until the upcoming annual general meeting of the Company and shall then be eligible for re-election.

      CORPORATE GOVERNANCE REPORT

   5. Board Diversity

      The Company recognizes the benefits of having a Board that has a balance of skills, experience and diversity of perspective appropriate to the requirements of the Company's businesses. The Board adopted a board diversity policy for the Company (the "Board Diversity Policy") which stipulates that for identifying individuals suitably qualified to become Directors, the Nomination Committee should, while reviewing the Board's composition, consider from a wide range of aspects for Board diversity, including, but not limited to gender, age, cultural and educational background, ethnicity, professional experience, required expertise, skills, knowledge and length of service, and any other factors that the Board may consider relevant and applicable from time to time. All appointments of Directors should have taken into account the aforesaid factors as a whole for the benefits of the Company. Selection of candidates will be based on the Company's nomination policy and will take into account the Board Diversity Policy. The ultimate decision will be based on merit against objective criteria and contribution that the candidate will bring to the Board. The Nomination Committee will monitor the implementation of the Board Diversity Policy. It will also from time to time review the Board Diversity Policy, as appropriate, to ensure the effectiveness of the policy.

      The Nomination Committee considered that the Board consists of a diverse mix of members and has provided a good balance of skills and experience appropriate to the business needs of the Group.

      The current board diversity mix is shown below:
      	Number of Directors
      Designation Executive Directors	3
      Non-executive Directors	2
      Independent Non-executive Directors	3
      Gender Male	7
      Female	1
      Age 41-50 years old	4
      51-60 years old	2
      61-70 years old	2

      CORPORATE GOVERNANCE REPORT

      Directors' skills, expertise and experience

      	Executive leadership & strategy/ directorship	Property		Accounting
      	experience with other	development, property	Mainland	professionals/ financial	Legal professionals/
      	listed company(ies)	management & construction	China exposure	management expertise	regulatory & compliance
      Executive Directors Mr. Hui Sai Tan, Jason	✓	✓	✓
      (Chairman and President)
      Mr. Xie Kun Mr. Zhao Jun	✓ ✓	✓ ✓	✓ ✓	✓
      Non-executive Directors Ms. Hui Mei Mei, Carol	✓	✓	✓	✓
      Mr. Shao Liang	✓	✓	✓
      Independent Non-executive Directors Mr. Lyu Hong Bing	✓		✓		✓
      Mr. Lam Ching Kam Mr. Fung Tze Wa	✓ ✓	✓	✓ ✓	✓	✓
      Coverage (% of entire Board)	100%	75%	100%	38%	25%

      To ensure there is gender diversity on the Board, the Board has set a target that there should have at least one Director of different gender on the Board, subject to the Directors (i) being satisfied with the competence and experience of the relevant candidates after a holistic review process based on reasonable criteria; and (ii) fulfilling their fiduciary duties to act in the best interest of the Company and the Shareholders as a whole when deliberating on the appointment.

      To develop a pipeline of potential successors of different genders to the Board, the Company will (i) ensure that there is emphasis on gender diversity when recruiting staff at all levels; and (ii) engage fair resources in training staff of different genders with the aim of promoting them to be members of senior management or the Board. Through this, the Company is committed to identifying suitable candidates of different genders both internally and externally in order to achieve the abovementioned target.

      Our Board currently has one female Director out of eight Directors, and the target has been achieved.

      Having reviewed the implementation of the Board Diversity Policy and the structure, size and composition of the Board, the Nomination Committee considered that the requirements of the Board Diversity Policy had been met.

      CORPORATE GOVERNANCE REPORT

   6. Directors' Induction and Continuous Professional Development

      Every newly appointed Director receives briefings and orientation containing his/her legal and other responsibilities as a Director and the role of the Board together with materials on the Company's businesses and operations from the Company Secretary. The Company provides appropriate and sufficient information to Directors in a timely manner to keep them appraised of the latest development of the Group and to enable them to make an informed decision as well as to discharge their duties and responsibilities as Directors of the Company. Each Director has independent access to senior executives on operating issues.

      The Directors are continually updated with corporate governance and environmental, social and governance, risk management and internal controls, board and directors' duties, legal and regulatory developments, business and market changes and strategic development of the Group to facilitate the discharge of their responsibilities.

      According to the records maintained by the Company Secretary, all Directors pursued continuous professional development during the year and relevant details are set out below:

      Directors Reading materials

      Mr. Hui Sai Tan, Jason ✓

      Mr. Xie Kun ✓

      Mr. Zhao Jun ✓

      Ms. Hui Mei Mei, Carol ✓

      Mr. Shao Liang ✓

      Mr. Lyu Hong Bing ✓

      Mr. Lam Ching Kam ✓

      Mr. Fung Tze Wa ✓

   7. Board and Committee Meetings

Individual attendance records of the Directors at board meetings, board committees' meetings, 2025 AGM and the Company's extraordinary general meeting held on 15 January 2025 (the "2025 EGM") during the financial year ended 31 December 2025, are set out below:

Attendance/Number of Meeting(s)